In countries like Sweden, Germany and the Netherlands it’s kind of done indirectly through waste to energy systems where plastic waste is burnt. I think there’s a few systems in place to mitigate the environmental impact.

Highlighting Vienna's district heating system which does this, partly because the facility in Spittelau had artist Friedensreich Hundertwasser design it to look like a psychedelic castle. https://hundertwasser.com/en/architecture/910_arch73_fernwae...

> Why don't the fuel producers do this?

I recall reading about some of them looking into it but running into issues ensuring a "clean" recycled plastic supply at the scales they need. Can't seem to find the article in my history but there's a ton of varied results I'm seeing from searches talking about the idea of recycling plastic. Example: https://www2.afpm.org/forms/store/ProductFormPublic/sum-21-3...

I think one of the main issues was, at least in the US, chlorinated plastic (e.g. PVC) ends up in the bulk supply of used plastics through negligence/malice/whatever and even at a few percent ends up creating some pretty corrosive compounds which are difficult/expensive to remove before they damage the equipment.

Looks like people are working on that issue too though: https://www.power-technology.com/features/plastic-pyrolysis-...

We kind of already do - just instead of making diesel, the plastic is burned to generate electricity. Since machines to harvest a difference in temperature or exothermic processes scales with size, one could argue it's more efficient to burn it in a massive, very efficient furnaces instead of converting the plastic into diesel that is then burned in an engine that must be operational at a far larger range of RPMs.

My understanding is that higher temperatures also mean some toxic byproducts get processed. And you can install scrubbers and other technologies to clean rest from exhaust... And with combined production also capturing waste heat after electricity production efficiency is comparatively good.