COPENHAGEN, August 28 (Reuters) - Toymaker Lego said on

Wednesday it was on track to replace the fossil fuels used in

making its signature bricks with more expensive renewable and

recycled plastic by 2032 after signing deals with producers to

secure long-term supply.

Lego, which sells billions of plastic bricks annually, has

tested over 600 different materials to develop a new material

that would completely replace its oil-based brick by 2030, but

with limited success.

Now, Lego is aiming to gradually bring down the oil content

in its bricks by paying up to 70% more for certified renewable

resin, the raw plastic used to manufacture the bricks, in an

attempt to encourage manufacturers to boost production.

"This means a significant increase in the cost of producing

a Lego brick," CEO Niels Christiansen told Reuters.

He said the company is on track to ensure that more than

half of the resin it needs in 2026 is certified according to the

mass balance method, an auditable way to trace sustainable

materials through the supply chain, up from 30% in the first

half of 2024.

"With a family-owner committed to sustainability, it's a

privilege that we can pay extra for the raw materials without

having to charge customers extra," Christiansen said.

The move comes amid a surplus of cheap virgin plastic,

driven by major oil companies' investments in petrochemicals.

Plastics are projected to drive new oil demand in the next few

decades.

Lego's suppliers are using bio-waste such as cooking oil or

food industry waste fat as well as recycled materials to replace

virgin fossil fuels in plastic production.

The market for recycled or renewable plastic is still in its

infancy, partly because most available feedstock is used for

subsidised biodiesel, which is mixed into transportation fuels.

According to Neste, the world's largest producer of

renewable feedstocks, fossil-based plastic is about half or a

third of the price of sustainable options.

"We sense more activity and willingness to invest in this

now than we did just a year ago," said Christiansen. He declined

to say which suppliers or give details about price or volumes.

Rival toymaker Hasbro ( HAS ) has started including plant-based or

recycled materials in some toys, but without setting firm

targets on plastic use. Mattel ( MAT ) plans to use only recycled,

recyclable or bio-based plastics in all products by 2030.

Around 90% of all plastic is made from virgin fossil fuels,

according to lobby group PlasticsEurope.