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The structure and properties of blends of a novel polyethylene terephthalate copolymer (COPET) obtained by chemical recycling of commercial PET with high-molar-mass poly-L-lactide (PLLA) are investigated and compared to corresponding composites with chopped flax fibres. The focus is on the morphology at nano- and micro-scales, on the thermal characteristics and on the mechanical behaviour. The blends are immiscible, as evidenced by virtually unchanged glass transition temperatures of the blend components compared to the neat polymers (49 °C for COPET and 63 °C for PLLA by DSC). At low PLLA content, the blends display a sea–island morphology with sub-micron to micron droplet sizes. As the composition approaches 50/50, the morphology transitions to a coarser co-continuous elongated structure. The blends and composites show strongly improved stiffness compared to COPET above its glass transition temperature, e.g., from melt behaviour at 60 °C for COPET alone to almost 600 MPa for the 50/50 blend and 500 MPa for the 20% flax composite of the 80/20 COPET/PLLA blend. The flax fibres increase the crystallisation rate of PLLA in blends with dispersed PLLA morphology. The evidence of cavitation on the fracture surfaces of blends shows that despite the immiscibility of the components, the interfacial adhesion between the phases is excellent. This is attributed to the presence of aliphatic ester spacers in COPET. The tensile strength of the 80/20 blend is around 50 MPa with a Young’s modulus of 2250 MPa. The corresponding 20% flax composite has similar tensile strength but a high Young’s modulus equal to 6400 MPa, which results from the individual dispersion and strong adhesion of the flax fibres and leads close to the maximum possible reinforcement of the composite, as demonstrated by tensile tests and nano-indentation. The Ashby approach to eco-selection relying on the embodied energy (EE) further clarifies the eco-friendliness of the blends and their composites, which are even better positioned than PLLA in a stiffness versus EE chart.