By John Richardson
MORE THAN 100 countries, including the US, are thought to favour a treaty being proposed at the next UN Environment Assembly in February and March that would set targets for reducing plastic waste in the environment, according to the BBC.
I see this as great news, a step forward, as I was last year calling for an international and binding agreement to clean-up plastic waste. Without such an agreement, similar to the COP 26 deal on reducing carbon emissions, we are going to go nowhere.
As the Ellen Macarthur Foundation says, a global problem needs a global solution as plastic waste doesn’t respect borders.
Countries and organisations can’t fix the problem on their own. It is a global challenge that needs a coordinated and globally aligned response. We need a UN Treaty that:
- Takes a circular economy approach, addressing the entire lifecycle of plastics and focusing upstream to design out waste before it is created.
- Sets global standards, clear definitions for success and common regulations to create a level playing field.
- Enables all participating countries by giving them the tools, knowledge, and robust frameworks to create a circular economy for plastics.
More than 70 leading businesses and financial institutions are calling for a legally binding treaty on plastic pollution, which is also supported by more than three quarters of UN member states and more than 2m people. We urge others to join them in supporting a treaty that will enable circular economy solutions to scale globally.
Meanwhile drip, drip, drip the pressure is building on our industry….
…as new reports are published almost every day, based on solid science or otherwise, about the net harm done by plastics to the environment.
The brand owners are under ever-more pressure from their customers over the plastic waste issue. A marketing manager with a leading brand owner told me he spent 40% of his time dealing with the public’s concerns about plastic waste.
This pressure is being transferred upstream to the polymer producers from the brand owners, who are demanding packaging that’s more recyclable or more compostable, while at the same time less carbon intensive.
Where to turn? Where to begin? Let’s start with how polymer producers need to prepare for a global treaty on plastic waste.
Accept that the traditional industry cost curve will become redundant
Right now, of course, we determine success by access to cheap feedstocks, efficient running of plants and smooth logistics. But I believe we will see these traditional measures of competitiveness upended.
Eventually, even if nothing of consequence happens at the next UN Environment Assembly, I see a global agreement on plastics waste as inevitable – and, as I said, the right thing to do.
We simply must find a way of paying for rubbish collection, storage (yes, there is nothing wrong with properly managed landfills), and where viable recycling systems for the 2bn people who lack access to any rubbish collection and processing systems. Another 1bn people have inadequate systems.
When it comes to the waste issue, it is not the plastic that is itself the problem, but instead how we dispose of it. And how we dispose of the rubbish in the developing world is behind the great majority of waste in the open environment.
Public awareness of the realities can only build and build, as has been the case with climate change, culminating in a global and binding treaty on plastic waste. This will be supported by global plastic taxes and/or a credits trading schemes, as is emerging in carbon.
Returning to the theme of cost curves, polymer producers should be planning for what such a scheme could look like in ten years’ time and how this would affect their costs of production.
The forward-looking producers are already looking to offset these future costs by supporting plastic clean-ups in the developing world.
Where are future feedstocks going to come from?
The other big industry challenge, already referred to in passing above, is carbon.
As electrification of transportation takes off in the developed world, especially Europe, refineries will shut down. Sure, some refineries might be adapted to make more petrochemicals feedstocks, but the majority of any refinery’s output is in transportation fuels.
So, on a net basis, global refinery capacity seems likely to shrink. Even in China, which has the central control to rapidly electrify its transportation, refinery projects have been cancelled.
Even if there remains ample access to feedstocks from refineries in some regions, the brand owners will increasingly be asking for less carbon intensive polymers.
How do producers square this circle as it can be argued that plastics recycling, whether mechanical or chemicals, is more carbon intensive than making polymers in conventional ways?
There is also the volume issue as the chart at the beginning of this blog post reminds us. Using linear-low density polyethylene (LLDPE) as an example, which is a type of plastic or polymer heavily used in packaging, the scale of demand growth over the next 20 years is eye-wateringly huge.
We can redesign to reduce consumption. But because polymers are so intricately woven into the fabric of modern-day life, as people get richer in the developing world, they will consume a lot more plastics.
How can we expect people in poverty not to want the things that we in the rich world take for granted, such as safe food wrapped in plastic films, mobile phones, TVs, refrigerators and computers etc. – all of which are made from polymers.
Access to sufficient polymers is a human right. Overblown? No, because we cannot separate heavy polymer consumption from modern-day lifestyles in any reasonable time frame.
How the industry could change over the next ten years
In Europe, as I said refineries are shutting down as legislation builds on reducing carbon emissions and increasing plastic recycling.
Commenting on where the US might end up is a political minefield but let me take this risk.
Even if future federal governments remain welded to the old hydrocarbons and plastic waste-intensive worlds, international treaties could well force local producers to behave differently. Individual US states also have considerable leeway to go in their own directions.
Then we must think of how the financial sector will behave. Banks are already very reluctant to fund new hydrocarbon projects.
There are also indications that financiers are considering the wider environmental footprint of the polymers industry, including of course the plastic waste issue and growing concerns over the health implications of microplastics.
How do we square these circles? Over the next years, this is what could happen:
- In the West, niche polymer producers emerge that largely or entirely give up on investing in big new polymer plants because they don’t have the feedstocks, and, anyway, cannot get the regulatory approval or the financing. Value over volume becomes their key metric as they increase output from bio-feedstocks, provided food supply is not jeopardised, and from recycled plastics.
- Refineries that are still operating focus more heavily on making petrochemicals feedstock to meet booming demand growth. But these refinery-petrochemical complexes reduce carbon through carbon capture and storage and electric cracker furnaces etc.
- And/or we will see the emergence over the next ten years of alternative production processes that provide sufficient volumes to meet demand, while also solving the carbon problem. But this seems a big stretch to me without an awful lot more investment. Take blue and green hydrogen as an example. Studies show that blue hydrogen might actually be worse for emissions than grey hydrogen. “Green hydrogen remains far-off from being a significant contributor to global energy supply, with just 21% of the 90m tonnes produced each year coming from renewable-sourced energy,” wrote Renewable Energy World in this article.
- Producers in general work with brand owners to “redesign the future”, producing packaging solutions that solve both the carbon and plastic waste issues (more on this theme in later posts).
Will there be room for any new long-distance cracker complexes built in say the US to take advantage of booming emerging markets demand?
Maybe not because of the lack of financing, regulatory restrictions if future federal government are more blue than red, and the carbon emissions from shipping polymers halfway around the world.
Throw into the mix China’s rising polymers self-sufficiency and its declining demand growth for virgin polymers and what is left to justify new long-distance assets?
One must also question how successful existing export-based crackers will be in this new environment.
Conclusion: my views are here to be challenged
Please come forward if you disagree. These are just some preliminary thoughts in what I hope will be a valuable debate that will take us forward.
Whatever the solutions, I think we can all agree that there can be no business as usual.