LONDON (ICIS)--Despite the bad publicity in recent years “plastics are winning on every front of the materials game”, according to the principle director of global resources research at professional services company Accenture.
Paul Bjacek states that the increasing demand for plastics in some end-markets – for instance increased use in the automotive industry in making vehicles more lightweight – coupled with opportunities in recycling will continue to spur growth in the sector.
Due to the high level of contaminants (or tramp elements) present in recycled steel, material cannot be used in primary applications, such as in the automotive industry, which means that is has to be downcycled.
While Bjacek anticipates that increasing levels of steel impurity will reach critical mass, there are opportunities to capitalise on the revolt against single-use plastic by engaging with innovative recycling technologies.
In part, the opportunities in recycling are there because of inefficiencies in the current system, with up to 40% of thermoplastics currently used in single use plastics and packaging.
According to research undertaken by Accenture last year, the amount of organic waste sent to landfill in the US was the equivalent of India's crude production
The pandemic has intensified pressure on the recycling sector, as cheaper crude has led to competitively priced virgin material, and the supply chain has also been hampered.
“The problem with the current recycling infrastructure is that there is a lot of manual interface," said Bjacek. And some manual collection has stopped while factory sorting has also been curtailed because of cornavirus restrictions.
With the limitations in mechanical recycling, the market is looking at how to build circularity in other ways, with chemical recycling providing distinct possibilities for producers.
In particular, there are opportunities for technologies which can use a wider variety of materials for feedstock, which could reduce costs throughout the value chain.
Polyethylene terephthalate (PET) is the most recycled plastic but depends on material that has been sorted and cleaned.
By funnelling unsorted material to be used in pyrolysis or gasification to bring polymers back to monomer level, this could be used in various chemical streams, or could be used in the hydrogen economy.
“All plastics will demand recycling. When you start going that way then you need inclusive technologies,” added Bjacek.
Naturally some producers would stand to gain more from this than others.
Although many European producers are moving away from commodity chemicals in favour of specialty materials, those with upstream capacity could stand to gain the most.
“The key would be for those who have refineries. They are experts at taking crudes, sending them to different places to make different fuels. They have optimisation models, so they have the most flexibility in how to handle things,” said Bjacek.
Despite the global economic blow delivered by widespread coronavirus infection rates, this remains high on the agenda for many in the chemical industry.
“If you look at producers, the main thing on their mind is coronavirus and recovery. But numbers two and three are the circular economy and labour – that is, where they find future labour. The main concern outside of recovery is how will [the] circular economy play out,” said Bjacek.
“In the past five years of new announcements I have tracked on chemical recycle, 75% of these have been made in the past year.”
Plastic production is once again under pressure from EU regulators with a new tax proposed for virgin material from 2021, but Bjacek thinks that heavy legislation may not be the most intuitive way to make the industry more sustainable.
“I think the industry is already activated and the industry is looking for scale-efficient ways to do it. Legislation can help the industry do things…but then regulations can go overboard, favouring one thing or another, then that stifles innovation,” he said.
“You need to set the bar at an appropriate level to continue, if you say you can recycle but don’t use gasification, all the innovation goes to the wayside.”
As consumers become more attuned to the ecological impact of their buying habits, then emissions used in producing materials will move closer to the spotlight.
This could also stand the plastics industry in good stead as, although paper is put forward as an alternative material in some applications, it is not as amenable to recycling and so in some respects less environmentally friendly.
This is not the only way that the footprint of key petrochemicals players is evolving, as while markets are down producers will be looking at ways they can expand into different areas.
As the pandemic has highlighted the flaws in global supply chains, there could be a shift in regional assets.
“I think we are seeing a new model industrial recalibration. Global investment may continue, as producers build plants to serve domestic markets not for re-export. There will be global investment rather than global trade,” said Bjacek.
And while previous investments had centred around China, Bjacek anticipates that this will move to ‘tiger cub economies’ including Indonesia, Malaysia, Thailand, the Philippines and Vietnam.
International trade was already under pressure ahead of the pandemic, so diversifying where investments are made into economies wherethere is room to grow in may be a key part of a financial recovery.
Insight by Morgan Condon