INSIGHT: Time for circular economy innovation at scale

LONDON (ICIS)–Given their deep understanding of efficient and targeted materials conversion, chemical producers are best-placed to take a lead when it comes to reducing plastics waste and shifting towards a circular economy.

There are different driving forces for change at work in different parts of the world, of course, but the battle for plastics really has only just been joined.

Chemical companies will continue to back plastics as the material of choice in terms of environmental friendliness, but they have to tackle the plastic waste crisis head on. Most are doing so, but they need to work differently within the virgin and the recycled materials chain as they attempt to address the needs of the brand owners and converters and address the societal call for change.

Chemical producers are uniquely placed to develop new plastics-waste solutions at scale, Accenture’s Paul Bjacek and Material ConneXion’s Andrew Dent say in a recent blog post.

They suggest that a response from chemical companies requires a three-fold strategy involving new materials for consumer products and packaging; the adoption of new processes; and the embracing of new business models that meet society’s sustainability requirements.

Individual companies would not necessarily take all three of these approaches, technology and their asset footprints dictate otherwise. But there are companies that, in responding proactively to the changing requirements of consumer packaging trends and greater circularity or eco-friendliness, can capture new growth.

The bio-plastics issue is complicated, for instance, because these materials are not always readily bio-degradable. There is also the issue of contamination of the traditional extracted hydrocarbons based plastics recycled waste stream.

Bjacek and Dent point to potential success stories for plastics degradability in the marine environment. Also, there are some starch-based bioplastics that work well with petroleum based commodity plastics in blends. The blending allows for mechanical and chemical recycling and even improves some physical characteristics of the polymer.

The real gains for chemical companies could come in their adoption of new processes. Petrochemical producers, often aligned with refineries, have the capabilities to adapt or adopt new process routes.

“While they have often been on the sidelines of new plastics-waste solutions, they are now becoming ‘awakening giants’ that can use their hardware and technologies to mitigate waste issues, at a scale significantly larger than most plastics recycling companies,” the analysts say.

More commentators are coming to believe that plastic and other waste present a real hydrocarbon opportunity for these players. The Btu (British thermal unit) content of organic waste, including plastic waste, going into landfill in the US alone is equivalent to India’s annual oil production (865,000 bbls of oil equivalent a day).

That is a significant hydrocarbon resource. Refinery or petrochemical sites could become hubs for waste collection, sorting and processing to optimise the flow of resources and value.

The authors add that using new bio-based or degradable products or new processes to produce plastics have strong business model implications.

Bio-based products need different supply chains based on feedstock. A shift in products or processes means that the location of production facilities, seasonal patterns of supply and demand and other factors that impact markets in this industry will change.

The biggest hurdle to change, however, is identified as the supply chain. Most plastic waste today that is collected and sorted by waste disposal companies in Europe, for instance, comes from industrial sources, a survey by McKinsey has shown. In reality, we have only begun to scratch the surface of the collection, sorting and efficient utilisation of post-consumer plastic waste.

The blog posts authors suggest that strong collaboration is needed, especially between integrated petrochemical companies, waste handling companies and government.

And it is a question of understanding the true value of plastics in our lives.

“Although revolutionary from a materials perspective, today’s plastic is a problem that society has a responsibility to solve. It’s time to pursue innovative circular economy solutions. The value of plastic should not be just the raw material cost of the petroleum-derived chemicals it is produced from, but also the impact it will have when not brought back into the material stream via recycling or strategic composting.”

Insight by Nigel Davis