Recycling barely dents crude demand as global infrastructure remains poor – IEA

LONDON (ICIS)–Crude oil demand from petrochemicals will rise in coming years as virgin plastics continue to be churned out at pace given the poor implementation of recycling infrastructure across the globe, a petrochemicals analyst at the International Energy Agency (IEA) said.

Tae-Yoon Kim said that for recycling to be a competing factor against virgin plastics the infrastructure across the world – apart from some in EU countries – would have to be developed quickly, something that is not happening.

The analyst said countries should put at the centre of recovery packages post-pandemic green policies like recycling; however, so far only the EU’s Green Deal has made that a priority; he mentioned the Green Deal as an example to follow.

“In terms of recycling momentum what is important is to have the infrastructure to collect and process the waste; Europe has a well-developed infrastructure already, but it is important to do this in developing economies in Asia, where demand is increasing the most,” said Kim.

“After the pandemic hit, many countries have announced plans to boost the economy. For instance, the EU’s Green Deal, which has the circular economy element, is very encouraging.”

As encouraging as it can be, the world is not yet following the EU steps; hydrocarbons-based petrochemicals continue to be the norm as alternative materials are in nascent stage, or are too expensive, or are unsustainable due to the production scale needed.

As Asia’s urbanisation continues relentlessly, it is that region Kim said should put a special focus on recycling.

SMALL GESTURES, BIG PROBLEMS
Before the pandemic, plastics and plastic waste were high on the agenda as public opinion started realising the extent of the damage to oceans and environment in general the hydrocarbons-based production of plastics had caused.

Due the public’s alarm, many local and national administrations rushed to ban single-use plastics – think takeaway food or hot drinks packaging, for example – which are especially damaging to the environment.

They are mostly made of polystyrene (PS), a chemical hardly recycling although some producers are trying to save market share by piloting some projects in Europe and North America.

However, the well-publicised measure may be a true drop in an ocean of plastics.

“It is important to think what methods you use to replace single-use plastics. Sometimes, they are replaced not by paper or other sustainable materials, but by multi-use plastics, which are meant to be reused several times but in reality, that is not the case,” said Kim.

“Overall, while encouraging, it’s a bit too early to say single-use plastics ban would have a very big impact on plastic demand.”

In recycling, the overarching infrastructure countries put in place is what will make a difference.

COAL-TO-CHEMICALS IS HISTORY
China’s need to import most of its petrochemical feedstocks prompted the country to look at alternative sources to produce the materials, with coal-to-chemicals (CTC, also called coal-to-liquids) plants no longer cost competitive.

However, coal’s polluting properties and the large amount of water needed in the process, which China lacks, have made the regime wary and it now favours other feedstocks which with the development of new technologies have also become more affordable.

While there are still some CTCs in development, the IEA expects not many new ones to be announced.

“These CTC projects require heavy investments, and some years ago they might have been justified, but the rationale for them today is disappearing and we don’t expect many more additions via that route,” said Kim.

While China made headlines in September when it pledged to be carbon neutral by 2060, Kim said the long-term objective had yet to be backed by “detailed measures” for its realisation.

“Realising these goals is important not only for the countries and companies concerned, but also for accelerating progress elsewhere by bringing down technology costs and by developing regulations and markets for low-emissions products and services,” he said.

“Technology-wise, this can be totally feasible, but what is important to back up the pledge with more detailed measures and near-term policy targets.”

CCSU – MISSED SILVER BULLET?
The IEA has always supported mass deployment of carbon capture, storage and utilisation (CCSU) units at existing industrial facilities to lessen the impact of a potential carbon free industry.

But uptake has been slow due to the high cost of the technology and most of the few existing projects developed or in development have been backed by public bodies.

Global capital expenditure (capex) in CCSU projects was under $1.0bn, according to Kim.

Kim went as far as saying that without CCSU deployed at a much-larger scale the Paris Agreement targets are unachievable.

He said the oil and gas sector, still with deep pockets and experience in large projects, could be still a pioneer in deploying CCSU at a larger scale, making it viable in the long term for a wider industrial base.

“There are reasons to think that the outlook for the next 10 years may improve. While few additional projects have reached final investment decisions, the rising number of public and private sector commitments to reach net-zero emissions, combined with growing interest in clean hydrogen production, has given CCUS renewed momentum,” said Kim.

“There is growing recognition that reaching net zero will be virtually impossible without CCUS given the massive amount of emissions ‘locked in” existing infrastructure.”

The IEA forecasts that large-scale CCUS projects at an advanced stage of planning around the world would represent a combined capital investment of $27bn if they all come to fruition, with most of it relying on public support.

“Continued policy support is critical in maintaining momentum and applying the technology widely in the next decade,” concluded Kim.

Front page picture: A worker makes hand sorting on plastic bottles for recycling in Tokyo; archive image.
Source: Koji Sasahara/AP/Shutterstock