Industry must act fast on plastics recycling as societal pressure mounts

Author: Joseph Chang

2021/04/13

NEW YORK (ICIS)--The chemical industry must accelerate investment in plastics recycling to achieve scale as activist and government pressures mount, the former CEO of Equate and MEGlobal said on Tuesday.

“Both the activists and the industry are in full agreement on the clear and present danger posed by plastic waste. However, I think the pace of change is too slow - industry has to move a lot faster before society looks to the producers as the problem and who have to fix it,” said Ramesh Ramachandran in an interview with ICIS.

“If the industry wants to double in capacity in 5-10 years without a clear solution in 2-3 years for plastic waste, this will not end well for industry. Policy, fines and taxes will beat them to the punch,” he added.

Ramachandran was CEO of Kuwait-based polyethylene (PE) producer EQUATE from 2017-2020 and CEO of UAE-based ethylene glycols (EG) producer MEGlobal from 2009-2017. He is now principal at the consultancy MEGVIN Advisors.

THERMODYNAMICS AND ECONOMICS
Plastics recycling can be broken down to two challenges - a thermodynamics challenge and an economic challenge.

Thermodynamics - the science behind the process - is sound. There are plenty of prototypes, catalysts and small-scale but fully developed chemical recycling processes that can convert plastics to pyrolysis oil, and this can then be used to make pellets.

“But we are nowhere close to an economic solution and an infrastructure to collect the plastic waste, sort it and bring it into the process. That part is simply not established and it’s not very viable economically today because nobody wants to pay for it,” said Ramachandran.

“Governments want producers to pay for it, producers want consumers to pay for it, consumers want the producers to pay and the large FMCGs [fast moving consumer goods companies] don’t want to pay a premium for these recycled products,” he added.

Thus far, the large FMCG players have yet to come out and say their cost of raw materials will rise meaningfully in the coming years because they want them to be sustainable. If they did and could pass along the costs to consumers, that would work, the former CEO noted.

“The consumers cannot get a free lunch here,” said Ramachandran.

“Economically it is really a challenge. Collection is an issue, and unless municipalities, governments and consumers change behaviour so that there is collection of these plastics to get them to a recycling centre to do the conversion, it will continue to be a challenge,” he added.

Alternatives to plastic packaging are expensive and have much higher carbon footprints, the former CEO noted.

In many cases there are no real alternatives. Bans on single-use plastics such as bags have successfully caused changes in consumer behaviour where they reuse cloth bags for shopping. But packaging for medical supplies, e-commerce and durables such as appliances still requires plastic, he noted.

“Activists and industry have to come together to solve this and public policy has to play a role. Some kind of fund has to be established so that consumer behaviour can be changed to collect these plastics and bring them to recycling locations,” said Ramachandran.

SPOTLIGHT ON PLASTIC WASTE
Meanwhile, the scale of the problem continues to grow, with masses of plastic bags being found in the stomachs of cattle in India and camels in Dubai and plastic pellets in fish – all highly charged and visible public issues.

A 23 March Washington Post article highlighted the latest example of plastics in wildlife, noting one instance where 2,000 plastic bags were found inside a dead camel. The author Marcus Eriksen, co-founder of the 5 Gyres Institute – called it “a whole new level of appalling”.

“The plastics industry thinks growth is going to be at 3-5%/year for packaging and capacity [eventually] doubled. These forces (prevalence of plastic waste and capacity expansion) cannot coexist. It is not going to end well if there is no viable solution,” said Ramachandran.

“The industry thinks it has a lot of time to solve this problem. But when I look at the level of activism from governments and the general public, I am worried that we don’t fully appreciate the intensity of the backlash. Something has to be done rather quickly. Otherwise, someone else will solve the problem for us, which won’t be pleasant,” he added.

Likely public policy will force action, restricting the sale and export of virgin plastics, the former CEO said.

“That would be an option – basically don’t allow exports unless the pellets have a recycled content of at least 30%. Then by default you force recycling at the origin. Then things will change very quickly,” said Ramachandran.

Forcing recycling at the origin before it is exported is preferable to only forcing the ultimate end user to recycle, he noted.

“Policy has to come in where you impact exports of virgin resin because that will force industry’s hand in realising that there is an economic barrier to just increasing production of virgin resin with no consequences,” said Ramachandran.

This can be done by the exporting countries as well as the importing countries. And once one or two countries start, it will likely have a ripple effect, he noted.

SOCIAL IMPACT OF DISRUPTION AND SCALE
Companies and governments must also consider the social impact of waste collection and plastics recycling. Having large-scale chemical recycling facilities where plastic waste is directed to may not be feasible.

“Garbage is a very local issue and typically controlled by very powerful families in municipalities – and this happens everywhere. The biggest issue [in collection] is the social impact. If you’re going to put people out of jobs or take revenue away from a segment of society, it’s going to take a very long time to successfully implement,” said Ramachandran.

“So you flip it on its head, accept that reality even though you don’t like it, and build these small $10m-15m units of 50-100 tonnes/day to convert the plastic to fuel right next to the municipalities where they have their solid waste collection today,” he added.

The resulting pyrolysis oil can be used as fuel, including to run the pyrolysis facility. It can be shipped off to other locations, including to crackers to produce new plastics. That ecosystem exists today, he noted.

“Recycled plastics-to-fuel is a sustainable business model with 10-15% returns and this can be self-funding. The biggest area that needs to be funded is influencing consumer behaviour to bring the plastic to a place where it can be easily collected and brought to these centers,” said Ramachandran.

“That ecosystem has to be built and it can be done. Look at the state of mask wearing compliance in the world [amid the pandemic]… It is possible to influence consumer behaviour in less than a year,” he added.

Interview article by Joseph Chang