Plastics Industry Must Build on Recycling Progress
By Sarah Rae, VP of Olefins for Argus (with input from Will Collins)
GPCA members in the Arabian Gulf represent a major centre for the production and use of plastics and can build on recent progress in recycling. Some countries have started plastic waste collection programs, but they are in the early stages and much of the collected waste is exported for others to handle. Governments in the UAE, Saudi Arabia and Qatar have launched plastic recycling centers and awareness of the issue is growing. This is just the first step towards a greater focus on the circular economy.
As a major exporter of plastic, the Arabian Gulf is directly affected by developments in other regions. Some parts of the world are taking a co-ordinated, albeit loosely defined, approach to increasing plastic recycling, whereas others are much less advanced. All aim to increase recycling to help tackle the problem of plastic waste. This threatens virgin plastic demand, but it will take time for consumers to have viable alternatives, and for recycling to increase enough to make a difference on a large scale. There is an opportunity for those that can develop sustainable solutions.
The COVID-19 pandemic has helped partly restore plastics’ tarnished reputation in the short term as their use in medical products and ability to protect food are being valued more highly. The pandemic has also driven crude oil prices sharply lower, decreasing the relative price of virgin plastic versus recycled, creating a less favourable environment for recycling investments. This will not erase the long-term need for a sustainable solution for dealing with plastic waste, but it is likely to delay global investment in recycling.
“Some parts of the world are taking a co-ordinated, albeit loosely defined, approach to increasing plastic recycling, whereas others are much less advanced.”
“Gulf Co-operation Council companies are already participating in projects in other regions, and there is an opportunity for GPCA members with expertise in refining and plastic manufacturing to increase their involvement.”
Development of recycling
Dealing with post-consumer waste is a major issue that has risen up the agenda of governments, brand owners and the petrochemical industry. China historically imported large amounts of plastic waste but closed its doors at the end of 2017. Some waste exports were shifted to other countries, largely in southeast Asia, but many of these are now implementing bans or restrictions.
There are two principal routes to recycling — mechanical and chemical. Mechanical recycling is the main commercially available process at the moment. It has the benefit that the technology/capacity is widely available, start-up costs are relatively low, it is economically viable on a small scale and less carbon-intensive than chemical recycling. But it requires a homogenous input stream, making it unsuitable for large swathes of plastic waste without significant investment in product design and collection/sorting systems. Additionally, in a mechanical recycling loop, every cycle of use downgrades the plastic, making it difficult for recycled plastic to be used in many markets for safety or technical reasons.
Innovation and capacity growth in mechanical recycling is continuing, with most regions also aiming to improve municipal waste infrastructure. But its limitations mean that a significant amount of large-scale investment from the plastic industry is focused instead towards chemical recycling.
Chemical recycling is the transformation of the molecular structure of a plastic waste stream. There are different recycling technologies defined as chemical but one that is attracting interest and investment is the processing of plastic waste into a feedstock generally referred to as pyrolysis oil, which can be fed back into a cracker to produce virgin plastic with “green” credentials. The technology benefits from higher flexibility on the plastic waste “feed”, and little or no limit on the potential end-uses because the final product is virgin polymer. But it is more carbon-intensive, has yet to be widely proven at a commercial scale and producers are working to resolve the issue of cracking a variable feedstock stream driven by the vagaries of waste. The industry is confident that it can overcome these challenges, and multiple targeted investment projects are at the early stages of commercialization.
Chemical recycling will take time to develop but will have an increasing role in the global discussion. Gulf Co-operation Council companies are already participating in projects in other regions, and there is an opportunity for GPCA members with expertise in refining and plastic manufacturing to increase their involvement.
Impact on demand
Rising emphasis on sustainability has the potential to affect virgin polyolefin demand in two main ways:
- Consumer choice
Consumers and brand owners have shown an increased interest in using less plastic, particularly in packaging, but getting beyond a marginal level of substitution — without unintended consequences — is difficult. Plastic is a cost-effective, clean and secure packaging material. It is weight-saving in transport and offers well-documented benefits for substantially reducing food waste, but as an uncontrolled waste it has a negative environmental impact and consumers are choosing alternative packaging materials.
Many governments are attempting to moderate the use of plastic — particularly single-use — by implementing laws or threatening to implement them if the industry does not react. The EU has perhaps the most advanced combination of regulation and targets, but governments are nervous of legislating before there are credible affordable alternatives and of threatening an industry that employs thousands of people. Some firm action has been taken, such as the EU-wide ban on plastic plates, cutlery, drinking straws and stirrers that is scheduled to begin from July 2021. There is a lot of discussion of targets and pledges, but plastic packaging production in the EU fell by just 1.4% in 2019 — from an all-time high in 2018. This was only marginally more than the year-on-year fall in total EU manufacturing and could easily be attributed to economic conditions as to a reduction to one-use packaging.
Legislation in other regions is even more patchy. The US has no country-wide legislation, although some states and cities have been implementing local bans, particularly on single-use plastics. China has said it will ban non-degradable plastic bags in major cities and single-use straws from restaurants by the end of 2020, from all cities by 2022 and from all markets selling fresh produce by 2025. But the economic fallout from Covid-19 may delay this as the alternatives are more expensive and availability is limited. Indian prime minister Narendra Modi has made bold statements about reductions in India, but his government is struggling to implement a co-ordinated approach to bans and the investment needed to deal with the waste. Other Asia-Pacific countries have banned single-use plastics, but these are not widespread.
“Consumers and brand owners have shown an increased interest in using less plastic, particularly in packaging, but getting beyond a marginal level of substitution — without unintended consequences — is difficult.”
“Brand owners and governments are driving for increased use of recyclates, but the lack of clarity around definitions of recyclability and recycling is causing confusion.”
Oman has introduced a “OneBottle” recycling campaign aimed at raising awareness of the millions of plastic bottles disposed of every day, the majority of these are PET with HDPE caps – higher rates of recycling will impact demand for both. Oman has also announced it will end the use of single use plastic bags by the end of 2020, where it is claimed one million plastic bags are used every day impacting demand for HDPE and LLDPE films. While Oman is an important market, it is small relative to China and India and if the one-use plastic bans proposed by the governments there gain momentum then the impact on plastic demand will be much greater. The EU is likely to be the first region to fully implement bans on one-use plastics although many of the countries in the region have already acted so the overall impact of new legislation is likely to be limited.
Government initiatives will become more focused and effective with time, if problems associated with plastic waste persist and the industry does not act. But they are immature at this stage, which gives the industry time to shape the agenda and find solutions that are truly circular.
2. Increased recycling
Virgin plastic demand growth will be eroded by increased use of recycled grades in existing applications. Converters say that innovation in the industry to create new recycled plastics — such as new colours or food-grade polyolefin recyclates — could substantially increase demand. But consumers would need to accept lower material standards and legislation would need to be amended to allow use in some sectors. Brand owners and governments are driving for increased use of recyclates, but the lack of clarity around definitions of recyclability and recycling is causing confusion.
Converters also have concerns about the stable supply of high-quality recyclates. Large packaging manufacturers use hundreds of thousands of tons a year of plastic resin — far in excess of available recyclate supply. All the facts suggest that it will take time, and potentially considerable development in recycling technology and infrastructure, for them to be confident that their requirements can be met. Chemical recycling on a commercial scale is seen by many as an answer to these problems, but this will inevitably take time to develop and needs investment.
Recycled plastic is part of the future petrochemical landscape, but it needs to be acceptable to the consumer in terms of price and performance and viable for manufacturers in terms of quality and regular supply. Any investment needs to meet the criteria for a circular economy being set by brand owners and governments. COVID-19 is likely to delay progress but not eclipse the green agenda.