HOW PLASTICS WASTE RECYCLING COULD TRANSFORM THE CHEMICAL INDUSTRY
Reusing plastics waste could become an important driver of profitability for chemical companies. Incumbent players need to make the right moves now to tap this opportunity.
If plastics demand follows its current trajectory, global plastics-waste volumes would grow from 260 million tons per year in 2016 to 460 million tons per year by 2030, taking what is already a serious environmental problem to a whole new level. In the face of public outcry about global plastics pollution, the chemical industry is starting to mobilize on this issue. Our recent article “No time to waste” showed how industry leadership is moving beyond the use-once-and-discard approach—under which the plastics industry has grown up—and embracing an expanded definition of product stewardship that includes dealing with plastics waste. As we underlined in that article, this is not only what society demands, and is becoming a condition for the industry to retain its license to operate, but could also represent an important and profitable new business opportunity.
That last insight is built on our comprehensive assessment of where future global waste flows will come from, how they could be recycled, and what economic returns this activity could offer—research that has filled a major gap in the public debate. In this article, we outline a scenario for the plastics industry through which 50 % of plastics worldwide could be reused or recycled by 2030—a fourfold increase over what is achieved today—and that also has the potential to create substantial value.
Following that path, plastics reuse and recycling could generate profit-pool growth of as much as $60 billion for the petrochemicals and plastics sector, representing nearly two-thirds of its possible profit-pool growth over the period. We also discuss the levels of support that will be needed more broadly across society, including from regulators, major plastics users such as consumer-packaged-goods companies, and consumers, to get to this outcome.
For petrochemicals and plastics companies—and by extension the chemical industry, since plastics production accounts for well over one-third of the industry’s activities—this presents an array of threats and opportunities, and we outline the kinds of strategic questions they will need to evaluate and the choices to make.
Modelling a virtuous circle of plastics recycling worldwide
Our research shows that just 12 % of plastics waste is currently reused or recycled (Exhibit 1). The fact that the great majority of used plastics goes to incineration landfills, or dumps, means that these materials are lost forever as a resource, despite plastics’ potential for reuse and recycling. Plastics production requires substantial capital investment and a substantial carbon footprint. Reusing plastics not only reduces these investment needs but can also contribute to reducing total industrial carbon emissions.
Images of plastics waste across the globe have contributed to a consumer backlash that is translating to regulatory moves to ban or restrict plastics use in numerous geographies, notably the European Union. Marine plastics pollution has been a powerful force to mobilize public opinion, and our colleagues have suggested ways to address the problem. When considering the potential for plastics-waste recycling, however, marine plastics pollution could best be understood as the highly visible tip of the iceberg.
What the chemical industry—along with major consumer industries, the waste industry, and indeed society, more broadly—has been lacking is a clear picture of a path forward under which the volumes of plastics being discarded could be recaptured and reused.
Also lacking has been a full perspective on where the majority of waste will come from and which recovery and recycling technologies offer the biggest potential.
Building a global picture
How could different regions contribute to worldwide value-creation growth? The modelling includes projecting the deployment of the most appropriate technology in geographies where it is needed and takes into account that some are still on a steep learning curve. The scenarios also incorporate an assessment of how waste collection and management will be able to ramp up. For example, most emerging-market countries lack infrastructure for sorting trash into different waste streams (and even in countries where human waste pickers salvage plastics, the volumes recovered are a small part of the total waste flow). As these countries build up their waste-management capabilities, the first step will be to separate the plastics waste from other wastes. Once this is achieved, pyrolysis of mixed plastics waste is likely to provide the most efficient way to process it, until capabilities are in place to separate different plastics. In the short to medium term, emerging markets are also likely to need to build incinerators to address their overall waste flows.
Not surprisingly, our projections for 2030 suggest China would represent the biggest potential profit pool—reflecting its position as the world’s biggest market for plastics use and biggest plastics-waste generator, as well as the fact that it has long had an established market for reused resin. Asia outside China will be the next biggest profit pool, a reflection of the massive projected demand growth in the region for plastics through 2030. In both the United States and Europe, redirecting plastics waste into plastics production via mechanical recycling or pyrolysis instead of abandoning it in landfills or incinerating it could generate sizeable profit pools.