There’s no question that plastics are extremely important to the global economy. Nobody argues about that. Production of plastics has risen from 15 million tonnes in 1964--when the industry began the switch to oil and gas feedstocks--to more than 300 million tonnes today. Plastic packaging, which represents around 26% of this volume, provides major benefits in terms of reducing food waste, and reducing fuel consumption by bringing packaging weight down.
But the problem is this: we cannot keep throwing plastic away after just one use.
Ninety-five percent of plastic packaging is currently lost to the economy after a short first-use cycle. This volume is worth between $80 billion and $120 billion per year. Today’s very low recycling and reuse rates mean that the oceans already contain 150 million tonnes of plastics. And estimates suggest that by 2025, they will contain 1 tonne of plastic for every 3 tonnes of fish.
These estimates come from a major new report, “The New Plastics Economy: Rethinking the future of plastics”, jointly published by the World Economic Forum, the Ellen MacArthur Foundation, and McKinsey. The report states that shifting to a circular model – which aims to keep materials in use in one form or another (as shown in the chart below) rather than discarding them in landfills--could generate a $700 billion economic opportunity. A significant proportion of that would be attributable to packaging.
The Waste Hierarchy
That big economic opportunity stems from solving the plastics industries’ glaring sustainability problems. Plastics production already accounts for around 6% of global oil consumption--equal to the aviation sector. By 2050, if current growth continues, it will account for 15% of the world’s total carbon budget (the level required to keep below the 2°C target for limiting global warming). This is unsupportable.
The problem is that almost all of today’s volume is only used once, and just 15% is collected for recycling. After allowing for loss during sorting and reprocessing, only 5% is actually retained for future use.
Compared with other industries, the plastics industry has a poor recycling profile. For example, 58% of paper and between 70% - 90% of iron and steel are recycled globally.
Too much plastic ends up either on the streets in towns and cities, or in the world’s oceans. The report’s authors calculate that the resultant clean-up costs, when added to the industry’s greenhouse gas emissions, amount to around $40 billion/year--more than the industry’s current profits.
Clearly something needs to change, and quickly. Already, a number of cities and countries have moved to limit or ban the use of single-use plastic bags in the retail sector. The 8 million tonnes of plastics that currently leak into the oceans are the equivalent of dumping one garbage truck into the ocean every minute. And plastics, as the report notes, take centuries to fully decompose in the marine environment, and have very negative effects on ecosystems and the economic activities that depend on them.
The report—which is based on expert evidence from major plastic producers and polymer convertors, as well as major brands such as Coca-Cola—argues that a change of mind set is required. It suggests that one priority should be to rethink current business models, and create an effective after-use plastics economy. As the chart suggests:
- One of the first steps should be to increase the economics, quality, and uptake of recycling
- This should not be difficult, given the low level of current performance
- The industry needs to focus on reducing the amount of plastic that is simply left lying around, creating urban and marine pollution
- The industry also needs to work with customers to enable reuse of plastic, and to reduce the volume of plastics currently being used.
The industry has been very successful over the past 50 years in generating revenue and profits from the value of the molecules that it produces. Now it needs to move to a more service-driven model, which focuses on the value provided by the molecules. Using our expertise to help people to obtain more value from our products will be critical in driving revenue and profit growth in the future.
The skills and expertise of ACS members will be critical to achieving the transformation now urgently required.
Paul Hodges is chairman of International eChem (www.iec.eu.com), trusted advisers to the chemical industry and its investment community. He is a member of the World Economic Forum’s Industrial Council on chemicals, advanced materials and biotechnology, and presents the ACS ‘Chemistry & the Economy’ webinars.