Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Plastic brings tremendous value to modern life and gives a
significant boost to the economy. It is lightweight,
multifunctional, easy to process, and user friendly. Its high
performance-to-weight ratio helps trim CO2 emissions, and superior
insulation properties help cut energy bills. Plastics packaging
also helps ensure food safety and limits food waste.
However, its benefits and user-friendliness have made plastics a
victim of its own success. Due to excessive littering and lack of
proper post-use manage-ment, major environmental issues have
developed. The millions of tons of plastic litter that end up in
the oceans every year are one of the most visible and alarming
signs of these problems, escalating public concern and the dismay
of authorities. Between 150,000 and 500,000 tons of plastic waste
enters the oceans of European Union countries each year.
Apart from marine litter, microplastics - which are fragments of
plastic below 5mm in size - accumulate in the sea, where they are
easily ingested by marine life. Recent studies have also found
microplastics in the air, drinking water, and foods such as salt
and honey, with yet unknown impacts on human health. It is
estimated that between 75,000 to 300,000 tons of microplastics are
released into the environment every year in the EU. At the same
time, landfill and incineration rates of plastic waste remain high,
at 31% and 39% respectively. While landfill has decreased over the
past decade, incineration has grown.
Lack of proper disposal has also led to suboptimal value
capture. According to estimates, 95% of the value of plastic
packaging material is lost to the economy annually after a very
short first-use cycle. Demand for recycled plastics today accounts
for only around 6% of plastics demand in Europe. This low demand
may be due to the fact that much of the collected plastic waste
was, until recently exported to countries such as China.
Plastics Recycling Strategies in the EU
Increasing the recyclability of plastics requires a focus on
plastics packaging. Today packaging accounts for about 60% of
post-consumer plastic waste in the EU (see Figure 1). Better
product design is one of the keys to improving recycling levels.
Experts calculate that design improvements could halve the cost of
recycling plastic packaging waste. Recently the European Commission
announced a series of measures to curb and manage use and disposal
of plastics. Four primary objectives are behind the EC move:
Make the recycling business profitable
Curb plastic waste and stop littering at sea
Drive investment and innovation
Spur change across the world
In a recent strategy paper, the European Commission proposed
that at least 50% of all plastics packaging in the EU should be
recycled by 2025. The number rises to 55% by 2030. The paper also
urged member states to reduce consumption of plastic bags to 90 per
person annually by 2019 and 40 bags per person by 2026. The paper
also focuses on improving product design to makes plastics more
durable, easier to repair, and easier to recycle. In addition, the
EU urges member states to monitor and reduce their marine litter.
The paper holds producers responsible for contributing to the
aware-ness, clean-up, collection, and waste treatment of plastic
packets and wrappers. It also identifies the following items as the
most polluting single-use plastic products:
Drink bottles, caps, and lids
Snack packets and wrappers
Sanitary applications
Plastic bags
Cutlery, straws, and stirrers
Drink cups and lids
Balloons and balloon sticks
Food containers, including fast-food packaging The European
Commission is also discussing a plastic tax with the twin
objectives of bridging the revenue gap post-Brexit and discouraging
plastic consumption.
Although this tax is currently in the discussion stage and
details are sketchy, such narratives show how authorities are
working to cap the use of plastic by fiscal and non-fiscal
means.
The EU authorities acknowledge the importance and value of
plastics in the economy and society. However, they want to promote
a responsible, managed use of the product and generate optimum
value through recycling and repairing. Given the resolve of these
authorities, it is clear that the proposed regulations and
legislation are irreversible. Executives in the plastic industry
are wise to collaborate with the various stakeholders to support
the initiative and work towards meeting the target. The European
Commission is also introducing the concept of new extended
producers responsibility (EPR), which will require plastics
producers and intermediaries to manage and enact the targets set by
the Commission.
Although the short-term outcome of the regulation is likely to
be detrimental to plastics demand, the authorities are playing the
role of facilitator - not inhibitor - by containing long-term
fallout and promoting design and innovation. By addressing
environmental and consumer concerns, the EU is taking a leadership
position that may become a template for other regions. Therefore,
the plastics industry should adopt a holistic global approach to
long-term scenario planning for the impact of EU regulation and not
desist from managing their responses to these new regulations.
Plastics Recycling Challenges in Asia
For almost a decade, a seemingly ideal business model addressed
recycling in Asia: China produced goods and took back the
packaging. This model balanced the trade deficit and utilized empty
containers through reverse haulage. Global plastic waste fueled
dynamic demand in China, and thousands of recycling companies
provided competitive raw materials. Imports of plastic scrap peaked
in 2016 at roughly 8 million tons, representing almost half of the
global traded recyclable plastic. Under this model, advanced
countries such as the U.S., Japan, and almost all of Europe relied
on China to take their waste.
Increasing environmental issues forced China´s authorities
to close the doors. On January 1, 2018, China stopped the import of
24 kinds of solid waste, including plastics waste. Under the new
standard, China will only accept recycled plastics that are less
than 0.5% contaminated. This program, named "National Sword," will
heavily impact market players along the chain. Chinese recyclers
will lose the access to high-quality scrap from the developed
world. Instead, China will need to focus on local plastic scrap,
which is considered low quality. What's more, official inspections
will take place; in case of violations of environmental rules,
recyclers will lose their licenses.
There is also a ripple effect that affects Southeast Asia's
emerging countries. Plastic recycling is a billion-dollar business,
providing enormous margin opportunities if crude oil prices pushes
virgin materials above $1,200 per metric ton. To keep their
businesses running, Chinese recyclers began making investments in
various countries, such as Vietnam, Malaysia, and Thailand. These
countries are competitive in their cost positions, and they provide
significant profit opportuni-ties to the Chinese plastics
community. Consequently, there is a massive ramp up in plastic
exports towards these countries (see Figure 2).
In March 2018, Malaysia and Thailand imported almost 200,000
tons of plastic scrap, the same volume imported in all of 2016. But
these countries were unprepared to receive such a huge wave of
waste. There are serious limits to their port facilities,
logistics, and qualified disposal plants. Recycling companies were
constructed in shortest possible time, and many more are planned.
Thailand received requests to license more than 1,000 additional
recycling facilities, almost all of them from Chinese companies. It
is estimated that already more than 500 Chinese recyclers have
moved their operations to South Asian countries.
But these importing countries are turning increas-ingly
defensive. Thailand has put licensing on hold and Vietnam is
expected to stop plastic scrap imports for a few months to attempt
to gain control of the imports. Thousands of containers are stored
in Thailand's harbor areas, uninspected and without any clear
ownership. As governments assert control, they will begin
inspecting shipments and fighting against scrap smuggling.
Restrictions will be imposed and the first import licenses may be
revoked. To avoid China's pollution problems, these Southeast Asian
countries may quickly take steps to stop uncontrolled growth of
recycling activities. For these newcomers to plastics recycling,
the war on illegal rubbish and toxic scrap is just beginning.
Coming Soon - IHS Markit Plastics Sustainability
Multi-Client Study
The study will address the following key issues:
What is global impact on virgin plastics from sustainability
initiatives spanning "Reduce, Reuse, Recycle, Recover" both today
and over the next decades?
What are the forecast supply/demand for both a base and
alternative case - with consistent assumptions across- reflecting
the high risk/high recycle use?
What is the potential impact on petrochemical monomer and
feedstock demand resulting from plastics sustainability
development?
What is the current status and trends for global and regional
regulatory actions affecting plastics demand and their
implications?
For further details, contact: Robin Waters Associate Director,
Research and Analysis | Robin.Waters@ihsmarkit.com