No time to waste: What plastics recycling could offer
Plastics
waste is hurting the chemical industry as well as the environment. By taking
the lead on recycling, chemical players could add a new dimension to the
industry and help solve the problem.
It’s not news that the
plastics-waste issue is becoming a crisis and that, in the eyes of the public,
the chemical producers that make all those plastics are deeply implicated. The
public’s concern is already translating into new regulations on plastics in the
European Union and elsewhere, and major customers, such as the
consumer-packaged-goods (CPG) industry, are ramping up efforts to increase
recycled content and reduce their plastics consumption. What is news, however,
is that chemical-industry leadership has started to declare that its concept of
stewardship and sustainability now extends to dealing with plastics waste. It
is also increasingly acknowledging that the “use once and discard” model, which
the plastics industry has grown up with, should be replaced by a new model
where plastics are recycled as much as possible.
This marks a watershed
moment for the chemical industry, given that more than one-third of the
industry’s sales are made up of petrochemicals and plastics production and plastics-related
products. But as the industry starts to mobilize, there is a lot of uncertainty
about what steps represent the best way forward. We believe that the chemical
industry has a central role to play in unlocking many of the challenges of the
plastics-waste issue. We also believe there are opportunities to build a new
and profitable branch of the industry based on recycled plastics, which our
research suggests could represent a profit pool of as much as $55 billion a
year worldwide by 2030.
Don’t waste all that good plastics waste
Plastics waste washing
up on pristine shorelines, from Antarctica to the Arctic, and vast floating
islands of plastics waste in the Pacific Ocean have received much media
coverage and contributed to the shift in consumer sentiment. Our colleagues have suggested ways that government and industry can stop the flow of
waste into the oceans and this tragic environmental degradation. In this
article, we focus on the plastics-waste question from a recycling-potential
perspective.
From this perspective,
marine plastics pollution may be best understood as the highly visible tip of
the iceberg. The majority of used plastics go to landfills and incineration,
where materials are lost forever as a resource. Our research shows that
currently only 16 percent of plastics waste is reprocessed to make new
plastics; the “leakage” into oceans is primarily due to lapses in landfill
management or a complete lack of waste-disposal systems.
From a
resource-efficiency and conservation perspective, this analysis suggests that a
huge amount of potential value is currently being lost—value that could instead
be captured by better approaches to reusing plastics waste.
An array of policy
decisions will be needed at the national and local levels to bring to reality
the switch of the plastics-waste flow from landfill and incineration to
recycling. But in general terms, for those parts of the world that are not
awash in abundant hydrocarbons and where the reuse of plastics materials makes
economic sense, there should be a clear advantage to making this shift.
Beyond the policy
decisions that will set the overall direction, let’s look in more detail at
three areas that will be crucial to making this ramp-up in recycling possible
and in which the chemical industry is likely to have a role to play.
Meeting technology needs in recycling
There are three
principal approaches to the reuse of plastics: mechanical recycling, chemical
recycling, and processing the plastics waste back to basic feedstock. All have
suffered from a vicious cycle, where a lack of raw materials due to low rates
of recovery of used plastics has limited their growth and dampened interest in
their further development and investment; this could now be reversed.
Mechanical recycling
takes used plastic and physically processes it back to resin pellets, leaving
the polymer chain intact. Recycling of polyethylene terephthalate (PET) and
high-density polyethylene has been established as a viable business, but there
is room for further process optimization. A key challenge is finding how to
preserve the performance quality of resins through recycling steps and avert
the deterioration that currently occurs.
Chemical recycling,
also referred to as monomer recycling, puts used plastics through a chemical
process that breaks them back down to their monomers. Such an approach is only
feasible for condensation-type polymers that can be re-monomerized, such as
polyesters (notably PET) and polyamides, but this still represents substantial
volumes, and there remains considerable scope for process improvements.
Processing back to
feedstock requires breaking polymer chains down to hydrocarbon fractions
through catalytic or thermal processing. A number of technologies are under
development. Among these, pyrolysis may offer the biggest potential, because it
should be able to process a wide range of low-quality mixed-plastics-waste
streams. This could be particularly useful for processing flexible packaging, a
major portion of the waste stream, which today’s mechanical recycling processes
cannot handle well.
Strengthening the waste-management chain
Our projections suggest
that the volume of plastics going to recycling could increase fivefold by 2030,
to 220 million metric tons per year, if current flows to landfill and
incineration are redirected and recycling capture improves. The
waste-management industry that collects plastics waste and does preliminary
processing has its own set of challenges—notably a lack of scale even now—and
these will need to be addressed if it is going to be able to handle these
massive new flows.
In developed economies,
the industry tends to have high costs due to small scale and lack of efficient
collection and sorting processes, with so far limited application of
automation. In emerging economies, plastics waste is typically processed
through informal systems—individual workers picking through waste dumps, with
hand sorting at collection points and landfill sites—and this represents a
processing structure that cannot easily be scaled up.
In our view, the
chemical industry could have at least a temporary role in supporting the plastics-waste-management
sector as it ramps up its operations. In industries such as aluminum and paper,
where recycling has become part of the industry’s structure, producers played
an important role in getting recycling established, including making investments
in and having ownership of recycling infrastructure.
A seat at the table
There has been
confusion on the part of all stakeholders—which, besides the chemical industry,
include policy makers, consumers, the waste-management industry, OEMs, and others—about
who is responsible for managing plastics waste. Customers and consumers have
been so happy with the versatility, convenience, and low cost of plastics that
they have accepted the downsides linked to plastics’ ubiquity and durability,
such as pollution. But the history of the chemical industry has many examples
where public opinion has ultimately reversed its view on such trade-offs: from
lead paint to chlorinated fluorocarbons to chlorinated solvents, and so on.
The chemical industry
is increasingly aware that it’s at another of these transition points.
It’s therefore important for the chemical industry to be at the table with all
stakeholders, and to come with clear points of view on how to solve the
problems. But the industry is also increasingly recognizing that to be a
credible participant, it needs to start making meaningful and bold moves right
away.
From waste to resource: Adding a new branch to the
chemical industry
If all these factors
can be aligned, chemical companies can help to solve the plastics-waste
problem. Less recognized is the potential within this for chemical-industry
players to build new kinds of profitable businesses, which, as noted above,
could represent a profit pool of $55 billion per year by 2030.
Under a scenario where
much larger quantities of plastics waste are routed for reuse instead of going
to landfill and incineration, we see a potential for chemical companies to
transform two areas: polymers produced from mechanical recycling, and the whole
field of pyrolysis and chemical recycling of used plastics. Projecting a step
further, it’s possible to imagine a wholly new configuration of petrochemical
and plastics plants.
First, petrochemical and plastics companies are strongly placed to advance the development of
improved technologies for mechanical recycling and the markets for polymers
made from mechanical recycling. Some companies have started to make moves in
this area—for example Borealis and LyondellBasell have recently acquired
polymer-recycling companies in Europe—but there is clearly scope to develop
this area further in view of the much increased used-plastic volumes that could
become available.
Second, in pyrolysis
and chemical recycling, petrochemical and plastics companies are arguably ideal
candidates to work on technology enhancements that will be needed to make those
processes work better and capture higher margins. Some companies, including,
for example, SABIC, are already active in development work, but these are still
early days. The focus will be on process scale, output quality, and new
technologies that can deal with the lower-value end of the spectrum of plastics
waste—a large part of the pie. In addition to their own work, chemical
companies can back small start-up companies active in this area with promising
technology offerings.
Thinking big and bold
Beyond this, there’s
scope for chemical companies to think big and bold about what would be possible
with a massively increased flow of plastics waste ready for reuse. In a scenario
where pyrolysis technology matures and offers low-cost economics in large-scale
plants, it is possible to imagine a new type of fully integrated plant
configuration, able to accept used plastics as well as traditional feedstocks.
Our research suggests that the economics of such plastics waste–based
feedstocks could be highly competitive with oil refinery–based feedstocks at
crude-oil prices of $75 per barrel and still competitive at a level of $65 per
barrel.
Petrochemical and
plastics companies would be well placed to invest in new feedstock units based
on pyrolysis-treated waste from the large volume of newly available waste
plastics that could be coming into the market, alongside the naphtha or
natural-gas-liquids feeds they have traditionally been using.
This is the kind of
investment that petrochemical companies are well used to making—involving large
investment sums and requiring the building of large-scale plants, and taking
risks where future oil prices are a key component of the equation for value
creation.
Established plastics
producers would also be in a strong position to invest in mechanical recycling
on a large scale—a much larger scale than what has been tried to date due to
the constraints of plastics-waste supply. They would also be able to make these
large-scale mechanical recycling units part of their integrated production
sites.
Working with other stakeholders
Finally, there’s a
clear role for chemical companies to get involved with and work alongside other
stakeholders. The waste-management sector will be the one to take the lead on
expanding its operations, which should be helped by a new virtuous circle of
much higher plastics-waste volumes to handle, and this should attract more
investment and technology development, particularly in areas such as
automation. But chemical companies can help in improving the operations of
plastics-waste collection and sorting by contributing new technology in areas
such as better solvents and additives for washing plastics as well as tracing
materials that can be added to plastics to facilitate automated infrared
sorting.
At the same time,
chemical companies building large-scale pyrolysis facilities may consider
partnering with or investing in waste companies as a way to ensure the supply
of large quantities of plastics waste that they will need, at least in the
early days, in a pattern not dissimilar to the aluminum and paper industries.
As the makers of
plastic resin, chemical companies are also strongly placed to move thinking
forward about how to optimize the design of plastic packaging for ease of
recycling. Besides working with CPG companies, chemical companies will have an
important role to play in discussions with consumer organizations and
regulators. Clearly this is an area where some companies are already active,
but there is plenty of scope to do more.
A clear change is under
way in the business and societal environments in which the chemical industry is
operating, with consumer sentiment about plastics-waste pollution on the rise,
regulators imposing new requirements, and a wider embrace of circular-economy
thinking in the business community. Leaders in the chemical industry clearly
recognize this and want to act. Producers face a mix of challenges and
opportunities, but it’s clear that the industry can make a significant
contribution to resolving those challenges and to also build a new
recycling-based dimension to the plastics business.
By Thomas
Hundertmark, Chris McNally, Theo Jan Simons, and Helga Vanthournout
https://www.mckinsey.com/industries/chemicals/our-insights/no-time-to-waste-what-plastics-recycling-could-offer?cid=other-eml-alt-mkq-mck-oth-1809&hlkid=6f8b5abad8d146c7b04b9ad70d4a5bb9&hctky=1627601&hdpid=64d8d2e7-56f2-452c-b13f-4120b2436c4f
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