Plastics waste and the petrochemical industry
The effective management of plastic wastes has become an urgent
issue across the world and several initiatives have been announced to take a
hard-nosed look at the problem and implement solutions that can work in the
short-, medium and long-term. The most recent is the formation of the Alliance
to End Plastic Waste (AEPW), which has amongst its members some of the leading
petrochemical and polymer companies, including India’s Reliance Industries Ltd.
The alliance, which has 30 members (with several others reportedly keen to
join), has committed an investment of $1-bn in the first phase, and will first
focus on tackling the urgent issue of plastic pollution in water bodies and eventually
the oceans. In the longer term the alliance is expected to jointly develop
recycling and reuse technologies that will lead to more sustainable
value-chains by closing material loops.
Part of the problem and the solution
The reason petrochemical companies have bandied together to
tackle the issue is two-fold: they are both a part of the problem and, at the
same time, best placed to offer recycling solutions – especially chemical
recycling solutions that could be even more important than the limited mechanical
recycling now in vogue. Plastics production accounts for well over one-third of
revenues of the global petrochemical industry (and even larger for some
companies), and hence a matter of survival.
Cleaning up the rivers – pilot in India
Getting rid of plastic waste from the oceans needs to start with
ensuring they do not enter water bodies such as rivers. A 2017 study by the
Helmholtz-Centre for Environmental Research and the Weihenstephan-Triesdorf
University of Applied Sciences, both in Germany, estimated that 90% of the
river-borne plastics comes from just 10 major rivers of which eight (Yangtze,
Indus, Yellow, Hai He, Ganges, Pearl, Amur, and Mekong) are in Asia and two
(Nile and Niger) in Africa. These 10 rivers collectively dump anywhere from 0.47-mt
to 2.75-mt of plastic into the seas every year, with the Yangtze alone dumping
up to an estimated 1.5-mt into the Yellow Sea. The rivers have two things in
common – high populations living in the surrounding regions, and poor waste
management.
The AEPW will partner with a non-profit, Renew Oceans, to tackle
the problem at the source and the initial focus will be on the Ganga. The river
is estimated to carry about 0.5-mt of plastic wastes to the oceans annually,
mainly due littering by the nearly 400-mn people who live alongside. Simple
interventions such as building fences and screens to trap the waste, and
encouraging rag pickers to collect it are to be tried out. The unrecyclable
waste is to be collected by mobile units and converted into fuels, such as
diesel, through well-established technologies. In the model to be adopted, the
waste collectors are to be to receive direct compensation linked to the value
of fuel generated from the wastes. If the model is successful it is to be
replicated with the required tweaks in other countries.
Going beyond
The AEPW however plans to go beyond the end-of-pipe approach
outlined above. It will also focus on building the infrastructure needed to
collect and manage waste and increase recycling; on innovation to advance
recycling and recovery technologies; on education of and engagement with
governments, businesses and communities to mobilise action; and the clean-up of
concentrated areas of existing plastic waste in the environment.
How much of a challenge this is likely to be can be gauged from
a couple of numbers: just 12% of all plastics produced are currently reused or
recycled, and a vast majority goes to incineration, landfill or dumps – in
essence lost forever as a resource. If plastics demand follows its current
trajectory, global plastics waste volumes will rise from 260-mt per year in
2016 to 460-mt by 2030 – taking an already serious issue to a whole new level.
Enhancing scale of mechanical recycling
Ameliorating the problem will take a combination of mechanical
and chemical recycling technologies. While the former is already a sizeable
business, it is still nowhere in scale compared to the mainstream plastics
industry and remains largely focussed on a handful of polymers – polyethylene
terephthalate (PET), high density polyethylene (HDPE) and polypropylene (PP).
Efforts to mechanically recycle other high volume plastics, notably polyvinyl
chloride (PVC), low density polyethylene (LDPE) and polystyrene (PS), are yet
to have much of an impact due several technical challenges, and difficulties in
collection. McKinsey, a consultancy, estimates that mechanical recycling of
HDPE and LDPE has the potential to generate the largest profit pool through
2030, primarily reflecting expectations of continuing high profitability in the
virgin polyethylene market due a tight demand-supply outlook. It sees the
potential to increase the overall mechanical recycling rates from the current
level of 12% of total plastics volumes to 15-20% of a much larger plastics
output.
Much will depend on the oil price prevailing. Low oil prices –
under $65 a barrel, as against a base case scenario of $75 for the above
estimates – will make the economics of mechanical recycling more challenging,
as evident when oil prices collapsed in 2015.
Chemical recycling – wide scope
Chemical recycling efforts can be classified into two
categories: monomer recycling and reprocessing of plastic wastes to make liquid
feedstock in a cracking type process known as pyrolysis.
Monomer recycling is inherently restricted to condensation
polymers such as PET and polyamides, but has the potential to generate some of
the highest plastics recycling profitability levels. The technology can
partially obviate the need to build new, capital-intensive monomer plants.
Converting waste plastics to liquid hydrocarbons through
pyrolysis yields hydrocarbon feedstock that can displace naphtha or natural gas
liquid demand. It is more resilient to oil price fluctuations and according to
estimates by McKinsey even profitable at low oil prices of $50 per barrel. The
other advantage of this technology is that it can handle mixed waste plastic
streams, which mechanical recycling systems cannot. In that sense it is an
important back-up process for handling wastes that have exhausted their potential
for mechanical recycling.
Pyrolysis technologies are now on offer from several vendors,
with capacities ranging from 30-100 ktpa at one end, and portable units that
can operate at a scale of about 3-ktpa, at another.
Biggest beneficiaries
The biggest plastic waste generators – the populous countries of
Asia including China, India and Indonesia – have the biggest potential profit
pools from exploitation of recycling technologies. Their demand for plastics is
expected to grow as living standards rise, and so will the quantum of wastes
generated. Given the right policy interventions, and active participation from
all stakeholders – resin producers, converters and end-users – the extent of
plastic waste reused in one form or another could rise to as much as 50% of
total production by 2030. This, according to McKinsey, will require the
industry to invest as much as $15-bn to $20-bn each year in waste recovery
capital. This is not a sum the industry cannot afford; petrochemical players
have invested between $80-bn and $100-bn in creation of new capacity each year
over the last decade.
Rethink on new demand for oil
The enhanced reuse of waste plastics – through mechanical or
chemical recycling efforts – could account for one-third of plastics demand by
2030 and twice the level by 2050. While it will make for a cleaner environment,
it will also slash the demand for ‘new’ oil for petrochemical production by as
much as 30%. Recent forecasts that petrochemicals will make the largest
contributions to world oil demand over the next decades may be premature and
need to be revised downward.
Ravi Raghavan
CHWKLY 5FEB19
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