How plastics waste recycling could transform the chemical industry PART
I
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. 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
percent 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.
Modeling
a virtuous circle of plastics recycling worldwide
Our research shows that just 12 percent of
plastics waste is currently reused or recycled (Exhibit 1). The fact that the
great majority of used plastics goes to incineration,1 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.
Exhibit 1 SEE THE ORIGINAL ARTICLE
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.
We address this gap with a comprehensive
model of global plastics-waste generation, the different approaches to plastics
reuse and associated recycling technologies, and their economics. Our reference
case scenario assumes an oil price of $75 per barrel. We’ve also explored lower
and higher price scenarios and their correspondingly smaller and larger
potential profit pools, as well as different societal approaches to recycling,
since these factors all have a major influence on the feasibility of plastics
recycling.
Technologies to handle all polymer families: Tapping the
potential
Let’s start with a look at the enabling
technologies that underpin these projections—technologies that exist or are
recognized as technically feasible and could make possible more plastics reuse.
These include a massive expansion of mechanical recycling volumes and the
launch on an industrial scale of two relatively new technologies—monomer
recycling and reprocessing of plastics waste to make liquid feedstock in a
cracking-type process, known as pyrolysis.
Mechanical recycling is already
established as a sizeable business—if nowhere near the scale of the mainstream
petrochemicals and plastics industry—in many of the world’s developed
economies, and it’s focused on polyethylene terephthalate (PET), high-density
polyethylene (HDPE), and polypropylene recycling. Contrary to commonly held
assumptions that waste management is simply a cost burden for municipalities
and taxpayers, there are many examples where mechanical recycling is already
profitable, albeit often in selective applications or markets. This is because
of its fundamentally different starting point from traditional plastics
manufacture: mechanical recycling can generate new polymer without having to
invest billions of dollars in steam crackers and other units to create
petrochemical building blocks. Therefore, it starts out as a comparatively
advantaged route to polymer production (Exhibit 2).
Exhibit 2 SEE THE ORIGINAL ARTICLE
The mechanical-recycling technology can
also be used for recycling many other polymers. But these businesses have not
yet grown much due to constraints in collection of the other major-volume
resins such as low-density polyethylene (LDPE). Our modeling suggests that LDPE
and HDPE mechanical recycling has the potential to generate the largest profit
pool through 2030, primarily reflecting expectations for continuing high
profitability in the virgin polyethylene market due to the tight supply–demand
outlook. Our projections suggest that mechanical recycling rates could increase
from the current level of 12 percent of total plastics volumes to 15 to 20
percent of the much larger projected total plastics output by 2030,
assuming oil prices of $75 per barrel. Under a scenario where oil prices move
below $65 a barrel, the economics of mechanical recycling become more
challenging; this pattern was seen following the 2015 fall in oil prices, and
was a factor in slowing recycling efforts.
The second component is monomer recycling.
Although it is inherently restricted in its application to condensation-type
polymers such as PET and polyamide, monomer recycling has the potential to
generate some of the highest plastics recycling profitability levels. Again,
this is because monomer recycling can avoid the capital investments needed for
steam crackers and aromatics plants, as well as the high-capital-cost plants
required to make PET and polyamide intermediates.
Third, our analysis suggests that
re-converting waste plastics into cracker feedstocks that could displace
naphtha or natural-gas-liquids demand—most likely using a pyrolysis process to
do this—also may be economically viable, and it is more resilient to lower oil
prices, remaining profitable down to $50 a barrel. Pyrolysis is an invaluable
technology to treat mixed polymer streams, which mechanical recycling
technologies currently cannot handle. Pyrolysis also is an important back-up
process to handle polymers that have exhausted their potential for further
mechanical recycling. A number of pyrolysis players are coming forward,
offering a range of facilities from large-scale plants with capacities of
30,000 to 100,000 metric tons a year to much smaller-scale modular units with
capacity up to 3,000 metric tons a year.
https://www.mckinsey.com/industries/chemicals/our-insights/how-plastics-waste-recycling-could-transform-the-chemical-industry?cid=other-eml-alt-mip-mck&hlkid=7a60e368b7744b859005ab00f4eede70&hctky=1627601&hdpid=6c036e83-2fc7-43fa-9629-a7793913b229
CONTINUES IN PART II
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