The Plastic Storm: Ocean Plastic Waste Brewing Tidal Wave of Consumer Activism and Increased Industry Uncertainty, IHS Markit Says
Rapidly changing consumer expectations for plastics and increasing
regulations or bans creating market challenges and disconnects for
producers
The growing global plastics sustainability movement is one of the
biggest potential disruptors for the plastics industry and is putting
future plastics resin demand and billions of dollars of industry
investments at risk. Sustainability efforts around plastics will, in
fact, have significant implications for the entire petrochemical value
chain, extending to feedstock markets, according to initial research
from IHS
Markit (Nasdaq: INFO), the global business information provider.
This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20181008005060/en/
Global plastics usage and waste generation. (Source: IHS Markit)
The study, Plastics
Sustainability - A Sea Change: Plastics Pathway to Sustainability,”
from a research alliance led by IHS
Markit, offers a base case (trend line) and alternative case
(maximum viable threshold) analysis of the plastics demand growth for
six key plastic markets. The study provides a granular view of the
impact of sustainability on specific end-use segments for these key
resins as well as analysis of the implications for upstream base
chemicals and feedstocks for the years 2018 to 2030.
Spurred by images of the “Great Pacific Garbage Patch,” a growing
accumulation of floating ocean plastic waste estimated to be larger than
France and weighing in excess of 593 million pounds*, many global
consumers have become increasingly outspoken in regards to plastics use
and recycling. In some cases, consumers are pushing for bans on
plastics, particularly single-use plastics, or are choosing substitute
products to minimize plastics waste or both, IHS Markit said. Some
figures shared by both the Ellen Macarthur Foundation** and the World
Economic Forum, estimate that by 2050, there will be more plastic than
fish in the ocean, and that annually***, according to THE OCEAN CLEANUP,
8 million metric tons of plastic waste are added to the world’s oceans,
much of it from rivers and mismanaged plastic and municipal waste from
Asia. By 2025, the non-profit agency estimates the amount of plastic
waste added to the world’s oceans will nearly double.
“Plastics sustainability is, by far, the most critical issue facing the
global base chemicals & commodity plastics industry during the decades
to come,” said Nick Vafiadis, vice president of plastics research at IHS
Markit and lead author of Plastics
Sustainability - A Sea Change: Plastics Pathway to Sustainability.
“During the past decade, we’ve seen a rapid increase in consumer
activism, and regulatory bans and restrictions regarding plastics
consumption and the handling of plastics waste, particularly as it
relates to single-use plastics. This is a trend that is going to
continue, and the entire petrochemical value chain will be impacted by
the coming changes in plastic demand growth, which is what we seek to
clarify and quantify in the study,” Vafiadis said.
The petrochemical value chain is global and dynamic with shifting
drivers, and plastics sustainability is no less a fundamental driver,
IHS Markit said. “This issue of plastics sustainability is, perhaps, one
of the least understood market drivers from a demand, supply, regulatory
and technology standpoint,” Vafiadis said. “It’s a challenge that
involves every participant of the value chain – from energy to consumer,
encompassing both the private and public sector. Importantly, plastics
sustainability also is one of the biggest potential disruptors on the
policy front and an issue that could lead to greater regulation
(including bans) and/or deselection by consumers, retailers and brand
owners.”
The demand for plastics also effects upstream feedstock demand (olefins,
aromatics and chlorine), which is critically important to the
petrochemical value chain, as well as for integrated oil companies
seeking refuge in petrochemicals from uncertain refining markets,
Vafiadis said.
The IHS Markit multi-client study examines regulatory changes, bans and
policy initiatives in key countries and regions, including China,
Europe, India, the United States and Canada. The research also includes
insight and analysis from More Recycling, a research and consultancy
focused on the recycling of post-consumer materials, specifically
plastics; and Environmental Packaging International, a consultancy
specializing in environmental compliance, product stewardship and
sustainability related to packaging and products.
“We expect the trend toward greater sustainability in the industry to
continue, which is certainly a positive development, but the pace of
change, the prospect of greater regulations, including bans, and
consumer deselection of certain plastics end-use products is creating
significant investment risk and market uncertainty for plastics
producers, processors, and consumer packaging companies, who must invest
now for the future,” Vafiadis said. “Additionally, municipalities and
governments are also tasked with investing for growth to ensure they
have a comprehensive recycling infrastructure that is optimal and meets
constituent expectations, but also is adequately funded. This requires
tremendous planning, and a multi-layered view,” Vafiadis said.
The IHS Markit study will be an ongoing effort to address future market
demand growth for traditional plastics, including polyethylene (PE,
including high-density, low-density and linear, low-density),
polypropylene (PP), polystyrene (PS), expandable polystyrene (EPS),
polyethylene terephthalate (PET) and polyvinyl chloride (PVC). The study
will also look at newer and evolving technologies, post-consumer resins
(PCR) and more sustainable options such as bio-based plastics,
biodegradable plastics, renewable chemicals, and recycling.
This special, multi-client study builds on existing IHS Markit research
in the area of sustainability, which includes a sustainability series of
specialty chemical and economic research reports covering a wide range
of topics from CO2 emissions and carbon capture technologies, to water
reclamation/desalination technologies, water treatment, sustainable
fertilizers, bio-based and biodegradable plastics, renewable chemical
building blocks, and renewable energy/fuels such as hydrogen, etc.
According to IHS Markit, global demand for PE, the world’s most-used
plastic, has nearly doubled during the last 20 years. IHS Markit expects
2018 global PE demand to exceed 100 million metric tons (MMT). However,
significant new market pressures, including a rise in consumer
expectations around sustainability, along with tightening environmental
regulations in mature markets such as Europe and key growth markets such
as China, could threaten future demand growth, which is why producers
are keen to understand and plan for the implications, Vafiadis said.
In the IHS Markit study, researchers examined the potential risk to the
entire supply chain from energy to resins. That initial analysis
indicated that a 10 MMT decline in PE led to a 10 MMT loss for ethylene
and would reduce global operating rates for ethylene production by 3
percent to 5 percent, which is equivalent to slightly less than two
years of demand, IHS Markit said. That, in turn, could reduce global
demand for natural gas liquids (NGLs) and naphtha, depending on ethylene
feedslate assumptions.
“A significant reduction in the demand growth for plastics could have a
fairly pronounced impact on refiners, in particular, who are already
facing long term declining demand for transportation fuels globally due
to mobility changes and increasing fuel efficiency standards in the
world’s automotive fleet,” Vafiadis said. “To counter that growing
demand destruction and market uncertainty, refiners are increasingly
seeking refuge in petrochemical markets, but that option would also
become less viable if there is a rapid or significant decline in
plastics resin demand growth,” Vafiadis said.
According to Robin Waters, director, plastics planning and analysis,
chemicals, at IHS Markit and co-author of the IHS Markit study, there is
a clear shift happening in the approach toward sustainability moving
from reactive to proactive. “In the reactive phase, the target was
preventing littering and focusing on plastics waste,” Waters said.
“Thereafter, the focus moved to managed disposal of plastic waste
(incineration, landfill, export, recycling). Now, we are focused on
circularity, often described as a circular economy, which makes the
producer a stakeholder in the careful management and reuse of plastic
and reducing end-waste. This is critical, but before you can truly
achieve viable solutions, you have to understand the scope of the
challenge or the opportunity, which plastics sustainability presents,
and that is what our study will articulate,” Waters said.
Europe uses a three-pronged approach to achieve this by setting targets
for plastic recycling, by enabling compliance through EPR (Extended
producer responsibility), creating a legislative framework to implement
compliance including taxation, and then introducing a certification
mechanism for eco-design, Waters said. This design standard will make
designs circular, and allow products to be approved so that they are
based not solely on functionality, performance or cost, but on
circularity, so they are 100 percent recyclable.
Designing plastics from the start so that they can be more easily
recycled for a second life is a key challenge for producers. This
life-cycle planning is a design challenge that some companies are
already exploring, and it, along with the issue of plastics and
sustainability will be key points of discussion at the upcoming Global
Plastics Summit (GPS) 2018, October 30 – November 1, in Chicago.
Experts from IHS Markit and the Plastics Industry Association will
discuss the latest market outlooks from key industry sectors, and will
feature senior business leaders sharing their companies’ strategies for
success and innovators presenting the latest in plastics technologies.
Bob Maughon, R&D vice president, Packaging and Specialty Plastics and
Hydrocarbons, The Dow Chemical Company, will discuss sustainability as a
catalyst for innovation in packaging. Don Thomson, president of The
Center for Regenerative Design and Collaboration, will address turning
plastic waste into building blocks for other uses.
To speak with Nick Vafiadis or Robin Waters, please contact Melissa
Manning at melissa.manning@ihsmarkit.com.
For more information on the Plastics
Sustainability - A Sea Change: Plastics Pathway to Sustainability,
contact Jennifer.eyring@ihsmarkit.com.
*Source: The Ocean Cleanup
**Source: Ellen Macarthur
Foundation: The New Plastics Economy: Rethinking The Future of Plastics
and Catalyzing Action, and The World Economic Forum
***Source:
The Ocean Cleanup
About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information,
analytics and solutions for the major industries and markets that drive
economies worldwide. The company delivers next-generation information,
analytics and solutions to customers in business, finance and
government, improving their operational efficiency and providing deep
insights that lead to well-informed, confident decisions. IHS Markit has
more than 50,000 business and government customers, including 80 percent
of the Fortune Global 500 and the world’s leading financial
institutions. Headquartered in London, IHS Markit is committed to
sustainable, profitable growth.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its
affiliates. All other company and product names may be trademarks of
their respective owners © 2018 IHS Markit Ltd. All rights reserved.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181008005060/en/
Copyright Business Wire 2018