Market Insights

Market Insights

Podcast: The Disruptive Truths of Plastics Recycling

Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Our podcasts are available on all leading platforms including SoundCloud, Spotify & Apple.

You can also read the transcript of the podcast below.



Luka Powell (00:13): Welcome to the Olefins Weekly wrap-up. Today is Friday, February 24th, and I’m your host Luka Powell.

Pablo Giorgi (00:22): And I am Pablo Giorgi.

Luka Powell (00:25): We have a slightly different structure to the podcast today as it’s a special focus episode, and also there are only so many times that we can recycle the energy markets puns. Speaking of recycling, today, we’re joined by our circular plastics team to discuss the disruptive truths of plastics recycling. Today we’re joined by our circular plastics gurus.

Tony Palmer (00:50): Hi, everyone. Pleased to be here. I’m Tony Palmer. I work out of New York and head up our activities in circular plastics and sustainability.

Robin Waters (01:01): Hi everyone. I’m Robin Waters, and I’m located on the East Coast in the state of Delaware, and I’m happy to join you today.

Luka Powell (01:12): Welcome to the podcast. So thank you for taking the time to talk to us today. Before we get into our conversation, could you please tell us a little bit about the circular plastic service here at Chemical Market Analytics?

Tony Palmer (01:26): Sure, Luka. The circular plastic service is a relatively new service offered by Chemical Market Analytics. It was launched in July of 2021, so we’re about 18, 19, or 20 months into the service. The service is an outgrowth of work that Robin and I have been collaborating on going back to 2018 when we had two initial forays as strategic studies looking at circular plastics and plastics recycling. One was done in 2018 and another in 2020. Based on that we relaunched circular plastics as an ongoing service with an annual subscription. It focuses on the non-durable plastic segments covering the value chains for polyolefins, polyethylene, polypropylene, PVC, polystyrene, EPS, and also PET. The service is very analytical but strategic at the same time. We provide our clients with databases, models, analytical tools as well as high-level strategic viewpoints. Much as what we’re going to present to you today, which are some truths that have come out of our work.

Tony Palmer (02:55): We deliver the material through our service portal aligned with overall CMA clients. The modules are updated on a frequent basis that is relevant to the topic. So models that deal with costs are updated twice a year as we refresh our cost views the same for demand. But others are updated more frequently, monthly following technology developments and regulatory issues. So that’s a quick overview of the service. We’re gonna talk today about some interesting strategic takeaways that our clients are getting out of our work.

Pablo Giorgi (03:36): Thank you, Tony. This was a very good view of the service. Could you explain a little bit to our listeners what is meant by a circular business model for plastics?

Robin Waters (03:50): Sure. Pablo, this is Robin. I’ll take that one. When we are talking about a circular model for plastics, we’re really talking about transitioning away from our past linear approach where we make use and dispose of products and packaging using plastics. We’re really talking about moving to a whole ecosystem in which we first minimize the consumption of resources. We keep the resources that we use, in use as long as possible, extracting the maximum value from those resources while they’re in use, and then we recover and regenerate valuable materials and products at the end of each service life. There’s a prioritization here that’s important to keep in mind, and that is what I would say is the description of a circular model that we use to build out our thoughts around the service itself.

Luka Powell (04:56): So 2020 saw 2.1 billion metric tons of municipal solid waste generated globally. On average, this waste contains 12% of plastics that we used in non-durable products, primarily packaging and other single-use applications. How do you think these stats will change in the long term?

Tony Palmer (05:17): That’s right, Luka. As our study focuses on non-durable applications, much of these non-durable plastics, such as food packaging and other single-use items will wind up in the municipal solid waste stream. Our study goes out to the year 2050, so we are looking with a long-term strategic perspective. And in order to do that, one of the first things the service does is take a look at what we expect the volume of this waste stream to be like and also to examine the geographic changes that we expect to see as to where plastic will show up globally after it serves its useful life. So, you’re correct about 2.1 billion tons of municipal solid waste was produced but not all of it, unfortunately, is collected. A good portion of it globally enters the environment, you know, through water or possibly disposed of in landfills, et cetera.

Tony Palmer (06:30): Not all of it is recycled and recovered. Our modeling looks at population growth and a standard of living as a way to forecast what this source of plastic waste is likely to look like going forward. And, and our model takes standard GDP growth rates looking at the standard of living per capita and general population trends globally. Our study covers 10 world regions, and the interesting thing is that we’ll see this growth expect to go from 2.1 up to 3.6 billion tons by the time we hit 2050. A lot of that growth is not going to show up in waste collected or generated in North America, Europe, or even China. The reason is that North America and Europe have slow-growing populations and relatively stable standards of living GDP projections. China, again, large population but stable but the increasing standard of living.

Tony Palmer (07:40): So, we will see some increase in the waste collected in China, but the vast majority of it is going to show up outside of those regions in Southeast Asia, Africa, and India and that presents a real challenge from the perspective of collection. We really need to ramp up collection rate efficiencies. And it also presents a challenge in terms of how to close the recycling loop, which is what the circular plastics 2050 case looks like. And our conclusions are that in addition to the need to increase these recycling rates and recovery rates, it also presents a challenge as to how we view closing the balance. As you could imagine the solutions for closing the loop are mechanical recycling of post-consumer waste, chemical recycling, and some other solutions.

Tony Palmer (08:40): Unfortunately, the waste is going to be generated quite a distance from where the plastics demand centers are. Production of petrochemical plastics is, you know, focused on North America, Europe, and mid-east China but the waste is going to show up well outside of those regions. So we need to look at the logistics issues around whether we use chemical recycling paralysis at a small modular installation in Asia, and then move the paralysis oil back to petrochemical centers where it could be utilized in steam cracking, et cetera. So some really interesting challenges and as I said our analytical approach is pointing out some major strategic issues that need to be assessed.

Pablo Giorgi (09:35): Wow, this is clearly a large-scale problem that requires large-scale solutions. Robin, what solutions are currently in place or in development and also very important? Are they enough?

Robin Waters (09:52): We can certainly say they’re not enough at this point. The solutions that we have are a tremendous amount of exciting technologies and capabilities throughout the whole recycling arena. I think what we’re seeing is a world in which, however, currently we’re highly dependent on mechanical recycling, and as Tony was pointing out very clearly we have a huge level of discrepancy in terms of the collection in the first place of plastics waste in different parts of the world. Our current pace that we’re at right now is really the question. Can we accelerate that pace of bringing new technologies, building out new infrastructure, bringing in new technologies to compliment mechanical recycling, and bringing in things like dissolution, de-polymerization, and paralysis at large scale in order to close the recycling capabilities that can’t be fully achieved with mechanical recycling alone?

Robin Waters (11:17): So I think it’s really the pace at which change occurs. I would say having been in this industry for quite a while, it’s different now. There are different perception drivers, the issues around plastics waste are clearly acknowledged, and there are huge sums of money being directed throughout the stakeholder chain at accelerating this pace that we are on. We are seeing really a restructuring reformation of the industry all the way from the waste management companies to integrated petrochemical and resin producers to the technology companies that are bringing new chemical technologies to bear companies that are bringing new capabilities to mechanical recycling and design of assets that combine the best of all of these different options. So it’s just a matter of accelerating the pace beyond the pace that we are on today, which frankly is not quite sufficient to get us to an endpoint where we can say we’re really dealing with a circular model. But we are seeing real change, and real restructuring, and expect to see a large amount of integration on the part of stakeholders. I would say in some areas significant industry consolidation as we look to scale up the capabilities of the infrastructure to deal with this issue around plastics waste and the recycling of plastics.

Pablo Giorgi (13:12): Thank you, Robin. So there’s, there’s clearly, you know, a lot of issues regarding the supply and demand balance. How is that supply currently meeting the demand for recycled plastics?

Robin Waters (13:30): Well, sort of building on the response from the previous question. The supply right now is extremely limited compared to the demand. The demand for recycled content in products and especially in packaging has reached very high levels. Brand owners have made commitments. There is significant new legislation that’s pointing to requirements for levels of recycled content both in Europe, North America, and elsewhere and there are other drivers that really are placing a huge demand on recycled plastics. Currently, as I mentioned earlier, we’re highly reliant on what we refer to as PCR or mechanically recycled plastics from either consumer or commercial sources, and the demand is really centered on trying to find that PCR that can be used to displace the virgin material. In many cases, the volumes of PCR might be much higher than the volumes of the PCR with the appropriate quality and traceability of content necessary to qualify for displacing virgin resin, especially in highly regulated areas such as food packaging or pharma, things like that.

Robin Waters (15:22): So it looks on, when we’re doing our modeling, we’re going to continue to be in a very tight short-supply market, particularly in those areas that are being driven by the desire to reduce our dependence on virgin polymer. While we are addressing the issue of plastics waste I would say that there are other incremental uses of plastics waste that will be used to handle the volumes of plastics waste that can’t be used in highly regulated or other areas that for plastics that go into very demanding converting process operations. So we’ll have incremental outlets that will grow in things like modification for asphalt or synthetic construction, plastic construction materials, that sort of thing. That’ll provide an outlet in many parts of the world where especially as Tony was alluding to, there isn’t an infrastructure to necessarily take the plastics waste and direct it efficiently back into existing facilities to produce plastic polymers or to use plastic in converting processes. So those are a number of the things that are hampering the situation now. And I go back to my earlier comment that the pace of change is, it’s necessary to speed that up.

Luka Powell (17:16): So the move towards a circular plastic business model is obviously occurring within the context of the transition to a net zero carbon position for the energy industry. Given this and the rest of our discussion, what is the carbon footprint of chemical recycling processes, and does this align with the net zero goals?

Tony Palmer (17:37): Great question, Luka. Yes, obviously, any work we do on trying to achieve a circular model for plastics has got to be considered within the context of the overall energy transition. As plastics use continues to grow recycling technology needs to develop particularly with an eye on the carbon footprint of the recycling processes. To really do this analysis properly, you’ve got to dive into true lifecycle analyses, cradle-to-grave type assessments that consider not only the manufacturer of plastics polymers but actually the end products and the comp competition that those end products have with conventional materials like glass, paper, metal, et cetera. Our study looks at feedstock to pellet analyses. So we are drawing the envelope at that level.

Tony Palmer (18:49): So our assessments on carbon footprint start at the ultimate hydrocarbon and through the conversion processes to a pellet, and then in our recycled technologies, taking the waste plastic at the start and converting that into a mechanically recycled pellet or a true chemically recycled product that’s suitable for displacing virgin directly. So, all the work we’ve done is falling a bit short of a true lifecycle analysis, but nonetheless, there are some interesting takeaways and all of it is done within the context of the overall energy transition. Unfortunately, the work that we’ve done so far indicates that these two objectives are at odds with each other. So, achieving a closed loop for plastics really in our view does have a negative impact on carbon generation.

Tony Palmer (19:52): We need to do more technical work and development work. The main technologies that we look at as solution sets to close the loop are recovery as a mechanically recycled PCR (post-consumer resin). That’s one, in our view, that’s the lowest capital operating cost and carbon footprint way to achieve maybe 25 to 30% closure of the loop. Mechanical recycling has its limits in terms of product quality and degradation with each cycle. But nonetheless, it can do a really good job at maybe 25 to 30% of, of the weight toward a circular model. We’ll then look toward, you know, harsher treatments, chemical recycling either paralysis or gasification. We have technologies under development for solution dissolution technologies. And then we also have the substitution of fossil-based plastics with bio-based materials.

Tony Palmer (21:06): Materials that are either referred to as, let’s say green plastics or green polyethylene, typically made from biomass as a starting point whether it be you know, waste biomass or sugar-based agricultural products that can be converted onto bio-based plastics. We’re considering the footprint associated with each of these solutions. But again, right now our conclusion is that the main workhorse, which we believe is going to be the chemical recovery and regeneration of plastics via paralysis technology will have a negative correlation to carbon, a penalty on carbon. So unfortunately, that’s the solution that we’re at right now doing a lot more work on it and again, it doesn’t mean that plastics don’t fill fit the bill as an overall excellent solution. You need to do a full life cycle analysis that takes into account competition with substitute materials, the whole transportation impact of heavier-weight glass as opposed to lightweight plastic for packaging, et cetera. So a very complicated topic, but I’ve given you a little bit of insight here.

Pablo Giorgi (22:27): Thank you, Tony. So, you know, we are currently in the midst of you know, a sweeping and global movement to eliminate and not just produce our use of fossil-based materials. However, you know, the base chemical industries is currently highly dependent on feedstocks derived from the processing and refining of both crude oil and natural gas. So, Robin, what do you think is the future for fossil-based feedstocks in this context?

Robin Waters (23:04): Well, I can speak to it from the perspective of plastics and when we look at plastics, they really are a huge component roughly 50% of all based chemicals demand. When we look at the contribution that from recycling, what we’ve been talking about, mechanical recycling and other dissolution de-polymerization, and chemical recycling approaches, there’s a difference between managing and reprocessing the waste that we generate versus the output at the other end of those processes and what they contribute to displacing virgin resin or in turn virgin fossil fuels. We simply it’s a little odd to think about, but we simply on an annual basis, don’t generate enough plastic trash to satisfy the total demand for plastics. And if you think about the plastics waste that we generate, it’s largely from non-durable applications such as packaging whereas the demand for plastics runs across both durable and non-durable applications.

Robin Waters (24:37): So in our modeling, to put it all together in our modeling we see the potential for plastics recycling to contribute to the point where we plateau in our use of fossil fuels to produce plastics and satisfy the demand for plastics. But even our modeling out to 2050, even at that point, we’re highly dependent on fossil fuels. If you take into consideration the annual generation of plastics waste that occurs globally, we’re not counting the impact of mining the accumulated plastics waste which may become a possible activity in the future. There’s the mining of waste materials for use in other industries today, primarily from an energy standpoint. But on an annual basis, we simply can’t expect the recycling of plastic waste to be the total solution for reducing our dependence on fossil fuels. Other technologies and other things would have to come into play.

Luka Powell (26:03): Well, thank you both very much for joining us. You clearly have a breadth of knowledge on what is a crucial issue for not only our NALO and CMA listeners but beyond.  Join us in San Antonio at the AFPM International Petrochemical Conference from March 26th to March 28th. Visit our hospitality suite, salon D at the Marriott River Center Hotel and attend our chemical market seminar on March 26th from one to 3:00 PM at the Salon I at the same hotel. Join us next week where we are joined by the Circular plastics team to discuss the disruptive truths of plastic recycling. Don’t forget to subscribe to our podcast on SoundCloud, Spotify, or wherever you get your podcasts, and give us a like or leave a review if you enjoy it. If you have any questions or want to cover something more specific, you can send us an email. Until next time.


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