Lengthy On Intentions, Brief On Answers

Petrochemical Industrial. Oil refinery and Oil industry at sunset/sunrises. Source: Shutterstock

</div> </div> <p>Petrochemical feedstocks made up about 12% of oil demand in 2017 but Wood Mackenzie Chemicals sees significant growth over the next 20 years as demand for plastics and fibres grows.</p> <p>Faced with the prospect of declining use in transportation as vehicle efficiencies and electrification bite, the <a href="https://www.woodmac.com/news/editorial/chemicals-oil-demand-2035/" target="_blank" data-ga-track="ExternalLink:https://www.woodmac.com/news/editorial/chemicals-oil-demand-2035/" rel="nofollow">oil industry is turning to petrochemicals</a> for long-term oil demand growth. However, &quot;petrochemicals&quot; mostly means &quot;plastics&quot;, which are now in the sustainability spotlight.</p> <p>The public, environmentalists, brand owners, institutions and now governments are responding to the rising tide of negative perception of plastics caused mainly by their improper disposal after use. The <a href="https://www.woodmac.com/news/editorial/rpet-market-uk-deposit-scheme/" target="_blank" data-ga-track="ExternalLink:https://www.woodmac.com/news/editorial/rpet-market-uk-deposit-scheme/" rel="nofollow">reaction to their environmental impact</a> has been to increase efforts to reduce, ban plastics and/or increase reuse and recycling.</p> <p>How does that impact the potential for chemicals to be the vehicle of long-term oil demand growth? This is a massively complex and increasingly sensitive issue and one that won’t be effectively resolved quickly or easily.</p> <p> </p> <p><strong>Plastics are just too efficient to be easily replaced</strong></p> <p>Understanding the implications for natural resources and the environmental consequences of shifting away from plastics must take into account the entire supply chain. What replaces plastics? Metal? Wood? Paper? Glass?</p> <p>There is little doubt that much, much more can be done to reduce waste and consumption. One of the key issues is that plastics, particularly in packaging applications, are incredibly efficient and cost effective; finding an alternative solution is not easy. Alternatives can also be costly and few want to incur the burden of higher costs. The consumer and/or brand owners eventually will have to absorb the higher costs but are they willing to do so?</p>

<p>Another important point to bare in mind is the size of the fibre industry, another large market that falls under the petrochemicals umbrella. It is approaching 100 million tons and we expect it will keep growing with rising incomes and improving standards of living. Polyester, one of the man-made fibres, is the largest of these markets by far. However, there is no meaningful alternative to meet growing fibre demand than polyester, so replacing this material within its current capacity would be near-to-impossible.</p> <p><strong>Intentions and implementation are not aligned</strong></p> <p>The importance of a circular economy for plastics is evolving from a minority view to a broader consumer desire via governments, brand owners and consumers. However, the solutions to overcome current barriers are not simple and clear. Many questions need to be answered when considering the wider implications, including the impact on natural resources.</p> <p>For example, plastics are extensively used in food packaging to prevent spoilage, which in turn reduces transportation costs, food costs and energy requirements. But if plastic food packaging is banned, spoilage increases and this will lead to more land, water, pesticides, equipment and so on being consumed. In the end, is this better for the environment? Further analysis is required to properly measure the full impact on the entire supply chain.</p> <p><strong>Rapidly growing need for circular plastics economy</strong></p> <p>What of the circular plastics economy? <span class="tweet_quote"> <a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=There%20is%20little%20doubt%20plastic%20waste%20needs%20to%20be%20addressed%20and%20a%20circular%20economy%20helps%20reduce%20waste%20via%20%40WoodMackenzie" target="_blank" data-ga-track="ExternalLink:https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=There%20is%20little%20doubt%20plastic%20waste%20needs%20to%20be%20addressed%20and%20a%20circular%20economy%20helps%20reduce%20waste%20via%20%40WoodMackenzie" rel="nofollow">There is little doubt increased plastic waste needs to be addressed and a circular economy helps reduce waste<span data-ga-track="ExternalLink:https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=There%20is%20little%20doubt%20plastic%20waste%20needs%20to%20be%20addressed%20and%20a%20circular%20economy%20helps%20reduce%20waste%20via%20%40WoodMackenzie"></span></a></span> .</p> <p>Recycling volume is a function of economics, waste management and sustainability initiatives/regulation. In order to move towards a circular plastics economy, plastic companies must innovate toward recyclable applications, participate in the recycling value chain and move away from single-use products.</p>

There is little doubt increased plastic waste needs to be addressed and a circular economy helps reduce waste.Wood Mackenzie

</div> </div> <p>A number of governments have recently taken measures to inspire this transition. In January 2018, China, the world’s largest importer of recycled material, <a href="https://www.woodmac.com/news/opinion/china-waste-plastic-ban-global-recycling/" target="_blank" data-ga-track="ExternalLink:https://www.woodmac.com/news/opinion/china-waste-plastic-ban-global-recycling/" rel="nofollow">implemented a ban on the import of plastic waste</a>. This initially increases virgin resin demand in China and will also advance recycling investments in other countries. Canada’s Waste Free Ontario Act encourages innovation in recycling processes and requires producers to take full responsibility for their products and packaging, imposing a target of 80% waste diversion by 2050. Finally, the European Union has stated its intentions for 2030 that 1) All plastic packaging is reusable or recyclable; 2) More than half of plastic packaging waste will be recycled; 3) Sorting and recycling capacity will increase dramatically.</p> <p><strong>Despite backlash, plastics growth will continue for the next 20 years</strong></p> <p class="tweet_line"><span class="tweet_quote"> <a href="https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=%22Despite%20all%20of%20these%20issues%2C%20chemical%20demand%20will%20persist%20for%20the%20next%2020%20years%22%20via%20%40WoodMackenzie" target="_blank" data-ga-track="ExternalLink:https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=%22Despite%20all%20of%20these%20issues%2C%20chemical%20demand%20will%20persist%20for%20the%20next%2020%20years%22%20via%20%40WoodMackenzie" rel="nofollow">Despite all of these issues, chemical demand will persist for the next 20 years<span data-ga-track="ExternalLink:https://twitter.com/intent/tweet?url=http%3A%2F%2Fwww.forbes.com%2Fsites%2Fwoodmackenzie%2F2018%2F08%2F12%2Fcircular-plastics-economy-long-on-intentions-short-on-solutions%2F&amp;text=%22Despite%20all%20of%20these%20issues%2C%20chemical%20demand%20will%20persist%20for%20the%20next%2020%20years%22%20via%20%40WoodMackenzie"></span></a></span> due to an increase in global median incomes, growing populations and an improvement of living standards. While there will be lower growth rates, the sheer size of the market today will generate sizeable volume growth.</p> <p>You can read more about our thoughts on a circular plastics economy at&nbsp;<a href="https://my.woodmac.com/reports/macroeconomics-risks-and-global-trends-a-circular-plastics-economy-long-on-intentions-short-on-solutions-23771?contentId=23771&amp;isPresentation=0&amp;isVideo=0&amp;source=30" target="_blank" data-ga-track="ExternalLink:https://my.woodmac.com/reports/macroeconomics-risks-and-global-trends-a-circular-plastics-economy-long-on-intentions-short-on-solutions-23771?contentId=23771&amp;isPresentation=0&amp;isVideo=0&amp;source=30" rel="nofollow">woodmac.com</a>.</p>”>

Petrochemical Commercial. Oil refinery and Oil trade at sundown/sunrises. Supply: Shutterstock

Petrochemical feedstocks made up about 12% of oil call for in 2017 however Picket Mackenzie Chemical substances sees important expansion over the following 20 years as call for for plastics and fibres grows.

Confronted with the chance of declining use in transportation as automobile efficiencies and electrification chunk, the oil trade is popping to petrochemicals for long-term oil call for expansion. Alternatively, “petrochemicals” most commonly method “plastics”, which are actually within the sustainability highlight.

The general public, environmentalists, logo homeowners, establishments and now governments are responding to the emerging tide of adverse belief of plastics led to basically by way of their unsuitable disposal after use. The response to their environmental have an effect on has been to extend efforts to scale back, ban plastics and/or build up reuse and recycling.

How does that have an effect on the possibility of chemical compounds to be the automobile of long-term oil call for expansion? This can be a hugely advanced and increasingly more delicate factor and person who would possibly not be successfully resolved briefly or simply.

Plastics are simply too environment friendly to be simply changed

Figuring out the consequences for herbal assets and the environmental penalties of moving clear of plastics should be mindful all of the provide chain. What replaces plastics? Steel? Picket? Paper? Glass?

There’s no doubt that a lot, a lot more may also be executed to scale back waste and intake. One of the most key problems is that plastics, in particular in packaging packages, are extremely environment friendly and value efficient; discovering an alternate resolution isn’t simple. Choices may also be expensive and few wish to incur the load of upper prices. The shopper and/or logo homeowners in the end should soak up the upper prices however are they keen to take action?

Any other essential level to reveal in thoughts is the scale of the fibre trade, every other huge marketplace that falls beneath the petrochemicals umbrella. It’s coming near 100 million lots and we predict it is going to continue to grow with emerging earning and bettering requirements of dwelling. Polyester, one of the crucial man-made fibres, is the biggest of those markets by way of a ways. Alternatively, there is not any significant selection to satisfy rising fibre call for than polyester, so changing this subject matter inside its present capability could be near-to-impossible.

Intentions and implementation don’t seem to be aligned

The significance of a round economic system for plastics is evolving from a minority view to a broader shopper want by the use of governments, logo homeowners and customers. Alternatively, the answers to triumph over present limitations don’t seem to be easy and transparent. Many questions want to be replied when bearing in mind the broader implications, together with the have an effect on on herbal assets.

As an example, plastics are broadly utilized in meals packaging to stop spoilage, which in flip reduces transportation prices, meals prices and effort necessities. But when plastic meals packaging is banned, spoilage will increase and this may result in extra land, water, insecticides, apparatus and so forth being fed on. Finally, is that this higher for the surroundings? Additional research is needed to correctly measure the total have an effect on on all of the provide chain.

Unexpectedly rising want for round plastics economic system

What of the round plastics economic system? There’s no doubt greater plastic waste must be addressed and a round economic system is helping cut back waste .

Recycling quantity is a serve as of economics, waste control and sustainability projects/legislation. To be able to transfer against a round plastics economic system, plastic firms should innovate towards recyclable packages, take part within the recycling price chain and transfer clear of single-use merchandise.

There’s no doubt greater plastic waste must be addressed and a round economic system is helping cut back waste.Picket Mackenzie

Quite a lot of governments have just lately taken measures to encourage this transition. In January 2018, China, the arena’s biggest importer of recycled subject matter, carried out a ban at the import of plastic waste. This first of all will increase virgin resin call for in China and also will advance recycling investments in different nations. Canada’s Waste Loose Ontario Act encourages innovation in recycling processes and calls for manufacturers to take complete duty for his or her merchandise and packaging, implementing a goal of 80% waste diversion by way of 2050. In spite of everything, the Eu Union has said its intentions for 2030 that 1) All plastic packaging is reusable or recyclable; 2) Greater than part of plastic packaging waste might be recycled; three) Sorting and recycling capability will build up dramatically.

In spite of backlash, plastics expansion will proceed for the following 20 years

In spite of all of those problems, chemical call for will persist for the following 20 years because of an build up in international median earning, rising populations and an development of dwelling requirements. Whilst there might be decrease expansion charges, the sheer measurement of the marketplace lately will generate sizeable quantity expansion.

You’ll be able to learn extra about our ideas on a round plastics economic system at woodmac.com.

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