Global transition needed to a circular economy for plastics

15 February 2016 Consultancy.uk

Plastic is currently being used in a wide range of sectors, from packaging to electronics. The material is, however, being used in ways that create a host of negative externalities, from pollution in the sea and on land, to a use model that sees an average of $100 billion in packaging thrown away every year. In a bid to reimagine the plastic packaging value chain, the WEF, Ellen MacArthur Foundation and McKinsey & Company have joined forces to investigate the potential for creating a circular plastic economy in which the material is reused, recycled or decomposed with positive secondary benefits.  

Plastic has a versatile profile related to a range of uses, from multiple packaging sorts to around 50% of the Boeing Dreamliner. Plastic touches many aspects of modern life, with much of the food we consume in someway encased or contained in the material. Yet, as commonly known, much of that plastic is not recycled, and in many countries across the globe, it too often finds its way into the oceans.

Growth in global plastics production

In a bid to create a framework to deal with the problem the WEF, Ellen MacArthur Foundation and McKinsey & Company have researched the potential of a circular economic model within the plastic packaging value chain. The report, titled ‘The New Plastics Economy: Rethinking the future of plastics’, takes a multifaceted focus on the wider value chain, highlighting how different sectors can transform their modes of production, utilisation or collection to create as far as possible a sustainable circular supply chain.

The growth of plastic
Since the 1950's, plastic production has increased drastically, increasing from 16 metric tons in 1964 to 311 metric tons in 2014. Of the current plastic produced, 26% is turned into packaging. Plastic packaging has a number advantages, including reducing food waste by extending shelf life and reducing fuel consumption for transportation by bringing packaging weight down. Yet, it is also one of the most wasteful products itself, with only 14% of packaging recycled, of which 5% of its material value is retained in its subsequent use. The result is that 95% of plastic packaging is lost in one cycle, at a total cost of between $80 billion and $120 billion.

Plastic packaging material value loss after one use cycle

And looking ahead, as more and more consumers enter the market in the coming years, the production of plastics is set to grow steeply, with a doubling of plastic produced in the coming 20 years.

Plastic waste
Plastic materials also tend to flow into a range of environments that produce a range of negative externalities. To begin with, 98% of plastic is produced from virgin feedstock, with 2% recovered from current closed-loop recycling. Of the 78 million tonnes of produced plastic in 2013, 14% was recycled, 14% was combusted, and 40% entered the landfill. The final 32% leaked into the natural environment. Another recent study by McKinsey, conducted together with the Ocean Conservancy, for instance found that every year 8 million tons of plastic waste ends up in oceans.

Global flows of plastic pachaging materials in 2013

The different flows of plastic result in different issues for the wider industry. Combusted plastic creates GHG emissions, while landfilled plastic is simple waste of a material that may – in other circumstances – have retained value. The plastic that leaks into the natural environment is not only costly to clean, but also generates a number of ecological health hazards – from plastic that enters the food web, traps animals, or leaks a range of sometimes toxic additives into the environment as it decomposes over 100s of years.

Circulating plastic
The development of a circular economy, rather than a linear one, in recent years has been shown by meta-analysis to potentially create a huge boon to the wider economy. The linear consumption pattern of the FMCG sector for instance sees goods worth over $2.6 trillion annually sent to the world’s landfills and incineration plants. According to the authors shifting to a circular model – where there is a focus on utilisation, reuse and recycling – could generate a $706 billion economic opportunity, of which a significant proportion is attributable to packaging. Reducing the need for plastic, where possible, is a further means of reducing the negative externalities of the product.

Ambitions of the new plastics economy

Moving towards a circular economic model would involve a number of key steps. The first is to create an effective after use plastic economy in which focus is placed on creating reusable types of packaging – particularly in the B2B market where a logistics system based on standardised, modularised and shared assets. Transitioning to the ‘Physical Internet’ could unlock significant economic value — estimated to be $100 billion and a 33% reduction in CO2 emissions annually in the US alone. Improving recycling methods is a further step, which focuses on the creation of a Global Plastics Protocol. This protocol will be able to set direction on the redesign and convergence of materials, formats, and after-use systems to substantially improve collection, sorting and reprocessing yields, quality and economics, while allowing for regional differences and continued innovation, among others.

Further steps towards a closed loop circular economy is closing the door on leakage into the environment. This could, according to the report, be achieved through various local and global initiatives that can address the critical development of infrastructure, and can work with the formal and informal waste management sector to stop plastics from leaking into the ocean. By having a reuse and recycle system in place, in which plastics remain valuable, incentives are created for the proper recycling of materials.

The final step is changing how plastics are produced, focusing on using new types of biodegradable plastics, recycling, as well as more sustainable feedstocks.

Composting plastic

Duel recycling
One area that the report highlights, as a means of reducing waste, is the development of industrially compostable packaging material. Food waste is, besides plastic waste, a significantly damaging form of waste – in part because the nutrients in the food end up being taken out of the soil and for the most part are dumped in biologically unproductive landfills. The Food and Agriculture Organisation of the United Nations estimates that roughly one third of the food produced globally is lost or wasted. In the UK alone, only 1.6 million tons of the 14 million tons of wasted food is recycled.

The report also highlights that a range of food products are stored in material that cannot be recycled, either eliminating the potential for the product to be recycled, or creating disincentives for consumers to separate their circular waste from their linear waste. Therefore, creating a plastic material that will act as a component within the circular cycle is key – food waste and carefully ladled plastic waste can both be collected and recycled together. By focusing on the creation of plastic materials that actually can be decomposed, as well as expanding the wider ecosystem of industrial composting, as well as the industrial anaerobic digestion capacity and the collection of food waste – two aspects of the wider circular economic value chain can be met.

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