Short Essay
THE NEW PLASTICS ECONOMY • • • 1
The New Plastics Economy Rethinking the future of plastics
THE NEW PLASTICS ECONOMY RETHINKING THE FUTURE OF PLASTICS
THE NEW PLASTICS ECONOMY RETHINKING THE FUTURE OF PLASTICS
2 • • • THE NEW PLASTICS ECONOMY
THE NEW PLASTICS ECONOMY • • • 3
CONTENTS
Preface 4
Foreword 5
In support of the New Plastics Economy 6
Project MainStream 8
Disclaimer 9
Acknowledgements 10
Global partners of the Ellen MacArthur Foundation 14
EXECUTIVE SUMMARY 15
PART I SUMMARY OF FINDINGS AND CONCLUSIONS 22
1 The case for rethinking plastics, starting with packaging 24
2 The New Plastics Economy: Capturing the opportunity 31
3 The New Plastics Economy demands a new approach 39
PART II CREATING AN EFFECTIVE AFTER-USE PLASTICS ECONOMY 44
4 Recycling: Drastically increasing economics, uptake and quality through compounding and mutually reinforcing actions 46
5 Reuse: Unlocking material savings and beyond 62
6 Compostable packaging: Returning nutrients to the soil for targeted packaging applications 68
PART III DRASTICALLY REDUCING LEAKAGE OF PLASTICS INTO NATURAL SYSTEMS AND MINIMISING OTHER EXTERNALITIES 74
7 Drastically reducing leakage into natural systems and associated negative impacts 76
8 Substances of concern: Capturing value with materials that are safe in all product phases 79
PART IV DECOUPLING PLASTICS FROM FOSSIL FEEDSTOCKS 86
9 Dematerialisation: Doing more with less plastic 88
10 Renewably sourced plastics: Decoupling plastics production from fossil feedstocks 92
Appendices 97
Appendix A. Global material flow analysis: Definitions and sources 98
Appendix B. Biodegradation 100
Appendix C. Anaerobic digestion 101
Glossary 102
List of Figures and Boxes 105
Endnotes 106
About the Ellen MacArthur Foundation 117
4 • • • THE NEW PLASTICS ECONOMY
PREFACE The circular economy is gaining growing attention as a potential way for our society to increase prosperity, while reducing demands on finite raw materials and minimising negative externalities. Such a transition requires a systemic approach, which entails moving beyond incremental improvements to the existing model as well as developing new collaboration mechanisms.
The report explores the intersection of these two themes, for plastics and plastic packaging in particular: how can collaboration along the extended global plastic packaging production and after-use value chain, as well as with governments and NGOs, achieve systemic change to overcome stalemates in today’s plastics economy in order to move to a more circular model?
The New Plastics Economy aims to set an initial direction and contribute to the evidence base by synthesising information from across many dispersed sources. It assesses the benefits and drawbacks of plastic packaging today, and makes the case for rethinking the current plastics economy. It lays out the ambitions and benefits of the New Plastics Economy — a system aiming to achieve drastically better economic and environmental outcomes. It proposes a new approach and action plan to get there.
The report’s objective is not to provide final answers or recommendations. Rather, it aims to bring together for the first time a comprehensive global perspective of the broader plastic packaging economy, present a vision and propose a roadmap as well as a vehicle for progressing this roadmap, and providing a much needed global focal point to carry this agenda forward. This report also identifies a number of significant knowledge gaps and open questions that need to be further explored.
This report is the product of Project MainStream, an initiative that leverages the convening power of the World Economic Forum, the circular economy innovation capabilities of the Ellen MacArthur Foundation, and the analytical capabilities of McKinsey & Company. We are grateful to our numerous partners and advisors for their insights and support throughout this project, and the Project MainStream Steering Board for their continued collaboration on the transition towards a circular economy.
For the three institutions that have launched the MainStream initiative, this report is an encouragement to continue to foster cross-industry collaboration as a major avenue to accelerate the transition to the much- needed circular economy. We hope you find this report informative and useful. We invite you to engage with us on this timely opportunity.
Dame Ellen MacArthur Founder, Ellen MacArthur Foundation
Dominic Waughray Head of Public Private Partnership, World Economic Forum
Martin R. Stuchtey Director of the McKinsey Center for Business and Environment
THE NEW PLASTICS ECONOMY • • • 5
FOREWORD H. E. Mogens Lykketoft President of the UN General Assembly for the 70th session
We live in a defining moment in history — a moment where the international community has come together to agree on an ambitious framework to resolve some of the world’s most daunting challenges.
Anchored in a set of universally applicable Sustainable Development Goals, the 2030 Agenda for Sustainable Development, adopted by all 193 members of the United Nations in September 2015, underlined a common determination to take bold and transformative steps towards a better future for all.
Now is the time for implementation. We must now begin to practise what we have preached — changing our production and consumption patterns in order to create virtuous cycles rather than depletive ones and harnessing the global interconnectedness, communications technology and breakthroughs in materials science.
All sectors of the economy must respond to these global agreements, and due to their sheer pervasiveness and scale, some sectors are facing questions as to the direction they should take. This is particularly the case for plastics, which have tangible and substantial benefits, but whose drawbacks are significant, long-term and too obvious to ignore. It is therefore very encouraging to see an initiative like the New Plastics Economy take shape, supported by a diverse group of participants from the industry striving for innovative solutions grounded in systems thinking.
Concrete and game-changing steps have to be taken for us to achieve the future we want anchored in the SDGs. I therefore welcome wholeheartedly the bold ideas, ambitious objectives and comprehensive action plan presented in this report. If implemented, it could make an important contribution to transforming this important sector of the global economy.
6 • • • THE NEW PLASTICS ECONOMY
IN SUPPORT OF THE NEW PLASTICS ECONOMY
‘As the Consumer Goods Forum, we welcome this groundbreaking report on the New Plastics Economy. Packaging
is integral to the delivery of safe, high-quality consumer products, but we recognise the need to rethink radically how we use plastics,
creating new circular systems that conserve resources, reduce pollution and promote efficiency. This report improves substantially our
understanding of the solutions we need.’
MIKE BARRY AND JEFF SEABRIGHT CO-CHAIRS OF THE CONSUMER GOODS
FORUM SUSTAINABILITY PILLAR
‘The Global Ocean Commission has been working with the Prince of Wales’ International Sustainability Unit to raise political and business awareness of
the urgent need to address plastic waste entering the ocean, and transition to a more circular model for plastics. I am very pleased to see that the Ellen MacArthur
Foundation and its partners have responded to this call to action, through the New Plastics Economy report, and have developed an ambitious yet realistic plan to address
the issue at its root. I strongly encourage nations and business leaders to consider the contents of this report and develop corresponding strategies.’
DAVID MILIBAND CO-CHAIR
GLOBAL OCEAN COMMISSION
‘It is high time to implement the circular economy principles in the plastic sector. Increasing plastic recycling would capture significant material value and help reduce greenhouse gas emissions. As pointed out in this report, plastic production has increased from 15 million tonnes in the sixties to 311 million tonnes in 2014 and is expected to triple by 2050, when it would account for 20% of global annual oil consumption. These are exactly the reasons why Veolia, which is already actively engaged in promoting circular solutions, welcomes and supports the New Plastics Economy.’
ANTOINE FRÉROT CEO
VEOLIA
‘Plastic products and packaging have an undeniably important role in our society. Plastic waste should not. Not only does plastic waste pollute our land and ocean — to the detriment of wildlife and humans — but the loss of plastic from the current plastic economy is an economic drain. Plastic waste is a problem we can solve and need to solve now. And the solutions are many. Near term benefits will be made by better waste management and less use, especially single use, of plastic. But ultimately this problem requires a circular economy approach, where used plastic becomes a feedstock rather than a waste. There has never been more political will and technical ability to solve our plastic waste problem. Together we can stem the tide of plastic waste suffocating our ocean. Together we can change the world — and save our ocean.’
CATHERINE NOVELLI U.S. UNDER SECRETARY OF STATE FOR
ECONOMIC GROWTH, ENERGY AND THE ENVIRONMENT
‘The New Plastics Economy takes a detailed look into one of the world’s most pervasive modern materials. The report lays out a foundation
for a more sustainable system of making and using plastics and plastic packaging, taking into account the unique challenges and
opportunities on the use, reuse, and collection of the material. It is a call to action for an ambitious redesign with a longer term view
of the value at stake and intensive collaboration among various players.’
DOMINIC BARTON GLOBAL MANAGING DIRECTOR
MCKINSEY & COMPANY
THE NEW PLASTICS ECONOMY • • • 7
‘London is already actively taking steps towards a more circular model for plastics and plastic packaging. However
more can and needs to be done, and I therefore welcome, support and thank the Ellen MacArthur Foundation, the World Economic Forum
and McKinsey for their effort in identifying and promoting the global innovations required if we are going to continue to enjoy the benefits that
plastics bring to our lives.’
MATTHEW PENCHARZ DEPUTY MAYOR FOR ENVIRONMENT AND ENERGY
GREATER LONDON AUTHORITY
‘The New Plastics Economy is an exciting opportunity to inspire a generation of designers to profoundly rethink plastic packaging and its role in a system that works.’
TIM BROWN CEO IDEO
‘In the Global Ocean Commission’s report From Decline to Recovery: A Rescue Package for the Global Ocean, we identified keeping plastics out of the ocean as one of our key proposals for action to advance ocean recovery. This report is an excellent next step, offering a root-cause
solution to the problem of ocean plastics as part of a broader rethink and new approach to capture value in the New Plastics Economy. The economic and environmental case is now clear — I therefore
call on governments and businesses alike to take urgent action to capture the opportunity.’
TREVOR MANUEL CO-CHAIR
GLOBAL OCEAN COMMISSION
‘SUEZ was pleased to contribute to the New Plastics Economy report, a collaborative case for rethinking the current plastics economy. As this report shows, a radical and joint rethink of both design and after-use processes will be required, in addition to other measures such
as stimulating demand for secondary raw materials. We look forward to continued collaboration to enable better economic and environmental results in the plastic packaging value chain and to
accelerate the transition towards the circular economy.’
JEAN-LOUIS CHAUSSADE CHIEF EXECUTIVE OFFICER
SUEZ
‘Systems thinking and integrated approaches are needed if we are to sustainably use and manage our global resources in a manner that enables the achievement of the Paris climate change
agreement while advancing a circular economy. In my work with the G7 Alliance on Resource Efficiency, there’s ongoing discussion about the need to disrupt “business as usual”. The New
Plastics Economy — Rethinking the future of plastics continues in that vein.’
MATHY STANISLAUS USEPA ASSISTANT ADMINISTRATOR
FOR THE OFFICE OF LAND AND EMERGENCY MANAGEMENT
‘This is an important report highlighting some of the key issues related to plastics and their leakage into the marine environment. It is also an exciting report that proposes new
approaches within a circular economy framework that could re-orientate society’s use of plastics and start to address the problems that our current use is creating.’
PROFESSOR STEPHEN DE MORA CHIEF EXECUTIVE
PLYMOUTH MARINE LABORATORY
‘At Desso we are proud to have been part of developing the New Plastics Economy report, a result of Project MainStream, one of the first cross-industry
collaborations of its kind. The report shows how companies — through collaboration, vision and clear research — can build a foundation for a
truly circular model for plastics.’
ROLAND JONKHOFF MANAGING DIRECTOR
DESSO BV (A TARKETT COMPANY)
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PROJECT MAINSTREAM This report was written under the umbrella of Project MainStream, a multi-industry, global initiative launched in 2014 by the World Economic Forum and the Ellen MacArthur Foundation, with McKinsey & Company as knowledge partner. MainStream is led by the chief executive officers of nine global companies: Averda, BT, Desso BV (a Tarkett company), Royal DSM, Ecolab, Indorama, Philips, SUEZ and Veolia.
MainStream aims to accelerate business-driven innovations and help scale the circular economy. It focuses on systemic stalemates in global material flows that are too big or too complex for an individual business, city or government to overcome alone, as well as on enablers of the circular economy such as digital technologies.
THE NEW PLASTICS ECONOMY • • • 9
DISCLAIMER This report has been produced by a team from the Ellen MacArthur Foundation, which takes full responsibility for the report’s contents and conclusions. McKinsey & Company provided analytical support. While the project participants, members of the advisory panel and experts consulted acknowledged on the following pages have provided significant input to the development of this report, their participation does not necessarily imply endorsement of the report’s contents or conclusions.
To quote this report, please use the following reference:
World Economic Forum, Ellen MacArthur Foundation and McKinsey & Company, The New Plastics Economy — Rethinking the future of plastics (2016, http://www.ellenmacarthurfoundation.org/publications).
10 • • • THE NEW PLASTICS ECONOMY
ACKNOWLEDGEMENTS
PROJECT FUNDERS
CORE PROJECT TEAM
ELLEN MACARTHUR FOUNDATION Andrew Morlet, CEO Jocelyn Blériot, Executive Officer — Communication & Policy Lead
Rob Opsomer, Lead, MainStream Simon Widmer, Project Manager Ian Banks, Analyst Dr Michiel De Smet, Analyst Joe Murphy, Analyst Philippa Steventon, Team Assistant
Sandy Rodger, Lead for Set-Up Phase
WORLD ECONOMIC FORUM Dominic Waughray, Head, Public-Private Partnership, Member of the Executive Committee
Nathalie Chalmers, Project Lead, Circular Economy
James Pennington, Research Analyst, Global Agenda Councils
Louis Baudoin, Associate Sander Defruyt, Associate
MCKINSEY & COMPANY Martin R. Stuchtey, Director of the McKinsey Center for Business and Environment
Steven Swartz, Principal Helga Vanthournout, Senior Expert
ADVISORY PANEL We are grateful for the support of our advisory panel members:
Dr Michael Braungart, Scientific Director, EPEA International Umweltforschung
Michael Carus, CEO, nova- Institute
Bruno De Wilde, Lab Manager, OWS nv
Dr Stephane Guilbert, Professor, Montpellier SupAgro
Dr Lauren Heine, Interim Executive Director, Northwest Green Chemistry
Dr Jenna Jambeck, Associate Professor, University of Georgia
William McDonough, Founder, William McDonough & Partners
Tom McKeag, Executive Director, Berkeley Center for Green Chemistry
Andreas Merkl, CEO, Ocean Conservancy
Gonzalo Muñoz Abogabir, Co- founder and CEO, TriCiclos
Dr Costas Velis, CERRY: Circular Economy & Resource Recovery Coordinator, University of Leeds
Dr John Warner, President & Chief Technology Officer, Warner Babcock Institute for Green Chemistry, LLC
Dr John R. Williams, Board Member, BBIA
Doug Woodring, Founder, Ocean Recovery Alliance and The Plasticity Forum
PARTICIPATING ORGANISATIONS Special thanks go to our participating organisations for their multiple contributions and active involvement:
ABRE Luciana Pellegrino, Executive Director
ALIPLAST Paolo Glerean, PET Films Sales Director
AMCOR David Clark, Vice President Safety Environment & Sustainability
Charlie Schwarze, Global Sustainability Manager
Gerald Rebitzer, Director Sustainability
Leonore Hijazi, Sustainability Manager
APK ALUMINIUM UND KUNSTSTOFFE AG Klaus Wohnig, Chief Marketing Officer & CFO
Soren Hein, Strategy Advisor
CITY OF ATLANTA Kristin Wilson, Deputy Chief Operating Officer
Monica Fuentes, Chief Service Officer
Stephanie Benfield, Director of Sustainability
INDORAMA UNILEVER
THE NEW PLASTICS ECONOMY • • • 11
BPI Andrew Green, Managing Director
Gerry McGarry, Commercial Director
CEDO Ton Emans, Director, Group Recycling and Purchasing Department
CITY OF COPENHAGEN Morten Højer, Special Advisor, Climate & Economy
Mette Skovgaard, Senior Advisor
CLOSED LOOP FUND Chris Ladd, Director & CFO Bridget Croke, Partner Relationships
COCA-COLA FEMSA Luis Dario Ochoa Rodriguez, Sustainability Manager
CYRAMID AFFILIATES Peter Schroeder, CEO Julian Blohmke, Practice Leader
DESSO BV (A TARKETT COMPANY) Anette Timmer, Director, Communications & CSR
Rudi Daelmans, Manager, CSR
DOW CHEMICAL Jeffrey Wooster, Global Sustainability Director, Packaging & Specialty Plastics
Bruno Pereira, NBD and Sustainability Manager
ROYAL DSM Fredric Petit, Director, Innovation & Sustainability at DSM Engineering Plastics
Gaelle Nicolle, Program manager Eco+
Lukas Hoex, Manager Circular Economy
DUPONT Hanane Taidi, Marketing Communications Director
Xavier Bories-Azeau, Regional Product Line Manager
IKEA Alexander Grouleff, Project Leader Recycled/Renewable Materials Category Plastic
Per Stoltz, Sustainability Developer
Nguyen Minh, Category Manager
HARTSFIELD-JACKSON ATLANTA INTERNATIONAL AIRPORT Liza Milagro, Senior Sustainability Planner
INDORAMA Aradhana Lohia Sharma, Corporate Strategy & Planning
Mark Ruesink, General Manager Wellman Recycling & Wellman France Recyclage
Paul Brennan, Commercial Manager Wellman Recycling & Wellman France Recyclage
KIMBERLY-CLARK Daniel Locke, Sustainability Strategy and Business Development Analyst
John Opsteen, Secondary Materials Program Leader
LONDON WASTE AND RECYCLING BOARD (LWARB) Wayne Hubbard, Chief Operating Officer
MARKS & SPENCER Kevin Vyse, Packaging Technologist, Foods & Packaging Innovation Lead
MANGO MATERIALS, INC. Dr Molly Morse, CEO
MTM PLASTICS Dr Michael Scriba, Managing Partner
MULTI-MATERIAL BC (MMBC) Allen Langdon, Managing Director
NATUREWORKS LLC Mariagiovanna Vetere, EU Public Affairs Manager
Steve Davies, Public Affairs and Communication Director
Erwin Vink, Environmental Affairs Manager
NESTLÉ Bernd Buesing, Senior Packaging Expert
Lars Lundquist, Senior Packaging Expert – Packaging Environmental Sustainability
NOVAMONT Andrea Di Stefano, Special Projects and Business Communication Director
Tony Breton, Market Developer, Source Separation & Recycling
Paul Darby, Area Manager UK & Ireland
NYC DEPARTMENT OF SANITATION Greg Anderson, Chief of Staff Bridget Anderson, Deputy Commissioner, Recycling and Sustainability
PACOMBI GROUP Alan Campbell, Technical Director
PLASTICBANK David Katz, Founder and CEO
PLASTICS RECYCLERS EUROPE Antonino Furfari, Director
QUALITY CIRCULAR POLYMERS (QCP) Huub Meessen, CEO
RECYCLING TECHNOLOGIES Adrian Griffiths, Managing Director
SABMILLER Andre Fourie, Head of Water Security and Environmental Value
SEALED AIR Ron Cotterman, Vice President, Sustainability
Vince Herran, Director, Global Recycling
12 • • • THE NEW PLASTICS ECONOMY
SUEZ Frederic Grivel, Vice President, Marketing
Peter De Boodt, Director, Projects Support & Implementation Department
Aurelien Toupet, Directeur Métiers Tri-Valorisation
Oliver Vilcot, General Manager — Plastics Recycling Division
TERRACYCLE Tom Szaky, Founder and CEO Albe Zakes, Global VP, Communications
Chris Baker, General Manager
UNILEVER Gavin Warner, Director Sustainable Business
Louis Lindenberg, Global Packaging Sustainability Director
Julie Zaniewski, Packaging Sustainability Manager
VEOLIA Gary Crawford, Vice President, International Affairs
Juliette Pouzet, Strategy Manager, Innovations & Markets Department
Martin Champel, Sorting & Recycling Activities Technical Expert, Technical & Performance Department
Marc-Antoine Belthé, General Manager, Veolia Propreté France Recycling
WASTE CAPITAL PARTNERS Parag Gupta, Founder Rob Whiting, Principal
WASTE MANAGEMENT MCDONOUGH SUSTAINABLE INNOVATION COLLABORATION Larry Black, Senior Advisor and Strategic Business Development
WRAP Claire Shrewsbury, Packaging Programme Area Manager
David Tozer, Project Manager
ZERO WASTE SCOTLAND Callum Blackburn, Head of Policy and Research
Louise McGregor, Head of Circular Economy
Tim Baldwin, Sector Manager, Reprocessing
EXPERTS CONSULTED Thanks also go to the many leading academic, industry, NGO and government agency experts who provided invaluable perspectives:
Conny Bakker, Associate Professor, TU Delft
Eben Bayer, Co-founder and CEO, Ecovative
Alice Bazzano, Sustainability Project Leader, Avery Dennison
Jan Berbee, Founder, Packaging & Distribution Innovators BV
Urban Boije af Gennäs, Policy Officer, European Commission, DG Environment, Chemicals Unit
Scott Boylston, Graduate Coordinator, Design for Sustainability, Savannah College of Art and Design
Phil Brown, Circular Value Chains Research Engineer, The High Speed Sustainable Manufacturing Institute (HSSMI)
Eilidh Brunton, Group Recycling Consultant, Vegware
Oliver Campbell, Director Worldwide Procurement, DELL
Lucy Chamberlin, Head of Programme, The RSA Great Recovery
Charles Cocoual, Associate, McKinsey & Company
Susan Collins, President, Container Recycling Institute
Bram de Zwart, Co-founder and CEO, 3D Hubs
Sam Deconinck, Marketing & Sales Manager, OWS nv
Daniel Dilges, Senior Research Analyst, McKinsey & Company
David Dornfeld, Director, Laboratory for Manufacturing and Sustainability (LMAS), University of California, Berkeley
Paul East, Packaging Technologist, RECOUP
Stuart Foster, Chief Executive Officer, RECOUP
Jason Foster, Founder and Chief Reuser, Replenish Bottling
Lucy Frankel, Communications Director, Vegware
Max Friefeld, Co-founder and CEO, Voodoo Manufacturing
Alysia Garmulewicz, DPhil Candidate, University of Oxford
Rich Gilbert, Co-founder, The Agency of Design
Jeroen Gillabel, Researcher Sustainable Materials Management, VITO
Nathalie Gontard, Food Packaging Scientist, Professor & Research Director, INRA & Université Montpellier
Peter Goodwin, Director, Closed Loop Environmental Solutions
Vasudha Gupta, Senior Analyst, McKinsey & Company
Sophie Hackford, Director, WIRED Consulting, WIRED Magazine
Dr John Hahladakis, Research Fellow on Resource Recovery from Waste, University of Leeds
Prabhdeep S. Hans, Group Manager Strategy and Planning, Brambles
Dr Britta Denise Hardesty, Senior Research Scientist, CSIRO
Keefe Harrison, Executive Director, The Recycling Partnership
Frida Hök, Senior Policy Advisor, ChemSec
THE NEW PLASTICS ECONOMY • • • 13
Wendela Huisman, Teaching Assistant Sustainable Design Engineering, Delft University of Technology
Maja Johannessen, Gov. & Cities Programme Associate, Ellen MacArthur Foundation
Juan Jose Freijo, Global Head, Sustainability, Brambles
Hanne Juel, Leader of Circular Economy Team at Innovation and Research, Central Denmark Region Government
Christie Keith, International Coordinator, Global Alliance for Incinerator Alternatives (GAIA)
Scott Knowles, Co-founder and Director, ObjectForm
Dr Eleni Lacovidou, Research Fellow on Resource Recovery from Waste, University of Leeds
Markus Laubscher, Program Manager Circular Economy, Philips Group Sustainability, Philips
Dr Mats Linder, Project Manager, Ellen MacArthur Foundation
Jason Locklin, Associate Professor, College of Engineering, University of Georgia
Guillermo Lopez-Velarde, Product Development Practice Senior Expert, McKinsey & Company
Dr Carlos Ludlow-Palafox, CEO, Enval
Anne-Mette Lysemose Bendsen, Soil & Waste, Ministry of Environment and Food of Denmark
Brock Macdonald, CEO, Recycling Council of British Columbia
Conrad B. MacKerron, Senior Vice President, As You Sow
Nicholas Mallos, Director, Trash Free Seas Program, Ocean Conservancy
Andrew Mangan, Executive Director, United States Business Council for Sustainable Development
Prof Dr Jur Helmut Maurer, Principal Lawyer, European Commission, DG Environment
Megan McGill, Circular Strategy Analyst, C&A Foundation
Richard McKinlay, Senior Engineer, Axion Consulting
Simon Mendes, UK Marketing Manager, Schoeller Allibert Limited
Béatrice Meunier, Senior Manager, PlasticsEurope
Jeff Meyers, Development Director, The Recycling Partnership
Kenneth F. Miller, Manager, KFM & Associates
Vitaly Negulayev, Knowledge Specialist, McKinsey & Company
Patrick Peuch, Executive Director, Petcore Europe
Harald Pilz, Senior Consultant, Denkstatt GmbH
Juergen Priesters, Business Development Director, TOMRA Sorting Solutions
Stefan Ranstrand, President and CEO, TOMRA Systems ASA
Volker Rehrmann, Executive Vice President and CTO, TOMRA Sorting Solutions
David Rosenberg, Co-founder and CEO, AeroFarms
Andrew Russell, Director, Plastic Disclosure Project
MD, MPH Megan Schwarzman, Associate Director, Berkeley Center for Green Chemistry, University of California, Berkeley
Marie Seeger, Fellow Senior Associate, McKinsey & Company
Mark Shayler, Boss, Ape James Sherwood, Research Scientist, Green Chemistry Centre of Excellence, University of York
Joan Marc Simon, Executive Director, Zero Waste Europe
Neil Spencer, Independent Consultant (Resource Management) & Schmidt- MacArthur Fellow
Luca Stamare, Secretary, EPBP Eugene Tseng, J.D., Professor, University of West Los Angeles School of Law; Professor, UCLA Engineering Extension, Recycling/MSW Management Program
Amy Tsui, Associate, McKinsey & Company
Ive Vanderreydt, Team Leader, VITO
Sari Varpa, Knowledge Expert, McKinsey & Company
Dr Michael Warhurst, Executive Director, CHEM Trust
Ken Webster, Head of Innovation, Ellen MacArthur Foundation
Dr Renee Wever, Professor of Industrial Design Engineering, Linköping University
Chris Wilcox, Principal Research Scientist, CSIRO Oceans and Atmosphere Business Unit
Adrian Whyle, Resource Efficiency Senior Manager, PlasticsEurope
PRODUCTION Ruth Sheppard, Terry Gilman, Len Neufeld, Fabienne Stassen, Editors
Sarah Churchill-Slough, Design
14 • • • THE NEW PLASTICS ECONOMY
GLOBAL PARTNERS OF THE ELLEN MACARTHUR FOUNDATION
THE NEW PLASTICS ECONOMY • • • 15
EXECUTIVE SUMMARY Plastics have become the ubiquitous workhorse material of the modern economy — combining unrivalled functional properties with low cost. Their use has increased twenty-fold in the past half-century and is expected to double again in the next 20 years. Today nearly everyone, everywhere, every day comes into contact with plastics — especially plastic packaging, the focus of this report.
While delivering many benefits, the current plastics economy has drawbacks that are becoming more apparent by the day. After a short first-use cycle, 95% of plastic packaging material value, or USD 80–120 billion annually, is lost to the economy. A staggering 32% of plastic packaging escapes collection systems, generating significant economic costs by reducing the productivity of vital natural systems such as the ocean and clogging urban infrastructure. The cost of such after-use externalities for plastic packaging, plus the cost associated with greenhouse gas emissions from its production, is conservatively estimated at USD 40 billion annually — exceeding the plastic packaging industry’s profit pool. In future, these costs will have to be covered. In overcoming these drawbacks, an opportunity beckons: enhancing system effectiveness to achieve better economic and environmental outcomes while continuing to harness the many benefits of plastic packaging. The ‘New Plastics Economy’ offers a new vision, aligned with the principles of the circular economy, to capture these opportunities.
With an explicitly systemic and collaborative approach, the New Plastics Economy aims to overcome the limitations of today’s incremental improvements and fragmented initiatives, to create a shared sense of direction, to spark a wave of innovation and to move the plastics value chain into a positive spiral of value capture, stronger economics, and better environmental outcomes. This report outlines a fundamental rethink for plastic packaging and plastics in general; it offers a new approach with the potential to transform global plastic packaging materials flows and thereby usher in the New Plastics Economy.
16 • • • THE NEW PLASTICS ECONOMY
BACKGROUND TO THIS WORK
This report presents a compelling opportunity to increase the system effectiveness of the plastics economy, illustrated by examples from the plastic packaging value chain. The vision of a New Plastics Economy offers a new way of thinking about plastics as an effective global material flow, aligned with the principles of the circular economy.
The New Plastics Economy initiative is, to our knowledge, the first to have developed a comprehensive overview of global plastic packaging material flows, assessed the value and benefits of shifting this archetypally linear sector to a circular economic model, and identified a practical approach to enabling this shift. This report bases its findings on interviews with over 180 experts and on analysis of over 200 reports.
This report is the result of a three-year effort led by the Ellen MacArthur Foundation, in partnership with the World Economic Forum and supported by McKinsey & Company. Initial interest in the topic of packaging was stimulated by the second Towards the Circular Economy report developed by the Ellen MacArthur Foundation and published in 2013. That report quantified the economic value of shifting to a circular economic approach in the global, fast-moving consumer goods sector, highlighting the linear consumption pattern of that sector, which sends goods worth over USD 2.6 trillion annually to the world’s landfills and incineration plants. The report showed that shifting to a circular model could generate a USD 706 billion economic opportunity, of which a significant proportion is attributable to packaging.
The subsequent Towards the Circular Economy volume 3, published by the Ellen MacArthur Foundation and the World Economic Forum in 2014, and again supported by McKinsey, explored the opportunities and challenges for the circular economy across global supply chains, focusing on several sectors — including plastic packaging. This study triggered the creation of Project MainStream, which formed material-specific working groups, including a plastics working group; this group in turn quickly narrowed its scope of investigation to plastic packaging due to its omnipresence in
daily life all over the globe. The resulting initiative was the first of its type and included participants from across the global plastic packaging value chain. It sought to develop a deep understanding of global plastic packaging material flows and to identify specific ways of promoting the emergence of a new, circular economic model. It was led by a steering board of nine CEOs and included among its participants polymer manufacturers; packaging producers; global brands; representatives of major cities focused on after-use collection; collection, sorting and reprocessing/recycling companies; and a variety of industry experts and academics.
In the course of the MainStream work, an additional key theme presented itself: plastics ‘leaking’ (escaping) from after-use collection systems and the resulting degradation of natural systems, particularly the ocean. Although not the focal point initially, evidence of the looming degradation of marine ecosystems by plastics waste, particularly plastic packaging, has made plastics leakage a priority topic for MainStream. The economic impact of marine ecosystem degradation is only just being established through scientific and socio-economic research and analysis. However, initial findings indicate that the presence of hundreds of millions of tonnes of plastics (of which estimates suggest that packaging represents the majority) in the ocean, whether as microscopic particles or surviving in a recognisable form for hundreds of years, will have profoundly negative effects on marine ecosystems and the economic activities that depend on them.
This report is designed to initiate — not conclude — a deeper exploration of the New Plastics Economy. It provides an initial fact-base, shared language, and sense of the opportunities derived from the application of circular principles, and a plan for concerted action for the next three years and beyond. It also identifies critical questions that could not be answered sufficiently within the scope of this work, but need to be in order to trigger aligned action.
THE NEW PLASTICS ECONOMY • • • 17
THE CASE FOR RETHINKING PLASTICS, STARTING WITH PACKAGING
Plastics and plastic packaging are an integral and important part of the global economy. Plastics production has surged over the past 50 years, from 15 million tonnes in 1964 to 311 million tonnes in 2014, and is expected to double again over the next 20 years, as plastics come to serve increasingly many applications. Plastic packaging, the focus of this report, is and will remain the largest application; currently, packaging represents 26% of the total volume of plastics used. Plastic packaging not only delivers direct economic benefits, but can also contribute to increased levels of resource productivity — for instance, plastic packaging can reduce food waste by extending shelf life and can reduce fuel consumption for transportation by bringing packaging weight down.
While delivering many benefits, the current plastics economy also has important drawbacks that are becoming more apparent by the day.
Today, 95% of plastic packaging material value, or USD 80–120 billion annually, is lost to the economy after a short first use. More than 40 years after the launch of the first universal recycling symbol, only 14% of plastic packaging is collected for recycling. When additional value losses in sorting and reprocessing are factored in, only 5% of material value is retained for a subsequent use. Plastics that do get recycled are mostly recycled into lower- value applications that are not again recyclable after use. The recycling rate for plastics in general is even lower than for plastic packaging, and both are far below the global recycling rates for paper (58%) and iron and steel (70–90%). In addition, plastic packaging is almost exclusively single-use, especially in business-to-consumer applications.
Plastic packaging generates significant negative externalities, conservatively valued by UNEP at USD 40 billion and expected to increase with strong volume growth in a business-as-usual scenario. Each year, at least 8 million tonnes of plastics leak into the ocean — which is equivalent to dumping the contents of one garbage truck into the ocean every minute. If no action is taken, this is expected to increase to two per minute by 2030 and four per minute by 2050. Estimates suggest that plastic packaging represents the major share of this leakage. The best research currently available estimates that there are over 150 million tonnes of plastics in the ocean today. In a business-as-usual scenario, the ocean is expected to contain 1 tonne of plastic for every 3 tonnes of fish by 2025, and by 2050, more plastics than fish (by weight).
The production of plastics draws on fossil feedstocks, with a significant carbon impact
that will become even more significant with the projected surge in consumption. Over 90% of plastics produced are derived from virgin fossil feedstocks. This represents, for all plastics (not just packaging), about 6% of global oil consumption, which is equivalent to the oil consumption of the global aviation sector. If the current strong growth of plastics usage continues as expected, the plastics sector will account for 20% of total oil consumption and 15% of the global annual carbon budget by 2050 (this is the budget that must be adhered to in order to achieve the internationally accepted goal to remain below a 2°C increase in global warming). Even though plastics can bring resource efficiency gains during use, these figures show that it is crucial to address the greenhouse gas impact of plastics production and after-use treatment.
Plastics often contain a complex blend of chemical substances, of which some raise concerns about potential adverse effects on human health and the environment. While scientific evidence on the exact implications is not always conclusive, especially due to the difficulty of assessing complex long- term exposure and compounding effects, there are sufficient indications that warrant further research and accelerated action.
There are many innovation and improvement efforts that show potential, but to date these have proved to be too fragmented and uncoordinated to have impact at scale. Today’s plastics economy is highly fragmented. The lack of standards and coordination across the value chain has allowed a proliferation of materials, formats, labelling, collection schemes, and sorting and reprocessing systems, which collectively hamper the development of effective markets. Innovation is also fragmented. The development and introduction of new packaging materials and formats across global supply and distribution chains is happening far faster than and is largely disconnected from the development and deployment of corresponding after-use systems and infrastructure. At the same time, hundreds, if not thousands, of small-scale local initiatives are launched each year, focused on areas such as improving collection schemes and installing new sorting and reprocessing technologies. Other issues, such as the fragmented development and adoption of labelling standards, hinder public understanding and create confusion.
In overcoming these drawbacks, an opportunity beckons: using the plastics innovation engine to move the industry into a positive spiral of value capture, stronger economics, and better environmental outcomes.
18 • • • THE NEW PLASTICS ECONOMY
THE NEW PLASTICS ECONOMY: CAPTURING THE OPPORTUNITY
The overarching vision of the New Plastics Economy is that plastics never become waste; rather, they re-enter the economy as valuable technical or biological nutrients. The New Plastics Economy is underpinned by and aligns with principles of the circular economy. Its ambition is to deliver better system-wide economic and environmental outcomes by creating an effective after-use plastics economy, drastically reducing the leakage of plastics into natural systems (in particular the ocean) and other negative externalities; and decoupling from fossil feedstocks.
Even with today’s designs, technologies and systems, these ambitions can already be at least partially realised. One recent study found, for example, that in Europe today 53% of plastic packaging could be recycled economically and environmentally effectively. While the exact figure can be debated and depends on, amongst others, the oil price, the message is clear: there are pockets of opportunities to be captured today — and even where not entirely feasible today, the New Plastics Economy offers an attractive target state for the global value chain and governments to collaboratively innovate towards.
Given plastic packaging’s many benefits, both the likelihood and desirability of an across-the-board drastic reduction in the volume of plastic packaging used is clearly low. Nevertheless, reduction should be pursued where possible and beneficial, by dematerialising, moving away from single-use as the default, and substituting by other materials.
CREATE AN EFFECTIVE AFTER-USE PLASTICS ECONOMY.
Creating an effective after-use plastics economy is the cornerstone of the New Plastics Economy and its first priority. Not only is it crucial to capture more material value and increase resource productivity, it also provides a direct economic incentive to avoid leakage into natural systems and will help enable the transition to renewably sourced feedstock by reducing the scale of the transition.
• Radically increase the economics, quality and uptake of recycling. Establish a cross-value chain dialogue mechanism and develop a Global Plastics Protocol 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. Enable secondary markets for recycled materials through the introduction and scale-up of matchmaking mechanisms, industry commitments and/or policy interventions. Focus on key innovation opportunities that have the potential to scale up,
such as investments in new or improved materials and reprocessing technologies. Explore the overall enabling role of policy.
• Scale up the adoption of reusable packaging within business-to-business applications as a priority, but also in targeted business-to- consumer applications such as plastic bags.
• Scale up the adoption of industrially compostable plastic packaging for targeted applications such as garbage bags for organic waste and food packaging for events, fast food enterprises, canteens and other closed systems, where there is low risk of mixing with the recycling stream and where the pairing of a compostable package with organic contents helps return nutrients in the contents to the soil.
DRASTICALLY REDUCE THE LEAKAGE OF PLASTICS INTO NATURAL SYSTEMS AND OTHER NEGATIVE EXTERNALITIES.
Achieving a drastic reduction in leakage would require joint efforts along three axes: improving after-use infrastructure in high-leakage countries, increasing the economic attractiveness of keeping materials in the system and reducing the negative impact of plastic packaging when it does escape collection and reprocessing systems. In addition, efforts related to substances of concern could be scaled up and accelerated.
• Improve after-use collection, storage and reprocessing infrastructure in high-leakage countries. This is a critical first step, but likely not sufficient in isolation. As discussed in the Ocean Conservancy’s 2015 report Stemming the Tide, even under the very best current scenarios for improving infrastructure, leakage would only be stabilised, not eliminated, implying that the cumulative total volume of plastics in the ocean would continue to increase strongly. Therefore, the current report focuses not on the urgently needed short-term improvements in after-use infrastructure in high-leakage countries but rather on the complementary actions required.
• Increase the economic attractiveness of keeping materials in the system. Creating an effective after-use plastics economy as described above contributes to a root-cause solution to leakage. Improved economics make the build-up of after- use collection and reprocessing infrastructure more attractive. Increasing the value of after-use plastic packaging reduces the likelihood that it escapes the collection system, especially in countries with an informal waste sector.
• Steer innovation investment towards creating materials and formats that reduce the negative
THE NEW PLASTICS ECONOMY • • • 19
environmental impact of plastic packaging leakage. Current plastic packaging offers great functional benefits, but it has an inherent design failure: its intended useful life is typically less than one year; however, the material persists for centuries, which is particularly damaging if it leaks outside collection systems, as happens today with 32% of plastic packaging. The efforts described above will reduce leakage, but it is doubtful that leakage can ever be fully eliminated — and even at a leakage rate of just 1%, about 1 million tonnes of plastic packaging would escape collection systems and accumulate in natural systems each year. The ambitious objective would be to develop ‘bio-benign’ plastic packaging that would reduce the negative impacts on natural systems when leaked, while also being recyclable and competitive in terms of functionality and costs. Today’s biodegradable plastics rarely measure up to that ambition, as they are typically compostable only under controlled conditions (e.g. in industrial composters). Further research and game-changing innovation are needed.
• Scale up existing efforts to understand the potential impact of substances raising concerns and to accelerate development and application of safe alternatives.
DECOUPLE PLASTICS FROM FOSSIL FEEDSTOCKS.
Decoupling plastics from fossil feedstocks would allow the plastic packaging industry to complement its contributions to resource productivity during use with a low-carbon production process, enabling it to effectively participate in the low-carbon world that is inevitably drawing closer. Creating an effective after-use economy is key to decoupling because it would, along with dematerialisation levers, reduce the need for virgin feedstock. Another central part of this effort would be the development of renewably sourced materials to provide the virgin feedstock that would still be required to compensate for remaining cycle losses, despite the increased recycling and reuse.
THE NEW PLASTICS ECONOMY DEMANDS A NEW APPROACH
To move beyond small-scale and incremental improvements and achieve a systemic shift towards the New Plastics Economy, existing improvement initiatives would need to be complemented and guided by a concerted, global, systemic and collaborative initiative that matches the scale of the challenge and the opportunity. An independent coordinating vehicle would be needed to drive this initiative. It would need to be set up in a way that recognises that the innovations required for the transition to the New Plastics Economy are driven collaboratively across industry, cities, governments and NGOs. In this initiative, consumer goods companies, plastic packaging producers and plastics manufacturers would play a critical role, because they determine what products and materials are put on the market. Cities control the after-use infrastructure in many places and are often hubs for innovation. Businesses involved in collection, sorting and reprocessing are an equally critical part of the puzzle. Policymakers can play an important role in enabling the transition by realigning incentives, facilitating secondary markets, defining standards and stimulating innovation. NGOs can help ensure that broader social and environmental considerations are taken into account. Collaboration would be required to overcome fragmentation, the chronic lack of alignment between innovation in design and after- use, and lack of standards, all challenges that must be resolved in order to unlock the New Plastics Economy.
The coordinating vehicle would need to bring together the different actors in a cross-value chain dialogue mechanism and drive change by focusing on efforts with compounding effects that together would have the potential to shift the global market. Analysis to date indicates that the initial areas of focus could be:
ESTABLISH THE GLOBAL PLASTICS PROTOCOL AND COORDINATE LARGE-SCALE PILOTS AND DEMONSTRATION PROJECTS. Redesign and converge materials, formats and after-use systems, starting by investigating questions such as:
To what extent could plastic packaging be designed with a significantly smaller set of material/additive combinations, and what would be the economic benefits if this were done?
What would be the potential to design out small- format/low-value plastic packaging such as tear- offs, with challenging after-use economics and especially likely to leak?
What would be the economic benefits if all plastic packaging had common labelling and chemical marking, and these were well aligned with standardised separation and sorting systems?
What if after-use systems, currently shaped by fragmented decisions at municipal or regional level, were rethought and redesigned to achieve optimal scale and economics?
20 • • • THE NEW PLASTICS ECONOMY
What would be the best levers to stimulate the market for recycled plastics?
Set global direction by answering such questions, demonstrate solutions at scale with large-scale pilots and demonstration projects, and drive global convergence (allowing for continued innovation and regional variations) towards the identified designs and systems with proven economics in order to overcome the existing fragmentation and to fundamentally shift after-use collection and reprocessing economics and market effectiveness.
MOBILISE LARGE-SCALE ‘MOON SHOT’ INNOVATIONS. The world’s leading businesses, academics and innovators would be invited to come together and define ‘moon shot’ innovations: focused, practical initiatives with a high potential for significant impact at scale. Areas to look at for such innovations could include the development of bio-benign materials; the development of materials designed to facilitate multilayer reprocessing, such as the use of reversible adhesives based on biomimicry principles; the search for a ‘super- polymer’ with the functionality of today’s polymers and with superior recyclability; chemical marking technologies; and chemical recycling technologies that would overcome some of the environmental and economic issues facing current technologies.
DEVELOP INSIGHTS AND BUILD AN ECONOMIC AND SCIENTIFIC EVIDENCE BASE. Many of the core aspects of plastic material flows and their economics are still poorly understood. While this
report, together with a number of other recent efforts, aims to provide initial answers, more research is required. Initial studies could include: investigating in further detail the economic and environmental benefits of solutions discussed in this report; conducting meta-analyses and research targeted to assess the socio-economic impact of ocean plastics waste and substances of concern (including risks and externalities); determining the scale-up potential for greenhouse gas-based plastics (renewably sourced plastics produced using greenhouse gases as feedstock); investigating the potential role of (and boundary conditions for) energy recovery in a transition period; and managing and disseminating a repository of global data and best practices.
ENGAGE POLICYMAKERS in the development of a common vision of a more effective system, and provide them with relevant tools, data and insights related to plastics and plastic packaging. One specific deliverable could be a plastics toolkit for policymakers, giving them a structured methodology for assessing opportunities, barriers and policy options to overcome these barriers in transitioning towards the New Plastics Economy.
COORDINATE AND DRIVE COMMUNICATION of the nature of today’s situation, the vision of the New Plastics Economy, best practices and insights, as well as specific opportunities and recommendations, to stakeholders acting along the global plastic packaging value chain.
THE NEW PLASTICS ECONOMY • • • 21
22 • • • THE NEW PLASTICS ECONOMY
PART I SUMMARY OF FINDINGS AND CONCLUSIONS
THE NEW PLASTICS ECONOMY • • • 23
24 • • • THE NEW PLASTICS ECONOMY
1 THE CASE FOR RETHINKING PLASTICS, STARTING WITH PACKAGING
Because of their combination of unrivalled properties and low cost, plastics are the workhorse material of the modern economy. Their use has increased twenty-fold in the past half-century, and is expected to double again in the next 20 years. Today nearly everyone, everywhere, every day comes into contact with plastics — especially plastic packaging, on which the report focuses.
While delivering many benefits, the current plastics economy has drawbacks that are becoming more apparent by the day. After a short first-use cycle, 95% of plastic packaging material value, or USD 80–120 billion annually, is lost to the economy. A staggering 32% of plastic packaging escapes collection systems, generating significant economic costs by reducing the productivity of vital natural systems such as the ocean and clogging urban infrastructure. The cost of such after-use externalities for plastic packaging, plus the cost associated with greenhouse gas emissions from its production, has been estimated conservatively by UNEP at USD 40 billion — exceeding the plastic packaging industry’s profit pool. In future, these costs will have to be covered. In overcoming these drawbacks, an opportunity beckons: enhancing system effectiveness to achieve better economic and environmental outcomes while continuing to reap the many benefits of plastic packaging.
1.1 PLASTICS AND PLASTIC PACKAGING ARE AN INTEGRAL AND IMPORTANT PART OF THE GLOBAL ECONOMY
Today, imagining a world without plastics1 is nearly impossible. Plastics are increasingly used across the economy, serving as a key enabler for sectors as diverse as packaging, construction, transportation, healthcare and electronics. Plastics now make up roughly 15% of a car2 by weight and about 50% of the Boeing Dreamliner.3
Plastics have brought massive economic benefits to these sectors, thanks to their combination of low cost, versatility, durability and high strength- to-weight ratio.4 The success of plastics is reflected in the exponential growth in their production over the past half-century (Figure 1). Since 1964, plastics production has increased twenty-fold, reaching 311 million tonnes in 2014, the equivalent of more than 900 Empire State Buildings.5 Plastics production is expected to double again in 20 years and almost quadruple by 2050. Plastic packaging — the focus of this report — is plastics’ largest application, representing 26% of the total volume.6 As packaging materials, plastics are especially inexpensive, lightweight and high performing. Plastic packaging can also benefit the environment:
its low weight reduces fuel consumption in transportation, and its barrier properties keep food fresh longer, reducing food waste. As a result of these characteristics, plastics are increasingly replacing other packaging materials.
Between 2000 and 2015, the share of plastic packaging as a share of global packaging volumes has increased from 17% to 25%7 driven by a strong growth in the global plastic packaging market8 of 5%9 annually. In 2013, the industry put 78 million tonnes of plastic packaging on the market, with a total value of USD 260 billion.10
Plastic packaging volumes are expected to continue their strong growth, doubling within 15 years and more than quadrupling by 2050, to 318 million tonnes annually — more than the entire plastics industry today.11 The main plastic resin types and their packaging applications are shown in Figure 2.
THE NEW PLASTICS ECONOMY • • • 25
FIGURE 1: GROWTH IN GLOBAL PLASTICS PRODUCTION 1950–2014
0
50
100
150
200
250
300
1950 1960 1970 1980 1990 2000 2010 2014
350
M IL
L IO
N T
O N
N E
S
311 MT (2014)
20 x
15 MT (1964)
Note: Production from virgin fossil-based feedstock only (does not include bio-based, greenhouse gas-based or recycled feedstock). Source: PlasticsEurope, Plastics – the Facts 2013 (2013); PlasticsEurope, Plastics – the Facts 2015 (2015).
FIGURE 2: MAIN PLASTIC RESIN TYPES AND THEIR APPLICATIONS IN PACKAGING
1
PET
2
HDPE
3
PVC
4
LDPE
5
PP
6
PS
EPS
7
OTHERS
6
WATER AND SOFT DRINK BOTTLES, SALAD DOMES, BISCUIT TRAYS, SALAD DRESSING AND PEANUT BUTTER CONTAINERS
MILK BOTTLES, FREEZER BAGS, DIP TUBS, CRINKLY SHOPPING BAGS, ICE CREAM CONTAINERS, JUICE BOTTLES, SHAMPOO, CHEMICAL AND DETERGENT BOTTLES
COSMETIC CONTAINERS, COMMERCIAL CLING WRAP
SQUEEZE BOTTLES, CLING WRAP, SHRINK WRAP, RUBBISH BAGS
MICROWAVE DISHES, ICE CREAM TUBS, POTATO CHIP BAGS, AND DIP TUBS
CD CASES, WATER STATION CUPS, PLASTIC CUTLERY, IMITATION ‘CRYSTAL GLASSWARE’, VIDEO CASES
FOAMED POLYSTYRENE HOT DRINK CUPS, HAMBURGER TAKE-AWAY CLAMSHELLS, FOAMED MEAT TRAYS, PROTECTIVE PACKAGING FOR FRAGILE ITEMS
WATER COOLER BOTTLES, FLEXIBLE FILMS, MULTI-MATERIAL PACKAGING
Source: Project MainStream analysis.
26 • • • THE NEW PLASTICS ECONOMY
1.2 TODAY’S PLASTICS ECONOMY HAS IMPORTANT DRAWBACKS
1.2.1 Plastic packaging is an iconic linear application with USD 80–120 billion annual material value loss
Today, 95% of plastic packaging material value or USD 80–120 billion annually is lost to the economy after a short first use. More than 40 years after the launch of the well-known recycling symbol, only 14% of plastic packaging is collected for recycling. When additional value losses in sorting and reprocessing are factored in, only 5% of material value is retained for a subsequent use (see Figure 3). Plastics that do get recycled are mostly recycled into lower-value applications that are not again recyclable after use. The recycling rate for plastics in general is even lower than for plastic packaging, and both are far below the global recycling rates for paper (58%)12 and iron and steel (70–90%).13 PET,14 used in beverage bottles, has a higher recycling rate than any other type of plastic, but even this success story is only a modest one: globally, close to half of PET is not collected for recycling, and only 7% is recycled bottle-to-bottle.15 In addition, plastic packaging is almost exclusively single-use, especially in business-to-consumer applications.
FIGURE 3: PLASTIC PACKAGING MATERIAL VALUE LOSS AFTER ONE USE CYCLE
100
36
0
14
V A
L U
E Y
IE L
D 1 (%
)
COLLECTED FOR RECYCLING (%)
64%
86%
100
95% LOSS (USD 80–120 billion)2
1 Value yield = volume yield * price yield, where volume yield = output volumes / input volumes, and price yield = USD per tonne of reprocessed material / USD per tonne of virgin material 2 Current situation based on 14% recycling rate, 72% volume yield and 50% price yield. Total volume of plastic packaging of 78 Mt, given a weighted average price of 1,100–1,600 USD/t Source: Expert interviews; Plastic News; Deloitte, Increased EU Plastics Recycling Targets: Environmental, Economic and Social Impact Assessment Final Report (2015); The Plastics Exchange; plasticker; EUWID; Eurostat.
A comprehensive overview of global flows of plastic packaging materials can be found in Figure 4. In addition to the 14% of plastic packaging collected for recycling, another 14% is sent to an incineration
and/or energy recovery process, mostly through incineration in mixed solid waste incinerators, but also through the combustion of refuse-derived fuel in industrial processes such as cement kilns, and (at a limited scale) pyrolysis or gasification. While recovering energy is a good thing in itself, this process still loses the embedded effort and labour that went into creating the material. For energy recovery in mixed solid waste incinerators, in particular, there are also concerns that over- deployment of such incineration infrastructure can create a ‘lock-in’ effect that, because of the large capital investments but relatively low operating costs involved in building up and running such infrastructure, can effectively push higher-value mechanisms such as recycling out of the market. Many organisations have also raised concerns about the pollutants that are generated during energy recovery processes, which can have direct negative health effects if adequate pollution controls are not in place, as is often the case in the developing world. Also, even if appropriate pollution controls are in place, the resulting by-products need to be disposed of.
Furthermore, an overwhelming 72% of plastic packaging is not recovered at all: 40% is landfilled, and 32% leaks out of the collection system — that is, either it is not collected at all, or it is collected but then illegally dumped or mismanaged.
This analysis of the global flows of plastic packaging materials is based on an aggregation of fragmented data sets, often with varying definitions and scope. The analysis not only reveals a significant opportunity to increase circularity and capture material value, but also highlights the need for better alignment of reporting standards and consolidation on a global level. Specific efforts could be dedicated to improving the data from developing markets with informal waste sectors.
THE NEW PLASTICS ECONOMY • • • 27
FIGURE 4: GLOBAL FLOWS OF PLASTIC PACKAGING MATERIALS IN 2013
78 MILLION TONNES 40% LANDFILLED
14% INCINERATION AND/ OR ENERGY RECOVERY
32% LEAKAGE
98% VIRGIN FEEDSTOCK
4% PROCESS LOSSES
8% CASCADED RECYCLING2
2% CLOSED-LOOP RECYCLING1
14% COLLECTED FOR RECYCLING
(ANNUAL PRODUCTION)
1 Closed-loop recycling: Recycling of plastics into the same or similar-quality applications 2 Cascaded recycling: Recycling of plastics into other, lower- value applications Source: Project Mainstream analysis – for details please refer to Appendix A.
1.2.2 Production relies on finite stocks of fossil feedstocks
The plastics industry as a whole is highly reliant on finite stocks of oil and gas, which make up more than 90% of its feedstock. For plastic packaging, this number is even higher, as the recycling of plastics into packaging applications is limited. Sources vary on the share of oil production used to make plastics, but a combination of extensive literature research and modelling indicates that 4–8% of the world’s oil production is used to make plastics (not just packaging), with 6% as the best estimate; roughly half of this is used as material feedstock and half as fuel for the production process.16 This is equivalent to the oil consumption
of the global aviation sector17 and is in addition to the natural gas used as material feedstock and fuel. If the current strong growth of plastics usage continues as expected, the consumption of oil by the entire plastics sector will account for 20% of the total consumption by 2050.18 The use of oil by the plastics industry is expected to increase in line with plastics production (growing by 3.5–3.8% annually); this is much faster than the growth in overall demand for oil, which is expected to increase by only 0.5% annually.19
28 • • • THE NEW PLASTICS ECONOMY
1.2.3 Plastics and packaging generate significant negative externalities
The externalities related to the use of plastics and plastic packaging are concentrated in three areas: degradation of natural systems as a result of leakage, especially in the ocean; greenhouse gas emissions resulting from production and after-use incineration; and health and environmental impacts from substances of concern. Valuing Plastic, a report by UN Environment Programme and the Plastics Disclosure Project (PDP) based on research by Trucost estimated the total natural capital cost
of plastics in the consumer goods industry at USD 75 billion, of which USD 40 billion was related to plastic packaging, exceeding the profit pool of the plastic packaging industry.20
The continued strong growth expected in the production and use of both plastics in general and plastic packaging in particular will spread the benefits of plastics to ever more people and in ever more useful applications; however, if production and use continue within the current linear framework, these negative externalities will be exacerbated, as laid out in Figure 5 and detailed below.
FIGURE 5: FORECAST OF PLASTICS VOLUME GROWTH, EXTERNALITIES AND OIL CONSUMPTION IN A BUSINESS-AS-USUAL SCENARIO
RATIO OF PLASTICS TO FISH IN THE
OCEAN1 (BY WEIGHT)
311 MT 1,124 MT
1:5 >1:1
6% 20%
2014 2050
OIL OIL
1% 15%
PLASTICS’ SHARE OF GLOBAL OIL CONSUMPTION2
PLASTICS’ SHARE OF CARBON
BUDGET3
PLASTICS PRODUCTION
1 Fish stocks are assumed to be constant (conservative assumption) 2 Total oil consumption expected to grow slower (0.5% p.a.) than plastics production (3.8% until 2030 then 3.5% to 2050) 3 Carbon from plastics includes energy used in production and carbon released through incineration and/or energy recovery after-use. The latter is based on 14% incinerated and/or energy recovery in 2014 and 20% in 2050. Carbon budget based on 2 degrees scenario Source: PlasticsEurope; ICIS Supply and Demand; IEA, World Energy Outlook (2015) (Global GDP projection 2013–2040 and Central ‘New Policies’ scenario oil demand projection 2014-2040, both assumed to continue to 2050); Ocean Conservancy and McKinsey Center for Business and Environment, Stemming the Tide: Land-based strategies for a plastic-free ocean (2015); J. R. Jambeck et al., Plastic waste inputs from land into the ocean (Science, 13 February 2015); J. Hopewell et al., Plastics recycling: Challenges and opportunities (Philosophical Transactions of the Royal Society B, 2009); IEA, CO
2 emissions from fuel combustion (2014); IEA, World Energy
Outlook Special Report: Energy and Climate Change (2015); Carbon Tracker Initiative, Unburnable Carbon (2013).
THE NEW PLASTICS ECONOMY • • • 29
Degradation of natural systems as a result of leakage, especially in the ocean. At least 8 million tonnes of plastics leak into the ocean each year21 — which is equivalent to dumping the contents of one garbage truck into the ocean per minute. If no action is taken, this will increase to two per minute by 2030 and four per minute by 2050.22 Estimates and expert interviews suggest that packaging represents the major share of the leakage. Not only is packaging the largest application of plastics with 26% of volumes, its small size and low residual value also makes it especially prone to leakage. One indicative data point is that plastic packaging comprises more than 62% of all items (including non-plastics) collected in international coastal clean-up operations.23
Plastics can remain in the ocean for hundreds of years in their original form and even longer in small particles, which means that the amount of plastic in the ocean cumulates over time. The best research currently available estimates that there are over 150 million tonnes of plastic waste in the ocean today.24 Without significant action, there may be more plastic than fish in the ocean, by weight, by 2050.25 Even by 2025, the ratio of plastic to fish in the ocean is expected to be one to three, as plastic stocks in the ocean are forecast to grow to 250 million tonnes in 2025.26 As pointed out in the report Stemming the Tide, even if concerted abatement efforts were made to reduce the flow of plastics into the ocean, the volume of plastic waste going into the ocean would stabilise rather than decline, implying a continued increase in total ocean plastics volumes, unless those abatement efforts were coupled with a longer-term systemic solution, including the adoption of principles of the circular economy.
Ocean plastics significantly impact maritime natural capital. While the total economic impact is still unclear, initial studies suggest that it is at least in the billions of dollars. According to Valuing Plastic the annual damage of plastics to marine ecosystems is at least USD 13 billion per year and Asia-Pacific Economic Cooperation (APEC) estimates that the cost of ocean plastics to the tourism, fishing and shipping industries was USD 1.3 billion in that region alone.27 Even in Europe, where leakage is relatively limited, potential costs for coastal and beach cleaning could reach EUR 630 million (USD 695 million) per year.28 In addition to the direct economic costs, there are potential adverse impacts on human livelihoods and health, food chains and other essential economic and societal systems.
Leaked plastics can also degrade other natural systems, such as forests and waterways, and induce direct economic costs by clogging sewers and other urban infrastructure. The economic costs of these impacts need further assessment.
Greenhouse gas emissions. As pointed out above, plastic packaging can in many cases reduce the emission of greenhouse gases during its
use phase. Yet, with 6% of global oil production devoted to the production of plastics (of which packaging represents a good quarter), considerable greenhouse gas emissions are associated with the production and sometimes the after-use pathway of plastics. In 2012, these emissions amounted to approximately 390 million tonnes of CO
2 for all plastics (not just packaging).29
According to Valuing Plastic, the manufacturing of plastic feedstock, including the extraction of the raw materials, gives rise to greenhouse gas emissions with natural capital costs of USD 23 billion.30 The production phase, which consumes around half of the fossil feedstocks flowing into the plastics sector, leads to most of these emissions.31 The remaining carbon is captured in the plastic products themselves, and its release in the form of greenhouse gas emissions strongly depends on the products’ after-use pathway.32 Incineration and energy recovery result in a direct release of the carbon (not taking into account potential carbon savings by replacing another energy source). If the plastics are landfilled, this feedstock carbon could be considered sequestered. If it is leaked, carbon might be released into the atmosphere over many (potentially, hundreds of) years.33
This greenhouse gas footprint will become even more significant with the projected surge in consumption. If the current strong growth of plastics usage continues as expected, the emission of greenhouse gases by the global plastics sector will account for 15% of the global annual carbon budget by 2050, up from 1% today.34 The carbon budget for the global economy is based on restricting global warming to a maximum increase of 2°C by 2100.35 Even though plastics can bring real resource efficiency gains and help reduce carbon emissions during use, these figures show that it is crucial to address the greenhouse gas impact of plastics production and after-use treatment.
Substances of concern. Plastics are made from a polymer mixed with a complex blend of additives such as stabilisers, plasticisers and pigments, and might contain unintended substances in the form of impurities and contaminants. Substances such as bisphenol A (BPA) and certain phthalates, which are used as plasticisers in polyvinyl chloride (PVC), have already raised concerns about the risk of adverse effects on human health and the environment, concerns that have motivated some regulators and businesses to act.36 In addition, there are uncertainties about the potential consequences of long-term exposure to other substances found in today’s plastics, about their combined effects and about the consequences of leakage into the biosphere. The 150 million tonnes of plastics currently in the ocean include roughly 23 million tonnes of additives, of which some raise concern.37 While the speed at which these additives leach out of the plastic into the environment is still subject to debate, estimates suggest that about 225,000 tonnes of such additives could be released into
30 • • • THE NEW PLASTICS ECONOMY
the ocean annually. This number could increase to 1.2 million tonnes per year by 2050.38 In addition, substances of concern might enter the environment when plastics and plastic packaging are combusted without proper controls, a common practice in many developing economies. This suggests the need for additional research and more transparency.
1.2.4 Current innovation and improvement efforts fail to have impact at scale
There are many innovation and improvement efforts that show potential, but to date these have proven to be too fragmented and uncoordinated to have impact at scale. Today’s plastics economy is highly fragmented. The lack of standards and coordination across the value chain has allowed the proliferation of materials, formats, labelling, collection schemes, and sorting and reprocessing systems, which collectively hamper the development of effective markets. Innovation is also fragmented. The development and introduction of new packaging materials and formats across global supply and distribution chains is happening
far faster than and is largely disconnected from the development and deployment of corresponding after-use systems and infrastructure. At the same time, hundreds, if not thousands, of small-scale local initiatives are being launched each year, focused on areas such as improving collection schemes and installing new sorting and reprocessing technologies. Other issues, such as the fragmented development and adoption of labelling standards, hinder public understanding and create confusion.
Through overcoming these drawbacks, an opportunity beckons: moving the plastics industry into a positive spiral of value capture, stronger economics, and better environmental outcomes. Actors across the plastic packaging value chain have proven time and again their capacity to innovate. Now, harnessing this capability to improve the circularity of plastic packaging — while continuing to expand its functionality and reduce its cost — could create a new engine to move towards a system that works: a New Plastics Economy.
THE NEW PLASTICS ECONOMY • • • 31
2 THE NEW PLASTICS ECONOMY: CAPTURING THE OPPORTUNITY
The overarching vision of the New Plastics Economy is that plastics never become waste; rather, they re-enter the economy as valuable technical or biological nutrients. The New Plastics Economy is underpinned by and aligns with circular economy principles. It sets the ambition to deliver better system-wide economic and environmental outcomes by creating an effective after-use plastics economy (the cornerstone and priority); by drastically reducing the leakage of plastics into natural systems (in particular the ocean); and by decoupling plastics from fossil feedstocks.
2.1 THE NEW PLASTICS ECONOMY PROPOSES A NEW WAY OF THINKING
The New Plastics Economy builds on and aligns with the principles of the circular economy, an industrial system that is restorative and regenerative by design (see Box 1). The New Plastics Economy has three main ambitions (see Figure 6):
1 Create an effective after-use plastics economy by improving the economics and uptake of recycling, reuse and controlled biodegradation for targeted applications. This is the cornerstone of the New Plastics Economy and its first priority, and helps realise the two following ambitions.
Drastically reduce leakage of plastics into natural systems (in particular the ocean) and other negative externalities.
3 Decouple plastics from fossil feedstocks by — in addition to reducing cycle losses and dematerialising — exploring and adopting renewably sourced feedstocks. FIGURE 6: AMBITIONS OF THE NEW PLASTICS ECONOMY
1 Anaerobic digestion 2 The role of, and boundary conditions for, energy recovery in the New Plastics Economy need to be further investigated Source: Project Mainstream analysis.
RADICALLY IMPROVED ECONOMICS & QUALITY
AD 1 AND
/OR CO
MP OS
TI NG
RECYCLING
DESIGN & PRODUCTION
USE
DRASTICALLY REDUCE THE LEAKAGE OF PLASTICS INTO NATURAL SYSTEMS & OTHER NEGATIVE EXTERNALITIES
DECOUPLE PLASTICS FROM FOSSIL FEEDSTOCKS
CREATE AN EFFECTIVE AFTER-USE PLASTICS ECONOMY 1
23
REUSE
RENEWABLY SOURCED VIRGIN FEEDSTOCK ENERGY RECOVERY1
LEAKAGE
OTHER MATERIAL STREAMS
ENERGY RECOVERY2
2
32 • • • THE NEW PLASTICS ECONOMY
Even with today’s designs, technologies and systems, these ambitions can already be at least partially realised. One recent study found, for example, that in Europe already today 53% of plastic packaging could be recycled ‘eco- efficiently’.39 While the exact figure can be debated and depends on, amongst others, the oil price, the message is clear: there are pockets of opportunities to be captured today — and even where not entirely feasible today, the New Plastics Economy offers an
attractive target state for the global value chain and governments to collaboratively innovate towards. This will not happen overnight. Redesigning materials, formats and systems, developing new technologies and evolving global value chains may take many years. But this should not discourage stakeholders or lead to delays — on the contrary, the time to act is now.
Box 1: The circular economy: Principles and benefits
The circular economy is an industrial system that is restorative and regenerative by design. It rests on three main principles: preserving and enhancing natural capital, optimising resource yields, and fostering system effectiveness (see Figure 7).
Multiple research efforts and the identification of best-practice examples have shown that a transition towards the circular economy can bring about the lasting benefits of a more innovative, resilient, and productive economy. For example, the 2015 study Growth Within: A Circular Economy Vision for a Competitive Europe estimated that a shift to the circular economy development path in just three core areas — mobility, food and built environment — would generate annual total benefits for Europe of around EUR 1.8 trillion (USD 2.0 trillion).40
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