Plastic packaging: Are producers ready for their 'diesel moment'?
As CDP's new report warns that "rapid process innovations" are needed to help the chemical sector align to the goals of the Paris Agreement, the organisation's head of investor research Carole Ferguson tells edie that plastic packaging is on the cusp of regulatory and consumer backlash.
The chemical sector is deeply embedded across all supply chains. Around 95% of global manufactured products rely on chemicals and a key output from the sector is plastic packaging – accountable for more than a quarter of plastic use.
The issues surrounding plastic packaging are well-versed. According to the Ellen MacArthur Foundation, 95% of the value of plastic packaging material, worth $80-120bn annually, is lost to the economy and on the current track, there could be more plastic than fish in the ocean (by weight) by 2050.
CDP’s “Catalyst for change” report notes that chemical companies are able to provide innovative solutions for the climate impacts of products, with around 20% of revenues from 22 of the largest chemical companies all coming from these solutions. But the $83bn generated through innovative solutions has done little to stem the amount of plastic packaging ending up in landfill or in the environment.
The report notes that nearly eight million metric tonnes of plastic packaging weight – equivalent to the weight of 2,000 Eiffel Towers – ends up in the oceans each year. According to CDP’s head of investor research Carole Ferguson, plastic packaging producers could face a regulatory backlash similar to the one faced by carmakers in the wake of the dieselgate scandal.
“The reason I coined the ‘diesel moment’ is because I see a combination of pushback from consumers as much as regulators, in saying this is something that needs to be dealt with,” Ferguson told edie. “I think it's actually working, so many countries are saying they'll implement a ban. It's a good way forward.
“From a global perspective the issue is who will invest in infrastructure and who will pay for it. A country like Kenya is taking some dramatic steps, they've banned plastic bags - that’s the push back you're going to have to see for companies to take it seriously.”
Despite the majority of plastics being recyclable, it is still being created through a linear approach. Plastics production has grown by more than 20 times in the past 50 years, and CDP anticipates the amount to double, because plastic is “engrained” into everyday use.
Plastics also consume the majority of petrochemical products, using 6% of global oil production annually. CDP also notes that plastics will account for 15% of the global carbon budget based on a business as usual approach by 2050, with its share of oil production set to grow to 20%.
Ferguson noted that numerous solutions could be implemented to improve the situation, but that pushing the blame down the value chain isn’t going to wield results. Reducing the amount of plastic used and improving recycling and collection methods are both obvious methods, but Ferguson suggested that switching from a fossil fuel feedstock to a bio-based solution could have a big impact – if producers get the supply chain correct.
“You have to look more deeply,” Ferguson said. “You can't replace fossil fuel feedstocks that go into plastic very easily, because bio-feedstock aren't sufficiently available from a sustainability perspective - it has to compete with agriculture and other uses and its more expensive to produce.
“It's a move in the right direction, but it doesn’t perform as well as it should do. The message is firstly to reduce the amount we use and we need to find ways to make them more biodegradable, but also retaining the material value in plastics in a better way. We might be better at plastic recycling in certain countries, but it’s not that well-handled globally, and it is a global issue. What people dump in one country can turn up in on beach elsewhere.”
Currently, bio-based plastics account for less than 1% of global plastics production. Demand is being driven a high level through the likes of Coca-Cola (which wants to increase its bio-based material use from 30% to 100% in the future) but it is regulatory and consumer levers that are likely to have the biggest immediate impact.
In a similar vein to how growing consumer awareness of tailpipe emissions coupled with scandals from within the sector led to a regulatory crackdown on diesel vehicles, Ferguson claimed that the rise in campaigns regarding ocean plastic waste was already bearing fruit through tougher policy landscapes.
Alongside Kenya’s plastic bag ban, around 20 countries have implemented some form of deposit scheme for plastic packaging. Looking ahead, Ferguson suggested that businesses across the plastic packaging supply chain would have to come together to grow new solutions as policy begins to restrict the use of plastic.
“It's not an issue for one part of the sector, the responsibility lies all the way through and also consumers, they have a choice too,” Ferguson added. “Businesses need to decompose where there's a reputational risk or whether there isn't sufficient pressure in the value chain. With vehicles, its clearer because you've got car companies and regulators setting the targets, but chemicals has a bigger value chain where the original producers might just be at one stage.
“Plastic is only 25% packaging use, a lot of companies that we are looking at are providing engineered plastics and resins, which come from the same chemical root into cars and energy efficiency, we shouldn't forget the big picture. But, if volumes really fall off, the companies taking this as business as usual will get the message.”