(Repeats adding dropped 's' to Plastics Industry Association)
* COVID-19 hit plastic recycling
* Oil industry looks to new plastic for growth
* Invests hundreds of billions in petchems mainly for Asia
* That spend dwarfs industry effort to tackle plastic waste
By Joe Brock
Oct 5 (Reuters) - The coronavirus pandemic has sparked a
rush for plastic.
From Wuhan to New York, demand for face shields, gloves,
takeaway food containers and bubble wrap for online shopping has
surged. Since most of that cannot be recycled, so has the waste.
But there is another consequence. The pandemic has
intensified a price war between recycled and new plastic, made
by the oil industry. It's a war recyclers worldwide are losing,
price data and interviews with more than two dozen businesses
across five continents show.
"I really see a lot of people struggling," Steve Wong, CEO
of Hong-Kong based Fukutomi Recycling and chairman of the China
Scrap Plastics Association told Reuters in an interview. "They
don't see a light at the end of the tunnel."
The reason: Nearly every piece of plastic begins life as a
fossil fuel. The economic slowdown has punctured demand for oil.
In turn, that has cut the price of new plastic.
Already since 1950, the world has created 6.3 billion tonnes
of plastic waste, 91% of which has never been recycled,
according to a 2017 study published in the journal Science. Most
is hard to recycle, and many recyclers have long depended on
government support. New plastic, known to the industry as
"virgin" material, can be half the price of the most common
recycled plastic.
Since COVID-19, even drinks bottles made of recycled plastic
– the most commonly recycled plastic item – have become less
viable. The recycled plastic to make them is 83% to 93% more
expensive than new bottle-grade plastic, according to market
analysts at the Independent Commodity Intelligence Services
(ICIS).
The pandemic hit as politicians in many countries promised
to wage war on waste from single-use plastics. China, which used
to import more than half the world's traded plastic waste,
banned imports of most of it in 2018. The European Union plans
to ban many single-use plastic items from 2021. The U.S. Senate
is considering a ban on single-use plastic and may introduce
legal recycling targets.
Plastic, most of which does not decompose, is a significant
driver of climate change.
The manufacture of four plastic bottles alone releases the
equivalent greenhouse gas emissions of driving one mile in a
car, according to the World Economic Forum, based on a study by
the drinks industry. The United States burns six times more
plastic than it recycles, according to research in April 2019 by
Jan Dell, a chemical engineer and former vice chair of the U.S.
Federal climate committee.
But the coronavirus has accentuated a trend to create more,
not less, plastic trash.
The oil and gas industry plans to spend around $400 billion
over the next five years on plants to make raw materials for
virgin plastic, according to a study in September by Carbon
Tracker, an energy think tank.
This is because, as a growing fleet of electric vehicles and
improved engine efficiency reduce fuel demand, the industry
hopes rising demand for new plastic can assure future growth in
demand for oil and gas. It is counting on soaring use of
plastic-based consumer goods by millions of new middle-class
consumers in Asia and elsewhere.
"Over the next few decades, population and income growth are
expected to create more demand for plastics, which help support
safety, convenience and improved living standards," ExxonMobil
spokeswoman Sarah Nordin told Reuters.
Most companies say they share concerns about plastic waste
and are supporting efforts to reduce it. However, their
investments in these efforts are a fraction of those going into
making new plastic, Reuters found.
Reuters surveyed 12 of the largest oil and chemicals firms
globally – BASF, Chevron, Dow, Exxon, Formosa Plastics, INEOS,
LG Chem, LyondellBasell, Mitsubishi Chemical, SABIC, Shell and
Sinopec. Only a handful gave details of how much they are
investing in waste reduction. Three declined to comment in
detail or did not respond.
Most said they channel their efforts through a group called
the Alliance to End Plastic Waste, which is also backed by
consumer goods companies, and which has pledged $1.5 billion
over the next five years on that effort. Its 47 members, most of
whom are in the plastics industry, had combined annual revenue
of almost $2.5 trillion last year, according to a Reuters tally
of company results.
In total, commitments by the Alliance and the companies
surveyed amounted to less than $2 billion over five years, or
$400 million a year, the Reuters survey found. That's a fraction
of their sales.
Plans to invest so heavily in new plastic are "quite a
concerning move," said Lisa Beauvilain, Head of Sustainability
at Impax Asset Management, a fund with $18.5 billion under
management.
"Countries with often undeveloped waste management and
recycling infrastructure will be ill-equipped to handle even
larger volumes of plastic waste," she said. "We are literally
drowning in plastics."
Since the coronavirus struck, recyclers worldwide told
Reuters, their businesses have shrunk, by more than 20% in
Europe, by 50% in parts of Asia and as much as 60% for some
firms in the United States.
Greg Janson, whose St. Louis, Missouri, recycling company
QRS has been in business for 46 years, says his position would
have been unimaginable a decade ago: The United States has
become one of the cheapest places to make virgin plastic, so
more is coming onto the market.
"The pandemic exacerbated this tsunami," he said.
The oil and chemicals companies that Reuters surveyed said
plastic can be part of the solution to global challenges related
to a growing population. Six said they were also developing new
technologies to reuse waste plastic.
Some said other packaging products can cause more emissions
than plastics; because plastic is light, it is indispensable for
the world's consumers and can help reduce emissions. A few
called on governments to improve waste management
infrastructure.
"Higher production capacities do not necessarily mean more
plastic waste pollution," said a spokesman at BASF SE of
Germany, the world's biggest chemicals producer, adding that it
has been innovating for many years in packaging materials to
reduce the resources required.
The new plastic wave is breaking on shores across the globe.
MAKE PLASTIC
Richard Pontillas, 33, runs a family-owned "sari-sari" or
"sundries" store in Quezon City, the most populous metropolis in
the Philippines. The liquid goods he sells used to be packaged
in glass. Many customers, in fact, brought in their own bottles
to be refilled.
Merchants like him are among key targets for the plastic
industry, looking to extend a trend established after 1907, when
Belgian-American chemist Leo Baekeland invented Bakelite. Since
World War Two, mass-produced plastic has fuelled economic growth
and spawned a new era of consumerism and convenience packaging.
"Many years ago ... we relied on goods repackaged in bottles
and plastic bags," said Pontillas, whose store sells rice,
condiments and sachets of coffee, chocolate drink and
seasonings.
Today, thousands of small-scale vendors in the developing
world stock daily goods in plastic pouches, or sachets, which
hang in strips from the roofs of roadside shacks and cost a few
cents a go.
Already, 164 million such sachets are used every day in the
Philippines, according to the Global Alliance for Incinerator
Alternatives, an NGO. That's nearly 60 billion a year.
Consumer goods firms including Nestle and P&G say they are
working hard to make their packaging either recyclable or
reusable. For example, P&G said it has a project in schools in
the Manila region which aims to collect one million sachets for
"upcycling."
But sachets are very difficult to recycle. They are just one
form of pollution that the pandemic is adding to, clogging
drains, polluting water, suffocating marine life and attracting
rodents and disease-carrying insects.
So are face masks, which are made partly from plastic.
In March, China used 116 million of them – 12 times more
than in February, official data show.
Total production of masks in China is expected to exceed 100
billion in 2020, according to a report by Chinese consultancy
iiMedia Research. The United States generated an entire year's
worth of medical waste in two months at the height of the
pandemic, according to another consultancy, Frost & Sullivan.
Even as the waste mounts, much is at stake for the oil
industry.
Exxon forecasts that demand for petrochemicals will rise by
4% a year over the next few decades, the company said in an
investor presentation in March.
And oil's share of energy for transport will fall from more
than 90% in 2018 to just under 80% or as low as 20% by 2050, BP
Plc said in its annual market report in September.
Oil companies worry that environmental concerns may blunt
petrochemical growth.
The U.N. said last year that 127 countries have adopted bans
or other laws to manage plastic bags. BP's chief economist
Spencer Dale said in 2018 that global plastic bans could result
in 2 million barrels per day of lower oil demand growth by 2040
– around 2% of current daily demand. The company declined
further comment.
USE PLASTIC
This year alone, Exxon, Royal Dutch Shell Plc and BASF have
announced petrochemical plant investments in China worth a
combined $25 billion, tapping into rising demand for consumer
goods in the world's most populous country.
An additional 176 new petrochemical plants are planned in
the next five years, of which nearly 80% will be in Asia, energy
consultancy Wood Mackenzie says.
In the United States since 2010, energy companies have
invested more than $200 billion in 333 plastic and other
chemical projects, according to the American Chemistry Council
(ACC), an industry body.
Those investments have come as the U.S. industry sought to
capitalise on a sudden abundance of cheap natural gas released
by the shale revolution.
The industry says disposable plastics have saved lives.
"Single-use plastics have been the difference between life
and death during this pandemic," Tony Radoszewski, president and
CEO of the Plastics Industry Association (PLASTICS), the
industry's lobbying group in the United States, told Reuters.
Bags for intravenous solutions and ventilators require
single-use plastics, he said.
"Hospital gowns, gloves and masks are made from safe,
sanitary plastic."
In March, PLASTICS wrote to the U.S. Department of Health
and Human Services, calling for a rollback of plastic bag bans
on health grounds. It said plastic bags are safer because germs
live on reusable bags and other substances.
Researchers led by the U.S. National Institute of Allergy
and Infectious Diseases, a U.S. government agency, found later
that month that the coronavirus was still active on plastic
after 72 hours, compared with up to 24 hours on cardboard and
copper.
The industry's letter was part of a long-standing campaign
for single-use material.
The ACC's managing director for plastics, Keith Christman,
said the chemicals lobby is opposed to plastic bans because it
believes consumers would switch to using other disposable
materials like glass and paper, rather than reusing bags and
bottles.
"The challenge comes when you ban plastic but the
alternative might not be a reusable product ... so it really
wouldn't accomplish much," Christman said.
Plastic makes up 80% of marine debris, according to the
International Union for Conservation of Nature, a global
alliance backed by governments, NGOs and companies including
Shell, which is also a member of the ACC.
Plastic pollution has been shown to be deadly to turtles,
whales and baby seals and releases chemicals that we inhale,
ingest or touch that cause a wide range of harms including
hormonal disruption and cancer, the United Nations says.
RECYCLE?
Plastic recyclers have faced new problems in the pandemic.
Demand for recycled material from packaging businesses fell
by 20% to 30% in Europe in the second quarter compared with the
previous year, ICIS says.
At the same time, people who stayed at home created more
recycling waste, said Sandra Castro, CEO of Extruplas, a
Portuguese recycling firm which transforms recycled plastics
into outdoor furniture.
"There are many recycling companies that may not be able to
cope," she said. "We need the industry to be able to provide a
solution to the waste we produce."
In the United States, QRS's Janson said that for two months
after the pandemic lockdowns, his orders were down 60% and he
dropped his prices by 15%.
And the pandemic has added to costs for big consumer
companies that use recycled plastic.
The Coca-Cola Co told Reuters in September it missed a
target to get recycled plastic into half its UK packaging by
early 2020 due to COVID-19 delays. The company said it hopes now
to meet that by November.
Coca-Cola, Nestle and PepsiCo have been the world's top
three plastic polluters for two years running, according to a
yearly brand audit by Break Free From Plastic, an NGO.
These companies have for decades made voluntary goals to
increase recycled plastic in their products. They have largely
failed to meet them. Coke and Nestle said it can be hard to get
the plastic they need from recycled sources.
"We often pay more for recycled plastic than we would if we
purchased virgin plastic," a Nestle spokesperson said, adding
that investment in recycled material was a company priority.
Asked how much they were investing in recycling and waste
cleanup programmes, the three companies named initiatives
totalling $215 million over a seven-year period.
At current investment levels in recycling, brands will not
meet their targets, analysts at ICIS and Wood Mackenzie say.
TOSS
Even if existing recycling pledges are met, the plastic
going into the oceans is on course to rise from 11 million
tonnes now to 29 million by 2040, according to a study published
in June by Pew Trusts, an independent public interest group.
Cumulatively, this would reach 600 million tonnes – the
weight of 3 million blue whales.
In response to mounting public concerns, the Alliance to End
Plastic Waste says it will partner existing small-scale NGOs
that clean up waste in developing countries.
One venture, which helps women earn money from selling
plastic scrap in Ghana, says it has successfully diverted 35
tonnes of plastic from becoming litter since March 2017.
That's less than 0.01% of the annual plastic waste generated
in Ghana, or 2% of the plastic waste that the United States
exported to Ghana last year, according to World Bank and U.S.
trade data.
"We do realise change won't happen overnight," said Alliance
president and CEO Jacob Duer. "What is important for us is that
our projects are not seen as the end, but the beginning."
In the Philippines, Vietnam and India, as much as 80% of the
recycling industry was not operating during the height of the
pandemic. And there was a 50% drop in demand for recycled
plastic on average across South and Southeast Asia, according to
Circulate Capital, a Singapore-based investor in Asian recycling
operations.
"The combination of the impact of COVID-19 and low oil
prices is like a double whammy" for plastic recycling, said
Circulate's CEO, Rob Kaplan.
"We're seeing massive disruption."
(Reporting by Joe Brock; Additional reporting by Neil Jerome
Morales in Quezon City, Catarina Demony in Lisbon, Noah Browning
in London, Karen Lema in Manila, Heekyong Yang in Seoul, Yuka
Obayashi in Tokyo and Marwa Rashad in Riyadh
Edited by Sara Ledwith)