ODDO BHF Asset Management
Initiated in 2022 in Nairobi, Kenya, at the United Nations Environment Assembly, the process of implementing a global treaty against plastic pollution entered its final phase at the end of November in Busan, South Korea. Plastics account for around 3.4% of global CO2 emissions, and their production is set to double by 2050 without any significant efforts on recycling and the search for alternative substitutes. At this stage in the discussions, two visions are clashing, one pushing for quantified targets for reducing plastic production in addition to developing recycling, while the other is defending an approach focusing on downstream measures, including recycling. Whatever the outcome of the negotiations, the future treaty against plastic pollution will be a structural growth driver for the recycling sector and producers of plastic substitutes.
A MAJOR ENVIRONMENTAL AND HEALTH ISSUE
Since the 1970s, the rate of plastic production has increased faster than that of any other material. If this trend continues, global primary plastic production is expected to reach 1,100 million tonnes by 2050, up from 460 million tonnes in 2023, a rise accentuated by the growing use of single-use plastics, which account for 76% of annual production. Today, only 15% of plastic waste is recycled, 17% is incinerated, and 68% ends up in landfill or in the environment. The environmental stakes are therefore enormous, as many natural ecosystems are affected. Because it is not collected efficiently, plastic waste is carried inland by rivers to the seas and oceans. The latest estimates put the amount of plastic waste in the oceans at 150 million tonnes, with some 20,000 billion particles of micro-plastic floating on the surface. As a direct consequence, around 700 species of marine fauna ingest these particles, ultimately posing a risk to human health.
THE SOLUTIONS EXIST, BUT THE CHALLENGE IS TO DEPLOY THEM ON A LARGE SCALE
Producing less plastic requires the large-scale development of alternatives with the same characteristics of strength, weight and diversity of use. Some innovations have emerged over the last ten years or so (plastic made from seaweed, olive seeds, cactus or cane sugar residues, etc.), but their development has so far been embryonic for lack of a sustainable business model. The main way of reducing plastic pollution is through recycling. Recycling is still not widespread enough (only 15% of plastic waste is recycled worldwide), and ambitious measures are needed in at least three areas:
- Regulation: the number of regulations has increased in recent years, mainly in developed countries, with growth in recycling activities of between 7% and 10% depending on the region. Asia-Pacific has seen the strongest growth in this area, ahead of Europe and North America. By way of example, the European Union has set itself a target of 55% recycling of plastic packaging by 2030, several states in the United States have established a regulatory framework to restrict the use of virgin plastic (not derived from recycling), and Japan is deploying a 3R strategy (Reduce, Reuse, Recycle);
- Technological development: most recycled plastic today is polyethylene terephthalate (PET) food packaging, which is 100% recyclable by mechanical processes (sorting, cleaning, grinding, granulation). The limitation of mechanical recycling is that it only works for the thermoplastic family (which softens when heated), unlike other plastics widely used for industrial applications or in construction, such as elastomers (tyres, textiles, seals, etc.) and thermosets (resins in melamine materials, for example). To remedy this situation, chemical recycling technologies have been emerging for some years now, but many are still at the experimental stage. Chemical recycling involves modifying the structures of the polymers present in waste using processes such as depolymerisation, dissolution or pyrolysis, in order to transform them into a new raw material with characteristics identical to those of virgin plastics;
- Infrastructures: to support regulatory ambitions and growing consumer demand for circular economy models, public authorities must facilitate the development of infrastructures dedicated to plastic recycling. This is particularly important in North America and Europe, two areas that are used to sending large volumes of plastic waste to China, which has turned it into a veritable economic sector for decades. But since 2018, China has decided to ban the import of plastic waste onto its soil, making many countries face up to their responsibilities.
