Looking for more information? Here’s everything you should need.
“Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses.” Said Kingsmill Bond, Carbon Tracker Energy Strategist and report lead author.
“There are huge benefits in the change from the current linear system to a more circular one. You can have all the functionality of plastics but at half the capital cost, half the amount of feedstock, 700,000 additional jobs and 80% less plastic pollution.” Said Yoni Shiran, lead author of Breaking the Plastic Wave
“It is simply delusional for the plastics industry to imagine that it can double its carbon emissions at the same time as the rest of the world is trying to cut them to zero,” Said Kingsmill Bond.
$400 billion of planned petrochemical outlay at risk on exaggerated plastics demand
LONDON/NEW YORK, September 4 – The oil industry is pinning its hopes on strong plastics demand growth that will not materialise, as the world starts to tackle plastic waste and governments act to hit climate targets. This risks $400 billion worth of stranded petrochemical investments, increasing the likelihood of peak oil demand, finds a new report from Carbon Tracker, basing some of its findings on a recent report “Breaking the Plastic Wave”.
The central scenarios of BP and the IEA imply that plastics demand will be the largest driver of oil demand growth, making up 95% and 45% of growth to 2040 respectively, as oil demand is challenged in its core area of transport.
The Future’s Not in Plastics finds that mounting pressure to curtail the use of plastics – now a worldwide public concern – could slash virgin plastic demand growth from 4% a year to under 1%, with demand peaking in 2027.
The implication for big oil is that the industry will lose its primary growth driver, making it more likely oil demand peaked as early as 2019.
“Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses.”
Kingsmill Bond, Carbon Tracker Energy Strategist and report lead author.
The petrochemical industry is already facing record-low plastic feedstock prices as a result of massive overcapacity. And yet, it plans to expand supply for virgin plastics use by a quarter at a cost of at least $400 billion in the next 5 years, risking huge losses for investors.
The plastics industry is a bloated behemoth, ripe for disruption. Plastics imposes an externality cost on society of at least $1,000 per tonne, or $350 billion a year, from emitting carbon dioxide, associated health costs from noxious gases, collection costs and the alarming growth in ocean pollution.
And yet it receives more in subsidy than it pays in taxation, and until recently there have been very few constraints on how you can use plastics. Meanwhile, 36% of plastic is used only once, 40% ends up polluting the environment and less than 10% is actually recycled.
SYSTEMIQ notes that technology solutions are already available to enable a massive reduction in plastic usage at lower cost than business as usual. Solutions include reuse, with better design and regulation of product, substitutions such as paper, and a large increase in recycling.
“There are huge benefits in the change from the current linear system to a more circular one. You can have all the functionality of plastics but at half the capital cost, half the amount of feedstock, 700,000 additional jobs and 80% less plastic pollution.”
Yoni Shiran, lead author of Breaking the Plastic Wave and analyst at SYSTEMIQ.
Policymakers in Europe and China are already taking steps to clamp down on plastics waste and have a wide range of tools they can use, from regulation and bans to taxes, targets and recycling infrastructure.
The EU for example in July 2020 proposed an €800/t tax on unrecycled waste plastic, while China has similar regulatory aspirations and has started to ban certain types of plastic. In China the first major flag came in 2018 when the country largely closed down its industry for importing and processing plastic waste – the world’s largest – forcing exporters to solve the waste issue at home.
The report notes a stagnation in demand in developed markets and a leapfrog in emerging markets. As has been seen in other areas of the energy system, OECD plastic demand is stagnating at the same time as emerging market leaders are looking for alternative solutions to plastic.
A further critical element that will dim the rosy petrochemical demand picture painted by incumbents is the effects of global policy action to tackle climate change. Carbon dioxide is produced at every stage of the plastic value chain – including being burnt, buried or recycled, not just extraction of oil and manufacturing. The analysis therefore finds that plastic releases roughly twice as much CO2 as producing a tonne of oil.
If one assumes 350Mt of plastic demand with a total carbon footprint of around 5 tonnes of CO2 per tonne of plastic, that implies 1.75Gt of CO2. Continuation of current growth rates would see the carbon footprint of plastics double by the middle of the century to around 3.5Gt. And yet, the Paris Agreement implies that global CO2 emissions (33Gt from the energy sector in 2018) will have to halve by 2030 and get to zero by the middle of the century.
“It is simply delusional for the plastics industry to imagine that it can double its carbon emissions at the same time as the rest of the world is trying to cut them to zero,”
Once embargo lifts the report can be downloaded here: https://carbontracker.org/reports/the-futures-not-in-plastics/
To arrange interviews please contact:
Stefano Ambrogi firstname.lastname@example.org +44 7557 916940
About Carbon Tracker
The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org
 IPSOS polls carried out in 2019 in 28 countries found 70-80% of those polled wanted action on waste including a ban on single use plastics and forcing manufacturers to pay for recycling costs