Low oil prices; downturning plastic recycling?
This article is republished from the LinkedIn article by prof. Steven De Meester and prof. Kim Ragaert, experts in plastic recycling at Ghent University, and Karl Vrancken, research coordinator sustainable materials management at VITO, in name of the research platform CAPTURE.
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Low oil prices might seem good news, but from a sustainability perspective some important considerations have to be made. Low oil prices might impede to focus on sustainability when relaunching the economy. One of the sectors on which the low oil price has a detrimental effect is that of plastic recycling. This sector is driven by enthusiastic pioneers. There is still a lot of work to be done in this sector to achieve a fully circular economy for plastics. So what if the companies active in that sector go under because of the current crisis? Dispose of more of our plastic waste to Turkey or Malaysia? And if they don't accept it anymore, then burn it? It would be a big step back in our development towards a sustainable society.
Circular economy is a priority for Flanders. The reuse of raw materials is not only important from a societal point of view, but will also become an important part of economic competitiveness. That is why we urge our policymakers to see this crisis as an opportunity: make the right choices, because these will mark our economy in the coming decades.
If we want to move towards a truly circular economy in the future, we need a strong and competitive (plastics) recycling industry with infrastructure, experience and knowledge in this field. Such companies, often outgrown SMEs and start-ups, do exist. They have been swimming against the stream for years not only to talk about recycling, but also to make it happen. In the midst of the corona crisis, many of these companies are running at a loss. Waste keeps coming, but few buy the recycled plastic. In this way, we risk losing these pioneers of sustainable use of raw materials. And that would put us years backwards in terms of recycling.
The reason is simple. Plastic is produced in pellets that you can melt into almost any kind of product. Those pellets are traditionally made from oil, but you can also make them from discarded plastics, through recycling. When the price of oil drops, the raw material price of new oil-based plastic also drops. However, the price of recycling remains high and depends more on the costs of collection, sorting and processing into pellets. In times of cheap oil, recycled plastic is therefore more expensive compared to new plastic. This trend has been going on for a while, but since the corona-crisis, the price difference increases very fast (graph by Matt Tudball, ICIS). And for many companies, still the price that counts, not the environmental benefit. Cheap oil can therefore be beneficial for consumers in the short term, but it is a detrimental for recycling.
Some recycling companies may still have some long-term contracts, or treat different waste streams, such as glass and paper. These will be able to last a little longer, but if the oil price and the price of new plastic remains low for a few months or even 1-2 years, these too will have to shut down the plastic recycling activities one by one. We also won't be able to make the necessary investments in the circular economy, something we can't afford at the moment.
Let it be clear. Plastic is a (too?) cheap raw material, and plastic recycling has never been sector with huge profit margins until today, even though the added value of recycling for climate and the circular economy has been proven several times already. Now urgent action is needed to help this sector and reduce our dependence on crude oil. It is not oil, but the accumulated quantity of plastics in our society that should be the raw material for new plastics.
We propose some interventions. Make sure the competition between fossil plastic and recycled plastic stops. This is the only way to create a stable market for recycling at a decent price. Accelerate the (European) targets for recycled plastic in new products. Support plastic recycling activities, or set a bottom price for new plastic based on oil. Offer free loans for the relaunch of the economy.
When we are relaunching the economy, we must give an important place to the reuse of raw materials. And let's make sure that by then we will still have active recycling companies to implement those plans.