• 4 minutes WTI Heading for $60
  • 8 minutes China Ready For Talks With the US to Resolve Trade Issues
  • 15 minutes Pros and Cons of Coal
  • 1 hour Big Brother Is Watching You: Chinese ‘Gait Recognition’ Tech IDs People By How They Walk
  • 44 mins Germany: 'Europe United' Must Be Answer To Trump's 'America First'
  • 2 hours Could EVs Become Cheaper than ICE Cars by 2023?
  • 3 days Bolsonaro Wins in Brazil
  • 2 days Court Blocks Keystone XL Construction
  • 1 hour Major News---Bigger Picture
  • 5 hours A Future of Ultrarich vs Useless
  • 15 hours A lesson from VW
  • 3 days Iran Sanctions Include Sunken Tanker and Closed Bank
  • 3 days 10 Incredible Facts about U.S. LNG
  • 4 days Layoffs, Furloughs and Shutdown at Faraday Future's EV factory
  • 4 days Khashoggi, Oil, Globalism and the PetroDollar
  • 3 days Frankenstein Web Tech World? Father of Web Says Tech Giants May Have To Be Split Up
Alt Text

Canada Lacks A Successful Energy Strategy

According to some researchers, Canada’s…

Alt Text

Oil Prices Hit Multi-Month Lows

Oil prices have hit a…

Alt Text

The Future Of Mexico’s Energy Industry Is In The Air

Mexico’s president-elect has not stated…

Andreas De Vries

Andreas De Vries

Andreas de Vries is a Strategy Consultant in the Oil & Gas industry, supporting companies to not only develop strategies for success but also execute them.

More Info

Trending Discussions

The Future For Plastic Is Uncertain

Few inventions have had an impact as profound as that of plastic. Invented just 100 years ago, plastics have found applications in areas as diverse as clothing, packaging, transport, tools, and machinery. There, they have largely replaced more traditional materials such as wood, cotton, wool, paper, metal, ceramic, leather and glass, because they are substantially cheaper to produce and easier to handle. They have effectively enabled economic globalization, by lowering the cost of cross-border transport; as well as the consumerist lifestyle, by greatly increasing the range of goods available to consumers at affordable prices.

For this reason the world’s plastics manufacturing capacity is well over 335 million metric tons (mmt) at present, with demand for plastic having grown by an average of 8.6 percent per year since 1950. Underlying this historic growth have been two trends. Firstly, growth in the global population, in particular growth in the number of people adopting the consumer lifestyle, which increased the demand for existing plastic solutions. Secondly, continued plastics innovation, which enabled plastics to replace traditional materials in more and more areas.

Since both these trends are expected to continue, many in the plastics industry foresee strong growth in demand for their products in the future.

A new plastics trend: Sustainability

While population growth and innovation will certainly be amongst the key factors determining the future fortunes of the plastics industry, a third trend has recently become of relevant, the sustainability trend.

The sustainability trend is often confused with environmental awareness or concern. In the West, the origins of environmental awareness go back to the industrial revolution. It grew especially after World War II, as science began to better understand the implications of industrial activity for the environment. This led to creation of an annual “Earth Day” in 1970, in order to raise awareness of environmental issues. This awareness did not translate into any meaningful change in the behavior of consumers, however. For that reason, from a trend perspective, it can be said the baby-boomer generation became “environmentally aware”.

The direct descendants of the baby-boomers, the Millennials, were the first go beyond environmental awareness. They were the first generation to be formally educated in the environmental issues from a young age, and consequently environmental awareness began to influence their behavior. For example, things such as the recycling of home trash became the norm for them. As such, again from a trend perspective, the Millennials can be considered the generation that became “environmentally concerned”.

Related: Pipeline Problems In The Permian Are Overblown

The descendants of the Millennials, Generation Z, grew up in environmentally concerned households. As a result, when it comes to the environment, they are even more aware. Generation Z consumers are considered the “green generation” because, for them, environmental concern is a key factor in day-to-day consumption decisions. For the sake of the environment they are willing to make do with products that are sub-optimal from a convenience perspective but deemed sustainable, and they are willing to pay a premium for products that are deemed sustainable.

This is the real sustainability trend, which can be defined as “the growing influence of environmental concerns on consumer decisions”.

An alternative future for the plastics industry

Since its inception, the industry has produced a total of 8,300 mmt of virgin product, of which some 9 percent has been recycled and 12 percent was incinerated (burned). The remaining 79 percent, or 6,600 mmt, has simply been discarded and made part of world’s ever growing garbage pile.

Because plastics do not fully decompose (in a meaningful timeframe), all this historic plastics waste is still with us. It is becoming increasingly clear this is not just a nuisance, but even danger, as plastics do degrade into micron-sized particles (microplastic) that have been shown to enter the food chain, providing cause for concern.

This information has caused plastics to become one of the focus areas of the sustainability trend, with a range of NGOs now working to highlight the challenges caused by plastics usage and influence consumer behavior. That this is working, and that consumer preferences are indeed changing, was outlined above. In response, some of the biggest users of virgin plastics have relatively recently committed to shifting to reusable, recyclable or compostable packaging by 2025 or earlier. Amongst these are Adidas, Unilever, Walmart, PepsiCo, The Coca-Cola Company, Evian, L’Oréal, Mars, Lego and Dell Computers. This is not just done to appeal to consumers, but also to investors, who increasingly factor in sustainability when making investment decisions, as evidenced by the spectacular growth of Impact Investing over the past 25 years. Even governments are responding (possibly in a bid to win over younger voters). Over the last few years more than 60 countries have decided to take action against single-usage plastics, such as plastics bags, straws and plastic cutlery, while the United Nations chose “plastics waste” as the theme for its 2018 Earth Day. Related: OPEC Outages Are Driving Up Oil Prices

Therefore, it is quite possible that the plastics demand forecasts that assume growth because of global population growth and economic development underestimate the potential of the sustainability trend. They assume that “convenience” and “cost” will remain the driving forces behind customer decision making, as they have been historically. Since plastics have a clear advantage over many traditional materials in these areas, this would indeed lead to continued plastics demand growth. The sustainability trend, however, is about customers moving away from “convenience” and “cost”, to “environmental concern” when making consumer decisions, and governments forcing those that do not do so to follow suit. Some of this is already happening, much more could be on the way, meaning that a fundamentally different future for the plastics industry is a real possibility.

Strategy options for an age of disruption

So what strategic options do plastics companies have to ensure they remain successful, even if a sustainability-disruption were to hit?

Firstly, geographic diversification, shifting focus from the historic centers of plastics demand in the U.S. and Europe, whose population are expected to decline over coming decades and where the threat of a sustainability-disruption is the greatest, to the areas where plastics demand has the biggest chance to grow, the areas that are foreseen to experience the biggest population growth and/or economic mobility, namely China, India and South-East Asia. However, even in these “new growth” areas, the threat of sustainability-disruption remains. The Chinese government, for example, is clearly committed to addressing the environmental issues caused by its rapid economic development, and plastics have recently come onto the radar screen. In India, too, there is growing concern about the problems that can be caused by plastics waste.

Secondly, manufacturing diversification, shifting focus away from virgin, fossil-based plastics to recycling or bio-based plastics, leveraging the sustainability-trend by producing the plastics-based solutions that the consumers of the future are likely to prefer. Neither of these opportunities are easy to achieve, as current recycling or bio-based plastics technologies do not yet lead to products that can compete fully with virgin plastics on a cost and/or quality basis. Advances in technology thus remain required in both areas, which means investment in R&D will be a necessity. However, full cost parity might not necessarily be required, because, as mentioned, more and more customers have shown willingness to pay a premium for sustainability.

Thirdly, vertical diversification, engaging deeper down the value to chain by becoming involved in plastic waste management. Right now, those who have been influenced by the sustainability trend see the plastics industry as being uninterested in the issue of waste management: “You produce it, sell it, and then allow the resulting waste to become someone else’s problem”. To address this challenge the plastics industry could undertake (collective) action to support more effective plastics waste management. This could be particularly effective in combination with an effort to become involved in plastics recycling (“manufacture, manage and recycle”), and/or in combination with research to develop solutions for speeding up the biodegradation of plastics. This latter potential would have the effect of removing plastics from the list of “eco-unfriendly products”, thus ensuring a future the plastic industry.

By Andreas de Vries for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • jim johnson on September 13 2018 said:
    Lots of potential to replace plastic products with hemp fiber now that people are realizing hemp never should have been classified as an illegal substance.
  • Tom on September 13 2018 said:
    We recycle at our house and I am amazed at the amount of plastic trash we generate, every week, it seems to be endless. This is a real problem for society. What will it take to get the industry to do more to reduce all the one-way plastic waste? I represent just one household.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News