GUF) THE PROBLEM RECYCLED PLASTIC CAN'T ESCAPE

Image inspiration - René Magritte - link

In November 2022, Shell began producing polyethylene at its enormous new Shell Polymers Monaca complex in Pennsylvania, right in the heart of America's shale gas region. The principle is simple: the plant takes ethane extracted from natural gas and turns it into polyethylene, one of the world's most widely used plastics, found in films, flexible packaging, bottles, containers and countless everyday products.

Shell Polymers Monaca has a designed production capacity of around 1.6 million tonnes of polyethylene every year. That's approximately 4,400 tonnes every day, 183 tonnes every hour, or around three tonnes of new polyethylene every single minute. Minute after minute. Day after day.

Shell deliberately built the plant close to both its raw material and its customers. When production began, the company said approximately 70% of the US polyethylene market was within a 700 mile radius of the site. It represented a huge industrial bet on the future of plastic.

Less than four years after production began, however, Shell is exploring strategic options for its US chemicals business, including potential sales and partnerships. According to recent reports, ExxonMobil and LyondellBasell are among companies that have shown interest, alongside Apollo Global Management and the chemicals arm of Kuwait Petroleum Corporation. Non-binding offers have reportedly been submitted, although no final deal has been agreed.

So, to sum up, Shell, one of the world's largest energy companies, built one of America's newest and biggest polyethylene complexes, began making plastic there in late 2022 and is already considering reducing its exposure to it. At first glance, you could conclude that the age of virgin plastic is beginning to draw to a close. Unfortunately, you'd be very, very wrong.

The explanation is considerably less comforting for anybody involved in recycling. The global petrochemical industry has become extremely good at manufacturing plastic. Huge amounts of new production capacity have been added, particularly across China, the Middle East and the United States. Production capability has grown much faster than demand, putting pressure on margins across the chemicals industry. Simply put: too much capacity - too much product and not enough customers prepared to pay the prices producers would like.

Recycling Has a Virgin Plastic Problem

In Britain and Europe we're expending enormous political, industrial and consumer effort trying to increase plastics recycling. We redesign packaging, introduce Extended Producer Responsibility, change collection systems, build sorting plants and specify recycled content. We develop chemical recycling technologies and encourage consumers to separate ever more complicated materials.

There is however, one rather inconvenient economic fact hiding behind all of it. Recycled polymer does not exist inside its own protected economy. It has to compete, and one of the things it competes against is new plastic. New plastic being produced in enormous petrochemical complexes capable of operating continuously, using established technology, huge supply chains and relatively cheap fossil feedstocks.

Globally we've traditionally asked how we can recycle more plastic but perhaps we should increasingly be asking who's going to buy all the recycled plastic once we've made it because those are not the same problem. Indeed, I believe that we may have spent too much of the last decade concentrating on creating supply while assuming that the market will somehow create the demand when there's absolutely no guarantee that it will.

Petrochemicals Aren't Going Away

The International Energy Agency expects the production of polymers and synthetic fibres to require the equivalent of around 18.4 million barrels of oil every day by 2030. That's more than one barrel in every six consumed globally. As oil demand for road transport eventually weakens, petrochemicals are expected to become an increasingly important source of demand for the oil and gas industry which means the companies supplying virgin plastic aren't preparing to leave the market - quite the opposite.

So perhaps Shell Monaca offers us a useful warning. Not that virgin plastic is disappearing, but that virgin plastic production has become so enormous, efficient and globally competitive that even one of the world's newest and most valuable polyethylene facilities can find itself operating in a brutally oversupplied market and recycled plastic has to enter that same market.

This is why I increasingly think the great plastics debate has moved beyond collection rates. We can perfect household collections. We can perfect sorting, washing and polymer identification. We can even perfect the recycling technology itself but if the resulting material cannot compete commercially with another tonne of virgin polymer rolling out of a petrochemical complex somewhere in Pennsylvania, Texas, Saudi Arabia or China, we haven't created a circular economy, we've basically created a very sophisticated way of manufacturing something nobody is obliged to buy.

In my opinion, we're spending extraordinary amounts of money perfecting the collection and recycling of yesterday's plastic while the petrochemical industry quietly manufactures tomorrow's and we need to start being more realistic.

Perhaps closed loop isn't always the right loop. Plastic may ultimately prove more valuable as a source of recovered carbon than as a source of recycled plastic and if that's true, the plastics recycling industry may eventually have to ask if we're trying to save the plastic when what we should really be saving is the carbon?

Perhaps the Waste Industry Should Know Where to Stop

There may be another assumption worth challenging. Why should the waste industry itself be trying to turn plastic back into plastic? Maybe our role could finish much earlier. We're exceptionally good at collecting materials, identifying them, separating them, sorting them, consolidating them and moving enormous quantities efficiently and that may be exactly where our job should end?

Waste plastic could be collected, sorted and prepared into consistent feedstocks by the waste and recycling industry and then handed back to the industry that understands hydrocarbons rather better than we ever will: the petrochemical industry. Let them extract the carbon. Let them turn it into chemical feedstocks. Let them decide whether that carbon becomes polymers, lubricants, chemicals or something we haven't yet considered.

Legally, that material may still be waste when it changes hands but commercially something rather important would have happened. The waste industry would stop trying to become a petrochemical industry and instead, it would become its raw-material supplier. Perhaps that is the division of labour we've been missing? More like this (Shell) - link - note like this (Pennsylvania) - link - more like this (China) - link