DAILY TRIFECTA: Petrostates Of Denial About Plastic
I want to say one word to you. Just one word...
THE SET-UP: Recycling is one of the most successful lies ever told by the private sector. Another zinger is the lie that oil is scarce. It isn’t. Instead, the market is glutted with capacity and the price of gas often reflects market manipulation and artificial scarcity imposed by a cartel.
Reminder: a cartel is, per Merriam-Webster, a “combination of independent commercial or industrial enterprises designed to limit competition or fix prices.”
That exactly describes what Saudi Arabia does when it sets the agenda for the OPEC cartel. They’ve mostly restricted oil production in concert with their OPEC+ partner in Russia since the pandemic first hit. As a result, a lot of oil that could be easily pumped into the market is staying in the ground. Excess capacity is why the head of Exxon just said most oil companies will not “Drill, Baby, Drill” after Trump takes the oath. Doing so might crater the price per barrel. Frankly, Big Oil’s support for Trump has already pay dividends by elevating a proud denier to the bully pulpit. Their “ka-ching!” rings every time he calls the changing climate a “hoax.” He will also try to stall growth and innovation in renewables, and he’ll scuttle global efforts to contain the climate-altering pollution oil produces.
In effect, Big Oil just wants Trump to complete the transformation of the United States into a petrostate. It’s not that far off. Petrostates work hard to ensure global climate talks produce window dressing-like agreements, as just happened during the climate COP29 talks in the petrostate capitol of Baku. Unsurprisingly, they are also doubling-down on the production of plastic and, therefore, the omnipresent pollution it generates even as another global treaty is pondered in Busan, South Korea. - jp
TITLE: Big Oil Still Betting On Plastics Despite Sector Going Bust
https://oilprice.com/Energy/Energy-General/Big-Oil-Still-Betting-On-Plastics-Despite-Sector-Going-Bust.html
EXCERPTS: [P]etrochemicals are going through a huge bust cycle. Earlier in August, [German plastics and chemicals maker Covestro] reported a 21%Y/Y fall in second quarter revenues to 3.7 billion euros. Covestro is hardly alone, with U.S. oil and gas giants facing a similar fate. Sluggish consumer demand as well as a deluge of new factories coming online over the past few years means petrochemical margins face a protracted downturn. The situation is so dire that Cologne-based Lanxness AG has called it a “Lehman 2” moment for the chemicals industry.
But Big Oil has chosen to play the long game here, and these companies are investing heavily in petrochemicals as a long-term hedge against an uncertain future for fossil fuels. Petrochemicals, which go into plastics, polyester and many other cheap and lightweight commodities that underpin modern life, could help oil companies stay afloat long after demand for transport fuels has peaked.
A 2023 review of the major oil and gas and chemicals companies found that over the next three years, Exxon Mobil Corp. (NYSE:XOM) plans to invest over $20 billion in expanding plastic production; CPChem will spend $14.5 billion and Dow Inc. (NYSE:DOW) plans to invest USD 10 billion.
A lot of those petrollars are flowing into the Chinese market. According to Ciarán Healy, oil market analyst at the IEA, ~6.7mn bpd, or 6.5 per cent of all global oil use, currently goes to supply China with petrochemicals. The International Energy Agency has reported that 90% of China’s increased oil demand from 2021 to 2024 comes from chemical feedstocks like LPG, ethane, and naphtha. IEA notes that between 2019 and 2024, additional Chinese production capacity for ethylene and propylene will exceed the combined current capacities of Europe, Japan, and South Korea. Between 2018 and 2023, China’s output of synthetic fibers alone rose by 21 million metric tons--enough to spin more than 100 billion T-shirts a year. A new breed of private refiners such as Hengli Petrochemical and Rongsheng Petrochemical has emerged in China whereby they are spending billions of dollars building plants specializing in chemicals, rather than gasoline and diesel.
Ironically, petrochemicals are crucial for the green energy transition, with EVs typically using more thermoplastics, foams, fibers and rubber pads than ICE vehicles. Indeed, U.S. chemical practice leader at Deloitte David Yankovitz has told the Financial Times that EV makers are substituting plastic resins for metal parts to make lighter cars. Yankovitz says that roughly three-quarters of all emissions-reduction technologies require chemicals, most of which are oil-derived. China has met much of that demand through domestic processing of imported crude. But the US shale oil boom has also formed a mutually reinforcing “symbiosis” with growing Chinese demand for petrochemicals. According to ICIS data, between 2019 and 2023, the U.S. was the only major producer to boost its polymer exports into China,
Exxon is currently building a petrochemical complex in southern China’s Guangdong province, as well as expanding its own chemical production at existing facilities on the U.S. Gulf Coast. According to Exxon, the chemical complex will produce performance polymers used in packaging, automotive, agricultural, and consumer products for hygiene and personal care.
Meanwhile, last year, Saudi Aramco acquired a 10% stake in Shenzhen-listed Rongsheng Petrochemical for $3.6bn, and has entered talks to buy a stake in Hengli Petrochemical, a top Chinese producer of chemicals for plastics. Last year, Aramco-owned S-Oil broke ground on a $7bn petrochemical factory in South Korea.
TITLE: What will it take to solve our planet's plastic pollution crisis?
https://www.newscientist.com/article/2457800-what-will-it-take-to-solve-our-planets-plastic-pollution-crisis/
EXCERPTS: The world currently produces more than 50 million tonnes of “mismanaged” plastic waste each year, and some researchers project this flood of pollution into the environment will double by mid-century. However, they also say that if countries can agree to adopt four key policies during global plastic treaty negotiations this week, we could slash that by 90 per cent.
Plastic pollution ends up clogging ecosystems on land and at sea. “This has an impact on every level of the food chain, from phytoplankton cells to humans,” says Sarah-Jeanne Royer at the University of California, San Diego. Plastics are also responsible for about 5 per cent of greenhouse gas emissions.
That is why most of the world’s countries are meeting in Busan, South Korea, this week to hammer out the final details of a global treaty aimed at ending such pollution. In 2022, 175 countries agreed to develop a legally binding treaty and have spent the past two years debating its requirements, with particular disagreements over setting limits on the production of new plastic.
To bring more clarity to the debate, Douglas McCauley at the University of California, Santa Barbara, and his colleagues used an artificial intelligence model trained on economic data to test how the policies under consideration would affect this pollution globally. “I wasn’t convinced that [eliminating plastic pollution] was actually possible,” says McCauley. “But it turns out you can get pretty darn close.”
According to their projections, under current conditions, such pollution is set to roughly double to between 100 and 139 million tonnes by 2050. But a combination of four policies, all of which are still on the table in the current treaty draft, were enough to reduce this by more than 90 per cent.
The most impactful was a mandate that plastic products contain at least 40 per cent recycled material. That rule alone cuts plastic pollution in half by mid-century. This effect is so significant because it reduces demand for newly made or “virgin” plastic, while also spurring demand for recycled materials, says McCauley. “Suddenly there’s a giant global market for recycling.”
But recycling on its own wasn’t sufficient. “If your target is to end plastic pollution, you need to do things across the entire life cycle,” he says. Deeper cuts required limiting production of virgin plastics to 2020 levels. This cap cuts plastic pollution by around 60 million tonnes per year by the middle of the century, according to the model. This change also had the greatest impact on greenhouse gas emissions from plastic production, as extracting fossil fuels and turning them into virgin plastics involves emissions-intensive processes.
A third policy, spending $50 billion on waste management, reduced pollution by nearly the same amount as the production cap – especially if these funds were spent in low-income countries with poor infrastructure, which are also the most inundated by plastic pollution. “When you start talking about global finance, [the amount of money needed] is not that big,” says McCauley. “Building a sanitary landfill is not like building a port.”
Finally, a small tax on plastic packaging cut pollution by tens of millions of tonnes. The researchers based this estimate on case studies of how people reduced their plastic use in response to similar taxes, such as a 5 cent fee on single-use plastic bags in Washington DC. Money raised by such a tax could also be used to pay for other changes, like building more waste management infrastructure or improving recycling systems.
Royer, who wasn’t involved with the study, says she thinks those policies would all help. Targeting the use of single-use plastic, such as grocery bags or plastic forks, via a tax or a ban could also make a difference, she says. “If we look at plastic pollution in general, 40 per cent of the plastic being produced is single-use items.”
However, she points out that local rules alone will never solve the problem. For instance, California banned some single-use plastic bags a decade ago and this year banned all such bags. But most of the plastic pollution that washes up on its beaches originates outside the state: plastic waste found in California generally drifts across the Pacific from Asia or is flotsam left by the fishing industry. “There’s no border,” says Royer.
That is where a global treaty comes in. The researchers showed how implementing different policies across the world would cut down on three things: the volume of mismanaged plastic waste, the production of new plastics and plastic-related greenhouse gas emissions. The four key policies in combination, seen in the graph below, reduced all three measures, and in particular slashed mismanaged waste by 91 per cent.
In Busan, countries have now reached the deadline to decide on a final treaty draft, but they remain far apart on key issues. A main fault line is whether the treaty should include a production cap on newly made plastics, which the researchers found was the second-most impactful policy. Plastic-producing countries and the petrochemical industry oppose these caps, instead throwing their support behind recycling measures.
TITLE: Unilever: Global Plastics Treaty Needs Rules, not Guidance
https://manufacturingdigital.com/articles/are-we-finally-going-to-get-a-global-plastics-treaty
EXCERPTS: Some of the biggest manufacturers in the world have lined up to demand definitive global plastics regulations as five weeks of negotiations comes to a close in South Korea.
Unilever is among many manufacturers that are lobbying for strict regulation as opposed to voluntary guidelines.
“Fragmented, slow and costly… or coordinated, fast and cost effective? This is the choice governments have in Busan when they meet to finalise the plastics treaty at INC-5," says Unilever CEO Hein Schumacher.
“Either a voluntary treaty that will lead to further regulatory fragmentation, causing additional cost and complexity to business.
"Or a treaty underpinned by global rules – one that harmonises regulations and supports business to unlock solutions to plastic pollution at the scale and speed we urgently require.
“Business needs global rules.”
Unilever has been amongst the most vocal manufacturers when it comes to the treaty.
The company urges governments to agree to a “legally binding treaty – underpinned by global rules – that covers the entire lifecycle of plastic products”.
It adds: “This will avoid the current disconnected national efforts and create a level playing field across the global economy.
In addition to Unilever a host of other manufacturers and global companies have signed a letter to the UN.
The letter calls for the following in the Global Plastics Treaty:
Global criteria and lists that enable the restriction and phase out of chemicals of concern as well as problematic and avoidable plastic products
Sector-specific approaches and global criteria for circular product design of plastic products, such as packaging
Common definitions and key principles for the effective implementation of Extended Producer Responsibility (EPR) schemes
A strong mandate for the governing body to strengthen the agreement over time.
Unilever says that creating this treaty is vital.
“A treaty would help simplify supply chains, scale existing solutions and spur further innovation," the organisation states.
“Voluntary initiatives alone aren’t enough. More interventions are needed across the full lifecycle of plastic: both upstream (for example, raw material extraction and production) and downstream (segregation, collection, sorting, recycling and disposal).
“Voluntary initiatives also distort the market because they often lead to higher costs. This means that companies taking action are at a competitive disadvantage compared to those not taking action.”
Unilever goes on to state that a voluntary treaty would not only be ineffective but actively harmful to global plastics reduction.
"As business leaders, we are working to transform our business models to catalyse a circular economy in which plastic never becomes waste or pollution, and the value of products and materials is retained in the economy.”
Unilever co-chairs the Business Coalition for a Global Plastics Treaty which aims to give confidence to governments that businesses and financial institutions want harmonised global rules and regulations.
Members of the Coalition, a group of 250+ global businesses, financial institutions and NGOs, wrote to world leaders ahead of the summit.
Signatories include:
Antoine de Saint-Affrique, CEO, Danone
Augusto Bauer, CEO, AJE
Barbara Martin Coppola, CEO, DECATHLON
Carsten Knobel, CEO, Henkel
Christian Klein, CEO, SAP
Fisk Johnson, CEO, SC Johnson
Hein Schumacher, CEO, Unilever
Jon Abrahamsson Ring, CEO, Inter IKEA Group
Kevin Kwilinski, CEO, Berry Global
Laurent Freixe, CEO, Nestlé
Magnus Groth, CEO, Essity
Peter Konieczny, CEO, Amcor
Philipp Lehner, CEO, ALPLA
Poul Weihrauch, CEO, Mars Inc
Ramon Laguarta, CEO, PepsiCo
Rodrigo Tona, CEO, Ternova
Samuel Sigrist, CEO, SIG
Stefan Doboczky, CEO Borealis
Surendra Patawari, Chairman, Gemini Corporation
Tom Daunt, Member of Executive Board, ALDI SOUTH Group
Tom Szaky, CEO, Terracycle
Tove Andersen, CEO, Tomra
Explore the latest edition of Manufacturing Digital