WEF the New Plastics Economy

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Industry Agenda

The New Plastics EconomyRethinking the future of plastics

January 2016


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WORLD ECONOMIC FORUM, 2016 All rights reserved.No part of this publication may be reproduced ortransmitted in any form or by any means, includingphotocopying and recording, or by any informationstorage and retrieval system.REF 080116


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3The New Plastics Economy: Rethinking the future of plastics

Contents

3 Preface

4 Foreword

5 In Support of the New PlasticsEconomy

5 Project MainStream

5 Disclaimer

6 Executive Summary

10 1 The Case for RethinkingPlastics, Starting withPackaging

10 1.1 Plastics and PlasticPackaging Are an Integral andImportant Part of the GlobalEconomy

12 1.2 Todays Plastics EconomyHas Important Drawbacks

16 2 The New Plastics Economy:Capturing the Opportunity

16 2.1 The New PlasticsEconomy Proposes a NewWay of Thinking

20 2.2 The New PlasticsEconomy Could BringSubstantial Benefits

21 2.3 Now Is an OpportuneMoment to Act

22 2.4 Where to Start

23 3 The New Plastics EconomyDemands a New Approach

28 For further information

28 List of Figures

28 Endnotes

31 Acknowledgements

The circular economy is gaining growing attention as a potential wayfor our society to increase prosperity, while reducing demands on finiteraw materials and minimizing negative externalities. Such a transition

requires a systemic approach, which entails moving beyond incrementalimprovements to the existing model as well as developing newcollaboration mechanisms.

The report explores the intersection of these two themes, for plastics and plasticpackaging in particular: how can collaboration along the extended global plasticpackaging production and after-use value chain, as well as with governmentsand NGOs, achieve systemic change to overcome stalemates in todays plasticseconomy in order to move to a more circular model?

The New Plastics Economy aims to set an initial direction and contribute to theevidence base by synthesizing information from across many dispersed sources.It assesses the benefits and drawbacks of plastic packaging today, and makesthe case for rethinking the current plastics economy. It lays out the ambitions and

benefits of the New Plastics Economy a system aiming to achieve drasticallybetter economic and environmental outcomes. It proposes a new approach andaction plan to get there.

The reports objective is not to provide final answers or recommendations. Rather,it aims to bring together for the first time a comprehensive global perspective ofthe broader plastic packaging economy, present a vision and propose a roadmapas well as a vehicle for progressing this roadmap, and providing a much-neededglobal focal point to carry this agenda forward. This report also identifies anumber of significant knowledge gaps and open questions that need to befurther explored.

This report is the product of Project MainStream, an initiative that leverages the

convening power of the World Economic Forum, the circular economy innovationcapabilities of the Ellen MacArthur Foundation, and the analytical capabilities ofMcKinsey & Company. We are grateful to our numerous partners and advisorsfor their insights and support throughout this project, and the Project MainStreamSteering Board for their continued collaboration on the transition towards acircular economy.

For the three institutions that have launched the MainStream initiative, this reportis an encouragement to continue to foster cross-industry collaboration as a majoravenue to accelerate the transition to the much-needed circular economy. Wehope you find this report informative and useful. We invite you to engage with uson this timely opportunity.

Dame Ellen MacArthur

FounderEllen MacArthur Foundation

Dominic Waughray

Head of Public Private PartnershipWorld Economic Forum

Martin R. Stuchtey

Director of the McKinsey Centerfor Business and Environment

Preface


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4 The New Plastics Economy: Rethinking the future of plastics

We live in a defining moment in history a moment wherethe international community has come together to agree onan ambitious framework to resolve some of the worlds most

daunting challenges.

Anchored in a set of universally applicable SustainableDevelopment Goals, the 2030 Agenda for SustainableDevelopment, adopted by all 193 members of the UnitedNations in September 2015, underlined a commondetermination to take bold and transformative steps towardsa better future for all.

Now is the time for implementation. We must now begin topractice what we have preached changing our productionand consumption patterns in order to create virtuouscycles rather than depletive ones and harnessing the globalinterconnectedness, communications technology and

breakthroughs in materials science.

All sectors of the economy must respond to these globalagreements, and due to their sheer pervasiveness andscale, some sectors are facing questions as to the directionthey should take. This is particularly the case for plastics,which have tangible and substantial benefits, but whosedrawbacks are significant, long-term and too obvious toignore. It is therefore encouraging to see an initiative like theNew Plastics Economy take shape, supported by a diversegroup of participants from the industry striving for innovativesolutions grounded in systems thinking.

Concrete and game-changing steps have to be taken forus to achieve the future we want anchored in the SDGs. Itherefore welcome wholeheartedly the bold ideas, ambitiousobjectives and comprehensive action plan presented inthis report. If implemented, it could make an importantcontribution to transforming this important sector of theglobal economy.

Mogens Lykketoft

President of the UN General

Assembly for the 70th session

Foreword


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In Support of the New PlasticsEconomy

As the Consumer Goods Forum, we welcome this groundbreaking

report on the New Plastics Economy. Packaging is integral to thedelivery of safe, high-quality consumer products, but we recognise

the need to rethink radically how we use plastics, creating newcircular systems that conserve resources, reduce pollution

and promote efficiency. This report improves substantially ourunderstanding of the solutions we need.

Mike Barry and Jeff Seabright, co-chairs of the ConsumerGoods Forum Sustainability Pillar

The Global Ocean Commission has been working with the Prince ofWales International Sustainability Unit to raise political and business

awareness of the urgent need to address plastic waste entering theocean, and transition to a more circular model for plastics. I am very

pleased to see that the Ellen MacArthur Foundation and its partnershave responded to this call to action, through the New Plastics

Economy report, and have developed an ambitious yet realistic planto address the issue at its root. I strongly encourage nations and

business leaders to consider the contents of this report and developcorresponding strategies.

David Miliband, Co-chair, Global Ocean Commission

It is high time to implement the circular economy principles in the

plastic sector. Increasing plastic recycling would capture significantmaterial value and help reduce greenhouse gas emissions. As pointed

out in this report, plastic production has increased from 15 milliontonnes in the sixties to 311 million tonnes in 2014 and is expected

to triple by 2050, when it would account for 20% of global annual

oil consumption. These are exactly the reasons why Veolia, which isalready actively engaged in promoting circular solutions, welcomes

and supports the New Plastics Economy.

Antoine Frrot, CEO, Veolia

The New Plastics Economy takes a detailed look into one of the

worlds most pervasive modern materials. The report lays out a foun-

dation for a more sustainable system of making and using plasticsand plastic packaging, taking into account the unique challenges and

opportunities on the use, re-use, and collection of the material. It is acall to action for an ambitious redesign with a longer term view of the

value at stake and intensive collaboration among various players.

Dominic Barton, Global Managing Director, McKinsey &Company

London is already actively taking steps towards a more circular

model for plastics and plastic packaging. However more can andneeds to be done, and I therefore welcome, support and thankthe Ellen MacArthur Foundation, the World Economic Forum and

McKinsey for their effort in identifying and promoting the global

innovations required if we are going to continue to enjoy thebenefits that plastics bring to our lives.

Matthew Pencharz, Deputy Mayor for Environment andEnergy, Greater London Authority

The New Plastics Economy is an exciting opportunity to inspire a

generation of designers to profoundly rethink plastic packaging and

its role in a system that works.

Tim Brown, CEO, IDEO

In the Global Ocean Commissions report From Decline to Recov-

ery: A Rescue Package for the Global Ocean, we identified keeping

plastics out of the ocean as one of our key proposals for action toadvance ocean recovery. This report is an excellent next step, offer-

ing a root-cause solution to the problem of ocean plastics as part

of a broader rethink and new approach to capture value in the NewPlastics Economy. The economic and environmental case is now

clear - I therefore call on governments and businesses alike to takeurgent action to capture the opportunity.

Trevor Manuel, Co-chair, Global Ocean Commission

SUEZ was pleased to contribute to the New Plastics Economy

report, a collaborative case for rethinking the current plasticseconomy. As this report shows, a radical and joint rethink of both

design and after-use processes will be required, in addition toother measures such as stimulating demand for secondary raw

materials. We look forward to continued collaboration to enablebetter economic and environmental results in the plastic packaging

value chain and to accelerate the transition towards the circulareconomy.

Jean-Louis Chaussade, Chief Executive Officer, SUEZ

Systems thinking and integrated approaches are needed if we

are to sustainably use and manage our global resources in amanner that enables the achievement of the Paris climate change

agreement while advancing a circular economy. In my work withthe G7 Alliance on Resource Efficiency, theres ongoing discussion

about the need to disrupt business as usual. The New Plastics

Economy Rethinking the future of plastics' continues in that vein.continues in that vein.

Mathy Stanislaus, USEPA Assistant Administrator for theOffice of Land and Emergency Management

This is an important report highlighting some of the key issues related

to plastics and their leakage into the marine environment. It is alsoan exciting report that proposes new approaches within a circular

economy framework that could re-orientate societys use of plasticsand start to address the problems that our current use is creating.

Professor Stephen de Mora, Chief Executive, PlymouthMarine Laboratory

Project MainStream

This report was written under the umbrella of ProjectMainStream, a multi-industry, global initiative launched in2014 by the World Economic Forum and the Ellen MacArthurFoundation, with McKinsey & Company as knowledge partner.MainStream is led by the chief executive officers of nine globalcompanies: Averda, BT, Desso BV (a Tarkett company), RoyalDSM, Ecolab, Indorama, Philips, SUEZ and Veolia.

MainStream aims to accelerate business-driven innovationsand help scale the circular economy. It focuses on systemicstalemates in global material flows that are too big or toocomplex for an individual business, city or governmentto overcome alone, as well as on enablers of the circulareconomy such as digital technologies.

Disclaimer

This report has been produced by a team from the EllenMacArthur Foundation, which takes full responsibility for thereports contents and conclusions. McKinsey & Company

provided analytical support. While the project participants,members of the advisory panel and experts consultedacknowledged on the following pages have providedsignificant input to the development of this report, theirparticipation does not necessarily imply endorsement of thereports contents or conclusions.


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Executive Summary

Plastics have become the ubiquitous workhorse materialof the modern economy combining unrivalled functionalproperties with low cost. Their use has increased twenty-fold in the past half-century and is expected to doubleagain in the next 20 years. Today nearly everyone,everywhere, every day comes into contact with plastics

especially plastic packaging, the focus of this report. Whiledelivering many benefits, the current plastics economyhas drawbacks that are becoming more apparent by theday. After a short first-use cycle, 95% of plastic packagingmaterial value, or $80120 billion annually, is lost to theeconomy. A staggering 32% of plastic packaging escapescollection systems, generating significant economic costsby reducing the productivity of vital natural systems suchas the ocean and clogging urban infrastructure. The costof such after-use externalities for plastic packaging, plusthe cost associated with greenhouse gas emissions fromits production, is conservatively estimated at $40 billionannually exceeding the plastic packaging industrysprofit pool. In future, these costs will have to be covered.In overcoming these drawbacks, an opportunity beckons:enhancing system effectiveness to achieve better economicand environmental outcomes while continuing to harnessthe many benefits of plastic packaging. The New PlasticsEconomy offers a new vision, aligned with the principlesof the circular economy, to capture these opportunities.With an explicitly systemic and collaborative approach, theNew Plastics Economy aims to overcome the limitationsof todays incremental improvements and fragmentedinitiatives, to create a shared sense of direction, to sparka wave of innovation and to move the plastics value chaininto a positive spiral of value capture, stronger economics,and better environmental outcomes. This report outlines

a fundamental rethink for plastic packaging and plasticsin general; it offers a new approach with the potential totransform global plastic packaging material flows andthereby usher in the New Plastics Economy.

Background to this work

This report presents a compelling opportunity to increasethe system effectiveness of the plastics economy, illustratedby examples from the plastic packaging value chain. Thevision of a New Plastics Economy offers a new way ofthinking about plastics as an effective global material flow,aligned with the principles of the circular economy.

The New Plastics Economy initiative is, to our knowledge,the first to have developed a comprehensive overview ofglobal plastic packaging material flows, assessed the valueand benefits of shifting this archetypally linear sector to acircular economic model, and identified a practical approachto enabling this shift. This report bases its findings oninterviews with over 180 experts and on analysis of over 200reports.

This report is the result of a three-year effort led by theEllen MacArthur Foundation, in partnership with the WorldEconomic Forum and supported by McKinsey & Company.Initial interest in the topic of packaging was stimulated bythe second Towards the Circular Economyreport developedby the Ellen MacArthur Foundation and published in 2013.That report quantified the economic value of shifting to

a circular economic approach in the global, fast-movingconsumer goods sector, highlighting the linear consumptionpattern of that sector, which sends goods worth over $2.6trillion annually to the worlds landfills and incineration plants.The report showed that shifting to a circular model couldgenerate a $706 billion economic opportunity, of which asignificant proportion attributable to packaging.

The subsequent Towards the Circular Economyvolume 3,

published by the Ellen MacArthur Foundation and the WorldEconomic Forum in 2014, also supported by McKinsey,explored the opportunities and challenges for the circulareconomy across global supply chains, focusing on severalsectors including plastic packaging. This study triggeredthe creation of Project MainStream, which formed material-specific working groups, including a plastics workinggroup; this group in turn quickly narrowed its scope ofinvestigation to plastic packaging due to its omnipresencein daily life all over the globe. The resulting initiative wasthe first of its type and included participants from acrossthe global plastic packaging value chain. It sought todevelop a deep understanding of global plastic packagingmaterial flows and to identify specific ways of promoting theemergence of a new, circular economic model. It was ledby a steering board of nine CEOs and included among itsparticipants polymer manufacturers; packaging producers;global brands; representatives of major cities focused onafter-use collection; collection, sorting and reprocessing/recycling companies; and a variety of industry experts andacademics.

In the course of the MainStream work, an additional keytheme presented itself: plastics leaking (escaping) fromafter-use collection systems and the resulting degradationof natural systems, particularly the ocean. Although not thefocal point initially, evidence of the looming degradation of

marine ecosystems by plastics waste, particularly plasticpackaging, has made plastics leakage a priority topic forMainStream. The economic impact of marine ecosystemdegradation is only just being established through scientificand socio-economic research and analysis. However, initialfindings indicate that the presence of hundreds of millionsof tonnes of plastics (of which estimates suggest thatpackaging represents the majority) in the ocean, whether asmicroscopic particles or surviving in a recognizable form forhundreds of years, will have profoundly negative effects onmarine ecosystems and the economic activities that dependon them.

This report is designed to initiate not conclude adeeper exploration of the New Plastics Economy. Itprovides an initial fact base, shared language, a sense ofthe opportunities derived from the application of circularprinciples, and a plan for concerted action for the next threeyears and beyond. It also identifies critical questions thatcould not be answered sufficiently within the scope of thiswork, but need to be in order to trigger aligned action.


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The case for rethinking plastics, starting withpackaging

Plastics and plastic packaging are an integral andimportant part of the global economy. Plastics productionhas surged over the past 50 years, from 15 million tonnesin 1964 to 311 million tonnes in 2014, and is expected todouble again over the next 20 years, as plastics come toserve increasingly many applications. Plastic packaging,

the focus of this report, is and will remain the largestapplication; currently, packaging represents 26% of thetotal volume of plastics used. Plastic packaging not onlydelivers direct economic benefits, but can also contributeto increased levels of resource productivity for instance,plastic packaging can reduce food waste by extending shelflife and can reduce fuel consumption for transportation bybringing packaging weight down.

While delivering many benefits, the current plasticseconomy also has important drawbacks that arebecoming more apparent by the day.

Today, 95% of plastic packaging material value, or $80120 billion annually, is lost to the economy after a shortfirst use.More than 40 years after the launch of the firstuniversal recycling symbol, only 14% of plastic packagingis collected for recycling. When additional value losses insorting and reprocessing are factored in, only 5% of materialvalue is retained for a subsequent use. Plastics that do getrecycled are mostly recycled into lower-value applicationsthat are not again recyclable after use. The recycling rate forplastics in general is even lower than for plastic packaging,and both are far below the global recycling rates for paper(58%) and iron and steel (7090%). In addition, plasticpackaging is almost exclusively single-use, especially inbusiness-to-consumer applications.

Plastic packaging generates significant negativeexternalities, conservatively valued by UNEP at $40billion and expected to increase with strong volumegrowth in a business-as-usual scenario. Each year, atleast 8 million tonnes of plastics leak into the ocean whichis equivalent to dumping the contents of one garbagetruck into the ocean every minute. If no action is taken, thisis expected to increase to two per minute by 2030 andfour per minute by 2050. Estimates suggest that plasticpackaging represents the major share of this leakage. Thebest research currently available estimates that there areover 150 million tonnes of plastics in the ocean today. In

a business-as-usual scenario, the ocean is expected tocontain 1 tonne of plastic for every 3 tonnes of fish by 2025,and by 2050, more plastics than fish (by weight).

The production of plastics draws on fossil feedstocks,with a significant carbon impact that will become evenmore significant with the projected surge in consumption.Over 90% of plastics produced are derived from virginfossil feedstocks. This represents, for all plastics (not justpackaging), about 6% of global oil consumption, whichis equivalent to the oil consumption of the global aviationsector. If the current strong growth of plastics usagecontinues as expected, the plastics sector will account for20% of total oil consumption and 15% of the global annualcarbon budget by 2050 (this is the budget that must beadhered to in order to achieve the internationally acceptedgoal to remain below a 2C increase in global warming).

Even though plastics can bring resource efficiency gainsduring use, these figures show that it is crucial to addressthe greenhouse gas impact of plastics production and after-use treatment.

Plastics often contain a complex blend of chemicalsubstances, of which some raise concerns about potentialadverse effects on human health and the environment. Whilescientific evidence on the exact implications is not always

conclusive, especially due to the difficulty of assessingcomplex long-term exposure and compounding effects,there are sufficient indications that warrant further researchand accelerated action.

Many innovations and improvement efforts showpotential, but to date these have proved to be toofragmented and uncoordinated to have impact atscale.Todays plastics economy is highly fragmented. Thelack of standards and coordination across the value chainhas allowed a proliferation of materials, formats, labelling,collection schemes and sorting and reprocessing systems,which collectively hamper the development of effectivemarkets. Innovation is also fragmented. The developmentand introduction of new packaging materials and formatsacross global supply and distribution chains is happeningfar faster than and is largely disconnected from thedevelopment and deployment of corresponding after-usesystems and infrastructure. At the same time, hundreds, ifnot thousands, of small-scale local initiatives are launchedeach year, focused on areas such as improving collectionschemes and installing new sorting and reprocessingtechnologies. Other issues, such as the fragmenteddevelopment and adoption of labelling standards, hinderpublic understanding and create confusion.

In overcoming these drawbacks, an opportunity

beckons: using the plastics innovation engine to movethe industry into a positive spiral of value capture,stronger economics and better environmentaloutcomes.

The new plastics economy: capturing theopportunity

The overarching vision of the New Plastics Economy isthat plastics never become waste; rather, they re-enterthe economy as valuable technical or biological nutrients.The New Plastics Economy is underpinned by and alignswith principles of the circular economy. Its ambition is to

deliver better system-wide economic and environmentaloutcomes by creating an effective after-use plasticseconomy, drastically reducing the leakage of plastics intonatural systems (in particular the ocean) and other negativeexternalities; and decoupling from fossil feedstocks.

Even with todays designs, technologies and systems, theseambitions can already be at least partially realized. Onerecent study found, for example, that in Europe today 53%of plastic packaging could be recycled economically andenvironmentally effectively. While the exact figure can bedebated and depends on, amongst others, the oil price, themessage is clear: there are pockets of opportunities to becaptured today and even where not entirely feasible today,the New Plastics Economy offers an attractive target statefor the global value chain and governments to collaborativelyinnovate towards.


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Given plastic packagings many benefits, both the likelihoodand desirability of an across-the-board drastic reductionin the volume of plastic packaging used is clearly low.Nevertheless, reduction should be pursued where possibleand beneficial, by dematerializing, moving away from single-use as the default, and substituting by other materials.

Create an effective after-use plastics economy.

Creating an effective after-use plastics economy is thecornerstone of the New Plastics Economy and its firstpriority. Not only is it crucial to capture more material valueand increase resource productivity, it also provides a directeconomic incentive to avoid leakage into natural systemsand will help enable the transition to renewably sourcedfeedstock by reducing the scale of the transition.

Radically increase the economics, quality and up-take of recycling. Establish a cross-value chain dialoguemechanism and develop a Global Plastics Protocol to setdirection on the re-design and convergence of materials,formats, and after-use systems to substantially improvecollection, sorting and reprocessing yields, quality and

economics, while allowing for regional differences andcontinued innovation. Enable secondary markets for re-cycled materials through the introduction and scale-up ofmatchmaking mechanisms, industry commitments and/or policy interventions. Focus on key innovation opportu-nities that have the potential to scale up, such as invest-ments in new or improved materials and reprocessingtechnologies. Explore the overall enabling role of policy.

Scale up the adoption of reusable packaging withinbusiness-to-business applications as a priority, but alsoin targeted business-to-consumer applications such asplastic bags.

Scale up the adoption of industrially compostable

plastic packaging for targeted applications such asgarbage bags for organic waste and food packagingfor events, fast food enterprises, canteens and otherclosed systems, where there is low risk of mixing with therecycling stream and where the pairing of a compostablepackage with organic contents helps return nutrients inthe contents to the soil.

Drastically reduce the leakage of plastics into naturalsystems and other negative externalities.

Achieving a drastic reduction in leakage would requirejointefforts along three axes: improving after-use infrastructurein high-leakage countries, increasing the economic

attractiveness of keeping materials in the system andreducing the negative impact of plastic packaging whenit does escape collection and reprocessing systems. Inaddition, efforts related to substances of concern could bescaled up and accelerated.

Improve after-use collection, storage andreprocessing infrastructure in high-leakagecountries. This is a critical first step, but likely notsufficient in isolation. As discussed in the OceanConservancys 2015 report Stemming the Tide, evenunder the very best current scenarios for improvinginfrastructure, leakage would only be stabilized, noteliminated, implying that the cumulative total volume

of plastics in the ocean would continue to increasestrongly. Therefore, the current report focuses not on theurgently needed short-term improvements in after-useinfrastructure in high-leakage countries but rather on thecomplementary actions required.

Increase the economic attractiveness of keepingmaterials in the system.Creating an effective after-use plastics economy as described above contributesto a root-cause solution to leakage. Improvedeconomics make the build-up of after-use collection andreprocessing infrastructure more attractive. Increasingthe value of after-use plastic packaging reduces thelikelihood that it escapes the collection system, especiallyin countries with an informal waste sector.

Steer innovation investment towards creatingmaterials and formats that reduce the negativeenvironmental impact of plastic packaging leakage.Current plastic packaging offers great functional benefits,but it has an inherent design failure: its intended usefullife is typically less than one year; however, the materialpersists for centuries, which is particularly damaging ifit leaks outside collection systems, as happens todaywith 32% of plastic packaging. The efforts describedabove will reduce leakage, but it is doubtful that leakagecan ever be fully eliminated and even at a leakage rateof just 1%, about 1 million tonnes of plastic packagingwould escape collection systems and accumulate in

natural systems each year. The ambitious objectivewould be to develop bio-benign plastic packaging thatwould reduce the negative impacts on natural systemswhen leaked, while also being recyclable and competitivein terms of functionality and costs. Todays biodegradableplastics rarely measure up to that ambition, as they aretypically compostable only under controlled conditions(e.g. in industrial composters). Further research andgame-changing innovation are needed.

Scale up existing efforts to understand the potentialimpact of substances raising concerns andaccelerate development and application of safealternatives.

Decouple plastics from fossil feedstocks.

Decoupling plastics from fossil feedstocks would allow theplastic packaging industry to complement its contributionsto resource productivity during use with a low-carbonproduction process, enabling it to effectively participatein the low-carbon world that is inevitably drawing closer.Creating an effective after-use economy is key to decouplingbecause it would, along with dematerialization levers,reduce the need for virgin feedstock. Another central part ofthis effort would be the development of renewably sourcedmaterials to provide the virgin feedstock that would still berequired to compensate for remaining cycle losses, despite

the increased recycling and reuse.


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The new plastics economy demands a newapproach

To move beyond small-scale and incremental improvementsand achieve a systemic shift towards the New PlasticsEconomy, existing improvement initiatives would need to becomplemented and guided by a concerted, global, systemicand collaborative initiative that matches the scale of thechallenge and the opportunity. An independent coordinating

vehicle would be needed to drive this initiative. It would needto be set up in a way that recognizes that the innovationsrequired for the transition to the New Plastics Economy aredriven collaboratively across industry, cities, governmentsand NGOs. In this initiative, consumer goods companies,plastic packaging producers and plastics manufacturerswould play a critical role, because they determine whatproducts and materials are put on the market. Cities controlthe after-use infrastructure in many places and are oftenhubs for innovation. Businesses involved in collection,sorting and reprocessing are an equally critical part ofthe puzzle. Policymakers can play an important role inenabling the transition by realigning incentives, facilitating

secondary markets, defining standards and stimulatinginnovation. NGOs can help ensure that broader socialand environmental considerations are taken into account.Collaboration would be required to overcome fragmentation,the chronic lack of alignment between innovation in designand after-use, and lack of standards, all challenges thatmust be resolved in order to unlock the New PlasticsEconomy.

The coordinating vehicle would need to bring together thedifferent actors in a cross-value chain dialogue mechanismand drive change by focusing on efforts with compoundingeffects that together would have the potential to shift theglobal market. Analysis to date indicates that the initial areas

of focus could be:

Establish a Global Plastics Protocol and coordinatelarge-scale pilots and demonstration projects. Re-design and converge materials, formats and after-usesystems, starting by investigating questions such as: Towhat extent could plastic packaging be designed with asignificantly smaller set of material/additive combinations,and what would be the economic benefits if this weredone? What would be the potential to design out small-format/low-value plastic packaging such as tear-offs,with challenging after-use economics and especiallylikely to leak? What would be the economic benefits if allplastic packaging had common labelling and chemical

marking, and these were well aligned with standardizedseparation and sorting systems? What if after-usesystems, currently shaped by fragmented decisionsat municipal or regional level, were rethought andredesigned to achieve optimal scale and economics?What would be the best levers to stimulate the market forrecycled plastics? Set global direction by answering suchquestions, demonstrate solutions at scale with large-scale pilots and demonstration projects, and drive globalconvergence (allowing for continued innovation andregional variations) towards the identified designs andsystems with proven economics in order to overcomethe existing fragmentation and to fundamentally shift

after-use collection and reprocessing economics andmarket effectiveness.

Mobilize large-scale moon shot innovations.Theworlds leading businesses, academics and innovatorswould be invited to come together and define moonshot innovations: focused, practical initiatives witha high potential for significant impact at scale. Areasto look at for such innovations could include thedevelopment of bio-benign materials; the developmentof materials designed to facilitate multilayer reprocessing,such as the use of reversible adhesives based on

biomimicry principles; the search for a super-polymerwith the functionality of todays polymers and withsuperior recyclability; chemical marking technologies;and chemical recycling technologies that wouldovercome some of the environmental and economicissues facing current technologies.

Develop insights and build an economic andscientific evidence base.Many of the core aspectsof plastic material flows and their economics are stillpoorly understood. While this report, together with anumber of other recent efforts, aims to provide initialanswers, more research is required. Initial studies couldinclude: investigating in further detail the economic

and environmental benefits of solutions discussed inthis report; conducting meta-analyses and researchtargeted to assess the socio-economic impact of oceanplastics waste and substances of concern (includingrisks and externalities); determining the scale-uppotential for greenhouse gas-based plastics (renewablysourced plastics produced using greenhouse gasesas feedstock); investigating the potential role of (andboundary conditions for) energy recovery in a transitionperiod; and managing and disseminating a repository ofglobal data and best practices.

Engage policy-makersin the development of acommon vision of a more effective system, and providethem with relevant tools, data and insights related toplastics and plastic packaging. One specific deliverablecould be a plastics toolkit for policy-makers, giving thema structured methodology for assessing opportunities,barriers and policy options to overcome these barriers intransitioning towards the New Plastics Economy.

Coordinate and drive communication ofthe natureof todays situation, the vision of the New PlasticsEconomy, best practices and insights,as well as specificopportunities and recommendations, to stakeholdersacting along the global plastic packaging value chain.


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Owing to their combination of unrivalled properties and lowcost, plastics are the workhorse material of the moderneconomy. Their use has increased twenty-fold in the pasthalf-century, and is expected to double again in the next 20years. Today nearly everyone, everywhere, every day comesinto contact with plastics especially plastic packaging, on

which the report focuses. While delivering many benefits,the current plastics economy has drawbacks that arebecoming more apparent by the day. After a first short usecycle, 95% of plastic packaging material value, or $80120billion annually, is lost to the economy. A staggering 32% ofplastic packaging escapes collection systems, generatingsignificant economic costs by reducing the productivity ofvital natural systems such as the ocean and clogging urbaninfrastructure. The cost of such after-use externalities forplastic packaging, plus the cost associated with greenhousegas emissions from its production, has been estimatedconservatively by UNEP at $40 billion exceeding theplastic packaging industrys profit pool. In future, these costswill have to be covered. In overcoming these drawbacks,

an opportunity beckons: enhancing system effectiveness toachieve better economic and environmental outcomes whilecontinuing to reap the many benefits of plastic packaging.

1.1 Plastics and PlasticPackaging Are an Integral andImportant Part of the GlobalEconomy

Today, imagining a world without plastics1is nearlyimpossible. Plastics are increasingly used across theeconomy, serving as a key enabler for sectors as diverseas packaging, construction, transportation, healthcare andelectronics. Plastics now make up roughly 15% of a car2byweight and about 50% of the Boeing Dreamliner.3

Plastics have brought massive economic benefits to thesesectors, thanks to their combination of low cost, versatility,durability and high strength-to-weight ratio.4The successof plastics is reflected in the exponential growth in their

production over the past half-century (Figure 1). Since 1964,plastics production has increased twenty-fold, reaching311 million tonnes in 2014, the equivalent of more than 900Empire State Buildings.5Plastics production is expected todouble again in 20 years and almost quadruple by 2050.

Plastic packaging the focus of this report is plasticslargest application, representing 26% of the total volume.6As packaging materials, plastics are especially inexpensive,lightweight and high performing. Plastic packaging canalso benefit the environment: its low weight reduces fuelconsumption in transportation, and its barrier propertieskeep food fresh longer, reducing food waste. As a resultof these characteristics, plastics are increasingly replacing

other packaging materials. Between 2000 and 2015, theshare of plastic packaging as a share of global packagingvolumes has increased from 17% to 25%7driven by astrong growth in the global plastic packaging market8of5%9annually. In 2013, the industry put 78 million tonnesof plastic packaging on the market, with a total value of$260 billion.10Plastic packaging volumes are expectedto continue their strong growth, doubling within 15 yearsand more than quadrupling by 2050, to 318 million tonnesannually more than the entire plastics industry today.11Themain plastic resin types and their packaging applications areshown in Figure 2.

1 The Case for RethinkingPlastics, Starting with

Packaging


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OTHERS

6

Water and soft drink bottles, salad domes,

biscuit trays, salad dressing and peanut

butter containers

Milk bottles, freezer bags, dip tubs, crinkly shopping

bags, ice cream containers, juice bottles, shampoo,

chemical and detergent bottles

Cosmetic containers, commercial cling wrap

Squeeze bottles, cling wrap, shrink wrap,

rubbish bags

Microwave dishes, ice cream tubs, potato chip

bags, and dip tubs

CD cases, water station cups, plastic cutlery,

imitation crystal glassware, video cases

Foamed polystyrene hot drink cups, hamburger

take-away clamshells, foamed meat trays,

protective packaging for fragile items

Water cooler bottles, flexible films,

multi-material packaging

Figure 1: Growth in Global Plastics Production 19502014

Figure 2: Main Plastic Resin Types and Their Applications in Packaging

Note: Production from virgin petroleum-based feedstock only (does not include bio-based, greenhouse gas-based or recycled feedstock)

Source: PlasticsEurope, Plastics the Facts 2013 (2013); PlasticsEurope, Plastics the Facts 2015 (2015).


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1.2 Todays Plastics EconomyHas Important Drawbacks

1.2.1 Plastic packaging is an iconic linearapplication with $80120 billion annualmaterial value loss

Today, 95% of plastic packaging material value or $80120billion annually is lost to the economy after a short firstuse. More than 40 years after the launch of the well-known recycling symbol, only 14% of plastic packagingis collected for recycling. When additional value lossesin sorting and reprocessing are factored in, only 5% ofmaterial value is retained for a subsequent use (see Figure3). Plastics that do get recycled are mostly recycled intolower-value applications that are not again recyclable afteruse. The recycling rate for plastics in general is even lowerthan for plastic packaging, and both are far below theglobal recycling rates for paper (58%)12and iron and steel(7090%).13PET,14used in beverage bottles, has a higherrecycling rate than any other type of plastic, but even thissuccess story is only a modest one: globally, close to half ofPET is not collected for recycling, and only 7% is recycledbottle-to-bottle.15In addition, plastic packaging is almostexclusively single-use, especially in business-to-consumerapplications.

Figure 3: Plastic Packaging Material Value Loss afterOne Use Cycle

A comprehensive overview of global flows of plasticpackaging materials can be found in Figure 4. In additionto the 14% of plastic packaging collected for recycling,another 14% is sent to an incineration and/or energyrecovery process, mostly through incineration in mixed solidwaste incinerators, but also through the combustion ofrefuse-derived fuel in industrial processes such as cementkilns, and (at a limited scale) pyrolysis or gasification. Whilerecovering energy is a good thing in itself, this process

still loses the embedded effort and labour that went intocreating the material. For energy recovery in mixed solidwaste incinerators, in particular, there are also concernsthat over-deployment of such incineration infrastructure cancreate a lock-in effect that, because of the large capitalinvestments but relatively low operating costs involved inbuilding up and running such infrastructure, can effectivelypush higher-value mechanisms such as recycling out ofthe market. Many organizations have also raised concernsabout the pollutants that are generated during energyrecovery processes, which can have direct negative healtheffects if adequate pollution controls are not in place, asis often the case in the developing world. Also, even ifappropriate pollution controls are in place, the resulting by-products need to be disposed of.

Furthermore, an overwhelming 72% of plastic packaging isnot recovered at all: 40% is landfilled, and 32% leaks out ofthe collection system that is, either it is not collected at all,or it is collected but then illegally dumped or mismanaged.

This analysis of the global flows of plastic packagingmaterials is based on an aggregation of fragmenteddatasets, often with varying definitions and scope. Theanalysis not only reveals a significant opportunity to increasecircularity and capture material value, but also highlightsthe need for better alignment of reporting standards and

consolidation on a global level. Specific efforts could bededicated to improving the data from developing marketswith informal waste sectors.

100

36

0

14

VALUEYIELD1(%)

COLLECTED FOR RECYCLING (%)

64%

86%

100

95% LOSS($80120 billion)2

1 Value yield = volume yield * price yield, where volume yield = output volumes/ input volumes, and price yield = USD per tonne of reprocessed material / USDper tonne of virgin material

2 Current situation based on 14% recycling rate, 72% volume yield and 50%price yield. Total volume of plastic packaging of 78 Mt, given a weighted averageprice of 1,1001,600 USD/t

Source: Expert interviews; Plastic News; Deloitte, Increased EU PlasticsRecycling Targets: Environmental, Economic and Social Impact Assessment

Final Report (2015); The Plastics Exchange; plasticker; EUWID; Eurostat


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1.2.2 Production relies on finite stocks of fossil

feedstocksThe plastics industry as a whole is highly reliant on finitestocks of oil and gas, which make up more than 90% of itsfeedstock. For plastic packaging, this number is even higher,as the recycling of plastics into packaging applications islimited. Sources vary on the share of oil production usedto make plastics, but a combination of extensive literatureresearch and modelling indicates that 48% of the worldsoil production is used to make plastics (not just packaging),with 6% as the best estimate; roughly half of this is usedas material feedstock and half as fuel for the productionprocess.16This is equivalent to the oil consumption of theglobal aviation sector17and is in addition to the natural

gas used as material feedstock and fuel. If the currentstrong growth of plastics usage continues as expected, theconsumption of oil by the entire plastics sector will accountfor 20% of the total consumption by 2050.18The use of oilby the plastics industry is expected to increase in line withplastics production (growing by 3.53.8% annually); this ismuch faster than the growth in overall demand for oil, whichis expected to increase by only 0.5% annually.19

1.2.3 Plastics and packaging generates

significant negative externalitiesThe externalities related to the use of plastics and plasticpackaging are concentrated in three areas: degradationof natural systems as a result of leakage, especially in theocean; greenhouse gas emissions resulting from productionand after-use incineration; and health and environmentalimpacts from substances of concern. Valuing Plastic, areport by the UN Environment Programme and the PlasticsDisclosure Project (PDP) based on research by Trucostestimated the total natural capital cost of plastics in theconsumer goods industry at $75 billion, of which $40 billionwas related to plastic packaging, exceeding the profit poolof the plastic packaging industry.20

The continued strong growth expected in the productionand use of both plastics in general and plastic packagingin particular will spread the benefits of plastics to ever morepeople and in ever more useful applications; however,if production and use continue within the current linearframework, these negative externalities will be exacerbated,as laid out in Figure 5 and detailed below.

78 MILLION

TONNES 40% LANDFILLED

14% INCINERATION AND/

OR ENERGY RECOVERY

32% LEAKAGE

98% VIRGIN

FEEDSTOCK

4% PROCESS

LOSSES

8% CASCADED

RECYCLING2

2% CLOSED-LOOP

RECYCLING1

14% COLLECTED

FOR RECYCLING

(ANNUAL PRODUCTION)

Figure 4: Global Flows of Plastic Packaging Materials in 2013

1 Closed-loop recycling: Recycling of plastics into the same or similar-quality application

2 Cascaded recycling: Recycling of plastics into other, lower-value applications

Source: Project Mainstream analysis for details please refer to the extended version of the reportavailable on the website of the Ellen MacArthur Foundation: www.ellenmacarthurfoundation.org


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Degradation of natural systems as a result of leakage,especially in the ocean.At least 8 million tonnes of plasticsleak into the ocean each year21 which is equivalent todumping the contents of one garbage truck into the oceanper minute. If no action is taken, this will increase to two perminute by 2030 and four per minute by 2050.22Estimatesand expert interviews suggest that packaging represents themajor share of the leakage. Not only is packaging the largest

application of plastics with 26% of volumes, its small size andlow residual value also makes it especially prone to leakage.One indicative data point is that plastic packaging comprisesmore than 62% of all items (including non-plastics) collectedin international coastal clean-up operations.23

Plastics can remain in the ocean for hundreds of years intheir original form and even longer in small particles, whichmeans that the amount of plastic in the ocean cumulatesover time. The best research currently available estimatesthat there are over 150 million tonnes of plastic waste in theocean today.24Without significant action, there may be moreplastic than fish in the ocean, by weight, by 2050.25Even by2025, the ratio of plastic to fish in the ocean is expected tobe one to three, as plastic stocks in the ocean are forecastto grow to 250 million tonnes in 2025.26As pointed out inthe report Stemming the Tide, even if concerted abatementefforts would be made to reduce the flow of plastics into

the ocean, the volume of plastic waste going into the oceanwould stabilize rather than decline, implying a continuedincrease in total ocean plastics volumes, unless thoseabatement efforts would be coupled with a longer-termsystemic solution, including the adoption of principles of thecircular economy.

Ocean plastics significantly impact maritime natural capital.

While the total economic impact is still unclear, initial studiessuggest that it is at least in the billions of dollars. Accordingto Valuing Plasticthe annual damage of plastics to marineecosystems is at least $13 billion per year and Asia-PacificEconomic Cooperation (APEC) estimates that the cost ofocean plastics to the tourism, fishing and shipping industrieswas $1.3 billion in that region alone.27Even in Europe, whereleakage is relatively limited, potential costs for coastal andbeach cleaning could reach 630 million ($695 million) peryear.28In addition to the direct economic costs, there arepotential adverse impacts on human livelihoods and health,food chains and other essential economic and societalsystems.

Leaked plastics can also degrade other natural systems,such as forests and waterways, and induce direct economiccosts by clogging sewers and other urban infrastructure. Theeconomic costs of these impacts need further assessment.

PLASTICS

PRODUCTION

PLASTICS SHARE

OF GLOBAL OIL

CONSUMPTION2

311 MT 1,124 MT

1:5 >1:1

6%20%

2014 2050

OIL OIL

RATIO OF PLASTICS TO

FISH IN THE OCEAN1

(BY WEIGHT)

PLASTICS' SHARE

OF CARBON BUDGET3

1% 15%

Figure 5: Forecast of Plastics Volume Growth, Externalities and Oil Consumption in a Business-As-Usual Scenario

1 Total ocean plastics growth (x5) is faster than plastics production growth (x3) as the majority of consumption growth will be in high-leakage markets. Fish stocksare assumed to be constant (conservative assumption)

2 Total oil consumption expected to grow slower (0.5% p.a.) than plastics production (3.8% until 2030 then 3.5% to 2050)

3 Carbon from plastics includes energy used in production and carbon released through incineration and/or energy recovery after-use. The latter is based on 14%incinerated and/or energy recovery in 2014 and 20% in 2050. Carbon budget based on 2 degrees scenario

Source: Plastics Europe; ICIS Supply and Demand; IEA World Energy Outlook (2015) global GDP projection 20132040, assumed to continue to 2050; Ocean Con-servancy and McKinsey Center for Business and Environment, Stemming the Tide: Land-based strategies for a plastic-free ocean (2015); J. R. Jambeck et al., Plastic

waste inputs from land into the ocean, Science (13 February 2015); IEA World Energy Outlook 2015 central New Policies scenario oil demand projection 2014-2040,assumed to continue to 2050; J. Hopewell et al., Plastics recycling: Challenges and opportunities, Philosophical Transactions of the Royal Society B, 2009; IEA CO2emissions from fuel combustion (2014); IEA World Energy Outlook Special Report: Energy and Climate Change; Carbon Tracker Initiative Unburnable Carbon (2013)


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Greenhouse gas emissions.As pointed out above,plastic packaging can in many cases reduce the emissionof greenhouse gases during its use phase. Yet, with 6%of global oil production devoted to the production ofplastics (of which packaging represents a good quarter),considerable greenhouse gas emissions are associatedwith the production and sometimes the after-use pathwayof plastics. In 2012, these emissions amounted toapproximately 390 million tonnes of CO2 for all plastics

(not just packaging).29

According toValuing Plastic, themanufacturing of plastic feedstock, including the extractionof the raw materials, gives rise to greenhouse gas emissionswith natural capital costs of $23 billion.30The productionphase, which consumes around half of the fossil feedstocksflowing into the plastics sector, leads to most of theseemissions.31The remaining carbon is captured in theplastic products themselves, and its release in the formof greenhouse gas emissions strongly depends on theproducts after-use pathway.32Incineration and energyrecovery result in a direct release of the carbon (not takinginto account potential carbon savings by replacing anotherenergy source). If the plastics are landfilled, this feedstockcarbon could be considered sequestered. If it is leaked,carbon might be released into the atmosphere over many(potentially, hundreds of) years.33

This greenhouse gas footprint will become even moresignificant with the projected surge in consumption. Ifthe current strong growth of plastics usage continues asexpected, the emission of greenhouse gases by the globalplastics sector will account for 15% of the global annualcarbon budget by 2050, up from 1% today.34The carbonbudget for the global economy is based on restricting globalwarming to a maximum increase of 2C by 2100.35Eventhough plastics can bring real resource efficiency gains andhelp reduce carbon emissions during use, these figures

show that it is crucial to address the greenhouse gas impactof plastics production and after-use treatment.

Substances of concern. Plastics are made from apolymer mixed with a complex blend of additives such asstabilizers, plasticizers and pigments, and might containunintended substances in the form of impurities andcontaminants. Substances such as bisphenol A (BPA)and certain phthalates, which are used as plasticizers inpolyvinyl chloride (PVC), have already raised concernsabout the risk of adverse effects on human health and theenvironment, concerns that have motivated some regulatorsand businesses to act.36In addition, there are uncertaintiesabout the potential consequences of long-term exposureto other substances found in todays plastics, about theircombined effects and about the consequences of leakageinto the biosphere. The 150 million tonnes of plasticscurrently in the ocean include roughly 23 million tonnes ofadditives, of which some raise concern.37While the speedat which these additives leach out of the plastic into theenvironment is still subject to debate, estimates suggest thatabout 225,000 tonnes of such additives could be releasedinto the ocean annually. This number could increase to 1.2million tonnes per year by 2050.38In addition, substancesof concern might enter the environment when plastics andplastic packaging are combusted without proper controls,a common practice in many developing economies.

This suggests the need for additional research and moretransparency.

1.2.4 Current innovation and improvementefforts fail to have impact at scale

Many innovation and improvement efforts showpotential, but to date these have proven to be toofragmented and uncoordinated to have impact atscale.Todays plastics economy is highly fragmented.The lack of standards and coordination across the valuechain has allowed the proliferation of materials, formats,

labelling, collection schemes, and sorting and reprocessingsystems, which collectively hamper the development ofeffective markets. Innovation is also fragmented. Thedevelopment and introduction of new packaging materialsand formats across global supply and distribution chainsis happening far faster than and is largely disconnectedfrom the development and deployment of correspondingafter-use systems and infrastructure. At the same time,hundreds, if not thousands, of small-scale local initiativesare being launched each year, focused on areas such asimproving collection schemes and installing new sortingand reprocessing technologies. Other issues, such asthe fragmented development and adoption of labelling

standards, hinder public understanding and createconfusion.

Through overcoming these drawbacks, an opportunitybeckons: moving the plastics industry into a positivespiral of value capture, stronger economics, and betterenvironmental outcomes. Actors across the plasticpackaging value chain have proven time and again theircapacity to innovate. Now, harnessing this capabilityto improve the circularity of plastic packaging whilecontinuing to expand its functionality and reduce its cost could create a new engine to move towards a system thatworks: a New Plastics Economy.


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The overarching vision of the New Plastics Economy isthat plastics never become waste; rather, they re-enter theeconomy as valuable technical or biological nutrients. TheNew Plastics Economy is underpinned by and aligns withcircular economy principles. It sets the ambition to deliverbetter system-wide economic and environmental outcomes

by creating an effective after-use plastics economy (thecornerstone and priority); by drastically reducing the leakageof plastics into natural systems (in particular the ocean); andby decoupling plastics from fossil feedstocks.

2.1 The New Plastics EconomyProposes a New Way ofThinking

The New Plastics Economy builds on and aligns with theprinciples of the circular economy, an industrial system that isrestorative and regenerative by design (see Box 1). The New

Plastics Economy has three main ambitions (see Figure 6):

1. Create an effective after-use plastics economy byimproving the economics and uptake of recycling, reuseand controlled biodegradation for targeted applications.This is the cornerstone of the New Plastics Economyand its first priority, and helps realize the two followingambitions.

2. Drastically reduce leakage of plastics into naturalsystems (in particular the ocean) and other negativeexternalities.

3. Decouple plastics from fossil feedstocks by inaddition to reducing cycle losses and dematerializing exploring and adopting renewably sourced feedstocks.

2 The New PlasticsEconomy: Capturing the

Opportunity

RADICALLY IMPROVED

ECONOMICS & QUALITY

AD1 AN

D/OR

COMP

OST

ING

RECYCLING

DESIGN &

PRODUCTION

USE

DRASTICALLY REDUCE THE

LEAKAGE OF PLASTICS INTO

NATURAL SYSTEMS & OTHER

NEGATIVE EXTERNALITIES

DECOUPLE PLASTICS FROM

FOSSIL FEEDSTOCKS

CREATE AN EFFECTIVE AFTER-USE

PLASTICS ECONOMY1

23

REUSE

RENEWABLY SOURCED

VIRGIN FEEDSTOCK ENERGY RECOVERY1

LEAKAGE

OTHER

MATERIAL

STREAMS

ENERGY RECOVERY2

1 Closed-loop recycling: Recycling ofplastics into the same or similar-qualityapplication

2 Cascaded recycling: Recyclingof plastics into other, lower-value

applications

Source: Project Mainstream analysis for details please refer to the extendedversion of the report available onthe website of the Ellen MacArthurFoundation:www.ellenmacarthurfoundation.org

Figure 6: Ambitions of the New Plastics Economy


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Box 1: The Circular Economy: Principles and Benefits

The circular economy is an industrial system that is restorative and regenerative by design. It rests on three main principles:preserving and enhancing natural capital, optimizing resource yields and fostering system effectiveness.

1. Hunting and fishing

2. Can take both post-harvest and post-consumer waste as an input

Source: Ellen MacArthur Foundation, SUN, and McKinsey Center for Business and Environment; Drawing from Braungart & McDonough, Cradle to Cradle (C2C).

Multiple research efforts and the identification of best-practice examples have shown that a transition towards the circulareconomy can bring about the lasting benefits of a more innovative, resilient, and productive economy. For example, the2015 study Growth Within: A Circular Economy Vision for a Competitive Europeestimated that a shift to the circulareconomy development path in just three core areas mobility, food and built environment would generate annual totalbenefits for Europe of around 1.8 trillion ($2.0 trillion).40

Farming/collection 1

Biochemicalfeedstock

Regeneration

Biogas

Extraction ofbiochemicalfeedstock2

Cascades

Collection

Minimise systematicleakage and negative

externalities

Parts manufacturer

Product manufacturer

Service provider

Collection

User

Biosphere

Finite materialsRenewables

Regenerate Substitute materials Virtualise Restore

Renewables flow management Stock management

Recycle

Refurbish/remanufacture

Reuse/redistribute

Maintain/prolong

Share

6 2803 0006 9

Consumer

PRINCIPLE

1

PRINCIPLE

2

PRINCIPLE

3Foster system effectiveness

by revealing and designing

out negative externalities

All ReSOLVE levers

Preserve and enhance

natural capital by controlling

finite stocks and balancing

renewable resource flows

ReSOLVE levers: regenerate,

virtualise, exchange

Optimise resource yields

by circulating products,

components and materials

in use at the highest utility

at all times in both technical

and biological cycles

ReSOLVE levers: regenerate,

share, optimise, loop

OUTLINE OF A CIRCULAR ECONOMY

Anaerobicdigestion

Even with todays designs, technologies and systems, theseambitions can already be at least partially realized. Onerecent study found, for example, that in Europe alreadytoday 53% of plastic packaging could be recycled eco-efficiently.39While the exact figure can be and depends on,amongst others, the oil price, the message is clear: there arepockets of opportunities to be captured today and evenwhere not entirely feasible today, the New Plastics Economyoffers an attractive target state for the global value chain and

governments to collaboratively innovate towards. This willnot happen overnight. Redesigning materials, formats andsystems, developing new technologies and evolving globalvalue chains may take many years. But this should notdiscourage stakeholders or lead to delays on the contrary,the time to act is now.

Given plastic packagings many benefits, it has becomeclear that the likelihood of a drastic reduction in the volumeof plastic packaging is low although reduction should bepursued where possible and beneficial, by moving awayfrom single-use as the default (especially in business-to-business applications, but also in targeted business-to-consumer applications such as plastic bags), bydematerializing and by substituting other materials.


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2.1.1 Create an effective after-use plasticseconomy

Creating an effective after-use plastics economy is thecornerstone of the New Plastics Economy and its firstpriority. Not only is it critical to capture more material valueand increase resource productivity, it also provides a directeconomic incentive to avoid leakage into natural systemsand helps enable the transition to renewably sourced

feedstock by reducing its scale.

As evidenced by todays capture of just 5% of after-useplastic packaging material value, there is significant potentialto capture more material value by radically improvingrecycling economics, quality and uptake. Coordinatedand compounding action and innovation across the globalvalue chain are needed to capture the potential. Theseactions could include: establishment of a cross-value chaindialogue mechanism; development of a Global PlasticsProtocol to set direction on the re-design and convergenceof materials, formats and after-use systems to substantiallyimprove collection, sorting and reprocessing yields, quality

and economics, while allowing for regional differences andcontinued innovation; enablement of secondary markets forrecycled materials through the introduction and scale-upof matchmaking mechanisms, industry commitments and/or policy interventions; pursuit of innovation opportunitiesthat have the potential to scale up, such as investments innew or improved materials and reprocessing technologies;and exploration of the enabling role of policy. Segmentswithin the plastic packaging market with the most attractiverecycling cost-benefit balance are likely commercial(business-to-business) films, beverage bottles and otherrigid plastic packaging.41

Reuse could play an important role as well, especially in

the business-to-business (B2B) segment. Reusable B2Bpackaging can create substantial cost savings, and ifused in pooled systems across companies and industries,significant value beyond packaging. In its most advancedform, it could help enable the Physical Internet a logisticssystem based on standardised, modularised, sharedassets. Transitioning to the Physical Internet could unlocksignificant economic value estimated to be USD 100 billionin the United States alone.42In the business-to-consumersegment, reuse is more challenging for many applications,but could however be pursued for targeted applicationssuch as plastic bags, and could be increasingly enabled bynew business models.

Industrially compostable plastic packaging could be a goodsolution and scaled up for certain targeted applications,if coupled with the appropriate collection and recoveryinfrastructure (anaerobic digestion and/or industrialcomposting) to return the nutrients of the packagedcontents (e.g. food) to the soil. Today, plastics are designedto be either recyclable or compostable (or neither of thetwo) keeping both options open by design is usuallynot possible with current materials technology and after-use infrastructure. For most applications, the recyclingpathway is preferable, as this keeps the material in theeconomy, whereas biodegradability allows plastic to breakdown into harmless, but essentially low-value elementssuch as water and CO2. In certain targeted applications,however, industrially compostable packaging could be avaluable mechanism for returning nutrients to the soil. Most

promising applications are the ones that meet the followingtwo criteria: First, packaging is likely to be mixed withorganic contents such as food after use making packagingin such applications compostable can help to bring backnutrients from the packaged contents (e.g. food) to the soil.Second packaging does not typically end up in a plasticsrecycling stream compostable packaging in its currentform can interfere with recycling processes. Examples ofapplications fulfilling both criteria are bags for organic waste,

packaging used in closed-loop systems such as events,fast food restaurants and canteens, and packaging itemssuch as tea bags and coffee capsules. The city of Milan,for example, more than tripled its collection of food waste from 28kg to 95kg per inhabitant per year after theintroduction of compostable bags for organic waste.43

2.1.2 Drastically reduce the leakage of plasticsinto natural systems and other negativeexternalities

Plastics should not end up in the ocean or other parts ofthe environment. Ensuring this doesnt happen requires

a coordinated effort to improve collection systems andrecovery infrastructure especially where the latter lagsbehind economic development, as is the case for manyrapidly developing middle-income countries in Asia, whichaccount for an estimated 80% of leakage. Various localand global initiatives address the critical development ofinfrastructure and work with the formal and informal wastemanagement sector to stop plastics from leaking into theocean. Local initiatives include, for example, the MotherEarth Foundation and Coastal Cleanup in the Philippines,while the Trash Free Seas Alliance, initiated by the OceanConservancy, is an example of an effort aimed at effectingchange on a global scale.

But even a concerted effort to improve collection andrecovery infrastructure in high-leakage countries would likelyonly stabilize the flow of plastics into the ocean not stop it which means that the total volume of plastics in the oceanwould continue to increase, given the cumulative natureof ocean plastics.44As argued by the Ocean ConservancyinStemming the Tideand by many others, a long-termroot-cause solution would include the incorporation ofcircular economy principles into the plastics sector. Creatinga working economy for after-use plastics would offer adirect economic incentive to build collection and recoveryinfrastructure. Furthermore, because plastics with high after-use value are less likely to leak, especially in countries with

an informal waste sector, improving the design of productsand materials to enhance after-use value would reduceleakage. Finally, levers such as reuse and dematerializationcan be a means of reducing the amount of plastic put onthe market and, hence, reducing leakage proportionally.

Even with all these efforts, leakage is likely to remainsignificant. Even in the United States and Europe, withadvanced collection systems, 170,000 tonnes of plasticsleak into the ocean each year.45Therefore, efforts to avoidleakage into the ocean would require complementaryinnovation efforts to make plastic packaging bio-benignwhen it does (unintentionally) leak into the environment.

Todays biodegradable plastics do not measure up againstsuch an ambition, as they are typically compostable onlyunder controlled conditions, as in industrial composters.Nor has additive-mediated fragmentation (for example,


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oxo-fragmentation) led to a breakthrough such plasticshave not been proven truly benign, but rather mostly led tofragmentation, hence increasing the amount of microplasticsin the ocean.

Hence, game-changing innovation is needed to makeplastics truly bio-benign in case they leak outside collectionsystems. Different avenues might help to reduce the harm of(unintentionally) leaked plastics: advanced bio-degradability

in freshwater and/or marine environments, a materialpalette without substances of concern, avoidance ofcolours and shapes that are typically ingested or otherwiseharmful to marine life for applications with high risks ofleakage, and radically new smart/triggered processesthat imitate metabolizing processes in nature could allcontribute to making materials benign to natural systems.Paper offers inspiration a widely used and recyclablepackaging material that is relatively benign if leaked into theenvironment (unless it contains substances of concern, suchas certain inks). Developing such bio-benign materials thatare still recyclable and competitive in terms of functionalityand costs demands further research of what constitutes bio-benign and represents a significant innovation challenge thatwill take time to overcome.

While scientific evidence on the exact implicationsof substances of concern is not always conclusive,especially due to the difficulty of assessing complexlong-term exposure and compounding effects, there aresufficient indications that warrant further research intoand accelerated development and application of safealternatives. These research and innovation efforts wouldneed to be complemented with enhanced transparencyon material content of plastics and, where relevant, theapplication of the precautionary principle to possibly phaseout specific (sets of) substances raising concerns of acute

negative effects.

2.1.3 Decouple plastics from fossil feedstocks

Recycling and reuse are critical to decoupling plasticpackaging use from the consumption of fossil-basedfeedstock. However by themselves they are probablyinsufficient. Even if global recycling rates rose from todays14% to more than 55% which would be higher than therate achieved today by even the best-performing countries annual requirements for virgin feedstock would still doubleby 2050.46

The likely remaining, albeit diminishing, cycle losses fromreuse and recycling loops and the attendant need for virginfeedstock to compensate for those losses call for exploringthe role of renewable sources either directly convertinggreenhouse gases like methane and carbon dioxide (GHG-based sources) or using biomass (bio-based sources).Innovators claim that production of GHG-based plasticsis already cost competitive to current fossil-based plasticsfor certain applications and qualify as carbon negativematerials.47Using bio-based sources without creatingsignificant externalities in other domains requires applyingregenerative agricultural principles and taking the impactsof the agricultural processes, including land use and bio-diversity, into account.

Box 2: The Role of Life Cycle Assessment(LCA)

Life Cycle Assessment (LCA) is a tool for the systematicevaluation of the environmental aspects of a product orservice system through all stages of its life cycle.48As such,if implemented well, it can provide a valuable tool to evaluatedifferent options at any given point in time. Like any tool,however, it has its limitations. Most fundamentally, while it

is well suited to evaluateindividual choices today, it is lesssuitable for determining the targetstate towards whichasystem as a wholecould innovate. Also, similar to theprisoners dilemma, the classic example from game theoryin which the individual maximization of benefits by rationalactors leads to a suboptimal overall outcome, an LCAoptimization by each individual actor does not necessarilylead to better system outcomes.

Take the case of electric vehicles. Most people would agreethat a mobility system supported by electric, grid-integratedvehicles and renewable electricity is a more attractive targetstate than one reliant on combustion engines and fossilfuels. However, an LCA study published in 2011 found

that the carbon advantage of an electric vehicle over asimilar conventional petrol car could be as small as 4%,and that drivers wanting to minimize emissions could bebetter off buying a small, efficient petrol or diesel car.49The right conclusion is clearly not to write off the conceptof electric vehicles. Rather, a good conclusion might be toacknowledge both the inherent attractiveness of the electricvehicle target state while also acknowledging the innovationopportunity and need to develop better-performing electricvehicles, improve effectiveness and efficiency of productionprocesses and after-use management, and increase theuptake of renewable sources of electricity.

Similar reasoning can be applied to many of the

mechanisms described in the vision for the New PlasticsEconomy. An economy in which the value of products andmaterials is maximized through multiple loops could beconsidered inherently more attractive than an economy withone-way linear material flows where 95% of material valueis lost after one use cycle. Similarly, an economy in whichplastics are sourced renewably from greenhouse gasesor biomass coupled with the application of regenerativeagricultural principles, could be considered inherentlymore attractive than an economy in which plastics aresourced from finite stocks of greenhouse gas-emitting fossilfeedstocks. That preference does not necessarily implythat every piece of plastic packaging should be recycled or

renewably sourced today, but it does offer a target state forthe plastic packaging value chain to innovate towards.

Finally, the life cycle assessments in recent publications onplastic packaging tend to focus on single measures, such ascarbon. While such measures are of the utmost importance,a single-measure focus inevitably fails to consider the entireimpact of plastic across the life cycle, including the effects ofleakage into the natural environment.


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2.2 The New Plastics EconomyCould Bring SubstantialBenefits

The New Plastics Economy aims to create long-termsystemic value by fostering a working after-use economy,

drastically reducing leakage and decoupling plastics fromfossil feedstocks.

A business-as-usual scenario for plastics will also bringgrowth, innovation and benefits, but if circular economyprinciples guide and inspire this growth and innovation,the sum of the benefits will be larger. In particular, the NewPlastics Economy provides several expected additionalbenefits, the most significant of which are capturing materialvalue and de-risking the value chain by reducing negativeexternalities. The ambitions described in this report, suchas increasing the economics and uptake of recycling anddeveloping renewably sourced plastics, will help in theseizing of those opportunities.

The New Plastics Economy could help capture plasticpackaging material value. Currently just 5% of materialvalue of plastics packaging is captured after one usecycle, corresponding to $46 billion.50While it is unlikelythat the industry could seize the full potential of materialvalue, concerted action on redesigning and converging onmaterials, formats and after-use systems through a globalplastics protocol, enablement of secondary markets andinnovating on technology and materials could allow tocapture a significant share (see Figure 7).

Working towards the New Plastics Economy would sig-nificantly reduce the negative externalities associatedwith plastics and plastic packaging.As explained above,the benefits of plastic packaging are accompanied by sub-stantial and accumulative degradation of natural systems due,in particular, to leakage into the ocean and to greenhouse gasemissions. Through creating effective after-use markets, theNew Plastics Economy provides a direct incentive to build upcollection and reprocessing infrastructure, and hence reduce

leakage. Through increased reuse and recycling and by de-veloping renewably sourced plastic materials, the New Plas-tics Economy actively mitigates the risk related to greenhousegas emissions. Recycling one additional tonne of plastics,for example, reduces emissions by 1.13.0 tonnes of CO2ecompared to producing the same tonne of plastics fromvirgin fossil feedstock.51 Some bio-based plastics also havebeen shown to have a negative global warming potential with-2.2 kilogram CO2e per kilogram of bio-based PE producedcompared to 1.8 kilogram CO2e per kilogram of fossil-basedPE produced.52By promoting more research on potentialadverse effects, increasing transparency on material contentand developing plastics without substances of concern, theNew Plastics Economy helps mitigate risks posed by sub-stances of concern.

Reducing these negative externalities would resultin real risk-reduction benefits for businesses. Whileexternalities by definition do not represent a direct costto businesses, they expose businesses to regulatoryrisks, including the internalization of negative externalitiesand even banning the use of specific types of plasticpackaging, with potentially large impacts on the plasticpackaging industry. The carbon tax a tax levied on thecarbon content of fuels, aimed at reducing greenhouse gasemissions provides an example of risk internalization. Thepossibility of an outright ban arose in India in 2015 when

the National Green Tribunal considered imposing a ban onthe use of plastics for packaging of all non-essential items,including multilayer packaging and PET bottles.53In addition,risks can also manifest themselves through customers forexample, bottle company SIGG USA went bankrupt in 2011following a scandal about some of its products allegedlyleaching the controversial substance bisphenol A.54

The New Plastics Economy can help reduce exposureto volatility of (fossil-based) virgin feedstock. Since theturn of the century, oil prices have been subject to highlysignificant volatility. Although prices have dropped fromthe historical high seen in 2008 and are expected by someobservers not to rise again soon, historically observed volatilitycould remain. The magazine The Economist predicted inMarch 1999 that oil prices, then at $10 per barrel, would likelydrop to $5.55By the end of that year they were at $25. Lessthan 10 years later they were at $145. Most major forecastersat the end of the 1990s agreed that oil prices would likely staybelow $30 for the next two decades56 again proven wrongby the events of the next decade. The unpredictable cost ofsupply for fossil feedstock-based plastics is a risk, and oneoption for businesses wanting to address their exposure tothat risk could be diversification into recycled and renewablysourced alternatives. Of course, these renewably sourcedplastics are also derived from commodity feedstocks withmarket prices subject to local market pressures, so price

volatility is still a concern, but diversification spreads the risks.Investments aimed at broadening the array of options forrecycled materials and renewably sourced feedstocks wouldfurther help to build in system resilience in the New PlasticsEconomy.

100

36

0

14

VAL

UEYIELD(%)

COLLECTED FOR RECYCLING (%)100

(95%)

$80120

billion

1. DIALOGUE MECHANISM

2. GLOBAL PLASTICS PROTOCOL

3. SECONDARY MARKETS

4. TECHNOLOGICAL INNOVATION

5. ENABLING POLICY

COMPOUNDING

LEVERS

Source: Project MainStream analysis

Figure 7: Theoretical Potential to Capture Material Value


21/36


2.3 Now Is an OpportuneMoment to Act

A favourable alignment of factors makes now anopportune moment to act. New technologies are unlockingnew opportunities, while the building up of after-useinfrastructure in developing countries has made this a critical

crossroads moment for getting systems right the first time.Concurrently, increasing regulatory action and growingsocietal concerns are morphing from a marginal to anincreasingly central issue, potentially affecting companieslicence to operate.

New technologies are unlocking new opportunitiesin areas such as material design, separation technology,reprocessing technology and renewably sourced andbiodegradable plastics. Dow Chemical recently developed,together with Printpack and Tyson Foods and for a specificset of applications, a mono-material stand-up pouch withimproved recyclability versus the existing multi-material

alternatives.

57

Chemical marker systems are advancing:the European Unions Polymark project, for example, isdeveloping a system to reliably detect and sort food-contact PET.58WRAP is working on machine-readablefluorescent inks and sorting technologies to improvepolymer identification.59The adoption of reprocessingtechnologies such as depolymerization has been limited dueto economics, but in the Netherlands Ioniqa Technologieshas developed a cost-competitive process for PET thattakes place at relatively low operating temperatures.60Theproduction of plastics from captured greenhouse gaseshas been piloted and is claimed to be cost competitive.For example, Newlights AirCarbon technology can convertmethane to PHA, or carbon dioxide to polyurethane and

thermoplastics.

Many developing countries are building up after-useinfrastructure, making this a critical crossroads moment.Investments made now will determine the infrastructurefor the coming decades. Coordinating action and agendasacross the value chain could catalyse impact.

A growing number of governments have implemented or are considering implementing policies related toplastic packaging. In Europe, the European Commissionsrecently adopted Circular Economy package includesthe action to develop a strategy on plastics in the circular

economy, a target to increase plastic packaging recyclingto 55%, a binding target to reduce landfill to 10% of allwaste by 2030, and a total ban on landfilling of all separatelycollected waste.61With the exception of Iceland, all of theNordic countries operate container deposit schemes. Suchschemes have also been deployed in the United States,where the overall recycling rate is 34%62while states withcontainer deposit laws have an average rate of 70%;Michigans $0.10 deposit is the highest in the nation, as is itsrecycling rate of 95% in 2013.63In 2015, a European Uniondirective came into force that required member states toreduce the use of plastic carrier bags.64France, for example,will outlaw single-use plastic bags as of January 2016.

Other countries have acted to restrict the use of plastic bagsand other plastic packaging formats because of their impacton the local environment: In

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WEF the New Plastics Economy