The industry has to react quickly to plastics recycling when the social pressure increases

NEW YORK (ICIS) – The chemical industry needs to accelerate investments in plastics recycling to achieve economies of scale amid mounting pressure from activists and governments, the former CEO of Equate and MEGlobal said Tuesday.

“Both activists and industry agree on the clear and present danger posed by plastic waste. However, I think the pace of change is too slow – the industry has to move much faster before society sees the producers as the problem and who has to fix it, ”Ramesh Ramachandran said in an interview with ICIS.

“If the industry wants to double its capacity in 5-10 years without finding a clear solution to plastic waste in 2-3 years, it will not end well for the industry. Politics, fines and taxes will get to the heart of it, ”he added.

Ramachandran was CEO of Kuwait-based polyethylene (PE) producer EQUATE from 2017 to 2020 and CEO of UAE-based ethylene glycol (EG) producer MEGlobal from 2009 to 2017. Today he is a principal at the consulting firm MEGVIN Advisors.

THERMODYNAMICS AND ECONOMY
Plastic recycling can be divided into two challenges – a thermodynamic challenge and an economic challenge.

The thermodynamics – the science behind the process – is solid. There are many prototypes, catalysts, and small but fully developed chemical recycling processes that can be used to convert plastics into pyrolysis oil, which can then be used to make pellets.

“However, we are nowhere near an economical solution and an infrastructure to collect, sort and include the plastic waste in the process. This part is just not established and economically not very profitable today because nobody wants to pay for it, ”said Ramachandran.

“Governments want producers to pay for it, producers want consumers to pay for it, consumers want producers to pay for it, and the big FMCGs [fast moving consumer goods
companies] I don’t want to pay a premium for these recycled products, ”he added.

So far, the big FMCG players have yet to come out and say that their raw material costs will rise significantly in the years to come because they want them to be sustainable. If they could pass the cost on to consumers, it would work, the former CEO noted.

“Consumers can’t get free lunch here,” said Ramachandran.

“Economically, it is really a challenge. Collection is a problem and unless local authorities, governments and consumers change behavior so that these plastics are collected and taken to a recycling center to do the conversion, it will continue to be a challenge, ”he added.

Alternatives to plastic packaging are expensive and have a much higher carbon footprint, according to the former CEO.

In many cases there are no real alternatives. Bans on single-use plastics such as bags have successfully resulted in changes in consumer behavior where cloth bags are reused for shopping. However, plastic is still required for packaging for medical supplies, e-commerce and durable goods such as household appliances.

“Activists and industry have to come together to solve this problem, and public order has to play a role. Some kind of fund needs to be set up so that consumer behavior can be changed to collect these plastics and bring them to recycling sites, ”said Ramachandran.

SPOTLIGHT ON PLASTIC WASTE
In the meantime, the problem continues to grow. In India there are masses of plastic bags in the stomachs of cattle and in Dubai of camels and fish plastic pellets – all highly charged and visible public problems.

A March 23 article in the Washington Post highlighted the latest example of plastics in wildlife. In one case, 2,000 plastic bags were found in a dead camel. Author Marcus Eriksen, co-founder of the 5 Gyres Institute, called it “a whole new level of horror”.

“The plastics industry expects packaging and capacity growth to be 3-5% per year
[eventually] doubled. These forces (spread of plastic waste and capacity expansion) cannot coexist. It won’t end well if there isn’t a viable solution, ”said Ramachandran.

“The industry believes it has plenty of time to resolve this problem. But when I look at the level of government and public activism, I worry that we don’t fully appreciate the intensity of the backlash. Something has to be done pretty quickly. Otherwise someone else will solve the problem for us, which is not comfortable, ”he added.

Public policy will likely enforce action and restrict sales and export of virgin plastics, the former CEO said.

“That would be an option – in principle, do not allow any exports unless the pellets contain at least 30% recycled content. Then by default you force recycling at the source. Then things will change very quickly, ”said Ramachandran.

Forcing recycling at origin before export is preferable to forcing only the end user to recycle, he noted.

“Policies need to be used where they affect virgin resin exports as it will force the industry to realize that there is an economic barrier to just increasing virgin resin production without consequences,” said Ramachandran.

This can be done by both the exporting countries and the importing countries. And once a country or two get started, it will likely have a ripple effect, he noted.

SOCIAL IMPACT OF INTERRUPTION AND SCALE
Businesses and governments also need to consider the social impact of waste collection and plastics recycling. It may not be possible to have large chemical recycling facilities that send plastic waste to.

“Garbage is a very local problem and is usually controlled by very powerful families in communities – and it happens everywhere. The biggest problem [in collection] is the social impact. If you want to make people unemployed or remove income from part of society, it will take a long time to successfully implement, ”said Ramachandran.

“So you turn it upside down, accept this reality even though you don’t like it, and build these little US $ 10 to 15 million units at 50 to 100 tons / day to get the plastic right next to the communities where They find themselves converting into fuel today to have their solid waste collection, ”he added.

The resulting pyrolysis oil can be used as fuel, including to operate the pyrolysis plant. It can be shipped to other locations including crackers to make new plastics. That ecosystem exists today, he noted.

“Recycled plastics for fuel are a sustainable business model with a return of 10 to 15% that can be self-financing. The biggest area that needs funding is influencing consumer behavior to get the plastic to a place where it can be easily collected and taken to these centers, ”said Ramachandran.

“This ecosystem needs to be built and it can be done. See the state of mask wear compliance in the world [amid the pandemic]… It is possible to change consumer behavior in less than a year, ”he added.

Interview article by Joseph Chang

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