No time to waste: What plastics recycling could offer

Thomas Hundertmark, Chris McNally, Theo Jan Simons, and Helga Vanthournout, McKinsey & Company

Plastics waste is hurting the chemical industry as well as the environment. By taking the lead on recycling, chemical players could add a new dimension to the industry and help solve the problem.

It’s not news that the plastics-waste issue is becoming a crisis and that, in the eyes of the public, the chemical producers that make all those plastics are deeply implicated. The public’s concern is already translating into new regulations on plastics in the European Union and elsewhere, and major customers, such as the consumer-packaged-goods (CPG) industry, are ramping up efforts to increase recycled content and reduce their plastics consumption. What is news, however, is that chemical-industry leadership has started to declare that its concept of stewardship and sustainability now extends to dealing with plastics waste. It is also increasingly acknowledging that the “use once and discard” model, which the plastics industry has grown up with, should be replaced by a new model where plastics are recycled as much as possible.

This marks a watershed moment for the chemical industry, given that more than one-third of the industry’s sales are made up of petrochemicals and plastics production and plastics-related products. But as the industry starts to mobilize, there is a lot of uncertainty about what steps represent the best way forward. We believe that the chemical industry has a central role to play in unlocking many of the challenges of the plastics-waste issue. We also believe there are opportunities to build a new and profitable branch of the industry based on recycled plastics, which our research suggests could represent a profit pool of as much as $55 billion a year worldwide by 2030

Don’t waste all that good plastics waste

Plastics waste washing up on pristine shorelines, from Antarctica to the Arctic, and vast floating islands of plastics waste in the Pacific Ocean have received much media coverage and contributed to the shift in consumer sentiment. From this perspective, marine plastics pollution may be best understood as the highly visible tip of the iceberg. The majority of used plastics go to landfills and incineration, where materials are lost forever as a resource. Our research shows that currently only 16 percent of plastics waste is reprocessed to make new plastics; the “leakage” into oceans is primarily due to lapses in landfill management or a complete lack of waste-disposal systems. From a resource-efficiency and conservation perspective, this analysis suggests that a huge amount of potential value is currently being lost—value that could instead be captured by better approaches to reusing plastics waste.

Meeting technology needs in recycling all that good plastics waste

There are three principal approaches to the reuse of plastics: mechanical recycling, chemical recycling, and processing the plastics waste back to basic feedstock. All have suffered from a vicious cycle, where a lack of raw materials due to low rates of recovery of used plastics has limited their growth and dampened interest in their further development and investment; this could now be reversed.

Mechanical recycling takes used plastic and physically processes it back to resin pellets, leaving the polymer chain intact. Recycling of polyethylene terephthalate (PET) and high-density polyethylene has been established as a viable business, but there is room for further process optimization. A key challenge is finding how to preserve the performance quality of resins through recycling steps and avert the deterioration that currently occurs.

Strengthening the waste-management chain

Our projections suggest that the volume of plastics going to recycling could increase fivefold by 2030, to 220 million metric tons per year, if current flows to landfill and incineration are redirected and recycling capture improves. The waste-management industry that collects plastics waste and does preliminary processing has its own set of challenges—notably a lack of scale even now—and these will need to be addressed if it is going to be able to handle these massive new flows.

In developed economies, the industry tends to have high costs due to small scale and lack of efficient collection and sorting processes, with so far limited application of automation. In emerging economies, plastics waste is typically processed through informal systems—individual workers picking through waste dumps, with hand sorting at collection points and landfill sites—and this represents a processing structure that cannot easily be scaled up.