Key conclusions regarding anticipating a shift in fossil-based virgin plastics production from the latest assessment of plastics sustainability by the IHS Markit Circular Plastics Service follows. Please feel free to quote from below.
Fossil Fuel-based Production Growth of Polyethylene is Forecast to Continue Until the Early 2040s While Focus Increases on Reducing Plastic Waste
Findings by the IHS Markit Circular Plastics Service examine the timing of the arrival of a peak in demand for virgin plastics produced from fossil-based raw materials
The production of fossil fuel-based polyethylene is expected to plateau in the early 2040s, according to the latest findings from the new IHS Markit Circular Plastics Service which provides a comprehensive, scenario-based road map of how the plastics value chain could transition from a linear to a circular economy.
“At some point in the not-too-distant future production of plastics will begin to disconnect from virgin fossil fuels. How and when will be determined by stakeholder resolve to effect a circular model.” – Robin Waters, director, circular plastics service, IHS Markit
By conducting rigorous, scenario-based analyses of global, large-volume polymers, the Circular Plastics Service (CPS) team at IHS Markit has quantified expected and potential outcomes for key measurements of plastics’ transition from a linear to circular industry model. One of the key measures of progress is the reduction, and ultimate elimination, of fossil-based raw materials used in the production of plastics.
To project outcomes of this magnitude, the impact of numerous levers must be considered from both demand and supply perspectives within the broader energy transition to net zero emissions. The team considered specific nuances for demand (both durable and non-durable), the evolving stakeholder and government regulatory outlook, investments in recycling technology and infrastructure and concluded that peak demand for virgin fossil-based plastics is decades away.
IHS Markit expects global plastics demand will grow at an average annual rate of 2.7% through 2050. Factors that can impact this growth rate include regulatory restrictions such as bans, materials substitution (e.g., from paper, glass, metal, etc.) and packaging design that eliminates excess material use as well as changes in consumer behaviors. Large-scale adoption of mechanical recycling has the potential to moderate demand growth for virgin polymers. Meanwhile chemical processes that convert waste plastics into feedstocks—either monomers (in the case of PET and PS/EPS) or hydrocarbon feedstocks (in the case of pyrolysis- or gasification-based technologies) reduce the need for fossil-based materials in the production of virgin plastics.
Focusing on plastics waste recycling has the added benefit of reducing the dependence on fossil fuel-based feedstocks for plastics. Even with aggressive consumption restrictions on non-discretionary single use products, the world will continue to demand increasing volumes of plastics. Waste plastics, if collected and properly processed, can serve as a bridge to achieving the overall elimination of our society’s dependence on fossil fuels. Technology exists, and is being rapidly implemented, to move beyond energy recovery by converting plastics waste into high value virgin plastics without the use of fossil feedstocks. Additionally, biomaterials and bio-based feedstocks offer the potential to decouple plastics demand from fossil-based feedstocks.
In addition to concerted efforts to scale the infrastructure for plastics waste collection and recycling, governments, brand owners and other stakeholder groups are promoting different means to reduce consumption of plastics. Governments around the world are increasingly implementing bans on a range of discretionary single use applications and taxing virgin (vs. recycled) plastics. The growth of returnable business models continues in developed regions for business-to-business transport packaging and is being evaluated for consumer packaging. Producers are capitalizing on the negative perception of plastics, paper, glass and metal, and are promoting alternatives to brand owners, often with negative cost and emissions implications. How effective are all these efforts in addressing plastics waste? Will we see demand for plastics peak as a result?
IHS Markit has incorporated scenario-based modelling to assess the above factors and their expected, and potential, extent and timing. Our base case assumes the circular plastics transition accelerates, with pivotal shifts in social, policy and market forces driving fundamental change. However, the transition moves in different ways and speeds depending upon the country or region being considered. Our second scenario assumes a more revolutionary effort, with industry moving in an aggressive manner aligned with overall goals for the energy transition but falling short of achieving a full circular model for plastics by 2050. Finally, IHS Markit has modeled a fully successful circular plastics scenario in which non-durable plastics are, by 2050, no longer lost to the environment, land-filled or incinerated.
“Without a significant decline in the overall demand trajectory for polyethylene, a peak in fossil-based production will not occur before 2043” – Robin Waters, Director, Circular Plastics Service, IHS Markit
The initial analysis was applied to the global polyethylene (PE) industry and determined the following:
- A Peak in total demand for polyethylene plastics
The IHS Markit outlook for global polyethylene demand growth anticipates an average annual growth rate of 3.0% through 2050. Factors that can impact this growth projection are materials substitution (e.g., from paper, glass, metal, etc.), down-gauging in applications, regulatory bans, etc. IHS Markit does not expect a peak in total demand for PE in any of the three scenarios.
- A Peak in the demand for non-durable applications for polyethylene plastics
Polyethylene demand is dominated by non-durable uses, representing approximately 60% of total global demand. Furthermore, packaging represents most of the non-durable applications, which is where we are most likely to see substitution, downgauging and the impact of regulations. Therefore, a peak in the total demand for PE is likely to develop well after we see a peak in non-durable applications. Again, IHS Markit does not see a peak in total demand for non-durable PE applications for any of the three scenarios.
- A peak in virgin polyethylene plastics production
A peak in virgin polyethylene plastics production is expected to be driven by an increased level of mechanical recycling. IHS Markit estimates that by 2050, PE mechanically recycled resins could represent 17% and 33%, respectively of total demand for the Base and Green Rules scenario. Therefore, while not impacting overall plastics demand, the large-scale adoption of mechanical recycling does have the potential to drive a peak in virgin plastics production. However, IHS Markit does not see a peak in virgin PE production for any of the three scenarios.
- A peak in virgin polyethylene plastics production from fossil-based feedstocks
Reducing dependence on “virgin” fossil fuels is arguably the most environmentally impactful goal for plastics other than eliminating waste plastics from entering the global ecosystem and represents a critical step in the path to peak plastics. A peak in virgin polyethylene production from fossil-based feedstocks can result from the large-scale adoption of chemical recycle technologies. For example, pyrolysis of mixed waste plastics can produce a pyrolysis oil that can replace the virgin sourced hydrocarbon feedstocks (e.g., petrochemical naphtha and NGLs) used in steam crackers for olefins production, thereby reducing the need for using fossil-based materials in the production of virgin PE plastics.
Our Base Case Scenario anticipates that a peak in fossil-based plastics demand will not develop during the study timeframe through 2050. The Green Rules Scenario assumes the aggressive development of mechanical recycle capability and results in a peak in the year 2046. In the aggressive scenario, which also includes the development of chemical recycle (e.g., pyrolysis technology with the pyrolysis oil being reprocessed and used to displace fossil-based hydrocarbon feedstock for virgin polyethylene facilities) the peak arrives in 2043. Combining this aggressive adoption of mechanical and chemical recycle with a fundamental effort to reduce the overall growth of polyethylene demand use (e.g., demand destruction though material substitution, packaging redesign, etc.) beginning in 2025, the peak moves even earlier (to 2042 or 2035), with a demand decline of 0.5% and 1.0%, respectively.
“If we combine demand discipline with an accelerated pace of appropriate infrastructure builds, we can accelerate this transition by 6 to 8 years. This assumption leaves room for additional advancements in collection rates of plastics waste and further accelerates the vision of a circular economy” – Robin Waters, Director, Circular Plastics Service, IHS Markit
The IHS Markit Circular Plastics Service provides a comprehensive, scenario-based evaluation of how the plastics value chain is expected to transition from a linear to a circular economy. It addresses implications of carbon intensity and the impact on future capital investments within the context of energy transition and carbon valuation, amid changing policy and regulations. This service quantifies the magnitude and timing of substantial market shifts, identifies key regulatory and societal risks and provides ongoing tracking of fast-moving developments. It is essential insight and analytics to reformulate your company strategy.
Click Here for more information about the Circular Plastics Service or contact the following members of the Circular Plastics Service team
Anthony Palmer Anthony.Palmer@ihsmarkit.com
Robin Waters Robin.Waters@ihsmarkit.com
Jonny Goyal Jonny.Goyal@ihsmarkit.com
Mino Angelilli Mino.Angelilli@ihsmarkit.com
Jeff R. Marn
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