Our ability to extract, transform and consume material resources defines us as a species. But the scale we’ve done this over the past 50 years is placing an unsustainable burden on the planet. In this complimentary report, we ask what it would take to make the plastics value chain truly sustainable.
On the current trajectory, materials use is set to double and waste generation is projected to increase by 70% by 2050.
Proactive measures are the next steps to prevent the environmental impact of our materials consumption, with governments, companies, and consumers all playing a critical role. Ambitious regulation, investment in sustainable solutions, and smarter consumer choices are all expected. There are major, formidable challenges, but the transformation underway in the energy sector shows that systemic change is possible.
Change at that scale will create winners and losers. In this Insight, we look at the potential impact on the packaging industry and plastic demand. If the plastics value chain is to become sufficiently sustainable, demand will be displaced at different stages in the energy and petrochemical value chains, which will leave many existing or planned assets uncompetitive. In one scenario, this could lead to the loss of 1.5 million b/d of demand for oil in 2040, with requirements for petrochemical feedstock – the key to oil demand growth after 2030 in our base case – flattened by increased circularity.
The challenge is substantial, but the transformation underway in the energy sector shows that systemic change is possible
The petrochemicals, plastics, and packaging industry is beginning to grasp the challenge, but the solutions to make the industry more environmentally and economically viable are elusive. To move onto a more sustainable track, the industries that produce and consume our material resources will need to find new ways of working. Just as we are undertaking an energy transition to change the way we power the world, so we must engage in a material transition to support a plastic circular economy.
We are living in a material world…
Materials consumption was localised for most of human history; it was only with the onset of the industrial revolution that technologies were developed to stimulate demand for and transport materials around the world. Fast-forward to the latter half of the 20th century, and a powerful combination of rising populations, growing incomes, and new technologies have vastly expanded our appetite for materials. Between 1970 and 2017, the total mass of materials extracted grew nearly 250%, with the rate of growth accelerating.
This trend, however, is unsustainable; we will need to find ways to decouple growth from material consumption. The good news is that this has been occurring in numerous economies over the past 30 years – the mass of material consumed per unit of GDP dropped by 47% in the US over this period. That's not a result of offshoring the problem – the measure takes account of materials consumed in the production of imports. The simple fact is we need fewer materials to generate the same unit of output.
This relative decoupling of material inputs and growth is driven by several structural factors that are likely to hold true for the foreseeable future. In other words, this decline will likely continue and could even accelerate.
While this trend offers hope that a more sustainable future is around the corner, the reality is that we need more than a relative decoupling. In absolute terms, consumers in rich countries use more materials and produce more waste. Continuing these trends will lead to increasing pressure on the planet and a growing waste stream that threatens our ecosystems. The OECD forecasts that by 2060, given expected growth in population and wealth – as well as the trends highlighted above – materials use will grow by 111% compared to 2011, with metals usage growing by 150% and nonmetallic minerals by 132%.
Given these conditions, the industries that make use of these materials require a paradigm shift towards an absolute decoupling of materials consumption from growth of the economy.
Meet the new transition – same as the old transition
Materials-consuming industries can learn from the energy industry, which is faced with the monumental challenge of decarbonising to align with a global warming pathway of 2°C or lower. And it needs to do this in a world in which we forecast energy demand will continue to grow as populations increase and become wealthier.
Sunk capital and established technologies will make this transition commercially challenging, even as consumers and society expect producers to take the responsible, sustainable decisions necessary to address the challenge.
The energy analogy extends to the solutions as well. In both the materials and energy industries, significant investment into new technologies could reduce or eliminate the harm that existing business models cause. At the same time, political and regulatory responses can further encourage (or impede) innovation. However, the uncertainty shrouding any future technology and regulations makes the path to a more sustainable future arduous. Not to mention the impact of coronavirus, which complicates the picture further in the immediate term.
The materials sectors lag their counterparts in the energy sector in developing more sustainable business models. If we are to avoid the irreversible destruction of valuable ecosystem services, they will need to catch up – and fast. By following the route map plotted by those looking to decarbonise the energy system, the materials sectors can accelerate the speed of this transition.
Look out for further analysis on the material transition's impact across the energy and natural resources value chain.