Plastic Waste: Tackling Circularity and Leakage

Global demand for plastics is rising because it’s lightweight, easy to shape, and cost-effective to produce. Because of this, plastics will likely continue to be a key part of supply chains worldwide, even as we try to move away from single-use plastics. But with more demand comes more plastic waste, leading to two big challenges—and opportunities—for businesses:

1. Reducing plastic waste pollution: When plastic waste isn’t properly managed, it can end up in the environment, especially in oceans near coastal cities.
2. Increasing plastic circularity: Many companies want to use recycled plastics in their packaging, but there isn’t enough supply. To make plastics more circular, we need better collection and more recycling capacity.

To tackle these issues, several global alliances between public and private sectors have formed. For instance, the United Nations Environment Assembly is working on an international agreement to end plastic pollution. Our research suggests that the solution involves two key actions:

1. Emerging economies should invest in modern waste management systems to prevent waste from leaking into the environment.
2. Companies across the value chain should develop new business models focused on improving collection, sorting, and recycling to boost plastic circularity.

The need to reduce plastic waste

In 2018, about 80 million metric tons of plastic waste weren’t managed properly. This included dumping, burning, and using poor-quality landfills. Research by McKinsey shows that between 5 and 10 million metric tons of this waste ended up in the ocean, with a lot coming from countries like Indonesia, the Philippines, Sri Lanka, and Vietnam.

Asian countries, including China, India, Indonesia, Thailand, and Vietnam, are responsible for about 85% of the world’s mismanaged plastic waste. In total, around 15 countries contribute to 80% of global plastic waste, which adds up to 270 million metric tons each year.

The issue here isn’t just about pollution. Many of these countries lack complete waste management systems, and building such systems requires a lot of money from governments, international organizations, and private companies.

We think the solution should be a unified approach rather than piecemeal fixes that might not work together well. A well-functioning waste management system is crucial for economic development and improves hygiene and quality of life. Emerging economies have a chance to create modern systems that could avoid some problems faced by developed countries today.

Setting up a comprehensive waste management system in these countries could cost between $560 billion and $680 billion over ten years. This includes expenses for roads, landfills, waste-to-energy plants, trucks, and recycling facilities. While this is a huge investment, it could boost economic growth by improving transportation and commerce, and enhance quality of life by improving health, sanitation, and cleanliness. This system would need to handle around 850 million metric tons of waste each year, not just plastic.

To make this happen, governments need to prioritize waste management and might need external support. Public funding will be crucial for infrastructure that doesn’t generate revenue, like roads. Private investors might be interested in projects that can make money, such as recycling and waste-to-energy plants. Public-private partnerships could also help with funding and innovative solutions for waste management.

Besides the high cost, there are operational challenges, especially in emerging economies. Issues like unclear land-use rights, coordination with various government levels, misallocation of funds, and obstacles to foreign investment can delay and complicate large-scale projects.

The need to increase plastic circularity

The push for recycled plastics and circularity is picking up speed. Over 80 major companies in consumer goods, packaging, and retail have pledged to use 15 to 50 percent recycled content in their packaging by 2025. Some are even promising to pay extra for recycled materials. In the U.S., we expect the amount of recycled plastic waste to double or triple by 2030 to meet these commitments. Alongside growing customer demand, we’re also seeing more global regulations targeting single-use plastics, extended producer responsibility (EPR), and recycled-content requirements.

One big challenge in scaling up recycling is getting enough sorted plastic waste. In 2016, only about 16 percent of plastic waste was collected for recycling worldwide. To increase this, we need changes in how people handle waste, better infrastructure, and more investment in recycling facilities.

The economics of recycling can vary widely depending on where the waste comes from (emerging or developed economies), the type of plastic (rigid, flexible, or durable), and the recycling method (mechanical or chemical). Mechanical recycling is more efficient for producing circular plastics, but it needs higher-quality, well-sorted waste. Chemical recycling can handle dirtier, harder-to-recycle waste and produces high-quality recycled plastics.

Currently, recycling might be profitable for about half of the plastic waste we generate, but there are challenges to overcome, such as collection issues, contamination, and limitations with different types of plastics. However, there are positive trends that could help improve recycling efforts: more companies are committing to recycling, prices for recycled materials are rising, carbon pricing and government mandates are increasing, new waste collection models are emerging, technology is advancing, and large investments in infrastructure are being made.

Also Read: Recycling vs Upcycling vs Downcycling

What stakeholders can do

Here are some ideas for tackling the plastic waste problem and growing the market for circular plastics:

Focus on local and regional needs
Every community is starting from a different place when it comes to managing plastic waste. In emerging economies, the first step is to set up basic waste collection systems that work well with recycling.

What works in developed countries might not be the best solution for emerging economies. In these places, more hands-on, labor-intensive methods might be more effective for now. In developed economies, where plastic waste is mostly landfilled or incinerated, there’s an opportunity to improve recycling processes and find ways to make waste valuable. In contrast, emerging economies often face higher costs for recycling because they lack established systems for collection and sorting.

Get regulatory support
Emerging economies need public funding and supportive regulations to build up their waste management industries and attract private investment. This includes creating the right infrastructure for waste collection and recycling. Good infrastructure not only helps reduce environmental pollution but also makes recycling more feasible by lowering costs and improving access to the right kinds of waste materials.

Collectively define the future paradigm

To tackle plastic-waste pollution and boost plastic recycling, everyone along the value chain needs to work together. This might mean rethinking parts of the value chain and setting up the right collaboration frameworks and incentives. One big challenge is getting consistent, high-quality plastic waste in a cost-effective way. Solving this requires understanding what both upstream and downstream partners need and finding creative ways to work together. Here are some examples of how collaboration is happening:

• Some chemical and waste management companies are teaming up to get the right materials and create high-quality recycled plastics. For instance, LyondellBasell and SUEZ have joined forces to form Quality Circular Polymers, which focuses on recycling polyolefins.
• Others are building platforms to improve transparency and connect different players in the waste plastic industry. Cyclyx, a partnership between ExxonMobil and Agilyx, is one such platform that helps match the supply and demand for plastic waste materials.

As plastic production and use are expected to grow, the goal is to stop plastic waste from leaking into the environment and to enhance recycling. This means setting up and improving waste management systems and recycling processes. Solutions will differ based on location and economic development, so it’s important to find the right strategies that bring everyone together to build effective waste management and recycling systems.