Oil Industry Is Waging Price War Against Recycled Plastics Amid Pandemic Demand Boom

With the coronavirus pandemic fuelling the demand for plastics, from face shields to packaging used for online shopping deliveries, oil industry players are taking advantage and starting a price war between new plastics that they manufacture against recycled plastics. Across the world, statistics are also showing that recyclers are losing the battle too, putting the little hope left of solving the world’s mounting waste crisis and climate emergency into serious doubt. 

Speaking to Reuters earlier this month, Steve Wong, CEO of Hong Kong-based Fukutomi Recycling and chairman of the China Scrap Plastics Association said that in the wake of the oil industry’s slashed prices for new petroleum-based plastics, many recyclers are struggling and “don’t see a light at the end of the tunnel”. 

Compared to new plastics, recycled plastics – even the most commonly recycled plastic materials such as PET bottles – are now 83% to 93% costlier, according to market research conducted by the Independent Commodity Intelligence Services (ICIS). Prior to the pandemic, prices for new plastics stood at around half compared to their recycled counterparts.

And with the coronavirus and growing electrification of vehicles reducing the global demand for fossil fuels from industrial operations, the oil and gas industry has decided to embark on a plan to shift more of their focus on virgin plastic production. A study by think tank Carbon Tracker recently found that the dirty energy industry is now looking to spend as much as US$400 billion over the next five years on enormous plants to make new raw plastic materials. 

The consequences of rising virgin plastic production extends beyond exacerbating the planet’s already dire outlook in terms of plastic pollution and waste crisis. Scientists have previously predicted that we would still be looking at 710 million tonnes of plastic waste left littering oceans and landfills by 2040 even if we significantly reduced plastic use. 

It’s also going to mean far more greenhouse gas emissions entering the atmosphere, further driving climate change and putting hopes of keeping temperatures 1.5 degrees celsius above pre-industrial levels as outlined under the Paris agreement into serious doubt. 

Based on a study by the beverage industry, the World Economic Forum (WEF) estimates that the manufacturing of just four new plastic bottles alone would release the equivalent carbon emissions of driving a mile in a car. 

On top of investing more into virgin plastic manufacturing, dirty energy companies are shirking on their waste-reduction responsibilities too, literally adding more fuel to the fire when it comes to environmental degradation. In a survey conducted by Reuters, only a handful of the 12 biggest oil and chemical corporations in the world have provided any details of how they would invest in tackling waste. 

Describing these moves as “quite concerning”, Lisa Beauvilain, the head of sustainability at Impax Asset Management told Reuters that this trend could completely overwhelm developing countries who are often at the forefront of handling the world’s trash, especially since China’s outright ban on plastic waste imports. 

“We are literally drowning in plastics,” she said. 

Meanwhile, recyclers are finding it hard to survive, with business shrinking by as much as 60% in the U.S. and 50% in parts of Asia-Pacific. Some have also seen their operations halted due to social distancing restrictions, including in the Philippines, Vietnam and India, where 80% of the industry were shut down at the height of the coronavirus pandemic. 

“The combination of the impact of COVID-19 and low oil prices is like a double whammy,” explained Rob Kaplan, CEO of Circulate Capital, a Singapore-based investment firm dedicated to financing solutions for ocean pollution. “We’re seeing massive disruption.”

At a crucial juncture in global affairs that has seen a number of right-wing groups stoking unfounded fears about reusable bags and successfully dismantling single-use plastic bans in several U.S. states and cities, what seems like the oil industry’s win against recyclers is a huge blow for anti-plastic efforts. 

It is vital now more than ever before that consumers do what they can to adopt reusables as much as possible. A few weeks ago, top scientists and experts reiterated that reusable items do not pose a higher risk of transmission and are perfectly safe for use during the crisis. 

Lead image courtesy of Plastic Oceans International.