Author: Aadya Kanodia
As Jess Shankleman, a Bloomberg reporter, accurately said: the ‘plastic soup’ within the oceans is very real. With growing environmental awareness within both consumerism and the corporate world, I think it’s apt to talk about the circular economy.
First and foremost, what is the circular economy? It involves moving away from the normal Take-Make-Dispose model, to an Upcycle-Recycle-Reuse approach. The aim of the circular economy is to maintain resources in the ecosystem as well as mitigate the negative impacts of climate change.
It is clear that most businesses have started green activities such as HP’s initiative to collect and upcycle ocean plastic and Lego’s initiative to replace plastic packaging to ensure that it is 100% bio-degradable. But are we missing something right under our noses?
If you’ve picked up a newspaper, I’m sure you’ve read “more renewable energy is being used as fuel to replace oil”. What is left unsaid is that the oil industry is now turning to petrochemicals (i.e. plastics) for future growth. Increasing usage of renewable energy, electrification of vehicles, and hockey-stick companies such as Tesla has rendered transportation to be declining market for the oil industry. Petrochemicals are expected to account for a third of the growth in oil demand to 2030 and half of the growth to 2050, exceeding trucks, planes, and ships. 99% of plastics in the ocean are made from petroleum and fossil gas products, essentially replicating a slow-motion oil spill. But guess what? Petrochemicals are found in almost everything you have at home: clothes, paper, fertilisers, medicine, food preservatives, and even cleaning products.
The growing investment in cracker facilities (which are plants that take ethane from fracked gas and cracks the molecules into smaller molecules that be transformed into plastic) are energy and emission intensive. It’s projected that this sector will grow rapidly in the next 30 years to the point where plastics will contribute to 15% of global greenhouse gas emissions.
Asset managers are now investing in petrochemicals to hedge risk and have been successful in offsetting the effect of the recent plunge in oil and gas prices. Plummeting oil prices have reduced the economic incentive to recycle plastics, hence the consumption of single-use has spiked.
Something more to consider is the fact that since China has stopped taking the world’s recycling waste, countries ought to find alternative solutions and rethink their waste control.
You all must be thinking as to why I’m ranting about petrochemicals and plastics, instead of talking about the circular economy. Please watch this space and I will soon be posting Part 2 of this blog series which would complete the jigsaw puzzle. Please get in touch with me if any of the aspects have intrigued you or if you have something to share further!