NEW YORK (ICIS)–The chemical industry must
accelerate investment in plastics recycling to
achieve scale as activist and government
pressures mount, the former CEO of Equate and
MEGlobal said on Tuesday.
“Both the activists and the industry are in
full agreement on the clear and present danger
posed by plastic waste. However, I think the
pace of change is too slow – industry has to
move a lot faster before society looks to the
producers as the problem and who have to fix
it,” said Ramesh Ramachandran in an interview
with ICIS.
“If the industry wants to double in capacity in
5-10 years without a clear solution in 2-3
years for plastic waste, this will not end well
for industry. Policy, fines and taxes will beat
them to the punch,” he added.
Ramachandran was CEO of Kuwait-based
polyethylene (PE) producer EQUATE from
2017-2020 and CEO of UAE-based ethylene glycols
(EG) producer MEGlobal from 2009-2017. He is
now principal at the consultancy MEGVIN
Advisors.
THERMODYNAMICS AND
ECONOMICS
Plastics recycling can
be broken down to two challenges – a
thermodynamics challenge and an economic
challenge.
Thermodynamics – the science behind the process
– is sound. There are plenty of prototypes,
catalysts and small-scale but fully developed
chemical recycling processes that can convert
plastics to pyrolysis oil, and this can then be
used to make pellets.
“But we are nowhere close to an economic
solution and an infrastructure to collect the
plastic waste, sort it and bring it into the
process. That part is simply not established
and it’s not very viable economically today
because nobody wants to pay for it,” said
Ramachandran.
“Governments want producers to pay for it,
producers want consumers to pay for it,
consumers want the producers to pay and the
large FMCGs [fast moving consumer goods
companies] don’t want to pay a premium for
these recycled products,” he added.
Thus far, the large FMCG players have yet to
come out and say their cost of raw materials
will rise meaningfully in the coming years
because they want them to be sustainable. If
they did and could pass along the costs to
consumers, that would work, the former CEO
noted.
“The consumers cannot get a free lunch here,”
said Ramachandran.
“Economically it is really a challenge.
Collection is an issue, and unless
municipalities, governments and consumers
change behaviour so that there is collection of
these plastics to get them to a recycling
centre to do the conversion, it will continue
to be a challenge,” he added.
Alternatives to plastic packaging are expensive
and have much higher carbon footprints, the
former CEO noted.
In many cases there are no real alternatives.
Bans on single-use plastics such as bags have
successfully caused changes in consumer
behaviour where they reuse cloth bags for
shopping. But packaging for medical supplies,
e-commerce and durables such as appliances
still requires plastic, he noted.
“Activists and industry have to come together
to solve this and public policy has to play a
role. Some kind of fund has to be established
so that consumer behaviour can be changed to
collect these plastics and bring them to
recycling locations,” said Ramachandran.
SPOTLIGHT ON PLASTIC
WASTE
Meanwhile, the scale of the
problem continues to grow, with masses of
plastic bags being found in the stomachs of
cattle in India and camels in Dubai and plastic
pellets in fish – all highly charged and
visible public issues.
A 23 March
Washington Post article highlighted the
latest example of plastics in wildlife, noting
one instance where 2,000 plastic bags were
found inside a dead camel. The author Marcus
Eriksen, co-founder of the 5 Gyres Institute –
called it “a whole new level of appalling”.
“The plastics industry thinks growth is going
to be at 3-5%/year for packaging and capacity
[eventually] doubled. These forces (prevalence
of plastic waste and capacity expansion) cannot
coexist. It is not going to end well if there
is no viable solution,” said Ramachandran.
“The industry thinks it has a lot of time to
solve this problem. But when I look at the
level of activism from governments and the
general public, I am worried that we don’t
fully appreciate the intensity of the backlash.
Something has to be done rather quickly.
Otherwise, someone else will solve the problem
for us, which won’t be pleasant,” he added.
Likely public policy will force action,
restricting the sale and export of virgin
plastics, the former CEO said.
“That would be an option – basically don’t
allow exports unless the pellets have a
recycled content of at least 30%. Then by
default you force recycling at the origin. Then
things will change very quickly,” said
Ramachandran.
Forcing recycling at the origin before it is
exported is preferable to only forcing the
ultimate end user to recycle, he noted.
“Policy has to come in where you impact exports
of virgin resin because that will force
industry’s hand in realising that there is an
economic barrier to just increasing production
of virgin resin with no consequences,” said
Ramachandran.
This can be done by the exporting countries as
well as the importing countries. And once one
or two countries start, it will likely have a
ripple effect, he noted.
SOCIAL IMPACT OF DISRUPTION AND
SCALE
Companies and governments
must also consider the social impact of waste
collection and plastics recycling. Having
large-scale chemical recycling facilities where
plastic waste is directed to may not be
feasible.
“Garbage is a very local issue and typically
controlled by very powerful families in
municipalities – and this happens everywhere.
The biggest issue [in collection] is the social
impact. If you’re going to put people out of
jobs or take revenue away from a segment of
society, it’s going to take a very long time to
successfully implement,” said Ramachandran.
“So you flip it on its head, accept that
reality even though you don’t like it, and
build these small $10m-15m units of 50-100
tonnes/day to convert the plastic to fuel right
next to the municipalities where they have
their solid waste collection today,” he added.
The resulting pyrolysis oil can be used as
fuel, including to run the pyrolysis facility.
It can be shipped off to other locations,
including to crackers to produce new plastics.
That ecosystem exists today, he noted.
“Recycled plastics-to-fuel is a sustainable
business model with 10-15% returns and this can
be self-funding. The biggest area that needs to
be funded is influencing consumer behaviour to
bring the plastic to a place where it can be
easily collected and brought to these centers,”
said Ramachandran.
“That ecosystem has to be built and it can be
done. Look at the state of mask wearing
compliance in the world [amid the pandemic]… It
is possible to influence consumer behaviour in
less than a year,” he added.
Interview article by Joseph
Chang