(March 2, 4:45 p.m. EST) — The debate is over about whether plastics improve people's lives: Most agree they do. Now the question is how to use the environmental agenda to kick-start a new era of growth for the plastics industry.
Energy and climate are ruling the headlines, and environmental and social “activism” have moved into the mainstream from the tree-hugging fringe. Rising consumer expectations for safe, green products are driving changes in product design and materials use. For instance, polypropylene, an eminently recyclable resin, does not score well on Wal-Mart Stores Inc.'s pilot packaging scorecard due to insufficient availability of recycled PP. Hence, some major brand-name PP users are considering alternative materials for their products.
Confronted with the high costs of cleaning up growing volumes of plastics waste, the European Union is enforcing take-back regulations such as those embodied in the Waste from Electrical Electronic Equipment directive and the End-of-Life Vehicle directive. Those mandates also affect U.S. materials and product manufacturers. ELV impacts PP significantly, as the average car contains more than 200 pounds of the resin. As a result, the auto industry is seeking a way to recycle the material efficiently.
The impact of plastics on energy and climate may be relatively modest, but their high volume, visibility and lack of good end-of-life solutions attract much attention. Innovative, cost-effective solutions are needed to help keep 40 billion pounds — in the U.S. alone — of six major commodity plastics out of the marine environment and our landfills.
Such solutions also would save energy and lower greenhouse gas emissions. If we could boost recycling rates to 80 percent, we could save energy equivalent to 141 million barrels of oil, or to supplying power to 4.4 million households or 6.5 billion gallons of gasoline for cars. The reduction of greenhouse gas emissions would be equivalent to removing 5 million cars from the road each year. (Estimates are calculated using the Environmental Protection Agency model available at yosemite.epa.gov/OAR/global warming.nsf/content/Actions WasteWarm.html.)
Roads toward change
So what can be done? We propose two paths: one suggests incremental changes to today's practices; the other, a fundamental change in the industry production, sale, recovery and reuse.
We believe incrementally reducing complexity in all parts of the plastics value chain can provide quick financial and ecological gains. Many would agree complexity is increasing.
By that we refer to the variety and complexity of plastics' composition, and to product construction. Not only do they make end-of-life identification, separation and recovery of plastics uneconomical, but they also increase costs during their lifetime.
While this level of differentiation meets producers' demands, the costs of switching from one grade to another results in “off-spec” products, which in turn lowers production capacity and profits.
The costs to procure, store and track these materials are significant. In the past, when margins were high, the costs were tolerable. But today the costs of complexity have exceeded the benefits.
If complexity is increasing costs, why is it being tolerated? We see this as a case of “complexity creep,” with many small changes made over time adding up exponentially. Designers, brand owners and producers all want their products to be different and to have consumer appeal.
Not all these changes are bad for the environment. Many innovations have lowered material weight, saved energy or preserved food. However, these innovations grew independent of concerns for end-of life recovery and waste-management costs. Time has come to review the cost/benefit ratio (including the externalized end-of-life costs) of complexity or differentiation.
This brings us to the more fundamental change — not just at the design level, but at a system level — that involves changing how companies produce, sell, recover and reuse materials. We believe by making and selling the plastics and products with plans already in place for their next life, the entire value chain can kick-start a new wave of innovations and a second growth curve.
Consider high density polyethylene bottles in the United States, the preferred packaging for milk distribution. These bottles have a useful life of about three weeks. That's about $1 billion worth of resin that has an economic life of less than a month, when the potential useful life of that resin should be measured in terms of years!
Although some 25 percent of HDPE milk bottles are recycled, most end up in lower-value applications. And there is only minimal connectivity between the virgin value chain (resin manufacturer, bottle fabricator and milk bottler) and the recycle value chain. For a material that retains much of its intrinsic value after its original use, that's like throwing away good money.
What if the polymer manufacturer could sell each pound of HDPE at four times, as high-value resin? With roughly two-thirds the value of HDPE tied up in hydrocarbon feedstock, that effectively would reduce the hydrocarbon raw material cost of each pound by 75 percent. Make and sell 1 pound of HDPE, then reuse it three times under a carefully crafted plan developed in advance of making that first pound.
In our work with clients, we have developed some tools and design principles for enhancing the physical and economic value of the materials via innovative sequencing of production of articles from a particular material, such as making simple, short-lived articles that subsequently can be used to make complex and long-lived articles. Apply these principles to even a third of the 26 billion pounds of thermoplastic packaging consumed in the United States and the numbers really add up.
Of course, this would require plastics manufacturers to rethink their business models and in particular how they manage their value chains. Firms would have to redefine themselves as plastics suppliers who create reliable infrastructure for domestic supply of high-value, used plastic. No single party in the value chain can solve the problem.
It requires all involved — polymer producers, converters, brand owners, retailers, waste management and recyclers — to recognize and mitigate the effects of their own decisions in other parts of plastics life cycle.
The pulp and paper industry has invested in building an infrastructure for collecting, sorting, recycling and reusing paper; the aluminum industry has done the same thing for its products. If they can do it, so can the plastics industry.
Without fundamentally changing the traditional “once-through” sales philosophy, basic plastics manufacturers and their customers will continue to fight an uphill battle with increasing costs, higher competitive intensity, lower margins and limited growth. The industry is missing opportunities to:
* Use a local competitive advantage — the abundance of plastic waste — to create growth.
* Improve its competitive position by effectively lowering feedstock cost.
* Create long-term growth without extending an industrial footprint.
* Preserve resources, both physical and financial.
Nucor Corp. found a way to do this in steel, using exclusively steel scrap, and today is an industrial leader. And by 2020, a few innovative companies will be doing the same in plastics, while others study their success.
Seetha Coleman-Kammula is founder of Simply Sustain LLC in Newark, Del. Karl Loos is managing partner at Stonybrook Partners LLC in Cambridge, Mass.