As plastics treaty debates production caps, a look at potential impact and implementation

As the plastics treaty heads toward the finish line, the debate over limits or caps on virgin resin production has gotten louder, with the Biden administration and now some global businesses publicly backing limits.

Still, the idea remains very controversial, and it's far from clear if caps will be part of any final treaty. Some observers say that even if caps are included, practical implementation could be years away.

Nonetheless, the idea of some kind of limits around plastics production is getting more attention as the talks move toward their fifth and final scheduled round of negotiations, from Nov. 25-Dec. 1 in Busan, South Korea.

Supporters of caps say the August announcement from President Joe Biden that his administration is now supporting caps, albeit without a lot of details, will give the idea more juice in the talks.

But the Biden move is also controversial in U.S. politics, with Republicans in Congress slamming Biden in letters this month and plastics groups joining that criticism.

But the business community is not monolithic. A coalition of global consumer brands including Unilever plc and Coca-Cola Co. in recent days signaled that it wants the treaty to include some regulation of plastic production levels.

On Oct. 21, the Business Coalition for a Global Plastics Treaty announced it had signed the Bridge to Busan, a position statement from 40 nations and the European Union that favors reaching "sustainable" levels of production of primary plastics in the treaty, including with potential freezes or reductions.

Some observers said they see momentum growing for yet-to-be-defined concept of caps.

"Recent news and announcements from the US and EU clearly indicate that not only the majority of countries but also some major producers agree that the treaty should cover and regulate the production of virgin plastics," said David Azoulay, managing attorney in the Geneva office of the Center for International Environmental Law. "This sets a solid basis for negotiators to move past the scope disagreements that have been delaying progress and provides a good foundation for advancing at INC5."

But plastics industry officials see it differently. They say opposition from some large countries makes caps dead-on-arrival, and question whether the U.S. Senate would back any deal that included limits.

"There are countries like China, like many of the [Persian] Gulf States, where production caps are a non-starter and they will not sign anything," said Patrick Krieger, a treaty delegate for the Plastics Industry Association.

But he said the treaty could also put in more general provisions that limit growth and could function as a cap, even if they are not a literal cap.

"There are ways that you can put a production cap in that doesn't say those words, and does a bank really want to give you a loan if you can't grow to pay it," he said.

Without specific proposals on how a cap would work, it's hard to assess the economic impact.

But some plastic groups say it would reduce jobs. industry figures say just over 1 million people work in plastics in the United States, including the resin, processing and machinery segments, making it the eighth-largest sector within domestic manufacturing.

"In general, a production cap would cost jobs," Krieger said.

A recent op-ed from the plastics association said a cap also risks moving jobs offshore to countries with looser environmental standards and could hurt U.S. efforts to build up domestic manufacturing.

An April study from the International Council of Chemical Associations said a cap would raise the price of plastic, as well as potentially shift demand to materials with higher greenhouse gas footprints, "generating a risk of unintended environmental consequences."

Stewart Harris, managing director of global affairs at the American Chemistry Council, said the impact of caps could extend beyond packaging markets, and hurt the availability of plastic for durable goods.

"We're still hearing pretty strident calls from governments on the need to limit the amount of material in the system," Harris said. "There's a clear disconnect with the government negotiators and their understanding of how the plastics value chain works."

An ACC statement said the Biden administration's shift "signaled it is willing to betray U.S. manufacturing and the hundreds of thousands of jobs it supports."

But an official with the Association of Plastic Recyclers said the build-out of new virgin plastic production around the world does impact the economics of recycling.

"Recycled plastic is a direct replacement for virgin and those economics are tricky," said Kate Bailey, APR's chief policy officer. "With so much virgin plastic coming on board, with the build out of many, many plants in China, in the U.S., we're seeing this huge growth in virgin production."

She said the treaty needs to be seen in a long-term lens.

Recycling creates jobs as well, she said, and relying less on virgin production could make the U.S. plastics industry more competitive, particularly if major trading partners start to enforce recycled content requirements.

"This is about competitiveness. Some of our biggest trading partners are making commitments that if your packaging is not recyclable or recycled content, it won't be allowed into the European Union or potentially Canada," Bailey said. "So this is also about how are we going to do business around the world."

Those who back caps say they're needed because the world can't manage the waste from current levels of plastic production, let alone from expected increases.

And they say the plastics treaty should be tied into efforts to limit global warming. Environmental groups say the world can't meet its global warming targets and stay within carbon budgets if fossil-based plastic production continues its rapid growth.

Countries that back caps, however, acknowledge that nations are far from agreeing on whether to do them or how they could be structured.

"I'm not saying it's going to be simple," said Sylvie Lemmet, France's ambassador for the environment, in comments at a U.N. session in September to discuss the treaty. "How do we identify a collaborative mechanism to get there? Probably it will take some time, but it is not something that should be left out of the treaty."

Erin Simon, vice president and head of plastic waste and business at WWF, said diplomats have work ahead of them if caps are to be in the treaty.

"Even with U.S. support, there will still be alignment that will be needed to be built out across member states," she said. "What we do know is that we can't manage what we produce today, and therefore we're not capable of catching up while also doubling production."

A 2024 study from Sweden's Lund University proposed that plastic production caps could be organized similarly to cap-and-trade systems that began in the U.S. decades ago and now cover 18 percent of global greenhouse gas emissions.

The Lund researchers said the treaty could set up a system that allocates production allowances for primary plastics to the countries signing the treaty. Companies would then buy those allowances on an auction platform.

The system, effectively a "producer pays" model, could use global climate targets to determine cap levels.

The study said the production of plastics accounts for 96 percent of greenhouse gas emissions from plastics, and it argued that limiting production will be necessary to control global GHG emissions.

The study also proposed that cap levels be guided by what's needed for "decent living" for people, looking at where plastics have essential uses such as in water, sanitation and energy transmission applications.

"In some application domains, plastics are not easily eliminated or substituted without negative effects," the study said, while arguing for reducing plastics in unneeded single-use applications or in the oversupply of fast fashion clothing.

The Lund study said that 117 countries have backed some form of reduction of plastics production in their formal submissions to the treaty, with a few advocating for a global plastics pollution fee.

On other side, it said 16 countries, including Saudi Arabia, China, India, Iran and Russia, explicitly rejected treaty provisions that could force reductions in plastic production.

"There is a large support for measures that reduce or restrict overall production of plastics, with nearly 2/3 of UN member states stipulating a support of such measures," the Lund study said.

Greenpeace favors reducing plastic production by 75 percent by 2040, from a 2019 baseline.

"Caps will be the most straightforward tool to get us there," said John Hocevar, Greenpeace USA oceans campaign director.

He predicted that the new U.S. position could tilt the negotiating field in Busan.

"When the U.S. joined the EU and other countries in supporting measures to reduce plastic production, it created ripples that will impact the position of many other governments," Hocevar said. "It is now more difficult for Saudi Arabia, for example, to take such an extremist approach."

"This shift in the U.S. will change what is possible for the negotiations overall," he said.

Another environmental group said resin caps could be more of a long-term action under the treaty.

"I don't think we're going to set targets for 2030, but I think we're going to set targets for 2040 or 2050, recognizing that it takes a second for these types of shifts to occur and to give countries time to adjust," said Anja Brandon, director of plastics policy at Ocean Conservancy.

It would be new territory for regulation in Washington.

"It remains an open question how exactly the U.S. government, from the federal side, is going to think about regulating production," she said.

There are steps short of a direct cap that could move in that direction, like tax policy changes eliminating subsidies for virgin resin production or enacting a 20-cent-per-pound tax on single-use plastic that's been proposed by Sen. Sheldon Whitehouse, D-R.I., Brandon said.

Within the treaty, details around caps could be postponed for post-treaty implementation meetings called the Conference of Parties, or COP, Brandon said.

The main body of the plastics treaty, for example, could call for a production reduction target but given limited time in Busan, leave details to a future COP, possibly with input from a scientific panel, she said.

"There's a pathway for the actual numbers and rates and dates and timing to get kicked out further," she said. "In some ways that would make sense, if the world truly wants to wrap things up at INC 5."

Others agreed that the treaty could leave details to COP meetings.

"While there is clear scientific certainty and growing political commitment on the need to reduce production, because there are still a lot of details to be hammered out — both in terms of technical and scientific elements as well as in terms of what type of obligations the countries would be willing to agree to — it is likely that the treaty will leave some aspects of the plan to be decided by the COP at a later stage," said CIEL's Azoulay.