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Big gap exists between recycled plastic demand and supply – Dow CEO

March 11, 2023
Chemical Value Chain

An enormous gap exists between the amount of post-consumer recycled plastic that companies want to incorporate into their products and the amount that can be supplied by the market, the CEO of Dow said on Tuesday.

The owners of many valuable consumer brands want to incorporate 30% of post-consumer recycled plastic into their products by 2030, said Jim Fitterling, Dow CEO. He made his comments during the CERAWeek by S&P Global energy conference.

The market can provide 2-5% of that demand, he said.

That gap between demand and supply is causing an influx of money into waste management, municipal recycling centres, curbside collection and technology for sorting waste, Fitterling said.

Dow itself could build a chemical recycling plant with Mura in Bohlen, Germany, that will rely on hydrolysis to break down plastic into monomers, which can then be re-polymerised. They could make a final investment decision in 2023.

The demand for products made of recycled and renewable plastic has caused them to command high premiums over their petroleum-derived equivalents, Fitterling said. In some cases, these premiums could be $1,000/tonne.

Customers are willing to pay such premiums on a smaller scale but not in the broader market, Fitterling said. For example, most consumers will not pay a 100% premium to own a net-zero automobile, he said.

If policy makers want to speed up the transition towards more sustainable products, then Fitterling said they should consider establishing a price on carbon. This would allow companies to recover the operating costs and capital costs involved in developing sustainable products while the markets for such materials develop and while demand grows.

Given how much companies are willing to pay and how much is at stake, Fitterling stressed the need for third-party certification and verification. Companies that own valuable consumer brands do not want to face accusations of greenwashing if they end up with materials that were not made from recycled or renewable plastics or chemicals.

The higher prices commanded by sustainable materials reflect fundamental market dynamics, and it should not be considered a premium, said Ken Lane, executive vice president, Global Olefins & Polyolefins for LyondellBasell.

If customers want sustainable products, then they need to pay a price that will justify investments to make those products, he said.

“It will not be that I’m benchmarking a price off of polyethylene. The price is what it is,” Lane said. “The market will determine whatever the price needs to be.”

Dow has developed a plan that could bring the company to net-zero emissions by 2050. Nearly all of that reduction will come from investments in new technologies, he said.

Some of those technologies are already available, such as purchase agreements for renewable power or hydrogen production that is coupled with carbon capture.

Others are farther out.

by Al Greenwood


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