As concerns are raised regarding the lack of supply of conventional recycled plastic, how can ocean-bound plastic help companies achieve their sustainability commitments – and ultimately rethink how we do plastic recycling?
The demand for recycled plastic is growing
The move towards recycled plastic is gaining more momentum amongst brands as they catch up to their sustainability commitments. In February beverage giant Coca Cola announced their decision to use 100% recycled plastic in their bottles in the US, moving away from plant-based materials.
Recycled plastic is also catching on amongst consumers. One in two UK adults expect that plastic will be made from 100% recycled material by 2030. These developments come at a crucial time, as concerns are raised about the availability of recycled plastic.
The market for recycled plastic fell into disarray months before the coronavirus hit due to a sharp decline in the oil price. With a cost drop of virgin plastic as a result, many buyers moved away from recycled plastic to the much cheaper virgin option. Accompanied by multiple global lockdowns, there was also a reduced demand for recycled plastic from key sectors such as automotive and construction.
Market intelligence agency, ICIS, demonstrated in their 2021 Global Outlook Report, that there is a shortage of recycled plastic on a global scale, suitable for packaging use – particularly in food grade applications. A lack of supply to meet demand in the United Kingdom was raised by Wrap back in 2019 and a similar picture is emerging in Canada and the United States. An analysis by Closed Loop suggests that the current supply of recycled plastic will only meet 6% of the demand.
While it is challenging to obtain a clear picture of this vast and quickly moving landscape – is the emerging ocean-bound plastics market facing a similar dilemma? And what can we take away about this new market to learn more about the intricate dynamics behind this lack of supply?
Ocean-bound plastic is outstripping demand
The market for ocean-bound plastics has been well underway, since Jenna Jambeck published her monumental study in 2015 which set the parameters of ocean-bound plastics. Concluding that up to 12 million metrics tonnes of plastic entered the sea every year, various actors moved into the space to try and solve this problem.
From a market perspective, the key difference between conventional recycled plastic and ocean-bound plastic is that the latter must be collected within the vicinity of an ocean or major waterway that feeds into the ocean. What differentiates a trusted ocean-bound plastic, is the ability to trace the plastic material back to the point of origin through a documented chain of custody. This means that although conventional recycled plastic can also be shipped from abroad, ocean-bound plastic supply chains have an added layer of complexity.
According to Nick Brown, Global Supply Chain Consultant for NextWave Plastics, an initiative tasked with developing a global network of ocean-bound plastic supply chains, there is currently an overabundance of plastic material being collected across the informal waste sector. In close communication with ocean-bound plastic recyclers all over the world he confirms that:
“The supply of raw material today is outstripping the demand across the board. Most suppliers and recyclers are typically at ¾ capacity.”
Since the 1950’s, a study estimated that more than 8300 million metric tons of virgin plastic has been produced – 79% of which has ended up in landfill or the natural environment.
If there is enough plastic on the ground – why the lack of ‘availability’?
Challenges at the point of origin
When it comes to recycled plastic, such as ocean-bound plastic, the issue isn’t with the supply itself but how it’s currently being routed through the supply chain.
Recycled ocean plastic predominantly comes from informal collection ventures in developing communities such as Haiti, Lagos and Indonesia. A significant proportion of this plastic is then exported to developed nations, such as the United States and the United Kingdom.
The issues thus start with a lack of infrastructure in these developing countries. Factories don’t always have enough resources or know-how to operate on a large scale. Obtaining high quality material at a low enough cost can then become a barrier for manufacturers. Investments are thus heavily needed to support recycling infrastructure at the point of origin.
But there are also constraints coming from the demand side, according to Kendall Starkman, Director of NextWave Plastics.
“When it comes to plastic recycling, it’s not as simple as there is not enough plastic. There are limitations to plastic collection and recycling, but successful use of recycled material also has to do with the demand and what’s actually being bought.”
Constraints facing brands and logistical bottlenecks
While on one side of the world, there is an overflow of plastic waiting to be scooped up, brands and companies are not always buying what is available. Kendall says:
“At the moment, brands may want recycled content, but have trouble accessing recycled material that meets their performance needs, or they may be working against long-set internal assumptions and processes.”
Integrating a different plastic material within a product line can be challenging at first. This is because due to the nature of collection, there can sometimes be inconsistencies. Due to its traceability, ocean-bound plastics can be more expensive and unfamiliar. ‘Ocean-bound plastics are nascent, so you have to put in some more effort to make it work,’ she says.
Kendall also points towards ‘an economic stalemate of sorts’ between the demand and supply side. Although many public commitments have been made by companies, these aren’t contracts to actually purchase the plastic material. Recyclers can only commence their operations once actual investments and orders have been placed. This is the only way through which the supply will grow. However, brands can be hesitant about investing without a guarantee that the material they are purchasing is of the quality and quantity they expect.
On the communications side, awareness about where to source ocean-bound plastic can also be a big problem for brands. NextWave Plastics is currently designing an ocean-bound plastics portal for members of the consortium to help brands deal with some of these challenges.
Yet the pandemic hasn’t made things easy either. Since the end of last year, a rise in shipping rates have made it increasingly difficult to transport at affordable prices. According to Michelle Khodabacksh, logistics manager at Bantam Materials:
‘When the pandemic struck, economies across the world were forced into lockdown. Shipping lines responded by cancelling voyages and taking vessels out of service. When the world started opening up again, a sudden surge in demand for goods meant that shipping lines started selling container space to the highest bidder.’
Unfavourable shipping rates could become a potential bottle neck for manufacturers, as well as brands who are interested in purchasing the material.
Despite these challenges, there are exciting opportunities ahead.
Remarkable optimism, but a bumpy road ahead
As with most sectors, post-pandemic, there is a clear opportunity to rebuild and rethink how we do things. New regulations, such as the EU’s levy on non-recycled plastic packaging waste can serve as a booster – and there is remarkable optimism about the future of the recycled plastic market.
While the supply in Europe will be hard to meet as the collection rates for recycled plastic remain low, according to ICIS, there is a big opportunity to bring in recycled ocean-bound plastic from abroad.
But this can only happen if there is enough demand from brands. Kendall remarks:
“Once companies start to invest, meet their commitments and buy the plastic material, I think that the supply of high-quality material will rise. But it will be a bumpy road to navigate the transition.’
As the appeal for recycled plastic grows, the notion that there isn’t enough supply doesn’t exactly hold true. While the ocean-bound plastic market faces additional challenges due to its unique proposition, as it continues to develop in uncertain times – there is a golden opportunity to do plastic recycling better.