Drowning in plastics3 December 2020
The use of plastics has dramatically increased since the beginning of the Covid-19 pandemic, creating issues around plastic waste disposal. The following is an edited extract from a white paper by fi nancial company Jefferies, which looks at a report it published earlier in 2020 called ‘Drowning in Plastic – Who Sinks, Who Swims?’, and examines the questions of sustainability around plastics in a pandemic.
The pandemic has proved beyond any doubt that we cannot live without plastics – they have saved thousands of lives in the form of medical equipment such as masks, gowns and face shields, which are made of polypropylene and polyethylene. It has also brought about sweeping and potentially long-lasting changes to many aspects of our lives. The frequency in which we spend time at home, order food delivery, grocery shop, purchase goods online and use personal protective equipment (PPE) have all increased significantly since the pandemic began. However, the pandemic appears to have put the topic of sustainability on the back seat for many.
Data on how plastic consumption has changed since the onset of Covid-19 is still limited. However, piecing together evidence and findings from different sectors of the plastics value chain points to a picture of swelling single-use plastic pollution. Although singleuse plastic consumption appears to be relatively flat to marginally up, the fact that waste management services around the world have been curtailed due to the pandemic means that much of it isn’t being recovered or disposed of properly. Waste collection and recovery plants have been affected by various factors, including concerns over virus exposure, pressure on municipal and government budgets, and further pressure on the profitability of recycling. As a result, single-use plastics are increasingly being sent to landfills and incinerators, or disposed of illegally.
It is also important to consider how consumer habits and behaviours will shift once the crisis is over. Given that Covid-19 will likely be around for at least a year from start to finish, it is reasonable to expect that some of our new habits will become entrenched going forward. Many environmentalists have expressed concern that temporary moves away from sustainable practices could become permanent. Notably, the hygiene of reusable products has been called into question by many, resulting in the substitution of reusables with single-use plastic goods.
Earlier this year Jefferies published a large report on the plastics issue, ‘Drowning in Plastic – Who Sinks, Who Swims?’. In it, the company outlined four possible future scenarios for the global transition to a circular economy. Jefferies now revisits those scenarios and adjusts for the impact of Covid-19.
Single-use plastics in a Covid-19 world
The global pandemic has transformed the PPE industry. Almost overnight, demand for all types of PPE skyrocketed, and look likely to remain permanently elevated even after the virus is gone. This is most evident in the surgical mask category, where consulting firm Grand View Research estimates that the market has grown from $800m in 2019 to $166bn in 2020.
Although PPE has been instrumental in helping to contain the virus, most equipment is made from single-use plastic, and the US International Solid Waste Association (ISWA) states that almost all of it is unsuitable for recycling. Surgical gowns and coveralls are made from polyester and polyethylene; surgical and N95 masks are made from non-woven polypropylene fibre; and face shields are composed of polycarbonate or polyvinyl chloride.
But how has the meteoric rise in PPE demand affected global medical waste volumes? For the US, earnings results from waste management companies suggest that the proliferation of PPE usage has been more than offset by the suspension of most non-critical services, preventative care and elective surgeries, as well as the temporary closure of small healthcare practices and a reduction in emergency room visits. Both Stericycle and Covanta have reported marginal declines in medical waste volumes in the past two quarters. However, Jefferies’ estimates suggest that globally, we are using 43 billion more PPE items every month when compared to pre-Covid levels. The company believes that this likely offsets any decline in traditional medical waste.
Despite announcements from major US waste managers, global demand for medical applications is expected to have risen since the onset of the pandemic. While volumes in developed countries like the US may be offset by the closure of non-critical services and procedures, a large amount of discarded PPE may not be accounted for as medical waste.
First, PPE may not always be disposed of correctly, which means it can commonly be handled as traditional municipal solid waste. Second, according to the National Waste and Recycling Association (NWRA), PPE is not typically classified as regulated medical waste in the US, which may be a factor when comparing volumes between different countries. Lastly, developing nations with less advanced healthcare industries were likely generating less medical waste from procedures like elective surgeries than the US. For example, during the peak of the outbreak, hospitals in Wuhan produced six times more waste on a daily basis, with most of it being plastic PPE.
Overall plastic waste down
Demand destruction across large swathes of the global economy has resulted in material decreases in overall waste generation, with major waste management companies indicating in recent earnings announcements that overall solid waste volumes were down high single digits to low double digits for the second quarter of 2020.
As a proxy, plastics make up around 15% of municipal solid waste in the US. The readthrough from the above suggests that overall plastic waste volumes are likely down as well. This makes sense intuitively, as sectors such as travel, hospitality and industry, which generate millions of tons of plastic waste every year, have witnessed substantial declines in activity. In spite of this, Jefferies believes that demand for single-use applications has remained resilient, with volumes likely to be flat or marginally up. This is mainly a result of strength in the medical sector, food delivery, food retail and overall fast-moving consumer goods, largely offset by weakness in food service, food wholesale, industrial/ product care packaging, beverages and certain categories of personal care.
Taking a look at global plastic waste generation by sector, it is reasonable to assume that the packaging, consumer, and other (which includes medical waste) segments have seen relatively muted impact, while the remaining sectors have seen significant declines.
Single-use plastic pollution has gone up
The recycling industry has been significantly impacted by the pandemic. Globally, one-quarter of the world’s population still has no access to basic waste collection systems. Developing countries burn, landfill or dump almost all of their trash. Even in the developed world, standards of waste treatment have gone down, with Covid-19 significantly affecting the waste management sector, and particularly the recycling industry. Many recycling and bottle redemption facilities have been forced to suspend their services, leading to a surge in the landfilling and burning of recyclables, further amplifying the negative effects of single-use plastic.
Collection and recovery facilities
Many waste management companies have faced financial and/or operational challenges during the Covid-19 crisis. These difficulties can largely be attributed to a combination of virus exposure, social distancing requirements, staffing limitations and waste volume shifts. Initially, uncertainties around how Covid- 19 was transmitted and its survivability on different surfaced led many governments and companies to proactively suspend their recycling programmes, in fear of transmission between front-line workers who manually handle waste products. The Recycling Partnership estimates that over 100 curb-side recycling programmes in the US have been suspended at some point during the pandemic.
As cases began to surge worldwide, additional facilities were forced to close as workers began testing positive for the virus. A material recovery facility (MRF) in Calgary was forced to close for two weeks in May when workers were confirmed to have contracted the virus, while a programme in Missouri was put on hold when employees went into quarantine.
The implementation of widespread stay-at-home orders also presented significant problems for the recycling sector, as operators faced material volume changes and staffing limitations, leading to the suspension of many facilities, particularly in California. Waste Management, the largest waste service provider in the US, suspended residential recycling operations at five California MRFs in March. Other companies, such as Advanced Disposal Services, Athens Services, and CR&R Environmental Services also followed suit and limited operations of their MRFs. Many of these operations had resumed usual service by late May.
Additionally, a number of governments have temporarily suspended enforcement or operation of bottle redemption facilities. According to the Container Recycling Institute, a North American authority on the collection and quality recycling of packaging materials, bottle redemption during the pandemic is estimated to be around 55% of its normal weight.
Pressure on local government budgets
The pandemic has significantly shifted the waste generation mix from commercial to residential, making local recycling programmes all the more important. Unfortunately, these programmes have been among the most affected by the virus. The virus-driven economic slowdown has put pressure on municipal and state government budgets across the globe. Some communities facing tough decisions on where to allocate limited resources are cutting funding to local recycling programmes. In the US, for example, certain municipalities in Illinois, Texas, Louisiana, and Virginia have all seen the funding for their curbside recycling programmes eliminated in order to save costs.
The economics of recycling Even before the pandemic, the global recycling industry was struggling to re-engineer its supply chain after China put an end to the importation of most foreign waste in January 2018, under a policy known as ‘national sword’. At the time, China was the world’s biggest importer of plastic waste, accounting for over 55% of global market share. Even countries like Indonesia, Malaysia, Thailand, and Vietnam, which initially helped offset China’s ban by purchasing more plastic waste, have clamped down on imports. These factors led to a dramatic decline in demand for recyclable waste. At the same time, recycling programmes around the world were already being shut down as they generated little revenue.
The pandemic has compounded these issues further as the economics of recycling have deteriorated considerably. The drop in oil prices in early 2020 significantly lowered the cost of producing virgin plastic, putting significant downward pressure on recycled resin prices and demand. In May the average prices for recycled PET containers and polypropylene in the US were one-half and one-third of the selling prices from a year earlier. Meanwhile, the costs of producing recycled plastics are largely fixed, so manufacturers have been forced to sell their products at a premium to its prime counterparts. According to IHS Markit, crude oil prices are expected to remain depressed for at least the next two years, suggesting that this trend will hold in the medium-term.
In addition, some US states have banned reusable plastic bags, which are required by law to compose of at least 40% recycled material. This has historically been an important demand driver for film recycling in North America, and the new regulations have resulted in bag manufacturers reverting back to the use of cheaper virgin LDPE. Consequently, many recovery facilities are ceasing operations because of current market conditions.
Illegal dumping of used PPE
The unprecedented nature of the pandemic has led to deficiencies in standard operating procedures, resources and personnel training on how to dispose of PPE. Used PPE is generally labelled as infectious or offensive, which means it needs to be burned. This has been problematic for some developing countries, where sufficient waste-to-energy infrastructure may not be available. According to Global Biodefense, China had to build close to 50 new medical waste and mobile treatment facilities to deal with excess medical waste, mostly made up of PPE. In other countries like India, there have been widespread reports of the mixing of clinical and general waste, as well as the illegal dumping of large amounts of used PPE in open spaces.
The recycling industry has been substantially affected by the pandemic. Companies have been hit by myriad factors including staffing limitations, forced closures, budget cuts, unfavourable regulations, low oil prices and demand destruction. Along with the illegal dumping of large amounts of PPE across the world, single-use plastic pollution looks to have increased materially.