Colbeck Capital Management on Plastics: Public Enemy №1
(Photo : Colbeck Capital Management on Plastics: Public Enemy №1)

Plastic was once lauded as one of the world's greatest inventions but has since become the most important environmental concern for many social influencers. The primary reason for this change is recycling, especially single-use items such as plastic bottles and bags. The role that plastic plays in climate change has been actively debated for decades, but many of these results are suspect. However, the actual costs and benefits of plastic can be surprising as Colbeck Capital Management delves into on their Limited Liabilities Medium blog.

Overview

Plastic was originally invented to conserve natural resources. Billiards was an extremely popular game in the United States during the 19th century, but one elephant tusk was needed to make three billiard balls. One billiard ball supplier offered a $10,000 award in 1863 to the first inventor to develop a substitute for ivory. John Hyatt invented celluloid six years later, but he never collected the prize since the balls made from this material made a mild explosion when they collided with each other.

Plastics are synthetic polymers, which are long molecular chains composed of repeating components known as monomers. This complex structure makes the plastic more difficult to recycle than simple materials like aluminum, glass, and steel. Polyethylene terephthalate (PET) is the world's most heavily recycled plastic, but only about one-fourth of it is recycled. Furthermore, the majority of this recycling activity uses plastic for less demanding applications, rather than converting it back into bottles. This process requires 50 to 75 percent virgin plastic, meaning that recycling plastic is often impractical for any purpose other than marketing.

History

Earlier generations came much closer to closed-loop recycling simply because they couldn't afford to waste anything. For example, clothing was once very labor-intensive to manufacture, so every scrap had to be reused as much as possible. Composting consisted of throwing unwanted food scraps into the street, where it could be eaten by a roaming pig or sold as fertilizer.

The use of plastic on a commercial scale promised an era of convenience and cleanliness after World War II. Its annual use at that time was two million tons, which has grown to 380 million tons today. Colbeck Capital Management also points out that the annual usage of plastic will exceed one billion tons before the end of the 21st century. Only nine percent of the total plastic produced is ever recycled, resulting in large islets made of plastic in the Pacific Ocean.

Major plastics manufacturers such as Dow, DuPont, Exxon, and Mobil have responded to this crisis by spending $40 million to develop plastic-recycling technology. However, they spent another $250 million on an ad campaign promoting the value of plastic. As Roger Bernstein of the American Chemistry Council explained, "As soon as [consumers] recycle your product, they feel better about it."

Current Problems

The main problem with the current recycling methods is that they aren't profitable. U.S. Companies that recycle plastic are only able to remain profitable by integrating this process with other activities such as garbage disposal, including exporting plastic to China. That country accounted for nearly half of the world's recycled waste for three decades until revising its purity standards in 2018. At that time, China began rejecting 99 percent of the waste from the U.S.

Municipalities that were previously able to dispose of their waste at a profit were suddenly unable to do so. For example, the city of Stamford, Connecticut made $95,000 by selling its recyclable materials, but it had to pay $700,000 to have them removed in 2018. Other municipalities have completely stopped their recycling efforts as a result of its loss of economy.

Placing Responsibility

Local governments and consumers have historically received much of the blame for the problems with recycling plastic. However, the trend during recent years has been shifting responsibility for this issue towards manufacturers, especially concerning the packaging. Sweden already provides incentives to producers who design a product with greater reusability that eliminates the need for recycling.

However, the greater emphasis on extended producer responsibility (EPR) also increases the use of incineration to dispose of plastics. Modern incineration methods are a far cry from traditional open burning, but it still isn't what most people consider recycling. David P. Steiner, CEO of Waste Management, referred to the crisis of recycling by saying, "Trying to turn garbage into gold costs a lot more than expected. We need to ask ourselves: What is the goal here?"

The supply chain for plastics achieved an annual growth rate of 8.4 percent between 1950 and 2015, which consumer-level recycling can do little to affect. Furthermore, consumers no longer have the ability to give up using plastic, given this material's entrenchment in virtually every manufactured product today. Cooperation between designers, distributors, and manufacturers will ultimately be needed to make plastic products more reusable and recyclable.

Colbeck Capital Managment is a strategic lender that partners with companies during periods of transition, providing creative capital solutions to meet their evolving needs. For more information visit their website here: https://colbeck.com/

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