PI Partnership – M&G Investments
by the world will come from mechanically or chemically recycled sources. Mechanical recycling is the easy bit. This involves collecting, sorting, cleaning and re-melting certain categories of plastic. It is mainly used for PET (clear drinks bot- tles) and HDPE (cloudy milk bottles). Because it doesn’t change the chemical composition of the plastic, mechanical recycling is a relatively simple process. It also generates fewer GHGs than virgin plastic, by up to 80%. The disadvantage is it cannot deal with mixed plastic waste, so requires extensive sorting and the plastic must be relatively clean. Furthermore, each re-melting results in the plastic degrading and being downcycled, so it usually results in a dif- ferent end use, such as plastic bottles becoming carpet fibres.
The opportunities in chemical recycling The answer to addressing a wider range of plastic feedstock lies in ‘chemical’ recy- cling, which itself breaks down into two broad technologies: ‘pyrolysis’ and ‘mon- omer’ recycling. Our analysis leads us to be more excited about the former, since it is a plug-and-play solution which pro- vides circular feedstock to existing, naph- tha-based petrochemical complexes. Pyrolysis breaks mixed plastic waste back into its original hydrocarbon building blocks using heat, in the absence of oxy- gen. For some plastics, it can produce higher greenhouse gas (GHG) emissions
than using virgin resin, because it requires high temperatures. However, it is still better for the environment, when accounting for the fact that much of the plastic feedstock it uses will either be burned in waste-to-energy facilities or left to slowly decay in landfill. Furthermore, plastic manufacturing accounts for around 8% of oil usage, so any growth in plastic demand which is not satisfied by a circular solution will require a corre- sponding increase in upstream oil development.
There are several other benefits. Pyrolysis can be applied to the plastics which don’t have established mechanical solutions (such as low-density polyethylene, poly- propylene and polystyrene), and its great advantage is that it can process labels, inks and food residue, so requires less sorting and cleaning. Pyrolysis-derived naphtha also produces new plastics which are chemically identical to those synthe- sised from fossil fuels. This means they are free from the degradation common in mechanical recycling, and they are suita- ble for food-grade applications, which is key to FMCG company interest. The economics, currently, are also strong. Demand for circular feedstocks far out- strips supply, so circular plastic sells at a premium to virgin, while in some cases the feedstock of part-sorted plastic waste is available at a low, or even potentially negative cost (if the seller is otherwise faced with landfill fees).
Some serious targets are now emerging from the petrochemical industry, which will support growth in the pyrolysis industry this decade. TotalEnergies pro- duces 60,000 tonnes of high-value circu- lar polymers today and targets 1 million tonnes in 2030. Similarly, INEOS aims to incorporate at least 850,000 tonnes of recycled and bio-sourced polymer into products by 2030, from close to zero today. Both companies have announced pyrolysis partnerships with M&G Catalyst investee company, Plastic Energy.
In conclusion We are all in the habit of putting all plas- tic containers in the correct bin, and assuming the recycling industry will do the rest. But whilst the mechanical recy- cling value chain has grown impressively to deal with specific waste streams, we now need innovative pyrolysis solutions to deal with the rest. This is the route to raising the 14% of plastic which is cur- rently recycled towards the 70% to 80% seen in the paper and glass industries, levels which are now explicitly targeted by industry and policymakers.
1) Ellen MacArthur Foundation, “Global Commitment Report 2022”, (
ellenmacarthurfoundation.org)
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.
Issue 125 | July-August 2023 | portfolio institutional | 35
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
