The environmental scourge that is plastic waste and pollution cannot be overstated. Plastic production is said to have soared from 2 million to 348 million tonnes in the last 70 years, while 11 million tonnes of plastic waste are flowing into our oceans each year. The impact isn’t restricted to marine life; scientists recently reported discovering microplastic particles in the blood and lungs of living humans.
With plastic flows into the ocean projected to nearly triple by 2040, to 29 million metric tonnes per year — or an equivalent of 50 kilograms of plastic per metre of coastline worldwide — the time to act has to be now.
In an earlier article (BT, “Asia well-poised to harness potential of plastics circular economy: Circulate Capital”, May 16, 2022), this paper touched on how investors can play a key role in solving the problem, and how investment opportunities exist across the entire plastic value chain. Today, we look at the scale of investment needed to bring about meaningful change, in the form of creating a plastic circular economy — arguably humanity’s best hope for a sustainable solution.
Reducing waste, creating jobs
The United Nations Environment Programme (UNEP), the global authority for the environment, has said that a shift to a circular economy can reduce the volume of plastic production by 55 per cent and the volume of waste in the oceans by 80 per cent, while reducing greenhouse gas emissions by 25 per cent.
The transition is also expected to save governments US$70 billion by 2040, and create 700,000 additional jobs.
A key milestone in this transition was reached when the United Nations Environment Assembly (UNEA) — the world’s highest-level decision-making body on the environment — adopted a resolution in March that would pave the way to a legally binding global treaty to end plastic pollution.
Agreed upon by leaders and representatives from 175 nations, the resolution addresses the full life cycle of plastic, from its production, to its design and disposal.
Inger Andersen, executive director of the UNEP, said the move offers a “huge opportunity to transition to a new circular plastics economy, one where businesses innovate across the plastics value chain”.
Jacob Duer, president and chief executive officer (CEO) of the Alliance to End Plastic Waste (Alliance), says financing will be critical to the success of the new global agreement. “Traditional financial institutions, as well as new financing players such as the Alliance, can capitalise on the surging global demand for recycled plastics to fund solutions at scale that could turn billions of investment capital into a US$1 trillion circular economy for plastics that supports both developed and developing countries globally.”
Funding the circular economy
Speaking to The Business Times, Duer stressed that significant investments are needed to accelerate solutions across the plastic value chain for circularity. He cited a recent report, Unlocking the Plastics Circular Economy, by Global Plastic Action Partnership (GPAP) — which comes under the auspices of the World Economic Forum — which said the transition to a circular economy for plastic will require investments of US$1.2 trillion by 2040.
A report by Google, Closing the Plastics Circularity Gap, out in March, estimated that more than US$430 billion needs to be invested over the next 20 years to ensure circular supply chains can meet the growing demand for plastics.
And, according to Breaking the Plastic Wave, a study by The Pew Charitable Trusts and Systemiq, the collection and processing of plastic waste between 2021 and 2040 will cost at least US$510 billion; though, it added, with plastic not able to be collected in isolation, the actual government cost for waste management could amount to US$3.1 trillion.
