In recent years, environmental pressure has been mounting on government, business and society to preserve our finite resources, protect the environment and adopt a more sustainable approach to their production and consumption habits. This has given rise to the circular economy – an innovative new concept that has emerged as an alternative to the existing linear economic model. In essence, what the circular economy does is create a closed loop for materials that aims to prevent waste and minimise resource consumption.
The chemical industry in the Arabian Gulf is one of the fastest growing sectors globally, the foundation of which was built upon the principle of circularity. By converting associated gas – that was otherwise being flared – into high-value chemicals and petrochemicals, the industry enabled tremendous value creation from what was being treated as ‘waste’.
For years, the GPCA member companies have been practising circular economy, thinking within their own value chain and operations. One example is using process streams as by-products and raw materials, the reclamation and recycling of process water and capturing CO2 for industrial uses.
Other areas where companies can obtain competitive advantage through the circular economy are circular procurement, chemical management, circular products and end-product recycling, which can help to further grow the regional industry and save carbon dioxide emissions.
Importance of plastic packaging and product design
The circular economy envisions that plastic does not leak into any natural streams whether land, or water, but is rather collected for reuse, recycling, or energy recovery, an idea that the industry fully supports through its efforts to increase the circularity of its products.
The industry has now intensified its research and innovation efforts to develop products with sustainability in mind, taking into account their entire lifecycle. A recent example is the Borouge Plastics Circular Economy Program that aims to address the end-of-life application of plastic products and accelerate the reuse and recycling of plastics globally.
With innovations in recycling technologies advancing fast, significant opportunities exist for the chemical industry in the GCC and globally to capitalise on plastic waste as feedstock, and to engage in partnerships and innovation to recover and use it. In a recent study, McKinsey estimates that integrating recycled plastic into the chemical value chain could create a profit pool of $55bn a year worldwide by 2030.
SABIC is already moving in this direction by signing a partnership to recycle low-quality mixed plastic waste and turn it into feedstock for the company’s steam crackers in Europe. As part of the project, SABIC will manufacture certified circular polymers to be used by its customers for packaging solutions for a variety of consumer products that will be introduced into the market in 2019.
New legislation driving the circular economy
In Europe, circular economy legislation is gaining momentum, with the introduction of the Circular Economy Package and the EU Strategy for Plastics 2030, which require 55% of recycled content in plastics packaging, over 50% of plastic waste generated to be recycled, and 100% of plastics packaging to be reusable, or recyclable. The changing regulatory landscape and new legislation emerging worldwide have spurred new partnerships across the plastic value chain to address waste and advance the circular economy.
In January this year, a group of global companies from the plastics and consumer goods industries launched the Alliance to End Plastic Waste (AEPW). SABIC is among this list of global companies and represents the Arabian Gulf as a founding member.
In the GCC, sustainability plays a central role in the governments’ national visions. The UAE Vision 2021 includes ambitious targets on the treatment of waste, the development of renewable energy and water recycling, which are all policies to support a transition towards a more circular economy. Saudi Vision 2030 seeks to safeguard the environment by increasing the efficiency of waste management, establishing comprehensive recycling projects, and reducing all types of pollution.
GPCA, for its part, has played an active role in supporting the development of the UAE Plastic Waste Management Strategy with the UAE Ministry of Climate Change and Environment, which is built upon a circular model.
In 2018, GPCA joined a coalition of brand owners, polymer producers, packaging manufacturers, regulators, retailers, hospitality players and NGOs to run a pilot on a plastics circular economy within the emirate of Abu Dhabi, with the view of expanding it across the GCC. GPCA continues to demonstrate leadership in advocating for the development of a plastics recycling sector within the region.
With China’s recent ban on imports of 22 types of lower-grade waste, including plastic waste, there is a real urgency to develop domestic recycling and waste management infrastructure in the Arabian Gulf, which exports a significant amount of waste to China. The establishment of a robust recycling and waste management industry could yield significant benefits for the region, including added value to the local economy, job creation, and achieving the sustainability targets listed in the GCC national visions. However, greater focus will be needed on developing land-based waste management infrastructure that supports robust collection, segregation and recycling practices.
Making the shift to a circular future
To truly transition into a circular economy, changes to all stages of a product lifecycle will be required – from raw materials, design, production, remanufacturing and distribution to consumption, reuse, repair and recycling. A prerequisite for transitioning from a linear to a circular economy model will be the emergence of successful new business models; at each value chain step, circularity must be a key business criterion. Therefore, the chemical industry in a circular economy will be radically different from what it currently is.
Some of the challenges that companies would need to consider are how to maintain the functional and social benefits of plastics and low environmental impact through innovative design, developing and supporting reuse formats, investing and collaborating on global waste management infrastructure to improve recovery, increasing recyclability of packaging, and stimulating recycling markets.
To enact a real shift from linear to circular economic model, cross-functional and cross-regional dialogue and awareness building will be required. Companies would need to identify the investments needed and the existing risks by utilising research and development, existing assets and robust infrastructure.
Overall, the GCC petrochemical industry must work together to increase waste collection, embrace the right technology, enhance the recyclability of plastic packaging, modernise its material recovery facilities, educate and engage consumers on circular economy principals, and create new opportunities for making products with recycled plastics.
The GCC plastics producers can seize the opportunity to participate in the circular economy. Possible initiatives include developing circular economy technology, designing products for recycling and reuse, optimising waste collection and educating consumers about waste.
Dr Abdulwahab Al-Sadoun is the secretary general of the Gulf Petrochemicals and Chemicals Association (GPCA). Set up in March 2006, GPCA is a dedicated non-profit association, serving its members with industry data and information sources. The 10th GPCA PlastiCon and 6th GPCA Research and Innovation Summit will take place during 11-12 March and 13-14 March, respectively, at ART Rotana, Amwaj Islands, Bahrain.
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