Fossil Fuel-based Production Growth of Polyethylene is Forecast to Continue Until the Early 2040s While Focus Increases on Reducing Plastic Waste

Findings by the IHS Markit Circular Plastics Service examine the timing of the arrival of a peak in demand for virgin plastics produced from fossil-based raw materials

The production of fossil fuel-based polyethylene is expected to plateau in the early 2040s, according to the latest findings from the new IHS Markit Circular Plastics Service which provides a comprehensive, scenario-based road map of how the plastics value chain could transition from a linear to a circular economy.

“At some point in the not-too-distant future production of plastics will begin to disconnect from virgin fossil fuels. How and when will be determined by stakeholder resolve to effect a circular model.” – Robin Waters, director, circular plastics service, IHS Markit

By conducting rigorous, scenario-based analyses of global, large-volume polymers, the Circular Plastics Service (CPS) team at IHS Markit has quantified expected and potential outcomes for key measurements of plastics’ transition from a linear to circular industry model. One of the key measures of progress is the reduction, and ultimate elimination, of fossil-based raw materials used in the production of plastics.

To project outcomes of this magnitude, the impact of numerous levers must be considered from both demand and supply perspectives within the broader energy transition to net zero emissions. The team considered specific nuances for demand (both durable and non-durable), the evolving stakeholder and government regulatory outlook, investments in recycling technology and infrastructure and concluded that peak demand for virgin fossil-based plastics is decades away.

IHS Markit expects global plastics demand will grow at an average annual rate of 2.7% through 2050. Factors that can impact this growth rate include regulatory restrictions such as bans, materials substitution (e.g., from paper, glass, metal, etc.) and packaging design that eliminates excess material use as well as changes in consumer behaviors. Large-scale adoption of mechanical recycling has the potential to moderate demand growth for virgin polymers. Meanwhile chemical processes that convert waste plastics into feedstocks—either monomers (in the case of PET and PS/EPS) or hydrocarbon feedstocks (in the case of pyrolysis- or gasification-based technologies) reduce the need for fossil-based materials in the production of virgin plastics.

Focusing on plastics waste recycling has the added benefit of reducing the dependence on fossil fuel-based feedstocks for plastics. Even with aggressive consumption restrictions on non-discretionary single use products, the world will continue to demand increasing volumes of plastics. Waste plastics, if collected and properly processed, can serve as a bridge to achieving the overall elimination of our society’s dependence on fossil fuels. Technology exists, and is being rapidly implemented, to move beyond energy recovery by converting plastics waste into high value virgin plastics without the use of fossil feedstocks. Additionally, biomaterials and bio-based feedstocks offer the potential to decouple plastics demand from fossil-based feedstocks.

In addition to concerted efforts to scale the infrastructure for plastics waste collection and recycling, governments, brand owners and other stakeholder groups are promoting different means to reduce consumption of plastics. Governments around the world are increasingly implementing bans on a range of discretionary single use applications and taxing virgin (vs. recycled) plastics. The growth of returnable business models continues in developed regions for business-to-business transport packaging and is being evaluated for consumer packaging. Producers are capitalizing on the negative perception of plastics, paper, glass and metal, and are promoting alternatives to brand owners, often with negative cost and emissions implications.  How effective are all these efforts in addressing plastics waste? Will we see demand for plastics peak as a result?

IHS Markit has incorporated scenario-based modelling to assess the above factors and their expected, and potential, extent and timing. Our base case assumes the circular plastics transition accelerates, with pivotal shifts in social, policy and market forces driving fundamental change. However, the transition moves in different ways and speeds depending upon the country or region being considered. Our second scenario assumes a more revolutionary effort, with industry moving in an aggressive manner aligned with overall goals for the energy transition but falling short of achieving a full circular model for plastics by 2050. Finally, IHS Markit has modeled a fully successful circular plastics scenario in which non-durable plastics are, by 2050, no longer lost to the environment, land-filled or incinerated.