Plastics recycling technologies compete in circular economy
A backlash against single-use plastics is encouraging recycling into intermediate products and fuels, complicating world oil demand forecasts
The factors feeding into world oil demand forecasts in recent years have been complicated by the rise of electric vehicles and ride-sharing, a change in world crude quality brought on by the US shale revolution and the challenge of new fuel blends for shipping arising from the International Maritime Organisation's 2020 sulphur restrictions. Now, plastics recycling is likely to further reduce demand expectations as technologies compete to establish themselves as the most efficient recyclers.
Initiatives from international bodies such as the UN and World Bank, and China's decision last year to ban the import of foreign waste, including many plastics, have helped focus attention on the need to review the world's love affair with plastics, and especially with post-consumer plastics (PCP) such as polyethylene and polypropylene, widely used in packaging and quickly discarded. The European Union (EU) last year launched a strategy for plastics in a circular economy, under which, by 2025, 50pc and, by 2030, all plastics packaging must be either reusable or cost-effectively recyclable.
Members of the American Chemistry Council's plastics division, which includes the leading US producers, also agreed last year a target that 100pc of US plastics packaging be recyclable or recoverable by 2030, and that, by 2040, all plastics packaging be reused, recycled, or recovered. Further pressure is mounting from major brands such as Coca-Cola that use plastic packaging and containers and are evaluating shifts to alternatives. Chemicals companies, including industry leaders BASF of Germany and Dow DuPont of the US, are actively researching recycling technologies.
Oil demand forecasts have begun to reflect the concern that such changes will substantially reduce projected consumption. BP's latest World Energy Outlook to 2040, published in February, suggests that a scenario in which a worldwide single-use plastics ban, progressively implemented by 2040, could reduce oil demand growth by up to 6mn bl/d. Until this year, BP and other major oil companies had consistently argued that the chemicals industry would be a key factor sustaining oil demand growth through their forecast periods, and oil producing countries were counting on the earnings from the sector to sustain revenues.
The chemicals industry regards this as a "licence-to-operate moment", says Paul Hodges, chairman of International eChem, a chemicals industry consultancy. In response, the chemicals, oil refining and waste management industries have begun to commercialise several long-standing technologies to address the issue. Some companies, such as Austria's Borealis, emphasise the need to recover intermediate products, such as ethylene and propylene, from discarded packaging waste. Borealis has been buying recycling businesses: in 2016, it acquired German firms MTM Plastics and MTM Compact, a post-consumer polyolefin recyclate producer. Two years later it bought Ecoplast Kunststoffrecycling, a recycler of household and industrial plastic wastes into low- and high-density polyethelene recyclates. The company is reportedly working with its key shareholders, Austria's OMV and Abu Dhabi's Mubadala investment fund, to bring its European recycling expertise to Asia, which-with Africa-is a key target for the growth of recycling.
While chemicals producers are concentrating on recyclates, waste management firms and oil refiners have long experimented with waste gasification and liquefaction, in order to produce fuel for industrial processes, onsite electricity generation, and oil refining or blending. In waste gasification, treated and homogenised feedstock is heated into a mix of combustible gases, collectively referred to as syngas, which can be used as a fuel or further processed.
The process is substantially the same as that used for integrated gasification combined cycle (IGCC) power generation from coal or heavy refined oil fractions. Like IGCC, however, waste gasification has high capital costs, which can exceed $150mn for a mid-sized plant, according to a 2013 report by solid waste management consultants Gershman, Brickner & Bratton. Costs appear to have fallen somewhat since then, but remain high. The quantity of waste input into the process is also very large, beginning at 300t/d, which makes it impractical for smaller-scale waste-collection processes.
Plastics-to-liquids technology appears to have acquired the most adherents among oil refiners, as recent interest in recycling plastic waste has grown. This technology involves the use of thermal cracking, or pyrolysis, technologies and catalysts to transform waste plastics into liquid petroleum products, either synthetic crude oils which can be blended into a refinery's crude oil input blend, or a feedstock or blending stock for the production of finished oil products. Because of the use of plastics as feedstocks, the resulting fuels tend to be lower in sulphur than those directly refined from most refinery input blends, helping refiners meet stringent end-user sulphur specifications.
OMV has emerged as one of the larger European companies developing such technology. Its pilot ReOil plant, located at its 190,000bl/d Schwechat refinery on the outskirts of Vienna, produces synthetic crude from about 800t/yr of PCPs. OMV says its proprietary technology produces approximately 1ltr of synthetic crude from 1kg of PCP feedstock. According to Manfred Leitner, head of OMV's downstream operations, "in the long run a commercial plant with a capacity of up to 200,000t/yr is targeted, depending on the learnings from the scale-up process".
While the equivalent of less than 4,000bl/d, the crude is expected to provide a consistent sweet crude feedstock for the OMV refinery. "It is lighter than fossil crude oil. It's possible to maintain a consistent crude quality, with minor deviations depending on the feedstock mixture," Leitner says. Should the commercial scale plant prove a success, OMV hopes to roll out the technology to its two other refineries, in Germany and Romania, and may market it through licences and joint ventures.
Creating logistics chains
Delivering PCP feedstock to refineries can be a challenge, plastics-to-liquids developers say, as a logistics chain to deliver municipal waste to the site must be established. Leitner says OMV is negotiating with feedstock suppliers from the waste industry to ensure that delivered material conforms to feedstock requirements and expects supplies for a commercial plant to arrive by rail or ship. He points out that feedstock should contain only minimal amounts of products such as PVC or PET. "Ideal feedstock contains common packaging material" such as polyethylene, polypropylene and polystyrene, Leitner says.
Further North, Finland's Neste aims to process up to 1mn t/y of waste plastic by 2030, largely using a process developed by its joint-venture partners ReNew ELP of the UK and Australia's Licella PTY. ReNew ELP says its CAT-HTR hydrothermal upgrading technology, which uses water in a supercritical state, allows for an environmentally cleaner conversion of waste plastics to fuels than other technologies.
Companies active in the sector are reluctant to reveal the technical details and economics of their technology while plants are in development. OMV's Leitner says that "costs per barrel depend on the income generation and the economies of scale effect by future plants with a higher throughput". Priyanka Bakaya, CEO of privately-held and US-based Renewlogy, says its can produce a diesel blendstock product at operating costs of $30/bl.
That compares with current US heating oil futures prices of about $85/bl. Capital costs, however, appear considerably higher: a 2015 analysis by the Ocean Recovery Alliance suggest that plastics-to-fuel development capital costs may run around $100/bl, in excess of current Brent prices around $65/bl. But the relatively small volumes to be blended into the crude and products pools may mitigate the price effect. Also, some of this cost differential may be offset in particular projects by tipping fees collected from waste management companies delivering feedstocks to plastics-to-liquids plants.
Analysts say current technology suggests such plants are best sited near large urban areas that generate high volumes of waste, with either onsite power generation consumption or nearby logistics which facilitate the consumption or sale of the resulting liquids. Like many other elements of the circular economy, plastics-to-fuels processes benefit from synergies between industry sectors. OMV's Leitner says his company is in "close cooperation" with affiliate Borealis and "both companies should profit from the synergies".
Industry officials believe that the major market for such technologies will be in Asia. A study by Germany's Helmholtz-Centre for Environmental Research suggests that just 10 river systems in Asia and Africa account for over 90pc of the used plastics carried into the world's oceans. eChem's Hodges says he believes that China in particular holds considerably promise for large-scale plastics-to-liquid technology as collection infrastructure develops around its cities. But he adds that as the technology is increasingly used smaller-scale units may well emerge, along the lines seen in the development of distributed power generation units on electrical systems. According to the Ocean Recovery Alliance, technology capable of converting as little as 1t/d of plastic waste to liquids has been available for years, although its economic viability is yet to be proved.
International attention grows
Global campaigns to eliminate plastics pollution have recently gained traction. In January, up to 30 petrochemicals producers and consumers announced the formation of the Alliance to End Plastic Waste to develop to scale "solutions that will minimise and manage plastic waste". The Alliance collects numerous chemicals producers, oil companies and consumer brands, including ExxonMobil, Total, Proctor and Gamble, Sasol, Braskem Petrochemical and Eni.
This year, the pace of recycling integration between oil and petrochemicals companies and plastics recyclers appears to be accelerating. In February, Total said it had agreed to acquire Synova, which makes recycled polypropylene for the auto manufacturing sector. Also, BASF announced its ChemCycling project, aiming to discover means of recycling plastic waste that is currently difficult to treat. In particular, it is focussing on multi-layered plastics structures which are difficult to handle by existing recycling processes because they combine various types of plastic, unlike packaging which is generally uniform.
Recycled plastics-to-liquids volumes are currently low, but each year nearly 300mn t of plastics are produced and most of that volume escapes recycling. Were it fully recycled at a rate equivalent to what OMV claims for its plastics-to-liquids process, it could yield up to 6mn bl/d of feedstock and fuel. Add that to inevitable substitution of plastics by other forms of containers, and oil industry forecasts of continued volume growth fuelled by petrochemicals demand growth look less certain.
BP's own forecasts to 2040 suggest that the displacement could make the difference between steadily rising oil consumption through 2040 and peak world oil use around 2035, towards the end of the forecast period. Oil producing countries counting on a buoyant petrochemicals sector to balance declining revenue from traditional crude oil sales may need to review their planning.