Circular Economy – A Potential Roadmap for The Plastic Industry

    LightCastle Analytics Wing
    LightCastle Analytics Wing
    Plastic Industry

    On August 7, 2021, the Intergovernmental Panel on Climate Change (IPCC) reported that Bangladesh is likely to face climatic complications – higher and frequent rainfall, flood, and more drastic cyclones in the coming years. The prime cause of such daunting circumstances is said to be global climate change led by global warming. According to Professor AKM Saiful Islam, one of the lead authors of the report, global warming will be conducive to category 4, category 5 cyclones, and with the frequency of these storm surges the coastal areas are to suffer a great deal. With the greater intensity of rain, flooding will see a rise damaging agriculture even more than before. Last year, Bangladesh suffered its second-longest and worst flood since 1998 which lasted for over 40 days. Prior to that, in 2018 the country faced the highest water levels during floods in history which unfortunately got broken in the next year. Human activities are responsible for approximately a 1.1°C increase in the temperature since 1850-1900 which is projected to reach or exceed 1.5°C in the next 20 years. IPCC suggests that a strong and sustained reduction in carbon-di-oxide and greenhouse gas emissions would be able to ameliorate the coming consequences [1]. Plastic has been one of the persistent pollutants on earth. Even after being discarded from its use plastic is capable of generating a huge amount of greenhouse gas. The impacts of plastic are far more sinister as a report by the Center for International Environment law, released in May, claimed that plastic pollution will have tripled by 2050 which will be accountable for up to 13% of the planets total carbon budget as plastics are produced from fossil fuels (mostly oils and gases). Sunlight and heat break plastic particles to threatening greenhouse gases which increase heat in the atmosphere and creates a cycle as the heat breaks further plastic particles down to methane and ethylene encouraging the temperature to grow even more resulting in a perpetual cycle [2]. A circular economic model is a necessity to erode the current process of plastic use. Bangladesh still being a developing nation, has a heavy use of plastic as it is cheap to produce and lasts a long time. However, instead of limitless abuse of plastic, the country should develop a roadmap to sustain environmentally through re-using plastic products. A circular model will help us sustain in terms of environment and attenuate carbon emission as it aims to refrain the disposal of plastic waste, rather accumulate and re-use plastic products which will concurrently be economically beneficial for the country giving rise to new employments and help achieve efficiency in resource utilization. 

    Replacing linear economic model with a circular model

    From the outset, our economy has been ‘linear’ [3]. A linear take-make-waste model means after a product made from various raw materials has been used up, it is discarded which does not return to the economy rather disrupts the environmental activities and excessive pressure on these ecosystems becomes a menace to the essential components like air, water, and soil. A report of the Ellen McArthur Foundation in collaboration with McKinsey & Company and World Economic Forum pointed out that in 2016, after production most plastic packaging was used only once of which 14% was collected for recycling. 95% of the plastic packaging material value which was worth around USD 80-120 billion annually, was lost from the economy. This proves the huge inefficiency of the linear model, currently in the driving seat of most Bangladeshi industries.

    Figure: The Disadvantages of a Linear Economic Model
    Figure: The disadvantages of a Linear Economic Model

    A circular economic model is not fully disparate from the preceding model, but it has a different belief that under the model, materials are designed to be used, not used up. It stays within the system enabling no materials to be lost, zero release of toxins and, maximum efficiency in each stage of production and use.

    Figure: Circular Economy for Plastic
    Figure: Circular Economy for Plastic

    The advantages to a circular economy are-

    Ecological advantages

    • Less greenhouse gases – It has been recorded that 62% of global gas emissions come from extraction, production, and processing of goods to meet consumer demand, and 38% is emitted during the use phase. However, adopting this model would impede such a high emission rate rather materials could be re-used
    • Conserving vital components – The model is conducive to creating vital ecosystems such as soil, air and, water bodies. They will create provisions for fertile farmland, pollination, and clean drinking water. For example – in Europe, the use of artificial fertilizers in agriculture would be reduced by 80% if a circular model is adopted. 
    • Conservation of nature reserves – A circular model would be able to blow off steam from the extraction of natural resources so often as materials would be re-usable

    Benefits for the business and economy

    • Reduction of material costs – A linear economy drives up the prices of materials due to shortage of supply whereas a circulation in the economy reduces such costs as materials are preserved
    • Growing demand for services – A growing demand for services would escalate employment as the economy would see a surge in services provided. For example – vacancies in remanufacturing and repairing products, etc. 
    • Economic growth – By using resources more effectively the world could save USD 2 trillion every year from 2050 according to the United Nations Environmental Program, 2017. This is feasible through the circular model. [4]

    Scopes for the plastic industry to adopt a circular model

    At present, most of the companies functioning in Bangladesh are following a linear strategy when it comes to producing plastic, electrical components, RMG, footwear, etc. Compared to that, very few allow for a circular economic system. Reports have shown that among all waste accumulated daily inside Bangladesh, more than 60% allocates for plastic waste. Plastic products can be produced from virgin resins as well as re-used plastic. Although resins perform better in terms of shaping and forming plastic products with precision, yet near the end of their life cycle they end up at landfills and eventually the sea. It also accounts for the huge consumption of fossil fuels.  But re-using plastics can be cost-efficient simultaneously reducing the emission of greenhouse gas. However, the recycling process can be somewhat intricate. Despite the complex process, the benefits of a circular model outweigh the cons. [5]

    At present, nearly 5,000 companies (mostly small) are actively contributing to not only make up for the social demand for plastic but also exports. The sector accounts for 1% of the total GDP and 1.5% of the total exports of Bangladesh. Currently ranked 89th, the country aims to be among the top 50 plastic-producing nations [6]. However, Bangladesh is ranked 10th in mismanaging plastic wastes. From 2005 – 2020, plastic wastes per day have gone up from 178 – 646 tonnes per day in Dhaka alone [7]. Being a country soon to graduate from Least Developed Nations status, Bangladesh has a population growth rate of 1.1% and an urbanization rate of 3%. It is forecasted that by 2030, the urban population will be more than rural which will be coupled with a per-capita increase in plastic consumption. If this huge number of plastic wastes was to be propelled in the direction of recycling through circular model things can be different for Bangladesh. Wasteconern speculated in 2018 that 72% of the waste was not recycled however if they had been through that process the country could have earned up to Tk. 61.50 billion annually. Findings further estimated that if the waste of only Dhaka and its outskirts was recycled, 75% of the waste could have been turned into fresh products which would save us Tk. 7 billion in exports [8]. Moreover, Bangladesh has been exporting plastic-based products and waste since 2015-16. In 2018-19 Bangladesh exported USD 477 million worth of plastic products among which USD 120 million were direct export and USD 357 million were indirect export. The country imported 0.4 million tonnes of plastic raw materials which mostly include HDPE, PE, LDPE, PVC, PC, PS. In a circular economy, the cost of import would have been negligible in amount. Moreover, Bangladesh is on the verge of achieving Sustainable Development Goals and a circular model can pave an easy way for that. Adopting such a model can help the country achieve several SDG goals including sanitation (SDG 6), climate action (SDG 13), life below water (SDG 14), sustainable cities, and communication (SDG 11), responsible consumption and production (SDG 12) and more. The benefits from materializing a circular model in the plastic industry are gratifying and with proper administrative guidance, the scopes are huge and feasible [9]. 

    Global execution of a circular model 

    With climate change glaring at us, some countries have already started to adopt the new circular model. According to Circularity Gap Report 2021, the current world is only 8.6% circular. To improve various European countries have already started their endeavors towards achieving circularity. Many developing countries like Bangladesh can use their preferred roadmap in their circumstances to limit the single-use of plastic. 

    Finland was the first country to prepare a national circular economy roadmap. Currently, they have this roadmap active in various sectors. 

    Diagram: How the circular economy works in Finland
    Figure: How the circular economy works in Finland

    According to their roadmap, context is key. The circular solutions cannot be imported to other countries unaltered. They must be revised concerning each country’s perspective and context. The Finnish government involved a diverse group to adopt the strategy. It is important to have a collaboration among govt officials, businesses, academics, and civil societies to bring the change. The Finnish government also invested in education starting from daycare teaching children not to waste food and be careful with plastic products to universities. In 2017, they created an education initiative for children to study the circular economy. This has brought in tremendous progress for them. Now, 88% of Finns believe they can play a role in the circular economy [10]. 

    Scotland is also ahead compared to its neighbors in maintaining circularity in plastic as they have set policies to charge anyone using plastic bags [11]. ‘Close The Loop’, an Australian company has spent nearly a decade to retrieve value from old printer cartridges and soft plastics. Their new technology turns these materials into making roads. The materials are mixed with asphalt with the use of recycled glass making the quality of asphalt even better than regular asphalt as the surface is proved to last 65% longer. In every km of road 530,000 plastic bags are mixed along with glasses and cartridges [12]. South Korea had also implemented policies that include the banning of both colored plastic bottles and PVC by 2020. They plan to erode the use of plastic screws and cups by 2027. In addition, the South Korean govt. intends to collect 100,000 tonnes of plastic bottles per year by the start of 2022. Similar to the Korean govt. the Wales govt. also launched a consultation on plans to ban single-use plastic products [13]. 

    Regulatory changes in plastic production and adopting the preferred model

    Effective implementation of the circular economic model can convert into many beneficial aspects. However, the implementation will demand revising our plastic production system, imports, laws regarding the use of plastic, etc. Asian countries like Bangladesh have very high rates of contributing to plastic pollution. In 2015, Ocean Conservancy estimated that almost 60% of marine plastic pollution comes from five countries in Asia namely, the Philippines, Thailand, Indonesia, Vietnam, and China. Although Bangladesh is not on the list, a significant amount of plastic waste comes from us as well. In addition, it is said that by the year 2050, the oceans will consist of more pollutants (mostly plastic) than the total weight of fish. According to an Asian Development Bank report, five approaches can drive a shift to a circular economy for Asian countries including Bangladesh,

    1. Increase investments in effective integrated solid waste management systems and infrastructure

    One remedy is digitizing the waste value chain. We need to create a digital backbone to support circularity in business models. This digital backbone must be a global public good. The foundation can reduce cost, time and, risk and prove conducive to coming business models. (Diagram-optional)

    1. Strengthen governmental policies, regulations, and commitments for a circular plastics economy

    Governmental and non-governmental associations are suggested to come together and propose a change in the design of plastic products so they can be re-used. The regulatory reforms will help shape a new plastic economy. For example, Vietnam has set its goal of reducing marine plastic waste by 70% within 2025 and they have made a strong regulatory framework based on that.

    1. Boost stakeholder engagement and value chain commitments to combat plastic pollution and introduce circular economy practices

    To boost stakeholder engagement, ADB suggests that the govt., businesses, academics, environmentalists, students all should come together and support the new cause of saving the ecology. This can better aware stakeholders regarding the situation. Some of these affiliations (global) involve Global Plastic Action Partnership, Nation Plastic Action Partnership, etc. 

    1. Rethink current delivery models and invest in innovation, and demonstration projects

    In Asian countries, personal skincare products and products of other categories have single-use sachet packs which are highly demanded by consumers. In recent records, it has been found that the Philippines account for the disposal of 163 million single-use sachets every day. To alleviate this, in 2018 the Sea Waste Education to Eradicate Plastic (SWEEP) took on a project where each sachet could be refilled and reused from 8 small convenience stores. In only seven months, the project was able to prevent the use and disposal of 45,000 sachet packs. 

    1. Learn from others

    The Extended Producer Responsibility Plan by China has given them a strict reform where the producers have to manage their recycling by themselves or third parties and the number of products recycled has to match their sales volumes. Bangladesh can make their country-specific strategies similar to this or many others described previously as well [14]. 

    The government of Bangladesh has manifold strategies that promote domestic plastic production. The govt. offers a 10% cash incentive on plastic exports. The sector accounts for almost 1.2 million employees in the country and there are 250 to 300 export firms. However, ever since China has banned the import of plastic wastes our export in the relevant category has been decreasing as China was Bangladesh’s prime focus in plastic waste exports. This will lessen the demand for plastic waste businesses allowing them to end up in landfills. Therefore, the govt must be vigilant not only at promoting plastic production but also in recycling them as well. The country saved USD 600 million from virgin resin import in the year 2010 by recycling 60% of the post-used plastic. This sheds light on the opportunity Bangladesh has in the recycling sector. According to ADB, efficient resource management through a circular economic model can create 9 to 25 million jobs globally. 

    Keeping all the evidence in mind, better science-based policies, the spread of education, action plans, and attribution of responsibilities to appropriate institutions are steps the country should follow. The GEF’s Small Grant Programme, by the UNDP, has been working to provide the country financial and technical support to civil society engagements to come up with innovative strategies regarding plastic waste management. Technological improvement, strong marketing scheme and investments can play an essential role as well. Scope for new employments by the circular model for the marginalized population should be an area of research. It is a promising agent for rising employments. 

    Furthermore, there are legal aspects that Bangladesh needs to develop to better handle plastic use and re-use. There are environmental laws and regulations in Bangladesh regarding the reduction of pollution however, only one section of a particular act is dedicated to plastic products under Bangladesh Environment Conservation Act (BECA), section 6(A). The legal system should have more reflection on plastic use. The plastic industry and the recycling of plastic should be modernized through a public-private partnership approach (PPP). Besides, all these reactive measures, the government should initially focus on a more ecologically secure plastic production inside domestic boundary. If all these are achieved and a greener and cleaner production of plastic are adopted the country will be achieving SDG 12 in no time [15]. 

    Samin Mahmud Khan, Content Writer, and Sanjir Ali, Senior Business Consultant & Project Manager, at LightCastle Partners, have prepared the write-up. For further clarifications, contact here: [email protected]

    References

    • 1. IPCC Climate Report: A grim picture painted for Bangladesh – The Daily Star
    • 2. Plastic waste and climate change – what’s the connection? – WWF
    • 3. Circular Economy – Government of Netherlands 
    • 4. Circular Economy – Het Groene Brein
    • 5. Recycled Plastics vs. Virgin Resins: Which One is better? – Mid Continent Plastics, Inc. Blog
    • 6. Urgent need for plastic waste management policy and EPR – The Financial Express
    • 7. 646 tonnes of plastic waste produced in Dhaka every day – The Daily Star
    • 8. Plastic recycling and waste management – The Financial Express
    • 9. Circular economy: A potential pathway to a sustainable Bangladesh – The Daily Star
    • 10. Countries must transition to a circular economy. The right roadmap can help – World Economic Forum
    • 11. Five countries moving ahead of the pack on circular economy legislation – The Guardian
    • 12. These 11 companies are leading the way to a circular economy – World Economic Forum
    • 13. From Austria to Wales: The five best recycling countries in the world – NS Packaging 
    • 14. A circular economy for a sustainable plastic future – Asian Development Bank
    • 15. Challenges and opportunities of plastic pollution management – The Daily Star

    Looking to invest in Bangladesh?

    We provide end-to-end strategy and entry support services to international investors

    Get in Touch
    LightCastle Analytics Wing

    LightCastle Analytics Wing is the research division of LightCastle Partners. It is tasked with producing periodic reports on the different sectors of the economy, analyzing trends in markets and making methodical, thorough and intelligent analysis to improve strategy and drive business growth.