Plastics production accounts for about 3 percent of humanity’s global carbon emissions footprint. In addition, about 1.0 billion to 1.2 billion metric tons of fossil CO2 is bound up in plastic per year and may be released at the end of that plastic’s life if not treated in a circular way or buried, according to McKinsey analysis. Plastics are used in almost every industry, in products as simple as plastic bottles and as complex as rocket ships. Decarbonizing plastics, therefore, is in the best interest of society at large.
Today, the stage is almost set to decarbonize plastics. Technologies for producing lower-carbon plastics exist, but the systems to decarbonize plastics and make them circular lack clear demand signals and coordination across the value chain, which are prerequisites for investments to provide the fuel necessary for this infrastructure-heavy industry.
To align the value chain at scale, stakeholders will need to engage in competitive yet constructive collaboration, as well as broad-scale education and capability building, to find commercially attractive solutions for both producers and consumers. If these conversations can help get solutions off the ground for plastics, circularity and renewable energy could reduce 80 to 90 percent of emissions from plastics by 2050.
This article is part of a series on decarbonizing materials and improving circularity across value chains. Here, we provide an overview of the plastics industry and the factors it must contend with.
Emissions and circularity challenges for plastics
Decarbonizing plastics and making circular plastics value chains will be critical for our planet, but to get there, the plastics industry must confront several challenges:
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A variety of plastic types. Unlike other materials, plastics vary in chemical composition and have a wide range of recyclability profiles. There are hundreds of plastic types, each differing in chemical composition, properties, and applications.
Many of these plastics may have a distinct value chain, making it difficult to generalize plastics decarbonization and circularity.
- Divided investment priorities. Many energy efficiency levers or circularity investments are in the money but are not (yet) hitting desired return thresholds for many producers, as compared with a conventional capacity investment project, for example. Although many of the technologies required are available today, they require a push or incentive to be installed among all the other investment priorities the supply side may have.
- Developing technological maturity. Several other full-scale decarbonization technologies—such as electrified high-temperature processes and select monomer recycling technologies—remain unproven on a commercial scale.
To address these issues, producers and consumers will need to raise awareness of and demand for circular and decarbonized plastics. By first gaining an understanding of the broader plastics industry, stakeholders can work to build low-emissions circularity for the relevant plastics in their value chains.
Emissions are split across the plastics production chain
Global plastics production was estimated at approximately 400 million metric tons (Mt) as of 2023, with estimated annual process emissions of about 1,000 to 1,200 MtCO2, according to McKinsey analysis. This results in a typical emissions intensity of 2.5 to 3.0 metric tons of CO2 per metric ton of plastics produced. In addition, the carbon contained in plastics is equivalent to another approximate 1.0 billion to 1.2 billion metric tons of fossil CO2 annually. However, it’s important to recognize that there is considerable variance in the carbon footprints of different plastic types. Some plastics, due to their applications and more energy-efficient production, exhibit much lower carbon footprints than others.
Process emissions are generated across the value chain, with a typical split as follows:
- Raw materials. About 20 percent of emissions come from upstream production of chemical feedstocks for plastics production, such as naphtha or natural gas. A large share of these emissions stem from the methane leakage connected to the extraction of crude oil and natural gas.
- Monomer production. About 25 to 50 percent of emissions come from the high-temperature processes (such as steam cracking and steam methane reforming) that produce the basic monomers needed to produce most plastic types. Such processes can entail temperatures of more than 850°C, which can only be achieved by burning fossil fuels.
- Plastics production. About 30 to 55 percent of emissions come from final processing (such as polymerization) into various plastic types.
This split can vary significantly depending on the complexity of the chemical production pathway. For example, polyethylene is the largest plastic product by volume and has a higher emissions share in the monomer production, whereas plastics that are more complex, such as polycarbonate, have a higher emissions share in the actual production of plastics.
A plastic’s carbon footprint depends on asset- and product-specific production parameters
Today, there is a significant spread in emissions intensity between different players and regions, primarily driven by four factors:
- Plastic type. The many different plastic types can have vastly different emissions footprints.
- Production pathways. For a single plastic type, there are often different production pathways that can have vastly different emissions profiles depending on their specific energy requirements and process engineering.
- Energy efficiency. Energy-efficient measures in the various production steps, such as heat recovery, can affect a plastic’s total emissions.
- Energy mix. The energy sources used in plastics production processes also affect emissions. The three typical energy supplies are direct heating (through burners), steam, and electricity. These can result in very different footprints depending on which fuels are used in generating that energy supply.
For the same plastic type, these variations can lead emissions to vary by a factor of two to five, in extreme cases.
Recycling can reduce emissions from feedstocks and production by skipping production steps
Recycling pathways (mechanical and chemical) can address the carbon equivalent contained in plastics because recycling does not consume additional fossil feedstocks for raw materials.
In addition, recycling technologies can enable producers to skip many steps in the linear plastics value chain, which can also lead to much lower energy consumption and thus lower emissions. However, this is by no means a guarantee. There are also plastics recycling pathways that do not have better process emissions than the respective virgin-plastics value chain.
Additionally, not all plastic types can be recycled using every method, and for many types, recycling technologies are still not operating at full industrial scale. On the other hand, some plastic types, such as polyethylene terephthalate, have notably high recycling rates and well-established recycling infrastructures in many countries, underscoring the progress that’s already been made toward a circular economy and the opportunities potentially in store for other plastics.
A few key abatement levers are common to all plastics circularity chains
Almost every plastic type—from commodity plastics such as polyethylene to engineering plastics such as polycarbonate—requires specific production systems and technologies. However, some factors for achieving both decarbonization and circularity hold true across all plastics value chains.
First, both the linear virgin-polymer value chain and the circular-recycling value chain can be decarbonized with levers available today and at relatively incremental cost. Available abatement levers include the following:
- energy efficiency and waste-heat recovery
- change of fuels (to renewables or hydrogen, for example)
- use of biobased feedstocks to eliminate carbon emissions from production yield losses
Second, the shorter the circular loop, the better the carbon footprint of the system. Investments in technologies that enable shorter loops will always beat other solutions—including biomass solutions, whose long loops go through the atmosphere—in terms of decarbonization potential.
As a rule of thumb, the more that processing steps are skipped in the virgin chain, the better the footprint of the recycling route. Conversely, the longer the recycling pathway, the more decarbonization is needed along the production chain to reduce emissions, compared with the virgin route.
Decarbonization at scale will thus require massive investment into innovation and assets. The industry still faces fundamental technological bottlenecks that, if overcome, would decarbonize large shares of emissions in one go. For example, the electrification of the high-energy processes (and running them with renewable electricity) is still a technological challenge, and replacing the existing assets will take significant time after the technology is mature.
Unlocking untapped sources of secondary plastics will be critical for building circularity
In addition to decarbonizing processes, plastics companies can work to increase their access to secondary plastics to ramp up circular value chains.
To illustrate the potential of this opportunity, we can look at a select example of an engineering polymer. For this polymer, 70 percent of today’s postconsumer scrap is not collected, and 70 percent of collected scrap is not recovered and not recycled. These unrecovered and unrecycled volumes come from various industries, including consumer goods, construction, automotive, packaging, and medical.
To increase collection and recovery rates for this polymer in each of these industries, stakeholders will need to contend with the specific dynamics that are at play. For example, recovery rates are low in construction, and the goods that are recovered are often contaminated (and thus unrecyclable by conventional mechanical recycling). Therefore, stakeholders can focus their efforts on such areas to have the greatest effect in unlocking additional scrap streams for advanced recycling technologies.
From a global perspective, two of the biggest opportunities to access more postconsumer scrap for this example polymer are consumer goods and automotive products in Europe and China. These opportunities stand out due to the large overall volumes of waste in these regions, combined with the potential to augment the subscale circular value chains that already exist in Europe and China for this polymer.
Similar analyses can be done to size the opportunity for other polymers, with solutions tailored to the specific factors affecting the waste and value chains of those polymers.
To build the systems to decarbonize and increase circularity in plastics, stakeholders can consider aligning to find commercially attractive and competitive solutions moving forward. Four critical strategies can accelerate decarbonization and enhance circularity in plastics:
- Boost energy efficiency. Many energy-saving technologies are available and “in the money,” but producers will need to focus on further growing these returns to prioritize energy efficiency investments over other investments (such as capacity increase).
- Advance technological innovation. There is an opportunity to accelerate the shift to key decarbonization technologies (for example, electrified high-temperature processes or hydrogen as fuel for furnaces) by trialing them on smaller assets in the production network.
- Aggregate and activate demand. Forming groups to aggregate demand for one or several assets can accelerate investment decision-making on the supply side.
- Scale up shortest loop circularity. Boosting short-loop circularity can potentially help drive down overall emissions faster. Some challenges with quality of the output materials still need to be solved, but solutions are progressing fast and should be fostered. Understanding opportunities to access unconquered pockets of secondary materials will be critical for setting up circular chains at sufficient scale.
In all of these areas, being a first mover will be an advantage. The decarbonization levers that exist today (for example, heating with renewable fuels such as biogas) will not be available to everyone. Accordingly, these will be highly competitive arenas at least for the coming decade because of a limited supply of solutions.
To secure a strategic position in the future industry, stakeholders can work to secure feedstocks and become the first to align net-zero value chains. If stakeholders can continue to develop these solutions, they will have a strong start in building decarbonization and circularity into the future of plastics.
