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Excess waste, limited recycling, little to no reuse — the general public is well aware of the problems associated with plastic packaging.
Environmentally conscious consumers have observed an abundance of plastic waste from the streets of urban areas to the countryside to the oceans, realize it’s a fossil-fuel product, and turn to consumer goods companies as the culprit. These companies then adopt zero waste and “sustainable packaging” programs, and point the finger at the global packaging companies down the supply chain.
What is the root of the issue? Packaging is a sleepy and consolidated essential industry that operates unsustainably and presents major risks to the climate. Despite these issues, it is critical to limiting food waste and ultimately reducing needless greenhouse gas emissions from spoiled food.
Much of the regulatory response in the U.S. and EU has focused on banning plastic bags, straws and other consumer products. We can’t just replace plastic with paper for all products and call it a day, though, as this would lead to massive food waste. Agriculture is a major cause of greenhouse gasses, so we need to ensure that we are actually consuming the food we produce. We need to find ways to replace current packaging methods with recyclable or biodegradable materials, without sacrificing their ability to seal products and keep them fresh.
“Consumer goods companies and consumers alike have dramatically increased their attention towards sustainability globally,” says Scott Dickman, former CEO of Oracle Packaging and current Climate Commodities Packaging CEO. “As an industry, it is critical that we help lead the holistic discussion on how packaging can improve to provide the most benefit possible to society.
“Packaging is critical in lower emissions as estimates show nearly 40% of all food produced globally is wasted. A poorly executed transition of packaging usage could easily lead to far greater food loss and result in more agricultural production demand and resulting emissions.”
The problem becomes even more murky when you consider the direct and indirect lifecycle greenhouse gas emissions from plastic packaging (including the petrochemicals used to make it), versus available alternatives such as paper, metal, and glass. A recent McKinsey study suggests that plastic food packaging can actually cause significantly lower emissions over their lifecycle.
One surprising example is grocery bags — HDPE plastic bags are thought to cause only 20% of the greenhouse gas emissions that paper grocery bags do. A big part of this has to do with weight — paper bags are significantly heavier than plastic, so they consume more fuel in shipping.
Packaging represents an intersection between climate consciousness and the global commodity conversion industry. The problems consumers are acutely aware of begin in the refinery, and many of the packaging companies are limited in what they can do with today’s products. It will take more innovations to address this issue, and once achieved the market must still adopt them.
Plastic-based packaging is a commodity business to its core, converting products from the crude oil refining value chain to staples of everyday modern life. These products often begin with a blown film extruder, which converts polymer resin into shrink, stretch, and barrier films used to protect meat, enable frozen food packaging, and support a full shopping bag at the store. Altering the input material or this process in general is a major engineering challenge and in many cases falls upstream in the oil, gas, and chemical value chain.
Structural and impactful change in the packaging industry over the long-term will be driven by materials science innovations, which are little known to consumers. Historically, such innovations have enabled consumer goods companies to reduce intensity of raw material input in packaging, and subsequently reduce packaging weight, providing an economic benefit in the form of lower material costs. (Have you noticed how thin and lightweight plastic water bottles have become in recent years?)
Further progress will be largely be driven by further innovation in the supply chain by substrate producers, such as resin producers in the oil, gas, and chemical value chain. Companies like Dow Chemical have been innovating in this sphere, producing single-material resins that can be more easily recycled. ProAmpac and other companies are finding new ways to increase the quantity of post-consumer recycled plastics in their packaging.
Many of these new packaging technologies have reached the market already, but to allow these materials to reach scale, we need sufficient commodities supplies for post-consumer recycled plastics (PCR), as well as recyclable mono-materials like polyethylene (PE) or polypropylene (PP).
“The demand for high-quality, verifiable PCR far oustrips the volume of supply,” notes Hannah Friedman, a climate-focused venture capital investor. “Corporate demand of large CPG companies, expressed in PCR targets by 2030 and 2050, is helping create the economic pull of the material through the system. Combined with the material science advances and monomaterial engineering feats of packaging material manufacturers within the chemical value chain, recycling and the circular economy can be profitable endeavors and compelling investment opportunities.”
Paper and board producers, meanwhile, are working to expand the variety of bio-derived products — typically recyclable, compostable, or both — that can replace plastics entirely in certain uses. As another McKinsey report described, these include flexible paper-based packaging with water-based coatings that can act as barriers for vapor, oxygen, and oil, and can therefore replace plastic and aluminum laminates.
Extraordinary innovation continues within the world’s integrated oil, gas, and chemical companies, and they will play a major role in addressing sustainability challenges through scientific innovations in the consumer value chain. Demonization of the companies producing these materials is not productive: pragmatism, bipartisanship, and the optimism of changing the face of our everyday lives for the better should lead in this discussion, not knee-jerk opposition as is too often the case today in today’s polarized United States.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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