Regulation driving sharp growth in demand for biodegradable plastics
Increasing regulations and bans against plastic bags and other single-use plastic items such as drinking straws is driving growing demand for biodegradable plastics, according to newly released report by IHS Markit.
The current market value of biodegradable plastics exceeds $1.1 billion in 2018, but could reach $1.7 billion by 2023, a new report by the consulting firm says.
Biodegradable or compostable polymers are bio-based or fossil-fuel-based polymers (plastics) that undergo microbial decomposition to carbon dioxide and water in industrial or municipal compost facilities. Some of these polymers decompose in backyard compost bins or in soil, freshwater or saltwater.
The food packaging, disposable tableware (cups, plates, and cutlery) and bags sector is the largest end-use segment, as well as the major growth driver for biodegradable polymer consumption.
This segment will benefit from local restrictions on plastic shopping bags and will achieve double-digit growth, according to the IHS Markit Chemical Economics Handbook: Biodegradable Polymers Report.
Compost bags are the second most important end-use for biodegradable polymers. This market segment will experience strong growth thanks to the gradual expansion of composting infrastructure and growing interest in diverting organic waste such as leaves, grass clippings and food waste from landfill.
Foam packaging, which includes starch-based loose-fill packaging (packing peanuts), is a significant end-use for biodegradable polymers in Western Europe and North America; mulch films and other agricultural applications are important end uses in Western Europe and Asia.
Nine percent annual growth
In 2018, global demand for these polymers is 360,000 metric tons, but total consumption of biodegradable polymers is expected to increase to almost 550,000 metric tons by 2023, representing an average annual growth rate of nine per cent for the five-year period, which is equivalent to a volume increase of more than 50 per cent from 2018 to 2023.
Western Europe, with the world’s strictest and increasingly stringent regulations for single-use plastics, commands 55 per cent of the global market value in 2018 for these specialty biodegradable polymers, followed by Asia and Oceania (Australia and New Zealand) at 25 per cent, then North America at 19 per cent of consumption, with the rest of the world combined for less than 1 per cent of demand.
“Biodegradable plastics, which are largely starch-based compounds or polylactic acid (PLA)-based materials, have become more cost-competitive with petroleum-based plastics and the demand is growing significantly, particularly in Western Europe, where environmental regulations are the strictest,” said Marifaith Hackett, director, specialty chemicals research at IHS Markit and the report’s lead author. “However, the demand for these biodegradable polymers is still a drop in the bucket when you compare it to demand for traditional plastics such as polyethylene (PE).”
According to IHS Markit, global demand for PE, the world’s most-used plastic, has nearly doubled during the last 20 years. IHS Markit expects 2018 global PE demand to exceed 100 million metric tons (MMT).
However, significant new market pressures, including a rise in consumer expectations around sustainability, along with tightening environmental regulations in mature markets such as Europe and key growth markets such as China, could threaten future demand growth.
Legislation drives demand
“The properties and processability of biodegradable polymers have improved, allowing the use of these materials in a broader range of applications, but legislation is the single most important demand driver for these plastics,” Hackett said. “Restrictions on the use of non-biodegradable plastic shopping bags in Italy and France have led to a significant increase in the consumption of biodegradable polymers in those countries, and we expect European countries will continue to lead in legislative restrictions.”
In contrast, Hackett said, biodegradable polymer use has grown more slowly or stagnated in places that lack mandates. “Growing consumer awareness and activism regarding environmental issues could certainly increase the market for biodegradable plastics,” she said.
“To truly capture the benefits of these biodegradable polymers, however, you need to have the collection and composting infrastructure to support their use. Very few major cities or municipalities currently have the necessary infrastructure in place.”
Despite the positive potential of biodegradable polymers, they are still mostly taking a backseat to other sustainability approaches, such as reducing plastics consumption and recycling, Hackett said.
“For various reasons, which may include consumer confusion regarding bio-based plastics versus biodegradable polymers, there is not as much demand for these more sustainable plastics as you might expect, despite heightened public awareness of the plastics waste issue,” she said.
Mandatory composting programs will contribute to demand growth as local governments implement programs to divert organic waste from landfills.
The expansion of composting programs can spur demand for compostable trash bags and food service ware, both important end uses for biodegradable polymers.
“More legislation is likely coming in Europe or at the EU level, and if that occurs, we could see major changes in this industry and pushback from producers of traditional plastic products,” Hackett said.
“The last time we at IHS Markit assessed the global demand for biodegradable polymers, we noted the U.S. was the largest driver of demand growth for this segment, but due to legislation, Europe is by far the leading demand center. Europe is the place to watch, as Europeans are particularly motivated to reduce marine litter.”
The issue of plastics and sustainability will be a key topic of discussion at the upcoming 6th Annual Global Plastics Summit (GPS) 2018, October 30 – November 1, in Chicago. Experts from IHS Markit and the Plastics Industry Association will discuss the latest market outlooks from key industry sectors, and will feature senior business leaders sharing their companies’ strategies for success and innovators presenting the latest in plastics technologies.