Gulf Monitor

The pros and cons of expanding plastics production in the GCC

The global pushback against single-use plastics could have implications for the future expansion of the polymer industry in GCC countries. 


Gulf Monitor | Aisha Al Sarihi | GCC polymer industry


 

The hydrocarbon-rich Gulf Arab states have been looking for alternative sources of income to reduce their economic vulnerability to oil prices and diversify their economies away from heavy dependence on oil and gas export revenues.

Despite the regional interest in promoting non-oil growth from sectors such as electricity and water; construction; trade, restaurants and hotels; transport, storage and communication; manufacturing; and finance, real estate and business services, non-oil growth has actually declined to 3.25%, well below the 7.75% during the period 2006-15.[1]

In this context, all the GCC states, except Bahrain, have pursued ways to maximize the value of readily abundant oil and gas resources through expanding downstream chemical and petrochemical industries, including plastics (Figure 1). As a result of these efforts, the GCC polymer industry expanded by a compound annual growth rate of 11% per year between 2006 and 2016, and is expected to grow by 3% per year between 2016 and 2022. Polymer sales revenues rose by 9% per year in 2006-16.

 

 

Environmental, health and climate change impacts of plastics

Despite this success, uncertainty over the future of GCC polymer industry is rising due to concerns over its impact on the environment, human health and climate change.

Around 79% of the plastic products produced over the last 70 years has been thrown away,[2] either into landfill sites or the general environment, presenting a direct threat to wildlife and human health. Some animals consume plastics whole or, as is more often the case, absorb degraded pieces of plastic, called microplastics, which are small enough to pass through the stomach into the flesh of fish and other animals. Microplastics consumed by humans could potentially be absorbed into the body tissue, with potentially harmful consequences.

Furthermore, there is a growing body of scientific evidence interlinking plastics with climate change.[3] In 2015 plastics accounted for 3.8% of global greenhouse gas emissions (GHG) over their lifecycles, and if the global trend of plastic production was to continue, GHG emissions from plastics would reach 15% of the global carbon budget by 2050. [4]While recycling and re-manufacturing plastics could save at least 30% of the carbon emissions that original processing and manufacturing produces, currently only 9% are recycled.

 

Implications for polymer industry of global commitment to curb plastics 

In response to the heightening environmental, health and climate change damage caused by plastics, earlier this year member states of the UN agreed to phase out single-use plastics, such as straws, bags, cups, cutlery and bottles, by 2030. [5]

In the GCC, Oman, UAE and Bahrain have joined the global commitment and introduced regulations to phase out the use of single-use plastic bags.[1] However, while the regulations introduced by these countries send a signal to both end users and retail markets to reduce use of single-use plastics, they do not apply to plastic production. Across the GCC, the polymer industry’s total output capacity is expected to increase to 34.5m tonnes by 2022, from 27.1m tonnes in 2016.

This growth is in line with the IEA expectations that suggest petrochemicals, dominated by plastics (Figure 2), will be the largest driver of global oil demand, in front of cars, planes and trucks, accounting for one third of world oil demand growth to 2030 and nearly half of growth to 2050.[7]

 

Yet, both global and domestic commitments to phase out the use of single-use plastics could possibly reduce demand for and hamper future sales revenues. In fact, many main importers[8]of plastics from the GCC, including China (24%), India (8%) and Turkey (6%), have already introduced regulations restricting the use of plastic,[9] which in turn could eliminate future demand for GCC plastic exports.

 

What can be done differently?

If the plastic industry is to continue growing, the GCC countries should strengthen environmental standards and regulations associated with plastic production and consumption in order to eliminate its environmental, health and climate change impacts. For instance, the use of renewables instead of fossil fuels to run the industry would ensure zero GHG emissions from plastic production.

Additionally, the creation of more bio-based plastic instead of single-use plastic would not only eliminate environmental and health impacts but also make the GCC plastic sales more competitive both at national and international markets. Importantly, because only 10% of plastic is recycled,[10] GCC countries should advance plastic re-manufacturing and recycling programs, which could, in turn, create new market opportunities for small and medium-sized enterprises and enhance economic diversification.

 

Aisha Al-Sarihi is a research associate at King Abdullah Petroleum Studies and Research Centre and served previously at the LSE Middle East Centre, Arab Gulf States Institute in Washington and Georgetown University’s Centre for Contemporary Arab Studies. She has a research interest in environment, energy, renewables and climate change policy and politics, with a special interest in the Arab Gulf States. 


Sources:

[1] Gulf Petrochemicals and Chemicals Association (2016). GCC Plastic Industry Indicators 2016. https://gpca.org.ae/wp-content/uploads/2018/03/GCC-Plastics-Industry-Indicators-2016.pdf
[2] Ian Johnston (2017).How plastic is damaging planet Earth. The Independent. https://www.independent.co.uk/environment/plastic-how-planet-earth-environment-oceans-wildlife-recycling-landfill-artificial-a7972226.html
[3] Samantha Staley (2009). The Link Between Plastic Use and Climate Change: Nitty-gritty. Stanford Magazine. https://stanfordmag.org/contents/the-link-between-plastic-use-and-climate-change-nitty-gritty
[4] Jiajia Zheng & Sangwon Suh (2019). Strategies to reduce the global carbon footprint of plastics. Nature Climate Change 9, 374–378.
[5] DW (2019). World agrees on first global commitment to curb single-use plastics. https://www.dw.com/en/world-agrees-on-first-global-commitment-to-curb-single-use-plastics/a-47938697
[6] Times of Oman (2018): Oman set to ban all plastic bags: Ministry. https://timesofoman.com/article/135834/Oman/Oman-to-ban-plastic-bags-from-supermarkets; Arabian Business (2019): Is the end in sight for plastic bags in UAE supermarkets? https://www.arabianbusiness.com/retail/423302-is-the-end-in-sight-for-plastic-bags-in-uae-supermarkets; Arabian Business (2019): Bahrain says to phase out use of plastic products from July https://www.arabianbusiness.com/politics-economics/422022-bahrain-says-to-phase-out-use-of-plastic-products-from-july
[7] IEA (2019) The Future of Petrochemicals: Towards a more sustainable chemical industry. https://www.iea.org/petrochemicals/?utm_content=buffercd8b9&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
[8] Gulf Petrochemicals and Chemicals Association (2016). GCC Plastic Industry Indicators 2016. https://gpca.org.ae/wp-content/uploads/2018/03/GCC-Plastics-Industry-Indicators-2016.pdf
[9] Worldwatch Institute: China Reports 66-Percent Drop in Plastic Bag Use: http://www.worldwatch.org/node/6167; Jack Guy (2019). Modi has vowed to ban single-use plastics to fight India’s trash crisis. CNNhttps://edition.cnn.com/2019/08/15/asia/india-single-use-plastic-ban-scli-intl/index.html Accessed 18 August 2019; and Borzou Daragahi (2018). Turkey to launch groundbreaking restrictions on plastic bags in fight against pollution. The Independent. https://www.independent.co.uk/news/world/europe/turkey-plastic-bags-ban-law-supermarkets-apk-pollution-waste-government-a8676221.html Accessed 18 August 2019.
[10] Heather Caliendo (2016). About 10% of Plastic is Recycled in GCC Countries. Plastics Technology. https://www.ptonline.com/blog/post/about-10-of-plastic-is-recycled-in-gcc-countries

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