Oxford Economics: Understanding the socioeconomic impacts of a potential global plastic production cap

23 Apr 2024 --- Oxford Economics finds that policy interventions like plastic production caps can have adverse industry effects and impact broader economies.

The global plastics and chemicals industry, represented by the International Council of Chemical Associations (ICCA), commissioned independent economic advisory firm Oxford Economics to analyze the socioeconomic and environmental implications of a cap on virgin plastics production ahead of the Intergovernmental Negotiating Committee’s fourth meeting (INC-4) in Ottawa, Canada.

“Plastic makers are innovating, investing and driving smart policies to help end plastic pollution, and we’ve been constructive stakeholders in bringing solutions and expertise to the negotiations,” says Chris Jahn, ICCA’s council secretary. “This economic study fills in critical data gaps to help inform negotiators of the wide-reaching consequences a cap on plastic production would have on society.”

Titled “Mapping the Plastics Value Chain: A Framework to Understand the Socioeconomic Impacts of a Production Cap on Virgin Plastics,” the study highlights policies such as limiting supply and introducing EPR programs, would affect the entire plastics value chain and require a modeling framework based on a database that describes the international structure of the global value chain, from polymer production to waste disposal. 

“To our knowledge, such a dataset has not been developed previously,” states the report.

“The very fragmented state of current data has perhaps contributed to a perception that the plastics industry remains somewhat misunderstood.”

Oxford Economics states that a cap on production will, by design, limit the availability of virgin plastics.Caps, costs and demands
The report stresses the “complex and sophisticated” nature of the plastics value chain and highlights the trillions of dollars it contributes to the global economy. 

Oxford Economics states that a cap on production will, by design, limit the availability of virgin plastics. Furthermore, cost increases resulting from limited supply and more expensive alternatives would disproportionately affect the lower-income class.

“The use of currently available alternatives may put upward pressure on global carbon emissions,” writes Oxford Economics. 

“Because of the increased weight, high energy inputs needed for recycling, and higher rates of waste associated with alternatives to plastics (for example, metals, glass and paper), switching to alternative materials could have negative environmental implications across multiple sectors, from healthcare to tech or clean energy.”

The firm explains that as the price of primary polymers increases, demand would shift toward alternative products, generating a risk of unintended environmental consequences, including increased GHG emissions and food waste. 

“Part of the current popularity of plastics is that they are relatively light and, therefore, require less energy to manufacture and transport, all else equal. Moreover, since alternative materials are typically more expensive than plastics, a production cap risks further increases in manufacturers’ production costs.”

“Essential role of plastics”
In light of the report, The Global Partners for Plastics Circularity (GPPC), supported by the World Plastics Council and the ICCA, encourages negotiators of the Global Plastics Treaty to engage with industry as a “constructive resource.”

“Our members are investing billions of dollars in infrastructure to scale-up the supply of circular plastics, so that used plastics are prevented from entering the environment as waste, landfill or via incineration, and instead become new plastics,” remarks Benny Mermans, chair of the World Plastics Council.

“An effective global agreement will accelerate this progress by creating demand signals incentivizing the billions of dollars of additional investment required to tackle plastic pollution. We urge everyone, including our industry and governments, to redouble our efforts and work even more closely to find solutions in Ottawa.” 

The value chain asserts that plastics directly contribute to the UN Sustainable Development Goals by enabling clean water, renewable energy, improved healthcare, energy-efficient transportation and preventing food loss. Hence, they argue the plastics agreement should “continue to enable the essential role of plastics in creating a more sustainable future.”

By Radhika Sikaria