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ClientEarth Communications

16th February 2021

Plastics Policy
Plastic as a business risk
Fossil fuels
Clean energy

Fossil fuel and plastic: what’s the link? – We ask our lawyers

The raw materials used to make fossil fuels and plastics are one and the same. But with demand for fossil fuels seemingly on the decline in many parts of the world, these two industries are becoming even more closely linked.

In the face of decreasing profit margins and the increasing demand for renewable energy, fossil fuel companies are searching for an easy alternative to keep themselves afloat, and it seems they’ve found one – plastic production. With this in mind, we sat down with our Fossil Fuel Infrastructure lawyer Maria Jolie Veder and Plastics lawyer Tatiana Luján, to talk about the future of these two industries, the potential impact of even more plastic on our saturated planet, and what ClientEarth are doing about it all.

Why are fossil fuel companies looking for alternative sources of income?

Maria Jolie: "There is a marked decline in demand for fossil fuels in the power sector. As a consequence, there’s a lack of new investment in, for example, gas infrastructure, so fossil fuel companies need another industry to take over the demand. One of those is plastic production."

Tatiana: "We now have people worrying more about their own health, climate activists pushing for change, governments trying to adhere to the commitments of the Paris Agreement, improvements in the manufacture of electric vehicles, and renewable energy is getting cheaper. Gas and oil are becoming more expensive than renewables, and fossil fuel vehicles, which play a large part in the demand for fossil fuels, are being phased out. All of this leaves the fossil fuel industry needing an alternative source of growth."

What has led to the decline in demand for fossil fuels?

Maria Jolie: "There are a lot of factors at play. In general, the production of renewable energy is getting cheaper, there is higher demand for energy efficiency, and there are climate targets to be met, which are all making investing in new fossil fuel infrastructure much riskier than it used to be. Also, existing fossil fuel infrastructure is either being phased out entirely, or is set to be phased out in the near future due to new climate policies."

Tatiana: "It’s also worth mentioning that the current Covid-19 crisis is accelerating the downturn in fossil fuel demand. There are many reasons for this – most notably that people’s everyday budgets are smaller due to income loss, furlough schemes etc, which reduces the demand for lots of types of products made using fossil fuels. The aviation industry is, of course, a huge consumer of fossil fuels, and that isn’t functioning right now what with so many aircraft fleets grounded and travel restricted. Also, far fewer people are commuting. So there are many industries that have just stopped working because of how Covid has affected the way we live our lives. It all has an impact."

There is a marked decline in demand for fossil fuels in the power sector, so fossil fuel companies need another industry to take over the demand. One of those is plastic production.
Maria Jolie Veder, Lawyer - Fossil Fuel Infrastructure

How is plastic made? And how are fossil fuels involved?

Tatiana: "Most plastic is made from fossil fuels. We extract oil or gas from land and the seabed, and transport it to what’s called a ‘cracker’. Crackers are plants that use huge amounts of heat and pressure to break fossil fuels into molecules that become the building blocks of polymers. For example, propane gets ‘cracked’ into propylene, and then, in a plastic plant, polypropylene is produced, which is used to make plastic bottles."

How closely linked are the fossil fuel and plastic industries?

Tatiana: "There are a lot of integrations between the two industries. In the past, they were separate, but the more fossil fuel industries are seeing a risk in using fossil fuels solely to make energy, the more they are trying to integrate with plastic production companies.

The problems that the two industries do, and will face, are also linked. In the same way that climate change poses a material business risk for industries that are climate intensive, intensive use and production of plastic also exposes companies to material business risks. There are regulatory risks that come from industries having to constantly adapt to changes in legislation, and across the world, legislation for both plastic and fossil fuel production is changing very fast. Globally, more than 90 companies are currently changing their legislation around plastics. There are also lawsuits being brought all over the world related to different parts of the plastic lifecycle. All of this creates financial risk that managers and investors should be aware of. Prudent investors shouldn’t be putting their money into plastic production and use."

How much of a plastic problem do we already have?

Tatiana: "We have a massive problem. There are many effects of plastic that we know of, but there are also so many that remain unknown. There are unquantified effects of plastic on human health, on the ocean’s carbon pump, and on climate change, purely from the presence of plastic in the ocean.

We already know that plastic aids the transmission of antibiotic-resistant genes. We know that microplastic can be found in the air that we breathe, and the deposits of microplastics in our lungs can cause cancer in the long-term. Traces of plastics have been found in human placentas, so babies can actually be swimming in microplastics when still in the womb. We know that the fertility and function of soil is being affected by microplastic pollution. It’s everywhere. As far as we know, if things keep going as they are, by 2050 plastic will consume 15% of the Earth’s overall carbon budget. There are so many things vital for our survival as a species that need this carbon budget, and yet we’re using it for plastics."

We have a massive problem. There are many effects of plastic that we know of, but there are also so many that remain unknown. There are unquantified effects of plastic on human health, on the ocean’s carbon pump, and on climate change, purely from the presence of plastic in the ocean.
Tatiana Luján, Lawyer - Plastics

Are some people affected more by plastic pollution than others?

Tatiana: "Yes. The extraction of fossil fuels to make plastic will have an effect on the air quality or water quality of the area in which the extraction happens, often inhabited by disadvantaged communities. Many people who live in ‘food deserts’ (heavily populated areas served only by a few large supermarkets), have less choice about how much plastic they buy, as the fresh fruit and vegetables they can get will often be wrapped in plastic.

At the end of its life, plastic is often disposed of near disadvantaged communities in Europe, or shipped to less advantaged countries, where it causes even more social illness. In the UK for example, there is a lot of plastic that is incinerated, and people who live near those incinerators will experience lower air quality and will inhale many of the substances emitted, like dioxins and furans, that are very harmful for people’s health. When plastic waste is shipped to other countries, often the waste management systems cannot cope with the amount of it, and so sewage systems end up blocking and causing floods. It’s very unfair."

So the last thing we need to do is produce more plastic?

Tatiana: "Yes. We do not need to produce any more plastic. The plastic production plants we currently have already more than meet the demand for plastic that exists."

Would it really be profitable for fossil fuel companies to start to produce plastic instead?

Tatiana: "No, I think it’s a bubble. I think it would just be postponing their inevitable decline."

What is ClientEarth doing to combat plastic production?

Tatiana: "As well as bringing cases against different petrochemical companies, we’re working on various legal reforms and implementation of different laws at EU level, including the Single Use Plastics Directive and the reform of the Packing and Packing Waste Directive. The reform of the Industrial Emissions Directive will have a huge effect on plastic production too."

Maria Jolie: "The Industrial Emissions Directive regulates the environmental permits of large industrial plants, including plants that produce plastic. The way that the IED works, is that roughly every seven to twelve years there are new emission limits introduced for these plants, which get increasingly more strict. With the IED reform, which we’re working on with other NGOs, the aim is to include more types of pollutants within the limits they prescribe. One of our objectives is to get GHG (greenhouse gas) emissions included in the IED permits for these plants – doing so could really impact their profitability, and could even threaten their right to exist. The inclusion of GHG emissions in the IED is still at a very early stage, and is something we’re really campaigning for. A lot of things could still happen with it, but hopefully it will be very impactful."

Tatiana: "ClientEarth also has lots of cases that use the Environmental Impact Assessment Directive, which requires that planning permits for the construction of plants must consider its carbon intensity. It’s all about getting judges around the world more familiar with the notion of denying a permit for a plant because of its carbon impact."

Tatiana is a Colombia qualified lawyer, and Maria Jolie is a lawyer/juriste.

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