Economic opportunities abound in plastic substitutes—UNCTAD report

Plastic substitutes present companies the opportunity to address environmental compliance issues and find new income streams as the world bears down on plastic usage amid rising levels of global pollution, according to a new United Nations report.

Nature abounds in sustainable alternatives to plastics, such as bamboo, sand, banana plants and algae that could be used to make eco-friendly versions of the straws, shopping bags, bottles, food wrappers, and other plastic products people consume daily, said the UN Conference on Trade and Development (UNCTAD).

UNCTAD pointed to findings indicating that plastic substitutes could cut global plastic waste by around 17% by 2040—about 63 million tonnes less, or 3.5 million fewer trucks in the queue.

“Besides the benefits to the planet, the shift offers economic opportunities,” said UNCTAD economist Henrique Pacini. “But countries and companies have to work together and across borders to scale up production and reduce trade barriers.”

The world traded about 369 million tonnes of plastics in 2021, enough to fill over 18 million trucks. The queue would wrap around the globe 13 times.

Since less than 10% of all plastics produced have been recycled, most of the products in those trucks will end up littering streets and flooding seas.

Worldwide trade in plastics substitutes and their products was worth around US$388 billion in 2020, according to the latest data—about one third the amount traded in plastics made from fossil fuels.

“This shows there’s already a significant market for plastic substitutes and there’s huge potential for growth,” Pacini said.

Two-thirds of global exports of plastic substitutes are in the form of raw materials, mostly from developing countries.

“Each country can focus on the materials they have an advantage in producing, such as coconut husks and bamboo in many island nations in the Caribbean Sea and Indian and Pacific Oceans,” Pacini said.

But many companies in developing countries lack the technologies and capacities needed to make finished or semi-finished products at a large scale.

This offers an opportunity for companies in developed countries to invest in developing countries and bolster their technology and skills, UNCTAD said.

“Scaling up the production of plastic substitutes will depend on strengthening collaboration between developed and developing countries,” Pacini said.

Besides boosting production across borders, countries need to work together to tackle trade barriers and remove incentives that keep the playing field unfair for plastic substitutes.

Most fossil fuel-based plastics benefit more from subsidies and lower tariffs than plastic substitutes.

For example, the average tariff worldwide for plastic straws is 7.7%. For paper straws, it’s 13.3%, making this plastic-free version less competitive.

“Put simply, current tariffs are making plastics cheaper, and therefore people are reluctant to stop using them and adopt nature-based substitutes,” said UNCTAD legal officer David Vivas.

Moreover, UNCTAD noted the wide application of non-tariff measures (NTMs) that also present barriers to trade.

Most NTMs applied are on natural fibers from plants/trees, dedicated crops, and agricultural by-products.

To help create a fairer playing field, UNCTAD said it has developed the first list of plastic substitutes and their respective harmonized codes (HS).

HS codes are part of an internationally standardized system of names and numbers that allow countries to be on the same page when classifying products before export and import.

Plastic substitutes on the list include traditional substitutes such as aluminum, ceramics, clay, cotton, glass, paper, wood, natural fibers, and wool.

Others include banana leaves, bamboo fibers, calabash had shell, coconut husks, coir, cork, down, fish skin, fruit peels, hay, hemp, jute, leather, pineapple leaves, rice paper, seaweed, sisal, straw, tofu waste, and wood bark.

UNCTAD also has a Trade and Pollution Dashboard, which provides a life-cycle analysis for various materials, allowing companies and countries to fully grasp the environmental benefits and drawbacks of different plastic substitutes.

“Together, the harmonized codes and dashboard can help countries identify promising plastic substitutes, cut tariffs and address non-tariff barriers to these products,” Vivas said.

“If such incentives for polluting materials were reduced,” he said, “a plastic-free economy could be achieved faster.”

UNCTAD said countries should consider exploring policy options that will enable the development of sunrise industries focusing on substitutes, especially where those can be competitive, scalable, recyclable, and promoting job creation.

In July last year, the Philippines saw the lapsing into law of the Extended Producer Responsibility Act of 2022, the milestone environmental law that mandates companies to develop recovery programs for their plastic packaging waste or face severe penalties.

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