New Report Warns of Hidden Economic Risks to Booming Plastics Investments

A new report released today by the Center for International Environmental Law (CIEL) raises new and significant questions about the economic rationale for the massive wave of new infrastructure investments in" plastics and petrochemicals. Untested Assumptions and Unanswered Questions in the Plastics Boom highlights global changes that threaten to dramatically disrupt the plastic industry at both ends of its supply chain, fundamentally altering both the costs of plastics production and the demand for plastic products.

As companies ramp up investments to create more plastic, they are banking on plastic infrastructure being profitable for decades to come. This assumes that demand for plastic will continue increasing and that plastics production will continue to be heavily subsidized by demand for the fossil fuels that supply chemicals critical to plastic production. However, the new report exposes changes in the economy, government regulations, and consumer attitudes worldwide that could make these investments much riskier than previously assumed.

"The fossil fuel and plastic industries are both undergoing major disruptions but are continuing to operate under business-as-usual assumptions," says Steven Feit, CIEL Attorney and lead author of the report. "Even as the phase-out of fossil fuels threatens to make plastics production more expensive, public pressure and government actions to limit plastic pollution are poised to reduce demand for disposable plastic in the years ahead. The industry will be increasingly squeezed from both sides: supply and demand. Investors (and communities) that don't challenge these assumptions and demand clear answers about these projects are putting money -- and livelihoods -- at risk."

As fossil fuels provide the primary material for plastic production, the shale gas boom in the United States has fueled a massive influx of investment in new and expanded plastic production infrastructure. But to meet their commitments under the Paris Agreement, governments around the world have agreed to phase out fossil fuels, which will make plastic production more expensive. At the same time, consumers are demanding an end to disposable plastics, governments are banning or taxing single-use plastic products, and the United Nations is undertaking an international campaign to reduce marine plastic pollution. These shifting attitudes -- at every level -- could mean decreased demand for plastic.

"These changes raise serious questions about the industry's mad dash to expand the fossil plastics industry when it is clear that both fossil fuel use and plastic use must rapidly decline," says co-author and CIEL President Carroll Muffett. "We already know the planet can't afford these new plants. The question is: Why do investors think they can?"

Today's report builds on CIEL's Fueling Plastics research series that exposes the links between the fossil fuel and plastic industries, the massive wave of investments planned to expand plastic production infrastructure, and how long the plastics industry has known that their products pollute oceans.