Oil, plastics and climate: why higher prices could accelerate the materials transition

That means that when the price of those raw materials rises, the cost of producing plastic often rises as well, creating incentives to reduce wasteful use, expand reuse systems, and invest in alternatives that contain less carbon and cause less damage to the environment.

Why is it important

The global plastics economy is not just a matter of waste. It is also a climate issue.

The increased use of plastics, which inevitably means more plastic pollution, is not only extremely harmful to the planet’s biodiversity but also contributes to climate change.

Oil prices, plastics and climate change

Plastics are overwhelmingly manufactured from petrochemicals derived from petroleum and natural gas.

According to the United Nations Environment Program (UNEP), plastics generate harmful greenhouse gas emissions throughout their life cycle, from extraction and refining to production, transportation and disposal.

UNEP says harmful gases that are driving climate change are likely to increase if plastic production continues to increase unchecked.

Where plastics are used and where it is easiest to change them

Plastics are used around the world because they are cheap, durable, lightweight and versatile.

• Most plastic is found in packaging, including food wrappers, bottles, shopping bags and single-use containers. These are the easiest to replace.
• Construction, such as pipes, insulation, floors and window frames, is also a large consumer of plastics (some replaceability)
• Consumer goods and textiles, polyester clothing, toys, furniture and household items also require a lot of plastic (mixed replaceability)
• As do transportation (e.g. vehicle parts) and electronics. (harder to replace quickly)
• Medical uses, such as yesSyringes, PPE and sterile packaging are difficult to replace with non-plastic products (low replaceability)

According to UNEP, “we need to rethink how we produce, use and dispose of plastics.”

So what plastics can realistically be replaced?

The key test is necessity versus convenience:

• About a third of the world’s plastics are easily replaceable. Many countries have already passed laws banning plastic shopping bags and utensils, encouraging people to shop with reusable bags and use metal or wooden cutlery.

These changes often become economically attractive when oil prices rise.

• Another third of plastics globally are partially replaceable, including textiles, building materials and furniture, although in some cases substitution can cause more environmental damage overall, especially in terms of climate emissions or deforestation.
• Some plastics with critical technical uses, including medical plastics and electrical parts, are almost impossible to replace.

As UNEP emphasizes, “the answer is not to ban all plastics, but to end unnecessary, avoidable and problematic plastics.”

It is worth remembering that not all plastic is equally harmful.

• Plastic insulation can reduce building emissions
• Lightweight vehicle components can reduce fuel consumption

Higher oil prices may spur adaptation

As virgin plastic becomes more expensive:

• Excess packaging becomes less attractive, so companies look for cheaper alternatives
• Single-use items, such as food packaging, lose their price advantage and can be replaced, for example, by reusable glass bottles.
• Bans and taxes gain public support as do recycling benefits

According to UNEP, “reuse is one of the most powerful market shifts available.”

The final result

The widespread need for plastics may keep demand for fossil fuels alive, although higher oil prices may act as a hidden accelerator of change.

As fossil-based plastics become more expensive, countries around the world have a realistic path to:

• First cut the unnecessary plastic
• Expand reuse and recharge systems
• Use alternatives where they make sense
• Decarbonize remaining essential plastics

That makes plastics not just a waste story, but part of the global energy transition.