Analysis of the “circular plastics economy” phenomena and its long-term implications for demand for petroleum market

Abstract

In recent years, the issues of polymer pollution and carbon footprints have stirred up an active debate around the future of petrochemical industry, which over the past 50 years has been a significant driver of global oil demand. It is assumed that the transition to a “circular plastic economy” should resolve environmental issues for the industry, simultaneously eliminating its dependence on petroleum feedstock. In this work, the authors attempted to untangle the concept of “circular plastics” and assess its potential impact on the market of liquid hydrocarbons. Even in the Moderate scenario, the “circular plastics economy” does become an important factor in demand for hydrocarbons in petrochemical industry, reducing it by 5–10% of the business-as-usual case by 2050 and greatly slowing down demand growth rates after 2045, and the more drastic scenario even sees hydrocarbon demand peak by 2040. These findings indicate the importance of taking into account “plastics circularity” when making long-term forecasts of global oil market.

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Environmental Science and Pollution Research (2023) 30:85889–85902
https://doi.org/10.1007/s11356-023-28441-9
RESEARCH ARTICLE
Analysis ofthe“circular plastics economy” phenomena andits
long‑term implications fordemand forpetroleum market
NikitaOKapustin1 · DmitryAGrushevenko1
Received: 1 June 2022 / Accepted: 21 June 2023 / Published online: 3 July 2023
© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2023
Abstract
In recent years, the issues of polymer pollution and carbon footprints have stirred up an active debate around the future of
petrochemical industry, which over the past 50 years has been a significant driver of global oil demand. It is assumed that the
transition to a “circular plastic economy” should resolve environmental issues for the industry, simultaneously eliminating
its dependence on petroleum feedstock. In this work, the authors attempted to untangle the concept of “circular plastics”
and assess its potential impact on the market of liquid hydrocarbons. Even in the Moderate scenario, the “circular plastics
economy” does become an important factor in demand for hydrocarbons in petrochemical industry, reducing it by 5–10%
of the business-as-usual case by 2050 and greatly slowing down demand growth rates after 2045, and the more drastic sce-
nario even sees hydrocarbon demand peak by 2040. These findings indicate the importance of taking into account “plastics
circularity” when making long-term forecasts of global oil market.
Keywords Petrochemical industry· Petroleum demand· Circular plastics· Demand forecast
Introduction
The petrochemical sector has been one of the fastest growing
sectors of demand for oil for over half a century. Since the
early 1970s and until 2019, the global demand for hydro-
carbon “virgin” feedstock from petrochemical synthesis,
has quadrupled, while total oil consumption has less than
doubled over the same period (IEA 2021). For many large
oil producers, such as the United States, Saudi Arabia, Rus-
sia, Iran, the petrochemical sector seemed to be a natural
long-term niche for the reorientation of fossil hydrocarbon
supply in the context of the global movement to limit the use
of petroleum motor fuels. This notion formed the basis for
long-term energy plans of many petroleum exporters (Logo-
fet etal. 2020; McKinsey and Company 2015).
However, in recent years, clouds have been gathering over
the prospects for demand for hydrocarbon feedstock in the
petrochemical industry (BNEF 2019). The main produce of
the petrochemical industry, which accounts for about 90%
of output, are synthetic polymers and plastics (Lange 2021).
And it is the plastics market that is now on the verge of
significant changes. The growing awareness of the issue
of plastic pollution has launched a global discussion on
the need for revision and radical reform of the established
approaches for the production, utilization and disposal of
polymers (Pillai 2022). The new concept for polymer market
has become known as “circular plastics economy” or “plas-
tics circularization,” which, among other things, is ought to
decouple petrochemical industry from petroleum feedstock
consumption (Ellen MacArthur Foundation 2023). The topic
of “plastics circularization” finds significant traction, and the
number of related scientific publications has seen explosive
growth over the past decade, from around 10 annually in the
early 2010s to over 80 in 2020 (Sitadewi etal. 2021; Alassali
etal. 2021). At the same time, there are only a handful of
studies, which evaluate the potential long term implications
of “circularization” for the petroleum market.
Responsible Editor: Philippe Garrigues
* Nikita O Kapustin
nikita.kapustin@mail.ru
Dmitry A Grushevenko
grushevenkod@gmail.com
1 The Department ofresearch ofenergy complex ofRussia
andtheWorld, The Energy Research Institute oftheRussian
Academy ofSciences, 117186, Nagornaya st., 31, k.2,
Moscow, RussianFederation
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