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Illustration: Rebecca Zisser/Axios

The oil and gas industry is ramping up petrochemicals — building blocks of plastics —right as the global outcry intensifies over plastic waste.

The big picture: Most people associate oil companies' products mainly with gasoline. But they also generate plastics that are interwoven into all facets of our lives. This durable material is, more and more, leaving waste virtually everywhere on Earth.

Where it stands: China, which had imported around 70% of the world’s plastic waste, has nearly banned all such imports since last year. That move, combined with horrific images of plastic waste circulating social media, has catapulted the world’s plastic problems to the front of people’s minds and politicians’ priorities.

  • Increasing government restrictions and mandates — plus the industry’s own response of better recycling — could cut plastic demand growth.
  • America is leading a worldwide petrochemical buildout, because its plentiful oil and gas supplies have produced cheap petrochemical feedstocks, or raw material.
  • Oil companies want this growth to offset anticipated lower oil demand elsewhere, particularly transportation as electric cars become more common.

Driving the news: Last week, ExxonMobil and Saudi Arabia-based SABIC got final approval to build in Texas what will be one of the world’s largest facilities processing ethane — the single largest type of feedstock in North America for petrochemicals used in plastics.

By the numbers on what's happening now:

  • Domestic demand for ethane has grown rapidly. The U.S. Energy Information Administration projects it will reach 1.7 million barrels per day by year’s end, an 83% increase over 2012.
  • Seven new petrochemical plants have come online in the U.S. since early 2017, with at least a couple more expected this year, per the EIA.
  • Exports of ethane have grown from nothing in 2013 to more than 250,000 barrels a day. EIA projects these exports to increase by another 50% this year.

By the numbers on what could happen next:

  • Petrochemicals, which accounted for half of the growth in global oil demand last year, are projected to rise to 70% share of growth by 2040, according to BP.
  • In response to growing concerns about plastic waste, BP modeled oil demand under a worldwide ban on single-use plastics — the first time BP has done that. It would roughly cut in half the growth of oil demand over the next two decades.
  • According to the research and consultancy firm Wood MacKenzie, various mandates and bans being imposed around the world will drop petrochemical demand below GDP growth beginning in 2028. Until then, it’s poised to grow above that.

What they’re doing: Companies across the plastic supply chain are unifying around lofty plans to fix the world’s abysmal recycling record as a way to simultaneously protect their profits and respond to growing pressure.

  • More than two dozen companies, including ExxonMobil and Procter & Gamble, formed a coalition earlier this year seeking to pour more than $1 billion into improving recycling.
  • They have their work cut out for them: Globally, less than 20% of plastics were recycled in 2015. In the U.S., it’s worse. Just 9% of plastics were recycled that year, according to the most recent data from the Environmental Protection Agency.
“It’s not really a plastic problem. It’s more of a waste problem.”
— Ashish Chitalia, analyst at Wood Mackenzie

What they're saying: While some experts and industry executives argue that plastic is better than alternatives, such as glass, environmentalists say industry’s focus on recycling reinforces the world’s plastic dependency and unfairly shifts attention to waste management.

“They could address it in very fundamental ways, by making commitments to reduce the amount of plastics being produced and reduce what it’s being used for,” said Carroll Muffett, president and CEO of the Center for International Environmental Law, an environmental nonprofit.

  • Muffett's group recently issued a report detailing the climate-change impacts of plastics, which happen in the process of extracting oil and gas through the refining and manufacturing — all which emit greenhouse gases.
  • "Plastics are poised to grow dramatically at precisely the moment we need to be cutting emissions from every sector of the economy," Muffett said.

What we’re watching: To what degree oil companies branch out into other technologies aimed at plastic recycling. Such moves would further diversify an industry already under pressure to invest in cleaner energy sources in response to climate change.

“The solution here is to try to find technology that can recycle plastic far more efficiently and far more effectively,” Spencer Dale, BP’s top economist, said in an interview with Axios earlier this year. “That’s just the type of scientific problem that we’re quite good at solving.”

He declined to elaborate, saying only: “Watch this space.”

Go deeper

Ben Geman, author of Generate
Aug 5, 2020 - Energy & Environment

Shale's struggles will persist despite a rise in oil prices

Illustration: Sarah Grillo/Axios

WTI, the benchmark U.S. oil future, traded Wednesday morning at its highest since early March — highlighting how the worst of shale's crisis is seemingly over, though more bankruptcies likely lie ahead.

Why it matters: Its price at the time — $43 — is still too low for many producers to do well, though it varies from company to company.

Janet Yellen confirmed as Treasury secretary

Janet Yellen. Photo: Alex Wong/Getty Images

The Senate voted 84-15 to confirm Janet Yellen as Treasury secretary on Monday.

Why it matters: Yellen is the first woman to serve as Treasury secretary, a Cabinet position that will be crucial in helping steer the country out of the pandemic-induced economic crisis.

Dan Primack, author of Pro Rata
4 hours ago - Economy & Business

Scoop: Red Sox strike out on deal to go public

Illustration: Sarah Grillo/Axios

The parent company of the Boston Red Sox and Liverpool F.C. has ended talks to sell a minority ownership stake to RedBall Acquisition, a SPAC formed by longtime baseball executive Billy Beane and investor Gerry Cardinale, Axios has learned from multiple sources. An alternative investment, structured more like private equity, remains possible.

Why it matters: Red Sox fans won't be able to buy stock in the team any time soon.