How Asia can beat its plastics addiction and fight climate change

AJ Gonzalez | February 25, 2021

This Week in Asia, Opinion, Rob Kaplan, Published: 8:10am, 24 Feb, 2021

  • While coping with the coronavirus pandemic, single-use plastics have proliferated and recycling has ground to a halt
  • To combat the problem, Southeast and South Asia need to adopt a circular economy framework in plastics, which would help cut noxious emissions

For many, 2020 was a year postponed. While we were focused on coping with the Covid-19 virus, we lost ground on other critical issues, including plastic pollution and climate change. The waste-management and recycling value chain in South and

Southeast Asia has ground to a halt while the use of single-use virgin plastics has soared. The situation is untenable for the long run and the environmental impact is sobering.

As we inch closer to the promise of mass vaccination and kick off 2021 in the Year of the Ox, it is time to adjust our perspective: these crises present incredible prospects for economic recovery and growth. We now have the chance to take a step back and hit the reset button, revisit basic assumptions and assess whether our current approach can address the problem.

First, we need to invest more in local resilience, economies, and supply chains to foster sustainable economic growth and generate new jobs in the new normal. Job creation can no longer just be about generating more positions; instead, we should be creating pandemic-resistant jobs.

Second, we need to harmonise the pandemic recovery response with strategies that attain systemic environmental resiliency. The pandemic and ongoing environmental issues can be addressed simultaneously – through a fundamental shift away from a focus on short-term performance of systems, to ensuring sustained outcomes in the longer term.
South Korea’s Green New Deal is one such plan that aims to address the economic and climate crises  concurrently, and can be used as a model throughout South and Southeast Asia. It aims to generate 650,000 jobs by increasing the supply of  renewable energy,  developing low-carbon industries and promoting electric vehicles, among other initiatives.  

CLIMATE CHANGE LINK

Today, public opinion largely agrees about the dangers of climate change. However, the link between plastic pollution and the climate crisis is not often made. Rather, some think that the growing focus on plastic pollution is detracting from the climate change issue.

According to The Ellen MacArthur Foundation, sustainability efforts such as moving to renewable energy sources can only achieve a 55 per cent reduction of global greenhouse gas emissions. This is an essential step, but embracing renewable energy alone cannot address the complex problem of climate change.

Bali’s famous beaches buried in plastic garbage pushed ashore by annual monsoon

Reductions in greenhouse gas emissions must also come from addressing the complex systems that produce, deliver and use products and food. Adopting a circular economy framework in plastics and other materials like steel, aluminium, cement and food could help cut 9.3 billion tonnes of greenhouse gases by 2050.

Using India and Indonesia as case studies (both among the top countries where plastic leaks into the environment), the connection between the plastic issue and the climate issue can be illustrated.
By ensuring that plastic waste is managed properly and recycled in these two countries alone, we have an opportunity to eliminate almost 150 million tonnes of greenhouse gas emissions by 2030, according to Circulate Capital’s Climate Impact Measurement Tool, developed in partnership with A*STAR, Singapore’s research agency for the advancement of scientific discovery and technological innovation.
This is achieved through the avoided production of virgin plastic materials in favour of recycled plastics, the formalisation of plastic waste routes and the diversion of plastic waste away from open burning. This is the same amount of emission savings that can be derived from shutting down 40 coal-fired power plants.

INVESTING FRONTIER

With this improved understanding of the connection between plastic pollution and climate change, investments in climate-resilient infrastructure and the transition to a lower-carbon future will be integral. They accelerate the development of sustainable infrastructure and drive significant job creation, while increasing economic and environmental resiliency. The waste-management and recycling industry lies at the heart of the circular economy and is the next frontier for infrastructure investors looking for climate-resilient opportunities.

As financial investors providing catalytic capital to support private enterprises advancing the circular economy, we believe that material improvements to the industry across the region can be made by addressing systemic gaps and pain points within the waste ecosystem, such as fragmentation, lack of waste source traceability and the low quality of recycled materials.

There are three key innovation strategies that can propel the positive impact of the industry in South and Southeast Asia.
First, scaling collection and sorting in collaboration with local cities will ensure that the material required to drive the circular economy is collected effectively and efficiently. India-based Nepra Resource Management exemplifies this opportunity through its work connecting local municipalities across Ahmedabad, Indore and Pune with more than 1,700 waste pickers and collectors to process more than 500 tonnes of waste per day.

Upcycling to derive more value from plastic waste will further close the loop on plastic. Instead of downcycling plastics into textiles or for energy use, we can invest in technology to produce certified food-grade recycled plastics and recycle difficult-to-manage flexible plastics into quality building materials or recycled packaging products.

Finally, accelerating the digitisation of the industry to promote efficiency and transparency will connect all players on the value chain. Waste-tech solutions are set to revolutionise the domestic industry by facilitating waste transactions to achieve higher rates of plastic collection and recycling, provide visibility of waste flows and demand dynamics, enable brands to trace recycled plastic material and meet government-regulated Extended Producer Responsibility requirements, as well as empower waste collectors with digital finance options for fair-value payments for plastic waste collected.
A stuffed toy of the Sesame Street character “Elmo” surrounded by plastic waste on a beach on the Freedom island critical habitat and eco-tourism area near Manila. Photo: AFP
A stuffed toy of the Sesame Street character “Elmo” surrounded by plastic waste on a beach on the Freedom island critical habitat and eco-tourism area near Manila. Photo: AFP

The waste management and recycling industry may not be the most exciting investment target, but this is not a frontier economy where investors are required to take on outsize risks. Other leaders show the potential in this space, with companies like Veolia, a transnational utility services firm, making €10 billion of revenue from waste management in 2019 alone.

The time is now for institutions, corporates, family offices and high-net-worth individuals to invest in the region’s waste-management and recycling industries so that the increase in plastic waste can be more effectively managed, resulting in the diversion of plastic waste from the environment and landfill and a reduction in greenhouse gas emissions.

Rob Kaplan is the Founder and CEO of Circulate Capital, an investment management firm dedicated to incubating and financing companies that prevent the flow of plastic waste into the ocean and advance the circular economy in South and Southeast Asia.

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