Problem Definition = Ocean Plastics
The planet’s seas are choking on our junk: Soda bottles, plastic bags and tons of cigarette butts. Distant spots in the ocean — called garbage gyres — have become vortexes where humanity’s trash bobs atop the water for miles on end (UNPRI). Each year, more than 8 million tonnes of plastic ends up in the oceans, wreaking havoc on marine wildlife, fisheries and tourism, and costing at least $8 billion in damage to marine ecosystems. Up to 80 per cent of all litter in our oceans is made of plastic (UNEP). It turns out that five countries are the leading contributors to this crisis. And all are in Asia. A 2016 report from the Ocean Conservancy claims that China, Indonesia, the Philippines, Thailand and Vietnam are spewing out as much as 60 percent of the plastic waste that enters the world’s seas.
Reasons why the problem is particularly prominent in Asia include the following:
• Increase in consumption in Asia mismatched with investment in waste management infrastructure (ADB) • Trash pickers can’t pick up everything i.e., pickers tend to focus on high-value items —like plastic bottles — in lieu of plastic bags, which fetch very little from recyclers (Plastic that has low residual value is more likely to leak into the ocean) • More plastic packaging in Asia (many can only afford to buy household products in tiny, cheap quantities, creating a “sachet culture” which produces more waste in packaging) • Garbage workers cutting corners. E.g., in Philippines, an island nation where sanitation trucks often flout the law, research suggests that up to 90 percent of the plastic dumped illegally ends up in the ocean.
Why is Blockchain Needed? = Enabling Reverse Logistics
Taking a step back from this tremendous problem, to attempt at reducing this problem we need to increase waste collection rates in these 5 key countries by expanding collection service as plastic waste is more than twice as likely to leak into the ocean if it remains uncollected.
Stopping the growth in absolute metric tons of leaked plastic would require that the weighted average collection rate in the five focus countries be doubled, from roughly 40 percent to nearly 80 percent (Ocean Conservancy). While more investment in waste management infrastructure is needed, we can also increase the rate of collection rates through collaborating with the informal economy of trash pickers through a blockchain enabled collection process creating a value-add reverse logistics chain for plastics.
Size of the Market = Plastic Leakage
Summary: • Total addressable market (TAM) is 95% of global plastic packaging production which is lost after first use o ~295 million tonnes annually o $80-120 billion annually lost in value • Serviceable available market (SAM) (based on the demonstration project in Manila) o At least 675,000 tonnes annually o ~$180-275 million annually lost in value
Total Addressable Market under Business-as-Usual Scenario
Plastics and plastic packaging are an integral part of the global economy. Plastics production has surged over the past 50 years, from 15 million tonnes in 1964 to 311 million tonnes in 2014 and is expected to double again over the next 20 years (WEF The New Plastics Economy Report, 2016). Of those tonnages, at least 8 million tonnes of plastics leak into the ocean each year. And with no action taken, estimates suggest that the ocean will have 1 tonne of plastic for every 3 tonnes of fish by 2025, and by 2050, more plastics than fish. Best estimate suggest that plastic packaging represents the major share of the plastics leakage into the oceans (WEF), and is thus our focus material.
Today, 95% of the plastic packaging material value, or $80-120 billion annually, is lost to the economy after a short first use. Only 14% of plastic packaging is collected for recycling, and when additional value losses in sorting and reprocessing are factored, only 5% of material value is retained for subsequent use. This rate is much lower than the global recycling rates for paper (58%) and iron/steel (70-90%). The cost of after-use externalities for plastic packaging, plus the cost associated with greenhouse gas emissions from its production, is conservatively estimated at $40 billion annually – exceeding the plastic packaging industry’s profit pool. (WEF)
Serviceable Available Market (SAM) on Project-Level
Our project will focus on collection of plastic pre-leakage to oceans as research confirms that land-sourced ocean plastic materials are relatively easy to collect and are one of the better short-term waste leakage solutions (Merkl and Stuchtey, 2016). Collecting land-sourced ocean plastic early in its lifecycle prior to entering the sea requires little energy and no skilled workforce. Additionally, only minimal physical/chemical weathering occurs on land. Existing land-based ocean plastics collection exist in Haiti, where collectors, also called “waste pickers” are paid for turning over a variety of preferred plastic materials.
Dell is one of the corporate leaders working on ocean plastics and is using 25% ocean plastic in its 100% post-consumer recycled content laptop trays. The company has published a white paper identifying the sources of ocean plastics which has provided foundational research for our project. (Link) The Dell study analyzed more than 100 ocean plastics waste accumulation sites in China, India, Indonesia, The Philippines and Vietnam (where more than 60% of ocean plastics originate from). The Dell report indicate that the top urban coastal locations with high plastic concentrations in Asia are in Manila, Philippines and Chennai, India. The table below summarizes Dell report findings of sites with opportunities for land-based collection sites to prevent plastics from leaking into the oceans.
Founded on Dell’s research, our project team will focus on Metro Manila, in the Philippines which has the highest visible waste accumulation sites among the top polluter countries, making it a demonstration site with high leverage. Note that the following analysis on serviceable market is based on estimates made for the demonstration project in Metro Manila.
According to the Philippines’ Department of Environment and Natural Resources (DENR), the Metro Manila area produced about 8,400 to 8,600 tonnes of trash per day equating to an estimated 3.0 million tonnes of trash annually. Applying DENR data to country-level plastic garbage statistics outlined in the Ocean Conservancy report, we can extrapolate that Manila’s plastic waste output is around 675,000 tonnes, with 135,000 tonnes of plastics entering the oceans. (We acknowledge that this estimate is conservative as Manila’s plastic to waste ratio is potentially higher than what is implied by the national average found in research).
Applying the tonnage to value lost ratio implied by the WEF report, we can extrapolate that the total serviceable market in Manila estimated in dollar terms if between $180-275 million in value for plastic waste.
Other Current Solutions Intuitively, there are two ways of reducing plastic waste in the system by either reducing the use of plastic, or be by increasing reuse rates thus keeping the plastic within the system. While our project is focused on reducing the leakage of plastics into natural systems (the oceans), it is aligned with the circular economy movement of initiatives addressing global value chains as well as specific ocean plastics reuse initiatives.
System Initiatives: The World Economic Forum and Ellen MacArthur Foundation’s initiative on plastics presents three strategies differentiated by market segment and a set of industry-wide actions to move towards a new plastics economy: • Fundamental redesign for 30% of plastic packaging that will never be reused or recycled due to small packaging • Profitable reuse for 20% of plastic packaging • Packaging redesign and after-use processes as part of a Global Plastics Protocol to address 50% of remaining plastics to be recycled (this is where our project is focused) Ocean Plastics/Recycling Initiatives:
Other than Dell’s ocean plastic initiative, there is one notable branding collaboration between Adidas and NGO Parley for the Oceans, where Adidas’ UltraBOOST Uncaged shoe is made with a knitted upper comprised of 95% recovered ocean plastic and 5% recycled polyester with the goal of producing one million pairs of shoes using Parley Ocean Plastic in 2017 (Source).
We also referenced companies that are collecting plastic to turn into polyesters (fabric for textile), and working with global brands (none appear to be working with blockchain): • Thread • Unifi • Reprieve • Bionic Yarn
The market scan of global brands (especially among consumer-packaged goods, CPG companies) working with recycled plastics demonstrate the market appetite for increased usage of ocean plastic as an input into products. According to industry publication Packaging Digest, “In due course, more companies will likely continue to incorporate ocean plastic as a feedstock once a reliable and larger stream of plastic is being recovered from waterways.”
There is currently one emerging application of blockchain for trash collection from Canadian social enterprise Trash Bank, which operates 30 collection centres in Haiti. Trash Bank plans to use blockchain to pay the trash pickers after the collected waste is delivered to the collection centres (Source).
We also conducted a market scan of blockchain application for supply chain and found that most use cases are used in pre-consumption transparency and traceability e.g., Provenance. We did not find other prominent blockchain use cases for reverse logistics such as recycling.