Improving Local Plastic Waste Management throughDemand Creation Models: A Case Study of Surabaya

Plastic Value Chains — Current Status Quo, and Interventions

As pervasive as the symbols and rhetoric of recycling might be, we find that today’s global consumption and recycling patterns are far from achieving the circular path envisioned. The World Bank estimates that while every person on the planet produces nearly one kilogram of solid waste on a daily basis, only 13.5% of this waste is recycled. While the global recycling rates of materials such as metal (70–90%) and paper (58%) provide some evidence of circular value chains, the global recycling rate of plastics remains low. To add to the challenge, the share of plastic waste in today’s urban economies is only increasing and causing complex problems across natural ecosystems and built/urban environments. There are many factors that obstruct the path to achieving optimal recycling outcomes, from types of plastics, gender inequalities of the informal sector workers, to involvement with and investments from local governments and stakeholders.

However, through the work of The Incubation Network and the Ocean Plastic Prevention Accelerator (OPPA) in Surabaya and across Southeast Asia, there are interventions in the plastic life cycles and value chains through social enterprise that are gaining traction, and whose models can be replicated and adapted across the region. This case study will examine such models that are harnessing demand creation to try to increase value and collection rates of single-use plastics, with a focus on Surabaya.

Recycling — an urban myth?

Plastics generally comprise more than 50% of products by weight today, while plastic packaging makes up 26% of the total plastic production. Due to their versatile use, low production cost, and high durability, there has been a sharp rise in global demand and plastics have become the first choice to create both products and packaging for our modern globalised economy. However, we are starting to find that the problems ensuing from rampant plastic production are increasing.

Currently, 9 out of 10 plastics are made from ‘virgin’ petrochemical feedstock, derived from fossil fuels such as natural gas or crude oil. If we continue on the current trajectory, global plastic production will account for 20% of total oil consumption by 2050. Meanwhile, an estimated 1.5 tons of plastic waste finds its way into the world’s oceans every minute. To understand the repercussions of this, by 2050 there is expected to be more plastic waste floating in the world’s oceans than fish (by volume). With growing production, limited repurposing, and rapidly escalating crises as a result of plastic waste, we need to place plastic value chains under greater scrutiny — recycling rates of other materials show us that with sufficient and stable demand, infrastructure is developed, and collection and process rates grow to increase supply.

Responses to issue of plastic waste vary greatly, based largely on the economic maturity of countries — from working towards 100% recycling rates (at least for some polymers, like PET) in developed countries like Norway, to setting targets to reduce ocean plastic pollution by 70% in developing countries like Indonesia. The variation in responses reflects differences in waste management systems (e.g. the infrastructure, how it is managed, and who is involved), and in broader social, political, and economic contexts. While governments across the world have pledged to collectively combat this “plastic plague”, it is important to note that growing quantities of solid waste pose a bigger challenge to developing economies. Since effective waste management efforts often end up taking 20–50% of funds available to municipal governments, roughly 90% of solid waste across developing economies is either disposed of in unregulated dumps or burned in open spaces. Across Asia, an estimated 80% of plastic waste finds its way into the oceans. Curbing plastic pollution at the source, by improving waste management, is the best way to secure the future of our marine ecosystems. The heterogeneity of the systems and contexts is one factor that makes coordinated, systematic learning about — and refinement of — responses, difficult. This hinders global progress on the issue. However, value chains are one of the common features and a potential leverage point for improving waste management and reducing pollution, given the feedback loop between demand and supply. This case study will explore the potential of approaches to reducing plastic waste by developing (or strengthening) value chains. The focus is on Surabaya, Indonesia, where our partners, the Ocean Plastics Prevention Accelerator (OPPA), have been working to generate and support a range of approaches to improving waste management.

An Overview of the Plastic Value Chain

As defined by Hitt et al (2007), a value chain “shows how a product moves from a raw material state to an output that will be delivered to the final customer.” The plastic value chain includes the full range of activities needed to bring a plastic product through the different phases of extracting raw materials, production, distribution and final disposal after use.

Why is the plastic value chain so complex?

As plastic moves from one stage to the next, it is expected to gain value. However, the plastic value chain is more complex — owing to the diverse nature of different types of plastics, uses and treatment routes at the end of the life cycle — coupled with a diverse number of stakeholders, including chemical and plastic manufacturers, consumer goods companies, retailers, waste management companies, and recycling technology companies as shown below:

Source: UNEP PWP Working Report, 2020

Today, there are more than 30 types of primary plastics which, combined with different chemical additives (such as stabilizers, fillers, plasticizers and colourants), result in thousands of plastic materials. Out of these, 97–99% of plastics are derived from fossil fuel feedstock and are used for a variety of purposes.

The structure of the polymers not only defines the type of applications but also is very crucial for plastics’ recyclability at the end of their use phase.

Connecting plastics: from polymers to materials to products to waste to ….?

When examining plastic waste, it can be categorised as either: pre-consumer (industrial) plastic waste, or post-consumer plastic waste. The majority of plastic waste comes from the post-consumer market. Post-consumer waste is found mainly in municipal solid waste (MSW), while plastic packaging has the largest share (35.8%) in the market of post-consumer plastic products with a short lifetime. In theory, nearly all plastics are recyclable. However, due to various challenges, plastic recycling rates vary. For example:

1. Pre-consumer plastic waste is typically uncontaminated and well-characterized in terms of origin and physical properties. It is typically more valuable than post-consumer plastic waste, since it requires little processing to mould in a new product. On the other hand, post-consumer waste often comprises mixtures of different plastic and/or plastic and non-plastic waste. To be recycled, the plastics must first be cleaned and separated into homogeneous materials. These factors contribute to the increased difficulties and costs of recycling post-consumer plastic waste when compared to pre-consumer plastic waste.
2. Recovery of plastics, in the form of material or thermal recovery, varies across countries and regions as well as among polymers. Plastic recycling rates vary from as high as 60% in India to as little as 9.1% in the U.S.However, some polymers end up breaking down under mechanical or thermal stress, and this hinders their ability to be recycled. In addition, many plastic products may consist of more than one polymer type (known as laminated plastics), which makes them more difficult to recycle.
3. Globally, PET is the most widely recycled type of polymer and recycled PET has a high value in international markets too; this value is driven by an increased demand in China, which is in turn, driven by an increasing global demand for plastic-based products. Most of the recovered PET bottles and flakes are sent to China for recycling and reprocessing. While developed economies like Japan enforce a high PET recycling rate through a rigid Extended Producer Responsibility (EPR) scheme, developing economies like Indonesia depend on waste pickers in the informal sector to selectively collect post-consumer PET bottles (which are seen as more valuable by waste aggregators whom these individual waste pickers sell their hauls to).
4. According to Vilaplana et al (2007), the quality of plastic scrap for recycling is mainly influenced by three quality parameters: the degree of mixing (polymers cross-contamination), the degree of degradation, and the contamination levels. Mixed plastic waste streams consist of several different types of polymers. The major plastic polymers predominantly found in household waste and other Municipal Solid Waste (MSW) sources are Polyethylene (PE), Polyethylene Terephthalate (PET), Polypropylene (PP), Polystyrene (PS), and Polyvinyl Chloride (PVC). Mixed plastic waste streams which are also referred to as cross contamination of plastics may occur during segregation and collection, within a plastic reprocessing facility, in a scrap yard, or in a sorting unit during the process. Plastic recycling contamination occurs when incorrect items/materials are put into the system (such as used-nappies, food waste, paints, and other problematic materials) or when the right items are prepared the wrong way (e.g., food residue in plastic containers, recyclables in plastic bags, and shrink plastic wrap recycling mixed in with cardboard, paper etc.)
5. Cost-effectiveness and efficient recycling of the mixed plastic stream is perhaps the biggest challenge facing the recycling industry. Practitioners propose that designing plastic products and packaging with recycling in mind can offer a solution to overcoming this challenge in the future.

Surabaya at Ground Zero: Local challenges abound

Today, Indonesia faces several challenges as far as managing and recycling plastic waste is concerned. Like most developing countries, Indonesia relies on an informal sector for many aspects of waste management, from collection to processing. An estimated 5 million informal workers form an integral part of the labour force, and are critical for systems and value chains to function. These workers — who range from informal but organised groups of collectors to individual waste pickers who roam streets and landfills — separate valuable materials to supplement or generate income. Without them, recycling rates would be much lower. However, they only collect the materials that there is demand (and a reasonable price) for. The contamination and low value of some materials means they do not get separated or collected, and so end up in landfill or the environment.

The waste streams are mostly organic waste mixed (or contaminated) with single-use plastics like bags (‘kresek’) or styrofoam food containers. High-value materials (e.g. PET) are recycled at high rates, while low-value materials become waste, but this is a question of value: If there were more applications and thus demand for so-called low-value materials like single-use plastics, it follows that this would increase their value and drive up supply. And as demand and supply increase, the infrastructure required to support the flow of materials (or the value chain) would also develop. Harnessing this feedback loop is a way to significantly reduce pollution while creating economic value and driving growth, rather than leaving the cost to governments.

According to the Ellen MacArthur Foundation and UNEP, innovation activity can improve the quality of output that can be achieved from mixed plastic waste streams, but it can also improve collection and separation by creating demand and addressing supply-side issues. New technologies will play a crucial role in this, but the development of new approaches (e.g. business models) is also necessary. A recent McKinsey report estimates that there is a $60 billion market opportunity for the petrochemicals and plastics sectors, in the effective reuse and recycling of plastics.

In Surabaya, two very different approaches to plastic value chain development are building momentum, and both are harnessing demand creation to try to increase value and collection rates of single-use plastics. We will examine each of these below:

1. Re>Pal pallets is a zero waste solution that enables customers to meet their sustainable development goals and create a circular economy in plastics by closing the loop with 100% recyclable pallets. Re>Pal zero waste pallets are made from 100% waste plastic using a unique technology process, which they call ThermoFusion™. With the ThermoFusion™ process, Re>Pal has a unique approach to managing plastic waste. They are able to generate a structurally strong ISO tested (ISO8611) product from a variety of mixed waste inputs. Their process also uses a minimal amount of energy compared to virgin plastic or timber pallet manufacture. Re>Pal’s ThermoFusion™ pallets offer businesses both profitability and sustainability in the form of a carbon neutral, environmentally-friendly, well designed and efficient freighting solution. Plastics that can be recycled using this process include high density polyethylene (HDPE) such as shopping & groceries bags, Ziploc bags, bread bags, newspaper bags, bubble wraps, milk bottles & caps, and shampoo, conditioner & liquid soap bottles. Re>Pal can also process low density polyethylene (LDPE) such as garbage bags, irrigation pipes, squeeze bottles, packaging films, agricultural films, laundry bags; as well as polypropylene (PP) such as crates, drinking straws, tarpaulins, plant pots and more. With its pallets, Re>Pal can help customers reduce logistics risk through zero waste future inspection time & cost.
2. Robries produce furniture and household products from mixed plastic waste. The company procures raw materials procured from the Central Waste Bank in Surabaya and some smaller waste banks around the city. After only two years of operation, they have already been able to establish demand for their products in several key cities across Indonesia (Jakarta, Bali, Yogyakarta, Surabaya). Additionally, Robries has started to export internationally to Singapore, Australia, Malaysia, Europe, and the United States. As a direct off-taker of plastic waste from waste banks, Robries shortens the plastic waste value chain. Shorter value chains provide significant potential to reduce leakage of waste that is often created by the involvement of multiple actors.

These examples from Surabaya illustrate what is possible, but they are not isolated examples. Across the world, approaches like these are being replicated and scaled. For example, in Vietnam, ReForm is creating a more circular economy through its innovative approach: Engaging local waste collector communities in Vietnam to collect all low-value plastics, ReForm then shreds the recovered materials and cleans them to remove impurities. The cleaned material is then mixed as per specific compositions and finally, melted and placed in a pressure mould to form a brand new product with established, local demand. By providing the technology for the localised processing and repurposing of low-grade plastics (into new materials), allowing small waste management facilities to generate additional revenue (by consolidating waste), and increasing total collection — ReForm enables the local community to tap into additional revenue streams that can translate into positive social outcomes (such as better housing, healthcare and education access) in the long-term for the waste collector community.

Finding the future: circular over linear

Bridging between value chains and circular economies: value chains as a mechanism for ‘bending’ linear chains

To drastically reduce plastic waste, changes must take place across the value chain. This will likely include the introduction of incentives for increasing collection (or disincentives to the contrary); technologies to increase value-recovery of all types of plastics; the implementation of new product design standards that take into account plastic life-cycles and support recycling, as well as stronger regulations around the packaging of products; and the proliferation of technologies that can work with mixed feedstock. However, many of these require multiple stakeholders coordinating their efforts. One mechanism for driving change quickly and simply is increasing demand for materials and/or products made from recycled plastic waste. Examples like those discussed above demonstrate what is possible. These companies raise awareness with their products and communications, increase the collection and recycling of waste that would otherwise end up in landfills or the environment, and generate additional revenue for people working in waste management, particularly informal collectors.

The types of value these companies create is part of what makes their approach so interesting and effective. They are harnessing market forces (demand) to address social, technical, and environmental issues by increasing incomes of marginalised people, improving waste collection, and reducing pollution. Approaches such as these are not a “silver bullet” but they can play an important role. As with all work that engages or impacts informal collectors, gender inequalities and human rights issues must be analysed and responded to. Women and girls account for the majority of informal workers, and while people working in the informal sector are often marginalised, women and girls face additional burden and risks. As such, directly engaging informal collectors in decision making, and/or working with civil society organisations like women’s right groups or collector cooperatives is necessary. This can help to anticipate and mitigate risks, increase engagement, and ensure that the value created is captured by those doing the work. In this way, efforts can advance gender equality and improve waste management in parallel.

The Ocean Plastic Prevention Accelerator (OPPA) is a social innovation ecosystem builder powered by The Incubation Network that’s supported by SecondMuse, The Circulate Initiative (TCI), Global Affairs Canada (GAC), Alliance to End Plastic Waste (AEPW) and more.

Source: UNPRI