Single-use plastics ban not expected to hurt petrochemical growth in Canada

One of Canada’s largest producers of plastics says there will be plenty of room for future growth in output despite a proposal by Ottawa to ban certain single-use plastic products by 2021.

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Prime Minister Justin Trudeau announces his government's intention to ban single-use plastics as early as 2021 during a news conference in Mont-Saint-Hilaire, Que., Monday, June 10, 2019. THE CANADIAN PRESS/Paul Chiasson

CALGARY — One of Canada’s largest producers of plastics says there will be plenty of room for future growth in output despite a proposal by Ottawa to ban certain single-use plastic products by 2021.

Nova Chemicals Corp. supports efforts to encourage more recycling of plastics, including the plan announced by Prime Minister Justin Trudeau on Monday, said John Thayer, senior vice-president of polyethylene for the company which operates large petrochemical complexes in Alberta and Ontario.

“Our fundamental belief is that globally, plastics will continue to grow and that we’ll need multiple plants to be built year over year to enable that growth,” he said in an interview.

“We believe if you couple that growth with the proper collection, repurpose, reuse of plastics, it’s going to continue to make the products more in demand.”

Thayer said a $2-billion expansion of Nova’s Sarnia polyethylene complex, now under construction, is unaffected by news of the ban.

In central Alberta, Inter Pipeline Ltd. and Pembina Pipeline Ltd. are both building projects to turn propane into polypropylene plastic at a cost of $3.5 billion and $4.5 billion, respectively.

Inter Pipeline supports research into plastic waste reduction, recycling and responsible use, said spokeswoman Breanne Oliver in an email, pointing out that the polypropylene it plans to produce at its central Alberta plant is highly recyclable.

“Polypropylene is used in items such as life-saving medical products, fuel-reducing car parts, textiles and packaging that can extend the life of food, resulting in less waste,” she added.

Trudeau said Monday the government will determine what is to be banned using a science-based review, but is considering bans on things such as water bottles, plastic bags and straws.

The proposals are expected and are generally supported by the sector, which is seeing a five-year high in capital spending this year thanks in part to incentive programs by federal and provincial governments, said Isabelle Des Chenes, executive vice-president of the Chemistry Industry Association of Canada.

“We are pleased to see they want to take a science-based approach,” she said in an interview. “Certainly, our only caution is that we don’t predetermine the outcomes until the science is in.”

She said her organization wants to be involved in the process to ensure bans are imposed only where there are “viable, cost-effective and environmentally sustainable alternatives.”

Canada’s biggest advantage as a producer of plastics is its abundant cheap natural gas feedstock and that won’t change under the proposed ban, said Ashish Chitalia, principal analyst for polyolefins for consultancy Wood Mackenzie.

He said the volumes required to produce consumer single-use plastics are small and, while a ban may impact some end-product manufacturers in Eastern Canada, it likely won’t affect the oil and gas sector in the West or the big industrial plastic manufacturers.

The ban could mean less raw plastic is imported from the U.S. to Eastern Canada manufacturers and more raw plastic is exported from Western Canada around the globe, he added.

Wood Mackenzie is forecasting four per cent annual growth in global plastics demand over the next five years, driven by rising consumer standards of living in Asia, with the rate falling to less than GDP growth after 2028, he said.

The federal government is also planning to require companies that produce plastics or use them in packaging to be responsible for the collection and recycling of the waste.

The move could lead to increased costs for industry and its customers, Thayer said, but also opens up opportunities for Canadian companies to take the lead in finding new and innovative ways to better recycle and reuse plastics.

Last year, industry groups that represent the plastics industry in Canada announced a target to make 100 per cent of plastics packaging recyclable or recoverable by 2030 and to have 100 per cent of plastics packaging being reused, recycled or recovered by 2040.

 

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Companies in this article: (TSX:IPL, TSX:PPL)

 

Dan Healing, The Canadian Press

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