Plastic credits: A ‘false solution’ or the answer to global plastic waste?

Each year, the world produces about 400 million tonnes of plastic waste – more than the combined weight of all the people on Earth.

Just 9 percent of it is recycled, and one study predicts that global emissions from plastic production could triple by 2050.

Since 2022, the United Nations has been trying to broker a global treaty to deal with plastic waste. But talks keep collapsing, particularly on the issue of introducing a cap on plastic production.

Campaigners blame petrostates whose economies depend on oil – the raw ingredient for plastics – for blocking the treaty negotiations.

This week, the UN is meeting in Switzerland in the latest attempt to reach an agreement. But, even if the delegates find a way to cut the amount of plastic the world makes, it could take years to have a meaningful effect.

In the meantime, institutions like the World Bank are turning to the markets for alternative solutions. One of these is plastic offsetting.

So what is plastic offsetting? Does it work? And what do programmes like this mean for vulnerable communities who depend on plastic waste to make a living?

Plastic credits are based on a similar idea to carbon credits.

With carbon credits, companies that emit greenhouse gases can pay a carbon credit company to have their emissions “cancelled out” by funding reforestation programmes or other projects to help “sink” their carbon output.

For each tonne of CO2 they cancel out, the company gets a carbon credit. This is how an airline can tell customers that their flight is “carbon neutral”.

Plastic credits work on a similar model. The world’s biggest plastic polluters can pay a plastic credit company to collect and re-purpose plastic.

If a polluter pays for one tonne of plastic to be collected, it gets one plastic credit.

If the polluter buys the number of plastic credits equivalent to its annual plastic output, it might be awarded “plastic neutral” or “plastic net zero” status.

Like carbon credits, plastic credits are controversial.

Carbon markets are already worth hundreds of millions of dollars annually, with their value set to grow to billions.

But in 2023, SourceMaterial, a nonprofit newsroom, revealed that only a fraction of nearly 100 million carbon credits result in real emissions reductions.

“Companies are making false claims and then they’re convincing customers that they can fly guilt-free or buy carbon-neutral products when they aren’t in any way carbon-neutral,” Barbara Haya, a US carbon trading expert, said at the time.

The same thing could happen with plastics. Analysis by SourceMaterial of the world’s first plastic credit registry, Plastic Credit Exchange (PCX) in the Philippines, found that only 14 percent of PCX credits went towards recycling.

While companies that had bought credits with PCX were getting “plastic neutral” status, most of the plastic was burned as fuel in cement factories, in a method known as “co-processing” that releases thousands of tonnes of CO2 and toxins linked to cancer.

A spokesperson for PCX said at the time that co-processing “reduces reliance on fossil fuels, and is conducted under controlled conditions to minimise emissions”.

Now, the World Bank is also pointing to plastic credits as a solution.

In January last year, the World Bank launched a $100m bond that “provides investors with a financial return” linked to the plastic credits projects backed by the Alliance to End Plastic Waste, an industry initiative that supports plastic credit projects, in Ghana and Indonesia.

At the UN talks in December last year, a senior environmental specialist from the World Bank said plastic credits were an “emerging result-based financing tool” which can fund projects that “reduce plastic pollution”.

Manufacturers, petrostates and the operators of credit projects have all lobbied for market solutions, including plastic credits, at the UN.

Oil giant ExxonMobil and petrochemicals companies LyondellBasell and Dow Chemical are all members of the Alliance to End Plastic Waste in Ghana and Indonesia – both epicentres of plastic pollution that produce plastic domestically and import waste from overseas.

But those companies are also members of the American Fuel and Petrochemical Manufacturers, a lobby group that has warned the UN it does “not support production caps or bans”, given the “benefits of plastics”.

Critics like Anil Verma, a professor of human resource management at the University of Toronto who has studied waste pickers in Brazil, call plastic offsetting a “game of greenwashing”.

Verma argues that offsetting lets polluters claim they are tackling the waste problem without having to cut production – or profit.

Patrick O’Hare, an academic at St Andrews University in Scotland, who has attended all rounds of the UN plastic treaty negotiations, said he has “noticed with concern the increasing prominence given to plastics credits”.

Plastic credits are being promoted in some quarters “despite the lack of proven success stories to date” and “the evident problems with the carbon credit model on which it is based”, he added.

Even some of the world’s biggest companies have distanced themselves from plastic credits.

Nestle, which had previously bought plastic credits, said last year that it does not believe in their effectiveness in their current form.

Coca-Cola and Unilever are also “not convinced”, according to reports, and like Nestle, they back government-mandated “extended producer responsibility” schemes.

Yet the World Bank has plans to expand its support for plastic offsetting, calling it a “win-win with the local communities and ecosystems that benefit from less pollution”.

Some of the poorest people in Ghana eke out a living by collecting plastic waste for recycling.

Johnson Doe, head of a refuse collectors’ group in the capital, Accra, says funds for offsetting would be better spent supporting local waste pickers.

Doe wants his association to be officially recognised and funded, instead of watching investment flow into plastic credits. They’re a “false solution”, he says.

This story was produced in partnership with SourceMaterial

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