Ethane-tsunami threatens Europe

Amsterdam, 29 October 2018 – Last month the International Energy Agency published the report ‘The Future of Petrochemicals’. One of the main conclusions is that in the next few years the number of petrochemical products, particularly plastics, will greatly increase due to the combination of the growing world economy, increasing world population and technological development.

According to the report, attempts by Governments to limit the use of one-time plastic packaging (the so-called single-use plastics), will be meaningless in comparison with the soaring consumption of plastic in developing countries. The global competition between plastic producers is caused as well as reinforced by the offer of cheap raw materials, particularly shale gas from the United States.

Ethane is a natural gas that is derived from shale gas. Thanks to cheap shale gas the United States has achieved a favourable competitive position again: plastic made of ethane now has a 40% share of the world production. Also in Europe ethane is the new raw material for plastic production, because it competes with the more expensive naphtha that is used in Europe. The IEA-report predicts that in 2030 the production of ethane will have increased by 70%. A quarter of the ethane that is produced is expected to be exported, mainly to Europe.

The gas is already being brought from the United States to Europe with ships owned by Ineos, a British chemical giant that invests in new ethane crackers on the continent. In Appalachia (USA) 35.8 billion dollars is being invested in shale gas infrastructure, including pipelines to terminals on the US East Coast. While the European Union is working hard to combat the plastic soup, the import of ethane will make it possible for European plastic producers to bring much more plastic on the market at even lower cost. It will be much harder to get recycling plastic off the ground, as part of the desired circular economy.

In conclusion, for the European Union the most effective way to fight the plastic soup and to promote recycling is to ban the import of ethane. Preferably in the very short term!

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