Oil companies to ramp up plastic supply to counter shift to renewable energy
Oil companies are set to ramp up their plastic production in a move to offset the shift towards renewable energy sources.
According to a report from Carbon Tracker, major oil companies, including Saudi Aramco and Royal Dutch Shell, plan to spend about $400bn to help grow the supply of virgin plastics by a quarter over the next five years.
Although plastic will be the main driver for oil demand growth in the near future, it is likely that it will stagnate as governments push to cut the use of single-use plastics and promote recycling.
The report said that demand for virgin plastics may peak in 2027, with growth slowing from 4% a year to 1%. This means that oil demand may have reached its peak in 2019.
“Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses,” Kingsmill Bond, energy strategist at Carbon Tracker, said.
“It is simply delusional for the plastics industry to imagine that it can double its carbon emissions at the same time as the rest of the world is trying to cut them to zero,” Bond said.
Other companies such as BP have decided to exit the industry. BP sold its petrochemicals business for $5bn to Ineos as it predicted that a ban on single use plastics would hit oil demand over the coming decades.