The "strictest plastic restriction order" in history has been implemented in China this year, and the plastic industry has ushered in the challenge of upgrading. Among them, biodegradable plastics, which are the most advantageous alternatives to traditional plastics, have become the "new favorite" of the market. However, the reporter found in the interview that the current degradable plastic industry is still "small and scattered", high-end production capacity is still insufficient, the cost pressure of enterprises and merchants is relatively large, and there are objective obstacles to the comprehensive promotion of products, which urgently need a new round of quality upgrades.

In January 2020, the National Development and Reform Commission and the Ministry of Ecology and Environment issued the "Opinions on Further Strengthening Plastic Pollution Control", which not only proposed the prohibition and restriction of disposable plastic products for multiple industries, but also proposed measures such as promoting the application of alternative products, cultivating and optimizing new business forms and models, and increasing the supply of green products. It is called the "strictest plastic restriction order" in history. After a year, this new regulation has been officially implemented in China, and various places have also introduced local versions of plastic restriction measures. Special rectification work has been gradually promoted, and the new and old plastic industries have ushered in the challenge of upgrading.

Since the implementation of the new version of the plastic restriction order, degradable plastic products have become the "new favorite" of the market, and related companies have also intensively deployed in this field. In 2019, China's plastic product output exceeded 80 million tons. Some people have suggested that if 20% of the market is replaced by degradable plastics, the corresponding market size will have a hundred times growth space compared with the current level, and the industry development will enter a "golden age". But at the same time, the scale of the degradable plastic industry is still "small and scattered", with overcapacity at the low end and insufficient high-end capacity, and it is in urgent need of a new round of quality upgrades.

Have the supermarkets and takeaway express delivery around you fully "reduced plastic"? How is the application and promotion of degradable plastics? Will the industry usher in a new spring of thriving growth?

You can control the big chains, but not the small shops

Many large chain supermarkets and catering companies have fully replaced degradable plastic bags, but some roadside shops are still using disposable plastic bags

After the release of the new version of the plastic restriction order, various parts of China responded positively. Hainan, Shandong, Zhejiang, Henan, Beijing...many places have successively introduced relevant measures to strictly prevent "white pollution". In December last year, Beijing issued the "Beijing Plastic Pollution Control Action Plan (2020-2025)", focusing on key industries such as catering, takeaway platforms, wholesale and retail, strengthening plastic reduction efforts, and strictly controlling disposable plastic products.

During interviews in Beijing, reporters found that many large chain supermarkets have fully replaced degradable plastic bags, and many large chain catering companies have also gradually eliminated disposable plastic packaging boxes and straws and other items that were commonly used in the past, replacing them with paper or other degradable material substitutes.

At the Carrefour Supermarket Zhongguancun store, reporters saw that the shopping bags here have been replaced with degradable plastic bags. Among them, the price of large shopping bags is 0.8 yuan, and the price of small shopping bags is 0.5 yuan. According to supermarket staff, the original general plastic bags were priced at 0.3 yuan for large and 0.2 yuan for small, but they will no longer be sold from January 1 this year. Due to price increases, the number of consumers who buy plastic bags has decreased significantly, and most of them are young people. Most middle-aged and elderly consumers will bring their own shopping bags.

In addition to Carrefour, supermarkets and convenience stores such as Hema Fresh, Convenience Bee, and Supermarket Fa in Beijing have fully implemented degradable shopping bags, and the prices have all increased significantly. The price of large shopping bags in some supermarkets even exceeds 1 yuan.

In front of the cashier counter of Auchan Supermarket in Xihongmen, Beijing, the reporter met Ms. Niu, who chose to temporarily buy degradable plastic bags from the supermarket because she did not bring her own shopping bags. She told the reporter that she rarely goes to offline supermarkets for shopping and has not developed the habit of bringing her own shopping bags. "I always thought that shopping bags in supermarkets are only about 30 cents, and I didn't think they were that expensive. Now the price of degradable plastic bags is indeed more expensive than before, but the material is more environmentally friendly. I will try to prepare my own shopping bags in the future."

The "plastic reduction" revolution is more innovative in the new tea beverage industry. The reporter tried to order a Heytea drink on the takeaway APP. There is a straw category on its order page, which is subdivided into three options: "PLA degradable straws", "paper straws", and "no straws". The PLA degradable straws in hand seem to be no different from ordinary plastic straws, but they actually hide a mystery. According to Heytea, before January 1 this year, Heytea had replaced all disposable non-degradable plastic straws, tableware, and packaging bags used in all its stores in China with polylactic acid (PLA) materials. This material can be completely degraded by natural microorganisms and eventually generate carbon dioxide and water. At the same time, PLA materials avoid the defects of ordinary paper materials in shaping, high temperature resistance, and immersion resistance.

Reducing the amount from the source and reducing the disposable waste entering the terminal link is the key to the implementation of the plastic restriction order in the takeaway industry. The reporter called several popular restaurants in Xicheng District, Beijing through the Meituan takeaway platform. Most merchants said that they had started using degradable plastic boxes for packaging since last year. "The platform requires us to gradually replace the original disposable plastic lunch boxes since December last year, and recommends degradable packaging solutions. There are many green packaging companies and products to choose from." However, some merchants said that they were not aware of the new version of the plastic restriction policy and had not received relevant notifications.

During the visit, the reporter also found that the use of degradable plastic products has not been fully popularized, but rather that "big chains can be controlled, but small stores cannot be controlled." The reporter visited several roadside breakfast shops and fruit shops in Beijing's Zhongguancun and found that most shops are still using disposable plastic bags.

A fruit shop owner admitted that the main reason for using disposable plastic bags is low cost. "The purchase cost of a degradable shopping bag is 20 cents. In comparison, the cost of ordinary plastic bags is much lower, about 2 cents per bag on average. We use hundreds of bags a day, and the total cost varies greatly."

However, the shop owner also said that ordinary plastic bags have become increasingly difficult to buy in recent months. "We are still using the previous inventory. When this batch is used up, we will also start using degradable plastic bags."

Compete for the "golden track" but don't rush in

The degradable plastic industry is expected to achieve rapid development, but the current industry is small and scattered, facing the challenge of a new round of industrial upgrading

The increase in downstream demand and the intensive release of plastic restriction measures in various places have helped many upstream production companies to increase the production capacity of degradable materials and compete for this "golden track".

On January 19, Yingkou Kanghui Petrochemical Co., Ltd., a subsidiary of Hengli Petrochemical Co., Ltd., officially signed a contract for an annual production of 600,000 tons of polybutylene succinate (PBS) biodegradable plastics project. After the project is put into production, it will greatly alleviate the supply gap of degradable plastics in China.

As a global leader in degradable plastic raw materials, Kingfa Science & Technology Co., Ltd. used to focus on export business, and 80% of the company's raw materials were sold abroad. After the implementation of the new version of the plastic restriction order, Kingfa Science & Technology's production line has been in full production and sales. As China's demand increases, the company is stepping up the construction of new production capacity and the development of new biodegradable plastics. The 60,000-ton PBAT production line currently under construction is expected to be put into production in the first half of this year, and the 30,000-ton PLA production line will also be put into production in the fourth quarter.

A report released by the Prospective Industry Research Institute shows that China's plastic product output in 2019 reached 81.84 million tons, accounting for about 1/4 of the global demand for plastics. At the same time, China's consumption of biodegradable plastics in 2019 was only 520,000 tons, accounting for only 4.6% of the world, significantly lower than the global average.

"With the introduction of supporting policies, the production capacity of biodegradable plastics, which are the most alternative to traditional plastics in degradable materials, will grow rapidly, and the entire industry will also usher in new development opportunities." Zheng Yueming, chairman of Levima New Materials Technology Co., Ltd., said.

At present, China's biodegradable plastics are still in the introduction stage of the industry. Zheng Yueming told reporters that taking PLA products, the mainstream biodegradable materials on the market, as an example, Chinese companies have just started, and there is still a big gap in technology from European and American companies. The continuous and stable production technology of the key raw material lactide has not yet made a breakthrough; Chinese companies have mastered the production technology of PBS products, but they need to further improve in terms of continuous and stable production; Chinese technology for polyhydroxyalkanoate (PHA) products is at the forefront of the world, but there is still a lot of room for production costs to fall.

However, this also means that the potential market gap needs to be filled. It is estimated that by 2025, the demand for biodegradable plastics in the four fields of disposable plastic tableware, plastic shopping bags, agricultural mulch and express packaging will form a total market space of about 2.5 million tons, and the market size will reach about 50 billion yuan.

"Although the new regulations are the "strictest plastic restriction order" in history, it does not mean a comprehensive ban on plastics, nor does it mean that degradable plastics can completely replace disposable plastics. We must strictly prevent the chaos of plastic companies rushing in, and reduce blind investment and low-level expansion." Du Huanzheng, director of the Institute of Circular Economy at Tongji University, said in an interview with reporters that the degradable plastic industry is expected to achieve rapid development, but the industry is currently small and scattered, and is facing a new round of industrial upgrading.

During the investigation and visit, the reporter also found that the biodegradable plastic products on the market are of varying quality. Some manufacturers are suspected of using environmental terms such as "degradable" and "biodegradable" to mislead consumers and make false and exaggerated propaganda. "We should strengthen the construction of relevant systems and industry standards for degradable plastics, increase support for relevant policies, continuously enrich standardized and international third-party testing capabilities, improve the efficiency and reliability of performance evaluation, and guide the healthy development of the industry." Du Huanzheng said.

Behind the surge in production capacity, the standardized development of the degradable plastic industry still has a long way to go. Zheng Yueming believes that the current structure of the biodegradable plastic industry is unreasonable, high-end production capacity is insufficient, and low-end production capacity faces the risk of overcapacity. The country also needs to strengthen industrial guidance, improve the standard system, and further increase support for the research and development and industrialization of key core technologies.

Use innovation as a starting point to promote quality upgrade

If companies want to achieve long-term development, they need to constantly innovate, improve product quality, and enhance product competitiveness

Scientific and technological innovation is becoming a weapon for large-scale companies to seize the industry's wind. Zheng Yueming believes that companies should reduce the cost of biodegradable materials through technological innovation and other means, while continuously improving product quality to enhance product competitiveness. "Biodegradable materials are one of the key research and development areas of Lianhong New Materials. Among them, the PLA project, including some products such as polylactic acid bottle cap special materials, has completed laboratory development." Zheng Yueming said.

Although the market opportunities brought by the new version of the plastic restriction order are promising, in the current mixed biodegradable plastic market, companies need to constantly innovate and improve product quality if they want to achieve long-term development. Consumer experience is an important factor that cannot be ignored in product updates and iterations, and is an important basis for companies to innovate their products.

In 2020, Hefei Hengxin Environmental Protection Technology Co., Ltd. became a packaging supplier for a new tea chain store. "Our original biodegradable products have been sold abroad before, but they encountered a very big bottleneck in the application in the Chinese market. Due to differences in consumption habits outside China, many products cannot be simply replaced. For example, in terms of the matching degree of PLA hot drink cups and lids, most of the drinks in China are take-out drinks, and the requirements for packaging materials should be completely sealed without any spills, etc." said Yan Deping, chairman and general manager of Hefei Hengxin Environmental Protection Technology Co., Ltd.

In order to make every cup of drink wear a "satisfactory and environmentally friendly" coat, Hengxin Environmental Protection constantly communicates with customers about their needs. In addition to strictly considering environmental factors such as degradability, it also polishes the straw length, inner and outer diameters, incision inclination, drop performance, appearance, etc. according to the characteristics of hot and cold drinks until the supply plan is confirmed. Yan Deping said with emotion, "In the past four months, we often received feedback from customers on consumer experience in the middle of the night, and then we continued to improve and perfect it, and finally produced packaging that combines good user experience with environmental protection needs."

"Since last year, China's influential chemical companies have unanimously responded to the requirements of the new version of the plastic restriction order, switching from ordinary plastics to biodegradable materials. This is why even in 2020, under the pressure of the new crown pneumonia epidemic, shortage of raw materials, and tight export containers, our company's degradable plastic products can still maintain a market growth rate of 23%. "Yan Deping said that now the company has received more and more orders from new tea drinks and large chain catering fields, and has also explored a set of "please come in and go out" methods, insisting on listening to more downstream customers' demand suggestions, and using consumer demand to help the industry's technology continue to upgrade.

As for the price and cost of degradable plastics, many industry insiders believe that as China's degradable plastics industry enters a stage of rapid expansion of production capacity and rising consumer demand, it is believed that from production sources to consumer terminals, the entire industry will reach a consensus on environmentally friendly materials, market demand and production scale will become larger and larger, and the production cost of degradable plastics will become lower and lower.

"The scale of China's biodegradable plastic market is huge. The previously reserved raw material production capacity cannot meet 100% of the market supply in the first place, and the construction speed of raw material production capacity is significantly slower than that of product processing capacity, which leads to rising raw material prices. The construction of qualified and high-quality raw material production capacity is particularly critical and the most difficult step. When the production capacity level continues to meet consumer demand, the cost will further decrease and the price will return to rationality." said Yuan Zhimin, chairman of Kingfa Technology.

"To reduce the cost of biodegradable plastic products, on the one hand, companies need to persist in technological progress and product innovation, and on the other hand, they also need to continuously expand the market application and strengthen the plastic restriction awareness of multiple parties. In this regard, relevant departments and organizations should increase environmental ethics education, so that consumers' active choices will force businesses." Tang Dajie, a visiting researcher at the Finance, Taxation and Law Research Center of Wuhan University, suggested that in this process, it will be crucial for the government to strengthen the enforcement of plastic restriction legislation and introduce subsidy policies for biodegradable plastics.

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