Thanks for allowing me to appear today.
I'm going to be speaking on and basically delivering a précis of some work that I did for the Smart Prosperity Institute here in Ottawa, called “A Vision for a Circular Economy for Plastics in Canada”. That work itself was precipitated by the work that my colleagues and I did for the Canadian Council of Ministers of the Environment in looking at the barriers to a circular economy for plastics.
Just to provide some context today, we generate in Canada about 3.3 million metric tons of waste plastic. These are 2016 numbers. Of that, we recycle nine per cent. The remaining 91% is either sent to landfills or is burned in energy from waste. About one per cent, or 29,000 metric tons, is discharged into the environment as litter. That's the context for what we're talking about.
It's an enormous amount of material, and that material, effectively, is congealed hydrocarbons. It's what we use to make plastics today. As pointed out by Michael, plastic is cheap. One of its advantages is that it's cheap to make, so we use it in a wide range of applications. It's highly flexible in its use and it delivers a lot of value, but that lack of price associated with it means that it's much cheaper to go and extract more raw materials and make more plastic than it is to recover plastic and recycle it in a meaningful way. We have this fundamental disconnect in economics between virgin plastics and plastics that end up as waste and recovering those plastics.
Why is plastic so cheap? Some of that is due to direct subsidies that we give for fossil resources. The plastics manufacturing sector is very large and it has large-scale efficiencies. It's integrated into the oil and gas sector and it's part of the petrochemical sector.
To give you some idea of scale.... Again, these are numbers that came from Deloitte and recent Deloitte work in addition to the numbers I stated earlier. This is all from analysis done by Deloitte. The virgin plastics production sector is 30 times the size of the recycling industry in Canada today. That will give you an idea of the scale efficiencies that exist for the production of virgin plastics. Then we have disposal, which is unpriced, so today you can dump plastics into the landfill and there's very little cost for disposing of them or sending them to energy from waste.
We talk of trying to aspire to a circular economy as a sort of aspiration to where we want to get to with plastics. A circular economy for plastics, in its end state or optimal state, would be about capturing carbon dioxide and using solar hydrogen to produce ethylene and to produce plastic.
We could use carbon capture. I live in Squamish, British Columbia. We have a company there called Carbon Engineering, which recently got a lot of investment, and it's doing carbon capture. It can produce diesel fuel from carbon dioxide captured from the atmosphere. With our chemistry today, and given existing chemistries, we could produce ethylene through a set of chemistries that would utilize that carbon dioxide and solar hydrogen.
Now you've locked carbon dioxide into plastic, and then, as pointed out by Michael, there are recycling technologies on the other end when you're done with it. These are mechanical recycling, which grinds up plastic and makes it available for the next cycle of production, and chemical recycling, which is nascent in Canada. There are a lot of emerging players in the chemical recycling industry that use various chemical processes to break plastics down into their building-block hydrocarbons—what are called monomers—and then re-form those monomers to create polymers again. They're going from plastic to plastic using chemical recycling.
The chemical recycling is not yet at commercial scale, and the chemical recycling industry suffers from not having enough of a clean supply of plastics from collection and not enough demand. Again, demand is driven by the value of plastic once it's recycled, against the price of plastic as a virgin resource, so we have an economic disconnect. Recycled plastic is generally more expensive than virgin resources, so that is a hurdle that we're going to have to overcome.
The benefit of a circular economy for plastics is manifest. You generate between three to five metric tons of greenhouse gases for every ton of polyethylene you produce. That varies across the world depending on energy inputs and manufacturing practices. When you recycle plastic, you can avoid 70% of those greenhouse gases even though the plastic was made from fossil resources. A tremendous amount of greenhouse gases and greenhouse gas emissions can be avoided through polymer recycling or through mechanical recycling.
The other opportunities are purely economic. If we were to recycle 90% of this resource that's being wasted today, Deloitte estimates an avoided-waste-disposal cost of about $500 million a year, avoided greenhouse gases of 1.8 million metric tons associated with recycling 90% of the waste plastic that I identified, and a recycled value of about $10 billion Canadian. They estimate there would be 17,000 direct incremental jobs and 25,000 indirect jobs.
The circular economy has an economic promise to it. Certainly when recycling gets to scale, the same companies that are producing virgin plastics today will more than likely be in the recycled plastics business because it will be a money-maker. It will deliver the same value that we get today from virgin plastics but without the waste.
For this last segment, I want to talk about the policy mechanisms to overcome the barriers that I have identified.
We've heard of extended producer responsibility. That is the idea that you make manufacturers of products or users of packaging responsible for the collection and recycling of those products and packaging. I'm talking about a wide range of products. We typically think of plastics embedded in packaging, but I'm talking about end-of-life vehicles, appliances, electronics. Plastics are ubiquitous. They are used throughout our economy. We need to create performance standards to have those plastics collected and recycled.
Today, a lot of those plastics are not recyclable. We have stringent performance standards for recycling. We will get what's called technological forcing. Some of these new approaches to recycling will become viable. Innovation will occur in trying to reach these recycling targets. What isn't recyclable today will become recyclable both through innovation in recycling technologies and in the reformulation of packaging or in how plastics are used, how they are bonded and laminated together, and how they are mixed with other materials. We'll get product and packaging design when we start to push stringent standards under extended producer responsibility.
EPR, as it's called, will also ensure that materials are collected in a way that they can be recycled. We've heard of deposit-return systems. We have curbside recycling systems and recycling in the industrial, commercial and institutional sectors. How we collect materials will determine how we can recycle those materials. EPR tends to be a supply chain exercise. It will start to reform how we engage in our recycling practices today.
You've also heard from the other speakers on recycled content. If we have extended producer responsibility creating a supply of plastics, recycled content mandates will now create demand for that recycled plastic to be incorporated into products and packaging. When we start looking at different products in the economy, we can set performance standards for 30%, 40%, or 50% recycled-content requirements that then require manufacturers to draw in that recycled plastic. The combination of extended producer responsibility and recycled content standards now starts to create scale efficiencies. You now have a pull for that and demand for that recycled plastic.
Government procurement is a very, very powerful tool. Governments across Canada at all three levels are large consumers of plastic products and services that use plastics. The recycled-content standards or renewable-chemistry-plastic standards that get written into government procurement will start to create demand for recycled plastics as well. Policies around green procurement or procurement of low-carbon plastics will definitely have an impact.
I think a critical thing that needs to happen if we're going to get these large-scale supply chains under extended producer responsibility is that the rules for extended producer responsibility need to be consistent across the country. When we as Canadians think of recycling systems, we think of our blue box at the corner, and we recycle typically at the municipal level. Recycling needs to go up to provincial and even regional levels to create the supply chains with scale efficiencies. That is going to require these policies to be harmonized at a national level so the rules are the same across provinces.
That's my time.