An initiative of
Economist Impact and The Nippon Foundation

PEAK PLASTICS:
BENDING THE
CONSUMPTION CURVE

Peak plastics: bending the consumption curve - Methodology Note

1

Glossary•	Ban: a ban on the sale and consumption of problematic, non-essential single-use plastic
products (SUPPs). For each country, we calculate the decline in plastic consumption thatwould result from a ban on SUPPs. This ban rate will vary for each country, based on existing
policy dynamics. We assume that these bans progressively increase over time, expanding the
products under the purview.
•	Consumption: the purchase of virgin resins by industries, which are then processed into virginplastic products to be used by individuals. For the purpose of this study, the purchase of PET by abottle manufacturer is accounted for in the consumption data (and not the purchase of a soft-drink
plastic bottle by a household). The consumption number here is the total consumption at country
level irrespective of production, import and export. For example, some of the countries may havezero production but instead its consumption is purely via imports. This is also referred to as ‘use’ inthe paper.
•	GDP: the gross domestic product is the market value of all finished goods and services produced ina country in a given period of time.
•	Landfills: modern landfills are well-engineered and managed facilities for disposing of solid waste.
They are located, designed, operated and monitored to ensure compliance with federal regulations
and are also designed to protect the environment from contaminants, which may be present in thewaste stream.
•	Peak plastics: Economist Impact defines this as the hypothetical point in time when the
consumption of plastic reaches its maximum rate, beyond which it will gradually decline due tovarious mitigation measures.
•	PET: polyethylene terephthalate, a type of plastic polymer.
•	Plastic leakage: this refers to plastics that enter terrestrial and aquatic environments.
•	Primary or virgin plastic: plastics manufactured from fossil-based feedstock (eg, crude oil) thathas never been used or processed before.

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note2•	Problematic and unnecessary plastic items: The New Plastics Economy Global Commitment1
proposes the following criteria for identifying problematic or unnecessary plastic packaging or
plastic packaging components:-	
It is not reusable, recyclable or compostable.
-	
It contains, or its manufacturing requires, hazardous chemicals that pose a significant risk tohuman health or the environment.
- It can be avoided (or replaced by a reuse model) while maintaining utility.
- It hinders or disrupts the recyclability or compostability of other items.
- It has a high likelihood of becoming litter or ending up in the natural environment.
•	Producers: firms that make polymers—the building blocks of all plastics—almost exclusively fromfossil fuels. Economist Impact identifies these firms as producers of new “virgin” polymers from oil,gas and coal feedstock. In 2019 more than half of all the single-use plastic waste created was madeby 20 polymer producers, while the top 100 producers were the origin of 90%.2•	Recycling: means any recovery operation by which waste materials are reprocessed into products,
materials or substances whether for the original or other purposes. It includes reprocessing organic
material but does not include energy recovery and reprocessing into materials that are to be used
as fuels or for backfilling operations.
•	Single-use plastic products: items designed and produced to be used once before being thrownaway or recycled, such as plastic bags, straws, coffee stirrers, soda and water bottles, and mostfood packaging.
•	Virgin plastics: new plastic polymers that have been produced using fossil fuels such as crude oil,coal or natural gas.
•	Waste: means any substance or object that the holder discards or is required to discard.
*The definitions of problematic plastic items, short-lived plastic products and SUPPs are adapted fromworking documents of the UN Plastics Treaty. The definition of consumption has been formulated inaccordance with the data we have used for the model.

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

3

Technical
methodology
The Peak plastics study examines the potential
impact of three key policies that could bend
the consumption curve. These levers cover
the entire lifecycle of plastic, from production
to disposal, including: a ban on problematic
single-use plastic products (SUPPs), mandatory
extended producer responsibility (EPR) schemes
for industrial consumers (ie, retailers andbrands) and a producer tax on virgin plastic.3
We study the effectiveness of their mandatory
implementation on plastic consumption among
19 selected countries from the G20.

We adopt a scenario analysis approach testing
the effectiveness of three possible policy options
to prevent future plastic pollution. The selectionof the three scenarios under considerationreflects the lifecycle approach to tackling theplastic crisis. The key underlying assumption in
all these scenarios is that compliance with thesepolicies is mandatory for all industry participants.
The countries in scope are the 19 countries of theG20.4 This selection was made owing to the factthat these 19 countries account for almost 78%
of global GDP.5

Context and rationale behind this study

Objective

In March 2022 the UN Environment Assemblyin Nairobi adopted resolution 5/14 “End plastic
pollution: towards an internationally legallybinding instrument.” This resolution endorses
the creation of an international legally binding
agreement by 2024 and focuses on the complete
lifecycle of plastic, including design, production
and disposal. The first round of negotiations on
the global plastics treaty began in November 2022.
That meeting was the first of five planned sessionsof the Intergovernmental Negotiating Committee.

The Peak plastics model aims to assess if
dedicated policy efforts can achieve a point of‘peak consumption', meaning the point after
which plastic consumption begins to decline.
Through modelling efforts, we try to establish if
policy interventions can arrest the exponential
increase in plastic consumption to bringabout such a peak. If so, we question at what
consumption level and at what time will this beachieved. At this stage, we test the possibilityof achieving a ‘consumption peak’ before theyear 2050 through three targeted interventions,
namely, a ban on SUPPs, mandatory EPR
schemes and a producer tax on the use ofvirgin resin.

In tandem with the ongoing treaty negotiations,the Peak plastics work stream under the Back toBlue initiative has been developing an evidencebased approach to form an understanding of theextent to which selected policy measures canbend the plastic consumption curve and help toreduce plastic pollution.

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

Model assumptions• Consumption: the purchase of virgin resins
by plastic producers who process these resins
into various plastic products, which are usedby individuals. The consumption number
here is the total consumption at country levelirrespective of production, import and export.
For example, some of the countries may havezero production but instead its consumption
is purely via imports.
•	
Fossil-fuel based plastic: the model takes
into account virgin plastic, which are polymers
that have been produced using fossil fuelssuch as crude oil, coal and natural gas. It does
not include plastics made from bio-basedmaterials such as cellulose or bamboo.
•	
Direct relationship between consumption
and waste generation: we assume that
reduced plastic consumption will lead toa decrease in the volume of plastic waste
generated, thereby lowering pollution levels.
•	
Mandatory enforcement of scenarios:
a fundamental underlying assumption in
the model is that the policy interventions
discussed below are mandatorily enforcedby national governments.

Variables and data
Dependent variable• T otal plastic consumption: the sum of
consumption volume (in kilotonnes) of sevenplastic categories (HDPE, LDPE, PET, PS, PVC,
PP and others). The data were sourced from
specialist data providers–Prescient, StrategicIntelligence and Grand View Research.

4•	We obtained historical data for plastics
consumption on an annual basis for 2000-21.
Our model considers data for seven maincategories of polymers, which account fornearly 80% of global plastic consumption.6
Independent variables•	
Retail sales: total annual sales of retailenterprises, excluding cash and carry(includes VAT). This is a demand side variable
that represents the total volume of retail sales
to account for domestic demand that covers
the consumption of most consumer productsthat use plastic as an input commodity.
These data were obtained from The
Economist Intelligence Unit.
• I ndustry value added as a percentage of
GDP: mining, quarrying, manufacturing,
construction and utilities value-added
as percentage of real GDP at factor cost.
This has been used as a proxy for
manufacturing. These data were obtained
from The Economist Intelligence Unit.
•	
Environmental taxes as a percentage of
GDP: a supply side variable that accounts
for the taxes imposed on plastic products
to limit plastic consumption. These data
were obtained from the OECD.
• C
 rude oil price index: a supply side variable
that represents the upstream cost. In thismodel we only consider transitional polymers
derived from crude oil-based feedstock.
These data were obtained from theInternational Monetary Fund (IMF).
•	
Dummy variables: we include dummy
variables to account for country-specific effects.

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

5

Table 1: Variables and data sources
Type

Variable Name

Units

SourceFrequency

Availability

Dependent

Total plastic
consumption

kilotonnes

P&S Intelligence

Annual2000-21

Independent

Industry value
added as % of GDP%

The Economist
Intelligence Unit

Annual2000-21

Environmental
taxes as % of GDP

%

OECD

Annual2000-21Crude oilprice index

Index

IMF

Annual2000-21

Retail sales

US$

The Economist
Intelligence Unit

Annual2000-21

Dummy variables
Country
dummiesCommodities
dummy
Pandemic dummy

We use 18 dummy variables for 19 countries
If year = 2014, commodities dummy = 1
If year ≠ 2014, commodities dummy = 0
If year = 2020, pandemic dummy = 1
If year ≠ 2020, pandemic dummy = 0

Model specifications•	We have consumption data for 19 countries for
2000-21 with the characteristics of a balanced
panel dataset. Consumption for each country
is observed across 21 years, hence we use apanel data, least-squares dummy variable
regression model and include 18 dummy
variables to account for the country-specificindividual effects. We take the US as thereference category for the dummy variables.
•	The estimated model coefficients are used
to generate forecasts for future plastic
consumption. The forecast model generates
a set of estimates that form our baseline
forecast for 2022-50.
•	There was a significant drop in crude oil prices
in 2014. To prevent the steep trend witnessed
during this year being replicated in futureforecasts, we use a dummy variable for that year.

•	Demand for plastic was abnormally low insome countries as a result of the extensive
lockdowns and sudden drop in consumer
demand following the start of the covid-19
pandemic. To prevent this trend being
replicated in future forecasts, we use adummy variable for 2020.
•	The model uses the natural log transformation (logto the base e) of the regressand and one regressor(retail sales). All other regressors (industry as a %of GDP, oil price index and environmental tax as a
% of GDP) are used at their level.
•	The baseline forecast here represents
the expected trend in plastic consumption
up to 2050 in the absence of any policy
interventions to prevent plastic pollution.
For each scenario, we use different levers
to alter the baseline estimates to quantify
their impact on plastic consumption.
© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

6Regression results and interpretation•	The model yields a healthy adjusted R
Squared of 95.58%. The p-values of all
regression coefficients (except the constant)	are significant at the 10% significance level,
hence we reject the null hypothesis of zero
slope coefficient.

The full regression equation is as follows:
Log (Total Plastic consumption) = β1*log (retail sales)) + β2(Industry value add as % of GDP)+ β3(environmental tax as % of GDP) +β4(crude oil price index) + β5(D_commodity) +β6(D_pandemic) + β7(D_Argentina) + β8(D_Australia) + β9(D_Brazil) + β10(D_Canada)+β11(D_China) + β12(D_Germany ) + β13(D_France) + β14(D_UK) + β15(D_India) +β16(D_Indonesia) + β17(D_Italy) + β18(D_Japan) + β19(D_South Korea) + β20(D_Mexico) +β21(D_Russia) + β22(D_Saudi Arabia) + β23(D_Turkey) + β24(D_South Africa) + μi

Figure 1: Regression results( Intercept )
L_ret
en_tx
oil_idx
ind_gdp
cm_d
pd_d
AR_d
AU_d
BR_d
CA_d
CH_d
GE_d
FR_d
UK_d
IN_d
IND_d
IT_d
JP_d
SK_d
ME_d
RU_d
SA_d
TK_d
SAF_d

Estimate

Std . Errort value

Pr ( > 1t | )

0.28
0.67
-0.05
-0.00
0.00
0.00
0.05
-0.07
-0.31
-0.10
-0.04
1.03
-0.24
-0.04
-0.81
-0.38
0.08
-0.05
-0.73
0.18
-0.17
-0.63
0.01
0.25
-0.60

0.40
0.03
0.03
0.00
0.00
0.04
0.04
0.12
0.10
0.08
0.09
0.06
0.08
0.09
0.09
0.09
0.07
0.10
0.07
0.10
0.09
0.09
0.12
0.11
0.12

0.70
24.94
-1.85
-2.79
1.71
0.06
1.20
-0.62
-3.08
-1.26
-0.43
16.74
-3.04
-0.43
-9.33
-4.08
1.16
-0.49
-11.0932e
1.92
-1.98
-7.40
0.10
2.23
-5.10

0.49
< 2e - 16
0.07 .
5.50E-03
0.09
0.96
0.23
0.53
2.24E-03
0.21
0.67< 2e - 16
2.53E-03
0.67< 2e - 16
5. 54e - 05
0.25
0.63
-1.60E+01
0.06
0.05
9.61e - 13
0.92
0.03
5. 50e - 07

Significance codes

***
**

0
0.001
0.01
0.05
0.1

***
**
*
.

**

***
**
***
***

***

***

***

Residual standard error: 0.1849 on 357 degrees of freedom. (17 observations deleted due to missingness).
Multiple R-squared: 0.9586,
Adjusted R-squared: 0.9558
F-statistic: 344.3 on 24 and 357 DF,
p-value: < 2.2e-16

Source: Economist Impact calculations, 2023

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note•	The signs of the model parameters are
consistent with theory:	-	Retail sales: an increase in total annual
sales of retail enterprises implies healthy
demand for packaging for most consumer
goods, which would lead to an increasein the demand for plastics. The positivecoefficient here implies that a 1% increase
in retail sales will translate into a 0.66%
increase in plastic consumption.
-	Industry value-added as a percentage
of GDP: an increase in the contributionof industry value-added to GDP implies
an absolute increase in industrial activity.
A rise in industrial demand would leadto an increase in plastic consumption.
The positive coefficient here is inconformity with this logic. A 1% increasein the contribution of industrial activity
to GDP will increase plastic consumption
by 0.15 kilotonnes.

7-	
Environmental taxes as a percentage
of GDP: an increase in tax on consumption
leads to higher prices for plastic products,
thereby leading to lower demandand hence consumption. A 1% unit
increase in the environmental tax as
a percentage of GDP leads to a 4.7%
decline in plastic consumption.
	-	Crude oil price index: consumption isinversely related with input costs. A risein the price of the key input commodity
here, crude oil, directly leads to an increasein the price and hence a decrease in
consumption of plastic. A 1 unit increasein the crude oil index means an increasein crude oil prices, which leads to a 0.08%
decline in plastic consumption.
•	We use the model parameters to generatein-sample estimates for the dependent
variable. The estimated series has a good
fit with the actual series and the trend
matches well. See chart below:

Figure 2: Model performance: actual values vs model predicted values
271,609247,813

101,608
89,9080
2001
Actual

2006

2011

2016

2021

Predicted© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

Model scenarios
The selection of model scenarios is basedon a literature review, consultations withexperts and negotiators close to the treaty.
Below we outline three selected scenariosthat are under consideration.
1.	A phased ban on problematic SUPPs
	In this scenario, ban rates are the lever tofind out the rate at which we need to ban
SUPPs in order to bend the curve on plastic
consumption. SUPPs account for over 40%
of all plastic produced.7 We estimate SUPPs
as a % of total volume in each of the sevencategories by applying their recycling rates.
To test the impact of a ban, we apply the banrates to this SUPP volume derived above
and deduct the same from the total plastic
consumption of that country. We assume
that bans progressively increase over time,increasing the number of products under
its purview.
	For countries that already have a SUPP ban
in place, we use the existing rates and apply
incremental increases of 10%8 each year,
starting in 2025. For countries that have notyet implemented nationwide bans, we assume
that the UN treaty forces them to implementa ban from 2025. We assume these ban rates
widen in scope each year and hence apply a
0.1% increment for each year after 2025.
2.	A mandatory EPR policy imposed on
industrial consumers
	We evaluate the effectiveness of imposing amandatory EPR policy on the consumptionof plastic packaging by industrial consumers.
Plastic is a valuable resource with myriad
applications. We need to implement policies
that encourage its optimal use instead of the8indiscriminate overuse that currently prevails.
Industrial consumers such as fast-moving
consumer goods (FMCG) companies are large
users of plastic packaging, many of which
can be single use. We evaluate a case where
governments implement a mandatory EPR
policy on industrial consumers (ie, retailers
and brands), wherein they are obligatedto collect the plastic packaging (such as
beverage bottles and shampoo bottles) andsort, clean and return it to polymer producers
for recycling. The industrial consumer bears
the cost of this EPR, which raises the priceof plastic packaging for them. We assume
that they would pass on this increase in input
costs by raising the prices of final goods.
We assume the transmission channel here
to be through the price effect. Since polymer
production generally becomes cheaper withscale, an external shock needs to be applied
to make them costly in production. Based on
historical data, we calculate the price elasticity
of demand9 to calculate the change in quantity
demanded as the result of a price increase.
	Under a mandatory EPR scheme, we use
the price elasticity of demand to calculate
the impact of an increase in the price ofplastic products as a result of a mandatory
EPR policy imposed by a consumer. The
underlying assumption here is that industrial
consumers of plastic packaging, such as
FMCG companies, are responsible for thecollection, sorting and transportation ofwaste (such as plastic bottles) to the polymer
manufacturer for recycling. To meet the costof the EPR rules, they pass on the cost to theend consumer, resulting in higher prices ofconsumer goods that use plastic packaging.
	We use the existing price level data foreach country-resin type combination
until 2030 and use linear extrapolation© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note9

to arrive at 2050 estimates for price growth.
We use the price increment factor per
country-resin combination to convert that
into an impact in volume, applying this directlyon the baseline numbers.

However, the current price only incorporates
the price of production and not the cost of
the negative externalities of producing that
product. Hence, if a tax were imposed tobring up the cost of production to a levelthat reflects the true total cost, it mightlead to a decline in consumption. A tax on
virgin resin could promote action amongproducers by disincentivising the productionof virgin plastic and promoting the use of
more recycled resins in product design.
We use carbon taxes as a proxy to quantify
the outcomes of this scenario.

3. Taxes on virgin resin production
	We evaluate the effectiveness of imposing anenvironmental tax to increase the production
cost to a level that reflects the true cost of
producing a disposable plastic product.
Plastic products are widely used because
they are available at affordable prices.

Table 2: Summary of model results
Plastic consumption (million tonnes)
Baseline

S1

S2

S3

Integrated
approach

2019

261

261

261

261

261

2030

334

327

320

325

304

2040

372

352

357

348

313

2050

451

385

434

409

325

2050:2019

1.73

1.48

1.66

1.57

1.25

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

10

Appendix

Table 1: GDP Data for 19 countries of the G20
Real GDP (US$ at 2010 prices), $ bn
Country

2019

Brazil

2,357.60

Canada1,960.30

China

11,418.90

France2,992.20

Germany

3,969.60

India

2,928.40

Indonesia

1,204.10

Italy2,157.80

Japan6,232.70

Mexico1,308.20

Russia1,895.70

Saudi Arabia

704.52South Africa

481.85South Korea

1,485.20

Turkey1,257.87

United Kingdom

2,975.10

USA18,306.20

World84,375.70

Source: The Economist Intelligence Unit

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note11

End notes
1 “The New Plastics Economy Global Commitment | UNEP.” n.d. UN Environment Programme. Accessed February 16, 2023.
https://www.unep.org/new-plastics-economy-global-commitment.
2 “Executive Summary | Plastic Waste Makers Index.” 2021. The Minderoo Foundation.
https://www.minderoo.org/plastic-waste-makers-index/pwmi-2021/findings/executive-summary/.
3 Please refer to the glossary for the exact definition of consumption used in the context of this research.
4 We refer to the 19 countries in the G20 group. We do not include the EU in these calculations.
5 These 19 countries accounted for an average of 78% of global GDP over 2010-19. Sum of Real GDP in 19 countries = $65,659.4
bn (2019), World GDP = $84,375.7 bn (2019)
Source data: The Economist Intelligence Unit.
6 Based on internal calculations, using data purchased from P&S Intelligence and Grand View Research. The seven categories
are PET, HDPE, LDPE, PS, PP, PVC and others
7 “Rethinking and optimising plastic waste management under COVID-19 pandemic: Policy solutions based on redesign andreduction of single-use plastics and personal protective equipment.” 2020. NCBI.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7324921/.
8 If ban rate in year t = x, ban rate in year t + 1 = 1.1x
9 By running a univariate regression for each country and each polymer type.

© Economist Impact 2023

Peak plastics: bending the consumption curve - Methodology Note

12

While every effort has been taken to verify the accuracy of this information,
Economist Impact cannot accept any responsibility or liability for reliance byany person on this report or any of the information, opinions or conclusions
set out in this report.

© Economist Impact 2023

LONDONGENEVA

The Adelphi, 1-11 John Adam St,
London WC2N 6HT,
United Kingdom
Tel: (44.20) 7576 8000
Fax: (44.20) 7576 8500
Email: london@economist.com

Rue de l’Athénée 32
1206 Geneva
Switzerland
Tel: (41) 22 566 2470
Fax: (41) 22 346 93 47
Email: geneva@economist.com

NEW YORK

DUBAI

750 Third Avenue
5th Floor
New York, NY 10017
United States
Tel: (1.212) 554 0600
Fax: (1.212) 586 1181/2
Email: americas@economist.com

Office 1301a
Aurora Tower
Dubai Media City
Dubai
Tel: (971) 4 433 4202
Fax: (971) 4 438 0224
Email: dubai@economist.com

HONG KONG

SINGAPORE

1301
12 Taikoo Wan Road
Taikoo Shing
Hong Kong
Tel: (852) 2585 3888
Fax: (852) 2802 7638
Email: asia@economist.com

8 Cross Street#23-01 Manulife Tower
Singapore048424
Tel: (65) 6534 5177
Fax: (65) 6534 5077
Email: asia@economist.com