Can Blockchain Fix the Ocean Plastic Problem?

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By Adam Allington

In the ocean between Hawaii and California, some 87,000 tons of plastic and other debris float in a swelling oceanic trash dump.

It’s called the “Great Pacific Garbage Patch,” and it’s the most visible feature of the 8 million tons of plastic waste scientists estimate enter the oceans from land every year.

Now, a number of companies are trying to cut the problem off at the source, using blockchain to divert that plastic—before it ends up as garbage on the high seas.

“Our goal is to be the largest recycling company without assets. We want to be the Airbnb of recycling,” said Shaun Frankson, the co-founder and chief digital strategist for Plastic Bank, a Vancouver, British Columbia-based startup trying to rid the oceans of plastic waste.

Frankson told Bloomberg Environment that about 80 percent of ocean plastic originates from developing countries with little to no waste management infrastructure.

Working in partnership with IBM, Plastic Bank designed a blockchain-based app that functions as an electronic ledger, allowing people to collect plastic bottles in exchange for digital tokens that can be exchanged for goods such as food, water, school tuition, or cash.

Collector-First Mentality

Plastic Bank is currently on the ground in Haiti, the Philippines, and Brazil and plans to expand into Indonesia by the end of the year.

Basically, collectors are paid to pluck plastic from beaches and unregulated dump sites. That material, called “social plastic,” is then sold to a global network of companies.

But unlike a straight commodities broker, Frankson says, Plastic Bank is able to pay an above-market rate to incentivize participation in the program.

“Instead of making maybe $1 a day, they can now make $5 or $7,” he said. “It’s a collector-first mentality, not supply chain first.”

“It makes a big difference in the quality of people’s lives, the communities where they live, and keeps a lot of plastic out of the ocean.”

Likewise, thanks to blockchain’s secure payments function, Frankson said, people who typically don’t have bank accounts can safely store their income on the recycling app, and then spend that income as they see fit.

Growing Demand for Social Plastic

A rapidly growing number of companies, including some major global brands, are exploiting the heightened focus on plastic pollution as a chance to burnish their environmental credentials by selling products sourced from recycled materials.

Last year German sportswear giant Adidas AG sold more than a million shoes made out of ocean plastic, according to information provided to Bloomberg Environment. Each pair of shoes prevents the equivalent of roughly 11 plastic bottles from entering the ocean, the company said.

What started as a program using recycled ocean plastic in shoes has since expanded into sporting apparel, including soccer jerseys, currently being worn by a number of teams playing in the World Cup in Russia.

Plastic Bank plans to deliver some 44 million pounds of social plastic, with contracts for another 220 million going to companies including British retailer Marks & Spencer Group Plc, Royal Dutch Shell Plc, and Henkel AG.

“Our experts in packaging development are currently evaluating the possibility of integrating social plastic into selected packaging for our laundry, home care, and beauty products,” said Rabea Laakmann, a spokesperson for Henkel, a major German chemical and consumer goods manufacturer, said.

Laakmann told Bloomberg Environment that the company is in the process of working to establish a reliable supply chain from Haiti to mature markets in Europe and North America.

And while the company expects incorporating social plastic to result in increased packaging coasts over virgin plastic, “Those costs won’t be passed on to the consumer,” Laakmann said. “We expect the first test results and pilots in the second half of this year.”

Market vs. Policy Debate

Environmentalists are increasingly divided over whether these types of market-based approaches to pollution problems work better than command and control policies that limit or ban certain plastics altogether.

For instance, while demand for recycled polyethylene terephthalate (PET), commonly used in plastic bottles, is quite strong, the same cannot be said for “mixed plastics,” a term that covers all non-bottle plastic films and packaging.

“Too much low-value material is going into these developing markets in the first place,” said Nicholas Mallos, director of the Ocean Conservancy’s Trash Free Seas Program.

“Things like plastic bags, films, wrappers, simply do not have any value. Even where collection opportunities exist, the end markets just aren’t there,” he told Bloomberg Environment.

“However, technology platforms, whether they’re based on blockchain or something else, do send important signals about opportunities for entrepreneurship.”

Others point out that even bans don’t often work as well as policymakers intend.

“Appealing to people’s better natures is good. Paying them is often much better,” said Gernot Wagner, a lecturer on environmental science and public policy at Harvard University.

“Incentives work, it’s as simple as that. Paying people to recycle surely motivates them to do so.”

Challenges in Building Up Supply Chains

While many companies claim to be interested in recycled plastics, the realities on the factory floor are often more complex.

“Virgin PET is purer and has performance specifications that can be precisely determined, whereas recycled PET is always a bit of a guessing game on purity and performance,” said Jeff Morris, an economist with Sound Resource Management, an environmental consultancy specializing in product life-cycle analysis.

Plastics for Change is a technology company based in India trying to remove that variability from the recycling sector.

“We have a small army of field coordinators, working with scrap shops and wholesalers to stabilize the price and de-risk the supply chain,” said Andrew Almack, the founder of Plastics for Change.

By using proprietary technology together with strictly enforced quality standards, Almack says the company has been able to find more buyers, which has brought consistency to the market.

“If you’re a waste picker in India today, the biggest problem is price volatility, and not knowing how much you’ll be paid for your work.”

By using a mobile payment system, instead of waiting for days or weeks for the wholesaler to get paid and he or she can pay the collectors, payments are now handled instantly, which increases collector participation.

The company charges a service fee in exchange for access to the supplier network. While not using blockchain specifically, Almack says Plastic for Change is still using technology as a way to create a kind of infrastructure for processing waste.

“For us, the technology is more about creating operating procedures, which then builds trust across the system,” he said.

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