No global fight against plastic waste is to be expected yet

7 august 2019

The central topic of the Analytical Center's new power bulletin is the ongoing fight against plastic waste Ecologists have been worrying about their accumulation for a long time, and the reduction in the use of plastic packaging is welcome. However, the authors of the bulletin noted another effect of the change in policy concerning plastic: it will become another factor - so far, comparatively small - in the global trend of gradual reduction of the demand for oil and gas in the future.

Experts write that developing countries and Russia are interested in the development of the petrochemical industry, while developed countries are discussing prohibitions and reduction of the use of its products. The overall global demand for petrochemicals is growing: developing countries need them to meet the needs of industrial development. And, as long as there is no global agreement on prohibition of plastics, the remaining commercial opportunities can be used.

The bulletin also mentions that a tender and selection of aggregator companies for management of electric power demand is rational step forward considering the actual situation in Russia.  With good organization and sufficiently high compensation for lowering power takeoff during consumption peaks, this may cut potential costs for peak capacity. According to experts, such experiments may become a good platform for the expansion of digitalization of power supply, power saving and long-term investments.

Talking about the decrease in prices for gas in Europe during the first half of 2019, analysts believe it was related to the increase of offer in the LNG market, reduction of the "Asian premium", growth of the role of renewable energy sources. The warm winter in Europe and the competition between Russian pipeline gas and American LNG also affect the prices. A side effect is the high commercial stability of gas-fired power generation against the advent of renewable energy sources. In developing countries this could encourage coal displacement, although this is not an easy option, due to infrastructural limitations. In the next couple of years no significant growth in the prices is expected, so the suspense related to the prospects of gas in the USA and in Europe still depends on non-market (political) factors.

You can find more details in the bulletin "Campaign against plastic: risks for the oil industry".

Other bulletins on power are available here.