A report released last week by the nonprofit Center for Climate Integrity, or CCI, chronicles a “decades-long campaign of fraud and deception” from Big Oil and the plastics industry to promote recycling as a solution to the plastic pollution crisis. New documents show that industry executives pushed plastics recycling despite knowing since the 1980s that it “cannot be considered a permanent solid waste solution,” and that recycled plastics would never be able to compete economically with virgin material.

Today, the U.S. recycling rate for plastics sits at about 5 or 6 percent. It has never risen above 10 percent.

The report’s authors liken the plastics industry’s recycling campaign to Big Oil’s tactics to convince the public that its products don’t cause climate change. Many companies have been involved in both efforts, since plastics are made from fossil fuels. “The oil industry’s lies are at the heart of the two most catastrophic pollution crises in human history,” Richard Wiles, CCI’s president, said in a statement.

CCI traces industry support for plastics recycling back to the 1980s, when it was proposed as a response to widespread public concern over the material’s proliferation — especially as litter. With the threat of regulation looming large, industry representatives felt they had little choice but “to recycle or be banned.”

Even then, the industry acknowledged major and potentially insurmountable hurdles to plastics recycling. Most significantly, there was no market for recycled plastic — it was too expensive and low-quality to compete with virgin material. One document uncovered by CCI — a 1986 report from the plastics industry trade group the Vinyl Institute — noted that “purity and quality demands set for many applications preclude the use of recycled material.” In the end, the report concluded that recycling “merely prolongs the time until an item is disposed of.”

Plastics and petrochemical company representatives repeatedly shared similar concerns at industry conferences, in meeting notes, and elsewhere: that plastics recycling consumed too much energy, that it would only work for a small fraction of plastic waste, and that a quickly growing supply of virgin materials would “kick the s–t out of” recycled plastic prices, as one official of the now-defunct American Plastics Council wrote in meeting notes obtained by CCI.

Davis Allen, an investigative researcher for CCI and the lead author of the report, said many of the new documents came from a former American Plastics Council staffer. Others came from industry document databases maintained by Columbia University, New York University, and the University of California, San Francisco.

The documents, Allen said, strongly suggest that the plastics and petrochemical industries saw recycling as little more than a way to tame public outrage and ward off anti-plastic legislation. One 1994 document quotes a representative of Eastman Chemical saying that, while plastics recycling might one day become a reality, “it is more likely that we will wake up and realize that we are not going to recycle our way out of the solid waste issue.” Another document — handwritten notes from a meeting between Exxon Chemical and the American Plastics Council — quotes Exxon Chemical’s then-vice president saying that, when it came to recycling plastics, “we are committed to the activities, but not committed to the results.”

Still, trade groups and large petrochemical companies invested heavily in public relations to improve plastics recycling’s image. They touted ambitious goals to increase the recycling rate, and then remained quiet when they failed to meet them, or changed the way they measured their progress. Advertisements “simply repeated the same lies about the viability of plastic recycling,” according to CCI. For example, one 1991 ad in Ladies’ Home Journal claimed that “a bottle can come back as a bottle, over and over again.” Meanwhile, educational materials created for use in schools implied that recycling could assuage students’ guilt over using disposable plastic foodware.

By the mid-1990s, the results seemed to have paid off. Industry polling showed that public opinion on plastics had greatly improved and state-level efforts to ban or restrict plastic production had waned considerably — even though the dismal state of plastics recycling had not significantly improved.

Today, the U.S. recycling rate for plastics sits at about 5 or 6 percent. It has never risen above 10 percent.

Today, most plastic waste gets incinerated or sent to landfills, where it creates hazardous air and water pollution that disproportionately affects low-income communities and communities of color. Meanwhile, environmental advocates say the “myth” of plastics recycling has facilitated the industry’s unmitigated expansion — plastic production has grown by nearly 230 times since 1950. Plastics are expected to drive nearly half of the growth in global oil demand between 2017 and 2050.

CCI isn’t the first group to document the plastics industry’s deceptive communication practices around recycling. A 2020 investigation from NPR and Frontline found ample evidence that the plastics industry and its trade groups promoted plastics recycling despite knowing it was “costly” and “infeasible.” Two former industry executives told the outlets that recycling was used to “advertise our way out of” negative PR.

Since the mid-2010s, a second wave of anti-plastic outrage has spurred the plastics industry and its lobbying groups to again promote the promise of plastics recycling — only this time, they’re pushing so-called “chemical recycling,” which can supposedly melt plastic into its constituent polymers so it can be turned back into new products. Although chemical recycling technologies have existed for decades, most existing facilities — and there are only a few — are still unable to create new plastic products; they mostly turn plastic into chemicals or fossil fuels to be burned.

Lew Freeman, the Society of the Plastics Industry’s former vice president of government affairs, told Grist in an interview last year that there are “serious questions” about the degree to which chemical recycling can ever work. “The industry seems to be doing the same thing it did 30-some-odd years ago,” Freeman said.

Ross Eisenberg, president of America’s Plastic Makers — a subgroup of the petrochemical industry trade organization the American Chemistry Council, which absorbed the American Plastics Council in 2002 — criticized the CCI report as “flawed.” In a statement, he said it “works against our goals to be more sustainable by mischaracterizing the industry and the state of today’s recycling technologies.” Eisenberg did not specifically refute any of the claims made by CCI.

The oil industry’s lies are at the heart of the two most catastrophic pollution crises in human history.

 

– Richard Wiles, president of Center for Climate Integrity

In response to Grist’s request for comment, the Vinyl Institute did not address any of the report’s claims but said it was “committed to increasing” the amount of polyvinyl chloride — a kind of plastic — that gets recycled each year. Eastman Chemical and Exxon Mobil did not respond to Grist’s requests for comment in time for publication.

CCI hopes that its report “lays the foundation” for more ambitious legal challenges against the plastics and petrochemical industries. According to Alyssa Johl, CCI’s vice president of legal and general counsel, most lawsuits so far have targeted the makers of specific products — for instance, Keurig, which misleadingly placed the “chasing arrows” recycling symbol on coffee pods that couldn’t actually be recycled.

These lawsuits “don’t go far enough,” Johl said. In her view, future cases should target the whole industry — including the fossil fuel producers themselves and their trade organizations, highlighting the integral role they played in promoting recycling as a solution to the plastic pollution crisis. Such lawsuits are mostly likely to be brought by cities or state attorneys general, Johl said, and they may invoke public nuisance, consumer fraud, racketeering, or conspiracy laws — similar to successful legal challenges that have been brought against the tobacco and opioid industries.

The most promising push so far has come from California Attorney General Rob Bonta, who in 2022 began investigating fossil fuel and chemical companies for their role in what he called an “aggressive campaign to deceive the public” about the viability of plastics recycling. That investigation is ongoing.

This article originally appeared in Grist. 

Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at Grist.org

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Iberdrola of Spain, Enel of Italy, Ørsted of Denmark and America’s NextEra Energy all have market values that are moving into, and sometimes beyond, the oil majors’ territory and have shareholder returns that are absolutely blowing them away. Enel, Europe’s largest utility, had a stock market value equivalent to US$110 billion in the late autumn after a 23% rise in the past year. BP’s value was US$83 billion, after losing about 40% of its value.

Italy’s ERG is also catching the new-energy wave, proving that high growth and value creation are not limited to the biggest names in the industry. Like some of its big-name rivals, the Italian company embarked on a black-to-green transformation out of necessity, not out of the goodness of its heart, but soon learned that cleaning up its act could produce compelling shareholder returns.

ERG began life as an oil refining and oil products company just before the Second World War and stayed that way until 2008, when it started to push its carbon assets out the door and moved into wind power, as Ørsted did when it shed its oil and coal businesses on its way to becoming the world’s top offshore wind-power company. Since then, ERG’s shares have gone from €7 to €25. “Now I’m fighting against climate change, and it’s paying off well,” says Luca Bettonte, the dapper accountant and auditor who became ERG’s chief executive officer in 2012.

ERG knows it will never be a “new energy major.” Its market value is €3.8 billion and it has only a small following on the Italian stock exchange in Milan because the Garrone family – the “G” in ERG – owns almost two-thirds of the shares and is giving no signs that it would relinquish control. But the company is ambitious. It’s already the top wind-power company in Italy and recently broke into the top 10 in Europe, where its expansion plans are focused.

Reaching the top five is not out of the question, and if President Joe Biden makes good on his commitment to propel the United States into clean energy, trans-Atlantic investments “might be an opportunity,” Bettonte says.
Until 2017, ERG and the French oil giant Total jointly owned TotalErg, the fourth-largest fuel marketer in Italy, with some 2,600 service stations. The collection had made ERG a brand name among motorists. Today, ERG has no retail presence – it’s a B2B company – and most Italians have no idea what it does to make money.

ERG was one of the family-owned companies that helped Italy get back into business after the Second World War, and it thrived when the country’s “economic miracle” was in full swing in the 1950s and 1960s, the era when Italy scrambled up the value chain to become an industrial and design powerhouse that would produce some of the world’s best-known brands, including Ferrari, Vespa, Alfa Romeo and Maserati.

Edoardo Garrone, ERG’s founder, was an industrialist at heart and a product of his home city, Genoa, the gritty seaport, oil terminal and transportation hub on Italy’s northwest coast. Best-known as the birthplace of Christopher Columbus, Genoa would emerge as a key player in Italy’s industrial revolution. Garrone realized that petroleum was necessary to lubricate Italy’s wealth-creation machine and launched a small oil, tar and chemicals business in 1938 but made little progress before the war started a year later. After the war, which left much of Genoa in ruins, he opened a brick factory to help Italy’s reconstruction effort. In 1947, when demand for oil products was taking off, he built the San Quirico refinery in Genoa.

In the early 1950s, he created a fuel distribution and retail business under the ERG name, which stood for Edoardo Raffinerie Garrone – “raffinerie” is Italian for refinery. BP, then British Petroleum, became the refinery’s main oil supplier in 1958 and would become a minority investor in ERG. Five years later, Edoardo died of a heart attack on a fishing trip in Norway at age 57. His son Riccardo was pushed into action, becoming chairman at age 27. The young man expanded the company, and ERG joined an investment group, called ISAB, that built an enormous refinery in southeast Sicily in the early 1970s (ERG would take control of the refinery in 1985).

When the ISAB refinery opened in 1975, the energy markets were in crisis. The 1973/74 Arab oil embargo had sent crude oil prices up fourfold, and oil-importing countries went into recession. Demand for oil products sank, and price volatility became the norm – a fatal recipe for low-margin European refineries. In Italy, a dozen refineries, including ERG’s original plant in Genoa, closed between 1975 and 1989, by which time the Garrone family had realized there was no future in being a one-trick company; ERG had to diversify to survive.

The first diversification move came in 1993, when ISAB built an electricity plant next to its Sicilian refinery. The power was generated by burning the gases extracted from the refinery’s heavy-oil products. The plant opened in 2000, and the technology proved to be a great success. At that point, it was still unthinkable for the Garrones that ERG would be anything but a hydrocarbon company – old habits die hard. But the first decade of the 2000s rocked the company yet again, and new thinking emerged.

Bettonte, who joined the company in 2007 as chief financial officer, says the Garrones were slowly taking the view that their precious Sicilian refinery was becoming uncompetitive and that the industry’s rather violent price swings eliminated any hope of financial stability.

Demand growth for refined products was shifting to soaring Asian economies. The Saudis were building dazzling new refineries, as were Asian nations, with superior technology. At the same time, the world was realizing that the science behind climate change was real. In 2004, ERG made an opportunistic move into Italian wind energy, through a partnership with a Spanish company. Two years later, it made a big wind investment through the purchase of Milan-listed EnerTAD. A year after that, EnerTAD entered the French wind market. ERG’s black-to-green transformation was in full swing.

In one of the best-timed deals of the decade, ERG sold 49% of the Sicilian refinery to Russian oil giant Lukoil just before the 2008 financial crisis. Suddenly, ERG was swimming in cash and had to decide where to invest it. On cue, the investment bankers came knocking. One of them suggested that ERG pump its new fortune into healthcare; another suggested shipping. But ERG by then was smitten with clean energy. “We had a huge amount of money and had identified a fast-growing business – renewables,” Bettonte says.

The problem was selling the idea to ERG’s managers and employees, many of whom had spent decades building an oil company. “There was a lot of resistance from their side,” he says. “They were worried because they didn’t know about the renewable-energy business. They thought we would transform the company into a financial holding company that would invest in infrastructure. They thought we would cease being an industrial company.”
But the Garrone family – by then control had passed to Edoardo’s grandson and his older brother Edoardo, who is now chairman – backed the transformation, as did the other shareholders. ERG would be a renewable-energy company, dominated by wind power, with a strong presence in hydro and solar power too. And it would not act merely as passive investor in portfolios of clean energy – it would build. “I can’t say we made the decision because we wanted to save the world,” Bettonte says. “But the idea to go green played a part in it.”

ERG’s transformation has been remarkable. In 2013, the year it sold its final piece of equity in the refinery to Lukoil, the company emerged as Italy’s biggest wind-power player with the purchase of GDF Suez’s Italian wind farms. A rapid-fire series of acquisitions saw its onshore wind business blow across Europe, where it now has a presence in the U.K., Germany, France, Poland, Romania and Bulgaria. At last count, ERG had almost 2,000 megawatts of wind capacity in Italy and elsewhere in Europe, with another 280 megawatts under construction (as a rule of thumb, 1 megawatt can power 650 homes). It also had a big hydropower business in Italy, is pushing into solar power and has an enormous electricity plant in Sicily fuelled by natural gas. It’s the last vestige of its hydrocarbon heritage but one that, for now, is essential to ERG’s diversification strategy.

In 2008, only 3% of its earnings before interest, taxes, depreciation and amortization (EBITDA, essentially operating earnings) came from renewable power. By 2014, the figure was 73%. In 2019, 87% of its reported €496 million in EBITDA came from renewables. Investors have cheered the overhaul. From the end of 2007 through September 2020, ERG’s total shareholder return, including dividends, was 250%, greatly outpacing the FTSE Italia All-Share Index. Of the nine analysts who follow the company, there is only one “sell” rating, from Citigroup, which fears that the relatively high exposure to “short-lived” electricity subsidies makes ERG shares vulnerable.

Bettonte says ERG’s goal is to be the “bigger among the smallers.” More growth in Italy will be difficult, though the company is “repowering” its wind sites – replacing old turbines with much bigger and more efficient ones, an exercise that will produce four times as much electricity from half the number of machines. The growth will come elsewhere in Europe, and even that may be difficult, since overall electricity demand is not rising and coal-burning electricity plants are hanging on longer than expected in Germany, Poland and other countries. Getting permits for new renewable-energy projects is also a hassle. “Hydrocarbon plants are like car plants – they are hard to shut down,” he says.

But ERG knows it made the right decision to go green and also knows that renewable energy’s rise is irreversible as climate change is factored into every energy decision. “We are strongly committed to grow in this industry,” Bettonte says. “I am proud that we have become a climate-change fighter.”

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