Chengdu Carbon Peak Pilot Project: Integrating Recycled Plastics into the Low Carbon Chain

Recently, the Chengdu Municipal People's Government issued the "Implementation Plan for the National Carbon Peak Pilot (Chengdu)" (hereinafter referred to as the "Plan"), launching the top-level design for the construction of national carbon peak pilot cities. The document proposes specific goals and paths around eight aspects, including energy, industry, urban and rural construction, transportation, and resource recycling. Among them, the content related to "resource conservation and intensive recycling", "waste material recycling system", "product carbon footprint management", etc. is highly relevant to the plastic recycling industry and is regarded by the industry as an important policy signal for the development of the industry in the coming years.

1.Overall objective

The Plan proposes that by 2030, Chengdu city aims to achieve a sustained decrease in energy consumption per unit of GDP and carbon dioxide emissions per unit of GDP. The competitiveness of green and low-carbon industries will be among the top in the country, and the policy system for green, low-carbon, and circular development will be basically sound, with the goal of peaking carbon emissions on schedule.

Under this framework, the recycling of plastics and other bulk materials is no longer just seen as a means of "reducing waste", but has been included as an important component of urban green and low-carbon transformation and carbon emission control, especially in chapters such as "zero waste city", "waste material recycling system", and "green manufacturing system", which provide clearer institutional space for plastic recycling.

Park City Under Snow Mountain "- Aerial View of Chengdu, Photo by Jianan

2.'Waste free city' and solid waste utilization:Expanding sources for recycled plastics

In the section of "Strengthening Resource Conservation, Intensive and Circular Utilization", the "Plan" clearly proposes to deepen the construction of "waste free cities", reduce solid waste at the source and utilize resources, standardize construction waste management, promote agricultural green production methods, and set multiple quantitative goals:

• By 2030, the utilization rate of urban household waste resources will increase to 87%;
• The comprehensive utilization rate of general industrial solid waste is higher than 96%;
• The comprehensive utilization rate of straw is higher than 98%;
• The utilization rate of construction waste resources has reached 55%.

At the same time, the "Plan" proposes to upgrade the Chang'an Vein Industrial Park National Resource Recycling Base, implement national standardization pilot projects for low-carbon parks, and promote the "Ten Million, Ten Thousand, and Ten Thousand Waste Free Cells" project, forming 22 typical demonstration types of "waste free urban cells". This will provide a more intensive industrial agglomeration platform for various renewable resource processing and treatment enterprises, including waste plastics, and promote the collaborative layout of recycling, dismantling, and reuse enterprises in the park.

3.Building a recycling system for waste materials: incorporating recycled plastics into key layouts

The Plan proposes to accelerate the construction of key cities in the national waste material recycling system, improve the waste material recycling network, promote the integration of garbage classification and renewable resources, and clearly require:

• Cultivate and integrate backbone enterprises that cover the recycling, dismantling, processing, logistics, sales and other aspects of waste materials;
• Accelerate the recycling and utilization of waste materials such as household appliances and metals, as well as new types of waste such as retired power batteries;
• By the end of 2030, the total amount of recycled waste materials will exceed 8 million tons, and the recycling rate of 9 major renewable resources will reach 86%.

Although the document does not separately list "waste plastics", from the scope of the expressions "waste materials" and "renewable resources", it is clear that waste plastics belong to one of the important categories. With the promotion of the integration of the two networks and the improvement of the recycling network:

• Waste plastics are expected to be more systematically incorporated into the urban renewable resource system, reducing the "scattered, small, and chaotic" recycling mode;
• The cultivation of backbone enterprises will promote the full chain integration of recycling sorting regeneration products, improve the quality and stable supply capacity of recycled plastic products;
• The joint dismantling of waste household appliances and other fields is expected to amplify the economic benefits of collaborative recycling of plastics, metals, glass, motors, and other materials.

This will be a window for structural adjustment and concentration improvement for the recycled plastic industry, which is still highly dependent on retail recycling and has significant quality fluctuations.

4.Green Buildings and Recyclable Building Materials: Expanding the Application Scenarios of Recycled Plastics

In terms of green development in urban and rural construction, the Plan proposes to actively promote the application of green building materials in government procurement projects, with a focus on promoting:

• Recyclable building materials
• Green component parts
• Green decoration materials

Water saving and energy-saving building materials, etc

And propose that by 2030:

• The proportion of star rated green buildings in newly-built buildings is greater than 60%;
• Building electricity accounts for over 65% of building energy consumption;
• The newly constructed public building meets the energy-saving requirement of 78%.

For recycled plastic companies, this means:

Recycled plastic profiles, pipes, insulation materials, waterproofing membranes, decorative panels, etc. have the opportunity to enter public works and large-scale construction projects through the green building materials standard system;

With the increasing government's green procurement efforts, recycled plastic building materials products with environmental performance and carbon reduction advantages are expected to gain clearer market entry and policy endorsement.

5.Product carbon footprint and labeling certification: The 'low-carbon advantage' of recycled plastics is expected to be quantified

The Plan proposes in the section of "Exploring the Construction of Product Carbon Footprint Management System":

• Establish a Chengdu product carbon footprint factor database;
• Support local enterprises and institutions to lead or participate in the research and development of carbon footprint accounting rules and standards for advantageous industrial chain products;
• By 2030, develop or revise more than 10 rules and standards related to carbon footprint accounting;
• Establish a public service platform for product carbon footprint certification, create carbon footprint certification for photovoltaic and electronic appliances (new displays) products with urban characteristics, and promote international mutual recognition of certification rules.

For the plastic recycling industry, this system has multiple meanings:

1. The difference in carbon emissions between recycled plastics and virgin plastics is expected to be quantified and visualized through standardized accounting methods and carbon footprint labeling, enhancing the low-carbon value of recycled plastics;
2. When dealing with domestic and international green trade barriers, tourism brands and terminal products can optimize their overall product carbon footprint by using low-carbon and recycled materials, creating higher value-added demand for recycled plastic materials;
3. Beneficial for recycling enterprises to participate in green supply chain management, achieving a shift from "selling raw materials" to "providing low-carbon solutions".
    

6.Digitization and 'Carbon Benefiting Tianfu': Promoting Plastic Enterprises to Incorporate Fine Carbon Management

In terms of digital empowerment of carbon governance, the 'Plan' proposes:

• Establish the Chengdu Carbon Peak and Carbon Neutrality Standard Information Database;
• Improve the functions of the energy digitalization platform to ensure the safe operation of the power grid;
• Support the construction of energy and carbon management platforms in parks that meet the conditions, covering major energy consuming enterprises, and enhancing the monitoring and allocation capabilities of energy load.

At the same time, it is proposed to accelerate the construction of the "Carbon Benefit Tianfu" characteristic carbon inclusive mechanism, using public carbon emission reduction points rewards and project carbon emission reduction development and operation as the path to guide low-carbon consumption and low-carbon living, and encourage enterprises in Chengdu to increase their procurement and application of products with lower carbon footprints.
 

7.Finance, Taxation, and Green Finance: Recycled Plastic Projects May Obtain More Financing Tools

In terms of fiscal, tax and financial policies, the Plan proposes:

• Vigorously develop green credit services and support financial institutions to innovate carbon emission reduction linked loans;
• Encourage green credit funds to support projects such as green infrastructure, green industrial parks, green buildings, energy-saving renovations, and energy transformation;
• Support eligible green enterprises to carry out direct financing, explore the issuance of carbon neutral bonds, climate bonds, transition bonds, etc;
• Implement tax incentives in areas such as energy conservation, environmental protection, and new energy, and strictly enforce tiered electricity and gas prices.

For recycled plastic enterprises and plastic recycling park projects that meet green standards, it means that capital costs can be reduced through green loans, green bonds, and other means, alleviating the pressure of short-term investment not matching long-term returns; Projects with plastic recycling, recycling processing, green building materials, and low-carbon packaging as their core are more easily included in various green project pools, improving financing accessibility; At the same time, the tiered energy pricing policy also forces enterprises to carry out energy-saving renovations and equipment upgrades, and improve the energy efficiency level of the recycling process.

8.Industry opportunities and challenges coexist: from "waste reduction" to "carbon governance participants"

Overall, the 'Plan' has shifted the plastic recycling industry from its traditional role of 'waste disposal' to an important participant in carbon reduction and resource efficiency improvement.

The opportunities are mainly reflected in:

• More stable and standardized sources of plastic waste: garbage classification, integration of the two networks, and construction of waste free cities will improve the basic conditions of the recycling system;
• More extensive downstream application scenarios: green building materials, green supply chains, and low-carbon product demand open up new markets for recycled plastics;
• More diverse policies and financial tools, such as green loans, green bonds, and tax incentives, provide support for enterprises to upgrade and expand their production;
• A clearer low-carbon value recognition path: product carbon footprint accounting and labeling can help quantify the emission reduction contribution of recycled plastics.

At the same time, the industry also faces certain challenges:

• Need to meet higher environmental compliance and carbon emission management requirements, increasing enterprise management costs;
• The traditional small-scale and extensive recycling system will be squeezed, industry integration will accelerate, and competition among enterprises will intensify;
• Raise higher requirements for the stability, traceability, and compliance with standards of recycled product quality.

Under the overall framework of the construction of carbon peak pilot cities, the plastic recycling industry is moving from the periphery to the forefront: it is not only an important lever for reducing solid waste, but also an important part of the green supply chain and low-carbon product system. For enterprises involved, how to combine "waste reduction," "carbon reduction," and "value-added" may become a key issue for future development.

(Source: Chengdu Municipal Government)