Bright ideas are great - but you need sales and profits too

by Tom Bulford, editor of Red Hot Penny Shares, April 2008

Tom Bulford

The great and ceaseless debate upon the future of the environment has homed in on one small and humble staple of every day life, the plastic carrier bag. Who would have thought that this insignificant but useful object could attract such contempt? Now it is blamed for littering the countryside, wasting precious natural resources, harming wildlife and outliving its usefulness by a thousand years. Marks & Spencer has delivered its own sentence by promising to charge 5p for it. And in a budget devoid of anything of real interest the headlines were grabbed by Alastair Darling's promise to impose a charge on single-use carrier bags '... if we have not seen sufficient progress on a voluntary basis.'

No less than 13bn billion plastic bags are given out free to UK shoppers every year, and with nobody having a good word to say for them you would think it should be the easiest thing in the world to simply ban them and return to the old days when nobody went shopping without a rather nice looking raffia basket. And yet, as I have found with every environmental debate, the deeper I delve the more complicated the whole matter becomes. Let me try to explain.

There are many good reasons why we use plastic bags, starting with the raw material. Although plastic is derived from a depleting fossil fuel it is actually made from naptha, a by-product of oil production that would otherwise simply be flared off into the atmosphere. The alternative is to use a 'natural' renewable material such as wood, cotton or a starch derived from, for instance, corn or potatoes. Immediately, you can see the first argument in favour of plastic. Nobody wants to chop down trees. Nobody wants to use a food crop to make carrier bags. Nobody wants to devote land that could be producing food to the cultivation of crops used for some other purpose.

Next, we come to the manufacture and distribution of carrier bags. Paper bags score particularly badly here. The production of paper bags uses 300% more energy than plastic, uses huge amounts of another increasingly scarce and valuable resource, water, and creates unpleasant organic waste. Paper is harder to recycle than plastic and is very bulky. A stack of one thousand new plastic carrier bags is just two inches high, but a stack of one thousand paper bags is two feet high. So it would take many more trucks to transport paper bags to the retailers, with all that entails for road congestion and pollution.

Hydro-biodegradable plastics - that is plastics made from starch - have problems of their own. For a start they are often, in fact, a mixture of starch and oil-based raw material, and the transformation of the former into a type of plastic involves the burning of fuel and consequent release of greenhouse gases. And once produced hydro-biodegradable plastic bags do not have the strength of conventional plastic bags.

Next, we have the use of carrier bags and their eventual disposal. Plastic bags last almost forever for the simple reason that they are very strong and durable. This means that they can be used several times over, although this depends upon another unknown variable in the whole debate, that of human behaviour. Can we be persuaded to re-use carrier bags and can we remember to take them with us whenever we go to the supermarket?

Will a charge of 5p a time cause us to immediately ascribe a value to our carrier bags and keep hold of them rather than chucking them away?

For all their retro appeal, and the fact that they are used by the likes of Starbucks, nobody seems to seriously believe that paper bags are the answer. But there are strong lobbies for two innovative types of plastic bag. One is the starch-based hydro-degradable that I have described above. The second is a type called oxo-biodegradable. The latter is being pushed hard by Symphony Environmental Technologies, an AIM quoted company that you may remember previously featured in RHPS under its old name of Symphony Plastic Technologies.

The key to oxo-biodegradable plastic is the addition of a small amount of a 'pro-degradant additive,' (a metal compound containing manganese, iron, cobalt or nickel) during the manufacturing process. This breaks down the molecular structure of the polymer, allowing it to eventually be consumed by micro-organisms, leaving a residue of CO2, water and humus. Oxo-biodegradable plastic has a number of advantages. It does not require any alteration to the basic manufacturing process. It is cheap. And by varying the addition of the pro-degradant the plastic can be timed to degrade after a set time. A year ago the UK's Periodical Publishers Association recommended to all its members that oxo-biodegradable film should be used for wrapping newspapers and magazines, and retailers such as the Co-op also use bags made from this material.

Oxo-biodegradable plastic bags can be recycled, assuming of course that they can be separated from the rest of the waste stream. Hydro-biodegradable plastic, on the other hand, should not be recycled with other polymers - but this requires refuse collectors to distinguish between the two. But the need to recycle hydro-biodegradable bags is lower because, being basically made from some form of plant, they are compostable.

Last year the city of San Francisco banned traditional plastic bags in favour of paper or compostable plastic. But a newsletter called the Use-Less-Stuff Report has claimed that owing to an absence of water, light and oxygen, compostable plastic does not in fact degrade in landfills any faster than conventional plastic. Neither does paper - and to prove its point the report showed a piece of newspaper that had been buried in an Arizona landfill for three decades without showing much sign of deterioration. So, it concluded, this type of material would have to be transported to specialist composting facilities, with all the extra cost to the environment that this implies. And the problem does not end there because even when it is finally composting, hydro-biodegradable plastic emits methane which is a potent cause of global warming. But then again - as our Red Hot share Alkane Energy has demonstrated - it is possible to capture methane and convert it to electricity.

The arguments seem to go on forever. And where millions of pounds worth of business is involved, pressure groups inevitably throw all sorts of arguments into the mix. For instance: '100,000 marine animals die every year from plastic entanglement.' Who has counted? For instance: 'A typical cotton bag is made in a third world factory where only 10% of workers have access to a toilet at work.' Do we conclude that if we stopped using cotton carrier bags then these workers would suddenly have access to a loo? And here is something else that I am sure never occurred to my grandmother as she lugged her raw meat and vegetables back from the market: 'Long-term re-usable shopping bags are not the answer... they are not hygienic unless cleaned after each use.'

Instinctively it feels wrong to use plastic bags. But those who have really studied the matter seem to think that they are in fact the best alternative - so long as we learn to use them more than once and capture them for recycling. I don't know. But my point is that environmental issues are always far more complicated than they at first appear, and lead one down avenues which seem to have no end.

The stock market is full of small companies that are trying to cash in on our desire to save the planet. They offer ways to improve energy efficiency, to cut waste, to clean the air and the earth. But my guess is that in aggregate they have not yet made a good return for investors. So we need to tread very carefully in this area, and try to invest in companies which do not only have a bright idea but also a real prospect of sales and profits.

Tom Bulford

This article reproduced from Red Hot Penny Shares, April 2008, with the permission of the author and publisher, Fleet Street Publications.