Compostable Plastic Market

Market Overview

The global compostable plastic market size was valued at USD 1.50 billion in 2022. It is projected to reach USD 5.51 billion by 2031, growing at a CAGR of 15.5% during the forecast period (2023–2031).

Packaging materials have long been primarily made of plastic. However, since synthetic polymers can't break down naturally, this has affected the environment and people's health. Sustainability is currently in style all over the world. Utilizing sustainable packaging is one way to promote sustainable living. An environmentally friendly substitute for plastic is packaging material made of compostable plastic. PHA, PLA, PBS, PBAT, and starch blends are plastic packaging materials that can be composted. With one exception—these materials are entirely compostable—these compostable polymers mimic the beneficial characteristics of conventional plastic, such as barrier properties, durability, shelf stability, etc. Due to high price issues, PHA, one of the primary components for compostable plastic types, has not yet been commercialized on a large scale. Several manufacturers are currently choosing various strategies to reduce the price of PHA and sustain ongoing demand. Only 15 to 20 manufacturers are currently active in this market, and they primarily handle the initial raw material processing themselves. The production capacities of these companies are changing quickly due to the high demand for compostable plastic, and similar trends are anticipated throughout the forecast period.

Market Dynamics

What Are The Primary Factors Driving The Market For Compostable Plastic?

Environmentally Friendly Practices And A Rise In Plastics Use By Consumers

Carbon footprints are reduced by 42% when using compostable plastic. Leading businesses like Coca-Cola, Nestle, Nike, and Ford are showing interest in producing and using compostable plastic materials across various applications due to these cutting-edge technical characteristics and functionalities. The adoption of compostable plastic materials is driven by a rise in consumer awareness of sustainable products linked to pressing environmental issues, such as global warming. Users increasingly favor bioplastics in various industries, including catering, packaging, agriculture, and automotive. Plastics that can be composted are appropriate for use in organic farming. Farmers in horticulture and agriculture use mulching films. They use fertilizer rods and plant pots, breaking down on the earth’s surface. Since compostable plastic packaging can break down alongside food, consumers prefer it to synthetic plastic packaging. Compostable plastic is favored for use and has become one of the primary growth drivers in this market due to factors like high biodegradability, zero toxicity, environmental friendliness, and direct replacement for conventional plastic.

High Demand For Compostable Plastic In A Food Packaging Application

More than 130 million tons of the 400 million tons of plastic produced annually are used for plastic packaging. Additionally, plastic makes up about 52% of all consumer packaging worldwide. One of the popular plastics used in food and beverage packaging is PET. Although these plastics are widely used, they are not environmentally friendly and do not degrade. This plastic is being replaced by plastic that decomposes more efficiently, is less harmful to the environment, and has fewer toxic effects. Due to the global ban on single-use plastic, the demand for compostable plastic is increasing. Compostable plastics use biomass residues to create various packaging items, including bottles, loose-fill, cups, pots, bowls, flexible films, And More.

What Are The Main Factors That Are Limiting The Market For Compostable Plastic?

High Cost Of Plastic

One of the main problems with the global plastic market is the high cost of compostable goods. Compostable goods cost twice as much as equivalent products made of traditional petroleum plastics. High R&D costs primarily cause this, as high construction costs for polymer plants, high raw material costs, and small production volumes. The manufacturers are investing significant money in improving R&D to increase production efficiency. With the increased petroleum prices, some biodegradable plastic resins are anticipated to reach price parity with traditional plastics. Compostable resin is more expensive than conventional plastic resin, typically costing around $1.2/Kg. High resin prices are also anticipated to pose a challenge to the expansion of the market as a whole.

What Are The Future Prospects Of Compostable Plastic?

A Rise In CSR Activities And Decreasing Dependence On Petroleum Resource

Companies are turning to sustainable and environmentally friendly alternatives as consumer environmental concerns increase to build and strengthen their brand image. For instance, top businesses are concentrating on using bio-based PLA, PSA, and other bottles for beverage packaging, like Coca-Cola and PepsiCo. On the other hand, a significant factor limiting the industry's growth is the high cost of bioplastics. This problem can be solved by the fluctuating price of crude oil, which drives up the cost of heteroplastic. This problem can be solved by improving R&D and reducing reliance on petroleum resources. The industry is expected to adopt a forward integration strategy to build its value chain because it has a solid capital base and good infrastructure. PepsiCo’s “green” PET bottle is entirely made of biomaterials and has the same molecular composition. In addition, a small number of PLA and PBAT-based food packaging products are being developed as a result of improvements in R&D.

Regional Analysis

The global compostable plastic market is bifurcated into four regions: North America, Europe, Asia-Pacific, and LAMEA.

Europe Dominates the Global Market.

Europe is the highest shareholder in the global compostable plastic market and is expected to grow at a CAGR of 14.8% during the forecast period. The UK, Germany, France, Italy, Spain, and the rest of Europe are all included in the analysis of Europe's compostable plastic market. For proper waste management, Europe has switched from conventional plastic to compostable plastic. An important factor driving the expansion of the European compostable plastic market is the promotion of sustainable and biodegradable government and environmental policies by European associations. A rise in consumer demand for compostable products in Europe stimulates the growth of plastic products in this region. Given the advantages of compostable products for the environment, European consumers favor them over traditional plastic products. As a result, Europe commands a sizeable revenue market share in the global market for compostable plastic. The extensive use of compostable plastic products is encouraged by European legal framework and strategies, which offers growth opportunities in the market for compostable plastic in Europe. Another important factor driving market expansion in Europe is the government's supportive policies for producers of compostable products.

North America is expected to grow at the fastest CAGR of 15.7% during the forecast period. The U.S. and Canada are included in the analysis of the compostable plastic market in North America. Due to the addition of new manufacturing facilities, the North American market is expanding significantly. Manufacturers of synthetic plastics are influenced to favor the production of compostable plastic materials by supportive government regulations and policies for the production and consumption of sustainable products, as well as the rise in consumer environmental consciousness. Due to growing environmental concerns about the non-degradability of synthetic plastic packaging materials, consumers prefer compostable plastic packaging. Furthermore, the development of the North American compostable plastic market is anticipated to be fueled by the presence of educated consumers with significant purchasing power, high levels of environmental awareness, and a legal and regulatory environment. The rising demand for compostable plastic cups in restaurants and confectioneries will drive the market demand.

Segmental Analysis

The market is segmented by type and application. 

Based on type, the global market is bifurcated into home compostable plastic and others.

The other segment is the highest contributor to the market and is expected to grow at a CAGR of 14.9% during the forecast period. Others include plastics that can be composted and used in various industrial contexts, including textile and agriculture. It must adhere to all requirements of the European Standard EN 13432 on Industrial Compostability to be suitable as a compostable plastic for industrial applications. Industrial compostable plastics typically break down into the water, carbon dioxide, and a small amount of biomass when composted under controlled conditions (such as temperature, humidity, and aeration). The market demand is anticipated to increase as compostable bioplastics increasingly replace petroleum-based plastics. Since most plastics made from petroleum are not biodegradable and thus clog landfills and waterways, the use of compostable plastics has increased. In industrial applications, compostable trash bags that can hold small, medium, and large amounts of waste are becoming more popular.

Based on application, the global market is bifurcated into compostable bags, compostable cutlery, compostable straw, compostable gloves, compostable cups, and compostable trays/dishes.

The compostable bag segment is the highest contributor to the market and is expected to grow at a CAGR of 16% during the forecast period. Since the demand for compostable bags is anticipated to grow steadily, they are widely used in various industries. The demand for compostable bags is primarily driven by the food and beverage sector. Compostable bags, like those made of starch and polylactic acid (PLA), are frequently used as an alternative to traditional plastics made from crude oil. These natural resource-based bio bags are approved for the BS N13432 standard. Compostable plastic bags are waterproof for a short time but are not as durable as regular plastic bags. The market will grow due to rising demand for compostable bags in grocery stores and online retailers. Additionally, numerous municipal programs, such as source separation of municipal waste, are designed to increase the use of compostable plastic bags, feeding the market demand.

Recent Developments

• November 2022, A Master Collaboration Agreement (MCA) between NatureWorks, an advanced materials company and the world's top producer of polylactic acid (PLA), and CJ Biomaterials, Inc., a division of South Korean company CJ CheilJedang, calls for the two companies to work together on the development of sustainable materials solutions based on NatureWorks' IngeoTM biopolymer and PHACTTM Biodegradable Polymers from CJ Biomaterials.

• March 2022, Genomatica, a leader in sustainable materials, and Asahi Kasei, a global manufacturer with a Japanese base, recently announced a strategic alliance to commercialize nylon made from Genomatica's bio-based HMDA (hexamethylenediamine) building block.