On the Conversion of Plastic Wastes into Oil

A Social Business Plan for an Alternative to Traditional Recycling


Term Paper, 2018
38 Pages, Grade: 15

Excerpt

Table of Contents

1. Introduction

2. Background
2.1 Objectives
2.2 Nailing the Vision
2.3 The problem and the opportunity
2.4 Mission
2.5 Tying the vision to action

3. The Solution:
3.1 Power Generation Using Fast Pyrolysis Liquids

4. Leadership: Team and Board

5. Financials:

6. Measurement and evaluation

7. Messaging/communications
7.1 Marketing Market Competition
7.2 Human Psychology / Acceptance

8. Ecosystem
8.1 Competitive Analysis:

9. Risks
9.1 Unauthorized Waste Collection
9.2 Adoption of other means than Pyrolysis
9.3 Technology for Conversio
9.4 Stable End Product Quality Related
9.5 Government Policies and Support
9.6 PESTEL Analysis

10. Scaling strategy
10.1 Sell as Furnace fuel (Furnace oil)
10.2 Sell as fuel (like diesel)
10.3 Convert sell as Electrical Energy
10.4 Captive Power plant with converted Fuel

11. Project Timeline

Bibliography

Appendix

Depth Interview 1: Interview with a Solar Farm Business

Depth Interview 2: Interview with an Industry Specialist

Survey Questionnaire

Survey Results

Five Year Financial Planning

Table of Figures

Figure 1 Vision of Project Recycle (Author’s own Work)

Figure 2 Current Scenario of Waste Management in different sectors

Figure 3 Outcomes Framework for Project Recycle (Author’s own Work)

Figure 4 First Year Budget for Project Recycle

Figure 5 Probable Market Price and Retained Earnings Per Share %

Figure 6 Profitability Ratio for Project Recycle

Figure 7 NPV of Project Recycle

Figure 8 Break-Even Analysis

Figure 9 Enhancing CLV (Author’s own work)

Figure 10 Competitive Analysis

Figure 11 BCG Matrix

Figure 12 PESTEL Analysis of Project Recycle (Author’s own Work)

Figure 13 Project Timeline Gantt Chart 22

Figure 14 Why isn't the pyrolysis Technology adopted yet?

Figure 15 Gauging reaction of adoption in case of financial backing

Figure 16 Utilization of plastic waste in industries

Figure 17 Plastic Wastes produced every day

Figure 18 Five Year Profit and Loss Projection

Figure 19 Five Year Balance Sheet

Figure 20 Five Year Cash Flow Projection

Executive Summary

There is a huge amount of plastic wastes lying around and no systematic process present in order to recycle that. The primary reason why the rising pile of plastic is concerning for Bangladesh is its 'Non-Biodegradability'. When it is thrown on land it destroys the fertility of the soil. Similarly, for the same reason, it is harming the sea, river and oceans lives when thrown on it. Through this Business plan, I want to bring insight to an alternative energy production mean, that is the plastic waste to crude oil conversion. With superior efficiency level, industrial waste will also reduce by a huge extent as plastic waste constitutes most of these wastes.

It is estimated that over 15,000 tons of waste is produced almost every day, marking well over 5 million tons annually. Waste Management current infrastructure highlights the fact about waste collection efficiency being very low in industries, hovering around the mark of 37% to 77%, an average of around 55%. Any move that could contribute towards lessening the adverse effect of plastic on our environment could be accelerated by using the plastic in a conducive manner. Energy and its depleting sources are another pressing matter that demands urgent attention. This process can decrease carbon footprint to a large extent and meet energy demand through a sustainable technique.

Pyrolysis is generally the initial chemical reaction that takes place in the burning of many solid organic fuels, cloth, like wood, and paper, and also of some kinds of plastic. A form of pyrolysis, known as Anhydrous Pyrolysis, is a method that can derive a liquid fuel akin to diesel from plastic waste; it is a heat-based breakdown of the plastic in anaerobic conditions at a temperature of 300-350 degree Celsius in a cylindrical reactor . It is a modern technology which is in fact used primarily to dispose waste plastics. The adoption of this technique can help convert Plastic Waste to Oil at a very efficient process with limited waste of resources.

The founding team would constitute me, along with a group of mechanical engineers from BUET who have already started to work on this project. A strategic partner will also be included by handing a 10% stake with a seed-funded investment, and who is already experienced in this field. He/she must have a knowledge about pyrolysis as well. The project is capital intensive which requires a budget of over 1.2 crore to set up. However, a breakeven is expected to be reached by the 4th year of operations and with larger revenue streams, the opportunity is huge for any investor. One-time product sale, subscription charge and the sale of crude oil will be main form of revenue streams.

To effectively measure the project’s development and growth, KPI is required to be set across all levels of the business. Another thing we need to look in the product overall development is how to effectively improve the CLV.

Making any industry or a factory realize the importance of adoption of such a product will always be a challenge at the start. To ensure that, at first the product quality and its safe usage is required to be accredited from the Government. Also, the certifications and recommendations provided by the major automobile companies and other research agencies is required to be collected.

Competitive Analysis show Project Recycle's vastly superior potential with lower price and higher heating value than its competitors. A large-scale project like this with plenty of stakeholders’ in action is always bound to face some risks. A number of challenges arise due to unauthorized waste collection systems, adoption of alternative means, the viable technology for conversion, end product quality as well as government policies and support. Demonstration of product and earning quality certification is a step towards mitigating these challenges.

The Scaling strategy for Project Recycle will be in selling as Furnace Fuel like Furnace Oil or a fuel like diesel. Again, it can be sold after conversion to Electrical Energy as well as a captive power plant with converted fuel.

An in-depth interview was conducted with the director of Solshare, Daniel Ciganovic, who was also one of its founders. Also, to gauge understanding of the industry scenario an in-depth interview was conducted with Yusuf Ahmed, Vice President of Business Development at new Thread. A survey questionnaire was circulated among a few industries with the help of Yusuf Ahmed where the market need of the product was understood.

1. Introduction

Bangladesh is well en route to be one of the largest economies in the world. With consistent growth of GDP in the recent years, marked at 7.2% last year, it is understood to be the 2nd fastest growing economy in the world. [1] In a recent statistic among the Asian countries, Bangladesh was placed at the bottom when ranked based on innovation. [2] And yet, imitative startups and concepts have been growing with traction in Bangladesh, some of which have also expanded outside the country. Pathao, for example, has now started its venture in Nepal after their highly successful business in Bangladesh which is following the same pattern as Indonesian successful ride sharing company “Go-Jek.” [3] Innovative startups are expected to join the queue as Bangladesh fast forwards to a higher economic status. Now known as a Developing country, the potential is huge for Bangladesh in the time to come. According to a recent report produced by PwC - 'The World in 2050’, they have placed Bangladesh to be the 23rd largest economy in the world by 2050. [4] The seemingly huge expectation is not without any obstacles. One such problem is the rising number of plastic wastes, and especially in the industries, which is polluting the environment around it. The plastic industry is growing in popularity in the country, but plastic is in fact one of the most harmful elements. The primary reason why the rising pile of plastic is concerning for Bangladesh is its 'Non-Biodegradability'.

The primary reason why the rising pile of plastic is concerning for Bangladesh is its 'Non-Biodegradability'. When it is thrown on land it destroys the fertility of the soil. Similarly, for the same reason, it is harming the sea, river and oceans lives when thrown on it.

2. Background

At present, there is a huge amount of plastic wastes lying around and no systematic process present in order to recycle that. “A Review on Primary and Sustainable Energy Scenario in Bangladesh” – a paper by Mondal, Jakaria and Hasan – focused their discussion on the present energy scenario as well as the future energy security. [5] The need for power and energy has been continually on the rise. The current production of Oil and Gas has been mostly catering to this demand. However, with the gulf of fossil fuels running out, lots of questions arise on the availability of sustainable energy sources and how Bangladesh will be tackling that in the coming future. This paper has discussed on the possibility of exploration of alternative energy scopes like plastic waste to energy conversion through the pyrolysis process for example, which has had limited impact overall up to now. Habib and Chungpaibulpatana in their paper “Electricity Generation Expansion Planning with Environmental Impact Abatement: Case Study of Bangladesh” talked about BAU (Business as Usual) scenario of Bangladeshi mills, factories and most importantly the industries. The alarming growth of plastic waste in industries is a major concern. Yet to address such a huge issue, lots of conversion technique are planned to be adopted. [6] Debnath, Mourshed and Chew in their research paper “Modelling and Forecasting Energy Demand in Rural Households of Bangladesh” explained the impact of electricity in the rural scenario. [7] The Bangladesh based research study delved into the energy demand on rural context, mostly on a user-level basis. A scope of need-gap analysis was also covered with a view to explain the detailed user end demand of energy.

2.1 Objectives

Plastic is a non-biodegradable product, which means it cannot be dumped into the ground. Plastic recycling has now become a very key element to protect the nature. Whether in Asia or in Europe, a number of countries are involved in plastic waste recycling. However, that is not quite observed in our country. As a result of which, the pile of plastic is perpetually rising.

Through this Business plan, I want to bring insight to an alternative energy production mean, that is the plastic waste to crude oil conversion. With superior efficiency level, industrial waste will also reduce by a huge extent as plastic waste constitutes most of these wastes.

2.2 Nailing the Vision

Plastic pollution is an ever-concerning issue. Not only we should look for steps to reduce it, but also to reuse the ones that is being wasted. Through this social business plan, the primary goal is to help reduce industrial wastes by a large extent. The need for crude oil is massive for most industries. If plastic wastes generated in those industries and factories were in fact converted in to oil, that would reduce the operational expenses by a sharp margin and more importantly will reduce a big chunk of their waste.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1 Vision of Project Recycle (Author’s own Work)

2.3 The problem and the opportunity

It is estimated that over 15,000 tons of waste is produced almost every day, marking well over 5 million tons annually. This amount is expected to be rising exponentially reaching almost 47,000 tons/day and near 17 million tons per annum by the year 2025, because of the increasing growth in population as well as the increase of per capita waste generation. At present, in the major cities, waste collection rate ranges within the mark 44.30% to 76.47%. On the needs of the present total urban population, 0.41 kg/capita/day is the per capita waste generation rate in the urban areas. Waste Management current infrastructure highlights the fact about waste collection efficiency being very low in industries, hovering around the mark of 37% to 77%, an average of around 55%. This current state is not at all satisfactory for these industries. This huge amount of uncollected wastes lying around (a high percentage of which is also organic), creates a nuisance and pollutes the environment around drastically. As a result of which, frequent removal is almost absolutely necessary to avoid unhygienic surroundings.

Let us see the current scenario of wastes in different sectors:

Abbildung in dieser Leseprobe nicht enthalten

Figure { SEQ Figure \* ARABIC } Current Scenario of Waste Management in different sectors { CITATION Isl16 \l 1033 }{ CITATION Isl15 \l 1033 }

Owing to such growing amount of plastic waste in industries, the situation is ever so concerning for these industry owners. In such a time, a product like Project Recycle will surely help the industries in two important ways: To combat plastic pollution and meeting the need of energy.

2.4 Mission

Plastic pollution is one of the critical issues that need to be addressed as swiftly as possible. A conservative estimate of USD 40 Billion is wasted on plastic manufacture and after-use externalities. Any move that could contribute towards lessening the adverse effect of plastic on our environment could be accelerated by using the plastic in a conducive manner. Energy and its depleting sources are another pressing matter that demands urgent attention. Integrating these two areas could be the difference that needs to be made.

2.5 Tying the vision to action

Theory of Change is mostly a comprehensive summary and a basic illustration of why a desired change is expected to occur in any particular context. It is primarily focused in mapping out or in the case of “filling in”, which in essence is described as “missing middle” between what a plan or an initiative will do and how would such lead to the achievement of such desired goals. Let us observe outcomes framework.

Input: Plastic Wastes thrown in the outskirts of the industries, mills and factories will be collected. And it will be put in to the pyrolysis plant to convert to crude oil.

Activities: Plastic waste will be treated in a cylindrical reactor.

Output: The plastic waste will be converted to crude oil. This will be the final product ready for sale in the market.

Outcomes: The converted crude oil can be used in nearby factories and industries where the plant will be established to meet their energy needs. The oil can also be used as an alternative energy production mean for Bangladesh government to reach the goal of vision 2041.

Impact: The process can decrease carbon footprint to a large extent, and meet energy demand through a sustainable technique.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3 Outcomes Framework for Project Recycle (Author’s own Work)

3. The Solution:

Pyrolysis is a type of chemical decomposition. Its major function is to decompose organic substances using heat. The word is derived from the Greek elements, pyro meaning "fire" and lysis, which means "decomposition". Pyrolysis is generally the initial chemical reaction that takes place in the burning of many solid organic fuels, cloth, like wood, and paper, and also of some kinds of plastic. A form of pyrolysis, known as Anhydrous Pyrolysis, is a method that can derive a liquid fuel akin to diesel from plastic waste; it is a heat-based breakdown of the plastic in anaerobic conditions at a temperature of 300-350 degree Celsius in a cylindrical reactor.

Plastic waste has a detrimental effect on human beings in a number of ways and adversely affects the ozone layer as well the ocean. Polyethylene, polypropylene, polystyrene and polyethylene terephthalate are scavenged from the packing material of nearby convenience stores. The waste is then converted into low-emissive hydrocarbon fuel, which can be used as a viable alternative to fuel. The pyrolysis was applied in a reactor at a temperature of 70-240 degree Celsius in the presence of a catalyst. The process had higher yields in case of individual plastic material when compared to mixed feed, with the exception of polypropylene in the absence of a catalyst. The pyrolysis can be carried out with or without catalysts like mordenite, FCC, USY, ZSM-5, etc.

3.1 Power Generation Using Fast Pyrolysis Liquids

Extensive R D in fuel derivation from biomass has yielded exciting new opportunities. In fact, if technically successful, biofuel formation can be achieved through a decentralized process. Different entities have attempted to develop technologies and system components. However, the approach has been myopic with hardly any long-term impact of produce and use. Nevertheless, it can be seen that the use of pyrolysis liquid has been most prevalent and advanced in the case of gas turbine plants and co-firing mode in large power stations. are technically most advanced.

There are numerous uses of bio-oil, some of which are listed below:

1. Heat and Power generation
2. Liquid Fuel
3. Raw Chemical Products

Despite a lower heating value, bio-oil can be used a burning fuel once certain changes in viscosity are made. And is far eco-friendlier than fossil fuels as it produces lower amounts of nitrogen oxide and sulfur gases when burned. In addition to that, the process is non-toxic and doesn’t have the drawbacks of incineration. Carbon black is a by-product, which also has a huge demand in the market.

The pyrolysis process leverages the production of bio fuel by being capable of using unsorted and dirty plastic. The entire chain of production, from waste to a usable fuel, is examined with waste plastic and wastes tires as the form of feed.

The use of plastic and its waste are growing at an unprecedented rate and need to be addressed as fast as possible. The design of plastic, coupled with its irresponsible disposal, are some of the key reasons why plastic problem is an alarming issue.

4. Leadership: Team and Board

Leadership in a social enterprise depends a lot on ethical standard, honesty and integrity, and knowledge and expertise which one would expect, but a more comprehensive understanding on empathy, self-respect and passion. These traits are often undermined when we focus our value about leadership in the corporate world, but it is never possible to shape the culture of any organization without that. To start out, the founding team would include me, along with a group of mechanical engineers from BUET who have already started to work on this project. A strategic partner will also be included by handing a 10% stake with a seed-funded investment, and who is already experienced in this field. He/she must have a knowledge about pyrolysis as well.

Co-Founder 1: Stake 50%

I will have half of the stake in the business and take my role as the CEO of the overall business. I will be coordinating most of the tasks at first as well as become primarily involved in pitching our idea to collect funds. Being fresh to this field, I’d like to develop a strong team around me in the process of enhancing my knowledge about the product meantime.

Co-Founder 2: Stake 40%

The 4-member engineer team will get 40% of the stake who will be working in the R D of this pyrolysis machine. They will be primarily involved in product manufacturing and design, as well as maintenances. However, for mass production or industrial deployment, their role will be scarce.

Co-Founder 3: Stake 10%

This will be the spot of the strategic partner whose main goal would be connecting us with his/her wide array of networks and also guide the engineering team or the business team to the right direction. As he/she will be experienced in his sector, a full-time effort is not expected from this personnel, but a need-basis role will mostly be functional.

5. Financials:

A capital-intensive project as this requires periodic financing. A large part of initial financing will be captured through seed-fund competitions, A2i grants and other means of equity financing. To start out, a 1.2 Crore seed funding is required to develop the MVP and proceed further. Installing the first product will help us gain traction that will also generate fund for future production. A 5-Year Financial statement has been established on this project. Financial Statements including Balance Sheet from 2018-2022 has been estimated under a few assumptions, Cash Flow Statements drawn from 2018 to 2022 as well as income statement developed for these fiscal years. Profitability ratio, Asset Turnover, Book Value and NPV has also been estimated for the total project. Break-even analysis has been conducted as well as Revenue streams have been identified.

Revenue Streams:

- One-Time Product Sale: Industries and Factories where large amount of plastics are gathered can deploy this product as a stand-alone. The product can keep converting the gathered plastics to oil, which can be sold in the market or use as raw material for further production in the same industry.
- Subscription Charge: If bought as a stand-alone product, regular maintenance and know-how is to be developed about the product. How to best utilize the product with reducing lead time can only be possible with regular data collection and R D. For such instances, a subscription charge will be collected on a monthly basis as it will keep the industry tied with us as well as provide us with regular cash flows.
- Sale of Crude Oil: The most advantageous of the revenue stream is the sale of crude oil that has an immense need in the country right now. With goals of vision 2041 aimed by the government to reach 100% renewable energy production, this product can help in a significant way on that basis.

[...]

Excerpt out of 38 pages

Details

Title
On the Conversion of Plastic Wastes into Oil
Subtitle
A Social Business Plan for an Alternative to Traditional Recycling
College
University of Dhaka  (Institute of Business Administration)
Course
Entrepreneurship
Grade
15
Author
Year
2018
Pages
38
Catalog Number
V445728
ISBN (eBook)
9783668877658
ISBN (Book)
9783668877665
Language
English
Tags
Entrepreneurship, Waste to Oil, Pyrolysis, Social Business, Business Plan
Quote paper
Rasib Afridi (Author), 2018, On the Conversion of Plastic Wastes into Oil, Munich, GRIN Verlag, https://www.grin.com/document/445728

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