We all know about China’s booming economy and some of its more unfortunate consequences. Last year, China surpassed the United States as the world’s largest producer of carbon dioxide, coughing out a ridiculous 6,200 million tons. Sure, most of the pollution comes from vehicle exhaust and coal-fired power plants. But the country has other serious pollution concerns, as well…

As China tries desperately to fix its environmental problems, a few unique tactics have emerged in the form of government mandates. One in particular focuses on getting rid of tons of litter while also saving tens of millions of barrels of oil every year…

The Ban Heard ‘Round the World

Our story begins with the innocuous grocery bag. These thin plastic bags are virtually omnipresent in both America and China. With the exception of a handful of environmentally conscious supermarkets and shops, the disposable plastic bag is the only way we transport our newly purchased belongings back to our homes and offices.

While convenient, plastic bags come with serious environmental consequences. The wind catches them and blows them into waterways. And they’re not biodegradable. If you toss a plastic bag out of your car window, your great-great-great-great grandson will have to look at it on the side of the highway unless some good Samaritan picks it up for you…

Bagging the Plastic Economy

So to combat litter and reduce petroleum consumption, China decided to ban production of thin plastic bags. According to the Chinese government, the country uses too many plastic bags and does not dispose of them properly.

“Our country consumes huge amounts of plastic bags every year. While providing convenience to consumers, they have also caused serious pollution and waste of energy and resources, because of excessive use and inadequate recycling,” government officials told Reuters.

As of June 1, making, selling or using plastic bags under 0.025 millimeters thick will be banned. It may seem like a small step, but it should have a giant impact. According to China Trade News, the Asian nation uses approximately three billion plastic bags per day. That means China has to refine 37 million barrels of crude every year just to make packaging plastics.

Cash in on the Demise of the Grocery Bag

This trend is not limited to China. In fact, plastic is coming under heavy scrutiny across the globe. Even here in the United States, some cities and towns are looking to ban thin plastic bags. After all, this country uses more than 250 million barrels of oil to make plastics and chemicals each year.

Governments and activists have plastic products in their cross hairs. With new legislation limiting the use of many disposable plastics under consideration around the world, merchants and consumers will have to scramble to find new and better ways to carry their groceries and other purchases. While some chains, like Whole Foods Market, have encouraged shoppers to purchase reusable bags, nothing can match the convenience of plastic. It’s sturdy, light and convenient.

But there is a little-known alternative that could help shops and consumers keep their plastics and save oil at the same time…

Good Carbs for Your Portfolio

There is one company looking to lead the charge in Earth-friendly plastics. Although, this company is far too small to give away in a newsletter this size, I’ll give you the basics and a way for you to actually cash in on it…

This company makes plastic — the same stuff you use every single day. But instead of petroleum, it uses starches. Supplementing the company’s plastic products is the starch from tapioca, corn, wheat and potatoes. The result is two distinct plastic product groups, one of which is fully biodegradable…

First are the Compostables. Launched more than a year ago, these plastic resins are certified as biodegradable and compostable in the United States and Europe. Second are the Hybrid Resins. Launched in October 2007, these plastics are made with at least 50% plant starch. The rest is made from petroleum like traditional plastics.

The hybrid products require less energy to make, because the machine temperatures are lower. And the product’s pricing is not as easily affected by oil prices. But the hybrid’s most important feature is that the product is cost competitive with traditional plastics…

The company doesn’t have futuristic machines to make its plastics. It’s the processes that are patented — the company uses conventional manufacturing equipment. This helps keep costs low and margins intact.

As this pollution cleanup idea develops, we’ll be sure to bring you up to date on many more investment opportunities.

Best,

Greg Guenthner
February 8, 2008

Plastic Bags are Now the Hottest Investment Across the Globe was originally featured in the Penny Sleuth.