Demand for plastics will not come to the rescue of the oil industry, as the world moves to tackle waste, pollution and climate change, a report warns.

The latest study from financial think tank Carbon Tracker said the oil and petrochemical industry was betting on growth in demand for plastics made from fossil fuels, as oil use for cars and planes starts to slow.

Before the pandemic, scenarios from the International Energy Agency and BP suggested plastics could drive 45-95% of growth in demand for oil up to 2040.

The oil and petrochemicals industry appears to be “tooling up” for 3-4% annual growth in plastic demand, with plans to invest £300 billion in expanding production in the next five years, the report said.

Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses.

That would see demand for plastics doubling in 18 to 24 years, worsening the carbon dioxide emissions, air pollutants and ocean pollution caused by packaging and plastic products – only 5% of which are recycled.

But mounting pressure around the world to tackle the plastics problem could slash the growth in demand for virgin plastic from 4% a year to just 1%, with demand likely to peak in 2027.

That would put hundreds of billions of pounds of investors’ money at risk, according to the report produced with SYSTEMIQ, a company focused on changing material, land and energy systems.

Demand for oil – and fossil fuels as a whole – is likely to have peaked last year, with the decline in polluting hydrocarbons driven by the rise of clean tech and hastened by coronavirus, Carbon Tracker says.

And if rising plastic use is curtailed, it makes it more likely oil demand will have peaked in 2019, according to the new report.

Consumers are increasingly supportive of tackling the problem of plastic waste, which costs society hundreds of pounds per tonne of plastic in pollution, health and disposal costs, and litters the environment and the seas.

A recent report by SYSTEMIQ suggests better design and regulation to reduce plastic use, using other products such as paper, and a huge boost to recycling, could halve costs and plastic and create 700,000 more jobs.

Politicians in Europe and China have taken steps to curb plastic waste and other countries including some African nations are also implementing initiatives to reduce plastics.

While Covid-19 has enabled lobbyists to halt plastic bans and created low oil prices which make virgin plastic cheap in the very short term, the report argues the pandemic is likely to speed up change.

That is because a tax on plastic could raise useful funds in struggling economies, especially at a time when oil prices are low, and the window of opportunity has been “opened for change”.

Kingsmill Bond, Carbon Tracker energy strategist and report lead author, said: “Remove the plastic pillar holding up the future of the oil industry, and the whole narrative of rising oil demand collapses.”

The report also warns that plastic production and disposal creates five tonnes of carbon dioxide per tonne of plastic – twice the amount of emissions associated with oil.

Increased demand would see the carbon pollution from plastic double to around 3.5 billion tonnes by 2050, despite targets to cut global emissions to zero to avoid the worst impacts of climate change.

Mr Bond added: “It is simply delusional for the plastics industry to imagine that it can double its carbon emissions at the same time as the rest of the world is trying to cut them to zero.”