This is different—the cost of plastic goes up if fossil fuel consumption goes down because currently it uses a waste stream. Not sure if it’s true, but it’s different than my prior intuition about fossil fuel and plastic.

Exactly - a common understanding of fossil fuels is that we could just "use them for planes and plastics" but there would be an unexpected cost there - because the plastics are basically "free" waste products of processing for other needs.

It's similar to how car heaters work on waste heat from ICE and have to be accounted for in electric cars.