Tick tock on the plastics tax

With just a year left until packaging with less than 30% recycled content faces a price hike, businesses are scrambling to minimise the impact. By David Burrows

In 12 months’ time the UK government will introduce its latest Pigouvian tax. Plastic that doesn’t contain at least 30% recycled content will be hit with a £200 per tonne tax. The intention is to drive investment in infrastructure, ship less waste overseas and reduce reliance on virgin materials. Greenhouse gas emissions should fall too: “Recycled plastic has a carbon footprint than can be up to four times lower than that of virgin plastic,” says the UK government.

Will it work?

Fears initially were that brands and supermarkets would look to edge up to that 30% threshold and go no further. But driven by consumer demand for more ‘sustainable’ packaging, recycled content has become a badge of honour – a positive marketing story for a much-maligned material.

At the Foodservice Packaging Association environment seminar in February Waitrose noted how companies were “top trumping” one another in a bid to achieve 100% post-consumer recycled content (PCR). Another speaker warned that the bigger retailers and manufacturers had already “buttoned up” supply with big contracts.

Indeed, forget the 30% target for recycled content by 2025 in the Plastics Pact. That’s rhetoric. It’s regulation, in the form of the tax, that’s put a rocket underneath the food and drink sector. Recycled content use across Pact members edged up from 9% to stand at 13% last year (saving almost 66,000 tonnes of CO2e according to the Pact’s coordinator Wrap). It’s a big leap to 30% and the big firms are ensuring they make it.

For some polymers hitting 30% come April 2022 is, technically, relatively easy. Polyethylene terephthalate (PET) and to some extent high density polyethylene (HDPE) are fine but the scramble for recycled material will see supplies squeezed and prices could shoot up. As commodity experts ICIS noted in a blog last year, if a big gap opens up between the price of virgin and recycled plastic the tax mightn’t be enough to incentivise businesses away from virgin.

Polypropylene (PP) poses more of an issue, as does polyethylene (PE), especially for the brands selling food where stringent food contact regulations must be met. Flexible packaging is a particular headache. There are some signs of technological breakthroughs – see Tesco’s cheese wrapped with recycled soft plastic – but many grocers and manufacturers will be looking to balance the hit they take on the bits of the portfolio reliant on PP and PE by ensuring they get to 30% on PET and HDPE.

Smaller brands risk being squeezed out. Or left hunting the globe for recycled plastic. Recycling charity Recoup reckons domestic recycling capacity needs to double to handle the demand for recycled content from the tax. That won’t happen in the next 12 months, which is why waste contractors have been pushing for the tax to escalate to a 50% content minimum.

Covid of course has shown the problems that sprawling international supply chains can bring during a crisis, so once again the supermarkets will be shopping close to home for their ‘greener’ plastic (and collecting more and more of it themselves). Others will have to contend with the vagaries of international markets and the issue of fraud (how to determine if packaging hits the 30% minimum is a question the government is yet to answer). Any change to regulations offers criminals the whiff of opportunity and the premium commanded by plastic badged as recycled rather than virgin will likely be handsome.

Expect also to see plenty of brands looking to swap polymers where they can – this is great news if new packaging is more widely recyclable and comes with recycled content, but there will need to be investment to ensure shoppers are aware of the changes. If their spaghetti or soup has always come in unrecyclable packaging there’s a fair bet they’ll continue to pop it in the bin destined for landfill. Habits are hard to budge.

The other option, of course, is to switch away from plastic. This is where the tax’s unintended environmental consequences lie – for example materials that are widely recycled but come with heftier carbon footprints than plastic. Switching also adds costs, perhaps even over and above plastic that’s taxed.

Another route is to use less packaging, to lightweight and shrink formats. Downsize the formats and suddenly there isn’t so much recycled plastic to get your hands on. Indeed, concentrates offer considerable (and largely untapped) environmental and financial wins for those in the food and drink sector – why cart vast quantities of water around the world when it can be added at home or in the café or restaurant?

Of course, some brands will be left with little option but to pay up or pass on the costs to customers. This will likely be pennies on the cost of an average product but in the current climate a price lift and unsustainable packaging are hardly a heady marketing proposition.

And don’t forget that following in the tax’s wake will come extended producer responsibility, which will see suppliers pick up the bill for the cost of dealing with the packaging they place on the market. Together the tax and EPR could

increase the cost of packaging compliance fees by around 21 times compared to 2017.

Foodservice businesses will need to consider the “unrecyclability of a lot of their packaging”, suggests Pendragon Stuart, consultant at Sancroft International. Laminated card may be judged difficult to recycle and therefore face higher fees, for instance. Contamination could prove a headache, too, with greasy pizzas and curry-stained cartons rendering some packaging far trickier to recycle. Compostables could provide some solutions but are far from a silver bullet.

“Eventually more attention will fall on these kinds of issues,” says Stuart. With the tax next year and another set of EPR consultations expected this month, ‘eventually’ isn’t a long way away. Tick tock.

2 Responses

  1. I dont think this is still the answer
    More bio packaging and compatible is the only way to go eventually
    If more resources is ploughed into that I am sure the over riding desire for plastic will diminish and stronger natural fibres that degrade when in contact with soil will be the key.
    Recyclable plastics still wreak havoc in our oceans and destroy marine flora and fauna, so much to do and long way to go but the 12 month deadline will send manufacturers scrambling for better practices over all we hope.
    Sadly Britain lacks recycling facilities which is the greatest hurdle for our nation. Govt needs to put investment into this element and drive it with a strong agenda. We do only glass if anything and that too selective glass not all of it.

    Anyway good news at least
    Hope we can solve the vacuum pouches debacle too
    All the best
    Have fun

  2. So are we going to see reverse vending machines funded by the big brands so that they can acquire polymers? Or will it mean that the cost of reverse vending will come right down because it will be so easy to sell the material?
    Are we seeing the required investment in plastic recycling in the UK ahead of this tax?
    I’m hoping that this will mean that all packaging will be recyclable plastic and that far less mixed plastic will have to be incinerated and none will be exported! thanks for keeping us in the loop.

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