Packaging Politics & Legislation

UK Plastic Packaging Tax

British Chancellor of the Exchequer Rishi Sunak has promised to deliver on the Conservative Party’s manifesto pledge to introduce a plastics packaging tax during his 2020 Budget today.

From April 2022, manufacturers and importers will be charged £200 per tonne on packaging made of less than 30 per cent recycled plastics.

This, says Sunak, will increase the use of recycled plastics in packaging by 40 per cent, which would be equal to carbon savings of nearly 200,000 tonnes.

The tax, which was added to the party’s manifesto in 2018, has received mixed responses from industry.

The British Plastics Federation (BPF) said that it was pleased that the tax includes dealers of pre-filled packaging too, as otherwise it risked disadvantaging UK businesses, driving jobs overseas and increasing carbon emissions by favouring heavier imported products.

However, the BPF questioned whether the tax would apply to packaging that cannot incorporate recycled content due to existing legislation.

It also wants to see the money raised by this tax invested appropriately and where it is needed: in upgrading the UK’s recycling infrastructure.

“In the interim, our recycling infrastructure could be improved via reforms to the existing PRN system, which the industry has been requesting for many years,” added the BPF in a statement.

Market analyst Wood Mackenzie echoed those sentiments and called for further progress on collection and investments in sorting and processing plastics materials.

“The industry will need to continue to invest in new technologies, such as chemical recycling, to fully deal with the issue,” explained Chloe Kinner, Wood Mackenzie’s research associate. “The UK currently recovers or recycles just under 50 per cent of plastics packaging, making it a middling performer in European terms. By increasing the price of virgin plastics relative to recyclate, this tax will help to incentivise more responsible sourcing and production.”

The proposed fee of £200 a tonne, while less than the sums originally mentioned, will be inflationary for plastics packaging using materials for which recycled content is not possible under food contact regulations, and for which alternative plastics cannot be used.

Martin Kersh, director of the Foodservice Packaging Association, would like to see this difficulty acknowledged and is concerned that there is no mechanism for ensuring plastics packaging converters can pass the tax on to their customers. “This could threaten the future of some producers,” he said.

“The gradual increase in recycled content by some producers should also be recognised by introducing a variable rate so that those businesses that have achieved, say 5 per cent recycled content, are rewarded,” said Kersh. “The increase in demand for recycled content will continue to increase the cost of recycled plastics, with UK businesses competing globally for rPET and rHDPE.

“We welcome the consultation also announced today that confirms an exemption to the tax for all packaging where plastics is a minority ingredient,” he continued. “However, the announcement of a de minimis for those placing less than 10 tonnes of packaging per year on the market needs to be assessed to ensure it doesn’t create an uneven playing field. We also hope that this does not create a precedent for producer responsibility reforms.”

The cost of recycled content is a moot point for packaging consultant David Tyson, who believes that the legislation would increase overnight the market for recycled polymers by such an extent that prices will almost certainly exceed virgin materials, particularly when the increased cost of processing recycled content is taken into account.

This, he says, will likely make the £200 per tonne worth swallowing from a commercial aspect.

“This would incentivise the use of virgin materials, which is exactly the opposite of the government’s intention,” said Tyson.

“Why not incentivise the collection and recovery of plastics packaging through local authorities? This will result in an oversupply of recycled polymer, making it more attractive to use by processors due to cost benefits. There is a time to use a stick and a time to use a carrot.”

Tyson also questioned whether the technology exists to accurately measure the amount of recycled content in a plastics product, and wonders how the content levels will be policed.

Recycling firm Biffa welcomes the tax, which it believes is a step in the right direction, and expects it to increase in future years with extra funds re-invested in recycling to keep driving up recycled content use and avoid manufacturers stopping at 30 per cent.

“The levy supports our strategy to invest in building the UK’s recycling infrastructure, enabling greater progress towards achieving a circular economy,” said the recycler in a post-budget statement.

Converter Hi-Cone also called it a “step in the right direction”. Hi-Cone has already introduced a 50 per cent-plus post-consumer recycled (PCR) product that will replace virgin ring carriers globally by the end of the year.

Not just a step in the right direction, but a “big step forward” in the circular economy according to James Nierinck, lawyer for environment and safety practice at legal firm Ashurst, he sees the tax as a great incentive for the increased use of recycled plastics.

 

REFS

Published on plasticsinpackaging.com

Mixed response to UK plastics packaging tax pledge

 

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