LONDON (ICIS)–The EU’s €800/tonne plastic
packaging waste charge, passed by the EU
Council last week and which takes effect from
January, sent shockwaves through the market
because of both its size and narrow timeframe
to implementation.
Reaction has so far been mixed, with immediate
questions on how it will be calculated, how it
will be passed through the supply chain, and
whether it will lead to greater regulatory
divergence on plastics .
In the first of a series of insights on the
charge we look at the known details that have
emerged since the announcements, and the
outstanding concerns and questions in the
recycling and virgin plastic markets.
The new charge of €800/tonne for all
non-recycled packaging waste will be paid by EU
nations from 1 January 2021. National
contributions will be calculated by the
European Commission using existing reporting
obligations under the Packaging Waste Directive
(Directive 94/62/ECC) and its implementing
Decision (Decision (EU) 2019/665.
Under that directive member states provide data
on plastic packaging and recycling. The data
are published on the Eurostat website.
The charge will be used to fund the coronavirus
recovery package and charged at nation state
level.
The charge is not a tax, although commonly
referred to as one, because it is payable at
state level rather than by individuals or
corporations. Nation states could,
however, seek to recover the cost of the charge
through taxation.
The methods used to meet the cost of the charge
will be up to individual countries, and the EU
Council has not proposed any regulatory
stipulations around this. Individual countries
are free adopt different approaches and could
seek to recoup the cost of meeting the charge
from differing parts of the supply chain,
leading to potential regulatory divergence.
How nation states will incorporate this into
national legislation remains the key
uncertainty for plastic and recycling markets.
Some players have welcomed the move because it
could encourage higher recycling rates in the
future, and for devolving how this is
implemented across the supply chain to
individual national governments.
“[It will be] good for the industry – I think
it’s a realistic thing because many countries
[and] people [have] had, long term, time enough
to think about packaging,” a recycled polymer
producer said.
Other players, however, raised concerns around
regulatory divergence and the resultant
potential difficulties with cross-border trade.
“What happens when I send something to the UK?
What happens when I send it to Germany. Who
bears this burden? … Don’t get me wrong, I’m
not against any of this, we just don’t
understand [how it will be implemented],” a
recycler said.
They further argue that it does little to
alleviate infrastructure shortages and
legislative barriers which limit the ability of
the market to increase recycled material
suitable for food-grade packaging and hazardous
material packaging, and that the charge could
encourage a shift to non-plastic packaging
types such as glass, paper and cardboard.
“Changing a plastic into a glass bottle is not
solving the problem. I think it’s a tool from
the politicians to do something that is their
own target, but is this the correct approach or
the right approach? Let’s see what the
countries do. For sure if there’s a tax it
could increase plastic use, but adding an
additional charge on plastic and changing to
other packaging is not the correct approach,”
one major packaging producer said.
There have been concerns that the bill does
nothing to address waste collection
infrastructure shortages, and that the short
timescale to implementation does not allow
nation states enough time to enact the
legislation in a considered manner.
“[in] the first years the tax won’t be dodged.
Supply chains just aren’t ready,” a packaging
converter said.
According to several sources, the lack of
suitable waste collection infrastructure will
mean that the cost of any potential plastic
taxes currently proposed or introduced on the
back of this legislation would simply be passed
on to the consumer until chemical recycling
matures and provides enough volume of material
to tackle shortages.
“To be honest I don’t see correlation between
use of recyled material and this new levy. The
national governments will not have the time to
implement this by January, and how [will they]
pass [this] through the supply chain. I’d love
to say we see a reaction but the only extra
project it will push is whether people want to
substitute to other materials that aren’t
plastic. That’s a pity. I thought greenwashing
was done by companies but now it seems the EU
are using it to raise money.
“It will be very dependent on the measures that
the country takes, if they just pass it through
it will be ultimately the consumer that pays
and [there will be] no incentive to do more
collection, better sorting or use more recycled
content in their product, if they just forward
to the consumer that’s more or less it.
This seems like a rushed tax which only fills
the gaps in the budget and that’s really
disappointing,” one integrated waste management
major said.
Some have also highlighted that if the cost of
the charge is passed through to the supply
chain, for many packaging applications the
limited volume per item of material will mean
the addition of only 1-2 cents per item, which
might easily be transferable to consumer.
“It sounds a lot of money, but at €800/tonne
and if it’s 20g [of packaging] it’s not a big
deal,” a recycled polymer producer said.
To achieve European Food Safety Authority
(EFSA) approval, 95% of the material used in
reprocessing must have been sourced from
food-contact applications, and there must be
full and provable traceability throughout the
chain.
For recycled material such as R-PP where
multiple forms of waste are collected in
kerbside schemes, proving provenance of
material to reach the 95% content threshold is
prohibitive.
The only post-consumer-derived source of food
grade R-HDPE pellets is the UK where milk
bottles provide an easily separated stream of
waste.
Structural shortages of material, along with
technical limitations such as opacity of
material and loss of tensile strength, have led
companies to explore other avenues for reaching
sustainability commitments such as chemical
recycling or bio-based materials.
Insight by Mark Victory
Additional reporting by Linda Naylor
