Taxing Plastic Packaging Based Upon the Amount of Recycled Content
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The BPF supports the UK government’s overall objective of increasing the use of recycled content. The implementation of the Plastic Packaging Tax (PPT) in April 2022 was supposed to “… provide a clear economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging, which will create greater demand for this material. In turn this will stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.”[1]
What is the PPT?
A levy of £217.85 per tonne is applied to any plastic packaging that does not contain 30% recycled content. This was originally set in 2022 at £200 per tonne but has increased in line with the Consumer Price Index (CPI). The tax includes primary, secondary, and tertiary packaging but certain items, such as packaging for licenced medicines, are exempt.
“The rationale of this tax aims to increase the use of recycled plastic in plastic packaging and it is estimated that as a result of the tax the use of recycled plastic in packaging could increase by around 40%. This is equal to carbon savings of nearly 200,000 tonnes in 2022 to 2023, based on current carbon factors.”[2]
What has implementing the PPT achieved?
According to the Chartered Institute of Waste Management:
“… the confirmation of the tax’s introduction certainly resulted in a flurry of capacity investments and a steady increase in the demand for, and the value of, recycled plastics. If anything, there is now not enough recycled plastic to meet demand – great for treasury coffers, not great for industry or the planet.”[3]
However, despite this upbeat assessment by CIWM, the BPF has data showing many UK recyclers have seen a reduction in sales in 2023 compared to 2022.[4] If the incorporation of recycled materials into packaging is increasing as the CIWM says , this suggests the material is either being diverted from other uses or imported.
In conclusion…
Policies that require recycled content in all plastic packaging components can result in unintended consequences and market distortions. Analysis conducted by the BPF and Ernst & Young (EY) concluded that the current legislation is not an effective option for reducing plastic waste. As a result, the BPF advocates changes in the tax to enable the legislation to achieve its original aims.
The PPT is, in some ways, a ‘blunt instrument’ and could benefit from more nuance. It could potentially discourage companies from incorporating more than 30% recycled content, for example, in cases where exceeding this limit is technically possible (and adequate quantities of recyclate are available). In cases where incorporating 30% recycled content is not currently possible, it could encourage abuse, so again the tax may benefit from more nuance, rather than mandating a blanket figure for recycled content.
By setting the tax at £217.85 regardless of market trends, market conditions may dictate that it is cheaper for companies to pay the tax than to incorporate recycled content, which runs against the aims of the tax. By tying the cost of the tax to the price of raw materials, the volatile price changes both to virgin and recycled feedstock could be mitigated. When virgin material prices are low it is cheaper to pay the tax than incorporate relatively expensive recycled polymers.
A certification system should be introduced to verify the recycled content within packaging. This is particularly relevant to imports of plastic packaging. Currently verification can be assessed with documentation that proves a pack contains the required 30% of recycled plastic. There is no definition on who would assess this and what methodology should be used. The BPF believes that clarification could be achieved by requiring companies to certify their recycled content under a scheme that operates to the UNE-EN 15343:2008 standard, as is required by the Spanish Plastics Packaging Tax.
Mass Balance accounting should be used in the calculation of recycled content for chemically recycled plastics. Legislation concerning the use of plastics recyclate in food contact applications should be amended. Due to current FSA legislation, mechanically recycled polyolefins cannot be used for direct food contact purposes, so a major part of the packaging industry has no source of material to incorporate in their packaging. This affects both rigid and flexible packaging. There is, however, a small stream of mechanically recycled HDPE that is approved for use in direct food contact applications (from milk bottles).
The revenues raised by taxing plastic packaging should be used to improve plastic recycling in the UK. This could include investment in technology, infrastructure, education or any other action that could develop the industry.
For specific information about the Packaging and Packaging Waste Regulation (PPWR), refer to the BPF’s dedicated PPWR position statement
Sources and further information
1) www.gov.uk/government/publications/plastic-packaging-tax/plastic-packaging-tax-screening-equality-impact-assessment
3) www.ciwm.co.uk/ciwm/news-and-insight/poltech_blog_pages/reflections_on_the_uk_plastic_packaging_tax
4) BPF Business Conditions Survey 2023
Originally published June 2019
Last reviewed and updated July 2024
