Approved EU Plastic Tax could damage eco-centric investment, industry warns

29 Jul 2020 --- The European Council has approved the implementation of a plastic tax starting January 1, 2021, as part of its latest agreement on the new Multiannual Financial Framework (MFF) (2021-2027) and coronavirus recovery fund. The plan foresees a €0.80/kg levy on non-recycled plastic packaging waste, which will be paid by Member States into the EU budget. The European plastics and food and beverage industries have raised concerns that the tax funds will not be reinvested in waste management and recycling infrastructure and potentially endanger the Single Market and EU’s COVID-19 recovery plans.

While the European Commission has presented the tax as a “contribution to the EU budget designed to incentivize Member States to increase recycling from plastic waste,” European Plastics Converters (EuPC), the Brussels-based EU-level Trade Association representative of the European plastics industry, warns that it might have “the opposite effect.” Further fiscal measures are “not the most efficient tool to drive innovation and investments needed to meet the Green Deal’s intended policy objectives,” EuPC says.

“As the revenues of the EU plastic tax are not earmarked to be invested into the waste and recycling infrastructure, it will not increase the recycling of plastic waste in Europe,” stresses Alexandre Dangis, EuPC Managing Director. “Instead, it will further increase the cost of plastic recycling and encourage the shift to other packaging materials with a bigger environmental impact. To truly increase recycling rates across Europe and protect the environment, taxation of the landfilling of plastic packaging waste would be more efficient.”

The urgency of plastic pollution reduction measures cannot be overstated. On the current trajectory, annual flows of plastic into the ocean could nearly triple by 2040, equating to 29 million metric tons of plastic leakage into the oceans at the cost of US$100 billion to the global economy. This is according to a groundbreaking report by The Pew Charitable Trusts and SYSTEMIQ, which employed a comprehensive plastic system modeling tool to create a global analysis that evaluates various strategies to reduce ocean plastic flows and quantifies the associated economic, environmental and social implications of each pathway.EuPC warns that the levy could redirect around €6-8 billion from recycling investment.

Will eco-innovation take a hit?
EuPC indicates that improving the recycling of plastics packaging requires “considerable investment” by the plastics value chain in innovation, new machinery and the ecological design of plastic packaging. With expected revenues of around €6-8 billion per year flowing into the general budget of the EU, this money would not be available anymore to be invested in the transition towards a circular economy, the trade association warns.

As a next step, further details on the tax will have to be worked out in a specific law and approved by the European Parliament and Council of the EU. While much of the details remain obscure up to now, according to EuPC, it is already clear that the Member States will have substantial freedom to implement the measures to collect the funds.

“The implementation and complexity of different schemes from country to country will lead to a host of heterogeneous measures, destroying the single market,” EuPC adds.

F&B industry echoes concerns
Before the EU leaders' budget meeting in Brussels on July 17-18, over 40 organizations from the packaging supply chain wrote a letter to voice concerns over the proposed inclusion of a plastic tax and significant under-investment in waste packaging infrastructure. The signatories echoed concerns that funds raised from the tax would be absorbed by the COVID-19 economic recovery pot rather than reinvested in critical waste management infrastructure and recycling technologies.

FoodDrinkEurope, CEFLEX, European Bioplastics and the other signatories are in full support of the policy objectives laid down in the European Green Deal to ensure that all packaging is reusable or recyclable by 2030. However, striving towards these goals requires significant investments from the packaging supply chain and the signatories are concerned about the possible introduction of new or additional fiscal measures on packaging.Further fiscal measures are “not the most efficient tool to drive innovation and investments needed to meet the Green Deal’s intended policy objectives,” EuPC says.

“If the levy translates into a new tax on non-recycled plastics at national level, it would provide a double hit to companies that already pay towards the Extended Producer Responsibility schemes for the end of life of packaging. These costs are already set to increase substantially under new EU waste legal requirements to boost packaging recyclability,” Laura Degallaix, Director of Environmental Sustainability at FoodDrinkEurope, tells PackagingInsights.

While the signatories fully support the EU leaders' ambition to establish a budget that will help all EU Member States to recover from the impact of COVID-19 and build a greener and more resilient economy, Degallaix reaffirms that the ambition to ensure all packaging becomes reusable or recyclable by 2030 will only be met with significant investment. “There are two goals,” she says, “and both can be achieved.”

“We are concerned that the EU’s circular economy targets are being undermined by a serious lack of investment in waste management infrastructure and recycling technologies. To play our full part in the circular economy, food and drink manufacturers need a secure supply of safe and affordable recycled packaging materials. But less than half of all plastic packaging waste is currently recycled, with most of it going to landfill or incineration. And we do not believe the plastic tax will help,” Degallaix explains.

As European plastic circularity targets draw closer, CEFLEX, the European consortium of companies representing the flexible packaging value chain, and UK sustainability non-profit WRAP, have both published new guidance on establishing effective recycling systems for flexible packaging. WRAP warns that urgent cross-sector action is required to meet the UK Plastics Pact target to make all plastic packaging reusable, recyclable or compostable by 2025. Similarly, CEFLEX’s guide aims to inspire “much-needed investment in sorting and recycling infrastructure to make all flexible packaging circular,” in line with the EU Plastics Strategy’s requirements that all plastic packaging must be recyclable by 2030.

By Joshua Poole