F&B industry unites in trepidation over impending EU plastic tax

15 Jul 2020 --- Ahead of the EU leaders' budget meeting in Brussels on July 17-18, over 40 organizations from the packaging supply chain have written a letter to voice concerns over the proposed inclusion of a plastic tax and significant under investment in waste packaging infrastructure. The signatories are concerned that funds raised from the tax will be absorbed by the COVID-19 economic recovery pot rather than reinvested in critical waste management infrastructure and recycling technologies. PackagingInsights speaks in depth with Laura Degallaix, Director of Environmental Sustainability at FoodDrinkEurope, about the potential repercussions of EU and national plastic levies.

Several EU Member States have introduced or are considering the introduction of taxation systems on certain packaging materials and applications. In parallel, the European Council is discussing the introduction of an EU-wide levy on non-recycled plastic packaging waste, as part of the negotiations on the EU Multiannual Financial Framework (MFF) for the period 2021-2027. This levy may be translated into new taxation schemes at national level.

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 public authorities and the signatories are concerned about the possible introduction of new or additional fiscal measures on packaging.The signatories are concerned that a plastic tax would not benefit the already significant under investment in waste packaging infrastructure.

“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 access to a secure supply of safe and affordable recycled packaging materials for our products. 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,” warns Degallaix.

Balancing COVID-19 recovery and recycling investment
The signatories are concerned that money raised from the plastic tax will go into Europe’s general COVID-19 economic recovery pot, rather than create an important revenue stream for critical waste management infrastructure and recycling technologies.

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 also believes 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.”

“[Also], 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,” Degallaix tells PackagingInsights.Fiscal measures must drive the availability of high-quality recycled materials across the EU at affordable prices, the signatories stress.

Safeguarding eco-centric innovation and the Single Market
Further, an increased tax burden will inevitably impact companies’ ability to invest in the innovations needed to find more sustainable solutions for packaging, while costs could be passed onto consumers, Degallaix continues.

“The plastic tax has not undergone a thorough impact assessment, in particular regarding potential environmental, economic and food safety impacts. For example, a plastics levy could lead to the use of other materials which may impact packaging functionality in terms of food safety, food quality and resource-efficiency.”

Fundamentally, the signatories are opposed to the plastic tax but would welcome investment of equivalent funds into collection, sorting and recycling infrastructure and technologies if there is clear support from EU leaders for the levy. The reinvestment could be achieved through the introduction of a supplementary and dedicated budget line in the MFF or the “Next Generation EU” fund.

If fiscal measures to incentivize the circularity of packaging materials and applications are considered, they should aim to drive the increased availability of high-quality recycled materials across the EU at affordable prices to be reintroduced in the value chain, the signatories highlight.

In particular, the measures should encourage and reward the uptake of sustainable materials, for instance, through a digressive scale or exemptions for recycled materials to enable packaging users to close the loop of circularity. It is also essential that such measures are non-discriminatory and avoid distortions and fragmentation of the EU Single Market, the signatories add.

Recycling, reusability or both?
Recycling and reusable packaging systems both have their merits and, in reality, a mixed approach is needed to reach sustainability targets, according to Degallaix. Whichever approach is implemented, it must demonstrate environmental benefits through a proper life cycle assessment.Even the best recyclable materials will end up in the environment if there is not sufficient infrastructure, Degallaix points out.

“Certain types of packaging are already being reused every day in the food and drink industry, such as secondary packaging like pallets and crates, and beverage containers in the hospitality sector. But this goes beyond simple packaging design decisions. Reuse or refilling of packaging requires the establishment of often new, alternative management systems and infrastructure which are different from those currently established. Reuse and refill systems should thus be established when it has been demonstrated to provide environmental benefits from a life cycle perspective,” she tells PackagingInsights.

Meanwhile, food and drink packaging should be designed in a way that limits environmental impact and ensures proper end-of-life management, while maintaining the functionality from a food safety perspective, Degallaix continues. “But even the best recyclable materials will end up in nature if there is no sufficient infrastructure that guarantees the collection, sorting and recycling of packaging waste materials. Moreover, we need to foster the development of technologies that allow the recycling of a wider number of packaging materials and a steady supply of recycled materials that can find their way into new products,” she concludes.

By Joshua Poole