What plastic tax? Veolia finds UK businesses are not prepared for incoming legislation

18 Aug 2021 --- Veolia research has found 83 percent of businesses asked are not aware of the impending UK Plastic Packaging Tax, with less than a year until the legislation comes into force.

The UK government has released draft legislation and a draft policy paper on its Plastic Packaging Tax – effective from April 2022 – for public consultation. The measure is expected to impact around 20,000 plastics packaging producers and importers.

The draft legislation is proposing a £200 (US$275) per ton tax rate for plastic packaging with less than 30 percent recycled plastic produced or imported into the UK.

“Eighty-three percent is high indeed – I am actually surprised it’s that high – and maybe more communication should come from the government on it, then businesses can prepare themselves for next year,” Timothee Duret, director of sustainable technology at Veolia UK, tells PackagingInsights.

Government intervention
The waste management specialist’s research found the two biggest drivers for acting more sustainably in business are government mandate (30%) and an environmental conscience (48%).

The Plastic Packaging Tax is a government policy aiming to directly increase plastic recycling in the UK and cut carbon emissions.

According to Imperial College London, if all plastics were recycled, society would avoid the 61 percent contribution of their emissions and save between 30-150 million metric tons of carbon annually.Veolia collects more than 100,000 metric tons of plastic for recycling in the UK every year.

Demand outstripping supply?
Duret explains plastic recyclers like Veolia can offer short and long-term supply of specific recycled grades to packaging manufacturers. “Demand is expected to outstrip supply in certain grades and we will keep investing to offer more tonnage to our customers,” he adds.

“Since it’s been announced, the Plastic Packaging Tax has already had an impact on demand for recycled plastics across all grades used in packaging (PET, HDPE, PP, LDPE). We expect the demand to continue to grow and we might see the tax evolve to ensure recycled content is incentivized against virgin plastic.”

“For that reason, it is important that the government regularly assess the situation to adapt the tax, for example, the escalation rate, to ensure progress is being made across all types of packaging.”

Helen Bird, strategic technical manager for plastics at WRAP, adds: “The end market for recycled plastic is central to circularity, and it’s positive to see that ahead of implementation, the Plastic Packaging Tax has positively impacted on demand.”

However, she highlights that challenges remain. “For some packaging, it is practical to reach higher levels of recycled content, while for others, the rollout of technological developments will be required to include any.”

“While we continue to export more than half of the UK’s plastic packaging waste, many businesses are struggling to secure enough recycled material to meet targets such as The UK Plastics Pact and tax obligations. We must continue to work together to drive investment to overcome these challenges and act more sustainably.”

In related news, Natural Mineral Waters Europe, the European Fruit Juice Association and UNESDA Soft Drinks Europe have urged the European Commission to provide the non-alcoholic beverage industry with “priority access” – or a similar mechanism guaranteeing “right of first refusal” – to recycled PET in the upcoming revision of the Packaging and Packaging Waste Directive.

Levelling the playing field
Veolia collects more than 100,000 metric tons of plastics for recycling annually in the UK. It recently expanded its operations to recycle dozens of different grades of plastics.

“The Plastic Packaging Tax is removing the economic burden of acting more sustainably and levelling the playing field for businesses,” says Duret.Veolia found the two biggest drivers for acting more sustainably in business are government mandate (30%) and an environmental conscience (48%).

“To continue this momentum, we need to escalate the tax and roll it out across all types of plastics like construction, cars, furniture and electric goods.”

“It is essential we continue pairing our actions with the backing of policy. Eighty-four percent of businesses we spoke to agreed and support the incremental increase to the Plastic Packaging Tax.”

“This will boost the circular economy, encourage more domestic infrastructure, create jobs, and ultimately reduce the UK’s climate impact.”

Who is affected by the tax?
The tax is designed to provide a clear economic incentive for businesses to use recycled material in plastic packaging. Creating greater demand for the material is expected to stimulate increased plastic waste recycling and collection, diverting it away from landfill or incineration.

The proposed levy exempts producers and importers of small amounts of plastic packaging, mitigating against disproportionate administrative burdens compared to the tax liability. The suggested registration threshold is 10 tons of plastic packaging produced in or imported into the UK annually.

The tax will not apply to packaging not predominantly plastic by weight.

By Joshua Poole