The Government wants to make big changes to consumer behaviour to reduce the impact of single use plastics, increase recycling of reusable materials and that the packaging industry will have to pay for this. It is likely that the cost of ‘packaging compliance’ will increase by a factor of five to ten times its current level over the next two to five years to meet changes in both British Governmental policy and new EU directives.
On Tuesday 13th March, in his Spring Statement, Philip Hammond announced that the British Government will consult on how the tax system can be used to change consumers’ behaviour and the use of plastic. This follows a lot of press coverage of European proposals for a ‘Circular Economy’, single-use plastics, coffee cup tax and plastics finding their way into water-courses and oceans. The UK currently holds the world record for a water-course with micro-plastics contamination.
The Secretary of State has asked WRAP (a resource efficiency charity), INCPEN (voice of the packaging supply chain) and the ACP (Advisory Committee on Packaging) to engage with stakeholders to identify options to improve the UK’s environmental performance. This is being done via a set of workshops that with trade and industry groups covering the whole supply chain.
In the UK, our producer responsibility legislation for packaging waste was designed to increase recycling of packaging in line with EU targets with the lowest nett cost to business and has done this very well over the last 20 years. The UK will have to comply with the EU’s new Circular Economy Package that comes into force before we leave the EU and during the transition that will follow. One of its principles is that producers (businesses using packaging) will have to subsidise not only the recycling of packaging waste as they currently do, but also its collection and sorting.
In other European countries which have already taken this approach their cost of compliance is typically £100/t, compared to the UK’s £20/t to subsidise recycling only. We expect to see these costs passed onto businesses handling packaging in the UK in the next 2-5 years.
There is no suggestion that the UK will go as far as France who are to ban all single-use plastics from 2020, unless they are made from compostable bio-sourced materials. Current thinking on a paper published in March 2018 suggested that the Government wants to give Industry time to develop innovative solutions before they consider a direct charge on coffee cups and plastic bottles.
The review looks at six main principles:
Everyone playing their part.
- Currently, packaging regs apply only to businesses that turn over more than £2m and handle over 50t of packaging. This will be questioned, although it is recognised that widening the net to include a lot of smaller businesses would not catch much extra packaging. It recognises that a lot of on-line sellers are excluded from the regulations because they fall below the threshold. It also recognised that the current regulators do not effectively police free-riders and this should be addressed with more vigour than chasing smaller businesses.
The system should reward recyclability
- It is clear that packaging is important to industry and in particular the food industry where some ‘difficult to recycle’ packaging may offer almost infinite shelf life, so we must accept that difficult to recycle plastics have their place in society.
- Our current system of PRNs does not distinguish between single material packaging that is easy to recycle and complex multi material packaging that can not be recycled.
- It is not clear how this proposal could be implemented but it was suggested that any material that is not readily recyclable in the UK could be subject to an additional per tonne levy for ‘difficult to recycle’ materials. This could fund innovation in recycling or new recycling facilities as appropriate.
- Deposit return systems have been shown to improve return rates (and therefore recycling rates) and should not be ignored, although there are none currently running across the UK.
The system should reward recycled content
- When a business buys packaging with recycled content they are supporting the use of recyclates, helping to reduce the amount of waste material that is not recycled. They are also stimulating demand for recyclate materials thereby reducing the cost of PRNs (that subsidise the cost of recycling).
- Creating demand for recycled content will stimulate demand for recyclate and help to make the system more effective. Our current PRN system rewards demand for recycled content by reducing the cost of PRNs when more material is being recycled.
- It would be nice if the recycled content of packaging were made VAT free (in line with having zero VAT on second hand goods) but we do not expect the Government to want to do this.
Local Authorities and businesses should work towards a standard base for recycling systems
- A common baseline for material recycled, where all authorities recycle a minimum number of material streams separately, would make nationwide education campaigns much more effective – all businesses, households and street bins having the same number of divisions for different recyclates.
- The On Pack Recycling Label (OPRL) is a scheme that indicates how likely it is that packaging is recycled in any given area. As there are over 300 local authority recycling groups in the UK, there are nearly as many different sets of arrangements. As much as the labels are a good idea, until we have the same recycling arrangements across the UK, the label will continue to be ineffective.
The proceeds of a new Producer Responsibility fund should be distributed by an independent cross sectoral body.
In our discussions we identified that in addition to the PRN, that subsidises the cost of recycling, we would need:
- a similar market-driven mechanism for collecting and sorting waste packaging (perhaps a CSN – Collection and Sort Note) that subsidises the cost of collection and sorting of waste packaging,
- a communication fund to promote recycling and
- a fund to promote recycling of the difficult to recycle materials mentioned above.
These latter two funds would need to be managed by an independent body made up of stakeholders from all affected sectors.
All recyclers of waste packaging should be required to be part of the system in order to capture more accurate data about recycling. Exporters of packaging materials should not be able to enjoy the advantages they now have over UK recyclers in the current system
- It is agreed that the current inequalities are created because the regulations are not enforced as rigorously on exporters as UK recyclers.
- There is resentment from some producers that when the price of a PRN increases, the extra revenue is not directed towards increasing capacity directly, it is an inducement for recyclers to recycle more and for additional recyclers to join in with the system. (But I will restate that it is this flaw that has helped give the UK the cheapest cost of compliance in Europe.)
- It is possible that there could be a limit on PRN prices so that recyclers cannot exploit the market when there is a shortage of supply. If the price were to hit the limit, producers (and their schemes) could contribute to a capacity building fund rather than paying too much for a PRN. This has been seen to be effective for waste electricals in the UK.
- There is general agreement that we should endeavour to promote a better standard of collection and sorting in the UK as well as encouraging recycling in the UK.
Please be aware that this summary reflects my personal impressions of the review organised for Packaging Compliance Schemes, our current research and that the Government may choose to follow up on none, some or all of these themes.