Technological watch
The yin and yang of plastics taxes
When you want to eliminate something, tax it. That’s what the U.S. government did with cigarettes when it wanted people to quit smoking. Taxing gasoline to push people into electric vehicles has been a talking point. Taxes on sugary drinks are a scheme some cities have implemented to cure obesity. Given all of that, will taxing plastic packaging be a successful strategy in eliminating those materials? Time will tell.
A report from the Imperial College London, “Shaping the Circular Economy: Taxing the Use of Virgin Resources,”addresses the proposed plastic packaging tax in the United Kingdom. The tax will apply to all UK-manufactured plastic packaging with less than 30% recycled content as well as imported unfilled packaging. The report evaluates the cost of this tax based on the price difference between recycled and virgin plastic, noting that virgin material taxes “can be an efficient method to encourage the use of recycled materials” by “targeting the relative price difference” between virgin and recycled materials.
While that may sound reasonable, it only works if the recycled material—rPET for example—is actually cheaper than virgin. As we learned several years ago when rPET was equal to or more expensive than virgin PET, converters were forced to use virgin PET. Considering that the main reason for not using recycled plastic is that virgin plastic costs less, the report noted, the proposed tax would have to compensate for the price difference to make recycled plastic competitive.
Taxing virgin resins to encourage the use of recycled materials might have an adverse impact, however, particularly if there is not enough recyclate to process and sell to meet mandated recycled content goals. “Targeting the relative price difference between virgin and recycled materials can increase the need for recycling and efficiencies, in general,” said the report. Yet, the law of supply and demand states that high demand and low supply will equal higher prices for that commodity. If there is not enough recycled material to meet the needs of brand owners who have committed to 30%, 50% or even 100% recycled bottles, containers and other packaging for their goods, it’s not far-fetched to consider that recycled polymer materials could be priced higher than virgin, resulting in a disincentive.
“For a circular economy to become a reality, end markets must be available for the recycled materials that the recycling and reprocessing sector produce, reducing the economy’s dependency on natural resources,” said the report.
In the United States, there is currently more end-market demand for recycled polymers than there are recycled materials to meet that demand. There are several reasons for this. First, recycled material from households must be clean and free of debris including labels, adhesives and food. When we hear that a good percentage of the recyclable materials that we consumers put into our recycle bins ends up in landfill, there’s the answer.
Second, the “greenwashing” of various alternative materials, such as biodegradable and compostable plastics, has many companies turning away from plastics that can be easily recycled—such as PET and HDPE—for which we have a viable and available infrastructure. The truth behind these “green” materials is complex, but the bottom line is that biodegradable plastics do not completely disappear—they fragment into smaller and smaller pieces. Additives are available to accelerate degradation to, say, six months to a year, but the fact is that even biodegradable plastic hangs around in the environment for a long time.
Recently I read a news brief about Cove, a company that claims its water bottle is “made entirely of biodegradable material.” The news brief stated that the Cove bottle is “plastic-free” and that it won the Dieline 2019 Award for being 100% biodegradable. The Cove bottle is made from PHA, a biodegradable polymer produced from bacteria.
Cove’s website claims the bottle will break down “in a compost or landfill, and even in fresh soil, fresh water and the ocean.” The company said that its science could not predict exactly how long the bottle would take to biodegrade. That means that anything thrown into the environment—the only reason to even make a biodegradable plastic bottle or container—might be hanging around for six months to a year, or longer. Is that acceptable to consumers? Do consumers care that a bottle of this type does nothing to enhance the recycling industry—the company says they are “sidestepping” the recycling process—or help brand owners meet mandated 30% recycled content goals?
A report from the Imperial College London, “Shaping the Circular Economy: Taxing the Use of Virgin Resources,”addresses the proposed plastic packaging tax in the United Kingdom. The tax will apply to all UK-manufactured plastic packaging with less than 30% recycled content as well as imported unfilled packaging. The report evaluates the cost of this tax based on the price difference between recycled and virgin plastic, noting that virgin material taxes “can be an efficient method to encourage the use of recycled materials” by “targeting the relative price difference” between virgin and recycled materials.
While that may sound reasonable, it only works if the recycled material—rPET for example—is actually cheaper than virgin. As we learned several years ago when rPET was equal to or more expensive than virgin PET, converters were forced to use virgin PET. Considering that the main reason for not using recycled plastic is that virgin plastic costs less, the report noted, the proposed tax would have to compensate for the price difference to make recycled plastic competitive.
Taxing virgin resins to encourage the use of recycled materials might have an adverse impact, however, particularly if there is not enough recyclate to process and sell to meet mandated recycled content goals. “Targeting the relative price difference between virgin and recycled materials can increase the need for recycling and efficiencies, in general,” said the report. Yet, the law of supply and demand states that high demand and low supply will equal higher prices for that commodity. If there is not enough recycled material to meet the needs of brand owners who have committed to 30%, 50% or even 100% recycled bottles, containers and other packaging for their goods, it’s not far-fetched to consider that recycled polymer materials could be priced higher than virgin, resulting in a disincentive.
“For a circular economy to become a reality, end markets must be available for the recycled materials that the recycling and reprocessing sector produce, reducing the economy’s dependency on natural resources,” said the report.
In the United States, there is currently more end-market demand for recycled polymers than there are recycled materials to meet that demand. There are several reasons for this. First, recycled material from households must be clean and free of debris including labels, adhesives and food. When we hear that a good percentage of the recyclable materials that we consumers put into our recycle bins ends up in landfill, there’s the answer.
Second, the “greenwashing” of various alternative materials, such as biodegradable and compostable plastics, has many companies turning away from plastics that can be easily recycled—such as PET and HDPE—for which we have a viable and available infrastructure. The truth behind these “green” materials is complex, but the bottom line is that biodegradable plastics do not completely disappear—they fragment into smaller and smaller pieces. Additives are available to accelerate degradation to, say, six months to a year, but the fact is that even biodegradable plastic hangs around in the environment for a long time.
Recently I read a news brief about Cove, a company that claims its water bottle is “made entirely of biodegradable material.” The news brief stated that the Cove bottle is “plastic-free” and that it won the Dieline 2019 Award for being 100% biodegradable. The Cove bottle is made from PHA, a biodegradable polymer produced from bacteria.
Cove’s website claims the bottle will break down “in a compost or landfill, and even in fresh soil, fresh water and the ocean.” The company said that its science could not predict exactly how long the bottle would take to biodegrade. That means that anything thrown into the environment—the only reason to even make a biodegradable plastic bottle or container—might be hanging around for six months to a year, or longer. Is that acceptable to consumers? Do consumers care that a bottle of this type does nothing to enhance the recycling industry—the company says they are “sidestepping” the recycling process—or help brand owners meet mandated 30% recycled content goals?
This project has received funding from the Bio Based Industries Joint Undertaking under the European Union’s Horizon 2020 research and innovation programme under grant agreement No 837761.
