Circular Economy / 17.02.2022

The United Kingdom, Spain and the plastic packaging tax

The United Kingdom, Spain and the plastic packaging tax

Next April, the United Kingdom will be the first country to begin applying a tax on plastic packaging, according to what was already announced in its 2018/19 Strategy on Resources and Waste. Today, after the United Kingdom, Spain and Italy will be the only European countries that, in the short term (2023), will begin to apply a tax on plastic packaging.

This tax will levy 200 pounds (about 230 euros) per ton on producers or importers of plastic packaging that do not contain a minimum of 30% recycled material and that manufacture or import a minimum of 10 tons in the last 12 months or are going to do it in the next 30 days. In the case of Spain, the tax included in the Draft Law on Waste and Contaminated Soil will apply to non-reusable plastic packaging and the tax rate will be 450 euros per ton of non-recycled plastic (virgin material).

 In the British case, there are some very specific exceptions to the application of the tax, such as plastic packaging for medicines for human use, which can be consulted in detail here. In the Spanish case there are also exceptions, such as containers for medication and healthcare products or, of course, reusable containers, those conceived, designed and marketed to be filled and reused.

The tax is applicable to the components of finished containers, understanding as such all those that “are not going to undergo a substantial modification before their use”. Although some exceptions are also made in this definition, such as applying the tax to the manufacturer of the preform in the case of bottles, what does seem clear is that in the case of trays it will be the company that obtains the thermoformed product, that is, the thermoformer himself or, where appropriate, the packer if they acquire the sheet and then thermoform it, who will be subject to the tax, while in the case of Spain, the taxpayers will be the sheet producers and the manufacturers of the preform.

There are two critical issues that arise for debate with a tax that is applicable to plastic packaging with less than 30% recycled material are, firstly, the availability of material in the market to be able to comply with this requirement and, secondly, the possible fraud derived from the above, boosted by the price hike that is taking place.

Regarding the first aspect, there is no doubt that the industry of the manufacture and recycling of plastic packaging in the United Kingdom must work to create the necessary infrastructure. According to a study carried out by RECOUP in 2020, the capacity for recycling plastics in the United Kingdom must double in order to respond to the demand that will be created as a result of the entry into force of the tax.

Regarding the second aspect, certification tools emerge as a possible solution to prevent the possibility of declaring a recycled material when it really is not, and thus avoid fraud. Thus, in addition to the recognized audit traceability methodologies, based on commonly used standards such as EN 15343 for the determination of recycled content in processes, complementary analytical support methodologies are beginning to be added to verify whether a product does indeed contain “more of or less than a specific percentage of recycled plastic previously established”.

This is the case of the BSI Flex 6228 standard currently under development that has emerged in response to this specific tax requirement in the United Kingdom and that may be used as a methodological reference based on tests carried out with conventional equipment using ultraviolet-visible spectrophotometry (UV -VIS). On the other hand, the Plastic Sense Foundation offers the Retray certification scheme since the end of 2021, in order to consolidate a circular economy model in the value chain of thermoformed PET packaging and increase the recycled material available in the tray-to-tray circuit. The Retray certification of processes to manufacture monolayer or multilayer PET sheet, thermoformed products (bases, lids) or thermoformed PET containers includes requirements to verify the percentage content of recycled plastic incorporated in the products manufactured over a certain period of analysis (under standard UNE 15343), both from tray-to-tray origin and from other sources (PET bottle, for example).

The debate that has arisen in the United Kingdom due to the application of the tax may provide clues about what is to come in countries of the European Union such as Spain that also contemplate taxing the use of plastic containers. There is no doubt that the new “green” tax on plastics will have far-reaching consequences, since it will affect both the country’s manufacturers and those who make intra-community acquisitions or imports of products packaged in plastic. Without forgetting that the lack of harmonization of European regulations generates an impact in the competitiveness of the companies themselves, with compliance costs involved that only companies in certain countries must assume.

The most controversial issues on the table for our British neighbors are:

Packaging design

In the United Kingdom it is thought that the design of the packaging will begin with the exclusive objective of avoiding the tax, such as, for example, that the percentage of recycled material is limited to that minimum of 30% and no more is introduced, although it can, given the lack of availability of recycled material and price pressure. This would not be the case in Spain where the percentage of recycled content is expected to be maximized to reduce the tax base.

Movements towards other materials

The tax may trigger movement to other materials to avoid having to pay if the 30% target cannot be achieved. PET naturally enjoys an advantageous position within plastic packaging as it is the only polymer that has been recycled with EFSA approval for food contact. In this sense, in Europe, market movements are also aimed at replacing plastic with alternative materials perceived to have a better environmental profile, while the sector’s demand is that the replacement of plastic with other materials be based on life cycle analysis and not in image campaigns.

The better half of the story is that companies will have to do the critical exercise of reflecting on whether the plastic packaging is really necessary or not, eliminating at least the overpack.

Food waste

We should keep in mind that certain replacements of materials cannot be made due to conservation requirements and the type of food to be packed. The problem of increased food waste appears when companies eliminate really necessary plastic and replace it with materials that do not provide the same functionality. It is difficult, if not impossible, for these alternative materials to achieve the same barrier function as plastic, which stands out precisely for its ability to preserve food, extending its useful life, which favors the use of food and also the resources used in the production of these.

Recycling infrastructures

In 2020, a study was carried out by RECOUP and one of the conclusions was that the United Kingdom had to double the recycling infrastructure capacity to be able to respond to the 30% recycled material that needs to be incorporated. Until this happens, it is expected that the companies that produce plastic packaging in this country will move out to be able to supply themselves with the necessary recycled material, thus adding pressure to a still deficient market.

To the lack of recycling infrastructure must be added the problems faced by the recycling companies due to the inadequacy of the waste collection and sorting infrastructure, which makes them inherit materials with reduced yields and makes it difficult for them to produce recycled materials with the qualities that packers need.

Zeal in collection

The British colleagues emphasize that the money collected with the tax will be money taken out of the system that unfortunately will not be reinjected into investments to build recycling infrastructure. This can only be done by the SCRAP entities when they eco-modulate their rates in 2023-2024. The Spanish sector shares the same feeling: despite the specific objectives of the Project Law of Waste on the prevention of waste generation, the tax applies only to plastic packaging (as if the rest of containers were not littering) and the money raised by the tax will not be used to increase recycling facilities or to improve waste collection and sorting facilities. And that, of course, it is necessary to eco-modulate the Green Dot tariffs for plastics that currently range from 0.367 to 0.960 €/kg and have never been eco-modulated.

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