Blog: What the Plastics Tax Might Mean for Users of Rigid Plastic Packaging for Food and Drink: a Quick and Dirty Post-Budget Reflection.
I am the first to admit that I have yet to fully digest the 51 page government consultation document
• £200 per tonne will be levied on plastic packaging that does not meet a minimum of £30% recycled content.
• This includes filled product and imported products.
• This will come into effect in April 2022.
• Exclusions would only apply to medicines and businesses that supply less than 10 tonnes of plastic packaging per annum.
• We have now entered a 10-week consultation period on the application of this tax.
I write from the perspective of a manufacturer that, at the current time, is asked by the marketplace (in both the UK and overseas) to supply products using rPET, PET, PP and PS. It is worth noting here that all these plastics are intrinsically recyclable. However, here in the UK, some are deemed less favourably than others because of the existing post consumer collection infrastructure and market economics
How will the tax influence choosing the right material?
First of all, there are no food grades of recycled PP or PS. In the case of the latter, the economics of recycling are not there.
In the case of PP, the economics are possibly there, but the world has yet to commercialise the technology to create food grade rPP. As PP is put to such widespread use, with many additives for a plethora of applications, not just in food, there is no way to remove the various additives. I am sure that we would all rather not have fire retardants (for example) leaching into our food for the sake of meeting some sort of recycling claim. The implication of this is, therefore, that if we need to use PP for food packaging with its inherent unique properties (e.g. the ability to be able to withstand domestic microwave cooking), then we are going to have to stomach (pun intended) the tax levied on PP packaged food and drinks. It is true that polymer manufacturers are bringing on stream rPP material but unfortunately none are food grade approved. We are hopeful that in the near future food grade materials will be developed.
So, whilst we are able, as a manufacturer, to design-in better environmentalism to PP products (e.g. lightweighting to reduce the amount of virgin plastic used), this will still fall foul of a tax penalty.
There is just one plastic for rigid food applications that meets the new recyclable content criteria.
So PET is Hobson’s choice.
But this is not all it seems either.
At the time of writing virgin, fossil fuel derived PET is about £1000/tonne. This price is significantly linked to the price of crude oil. What with CoronaVirus and other world troubles, the virgin PET price is going south.
At the same time, food grade 100% rPET is £1,500 - £2,000 per tonne. This price is likely to go up with time as the demand further outstrips supply. Already we are seeing that UK manufactured food grade rPET is of insufficient quality, compared to certain imports, because of the vast disparity in kerbside waste segregation schemes we run in the UK.
So rPET is getting on for being twice as expensive as virgin PET. This margin is likely to increase for the foreseeable future.
It currently seems, therefore, that at these tax levels, the economic drivers to encourage the more widespread use of recycled rigid plastics (whether PET, PP or PS) in food and drink applications are weak.
Of course, we are only at the start of our plastic packaging tax journey. Quite rightly, the government has said that it will keep things under review.
I note that the Italian government is talking about a plastic packaging tax of 450 euros/tonne effective from 1st July 2020. However, the rules concerning application are not clear at present.
What is a food and what is a medicine?
Food supplements and vitamins will not be exempt of the tax. They use food contact approved materials to meet required legislation.
So what is the right material choice for ‘my’ food or drink packaging?
There is a very grave danger that this tax and the other plastics policies of the UK Government will create the unintended consequences over which many have voiced concerns. One report suggests that, taken collectively, these polices will result in a tripling of carbon emissions. We need to consider the carbon footprint of every competing packaging material over its full lifecycle. This is the only way that we can redress the real issue of reducing consumption of all virgin materials and not contribute to climate heating.
What will Aegg be doing?
We aim to continue to actively engage in UK government consultations, which we started doing in early 2019. We are endeavouring to contribute to the latest invitation to meet with the Treasury and air our views through our local MP. These have been invited for April 2020.
Otherwise, we continue to supply our food and drink customers with glass and plastic packaging to the required food contact legislation, working with them to choose the material that best meets the needs and perceptions of all stakeholders. In a world of imperfect information and much vested interest, these decisions are not easy, and we strive to act with pragmatism and integrity.
We maintain very active innovation programmes in both glass and plastic.
We currently supply ranges of rigid plastic pots and bowls in PET, 30%rPET, PP and PS. We also supply ranges of jars, bottles and pots in glass If you can’t find what you are looking for, please contact us.