Blog: A view on the UK Government plastic packaging tax consultations

Written by Nick Parker on Friday, 06 September 2019. Posted in Blogs

Blog: A view on the UK Government plastic packaging tax consultations

Aegg is involved in the consultations for the UK Government's proposed plastic packaging tax. Read on to find out Aegg's thoughts on the proposals...

1. Background

The UK Government has been working on a Resources and Waste Strategy as part of delivering its 25 year plan (2018 to 2042; 25 year environment plan).

Within the plastic packaging part of this plan, the Government has run four consultations with industry and the public (Resource and Waste and Plastic Packaging Tax Consultations).

The scope of these will affect everything to do with plastic packaging: from the way packaging is designed, manufactured, used, to the way it is handled post first intended use.

The four consultation areas were

1. Reforming the packaging producer responsibility regulations in the UK
2. Introducing a deposit return scheme for drinks containers in England, Northern Ireland and Wales
3. Measures to accelerate consistency in recycling for both households and businesses in England
4. The design of a plastic packaging tax. This is for implementation in April 2022.

Core to the thinking within this consultation exercise is the intention to move towards a circular economy for plastic packaging. This contrasts to the current linear economy of ‘make, use and throw away’.

 

2. Aegg’s role in the consultation processes

Being a dynamic and well intentioned plastic packaging producer, Aegg was invited to join the contributions that the British Plastics Federation made to the plastic tax consultations, ie to Consultation No. 4 above.
One of the reasons for the Government consultation process is to avoid any unintended consequences of any legislative outcome. As Aegg is a player active in both the plastic and glass packaging industries, we felt a sense of duty to express our corporate opinion in pursuit of the right decisions. We have every intention of wishing to play our role in contributing to a sustainable future.
Whilst the outcomes of all consultations will have some effect on each other (notably No.1 and No. 4), the discussion in this blog is limited to the area of the plastic packaging tax as it relates to rigid plastic packaging for use in the UK food and drink sector.

 

3. Aegg views on the summary Government conclusions to plastic packaging tax consultations

In the 2018 Budget, the Government announced that, from April 2022, it would be introducing a world-leading new tax on the production and import of plastic packaging with less than 30% recycled content.
Consultations ran in the few months concluding May 2019 and preliminary conclusions on these consultations were published in July 2019.

See

Government consultation plastic packaging tax

and

Plastic packaging tax: summary of responses to the consultation

 a) Defining Plastic in Scope

It is recognised that European Union regulations go some way towards creating definitions for plastic, including bio-based, biodegradable and compostable plastic. The UK Government’s position on these materials in the tax will remain under review as further evidence emerges. The Government also recognises that compostable plastics, for example, may be beneficial in specific applications, but also that the infrastructure for dealing with these is not sufficiently developed.

The Aegg view

One of the reasons for the Government holding the consultation process is to avoid unintended consequences. The area of non-fossil fuel derived plastics is one such area because promoting any solution that encourages increased use of these ‘greener’ materials may lead to unintended outcomes. The following are some of the reasons:

1. These materials create items with very different user characteristics (for example, less transparency, different durability)
2. Some of these materials need energy intensive industrial processes for their breakdown
3. Some need fossil derived plastics as an ingredient in order to increase their strength. On degradation, this creates nano-particulate plastics that then pollute the environment.
4. There are safety concerns over nano particulate pesticides and other contaminates when using biomaterial inputs. These are a concern for human health when used in food contact applications. These particulates also compromise bacterial activity and life in the breakdown digestion progress.
5. There are problems differentiating these plastics from fossil fuel derived plastics in the recycling processes.

It is very good to see that the Government has launched a call for evidence in this area, with a 14th October 2019 deadline.

See

Standards for bio-based, biodegradable and compostable plastics

b) Percentage of recycled content

The Government has recognised that further consideration would be given to the appropriateness of a single 30% recycled content threshold. This could result in multiple thresholds.

The Aegg View

As it stands, and without change to this threshold, there is insufficient UK production capacity (current, planned or possible) in recycled food grade materials to meet the 30% content threshold by 2022. Furthermore, users of recycled raw materials are already experiencing UK recycled materials being inferior to similar materials sourced from the European continent. This is because of the lack of consistency in UK collection schemes.
As a consequence of all this, we could be exporting jobs or increasing imports. Or we could be creating inferior products, using inferior raw materials, which in the case of food and drink applications, could be downright dangerous to human health.
Of course, it would be a good thing if the financial proceeds of the tax were to be ringfenced to create greater UK production capacity in recycled materials, the waste management industry generally or wider environmental measures.
From our perspective, it would be beneficial to have multiple thresholds, perhaps increasing with the passage of time, so that a ‘getting on the ladder’ could be made by all producers in light of the limited supply of recycled materials. This could also encourage the very many smaller packaging producers from electing simply to pay the tax, possibly due to aversion to increased investment needs in production tooling and raw materials.

c) Effects on consumer prices

The Government recognised that the effects of conforming to the packaging tax would be passed on, at least in part, to the consumer. This was more likely in packaging where including recycled content is more challenging, such as in medical or food-contact applications.

The Aegg View

It is likely that both where the tax is levied, or where the tax is not levied (due to meeting the recycled content requirement), will result in increased cost for the consumer. Perhaps the consumer is prepared to pay the economic cost for what they consider to be less costly on the environment. Ultimately, the consumer should have a choice.

It is interesting to read that one piece of recent research on behalf of Veolia estimates that the plastic packaging tax could cost UK households an additional 7p per week. A very significant driver in this is the fact that currently virgin plastic is cheaper than recycled material, to the tune of approximately £500 per tonne. Therefore, a minimum tax level needed to make the costs of using 100% virgin plastic to using 30% recycled content, equates to approximately £150 per tonne.

See

Governments 'plastic tax' could cost households 7p per week

d) Recycled content for food (and medical) applications

The Government has recognised the potential problems associated with the inclusion of recycled content in food contact and medical applications.

The Aegg View

We do have concerns, as cited elsewhere in this article, about the food safety issues created by having ‘dirty’ recycled content in contact with food. There are technical solutions to this, such as ‘sandwiching’ the recycled content between outer and inner layers of clean virgin material. However, in our opinion this
1. Counteracts the current moves in light-weighting packaging (ie using less tonnage of plastic; itself a stated goal of many retailers)
2. Necessitates heavy investment in new production processes, which in themselves are also less production efficient. This will result in higher costs and the consumer having to pay more.

It is interesting to note that a public consultation was launched in Europe to give citizens and experts the opportunity to provide their views on the existing legislation on Food Contact Materials (FCM). This closed on 6th May 2019. The general public, businesses NGO’s and consumer organisations, public authorities, including public enforcement laboratory and regional/local enforcement offices were all given the opportunity to comment.

We note from the following 2 graphs from the report that the public trust in the safety of food contact materials is not reassuringly high. Furthermore business confidence in being able to conform to the regulations, without access to significant resources, is not high. We would hope that we could avoid a similar situation in the UK.

fig.5.png

 

 

 fig10.png

For further details, see

Evaluation of Food Contact Materials (FCM)

 e) The UK Government’s next steps

Several Government departments are involved in the consultation processes, notably HMRC and DEFRA. They have expressed the need to continue to work closely to ensure that the plastic packaging tax, the packaging producer responsibility regulations, the waste collection schemes and a potential deposit return scheme for drinks containers all work in sympathy.

The Government will set out the next steps at the 2019 Budget and publish a draft for the plastic tax design in 2020.

 

4. Aegg’s further views

a) Glass: a better alternative, or not?

We have launched a significant range of glass food and drink packaging products in response to demand from our food and drink manufacturing partners. This material presents itself as an alternative to plastic, with recycled content, or not.

The drivers for glass demand will be partly due to the perception that glass is a greener material. It can be recycled an indefinite number of times without losing its performance characteristics (with the exception of declining lustre).

It is not clear to us that this increase in demand for glass is a long term one:

1. Glass production requires huge amounts of energy during production and recycling processes
2. No-one has of yet undertaken a full comparative carbon life cycle analysis
3. Glass is heavy, incurring greater transport costs
4. Glass creates food safety issues due to its fragile nature and difficulty in detection of breakages

Even at this relatively early stage in the plastics debate, where we have seen manufacturers switch out of plastic into glass, the challenges that glass is creating for consumers in the home, for food safety on food production lines and by breakages elsewhere in the supply chain, are all reason as to why manufacturers are talking about switching back in to plastic.

b) What does the consumer really, really want?

We have not seen a decline in the demand for our plastic packaging products. In a straw pole in our office, employees (in their role as food shoppers in supermarkets) cite that the convenience of plastic transcends all other considerations.
In addition to this, we know that the general public consider that biodegradable or compostable products (most people are not interested in the technical difference in definition of these two terms) has very significant appeal. But as cited elsewhere in this blog, these products:

1. cause problems if they get into recycling schemes
2. are not part of the circular economy where the carbon is locked away from the atmosphere
3. because they ‘rot’ into valueless by-products, they cannot retain the commercial interest of all stakeholders in the circular plastics economy.

So we welcome two initiatives prompted by the UK Government

1. The consultation on bio-based, biodegradable and compostable plastics, as cited above
2. A commitment to invest £60million into new forms of packaging and plastics made from plants, wood chippings and food waste. This is part of reaching the
Government target of net zero carbon contribution by 2050 and its Clean Growth Challenge.

See

UK to lead global innovation in sustainable plastics in drive to net zero

5. In conclusion

The way ahead continues to be very unclear. The current legislative status on plastics remains the plastic industry’s very own Brexit moment. Where once we looked over the water to America to see what was coming our way in many aspects of our lives, we are not convinced that we will be following the younger American consumer who appears to have an increasing appetite for plastic.

See

Plastic preference? "US retailers are pushing for more plastic packaging," says researcher

 

It perhaps goes without saying, we monitor developments in this area with great interest and shall make further blog posts in due course.

 

 

About the Author

Nick Parker

Nick Parker

I see my job as being here for our customers and potential customers, interpreting their needs and attitudes so that we supply them with packaging items and services that surpass their expectations.  I am particularly excited by product designs that are customer lead, both aesthetically and in function.  Despite being in sales and marketing for more than 30 years, I love the constant striving to be better through learning new skills, improving my relationships with others and urging us to become more responsible and ethical corporate citizens.

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