July 28, 2020

A financial incentive for boosting plastics recyclability

EU proposes financial incentive to boost plastics recyclability

What does CITEO think about this approach?

From January 2021, European Union (EU) countries will likely pay an annual levy of €0.80 per kilo of unrecycled plastics packaging waste – which would be equivalent to €0.024 for a 30g, 1.5–litre PET bottle.

This initiative was announced in May 2018 by the European Commission in its ‘own resources’ proposal*. Part of EU budget discussions for 2021-2027, the so-called multi-annual financial framework (MFF) has been confirmed in the latest proposals adopted May 27 that take into account the coronavirus crisis.

A Commission spokesperson told Pont Europe the plastics levy would “provide the right incentive for member states to stimulate recycling or reduce single-use plastic packaging and at the same time leave them the choice of the best measure to achieve this objective”.

The exact amount member states will pay would depend on the overall weight of unrecycled packaging “to encourage them to introduce recycling technologies or to reduce the amount of single-use plastic that they generate,” she added.

Based on 2015 plastics packaging recycling figures from the EU’s statistical arm Eurostat, if the proposal is agreed by all member states, the average EU citizen would pay around €15 per year. But taking into account the amount of plastics packaging waste generated per person and the amount already recycled, some could pay twice as much. Figures range from €31.1/person in Ireland to €4.4/person in Bulgaria, with Belgium coming in at €13.7/head**.

The aim is to reduce the weight of the gross national income contribution for member states and reflect the EU’s policy priorities – for example to promote sustainability – the spokesperson explained.

Schemes to boost the recyclability of packaging materials are not new. France’s packaging recovery organisation CITEO (in its former incarnation, until 2017, of Eco-Emballages and Ecofolio) has operated a ‘bonus/malus’ system for years. Paper companies pay 10% less (bonus) if they use packaging with more recyclable material but 5% more (malus) if they use unsustainable fibres or introduce materials, like ink or glue, into the recycling system.

Indeed, CITEO’s EU-International Affairs advisor-circular economy, Axel Darut, told Pont Europe the Commission could base the common guidelines on eco-modulation with a specific bonus and penalty system based on elements including the amount of incorporated recycled material, sustainability and repairability of the product and opportunities for reuse as well as recyclability, similar to France.

He welcomed new EU initiatives to cut single use plastic and promote the incorporation of recycled materials in products through fiscal measures. But he warned the new levy should be translated consistently and efficiently at the national scale, leading to “a coherent and efficient fiscal system to increase recycled content and reduce virgin material use.

“Such fiscal measures should increase the use of recycled plastics in packaging and reduce the spread between the price of recycled plastic and the price of virgin plastic in a context of low oil prices in the aftermath of the Covid-19 crisis,” he said.

“In this context, we strongly encourage the Commission to pay attention to the implementation of the new levy so it does not lead to fragmentation of the EU single market,” he concluded, calling for harmonised measures.

For now, approaches to boost plastics recycling vary Europe-wide, based on recycled content or plastic type. From April 2022, the UK will charge manufacturers and importers £200/€230 per tonne of plastic packaging containing less than 30% recycled content. “This will increase the use of recycled plastic in packaging by 40% – equal to carbon savings of nearly 200,000 tonnes,” Chancellor of the Exchequer Rishi Sunak announced March 11.

Meanwhile Italy’s €0.45/kg tax on single-use plastics, included in its 2020 budget law ‘MACSI’, published in the Italian Official Gazette in December, came into force July 1. This covers bottles, bags and food containers in polyethylene, tetra pack containers, packaging in expanded polystyrene, rolls of pluri-ball plastic and plastic caps.

Spain has also proposed a €0.45/kg tax on single-use plastic containers in legislation to come into force in January 2023. “This will impact the manufacture, import or acquisition within the European Union of non-reusable plastic containers for use within the Spanish market,” a June 3 ministry statement said.

The European Environmental Bureau (EEB), the EU’s umbrella organisation for environmental NGOs, welcomes all initiatives that will reduce plastics use.

“The EU levy will encourage recycled content if the tax on virgin plastic is high enough and if there will be enough clean material on the market,” EEB Senior Policy Officer for Waste Piotr Barczak told Pont Europe. And he added the tax should be “a permanent economic correction to incentivize secondary raw materials.”

For Barczak the rate of 0.80 cents/kg was reasonable, especially as it was almost twice as much as the taxes proposed in Italy and Spain. “This means €800 per tonne, enough to make secondary plastic cheaper than virgin pellet.”

He emphasised that any tax should target first and foremost virgin plastic. In addition, the revenue raised from the new tax should be invested in measures to prevent plastic pollution, including better product design.

* https://ec.europa.eu/commission/sites/beta-political/files/system-own-resources-may2018_en.pdf

**http://www.collection4recycling.eu/pdf/2018.05.03_plastics_packaging_EU_levy_impact.pdf

Due to the rapid evolution of the sustainability into the packaging sector as well as local differences of recycling processes and law, information provided within this document are for information only.
We advise you to check your local regulation’s update.