The case for serialisation to support plastic taxation and recycling

As COP27 - UN Climate Change Conference meetings take place in Egypt most people are well aware of the issues of plastics which have a high carbon footprint and cause a serious issue when not correctly recycled at end of life.

Just this week we have seen reports that Coca Cola (a COP27 sponsor) has failed to meet its objectives to reduce use of virgin plastics in their packaging, and has in fact increased the volume of virgin plastic used by 3.3% since 2019 (Coca-Cola increased plastic use ahead of COP27 summit it is sponsoring | Financial Times (ft.com)) and while they say 90% of their packaging is recyclable how much is actually recycled?

A recent OECD - OCDE study into the management of plastic waste (Plastic pollution is growing relentlessly as waste management and recycling fall short, says OECD) found that only 9% is recycled with 22% being mismanaged (i.e. not landfill, incinerated or recycled).?Currently it is easy for a company like Coca-Cola to hide behind the idea that they are making their packaging recyclable as there are few, financially meaningful, consequences for them of what happens to this plastic at the end of its life.

And what about that missed objective to increase the volume of packaging from recycled material??The same OECD report found that globally only 6% of plastic production is from recycled materials although this has grown significantly from 6.8m tonnes to 29.1m tonnes in the 19 years to 2019.

So, plastic is a problem and commitments are being missed – what are the solutions.

Many countries have made a start with bans on single-use plastic bags, drinking straws etc but any trip to an American hotel where you will unwrap your plastic teaspoon from an individual plastic bag to make coffee from a plastic-wrapped pouch in a plastic single-use cup (which was also wrapped in a sealed plastic bag) will know that even in supposedly developed countries we are barely scratching the surface.

The UK government has reported on the success of the single use bag charging scheme (10p bag charge turns the tide on plastic waste - GOV.UK (www.gov.uk)) which has reduced single-use plastic bags issued by the main retailers from 7.6 billion per year to 197 million.?Sounds impressive but plastic bags represent only a very small proportion of the total plastic waste that the UK produces with Statista reporting that UK plastic packaging waste is back to 2.5m metric tonnes in 2021 which is close to the levels seen before the ban on single use bags.

All this means that we need another way to tackle this issue and it is encouraging to see that governments are starting to look seriously at how to make producers and consumers more accountable for their plastic waste. ?There are a number of policy areas being explored around the world including: plastic packaging tax (e.g. UK, in force from April 2022 for producers and importers based on threshold level of recycled plastics); extended producer responsibility (EPR) schemes (e.g. schemes in US states such as Maine and Oregon); and deposit and return schemes (e.g. Sweden which expanded existing aluminium can deposit and return scheme to include PET bottles)

The first two of these schemes attempt to disincentivise the production and use of plastics, especially virgin plastics, while the latter attempts to incentivise consumers to recycle more.?But many of these schemes have been in place for several years and, as the OECD study shows there is no meaningful reduction in plastic waste being produced nor in plastics being recycled.

A recent 世界银行 report The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC (worldbank.org) sets out a three-stage implementation programme for Extended Producer Responsibilty (EPR) and highlights the components required for a successful scheme.?They recommend establishing a Producer Responsibility Organisation (PRO) to manage the physical and financial interface between the producers and the recyclers.?They highlight the criticality of data and reporting to ensure that the correct taxes and EPR fees are paid by the producers based on the volumes produced, and they highlight the need for consumer education focused on correct sorting of the plastics before recycling.

Many of these requirements are closely aligned to excise tax track and trace schemes implemented to comply with the World Health Organization tobacco Illicit Trade Protocol.?They require the registration of economic operators and supply chain agents; the accurate recording of volumes to ensure the correct tax is paid which is achieved through product serialisation, and the ability for consumers to interact with the product and engage with the tax authority when they find products in the market which are not correctly marked.?In the case of a plastics recycling scheme the PRO is equivalent to the tax authority and would be accountable for registering the producers and recyclers and to facilitate the payment flows through the system.

Carla Worth of Resource Futures writing in Circular Online makes a strong case for product serialisation to support deposit return schemes Deposit Return Schemes and the case for "digital" (circularonline.co.uk) There are technologies and suppliers who can mark primary and secondary plastic packaging at production line speed and associate the marking with data linked back to the producer, the type of plastic and the % of recycled content – in short all of the information that will be required to facilitate deposit return and EPR schemes. There are also suppliers with proven experience of operating tobacco track and trace solutions who have the database and event-capture technology which can tie together the data-flows from an EPR and/or deposit return scheme to facilitate the smooth running of the scheme and ensure the correct suppliers are paying the correct amount.

In summary: we all know plastics are a problem and need a solution; the components of a successful digital solution already exist and are in-use at scale; the Illicit Trade Protocol demonstrates how global standards can be set for track and trace systems; and governments are starting to talk the right language and appear to be ready to act.??There may be cause for optimism that we can finally start to tackle the global issue of the 91% of plastic that is not currently recycled.