The first part of this blog series examined the plastic tax’s positive determinants for the packaging sector. It is evident that many brands and retailers are already beginning to react, research and introduce sustainable packaging solutions that mitigate the new taxation impact.
However, there remain numerous roadblocks throughout the plastic packaging supply chain that need to be addressed and resolved in time for the incoming taxation.
Limited recycling infrastructure and potential material supply
The UK’s recycling infrastructure is widely understood to be a fragmented and inefficient system. Through lack of private investment, local council budgetary cuts and dysfunctional kerbside collection throughout the nation, the UK recycling system has caused confusion and misinformation amongst the general public. These inefficiencies today result in a lack of suitable recycled plastic being available to meet the new demands which the plastic tax will bring.
Compound this with the demand for plastic packaging producers to foot the bill for dealing with the waste they generate through the Extended Producer Responsibility (EPR) policy already in place and this double whammy of taxation makes the situation complicated and costly for all.
First, the structuring of the new tax policy may simply force brands and retailers to absorb the tax into their overall costs. This would be counterproductive as inevitably, through the absorption of the tax as a business overhead, the cost would then be passed on to the customer and ultimately, the consumer.
While its clear, many consumers are prepared to pay for more environmentally friendly packaging, this would hit the poorest in society hardest (food being a larger percentage of disposable income for those on low income) as well as create potential for market inflation.
Sorting and recycling plastic packaging can be complex, and it raises several quality, cost and health and safety questions.
Food packaging in particular is one of the most highly regulated sectors, with several legal compliance requirements in place. Food contact legislation for example ensures that when food comes into contact with its packaging, the Food Contact Material (FCM) does not breakdown or transfer odour, alter the taste or composition of the food creating a risk to human health. These special measures have been put in place to ensure food is safe for consumption following rigorous testing and establish clear channels of traceability through the supply chain.
Virgin plastics have been utilised as an FCM for decades and have a proven track record for safety. However, today recycled materials must not be in direct food contact due to contamination risks. It can be used in food packaging; however, it must be located behind an appropriate functional barrier (typically foil) to ensure minimal migration of any contaminants into the packed product.
Stringent legislation set out by the European Union (EU), and the European Food Safety Authority (EFSA) outlines that recycled plastics must also be EFSA-approved before it can re-enter the supply chain. The lengthy application requires plastic manufacturers and producers to compile extensive scientific and traceability data and keep up to date with regular EFSA updates to ensure that their recycled FCM is still certified for use.
This raises the question, how are companies and manufacturers going to be able to achieve the 30% inclusion of recycled plastics in their packaging to avoid the tax? These packaging changes require huge amounts of investment to run migration testing as well as health and safety auditing to comply with legislation that is already in place – further driving up costs.
Lack of consistency
It is well understood that consistency is vital in building a successful brand. An essential vehicle for brands to communicate their consistency is often through the aesthetics of their packaging. Due to the nature of the process, recycled plastics do not provide the clarity, crispness or sheen of virgin plastics, although these innovations are in development. They tend to be cloudier with varying hues of blues, greens or greys. This dulled and hazed appearance is often a result of the mixture of plastics found in the recycling process.
The varying appearance of the plastic and its cloudy nature may discourage customers when shopping or convey poorer perceived quality, reducing shelf impact. If the plastic tax affects the market as expected, it would be prudent for the sector and government bodies to communicate the realities of recycled plastics to consumers – clearly highlighting that these new looking plastic products are not reflective of quality but indeed sustainability.
A recovering economy
Finally, nobody could have foreseen the impact of Covid-19 on global markets. Here in the UK, the treasury has announced that it may take more than five years for the economy to recover. A surge in government spending and the growing unemployment rate will have a lasting effect on the growth and recovery of the economy. Fast forward to April 2022 and its clear that the last thing the packaging sector needs is increased costs, imposed by a new tax, before the economy has fully recovered.
So, will the plastic tax be successful? Its introduction is confirmed and therefore the industry will adapt. The key challenges outlined may hinder the fundamental objective of the tax – to boost the use of recycled material and diminish the role of virgin plastics in contemporary packaging design. However, it is clear that the packaging industry is working hard to innovate and drive improvement in both the use and appropriate application of virgin plastics going forward.
What is key is that collaboration through the supply chain – from farm to fork and into waste management – is essential. While the packaging industry will manage the costs associated with bringing about change, strengthening of the UK’s recycling infrastructure is undoubtedly required to bring about both the volume and quality of recycled material required after April 2022.