Packaging Tax: Plastics, policy, potential
Senior Policy Advisor for Mura Technology Dr Geoff Brighty offers the recycler’s eye-view of the now in effect UK Plastics Packaging Tax.
Plastics industry players, particularly those in packaging markets, have stressed the importance of a head start in working with this new packaging tax. Is that a strategy you agree with?
As with any new regulatory measure, it isn’t fully clear how the marketplace will respond, and ultimately what impact will be achieved. Moreover, we don’t know how significant recycled packaging is as a differentiator in the mind of the consumer, but we can expect brand claims emerging soon as they adapt their packaging to be compliant with the tax threshold of 30 per cent recycled content.
Companies placing packaging on the market should be looking into this now for two reasons: On financial grounds, to avoid the tax burden at £200 per tonne, which is a further cost to business that can be avoided legitimately through recycled content; and enhancing the sustainability of the packaging, and therefore the sustainability credentials of a manufacturer.
Being engaged early gives companies the best chance of understanding the implications so they can respond quickly to emerging challenges and opportunities.
What measures would you now take in advising any businesses currently not implementing the minimum PCR content stipulation?
HMRC has stated that it wants behaviour change through incorporation of recycled content into packaging, and thereby not to receive the tax. There is really no reason why a business shouldn’t engage organisations like the BPF, who have been leading on this for some time. We would recommend consulting their guidance now, at least to see how to comply.
Importantly, it could be critical to secure recycled plastic feedstock as this tax should see an increase in demand for high-quality recyclates, which might affect both availability and price. Engaging the supply chain will be key so that the cost of compliance is minimised.
Finding things to tax seems like a default setting for the UK Government. As an advanced recycling company, would you say the tax was fit for purpose?
We understand from HMRC that the intention is to drive behavioural change to more sustainable packaging, and success is effectively ‘no tax revenue is collected’ because all packaging will have 30 per cent PCR content. It’s a useful principle to drive up recycled content in packaging. However, for the tax to be effective, it needs to address all plastic recycling and applications into packaging. This is currently not the case for chemical recycling, or its value chain.
Although chemical recycling is identified in the primary legislation (Finance Act 2021) as being an appropriate process to generate recycled content, in practice, HMRC has yet to agree how this is accounted for in the petrochemical system. Currently, plastic produced from our hydrocarbon will not count towards the 30 per cent content. This is part of an ongoing discussion with HMRC, and how mass-balance accounting can solve this challenge.
In practice, as chemically recycled content would not be accounted for, this is a challenge for food-contact packaging which cannot use recyclates generated by the mechanical recycling industry.
Therefore, there will be winners (those that use mechanically recycled plastic for content in packaging) and losers (those that need to meet other technical regulatory requirements in packaging). As a consequence, these will only be able to use fossil material and pay the tax.
In what ways is Mura best placed to guarantee an ongoing service for the plastics packaging sector?
We know the plastics sector is looking for highly versatile, recycled hydrocarbon that can be applied to a range of packaging and other applications and, similarly, recycling processes that can then take the packaging post-use and take it back to recycled hydrocarbon.
Chemical recycling delivers both outcomes for the plastics packaging sector, addressing the recyclability of plastic packaging (which relates to Extended Producer Responsibility market regulation) and generating recycled content for new packaging, as incentivised by the Plastic Packaging Tax.
Mura’s strategy is therefore set on a sustainable, circular plastic economy, and on technology which can be deployed at scale. To do that we are focusing on recycling post-consumer household waste plastic, and especially the hard to recycle packaging such as flexible, multi-layered packaging – most of which is sent for incineration. Mura’s technology generates recycled hydrocarbon ( which has the widest possible set of applications for the plastic packaging sector) for the consumer market.
In what ways does the tax help maintain the established packaging quality that consumers expect?
Whilst this is still very early in the life of the tax, we think there will be changes in the way companies will look at their packaging; this will lead to new innovations and even diverting away from plastic. This will include issues such as function and ‘form’. For example, recycled plastic tends to be darker through the blending of different coloured plastics. We have already seen testing of recycled plastics in packaging that delivers functionality but diverts from corporate branding.
What we don’t want to see is the tax avoidance driving divergence into other packaging materials that are not subject to tax, but are worse from an environmental sustainability perspective, such as from plastic to glass.
What is critically important is that trust remains in the system so that consumers can be confident that claims made by brands are verifiable.
How does Mura contribute to assisting the consumer and – more importantly – protecting the environment?
Broadly, Mura’s environmental sustainability approach is to be able to recycle hard to process plastics, particularly packaging, into beneficial hydrocarbon products that can be used for a wide range of applications.
The consumer benefits by purchasing goods in sustainable packaging that can be recycled again. This is likely to become an important selling point for consumer-facing brands.
The environmental benefits are that plastic is not otherwise lost to the system by being incinerated, landfilled or escaping into the environment, and avoids the significant carbon emissions associated with these processes. The recycling process avoids the need to extract and refine virgin fossil oil, thus conserving oil stocks and processing the hydrocarbon at a much lower carbon footprint.
Can you explain a little about how you collect the waste plastic and the scientific process used in creating these recycled materials?
The plastic that Mura processes predominately comes from post-consumer household waste left over after mechanical recycling operations. The HydroPRS (Hydrothermal Plastic Recycling Solution) process utilises the CAT-HTR technology, which uses supercritical water and heat to break down the long-chain hydrocarbons and donate hydrogen to produce shorter-chain, stable hydrocarbon products, converting plastics into valuable chemical and oils for sale into the petrochemical industry. This can then be used in the production of new plastics and other materials.
Finally, what are the major contributions Mura can offer the UK plastics industry?
Mura’s first plant in the UK is already under construction in Teesside and is expected to be operational later this year. Capable of processing 80,000 tonnes of plastic waste per year, the site is a blueprint for the rapid global roll-out to meet our ambition of reaching one million tonnes of recycling capacity by 2025. The site will be capable of recycling all forms of plastic an infinite number of times, playing a key role in eliminating single use plastic waste and putting the UK at the forefront of the circular global plastics economy.