Virgin resin tax may make packaging more circular

One thing that’s going to be needed to fix plastics recycling in the United States is money, and lots of it.A recent report from the industry-funded Recycling Partnership that $17 billion over five years could make big improvements, including $4 billion alone for residential recycling to be able to handle Plastic films and flexibles.But there’s a gap in how to pay for it. Here’s an idea to close the gap that may sound radical in the United States but is getting attention elsewhere — a tax on virgin resin in plastic packaging that doesn’t have recycled content.The government in the United Kingdom has it, and consumer product companies in this country have the idea of resin fees generally.The U.K. is suggesting a tax of 200 pounds sterling per metric ton of plastic packaging made there or imported, but it would exempt any package with more than 30 percent recycled content.In the U.S., by my calculations, that works out roughly to $250 per U.S. ton, or 12.5 cents per pound. Most plastics in packaging sells for 80 cents to $1.20 a pound, although it’s worth noting those prices are at historic highs.At this point, I’m sure some of the Plastics News readers are thinking: This is crazy. Why would we want to effectively raise our prices?Hear me out. It would raise the kind of serious money needed to improve recycling infrastructure and get our plastic packaging recycling rate above the 14 percent rate the EPA says we have now. That’s anemic.It would also send a strong signal in favor of recycled content and more circular plastic packaging.Hurdles would have to be addressed. The money collected would have to be limited to plastics recycling, like federal gas taxes going to the Highway Trust Fund.A colleague I ran this by said it would put administrative burdens on companies. But it seems to me that any big attempt at improvements will do that. The extended producer responsibility programs plastics industry groups say they’re now in favor of would also have administrative burdens for companies.Government policy has always been involved in recycling. The PET recycling business got its start with bottle bills in the 1970s, and our taxes pay for curbside recycling that provides industry with materials.We use tax policies all the time for things society values, like home ownership. In that context, a tax to support recycled content isn’t so radical, and it has the advantage of being a tax that can be avoided if we do the right thing and make packaging circular.And if chemical or advanced recycling takes off in the way some say it will for plastics, the tax would drop off.So how much money are we talking about?As one example covering part of the packaging sector, the EPA estimates there’s about 8.4 billion pounds of plastic used bags, wraps and sacks each year.Using that as a rough stand-in for flexible packaging, a 12.5 cent resin tax would raise $1 billion a year. Over five years, you’ve got the money the Recycling Partnership says is needed to pay for flexible plastics recycling in curbside programs.The Plastics Industry Association recently had its annual Washington lobbying event for member companies, and recycling and sustainability were among the key talking points. Industry lobbyists hope to see some funding for recycling in the infrastructure plans Washington is debating.In an era of rising federal deficits, a tax like this has the advantage of not making the government’s financial situation worse and making it an easier sell to get recycling in any new Washington spending.It would still allow for all the arguments in favor of plastics packaging — that it’s lightweight, that it can have a lower greenhouse gas impact over its use phase, and that its flexibility and functionality make it popular in packaging.But plastic packaging’s big weakness is a lack of circularity and overreliance on virgin fossil resources.I saw a small example of that last weekend when I bought an aluminum can of water at a 7-11.The brand name, Liquid Death Mountain Water, drew me in, but the labeling went right at the challenge for plastics packaging.It noted pointedly that the average aluminum can has 70 percent recycled content but the average plastic bottle has 3 percent. I’ve seen other estimates in that range, that plastics packaging has low single-digit percentage of post-consumer content.There’s no technological reason why all plastic beverage bottles couldn’t have much higher recycled content.A lot of it comes down to political will, in my opinion. There are some economic differences in the recycling of aluminum compared with plastics, but it’s mostly political will that’s needed to fund our government-run collection systems and incentivize companies to use recycled content.A virgin resin tax, with a carveout exemption for recycled content, is a way to get the money needed to make that political will happen.Steve Toloken is a Plastics News assistant managing editor. Follow him on Twitter @Steve_Toloken.Do you have an opinion about this story? Do you have some thoughts you’d like to share with our readers? Plastics News would love to hear from you. 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