The government is keen to drive the circular economy with a string of policy announcements. But is the infrastructure in place to do this and will it drive change? Philip Chadwick was at the FPA Environment Seminar to find out more.

The two subjects may be familiar but businesses still need clarity: extended producer responsibility (EPR) and the plastic packaging tax (PPT). Both have been mooted for some time and are now very much a reality.

But how much does the industry know about the government’s intentions in these areas, and could it all add up to a major headache for the supply chain at a time when it is having to contend with rising energy costs and material shortages? Last month’s Foodservice Packaging Association’s (FPA) Environment Seminar aimed to give some kind of guidance on what lies ahead.

Taking place in Birmingham, ahead of the Packaging Innovations show, the seminar brought together a strong speaker line-up of experts; from civil servants to analysts. It proved to be a thought-provoking day and provided some clarity on the future – although challenges were clearly on the horizon over the coming months and years.

There were no doubts on the government’s priorities following a recorded address by waste minister Jo Churchill MP. “Our resources and waste strategy provides a roadmap towards minimising the amount of waste we use. We want to shift from a linear economy to one that is more circular and sustainable. We want to become a world leader and prolong the life of materials and goods.”

The minister added that the government had “made progress” through its Environment Act with a deposit return scheme, EPR and consistent collections all on the table

“Foodservice packaging manufacturers are absolutely key to these reforms. You are instrumental on changing the products that arrive on the marketplace,” added Churchill.

Also delivering a recorded address was Lorna Slater MSP, Scotland’s minister for the circular economy. Slater echoed Churchill’s sentiment that the FPA had an important role to play in driving change.

“Getting packaging right is vital,” said Slater. “We need to tackle our throwaway culture, encourage reuse and repair, as well as responsible consumption. This is an exciting time for the circular economy in Scotland.”

Details on EPR are now beginning to see the light of day. The conference was updated on how the proposed new system was progressing by Linda Crichton, DEFRA’s team leader for packaging producer responsibility. She outlined the government’s response to its consultation. “EPR has wider objectives – protecting the climate, get more materials back into the economy and net zero. These are big policy drivers. We want to see improved design and use of packaging.”

DEFRA plans to introduce the payment of fees from producers in 2024. Modulated fees are in the mix, designed to incentivise producers to design recyclable packaging. Crichton confirmed that the money raised from EPR would go to supporting infrastructure from collecting and sorting. The money would be ringfenced and local authorities would likely receive payments in 2024/25.

Mandatory binary labelling of packaging with a single format is also on the cards. A ‘recycle/do not recycle’ message will apply to primary and shipment packaging and there will be no producer de-minimis. There will also be a mandatory takeback requirement for the collection and recycling of fibre-based cups.

There have been some changes to the government’s approach following the consultation. Unlike Scotland and Wales, England and Northern Ireland will not introduce payments for packaging waste that is littered. Also, the government is planning to continue the Packaging Waste Recycling Note (PRN) system as the means by which producers demonstrate they have met their recycling obligations. The scheme administrator will be a government appointment. Industry had been pushing for an independent administrator.

The finer details of EPR will be thrashed out over the coming months but what has been unveiled to much fanfare from the government is the plastic packaging tax. This came into force in April and is charged at a rate of £200 per tonne of packaging but only if it contains less than 30% recycled content. On hand to guide delegates about the tax were Hilary Pogson and Mark Palmer from the HMRC Plastic Packaging Tax Team. Palmer said that it was an unusual tax as “it’s a tax we would prefer you not to pay” and that the hope was that it would drive up the recycled content in plastic packaging.

“This is not about the money but it’s an environmental incentive,” said Palmer.

What is covered by the tax is packaging used in the supply chain and single-use by the consumer. Packaging that is considered “integral to the product”, such as an asthma inhaler, would be exempt from the tax. “If you took the packaging out then you would be hard pressed to use the product,” added Palmer.

On compliance, Pogson added: “There are concerns about getting it right and it is a complex tax in some areas. We expect 18,000 businesses to register by the end of the year.”

When asked about whether compostable plastics would be eligible for the tax in the future, Palmer said that there were “no firm plans to change the tax at the moment but everything is kept under review. Technology is changing all the time and we will monitor what impact there will be on the market. I expect the tax to evolve but there are no changes in the pipeline.”

RECOUP’s head of policy and infrastructure Steve Morgan said that the industry was in the middle of a complex policy development. He likened the situation to a whirlpool that has come together at speed. Morgan also observed that the plastic recycling infrastructure wasn’t up to speed to cope with the potential market demand.

“We need double the facilities – that’s the challenge ahead of us,” he said. “It takes time to produce capacity and there are lot of dynamics making it tough for recyclers to invest in the UK at the moment. If you were going to build a recycling plant that processes 20,000 tonnes of PET every year, then – based on equipment costs and lead times – you are talking about an investment of £20m.” Tom McBeth, RECOUP policy and infrastructure projects manager, noted that the PPT is estimated to raise £700m by 2025. But he added that will not be reinvested into recycling infrastructure but will go straight to the Treasury.

Businesses face higher costs at a time when they are under pressure like never before. Egor Dementev senior analyst from ICIS: Plastics observed that the European plastics market is reeling from record highs. “Consumption is much higher than capacity growth,” he said. “Everything is on a growing trend and it’s driven by high feedstock prices, high production costs and freight.” He added that the rise in oil and gas prices, which took hold in the last quarter of 2021, has “put significant pressure on virgin and recycled” plastic markets.

The paper and board markets were also under the spotlight. Neil Osment, managing director at NOA, said that corrugated benefited hugely during the pandemic as working from home became the norm for many. But that ultimately led to supply chain gaps and pressure grew on the European market. Box prices, on average went up 60%.

Supermarkets remain buoyant – thanks to both bricks and mortar, and online ordering – although hybrid working has reduced demand for food-to-go. And there are other factors on the horizon.

“We have not seen the full impact of the Ukraine/Russia war,” he said. “There are shortages of wheat, pulp and pallets. Covid made a massive difference and there is a new normal – the last few years have been disruptive. Inflation will cool the economy.” Michelle Wilson, network director at WasteAid, provided the audience with an even broader perspective. Adopting circular thinking in developing countries could go some way to preventing waste from being burnt or ending up in the ocean. The charity has developed the Circular Economy Network, in partnership with Huhtamaki, designed to fast-track entrepreneurs to meet decision makers and help them with business support and access to funding.

“We need the private sector to help,” said Wilson. “How can we stimulate local markets for recyclables? PET has great results but let’s look at the other hard to recycle materials. How can we make sure people are collecting waste and get more value for their labour?”

The next 12 months will go some way to deciding how the industry will rise to the challenges ahead.

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