Can a new tax help reduce plastic use?

Albatrosses feeding plastic to their chicks, a pilot whale mother nursing her dead calf, poisoned by plastic, the news that ninety percent of the world’s sea birds have fragments of plastic in their stomach. 1 Five years have passed since BBC’s Blue Planet 2 series caused shock waves when it highlighted the extent of marine pollution – particularly plastics. And recent research shows that human blood now contains microplastics. 2

Every item of plastic produced today is a potential problem for the future. In the UK, approximately five million tonnes of plastic are used every year – that’s the weight of more than 400,000 London buses. 3 Global plastic production continues to rise to a cumulative total of eight billion tonnes. 4 Only a small fraction is recycled, meaning most either becomes litter, is sent to landfill, where it lasts for centuries, or is exported. In 2020, the UK exported 0.54 million tonnes of plastic waste. The amount has started to fall, and the Environment Agency is calling to ban the export of waste overseas. 5

The pandemic exacerbated demand. Single-use plastic required for masks, tests, gloves, aprons and more soared. A 2021 study estimated that approximately 3.4 billion single-use facemasks were discarded globally, every single day. 6


The problem with packaging

Plastic is so popular as a packaging material because it is both cheap and light, whilst contributing to food safety and hygiene. Around half of the plastic used in the UK is for packaging. 7 The most frequently littered items, which dominate ocean plastics, are packaging from food and drinks. 8

So has the Blue Planet effect been long forgotten? Especially as we are currently so far from the target set by the UK Government under Prime Minister May for “all plastic packaging placed on the market being recyclable, reusable or compostable by 2025.” 9

It may seem gloomy, but there has been some recent progress in the UK. A new Plastic Packaging Tax (PPT) that was first outlined in the 2017 budget has just become a reality. Implemented in April 2022, the tax directly targets plastic usage for packaging. It has received very little media attention, so we’d like to take the opportunity to tell you more.


What is the Plastic Packaging Tax?

The PPT will be paid by businesses that manufacture or import plastic packaging components or import packaged goods into the UK. It is currently set at £200 per tonne of plastic packaging and only applies to plastic packaging with less than 30% of recycled material. The UK government estimates that it affects around 20,000 packaging producers and importers. 10

What should the PPT achieve?

The new tax will provide a clear incentive for businesses to use recycled plastic in their packaging. This should:

  • generate increased demand for recycled materials
  • challenge the reliance on new ‘virgin plastics’
  • lead to more recycling of plastic waste
  • reduce incineration or landfill of plastics, and
  • reduce production of difficult or impossible to recycle plastics, such as black food trays.

This is a step towards a circular economy, but domestic capacity to recycle and reuse plastic waste will need to grow. However, Greenpeace UK states that we will be unable to recycle the quantity of waste plastic we’re currently producing, arguing that the best way to deal with plastic pollution is for governments to implement strict restrictions on single-use plastics. 11


Impact on consumers

The PPT should make it easier for consumers to avoid packaging made from new plastic, and it may also result in the amount of packaging being minimised. However, it is also likely that a significant percentage of the cost will be passed on to the purchaser. At a time when prices for many commodities are rising, this is likely to be more challenging for shoppers as budgets are already squeezed.
What about bio-based plastics?

Many are surprised to discover that the plastic tax will also apply to compostable, biodegradable bio-based plastics. Made from renewable sources such as corn or cane sugar, bioplastics are often considered more eco-friendly than typical petroleum plastic. However, they have not been excluded from the tax for three key reasons:

  • Firstly, bioplastics cannot be recycled and can contaminate a batch of plastic recycling meaning it must all be disposed of.
  • Secondly, in the environment, including the ocean, they often behave just like plastics, taking a long time to break down and creating similar issues to microplastics.
  • Finally, compostable bioplastics often end up in landfill, which is a low-oxygen situation. Alarmingly, that can result in the production of methane, a more potent gas than carbon dioxide. 12

The investment opportunities

The new tax, coupled with the rising price of oil making plastic production more costly, certainly makes investing in businesses involved in recycling or producing alternatives to virgin plastic increasingly relevant. With Holden & Partners, you can invest in Ninety One Global Environment. Looking at their recent impact report (July 2022), many of the underlying holdings are focused on the ‘resource efficiency’ theme. This aligns with the Sustainable Development Goal (SDG) 12: ‘Responsible consumption and production’. 13

Find out more about SDGs here.

Two specific examples of companies held by Ninety One Global Environment include:

    1. Waste Management, the largest waste-collection and processing company in the US, are heavily involved in the recycling industry, collecting and sorting materials such as plastic, reducing the need for virgin materials.
    1. Novozymes sells enzymes and microbes which serve as biological catalysts to speed up chemical reactions. A few years ago, they launched a joint development collaboration to commercialise biodegradable plastics, reducing the damaging effects of single-use products, such as plastic bags.14

In summary

The war on plastics is only just beginning, and this new tax represents a significant first step. We are a long way from ending our toxic relationship with plastic, let alone tackling the existing levels of pollution in the environment, but with sustainable investment, fiscal stimulus, and new technologies it is just possible that the Blue Planet moment might still lead to real change.


1 https://www.wastedive.com/news/90-of-seabirds-have-plastic-waste-in-stomach-study/405101/#:~:text=A%20recent%20analysis%20published%20by%20the%20Proceedings%20of,This%20number%20was%20only%205%25%20in%20the%201960s.

2 https://www.theguardian.com/environment/2022/mar/24/microplastics-found-in-human-blood-for-first-time

3 https://researchbriefings.files.parliament.uk/documents/CBP-8515/CBP-8515.pdf#:~:text=In%20the%20UK%20it%20is%20estimated%20that%20five,every%20year%2C%20nearly%20half%20of%20which%20is%20packaging.

4 https://earthbound.report/2021/05/26/the-top-ten-producers-of-single-use-plastics/

5 Ban all rubbish exports to crack down on waste crime, Environment Agency urges | The Independent

6 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7896824/

7 https://researchbriefings.files.parliament.uk/documents/CBP-8515/CBP-8515.pdf#:~:text=In%20the%20UK%20it%20is%20estimated%20that%20five,every%20year%2C%20nearly%20half%20of%20which%20is%20packaging.

8 Takeaway food and drink litter dominates ocean plastic, study shows | Plastics | The Guardian

9 https://researchbriefings.files.parliament.uk/documents/CBP-8515/CBP-8515.pdf#:~:text=In%20the%20UK%20it%20is%20estimated%20that%20five,every%20year%2C%20nearly%20half%20of%20which%20is%20packaging.

10 https://www.clarity.eu.com/plastic-packaging-tax-the-complete-guide/

11 Takeaway food and drink litter dominates ocean plastic, study shows | Plastics | The Guardian

12 https://learn.eartheasy.com/guides/bioplastics-are-they-really-better/

13 https://ninetyone.com/-/media/documents/impact-report/91-global-environment-impact-report-2022-en.pdf

14 https://www.labiotech.eu/more-news/novozymes-carbios-biodegradable-plastic/

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