In early 2021, the European Union announced that they would allocate around €6-8 billion a year from its general budget to a levy for packaging waste from non-recycled plastic. Analysts have assessed how this levy will impact EU nations and how this will affect packaging types, and what this will mean to consumers.
On January 1, 2021, the EU implemented a new levy on non-recycled plastic waste calculated at around €0.80 per kg. Contributions will greatly vary across member countries, and the national governments of each member state will be responsible for deciding how to collect the additional revenue required.
General contributions could absorb the costs. Governments could implement taxes on non-recycling disposal channels like energy recovery or landfills. They could pass the tax on to plastics producers and/or packaging companies.
The most likely action is that countries will combine two or more of these options. As such, there may be a variety of tax collection initiatives executed in member states. Exactly how this is affected will vary from country to country. There will also be an intensified focus on reducing how much plastic ends up as waste.
As mentioned in the EU council’s approved proposal, one of the levy’s prime targets is the flexible plastic packaging industry. Since the industry has already taken a stand in implementing more sustainable practices, it is hoped that the levy will lead to improved options in terms of sustainability. This includes mono-material structures that are recyclable and often polyolefin-based and post-consumer recycled (PCR) content.
Despite longstanding discussions around it, many of the significant converters show hesitation to commit to large volumes, which also means considerable investment. The new EU levy can increase converter confidence. Conversely, it could put pressure on them to make more significant sustainable shifts.
While it won’t be possible to switch all plastic packaging from multi-material to mono-material structures, the trend will most likely begin to gather momentum. Soon, there may well be a more rapid shift across the board.
Even though switching to more sustainable plastic packaging has many benefits, the new EU levy will affect the packaging cost, no matter how the tax is collected. This may result in flexible packaging losing its cost advantage. There may be a movement towards alternative materials to avoid the additional costs.
Increased costs will inevitably also affect consumers. So many products rely on multi-material flexible packaging. With the increased costs, packaged products will likely see price increases. Even if governments push taxes on packaging producers, they will probably pass the additional expenses down the supply chain. Eventually, this tax will trickle down to the price of consumer items.