Plastic tax ‘not efficient’ to increase recycling rates - Borealis’ CEO

Source: ICIS News

2018/11/01

LONDON (ICIS)--A tax on plastics would only add costs to the supply chain and it is “not the most efficient” method to increase recycling rates, the CEO at Austrian polymers and fertilizers major Borealis said this week after the UK announced intentions to tax plastics production.

Alfred Stern said that packaging across the EU is already subject to “some kind of taxes” under the Extended Producer Responsibility (EPR) schemes through which a “significant amount of money” is already collected to organise the collection of packaging materials post-use.

The UK’s minister for the economy – or Chancellor – Philip Hammond proposed this week a tax on plastics which contain less than 30% of recycled material, starting in 2022.

The director general at the country’s plastics trade group the British Plastics Federation (BPF) said in an interview with ICIS that, while it did not welcome the tax, in order to make the proposals work the UK needed to improve the supply of recyclates and the infrastructure to recycle.

Borealis’ Stern, however, said that the EU has the most-advanced recycling systems, with schemes like EPRs, although he conceded that large investments are still needed to achieve a more circular economy.

“I think some innovation around those types of themes [EPR-type schemes] could also help to try cost efficiency. Because just adding cost to the supply chain [taxing plastics] is not the most efficient way,” he said.

“It would be more helpful to also try innovation, development, and investment with that kind of activities [EPR schemes] … One that could provide significantly bigger incentives for collection, separation and recycling of the materials. Many of the tools that already exist could be used more efficiently.”

While countries like Borealis’ home market of Austria, Germany, or the Nordics have better recycling systems than countries like the UK, producers from all areas recognise that the sector still requires important investments.

BPF’s director general had said that proceeds from any tax should be exclusively used to improve recycling systems, although he also added that the government was “probably hopeful” companies could bear the cost of improving recycling systems.

However, Borealis’ Stern (pictured) preferred to see the glass half-full.

“If Europe doesn’t have the infrastructure, it would be very difficult to see how anybody else would have it. If you look at waste collection, or waste treatment, Europe probably has the most advanced infrastructure,” he said.

“I do think that, in order to make plastics circular, significant investment is still needed and that will require some tremendous efforts over the next couple of years.”

Asked whether the investment should be public or private, he said it would be a mixture of both: “I don't think one single industry can make this.”

Borealis’ efforts to improve its own record within the recycling sector would appear to be ahead of other large polymers producers, after the company acquired two producers of recycled materials.

The company said in October that it was aiming to increase by fourfold its capacities for recycled materials by 2025, compared to the 2016 baseline, when it made the first acquisition.

Borealis acquired mtm plastics in Germany in 2016, and this year it invested €15m to increase the firm’s processing capacities of post-consumer waste plastics from 60,000 tonnes/year to 80,000 tonne/year.

This year, the companyacquired Austria’s Ecoplast, which processes around 35,000 tonnes/year of post-consumer waste from households and industrial consumers and converts them into low- and high-density polyethylene (LDPE and HDPE) films.

If the company follows through on this commitment to quadruple its combined processing capacities from the two recyclers, 115,000 tonnes/year, it would process 460,000 tonnes/year by 2025.

Borealis’ CEO, however, would not be forthcoming with exact figures.

“This environment changes very quickly, so it's very difficult to set a long-term quantitative target. But at the same time we need to make sure that we show some commitment – that is why we have set a [target of] fourfold increase from the 2016 baseline,” said Stern.

“I would like to avoid giving you figures because it's part of our strategy in a very dynamic and changing environment.”

He added that Borealis is also making efforts to increase it research and development (R&D) expenditure and highlighted how it has signed the commitment with other large global companies to increase the use of recycled materials.

Borealis was the only major polymers producer to sign the commitment, an initiative led by the Ellen MacArthur Foundation. You can view the list of singnatories on this website.

Pictured: A recycling plant in Germany
Pictures sources: Clemens Bilan/EPA/REX/Shutterstock and Borealis 

Interview article by Jonathan Lopez