INSIGHT: Chemically recycled content to be exempt from Spain’s plastic packaging tax

Jonathan Lopez

18-Jan-2022

MADRID (ICIS)–Spain’s draft legislation on the circular economy proposes that material produced by chemical recycling will not be subject to its €450/tonne tax on single-use plastic packaging.

The proposed regulation is aiming to implement from 1 January 2023 a €0.45/kg tax on single-use plastic packaging which would affect only the non-recycled content included in a plastic.

Moreover, the plastic’s sector has successfully lobbied for the tax’s burden to be shared across the value chain; in a previous draft, its costs would have had to be paid by producers or converters.

The plastics industry in the 47m-strong country thus managed to score a goal with legislators including chemically recycled content as recycled, although the plastic industry’s strong lobbying against the plastic tax did not stop its approval.

The Spanish upper house where the regions are represented, the Senate, is now considering the draft legislation but major changes are not expected before it returns to Congress – the lower chamber – for final approval.

CHEMICAL RECYCLING: IN
Chemical recycling is an umbrella term for a variety of methods that use different production routes to create new material from waste. Common chemical recycling methods include pyrolysis, gasification, glycolysis, hydrolysis, methanolysis, and enzymatic hydrolysis.

Plastics producers across the EU are lobbying for the 27-country bloc’s legislation to grant chemical recycling the same legal status as mechanical recycling after technological improvements have made processes commercially feasible.

The European Commission – the EU’s executive body – is yet to take a decision on this front.

In an interview with ICIS in June, the president of Spain’s chemicals trade group Feique said the country could only meet its circular economy targets if chemical recycling was recognised as one more technology to recycle materials.

That way recycling rates could be increased from the current 45% to 80-90% by 2050, added Carles Navarro.

The draft legislation (read it here, in Spanish) establishes that “the amount of recycled plastic, be it from chemical or mechanical recycling … will have to be certified by an accredited entity” in line with the EU’s certifications.

The recognition by Spanish legislators that chemical recycling can play a role in the circular economy may come from their ambitious targets for plastics-use reduction.

For single-use plastics, the draft legislation establishes a reduction of 60% by 2026, compared with 2022, and of 80% by 2030.

‘CHANGED PERCEPTION’ ON TAX
The director general at Spain’s chemicals trade group Feique celebrated the win on the chemical recycling front legal status and toned down the pessimistic forecasts by the Spanish plastics sector about the plastic tax.

In a document published in November (read it here, in Spanish), the sector-specific trade group EsPlasticos argued that as many as 95% of plastics producers could go bankrupt if the tax was implemented, causing thousands of job losses.

EsPlasticos’ biggest fear was, at the time, that the tax would fall entirely on plastics producers; the current draft legislation does establish how the costs would be shared across the value chain.

Feique’s director general, Juan Labat, said “the perception” about the tax had now changed and its impact on the industry would be diluted along the value chain, so the plastics industry would avoid a large impact on its profitability.

Moreover, the draft legislation does not establish a minimum percentage of recycled content necessary in the final product to be exempt from the tax.

The legislators established that the company – producer or converters, mostly – issuing a bill for plastic materials will have to state in the bill the “amount of non-recycled plastic” contained in the final product.

“In those cases where the bill does not state the amount of non-recycled plastic [the authorities] will presume, unless proven otherwise, that the material has been manufactured entirely with recycled plastic,” says the draft legislation.

Asked whether this complicated system could lead to scams, Feique’s Labat said the EU-type certifications in place for the plastics industry would guarantee that does not happen.

He was also pleased with legislators’ change of course in who would have to take on the hit from the plastic packaging tax.

“Producers or converters will pay for the tax, but they will be allowed to pass on the costs to the packaging company when billing them. Packagers will then pass on the cost to the distributor, who at the same time will pass it on to the retail outlets who would pass it onto the end customers,” said Labat.

“This is why the perception about the tax has now changed. In the previous draft legislation, producers/converters were obliged to pay for the tax but not able to pass on the costs – the burden will now be now shared across the value chain. Probably large packagers like food companies will be the ones hit hardest.”

As for EsPlasticos’ alarming forecasts for the Spanish plastics industry when the tax comes into force, they have now been toned down.

In a written response to ICIS, a spokesperson said the cost-sharing clauses under the current draft legislation could make the forecasts “somehow less negative” but maintained its negative view about the tax overall.

“This new tax still represents a burden for a strategic sector of the Spanish economy,” the spokesperson concluded.

Front page picture source: Feique

Insight article by Jonathan Lopez

Additional reporting by Mark Victory 

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