Italy's postponed virgin plastic tax to be implemented in January 2021

Author: Matt Tudball

2020/05/15

LONDON (ICIS)--Italy's proposed €0.45/kilo (€450/tonne) tax on all virgin plastics has been postponed until 1 January 2021, the government confirmed this week.

The tax, initially due to come into effect on 1 July 2020, was pushed back due to the coronavirus pandemic.

The tax will impact all single use items with the exception of those produced from recycled plastics or compostable bioplastics.

Initial reaction to the tax from the plastics industry in the country was mixed, but the postponement of the tax, which was announced in April, was welcomed by the industry.

However, given the current spread between prices in the virgin polyethylene terephthalate (PET) and recycled PET (R-PET) markets, the tax may do little to encourage the use of more recycled content.

As of 12 March, the spread between R-PET food-grade pellets (FGP) and virgin PET was €675/tonne (see chart below), meaning that in the current market situation converters could afford to buy virgin PET, pay the €450/tonne tax, and still make profit.

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Additionally, some players in polymers markets such as PET and R-PET have previously stated concerns that the tax will have a negative impact on the Italian public’s perception of plastics overall, and this may be felt more so in the recycled polyolefins markets.

The European Food Safety Agency (EFSA) requires that at least 95% of the waste used in food grade recycled material production be sourced from food-contact material and be fully traceable throughout the chain.

The major waste feedstock source for R-PET is used plastic drinks bottles, making this relatively easy to achieve.

For other polymers, and in particular polyolefins, the mixed nature of the waste makes this more difficult and more costly.

For recycled high density polyethylene (R-HDPE), for example, food-grade pellet supply is limited to material from the UK – which is sourced from used milk bottles, which are made from HDPE , but from PET in other parts of Europe – and some small quantities of post-industrial waste from agriculture, with around 100,000 tonnes/year of waste available.

For recycled low density polyethylene (R-LDPE) and recycled polypropylene (R-PP) there is no EFSA approved food-grade material available beyond marginal quantities from post-industrial agriculture and meat industry sources.

This is limiting adoption from the packaging industry for recycled polyolefins outside of the cosmetics and household goods sectors – where food-grade material is not legally required.

As a result, there have previously been concerns in the market that rather than encouraging the increased use of recycled plastics material in Europe, it could hasten a shift to other materials such as paper and cardboard, which potentially have higher environmental impact.

Front page picture: Italy's Prime Minister in press conference, archive image; the country's government approved on Friday the tax on virgin plastics
Source: Angelo Carconi/EPA-EFE/Shutterstock

Focus article by Matt Tudball

Additional reporting by Mark Victory

Click here to see regulatory targets and a list of chemical and mechanical recyclers on the ICIS Circular Economy topic page.