The Government has launched an exceptionally wide ranging consultation aimed at improving the collection and recycling of waste packaging. The consultation is exceptionally long, at over 200 pages, and has over 100 separate questions. If the proposed changes proceed, some could be implemented in 2023.
Major cost increases
At the heart of the consultation is a proposal that businesses selling consumer products should pay the “Full Net Costs” of the collection and recycling of waste packaging. Previously, businesses have only paid a small part of the costs, and so, for producers within the scope of the legislation, this will result in a major cost increase. It is estimated that costs will increase some ten fold.
The cost increase is caused by the exceptionally wide range of costs that are to be covered by producers, including all collecting, sorting and recycling of packaging waste from households and businesses.
Costs will be further increased for those producers that continue to use unrecyclable packaging (such as polystyrene or black plastic). Higher fees, the government argues, will incentivise such businesses to change to recyclable packaging.
Online Sellers required to comply
Pleasingly, the Government proposes to include operators of online marketplaces in the new legislation. This will, at a stroke, eliminate much of the wide spread non-compliance that has been a feature of products sold via online sites.
Data required for each nation in the UK
One of the most controversial aspects of the document is that producers are being asked to report separately on the packaging supplied into each of the four nations of the UK. Whilst this would allow each nation to assess its own recycling rate, for many businesses, this information is simply not available. Product is sold to distributors who determine where it is subsequently sold. This data is not passed back up the supply chain.
Small producers do not need to comply – but still get increased costs
Smaller businesses are likely to be able to continue to avoid the need to comply if they use less than fifty tonnes of packaging per year. However, that will not mean they will avoid cost increases – the producers and suppliers of packaging will be required to finance recycling costs, which presumably will result in increases in the costs of packaging materials.
The consultation document also includes proposals for mandatory recyclability labelling to be applied on packaging.
Commenting on the consultation, Recolight CEO Nigel Harvey says “The net effect of these proposals will be a very significant increase in costs to businesses. Arguably that will translate into a very strong incentive to reduce the weight of packaging used – which is great. But with no gradual lead in, or ramp up, the sudden cost increase could be damaging to some businesses still reeling from the pandemic.”
He adds “It is pleasing to see the Government taking action to close the online marketplace loophole. But current proposals could mean that it is cheaper for non-UK producers to sell through online marketplaces, than to sell direct. That would be damaging to competition, and transfer more market power to online marketplaces.”