Economics

Proposed Resin Tax Takes Wrong Approach to Promote Recycling

A newly proposed tax on virgin plastic would have unintended consequences and fails to acknowledge the necessity of both recycled and virgin resins.

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Plastics are already the most sustainable choice when compared to alternative materials. For instance, plastic bottles create the least CO2 emissions in production compared to alternatives like aluminum cans and glass bottles, and plastic bags use less energy in production than paper and cotton bags. 

Unfortunately, some Senate Democrats are considering creating a tax on virgin plastic to help fund a $3.5 trillion climate and healthcare spending plan. This excise tax would place a $0.20 fee on every pound of virgin plastic used for single use products and packaging, making the material artificially more expensive. Ostensibly, the goal of such a measure is to make recycled plastics less expensive in comparison but doing so through an immediate excise tax won’t increase the availability of recycled plastic and could shift demand to alternative materials that have a larger carbon footprint.  

A Resin Tax Would Have Unintended Consequences

Using more recycled plastics to create products would not only reduce energy use and improve plastic waste management but it would also create jobs and better the circular economy. Many consumer brands have already created pledges to use more recycled plastic content, yet a shortage of recycled plastic material has hindered these plans for years. Part of the issue is the need for better consumer education—the feedstock for recycling can be low quality or unusable due to contamination. But quality feedstock is only useful if there are recycling facilities to process it and often, the necessary infrastructure is lacking. 

Creating an excise tax on plastic will also harm American workers and cost consumers who will bear the burden of paying at a time when the costs of food and essential goods for families are rapidly increasing with inflation. 

While this tax penalty is meant to force the use of recycled plastic resin, it ignores the fact that the infrastructure to produce enough replacement recycled plastic simply does not exist. By trying to force the use of recycled plastic through a punitive tax before infrastructure is in place, this measure will result in job loss. 

Placing a tax on virgin plastic to coerce use of recycled plastic, while lacking the infrastructure to recycle also raises the problem of a shift towards alternative materials that use more energy and create more emissions in production, transportation and recycling. The shift to using cotton bags for groceries rather than plastic ones is a good example of how well-intentioned but misinformed actions to promote sustainability can create worse outcomes. A single use of a plastic bag offsets its environmental footprint from production, but an organic cotton tote bag has to be used 20,000 to offset its footprint.  A resin tax could have severe unintended environmental consequences. 

Both Recycled and Virgin Resins are Necessary

Recycled plastic has an important role to play in a circular economy, but so does virgin resins and we have to equip ourselves with the tools necessary to maximize efficacy. The plastics industry understands this and is investing billions in the dual-track of producing recycled plastic and backing recycling technologies to make this concept a reality. 

But there is still a ways to go and true change does not occur in silos – it will require all stakeholders, industry and government alike, to come to the table. Improved and expanded recycling infrastructure as well as established end markets for recycled plastic need to be in place, and in some cases legislated,  before a significant transition from virgin plastic to recycled plastic from virgin plastic to recycled plastic can be achieved. Until that time, both recycled and virgin resins are necessary.   

Just as traditional recycling can convert materials into new plastic products and keep it out of the environment, so can advanced recycling. In fact, with the latter, plastics can be infinitely recycled, and advanced recycling technologies can emit 50 percent less emissions than other recycling technologies. Unfortunately, pending legislation would kill any new advanced recycling facilities. Without an embrace of this technology and more investment in it, it will be impossible to produce enough high-quality recycled plastic to meet demand. As with the proposed resin tax, policies that are punitively based on exclusion can do more harm than good.  

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