Consequences of the new Plastic Packaging Tax (PPT) legislation?

This article aims to provide clarity on the new regulation on plastic packaging and the consequences for companies. The decision-making basis for a plastic packaging tax in the UK is based on various climate laws, which the UK has signed. Learn the background and discover how PlasticPlan has created a transparent solution path for companies and their packaging data.

• UK set its national climate change contributions and implemented them through various regulations
• PPT encourages companies to make their packaging more sustainable
• PlasticPlan's goal is to provide transparency and clarity around packaging data, with expert guidance on data aggregation and processing

The impacts of various regulations and domestic legislation

The Producer Responsibility (Packaging Waste) Regulations were introduced in 1997 to reduce the amount of packaging waste going to landfills. This was the first piece of legislation in the UK to make producers collectively responsible. Also, the Climate Change Act, passed by a large majority in Parliament in 2008, set the legal framework for achieving the goal of reducing greenhouse gas emissions by 80 percent by 2050 compared to 1990.

One of the greatest challenges of our time is climate change. If the global surface temperature warms by 2 °C, a quarter of the world will regularly suffer from extreme heatwaves. The Paris Climate Agreement is the successor document to the Kyoto Protocol and is considered an important milestone against global warming. In April 2016 together with other member states of the European Union, the UK signed the Paris Agreement and thereby committed to the ratification. With this, all signatory countries have committed under international law to limit global warming to well below 2 °C, compared to the pre-industrial era, and aim to limit the increase to 1.5°C, since this would significantly reduce risks and the impacts of climate change. To achieve this long-term temperature goal, countries strive to eliminate the maximum global level of greenhouse gas emissions as quickly as possible to create a climate-neutral world by 2050 at the latest. For more information, you can read here.

To achieve the goals of the climate laws, the UK set its national climate change contributions and implemented them through various regulations and domestic legislation.

Impact of PPT on companies and environment 

With upcoming changes to the Plastic Packaging Regulations, cost increases for UK packaging users and producers can be expected. The reforms are intended to encourage companies to make their packaging more sustainable, to reduce compliance costs and environmental impact. Reforms in plastic packaging are leading to a societal shift in the way packaging is used and disposed of. By encouraging companies to ensure that large quantities of recyclable plastic are turned into packaging, resource recyclability is achieved, which in turn benefits the environment.

From April 1, 2022, the Plastic Packaging Tax (PPT) will be introduced in the United Kingdom. The PPT is a tax on manufactured or imported plastic packaging that does not contain at least 30 percent recycled plastic. Companies in the UK are required to know and report on their environmental footprint. All companies with more than 10 tons of plastic packaging must pay a tax of £200.00 per ton.

Some countries have already introduced a plastic tax and others will soon follow suit. In most cases, it is not yet clear whether new legislation will replace existing laws or whether existing laws will be updated. What is already clear, however, is that UK companies are facing changes for which most are not yet prepared. Responsibilities within teams are unclear, as is reporting and accounting to HMRC.

What lies ahead for companies?

The global economy plays a central role in achieving significant success. In reaction to the plastic flood, governments are taking measures relying on market-based climate solutions. This strategy aims to introduce extended producer responsibility (EPR) and a plastic packaging tax. The idea is to create incentives for reducing plastics, improving recyclability and plastic alternatives. 

The introduction of the plastic packaging tax will have a major impact on supply chains and will test the way societies consume. It's no secret that companies will face challenges that they will need to overcome. There are some ways to mitigate the risk and become familiar with the issue before PPT is introduced. An essential building block for successful reporting is to have an overview of all important data as well as its classification and processing. The enormous amount of data might raise questions such as: 

• What data needs to be captured? 
• How can internal data silos be overcome to structure data for the ever-changing internal and external packaging reporting requirements?
• How can cross-departmental collaboration with multiple suppliers and customers be achieved without losing track of endless Excel spreadsheets and static reports?
• How to analyze complex business processes across the value chain, including import, export and production operations? 
• How to deal with internal data gaps (e.g. percentage of recycled content) or inconsistencies when upcoming legislation requires sophisticated reporting at the product component level?
  

In addition, challenges can arise with PPT reporting and data transparency. PPT reporting challenges companies to capture, optimize and communicate their plastic packaging data, capabilities, and insights. In most cases, data is spread across multiple systems and not available at the packaging component level. Data aggregation processes rely on manual spreadsheets that incur high overhead costs and can be a source of error rates. In many cases, the distribution of responsibilities within the company for PPT reporting is often unclear, too. 

How can PlasticPlan help?

Ideally, companies have already thought about their packaging strategy before the effective date of PPT. One important point, among others, is to review the supply chains to determine which companies within the group may be affected. It may also be the case that manufactured or imported products qualify for exemption from PPT. Existing systems and processes should capture all information required to meet PPT requirements by April 2022. Even if it is to be proven that no PPT is taxable.

PlasticPlan's goal is to provide transparency and clarity around packaging data, with expert guidance on data aggregation and processing. Our AI data engine automates the process of structuring, cleaning, validation, and enriching your material master data and transactional data. Intelligent approval workflows make it easy to collaborate across multiple departments, saving you up to 80% of your time and associated costs. Our solution is powered by three blocks, which include

• data aggregation for customer raw data
• data modeling and classification for automation
• data validation and insights for reporting

Based on the country-specific legislation, we offer an intelligent classification of your packaging products, breaking it down to a component level. Get your compliance-ready tax return reports, faster and with high data quality. Get in touch with us.