February 22: The Government has proposed two options for changing the definition of obligated businesses (producers) under a reformed system.

• Option 1: A single point of compliance. In this model 100% of the obligation is placed on one business for each unit of packaging placed on the market. The Government is seeking views on whether this should be the brand owner (equivalent to the “pack-filler” in the current regulations) or the seller of the packaged product to the end user.
• Option 2: Retain shared responsibility. This option retains the shared responsibility approach but looks to draw into the system more businesses who are not obligated under the current system by lowering or removing the de-minimis threshold, extending it to wholesalers and a new approach to online distance-selling.

• Under Option 1, there are two approaches to a single point of compliance, one of which could have greater implications for wholesale:
  • A: Replace the current de-minimis threshold with a lower turnover threshold aimed at excluding the small and micro businesses who would otherwise be obligated
  • B: Retain the current de-minimis threshold and obligate wholesalers and direct-to-retail sellers of unfilled packaging. They would pay modulated fees or deposits on the unfilled packaging products (or own brand products) they sell to producers (i.e. brand owners, pack fillers) below the de-minimis threshold. Wholesalers and direct sellers of packaging would be expected to present prices inclusive of an ‘EPR obligations’ when selling unfilled packaging. The wholesaler could discount the fee when selling to an obligated business.

• Under Option 2 noted above, there also suggested approaches which will have implications for wholesale.
  • A. Lower or remove the de-minimis, which would bring up to 910,000 additional businesses into the EPR system. The costs involved in regulating this number of additional businesses plus the burden on small businesses may outweigh the environmental and societal gains.
  • B. De-minimis threshold remains unchanged and extend obligations on distributors of packaging or packaged products. Wholesalers currently have packaging obligations; however they do not take on an obligation for any packaging they sell to non-obligated sellers, that is subsequently sold on to the final consumer. The proposal is that the de-minimis threshold would be retained and wholesalers who sell packaging or packaged goods to non-obligated businesses, which are subsequently sold on to the final consumer, would be required to take on the obligation of that business. As an example, a wholesaler selling primary packaging to a non-obligated seller would take the 48% obligation of a seller on that packaging.

 Clean Air Strategy

January 14: The Government has published its finalised Clean Air Strategy which has the following implications for FWD wholesalers:

Transport

• The strategy refers to the Road to Zero Strategy which set out plans to end the sale of new conventional petrol and diesel cars and vans by 2040.
• This strategy will position the UK as the best place in the world to develop, manufacture and use zero exhaust emissions vehicles and, during the transition, the Government will ensure that the cleanest conventional vehicles are driven on our roads.
• New legislation will enable the Transport Secretary to compel manufacturers to recall vehicles and non-road mobile machinery for any failures in their emissions control system, and to take effective action against tampering with vehicle emissions control systems.
• The Government will work with international partners to research and develop new standards for tyres and brakes to address toxic non-exhaust particulate emissions from vehicles which include micro plastics and can pollute air and water.
• The strategy will reduce emissions from rail and reduce passenger and worker exposure to air pollution. By the spring 2019, the rail industry will produce recommendations and a route map to phase out diesel-only trains by 2040.
• Action to encourage the use of the cleanest modes of transport for freight and passengers, including active travel.
• Review current uses of red diesel and ensure its lower cost is not discouraging the transition to cleaner alternatives. The strategy will also explore permitting approaches to reduce emissions from non-road mobile machinery, particularly in urban areas.

Other

• Give new powers to local authorities to take action in areas of high pollution.
• Legislate to prohibit the sale of the most polluting fuels.
• Provide a personal air quality messaging system to inform the public, particularly those who are vulnerable to air pollution, about the air quality forecast, providing clearer information on air pollution episodes and accessible health advice.
• Phasing out coal-fired power stations, improving energy efficiency, and shifting to cleaner power sources will reduce emissions of air pollution as well as carbon dioxide. As we phase out oil and coal heating, the Government will ensure this transition improves air quality wherever possible and cost effective to do so.

The strategy notes that analysis shows that the actions set out in this strategy can meet the Government’s ambitious emissions reduction targets, if they are implemented with the necessary pace and determination. The Government also claims that these improve on current EU rules.

Resources and Waste Management

December 20: The Government has published its Resources and Waste Strategy, setting out how it wants to make the UK a world leader in using resources efficiently. The overarching theme of the strategy is that businesses and manufacturers will pay the full cost of recycling or disposing of their packaging waste. 

Packaging

 The Government are using the ‘polluter pays’ principle and will extend producer responsibility for packaging, ensuring that producers pay the full costs of disposal for packaging they place on the market. This means that retailers could be charged penalties for putting difficult to recycle packaging – such as black plastic trays – on the market. As an incentive, they would be charged lower fees for packaging that is easy to reuse or recycle. Currently the taxpayer, through local authorities, funds 90% of the costs of recycling and businesses just 10%. The scheme could also see producers of waste cover the full costs of recycling and collecting it. A consultation on this extension is expected in early 2019, and plans are set to come into force in 2023. Wholesalers’ current exemption from the Packaging Recovery Note scheme is not referenced in the strategy, but FWD will engage in this consultation to ensure their views are heard.

 Deposit Return Scheme 

 The Government will introduce a deposit return scheme, which will be subject to consultation also expected in early 2019 and set to come into force in 2023. The scheme will be aimed at increasing the recycling of single-use drinks containers including bottles, cans and disposable cups filled at the point of sale. The strategy does stipulate that the Government’s preference is to adopt a UK-wide approach to DRS if it is introduced.

Plastics

 The strategy puts pressure on the supply chain to voluntarily reduce the amount of single use plastics – plans are already in place from 2022 for a tax on plastic packaging that does not have a 30% minimum recycled content. If sufficient voluntary progress is not made by businesses, then the Government will consider other options and forthcoming consultations will consider whether or not to drive further progress by including disposable cups filled at the point of sale in a DRS; using the reformed packaging producer responsibility system to provide a strong incentive for business to provide cups that are easy to recycle; and setting targets to encourage higher levels of recycling.

 The Government plan to consult on increasing the 5p plastic bag charge to 10p and extending the scheme to smaller retailers. A consultation on this also expected in early 2019. After the success of the 5p plastic bag charge, the Government will look at the relative costs and benefits of different approaches, including taxes, charges and other policy instruments such as regulations or bans, which have been proposed for plastic straws, stirrers and cotton buds, for example.

Recycling

 The Government will also look at providing ‘Eco labels’, which are used around the world to show that a product meets a certain standard of environmental performance. The strategy notes “under extended producer responsibility for packaging we could require producers to ensure that packaging items are clearly labelled as to whether or not they can be recycled.”

 Food Waste

The Government also confirmed a range of measures to reduce food waste, including: taking action (and possibly legislation) to ensure that businesses separate recycling and food waste separately from residual waste; consulting on whether businesses should be required to report their food waste annually; reviewing the current recommendation for most pre-packed uncut fresh produce to carry a ‘Best Before’ date; and identifying progress made by all retailers and food businesses to implement best practice on food waste.

A timeline of consultations and key milestones appears on page 13 of the strategy. FWD will continue to monitor for the deposit return scheme and producer responsibility extension for packaging consultations in early 2019. 

Plastic straws, drink stirrers and cotton buds

Packaging Recovery Notes (PRN)

The National Audit Office has published its review of the packaging recycling obligation system, including Packaging Recovery Notes (PRNs). The report says the Government has no way to use the PRN system to incentivise companies to minimise packaging or make packaging easy to recycle and therefore it is unclear what value the system current has.

Due to a lack of follow-ups by the Environment Agency, at least 4.5% of obligated companies may not register under the scheme

Businesses only pay £73million towards the cost of recycling their packaging, but local authorities spend £700million

There is a financial incentive for companies to fraudulently claim they have recycled packaging, particularly for plastic

The Environment Agency has low visibility and control over waste that is sold for recycling abroad and there is a risk that some of it is not recycled and is sent to landfill or littered

The Government has no evidence that the scheme has encouraged companies to minimise packaging or make it easy to recycle

The Department for Environment, Food and Rural Affairs does not know what value the scheme has added in its 20 years of operation.

The report suggests that the PRN system has evolved into “a comfortable way for Government to meet targets without facing up to the underlying recycling issues”. The Government is consultating on proposed reforms to the PRN system later this year which FWD will be responding to.

Plastic bottle Deposit Return Scheme

Plastic

Earlier this year the government ran a call for evidence to explore how changes to the tax system or charges could be used to reduce the amount of single-use plastics wasted. It received 162,000 responses

There were a number of  suggestions on how best to reduce the amount of single-use plastics, and over the coming months the government plans to explore the following proposals in more depth:

• Using tax to shift demand towards recycled plastic inputs.
• Using tax to encourage items to be designed in a way that is easier to recycle.
• Taxes or charges on specific plastic items that are commonly use on-the-go and littered, in order to encourage a reduction in production and use.
• Using tax to ensure that the right incentives are in place to encourage greater recycling of waste that in currently incinerated.

At Budget 2018, the Chancellor will announce the policies that the Government will take forward, and, further consultation on the detail and design of those policies will follow the Budget.

The document also confirms that the Government’s new strategy on resources and waste will be published later this year, as will a consultation on the reform of the packaging waste regulations and a deposit return scheme.