Technological watch
Lightening the UK Packaging Tax load
Packaging specialist at Sumitomo (SHI) Demag UK, Ashlee Gough
On 1 April 2022 the UK Packaging Tax comes into force. Pushing an already fragile industry contending with escalating raw material costs – double what there were 12 months ago – towards even greater counterproductive pressures. Despite the good intentions of incentivising the use of recycled materials, the compliance obligations and numerous abstracts that continue to stoke the zealots both sides of the argument have overshadowed the circular and sustainable practicalities that can be accomplished claims packaging specialist at Sumitomo (SHI) Demag UK, Ashlee Gough. He shares some insightful pointers and tackles several misconceptions that might help the entire packaging and recycling value chain to lessen the financial burden of the new UK Packaging Tax.
Applicable to all plastic packaging with less than 30% recycled content which is manufactured in the UK, in addition to unfilled packaging imported into and filled in the UK, the tax concept in theory sounds like a sensible ‘catch-all’ environmental solution. Yet for nearly 50 percent of end packaging users – predominantly in food packaging , it’s more like a ‘Catch 22’ situation. Existing regulations and technical constraints severely restricts the viability of recyclate processing in the largest packaging sub-sector – food packaging.
“Chargeable for each plastic component, food safety laws mean caps and closures, pots , tubs and trays are all manufactured using virgin polymers and therefore are all liable for the UK Packaging Tax,” highlights Ashlee. “If a plastic packaging component is made from multiple materials but contains more plastic by weight than any other substance, it will be classed as a plastic packaging component for the purposes of the tax. Additionally, it’s worth noting that biodegradable, compostable and oxo-degradable polymers are not exempt either!”
Applications where the packaging function is secondary to the storage function are not subject to the tax. The lengthy HMRC list cites toolboxes, CD, DVD, and video game cases, and board game boxes as well as printer and toner cartridges, inhalers and teabags as spared examples.
Given the prolific range of in-scope packaging applications, reducing material weight (light weighting) is the predominant technique that can be deployed to limit exposure to this new tax. This usually means thin walling, a long standing practice adopted in primary food contact and medical packaging applications. Additionally, MuCell injection moulding using a physical foaming process which can reduce weight by up to 35 percent.
For several decades now light-weighting and consumer convenience have given packaging manufacturers a strong commercial incentive to reduce material in packaging applications. Ashlee cites closure manufacturers as being among the most successful, with many slashing raw material consumption by over 35 percent in recent years. The paradox notes Ashlee is that EU Tamper Evident rules will reverse much of this sustainability-driven progress.
Nevertheless, packaging manufacturers and designers are well versed at responding to rapid demographic and lifestyle changes and balancing a wide range of variables, including cost, increased strength, recycle rates and functional requirements. Indeed, packaging designers have long understood the correlation between encouraging end user recycling and how single materials assist with the post-consumer waste, segregation, regrind and reuse agenda that’s actively encouraged by environmental groups and policymakers.
It’s why single material thin walling remains such a fast growing segment, reiterates Ashlee. Food is by far the largest thin walling market. However, there are also a number of non-food applications, such as pharmaceuticals, cosmetics, paint and adhesives.
Easing the squeeze
Stackability of containers is another reason food suppliers and retailers select thin walled packaging over thermoformed containers. What’s more, the price of oil directly correlates to the price of plastics, and this will always cause a ripple effect on business costs.
“Given that recyclable granular is more expensive than virgin polymers, the impetus to lightweight now stretches across all packaging material substrates,” observes Ashlee.
With Europe having introduced their Packaging Levy at the start of 2021, the Group’s Packaging Development Director Arnaud Nomblot adds further insight. He affirms that despite exciting alternative materials projects emerging, including using waste cooking oil, the real cost of recyclate materials continues to limit commercial viability, especially in food contact applications. In fact, Arnaud alludes that absorbing the tax on virgin polymers remains more economical than switching to approved recyclate materials which can cost upwards of $900 more per ton than virgin polymers.
Industry analysts are forecasting that the price of recyclate materials have yet to peak. An unintended consequence of increasing demand for any commodity is prices generally increase too, cautions Ashlee.
Financial incentives play a critical role, cites Arnaud. Scale is also important. Lots of European countries are now looking to emulate Germany’s successful plastic and glass bottle return scheme (Einwegpfand). “Here the deposit for plastic bottles is €0.25, but it gives consumers the financial impetus to return. It’s a model that considers the entire chain of responsibility and should be emulated globally.”
Industry calls for joined up thinking
Circumventing this tax for most is impossible, reiterates Ashlee. Virtually all packaging converters and users process or import more than 10 tonnes of plastics packaging in a 12-month period. For every metric tonne, the equivalent of 50,000 plastic drink bottles, the user that makes the most substantial modification – in most instances the manufacturers filling the packaging in their factory – will be liable for the £200 per material tonne tax.
Assuming this tax cost is passed down the chain to householders by packaging producers, manufacturers and retailers, the average impact of plastic packaging tax would be in the range of 7 pence per week per household, reports Imperial College London in their Shaping the Circular Economy abstract.
As a volume driven low value market, thin walling is the most practical method to minimise the tax exposure, improve barrier performance and consequently reduce farm-to-shelf-to-fork waste, claims Ashlee.
To assist the entire packaging value chain, Sumitomo (SHI) Demag continues to focus its R&D efforts on process improvements. Injection via accumulators available on the company’s machines offers a distinct competitive advantage and the potential to go even thinner without compromising the mechanical properties of packaging applications.
Ashlee expands: “From a machinery performance viewpoint, thinner wall sections bring changes in processing requirements. Among them, higher pressures and speeds, faster cooling times, and modifications to part-ejection and gating arrangements. These process changes need to be factored into the mould, machinery, and packaging component design.”
Always aligned to these evolving market trends, the latest generation of EL-Exis SP’s are specifically designed to withstand the higher stresses and injection pressures that are so critical in achieving repeatability in thin walled packaging products. Capable of delivering a cycle time of less than two seconds, the El-Exis SP remains the fastest injection moulding machine series for packaging manufacturers on the market today. The series also offers exceptional process consistency through acceleration, mould movement and deceleration. Having this additional control during the manufacturing process saves moulders and converters money by lowering operational costs and delivering energy savings of around 15 percent.
Being able to adjust the accumulator charging to the injection pressure required for the exact moulding process not only lowers energy usage, but also reduces wear and tear on parts. Additionally, to help factories make informed and conscious energy consumption decisions, the machine now includes an integrated energy monitor as standard. This data can be used by packaging suppliers and buyers to help demonstrate sustainability in their annual CSR reports.
“Despite the challenges and numerous narratives surrounding the roll out of the new UK Packaging Tax, light-weighting and other material saving techniques continue to provide promising options to help mitigate the impact of this new financial burden. It’s easy to get caught up in the regulatory and tax hype. Yet, often there’s a range of authentic and pragmatic solutions that can reframe our conceptions and misconceptions of the packaging crisis,” ends Ashlee.
Back to Search Results
On 1 April 2022 the UK Packaging Tax comes into force. Pushing an already fragile industry contending with escalating raw material costs – double what there were 12 months ago – towards even greater counterproductive pressures. Despite the good intentions of incentivising the use of recycled materials, the compliance obligations and numerous abstracts that continue to stoke the zealots both sides of the argument have overshadowed the circular and sustainable practicalities that can be accomplished claims packaging specialist at Sumitomo (SHI) Demag UK, Ashlee Gough. He shares some insightful pointers and tackles several misconceptions that might help the entire packaging and recycling value chain to lessen the financial burden of the new UK Packaging Tax.
Applicable to all plastic packaging with less than 30% recycled content which is manufactured in the UK, in addition to unfilled packaging imported into and filled in the UK, the tax concept in theory sounds like a sensible ‘catch-all’ environmental solution. Yet for nearly 50 percent of end packaging users – predominantly in food packaging , it’s more like a ‘Catch 22’ situation. Existing regulations and technical constraints severely restricts the viability of recyclate processing in the largest packaging sub-sector – food packaging.
“Chargeable for each plastic component, food safety laws mean caps and closures, pots , tubs and trays are all manufactured using virgin polymers and therefore are all liable for the UK Packaging Tax,” highlights Ashlee. “If a plastic packaging component is made from multiple materials but contains more plastic by weight than any other substance, it will be classed as a plastic packaging component for the purposes of the tax. Additionally, it’s worth noting that biodegradable, compostable and oxo-degradable polymers are not exempt either!”
Applications where the packaging function is secondary to the storage function are not subject to the tax. The lengthy HMRC list cites toolboxes, CD, DVD, and video game cases, and board game boxes as well as printer and toner cartridges, inhalers and teabags as spared examples.
Given the prolific range of in-scope packaging applications, reducing material weight (light weighting) is the predominant technique that can be deployed to limit exposure to this new tax. This usually means thin walling, a long standing practice adopted in primary food contact and medical packaging applications. Additionally, MuCell injection moulding using a physical foaming process which can reduce weight by up to 35 percent.
For several decades now light-weighting and consumer convenience have given packaging manufacturers a strong commercial incentive to reduce material in packaging applications. Ashlee cites closure manufacturers as being among the most successful, with many slashing raw material consumption by over 35 percent in recent years. The paradox notes Ashlee is that EU Tamper Evident rules will reverse much of this sustainability-driven progress.
Nevertheless, packaging manufacturers and designers are well versed at responding to rapid demographic and lifestyle changes and balancing a wide range of variables, including cost, increased strength, recycle rates and functional requirements. Indeed, packaging designers have long understood the correlation between encouraging end user recycling and how single materials assist with the post-consumer waste, segregation, regrind and reuse agenda that’s actively encouraged by environmental groups and policymakers.
It’s why single material thin walling remains such a fast growing segment, reiterates Ashlee. Food is by far the largest thin walling market. However, there are also a number of non-food applications, such as pharmaceuticals, cosmetics, paint and adhesives.
Easing the squeeze
Stackability of containers is another reason food suppliers and retailers select thin walled packaging over thermoformed containers. What’s more, the price of oil directly correlates to the price of plastics, and this will always cause a ripple effect on business costs.
“Given that recyclable granular is more expensive than virgin polymers, the impetus to lightweight now stretches across all packaging material substrates,” observes Ashlee.
With Europe having introduced their Packaging Levy at the start of 2021, the Group’s Packaging Development Director Arnaud Nomblot adds further insight. He affirms that despite exciting alternative materials projects emerging, including using waste cooking oil, the real cost of recyclate materials continues to limit commercial viability, especially in food contact applications. In fact, Arnaud alludes that absorbing the tax on virgin polymers remains more economical than switching to approved recyclate materials which can cost upwards of $900 more per ton than virgin polymers.
Industry analysts are forecasting that the price of recyclate materials have yet to peak. An unintended consequence of increasing demand for any commodity is prices generally increase too, cautions Ashlee.
Financial incentives play a critical role, cites Arnaud. Scale is also important. Lots of European countries are now looking to emulate Germany’s successful plastic and glass bottle return scheme (Einwegpfand). “Here the deposit for plastic bottles is €0.25, but it gives consumers the financial impetus to return. It’s a model that considers the entire chain of responsibility and should be emulated globally.”
Industry calls for joined up thinking
Circumventing this tax for most is impossible, reiterates Ashlee. Virtually all packaging converters and users process or import more than 10 tonnes of plastics packaging in a 12-month period. For every metric tonne, the equivalent of 50,000 plastic drink bottles, the user that makes the most substantial modification – in most instances the manufacturers filling the packaging in their factory – will be liable for the £200 per material tonne tax.
Assuming this tax cost is passed down the chain to householders by packaging producers, manufacturers and retailers, the average impact of plastic packaging tax would be in the range of 7 pence per week per household, reports Imperial College London in their Shaping the Circular Economy abstract.
As a volume driven low value market, thin walling is the most practical method to minimise the tax exposure, improve barrier performance and consequently reduce farm-to-shelf-to-fork waste, claims Ashlee.
To assist the entire packaging value chain, Sumitomo (SHI) Demag continues to focus its R&D efforts on process improvements. Injection via accumulators available on the company’s machines offers a distinct competitive advantage and the potential to go even thinner without compromising the mechanical properties of packaging applications.
Ashlee expands: “From a machinery performance viewpoint, thinner wall sections bring changes in processing requirements. Among them, higher pressures and speeds, faster cooling times, and modifications to part-ejection and gating arrangements. These process changes need to be factored into the mould, machinery, and packaging component design.”
Always aligned to these evolving market trends, the latest generation of EL-Exis SP’s are specifically designed to withstand the higher stresses and injection pressures that are so critical in achieving repeatability in thin walled packaging products. Capable of delivering a cycle time of less than two seconds, the El-Exis SP remains the fastest injection moulding machine series for packaging manufacturers on the market today. The series also offers exceptional process consistency through acceleration, mould movement and deceleration. Having this additional control during the manufacturing process saves moulders and converters money by lowering operational costs and delivering energy savings of around 15 percent.
Being able to adjust the accumulator charging to the injection pressure required for the exact moulding process not only lowers energy usage, but also reduces wear and tear on parts. Additionally, to help factories make informed and conscious energy consumption decisions, the machine now includes an integrated energy monitor as standard. This data can be used by packaging suppliers and buyers to help demonstrate sustainability in their annual CSR reports.
“Despite the challenges and numerous narratives surrounding the roll out of the new UK Packaging Tax, light-weighting and other material saving techniques continue to provide promising options to help mitigate the impact of this new financial burden. It’s easy to get caught up in the regulatory and tax hype. Yet, often there’s a range of authentic and pragmatic solutions that can reframe our conceptions and misconceptions of the packaging crisis,” ends Ashlee.
Back to Search Results
This project has been co-funded with the support of the LIFE financial instrument of the European Union [LIFE17 ENV/ES/000438] Life programme
The website reflects only the author's view. The Commission is not responsible for any use thay may be made of the information it contains.Last update: 2022-01-31
