The effect of plastic packaging recycling policy interventions as a complement to extended producer responsibility schemes: A partial equilibrium model

Abstract

Extended producer responsibility (EPR) schemes have effectively increased the plastic waste that is separately collected. However, due to the structure of the recycling industry, EPR cannot increase recycling rates up to the target levels. Additional policy instruments to increase recycling rates such as recycled content targets, green dot fees bonus for recycled content, recycling targets and taxes on non-recycled plastic packaging have been discussed on a political level in the last years. However, very little research has quantitatively studied the effectiveness of these policy interventions. Using a partial equilibrium model, this paper examines the effectiveness of the implementation of the aforementioned policy instruments to increase recycling rates and the impact on different stakeholders of the value chain: plastic producers, consumers, producer responsibility organization and recyclers. Results show that direct interventions (recycled content standards and recycling targets) have the benefit of decoupling the recycling industry from external markets such as the oil market. They can be a good starting point to increase recycling, but in the long term they may be restricting by not presenting incentives to achieve recycling levels beyond the targeted amounts and by limiting technological innovation. On the contrary, economic interventions such as a green dot fee bonus or a packaging tax create economic incentives for recycling. However, these incentives are diminished by the lower perceived quality of packaging with higher recycled content levels.

Keywords: Circular economy; Extended producer responsibility; Packaging tax; Plastic recycling; Policy instrument; Recycled content.