Equilibrium & Sustainability

Plastics industry lashes out at ‘regressive’ Democratic tax plan

Greg Nash

A Democratic proposal to help finance the party’s $3.5 trillion spending bill by taxing single-use plastics is generating sharp pushback from members of the industry, who argue it would produce more waste and hurt average Americans.

The Senate Finance Committee is weighing the idea of a tax on the sale of virgin plastic resin — the base materials used to make single-use plastics — as one potential way to pay for the mammoth spending bill, according to a document released earlier this month.

But the proposal has garnered fierce opposition from the plastics division of the American Chemistry Council (ACC), a trade group representing 28 companies including oil giants such as ExxonMobil, Chevron and Shell as well as major chemical manufacturers such as DuPont and Dow Chemical.

The group argues that such a levy would amount to some $40 billion in additional taxes and “punish Americans” who depend on plastics in electric vehicles, home insulation, electronics and packaging, while funding unrelated government programs and fueling inflation.

“Plastic goes into a variety of applications, not just food packaging,” Joshua Baca, vice president of the ACC’s plastics division, told The Hill. “At the end of the day, this would result in a regressive tax that would largely impact those who can least afford it.”

Baca argued that implementation of the measure would lead to “incentivizing the use of other materials — whether that’s paper, glass, aluminum — all of which have a higher [carbon] footprint than plastics.”

Manufacturing such alternatives produces 2.7 times more greenhouse emissions than their plastic counterparts and consumes twice as much energy, Baca contended.

If all plastic bottles were replaced by glass ones, the power necessary to manufacture them would be the equivalent to running 22 large coal fired power plants, he said, arguing that such a shift would negatively impact the climate and “also be detrimental to our economy.” 

A plastic resin tax is not the only funding option under consideration for the $3.5 trillion spending bill. The Senate Finance Committee is also discussing taxes on stock buybacks and on corporations whose CEO pay exceeds the pay of their average workers, as well as energy-tax proposals.

The idea for a plastics tax was first introduced by Sen. Sheldon Whitehouse (D-R.I.) in August. His bill, known as the REDUCE Act, would impose a 20-cent per pound fee on the sale of new plastic for single-use producers — with the goal of helping “recycled plastics compete with virgin plastics on more equal footing,” according to Whitehouse’s office.

“Plastic pollution chokes our oceans, hastens climate change, and threatens people’s well-being,” Whitehouse said last month. “On its own, the plastics industry has done far too little to address the damage its products cause, so this bill gives the market a stronger incentive toward less plastic waste and more recycled plastic.” 

This “excise tax” — a duty imposed on a specific good — would apply to virgin resin, according to Whitehouse’s bill. Manufacturers, producers and importers of the resin would pay $0.10 per pound in 2022, which would gradually rise to $0.20 per pound in 2024.

The fees generated by this process would go toward a Plastic Waste Reduction Fund, which would serve to improve recycling activities. 

The ACC immediately opposed the REDUCE Act in August, arguing that policymakers should instead adopt comprehensive policies that could lead to a “circular economy” — an economy in which production and consumption focuses on extending the lifecycle of products and minimizing waste, as defined by the European Union.

Some policies the ACC has backed include requiring plastic packaging to contain 30 percent recycled plastic by 2030, developing a national recycling standard for plastics and studying the impact of greenhouse gases from materials, among other proposals.

Baca stressed the importance of establishing a better set of recycling standards for communities across the country, arguing that suitable regulations for recycling technologies would ensure “that private sector investment continues to happen at a commercial scale.”

“When you tie all of those things together, that is how you get a circular system,” Baca said. 

The need to transition domestic recycling programs to a “circular economy” was the topic of discussion at a Senate Environment and Public Works Committee hearing on Wednesday. 

“I love the idea of a circular economy, where things — and the materials they are made of — can be reused over and over again instead of ending up in a landfill somewhere,” Committee Chairman Tom Carper (D-Del.) said at the hearing.

Carper called upon companies to “step up and take greater responsibility for reducing, reusing and recycling their products,” adding that the government should play a role in ensuring that industry can succeed in this effort.

In response to the hearing, Baca said that the ACC submitted statements expressing the group’s viewpoints, including measures it would support.

Asked how the group’s members are working to make hard plastics easier to recycle, Baca explained that traditional recycling tools have their limitations and more advanced systems must be developed to break down plastics into their basic building blocks.

Tennessee-based Eastman Chemical has invested in a $150 million plastics facility that will come online soon, he said, adding that ExxonMobil has partnered with Oregon-based Agilyx to launch a joint plastic recycling venture.

Baca also said that due to supply chain issues, plastic manufacturers cannot all overhaul their plants to use solely recycled or biobased feedstock. To use more recycled plastic, companies need to either have the innovative technologies to break down hard-to-recycle materials or the means to collect feedstock, he said.

To date, Baca said, the plastics industry has invested almost $7 billion in promoting advanced recycling technologies, which he called “a step in the right direction,” as many companies begin to launch these technologies on a commercial scale.

“Brands have made a commitment to use more recycled plastics,” Baca said. “If we don’t produce and make that material we won’t be in business. This is not only good for our company, bottom line, but it’s good for the environment.”

Tags Plastics plastics industry Sheldon Whitehouse single-use plastic single-use products Tom Carper
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