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REDUCE Act receives support from environmental groups, while plastics industry voices concern

The legislation would set a fee on virgin plastic to incentivize recycling.

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September 30, 2021

In early August, Sen. Sheldon Whitehouse introduced the Rewarding Efforts to Decrease Unrecycled Contaminants in Ecosystems (REDUCE) Act to the Senate. The bill, co-authored with Congressman Tom Suozzi, is designed to create a new incentive to recycle plastic and to address plastic waste in our ecosystems by imposing a 20-cent-per-pound fee on the sale of virgin plastic used in single-use products. It has been included as part of the budget reconciliation package before Congress. According to the sponsors, the fee would help recycled plastics compete with virgin plastics and ensure the plastics industry is accountable for its harms to the climate, oceans and minority and low-income communities.

Whitehouse has announced that the bill has received support from a number of environmental groups.

“Support is growing for our plastic polluter fee bill,” he says. “We need to end the cascade of plastic pollution into our environment. That pollution chokes our oceans, hastens climate change and threatens Americans’ well-being, and it’s the plastics industry that should cover the cost of the damage. I’m glad to partner with Congressman Suozzi to send a strong market signal to reduce plastic waste and boost recycled plastic. I’m also glad to earn the support of leading ocean and environmental advocates.”

Signatories to a Sept. 16 letter addressed to Sen. Ron Wyden, the chair of the Senate Committee on Finance and Rep. Richard Neal, the chair of the House Committee on Ways and Means, indicate their support for the bill. Those organizations include the Ocean Conservancy, U.S. PIRG (Public Interest Research Group), the World Wildlife Fund, the American Sustainable Business Council, Barrel Bag, Californians Against Waste, the Clean Air Council, Environment America, Fenceline Watch, GAIA (Global Alliance for Incinerator Alternatives), Greenpeace, Inland Ocean Coalition, Lonely Whale, Oceana, Oceanic Global, Our Climate, the Plastic Pollution Coalition, Social Venture Circle, Surfrider Foundation and the Turtle Island Restoration Network.

“A virgin plastic fee, such as the REDUCE Act, as introduced by Senator Whitehouse and Representative Suozzi, will level the economic playing field between virgin and recycled plastic, incentivize reuse and recycling of plastic and will raise revenue to invest in needed recycling and waste management infrastructure,” the letter reads in part. “In our current political moment, we cannot afford to pass on the opportunity to create change in upcoming legislative packages, including reconciliation.”

A news release issued by Whitehouse’s office says the REDUCE Act would:

  • Establish an excise tax on virgin plastic resin. Manufacturers, producers and importers of virgin plastic resins would pay 10 cents per pound beginning in 2022, which would increase gradually to 20 cents per pound in 2024. This fee would apply to virgin plastic used to make single-use products, including plastic packaging, beverage containers, bags and food-service products. Exported virgin plastic resin and postconsumer recycled resin would be exempt from the fee.
  • Provide rebates for certain products. Companies that use virgin plastic to make medical products, containers or packaging for medicines, personal hygiene products and any packaging used for the shipment of hazardous materials would not have to pay the fee and could qualify for a full rebate for any fees paid on the plastic they use for such products. Virgin plastic used to make products intended for repeated use also would qualify for this rebate.
  • Establish a Plastic Waste Reduction Fund. The bill would direct revenue from the virgin plastic fee into a Plastic Waste Reduction Fund. These funds would be available to carry out plastic waste reduction and recycling activities, including making improvements to recycling infrastructure; carrying out marine debris reduction, detection, monitoring and cleanup activities; and addressing environmental justice and pollution impacts from the production of plastic.

Industry opposition

Unsurprisingly, a number of organizations that represent the plastic industry do not support the proposed legislation.

Joshua Baca, in a blog post to the Washington-based American Chemistry Council's (ACC's) website, writes in part, “Can we address the problem of plastic waste while preserving the societal benefits of plastics?

“Absolutely. But not if Congress passes ill-advised taxes on plastics.”

He writes that the measure “would impose significant additional costs on most everything we buy,” given the widespread use of the material.

“The tax ostensibly is designed to help reduce plastic waste. But it would do nothing to create circular solutions that help keep plastics out of our environment,” Baca adds.

He writes that while the tax is said to focus on packaging and single-use plastics, “… it taxes resin that is not used to manufacture ‘single use’ products … and then provides tax rebates to many downstream users of plastics that do not pay the tax in the first place. (The rebate is galling. Many companies would pay the tax, the government would hold the money, and then companies would have to ask for it, an expensive use of labor that defies common sense and imposes lost opportunity costs).”  

He continues, “In its implementation, the tax would penalize many of the durable products that we need to combat climate change. It actually is at direct odds with the spending plan’s provisions to combat climate change.”

Baca adds, “Taxing plastics basically would incentivize the use of many alternative materials that are less effective at delivering the fuel, energy and operational efficiencies needed to combat climate change.”

The ACC has made suggestions to Congress that would help to create a circular economy for plastics. The strategy supports producer responsibility for plastic packaging and includes a national standard that all plastic packaging contains at least 30 percent recycled plastic by 2030. It also involves creating a regulatory system that would enable the rapid scaling of advanced recycling, or chemical recycling.

The ACC, the Plastics Industry Association (Plastics), Washington, and other organizations representing the plastics industry sent a letter dated Sept. 27 to Sen. Mitch McConnell, Sen. Chuck Schumer, Rep. Nancy Pelosi, Rep. Kevin McCarthy expressing concerns with the proposed inclusion of the virgin plastic resin tax in the budget reconciliation package.

This correspondence follows a similar letter that was sent to Congress earlier this month from 38 CEOs representing America’s plastic makers and the plastics value chain, the Plastics Industry Association notes.

The most recent letter raises concerns about raising costs of everyday goods on American consumers, reduced U.S. manufacturing competitiveness and lack of meaningful solutions to address plastic waste associated with the proposed tax. “Additionally, there has been a lack of expert analysis, public debate and other considerations associated with the regular legislative process but not included in the ‘fast track’ reconciliation process,” a press release issued by the Plastics Industry Association states.

The letter reads in part, “Our respective industry commitments to sustainability include goals of using less material and working to reduce our overall environmental footprints. We stand ready to continue conversations with Congress to advance these goals, but don’t believe a tax of this sort moving through the process in this manner is the right approach. This resin tax proposal having first been introduced only weeks ago has not been fully vetted. No witnesses have been called to provide expert analysis by either side in the public setting of a committee hearing. There has been no opportunity to study the economic impacts of a tax of this size nor how such a measure would viably be applied.

“Early analysis paints a bleak picture: One industry estimate concludes the resin tax will place 92,000 American jobs at risk and increase the cost of plastic resin by up to 26 percent. On top of the direct impact on the cost of resin, the complexities of implementing such a tax would place an enormous burden and cost on manufacturers and users of plastic products trying to comply.”

“This is a massive tax,” says Matt Seaholm, vice president of government affairs at the Plastics Industry Association. “It is [adding] 20 cents per pound on a pound of resin that may sell for 70 cents per pound. You do the math—that’s a substantial tax.”

Seaholm says Plastics agrees that the industry should promote ways for manufacturers to incorporate more recycled plastic; however, he says, the association doesn’t think this tax is the right way to go about that.

“We believe there is a false assumption being made by some that there is the same amount of virgin resin and recycled-content resin and that businesses are making a choice to use the cheaper version,” he says, adding that recycled-content resins generally are cheaper than virgin resin already. “What we’re trying to make clear is there’s not a sufficient amount of recycled resin to switch to. The tax would just be an increased cost in finished products and would be felt throughout the supply chain.”

He concludes, “We share the goal of increasing the amount of recycled plastic that's used, but we disagree with a tax of this size and in this manner. We also believe there should be a much more robust conversation about it.”