Europe against waste: is the private sector ready?

This article is available in Bulgarian.

Several years ago at the Coca-Cola Company offices in London we were met with skepticism when we explained that the problem of plastic waste in the oceans would turn into the “new global warming”. No one in the large business sector wanted to believe that the most versatile material invented by humanity would become the subject of such heavy criticism, let alone that they would have to face regulatory measures aimed against its use.

The facts, however, are plain: the “circular economy” mantra is in full power while Europe is hopelessly far from actually implementing it for any one of the numerous material streams of the economy. A large part of our “recycling” efforts constitute sending bulk shipments of plastic to Indonesia, where they form gigantic open landfills whose contents, transported by rivers, end up in the oceans. The locals don’t seem to mind it very much – after all many of them make a living from this. But the sensitive heart of the European tourist, who pays large sums of money to enjoy “virgin beaches”, suffers from “ecological grief” while movies of dying sea turtles masterfully add fuel to the fire. And so the European Union went on a crusade against plastics and other kinds of waste. There is no time to spare and the business world is not ready to meet the avalanche of new regulations aimed at plastics. It’s time to wake up!

The new directives of the circular economy can be divided into two types 

On the one hand, there is the Circular economy package that was brought into power in 2018, which includes a renewal of European Union laws pertaining to waste. On the other hand, there is the Directive for plastics, accepted last month, which seeks to regulate the effect of single-use plastic products on the environment. The introduction of these directives into our (Bulgarian) law system comes into power next year, and the affected businesses have a very limited time to react.     

Producers (and importers) of beverages and beverage packages: In regard to single use plastic bottles, the laws require the design of new bottles with attached caps to be introduced into the market within a few years. This will require significant investments in designing new bottles and refactoring production lines. Given the short time frame and the significant expenses surrounding the implementation of the new laws, small producers are expected to face serious challenges during this transition.

The Directive for plastics also foresees requirements for the use of recycled plastic in bottles – at least 25% by 2025 and 30% by 2030.

The increased targets for the separate collection of plastic bottles (77% by 2025 and 90% by 2029), shouldering expenses for the collection of waste by community systems and for the cleaning of communal areas will inevitably lead to additional challenges for market participants who deal with single use plastic bottles.    

In addition, the revised Directive for packaging waste foresees significantly increased targets for separate waste collection and recycling according to packaging types: plastics, wood, metals, aluminum, glass, paper and cardboard. In light of the current level of development of Bulgaria, meeting the new EU targets for separate waste collection and recycling of plastic bottles and aluminum cans looks, to say the least, difficult to achieve.

Producers (and importers) of specific single use plastic products: This sector is the most affected by the Directive for plastics, which will enforce a complete ban on certain single use plastic products: eating utensils, plates, straws, stirrers, q-tips, balloon sticks, cups, food and drink containers made from Styrofoam, as well as products made from oxo-degradable plastics. The Directive for plastics also foresees a limitation on the sale of single use plastic cups and boxes, whose volumes will have to be reported by member states. Through these new rules the EU will directly stop the market participation or severely limit the economic activity of particular companies in the sector.      

Retail outlets that sell food products or beverages in single use plastic packages (e.g. retailers, neighborhood shops, etc.): In light of the limitations and bans mentioned above, some shops that sell beverages or packaged foods might have to reconsider the types of packages which they use.

Online shops that sell, for example, appliances and electronics: At this time it is difficult to determine who carries the responsibility for distance sales. The argument that online retailers are only intermediaries and therefore do not owe product taxes is popular among those in the branch. In cases where the customers are individuals and the sellers are registered outside of the country (or they are also individuals), there is no easy way to apply EU laws in their current form. This is why the new laws in the Frame Directive for waste will include guidelines meant to help member states deal with such issues. This will likely have a tangible effect on the online store sector. 

Producers (and importers) of fishing products: In light of the requirements for separate waste collection, determined by the state, the Directive for plastics will practically lead to the creation of an organization for the use of fishing nets. The laws that mandate greater responsibilities for the producers represent unknown territory for the producers and importers of fishing products. This is why all of the participants in this market will not only have to be ready to pay additional taxes for the management of their products and wastes, but also participate in the creation of a system for the collection of said wastes.

Producers (and importers) of cigarette products: The Directive for plastics foresees an introduction of expanded responsibilities for producers and importers of cigarette products. The requirements for the participants in this sector are relatively limited and include covering public costs for collecting cigarette waste, costs for increasing awareness as well as costs for cleaning public spaces and reporting on collected quantities. The Directive gives plenty of freedom to member states in choosing how to create a system for the expanded responsibilities of producers. This is why market participants in this sector should consider coming up with a common position for the financing, functioning and reporting that will be required in the future system. 

Producers (and importers) of packages, electronics, appliances, batteries, cars, tires and oils: The Frame Directive for wastes foresees some changes to the current rules for expanded responsibilities of the producers in Bulgaria. First off, the taxed amounts will be adapted according to the product’s ability to be repaired, used again and recycled. In addition, laws mandating proportional expenditures that directly and transparently reflect the value of all activities carried out by recovery organizations will be adopted. Rules for the fair treatment of large and small merchants will also be adopted – for example, when it comes to the administrative weight of reporting. Last but not least, companies that fail to comply with paying taxes will be subject to more strict controls.

Producers (and importers) of packages: The Directive for packaging foresees that by the end of 2020 the possibilities for increasing the requirements for reusable and recyclable packaging will have been researched. The preliminary indicators from the Commission show that if a certain package is not easily and profitably recyclable, it will have a difficult time being sold on the EU market at all.  

In Summary

All market players have to carefully consider how to adequately react, which requires lots of data, information and analytical capabilities. It will not be easy and the cost will be high, but at the end everything will be paid for by the consumer. It is our opinion that in chasing a “wonderful new world” Europe has gone too far in trying to plan and regulate processes and material streams which change on a daily basis in the real economy. This will give an advantage to two types of players: a) global companies that have the resources to navigate through the change and b) the fraudsters who will always find a way to get past the law. If you are small and honest, you will not have much opportunity for success because everyone with experience in the sector knows: garbage always finds the cheapest path!  

Authors: Boyan Rashev, Nikolai Mihaylov

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