INCENTIVES FOR RECYCLING
AND REUSE OF PLASTICS
A Summary Report
U.S. ENVIRONMENTAL PROTECTION AGENCY
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INCENTIVES FOR RECYCLING AND REUSE OF PLASTICS
A Summary Report
This open-file report (SW-41o.l) summarises a study performed
for the Federal solid waste management program under contract no. CPE-R-70
and is reproduced as received from the contractor.
This report has been reviewed by the U.S. Environmental Protection
Agency and approved for publication. Approval does not signify
that the contents necessarily reflect the views and policies of the
U.S. Environmental Protection Agency, nor does mention of commercial
products constitute endorsement or recommendation for use by the
U.S. Government.
U.S. Environmental Protection Agency
Region V, Library
230 South Dearborn Street .'
Chicago, Illinois 60604
U.S. ENVIRONMENTAL PROTECTION AGENCY
1973
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This summary is based on a 300-page report (SW-41c) entitled
Incentives for Plastic Recycling and Reuse by ARTHUR D. LITTLE, INC.,
which is available as PB-214 045 from the National Technical Infor-
mation Service, Department of Commerce, Springfield, Virginia.
The full report includes 59 tables and 38 figures, and consists
of these major sections:
The Technology of Plastics
The Economics of the Plastics Industry
The Plastics Cycle
Scrap and Nuisance Plastics Industry
The Plastics Cycle
Scrap and Nuisance Plastics: Isolation, Applications,
and Markets
Tactics and Strategies for Recycling
An environmental protection publication (SW-41c.l)
in the solid waste management series
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SUMMARY
Plastics are one of the major materials in use today, and in the 1980's
more products will probably be made from plastics than from any other
material including steel. The production of plastics or resins was 20 billion
pounds in 1970 and is expected to rise to more than 50 billion pounds per year
by 1980. This rapid growth is due to the many advantages offered by plastics.
They are lightweight and strong, they offer freedom in design and ease of
fabrication and their cost is low.
At the disposal site, plastics represent an average of less than 2 per-
cent of the solid waste stream today, and even at the projected rapid rate
of growth of plastic use, plastic wastes are not expected to exceed an average
of 3 percent by 1980. This projection assumes little or no change in the
material composition of the solid waste stream. If, however, other materials
such as paper, metal, and glass are recycled, the percentage of plastics in
solid wastes will increase. But in contrast to the other major materials,
plastics are not now being extensively recycled from the consumer. This
study, therefore, examines the possibility of promoting the recycling of
plastics—considering the technical and economic impediments; and it
further provides the methodology for investigating other materials in the
disposal area.
Plastics Technology
Plastics are a family of synthetic materials composed of extremely
large molecules called polymers, which are synthesized from simpler mole-
cules called monomers. The overall properties of a plastic are a result
of the combined properties of all its molecules, such as their different
sizes, their chemical structure and shape, and their ability to crystallize.
Furthermore, the properties of plastic materials can be altered by mixing
them with additives. Additives are mixed or compounded with the polymer to
improve its processing characteristics and produce other desirable properties.
The resulting product is then called compound or resin. Resin is a general
term that also denotes additive-free polymer.
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Plastics are generally sensitive to environmental conditions, and
particularly to oxidation. The net effect of weathering or reheating can
cause the plastic to lose strength and to become embrittled and discolored.
Because recycling plastics normally involves reheating, some reduction in
the physical properties of the plastic occurs. To retard these effects,
stabilizers are often added to most plastics.
Polymers that soften when heated and can be shaped if heat and pressure
are applied are called thermoplas tics. Polymers that soften and can be
shaped only during the first heating cycle and cannot be reformed are called
thermosetting plastics. Since thermosetting plastics are not easily
recycled, this study was limited to thermoplastics, which today represent
about 80 percent of all plastics. Some coatings and adhesives are thermo-
plastic, but they are impossible to recycle. When they are excluded, the
percent of potentially recyclable thermoplastics remaining is 75 percent
of all plastics, or approximately 15 billion pounds in 1970. This study
was restricted to the five major thermoplastics: low-density polyethylene
(LDPE), high-density polyethylene (HDPE), polypropylene, styrene polymers,
and polyvinylchloride (PVC). These five represent 89 percent of all thermo-
plastics (excluding coatings and adhesives).
Resins are available in granulated, powdered, or pelletized form. The
process of transforming them to a plastic or plastic-containing item is
called fabricating, and the process of altering a fabricated plastic
product by decorating, -cutting, or sealing is called converting. Fabri-
cating and converting are both examples of processing; operations. Processing
can also include reprocessing, which is the operation required to recycle
scrap plastic (SP) into a useful plastic product.
In this study we use the term scrap plastic (SP) to denote all scrap
that has value and is recycled, such as the scrap generated during the
manufacture of resin and plastic items. This scrap may be in the form of
contaminated compound, film trimmings, strands, or large chunks of plastic
from the molding machinery.
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Another term—nuisance plastic (NP)—is used to denote that portion of
plastics production that has no value and is usually found in the disposal
area. For example, the consumer generates NP when he disposes of his
spent plastic products, and, if the manufacturer cannot use his' scrap,
it also becomes NP.
Reprocessed SP is called secondary resin and is used in fabrication.
It competes with prime and offgrade virgin resins. Prime virgin resin
meets the specifications required by the fabricated plastic product,
whereas offgrade normally does not. However, offgrade can be used to
fabricate plastic products that can tolerate raw materials having a range
of physical properties.
Reprocessing or recycling is often an integral part of fabrication.
Normally, the SP is reground and combined with the virgin resin in the
fabrication process. An average of approximately 10 percent of the resin
used in fabrication is recycled, although the amount can climb as high as
35 percent, depending on the requirements of the end plastic item. About
1.2 billion pounds of resin were recycled by the fabricator in 1970.
Reprocessing is also carried out by a special segment of the plastics
industry—the reprocessor. He purchases scrap primarily from the resin
producer and fabricator. The scrap varies by plastic type and form and is
purchased for 0 to 10 cents per pound (the average price is approximately
4 cents per pound). About 1 billion pounds of SP are processed by the
reprocessor annually, and over half of this volume is derived from the
basic resin producers. The reprocessor, like the resin producer, sells
his resin (secondary resin) to the fabricator.
One of the major functions of the reprocessor is to remove the con-
taminants from the scrap, and over the years he has developed a number of
different methods for carrying out this process. He can also alter the
melt flow characteristics of the resin by blending different lots and
adding plasticizers. The principal difficulty in recycling or reprocessing
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plastics is that different polymers are generally not compatible with each
other. Thus, segregation of the various plastics is required in most
reprocessing operations.
The Economics of the Plastics Industry
The cumulative value of shipments of all the products made and all the
equipment used by the plastics industry was approximately $24 billion in 1970,
and resins alone accounted for about $4 billion of this total. The raw
materials used for the production of these resins are petrochemicals such as
ethylene and styrene. Approximately $2 billion worth of these materials was
used in the manufacture of resins in 1970. When combined with other basic
materials (e.g., paper, textiles, and metals) and processed into semi-finished
or finished products, these products have a value at the manufacturer's level
of over three times the cost of the polymer and additives, or approximately
$17 billion.
Integration among the various segments of the plastics industry, namely
the resin producer, the fabricator, and the converter is very extensive.
Nearly all resin producers are also manufacturers of fabricated products.
Another 25 to 30 percent of all plastic materials is fabricated by the
manufacturer/packager segment of the plastics industry, which assembles the
plastic or plastic—containing product or fills the plastic container. In
addition, over 2,500 independent fabricators, most of which are small,
privately-owned businesses, process 40 percent of all resins.
The main factor in the spectacular growth in the use of plastics has
been the continuing large decrease in the selling prices of the basic resins.
For example, in 1961 the average price of LDPE—the major thermoplastic—was
about 24 cents per pound; in 1971 it was 13 cents per pound. During the same
period the price for offgrade LDPE dropped from about 19 cents to 9 cents per
pound. But the price of secondary resin did not drop as rapidly. Secondary
resin, which is made from scrap, competes with offgrade virgin resin, and in
1961 the difference between a secondary LDPE resin and the equivalent offgrade
resin was 3 cents per pound; in 1971 the difference was 1 cent or less per pound.
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This narrowing of the selling-price gap has acted as a major Impediment
to recycling plastics. Although the prices of virgin resins have been
tailing, rising costs of labor and distribution involved in reprocessing
have prevented a similar decline in the price of secondary resins. Even if
the reprocessor's raw material costs are negligible, his product cannot sell
tor much less than 5 cents per pound, which is the average conversion cost.
Over the past several years, the total plastics production handled by
the reprocessor has been decreasing. During the Sixties, as the resin producers
became more sophisticated and their profit margins decreased, they improved
their processes and generated less scrap, which reduced the volume of SP going
to the reprocessor. Today the reprocessor industry is composed of 50 to 75
companies, most of which are small. Sales of secondary resins by this segment
were only $150 million in 1970. As the profitability of reprocessing has di-
minished, the reprocessors have turned their business more toward the compounding
and distribution of virgin resins (mainly offgrade).
The Plastics Cycle
In addition to the segments of the plastics industry mentioned above,
the plastics cycle through which all plastic articles pass includes the
wholesaler/retailer and the consumer. Further, the consumer segment is made
up not only of the householder and various industries, but also of such
institutions as hospitals, restaurants, and airlines. All of these segments
contribute NP to the disposer who collects and disposes of it in land fill,
by incineration, and other methods.
As a plastic product is made, starting from the resin, it normally passes
through manufacturing facilities that become progressively smaller in size and
more widely dispersed geographically. The wholesaler/retailer and consumer
segments are obviously concentrated according to population density.
Each segment in the plastics cycle has a role to play. The resin producers,
which are the largest companies in the cycle, determine the chemistry of the
plastic item. The converters and fabricators determine the structure of the
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plastic product—whether it will be a garment bag or an appliance part, for
example. The manufacturer/packager is often the major decision-maker in
determining the type and form of plastic item, because he is the one who
instructs the fabricator or converter to make the product of his choice. Thus,
if he is a packager he usually decides whether his product will be sold in
plastic bottles or in a plastic pouch. He is keenly aware of the needs of
the consumer, and he works closely with the fabricator and converter in
setting specifications.
We defined the term "NP" as plastics of no value, but this is a time-
dependent phenomenon. The consumer disposes of a plastic item only after a
certain lapse of time, which is the service life of the product. For example,
packaging, novelties, disposables, etc., have a short service life (less than
1 year). Other items, such as furniture, sporting goods, and luggage have
estimated service lives of 6 to 10 years, and products such as instruments,
hardware, and various machinery can serve for 11 to 20 years. It is those
plastic items having a short service life that are the major source of NP in
the disposal site today and, therefore, recycling of these should be promoted.
Packaging—a short service life product—is the major source of NP. The
NP derived from packaging wastes generated by the five major thermoplastics
accounted for 60 percent (weight) of the 6.5 billion pounds of all NP in the
disposal area in 1970. Assuming that conditions and technology remain
unchanged, we estimate that plastic packaging wastes will still dominate the
disposal area in 1980 when they will be equivalent to 10 billion pounds or
54 percent of all NP. If the plastic beverage container becomes a reality,
plastic packaging wastes could increase to 12 billion pounds by 1980, or almost
three times the 1970 volume. This would represent about 59 percent of all NP
in the disposal area.
The second major category of NP is that generated by each segment of the
plastics cycle as the product is made—from monomer to consumer. We estimate
that in 1970 approximately 1 billion pounds of NP was derived from this source
alone. This represents 15 percent of the total NP in the disposal area
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derived from the five major thermoplastics. NP from this source will rise
to 3 billion pounds by 1980, when it will account for 16 percent of the
total NP.
Thus, these two categories of NP—packaging and industrial wastes—account
for 75 percent of all NP in the disposal area. NP derived from other consumer
products accounts for only a small fraction of the total. For example, the
third major fraction of NP in the disposal area comes from discarded house-
wares; but this source is a distant third and represents only 6 percent of the
total NP. Often these other wastes are an integral part of a non-plastic
material and therefore are more difficult to recycle.
Of the five major thermoplastic wastes in the disposal area today, 70 per-
cent is based on polyolefins: HOPE, LDPE, and polypropylene. PVC accounts for
about 18 percent. Of the NP derived from spent packaging alone, 83 percent
is polyolefins and 6 percent is PVC. We foresee little change in the chemical
composition of NP generated by the five major thermoplastics during this decade.
Industrial wastes are generated primarily from the fabricating and
converting processes. These account for about 57 percent of the industrial
NP; the remainder comes from resin production, packaging, assembling, and
distributing. LDPE and PVC predominate in these wastes; they account for 34
and 32 percent of the total, respectively. The high concentration of PVC in
these wastes arises from its more difficult processing characteristics. This
distribution of various plastics will probably not change during this decade
if the present conditions continue.
Scrap and Nuisance Plastics: Applications and Markets
In addition to some of the technical impediments to recycling already
mentioned, another significant consideration is the possible presence of
additives in the scrap plastic. Depending upon the application, the additives
may be inappropriate and the scrap then becomes NP. For example, if a cadmium-
based pigment is present in the scrap, this scrap cannot be recycled readily
for a toy application, because the pigment is poisonous. Furthermore, all
plastics that come in contact with food require FDA-approved additives; and
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scrap containing additives that are designed for one fabrication process
occasionally interfere with the use of this scrap in another fabrication
process. In addition, certain inks can also hinder recycling because they
promote degradation of the plastic material during the reheating process.
As a general rule, scrap plastic has to be used in .an end application
having broader specification requirements than the product yielding the
scrap. The fabrication of bottles, film of high quality, and certain
coatings requires resin with tightly controlled specifications. In contrast,
many plastic products made by molding or extrusion, whether they are house-
wares or pipe, use resin having a relatively broader specification range.
Thus, scrap from plastic bottles, though difficult to recycle as bottles, can
be used for pipe, siding, and a variety of structural products.
Scrap is being used to make a number of products today, and we believe
that if more secondary resin is made available at a sufficiently low price,
new applications will develop. Flexible PVC, for example, can be used to
manufacture such end items as hose, weather stripping, certain coatings, and
a number of molded articles. Much of the polyolefin scrap today is used to
manufacture duct work in automobiles, and the use of scrap plastic as filler
in foamed plastic products is a developing application. New applications on
the horizon include the use of scrap plastics in concrete to improve the
strength of concrete and its ease of fabrication. One company has developed
a coating for fiber drums based on scrap from polyethylene-coated fiber
board that is available from both converters and fabricators. This coated
scrap could also be used in novel molding processes to make construction
articles. Some longer-term applications might possibly include the use of
scrap plastic to absorb oil spills or to produce artificial snow.
One company today is considering constructing a plant that will be
capable of recycling scrap that is available in large quantities from the
manufacture of PVC-coated fabrics used extensively in upholstery. Their
process involves the solvent extraction of the PVC, leaving the fabric
backing. Both products can then be sold for recycling.
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A major market for scrap plastic is plastic pipe. The pipe, fittings,
and conduit market used 380 million pounds of plastics in 1970. About
50 million pounds of offgrade polyethylene were used in 1970 to make utility
pipe for open drainage, drain tile, and other non-pressure applications.
The use of polyethylene in drain tile is a new application. This market
could use as much as 200 to 300 million pounds of polyethylene per year in
the coming years. Certain high-quality high-density polyethylene scrap could
be used in this product area. Low-head irrigation pipe is another market
where secondary resins could penetrate. It is at least a 40-million pound
per year market. Perhaps the largest market, which has barely been penetrated,
is the manufacture of sub-soil irrigation pipe from secondary resins. This
pipe can be used to irrigate arid land and is already being used to water
lawns.
Another potentially large future market for scrap plastics is pallets.
In 1970, about 10 million pounds of HDPE were used in this application, but
this figure could rise to as much as 300 million pounds per year by 1980.
Many of these applications need further development before they can be
considered commercial. A few resin companies are carrying out research to
explore new applications, and we believe this is a fruitful area for new
research—one that warrants Government funding.
Plastics are materials that can be recycled to produce non-plastic
products (we have chosen to call this process tertiary recycling). For
example, pyrolysis of scrap polyethylene converts it into waxes, greases, and
oils. Most plastics can be pyrolyzed, and by varying process conditions, the
products obtained can be either solids, waxes, liquids, or gases. This
approach also warrants more research. The economics of these processes are not
yet very well known, but they can be crucial in developing a viable recycling
process. Tertiary recycling is a more severe downgrading of the plastic scrap
than secondary recycling which involves the recycling of scrap from one
product to make another plastic product. The later approach yields a product
of higher value than that produced by pyrolysis.
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The highest value is obtained by reusing the plastic product, or by
recycling the scrap back into its original product form (primary recycling).
The best example today is the returnable polyethylene milk container. About
8 million bottles of this type were used in the U.S. in 1970 for 288 million
fillings. This represents the removal of 65 million pounds of scrap poly-
ethylene per year from the disposal area.
As another approach to the reusable plastic container, a new company was
formed in 1970 that de-inks plastic containers for packaigers and labelers who
incorrectly labeled containers. The de-inking process can be used perhaps
to salvage many spent plastic containers discarded either by the manufacturer
or the consumer. Obviously, if a reuse is a possibility, it should be promoted,
for a fabricated container is usually worth about three times the cost of the
raw material.
Tactics and Strategies for Recycling Plastics
In developing strategies and ranking alternative solutions to the
problems of recycling plastics, we used the following criteria: (1) minimize
environmental damage, which is essentially subjective and not easily measured;
(2) maximize pound-volume of "troublesome" nuisance plastics recycled and/or
reused as a percentage of total plastics production (troublesome NP has low
bulk density and/or is a problem to incinerate); (3) minimize pound-volume yield
of troublesome nuisance plastics as a percentage of total plastics production;
(4) minimize the "social" costs of achieving objectives 1, 2, and 3; (5) mini-
mize economic disruption of industry; (6) minimize disposal costs; and
(7) maximize the recyclability of plastics. The primary objective is to reduce
environmental damage, and an effective way to do this is to recycle discarded
plastic products. The interest in minimizing disposal costs follows from the
conclusion that all plastics are not recyclable; therefore, those remaining
should be disposed of with minimum cost to society and the environment.
In developing alternate strategies, we have assumed that the cost to society
of failing to clean up the environment is greater than the clean-up costs. In
other words, no matter how much it would cost to recycle or dispose of NP with
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minimal environmental damage, from society's view, the cost of doing nothing
is, say, one dollar greater. Clearly, this assumption must be re-evaluated
when the costs are more accurately known.
Another important consideration in developing our recommendations concerns
the systematic interdependencies in both our ecological and economic systems.
These interdependencies, therefore, make any piecemeal action inefficient and
potentially harmful, because discouraging the use of one substance (e.g., virgin
plastics) may merely transfer pollution from one source to another. This need
implies that certain strategies developed for promoting recycling of plastic
wastes must include not only plastics but glass, metal, paper, etc. Therefore,
in considering various strategies, we noted where they had to apply to all
materials and where they could be applied to plastics alone. However, because
this study was restricted to plastics, we only analyzed the Impact of our
recommendations on the plastics industry.
To promote recycling effectively requires partial control or conditioning
of the production and consumption of these materials, which can be accomplished
either by regulation or by economic incentives or disincentives. Because the
essence of our system is consumer sovereignty and the belief that resource
allocation (production and consumption decisions) can best be guided by a price
mechanism, we believe that regulation by legislation to promote recycling is
inconsistent with this philosophy of a free-market economy. Consequently,
the strategies discussed below are built primarily on economic incentives and
disincentives rather than regulations, because the major impediment to recycling
plastics today is the economic one.•
Some of the schemes, while primarily intended to influence production-
consumption choices, will also yield resources. We recommend that revenues
generated by any taxing schemes be considered as part of the Federal Government's
general tax revenues. In general,^we do not favor the trust-fund theory of
taxation and revenue use. While this approach may be beneficial in the short
run; in the long run it might invite the sub-optimization of public funds.
Generally, trust funds are not satisfactory because they "lock-up" funds over
an extended time.
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We considered the following schemes of selective taxation and incentive
payments: (1) a tax on virgin materials; (2) an incentive payment to promote
the use of secondary materials; (3) a tax on all non-recycled products, which
is applied to all plastic products that are not easily recyclable; (4) a
rebatable tax on all products that are recyclable.
Tax on Virgin Materials. This tax is designed to directly widen the gap
between virgin and secondary materials. It could be levied on the monomer
producer who would collect it from the resin producer. Effective compliance
would be expected, and administrative costs would be minimal. This tax
would be levied on all resins on a volume rather than a weight basis. However,
it could not be levied on plastics alone, because taxes on virgin materials
should not discriminate against one material, unless the material is demons-
trably more damaging to the environment than others.
Though this tax can provide the economic incentive to use secondary resins
alone, this tax will not be very effective, because it does not assure an
adequate supply of quality secondary material. Furthermore, reprocessing
costs would not be reduced, and the raw material, namely scrap plastic, would
become more costly. Therefore, only a small portion of the NP would be
converted to secondary resin. Marginal NP from the industrial sector would
remain untouched. Perhaps about 20 percent of the industrial NP (about 200
million pounds) would be converted to secondary resin, if this were the only
tactic.
If clean consumer scrap were made available at a low price by some economic
scheme, this tax could promote its conversion to secondary resin. As much as
1.5 billion pounds of this scrap are potentially available,. But again,
auxiliary tactics would be required.
This tax would adversely affect our balance of trade because the price
of U.S. goods would be inflated. Conversely, the demand for foreign goods
would increase in the U.S., and imports would be encouraged. And, because
this tactic must be applied to all materials, this effect could be very
pervasive and would tend to reduce our gross national product and increase
unemployment.
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Incentive Payment to Promote Recycling. The primary objective of this
tactic is to increase the demand for secondary resin. This tactic need not
be employed across-the-board to all material categories, although we
recommend that all materials be considered.
The incentive payment would be most effective if offered to the scrap
generator, who would show by his invoices that scrap was sold to a reprocessor
or an outside fabricator. The scrap generator would then list the sale on his
Federal Income Tax Form and request payment. This action would simultaneously
increase the supply of secondary resin and the demand. It would motivate the
scrap generator to segregate, store, and transport much of the scrap plastic
that he now considers marginal to a reprocessing facility.
This system of awards should promote the recycling of industrial scrap
plastic that is relatively clean and is generated in isolated locations.
Although industrial NP amounts to about 1 billion pounds per year today,
perhaps no more than 75 percent or 750 million pounds is actually usable for
recycling because of contamination. This NP is in addition to the 1 billion
pounds of scrap plastic that is presently being reprocessed annually.
This incentive system may also motivate the formation of centers for the
separation and collection of consumer NP, especially that from large institu-
tional and commercial consumers. These centers also could receive this incen-
tive payment. Although the volume of consumer NP available is much greater
than the volume of industrial NP, most would be difficult to retrieve based
on current technology, either because the NP is part of a composite or a
multi-plastic product, or it is not economically collectable. Potentially,
only NP derived from spent packaging can be recycled. However, because
recycling requires collectability and monoplastic materials, at this time
no more than 1.5 billion pounds of this type of consumer NP are available,
which is equivalent to all monoplastic rigid packaging.
Realistically, however, the most collectable items are plastic bottles.
Over 600 million pounds of plastics were used to make bottles in 1970, and
this market is expected to increase to 1600 million pounds by 1980 (exclusive
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of the new acrylonitrile plastics on the horizon). Of the "big five" plastics
used to fabricate bottles in 1970, over 80 percent (or 500 million pounds)
was HDPE.
HDPE is used to package such major products as milk, bleach, detergents,
and other liquid laundry detergents. Packaging for these products accounted
for 400 million of the 500 million pounds of HDPE used in 1970; and only two
major grades were used. Thus, the successful collection of these bottles
could provide a "clean" stream of one plastic. Although effective collection
of these spent containers from the consumer would remove only 7 to 8 weight
percent of the total NP, it is the volume occupied by this NP that is more
significant. These bottles, if uncrushed, represent about 30 percent of the
volume of plastic wastes. As a maximum, we estimate that all usable consumer
NP (primarily rigid packaging wastes) amounts to no more than 750 million
pounds per year.
Accordingly, the total potential volume of recyclable NP from both the
household consumer and industry is about 1.5 billion pounds per year. This
could increase to about 4 billion pounds per year by 1980, and, if consumer
recycling programs are successful, an even larger proportion of packaging
wastes may be recovered and reprocessed.
Under this award system, fabricators would purchase more secondary resin,
because the supply would be assured and available at relatively low prices.
However, if the price of the secondary resin is lowered because of the sub-
stantial increase in the supply of scrap, the demand may still not increase if
the market is inadequate. However, we believe that new markets will auto-
matically arise with an appropriate incentive payment. Secondary resins will
probably replace the virgin materials in those applications that do not
require resins with very narrow specifications; hopefully, secondary resins
will also enter brand new markets, where they will not be competing with virgin
plastics but with non-plastic materials such as wood, cement, etc.
This strategy could be used alone to promote recycling, for it does not
necessarily require auxiliary tactics. However, because an incentive payment
requires a net payout by the Government, a desirable auxiliary tactic would
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be one that generates funds such as the tax on virgin materials or the tax
on non-recyclables described below. These funds, then, could be used to
provide the awards to the scrap generator.
Tax on Non-Recycled Products. The primary objective of this tax is to
promote a demand for recyclable products and, therefore, the supply of useful
consumer scrap plastic. This scheme assumes that an effective collection and
separation system exists for plastics. If the product cannot be made available
in an easily recyclable form, then the secondary objective of this tactic is to
reduce the disposal and social costs of non-recyclable products; ideally, this
tax should be computed to reflect these costs. Furthermore, this tax, like
the tax on virgin materials, would have to be levied on products made from all
materials to avoid adverse selection, as discussed previously.
An example of a "finely-tuned" tax is one that would reflect the disposa-
bility characteristics of a discarded product, such as (1) service life;
(2) chemical composition, which indicates behavior in an incinerator or a
land fill; (3) volume occupied by the discarded product in the disposal area;
(4) compressibility, which reflects the ease with which the volume of the
spent product is reduced by the various intermediate treatment processes
and/or the final disposal process.
This tax would preferably be computed by using the service-life property
as a factor for multiplying the sum of the three other properties. Thus, the
tax could be designed so that items with relatively long service lives would
bear no tax. This tax would be computed on a weight basis, but with a density
correction factor that would be used to equalize the tax on materials of
different density.
The characteristics of a product that this tax reflects have been designed
into the product before it reaches the manufacturer/packager segment of the
plastics cycle. But,because the manufacturer-packager is the most significant
decision-maker in selecting the package, we believe that the tax should be
imoosed on him.
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This tactic could promote recycling only if an effective collection and
separation system exists for spent plastic products, because the consumer
would select the less expensive recyclable product that would not bear this
tax. However, most of the potentially recyclable products are voluminous
rigid containers that can be viewed as relatively costly to dispose of.
Therefore, this tactic requires an auxiliary tactic such as the rebatable tax
described below to insure that the recyclable plastic products are indeed
collected and separated; otherwise all plastic products, whether potentially
recyclable or not, should bear a tax.
This scheme will also require a thorough analysis of the disposability
characteristics of spent products (primarily packaging) to establish various
taxation levels. Furthermore, because this program is somewhat more complex
than those mentioned above, administrative expenses may be an important factor
when one compares the costs versus the benefits of this tactic.
Rebatable Tax. The objective of this tax is to directly promote recycling
by providing a supply of scrap plastic primarily from the consumer. This tax
is essentially a tax on plastic packaging materials, for these are the most
easily collected and recycled. The effectiveness of this tax obviously depends
on the availability of a collection and separation system.
In this scheme, the consumer would receive an award payment to pay for his
costs of sorting, storing, and, if necessary, transporting spent containers to
collection centers. These containers would bear a rebatable tax. Interception
via a collection center is only one approach—collection from the home is not
ruled out.
The rebatable tax would be levied according to the size of the container—
the larger the container, the higher the tax. And, generally, the rebatable tax
on a package would be higher than the tax on the non-recycled package. However,
different rigid containers are often used to package the same item, such as
milk, water, etc. If one of these containers is recyclable, an equivalent tax
would be levied on all rigid containers used to package this item. This
would provide a powerful incentive for promoting the use of recyclable
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packaging. This tax would be imposed on the wholesaler/retailer and collected
by the manufacturer/packager who would list the tax as a separate item on his
sales invoices.
To avoid the strong objections of the retailer, we suggest that collection
centers to collect items bearing the rebatable tax be set up at convenient
locations for the consumer outside the retailer's store. These centers could
be operated by a local government or by an appropriate private agency operating
under government control. The bounty offered for the selected discarded
container could be equal to, less than, or more than, its rebatable tax,
depending on factors such as the market price for the spent material, the social
costs involved in its disposal, etc.
This tactic, if successful, could generate about 400 million pounds of
scrap HDPE from the consumer per year, based on 1970 consumption statistics,
and perhaps as much as 1100 million pounds of scrap HDPE per year by 1980.
This still represents only about 5 pounds of plastic per capita per year.
These statistics assume that the consumer would be asked to return only the
plastic bottles used for the major commodities, namely milk, bleach, and
detergents.
But the administrative costs of this program are no doubt the highest of
any program discussed so far. And the need to develop a working arrangement
between the Federal and local government groups further complicates the
successful operation of the program.
Other Tactics. In addition to these taxation concepts, we recommend that
the Federal Government review political impediments to recycling imposed by
Federal, state, and local agencies that restrict the use of secondary materials,
and, in particular, purchasing specifications. We also recommend that the
Government, together with the plastics industry, develop standards for secondary
resins similar to those for the virgin products and set up an inventory of all
sources of plastic scrap, describing availability, physical and chemical form,
etc., as a resource for fabricators interested in purchasing secondary material.
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The tax revenues that would be realized by some of the schemes outlined
above could well be used to contribute to the general improvement of the current
systems of disposing of NP. And to meet the economic impediment head on, the
Government could reduce reprocessing costs directly by providing easy financial
conditions for extending and operating a reprocessing business. Thus, the
Government could provide tax credits, special depreciation allowances, low-
interest loans, and similar incentives.
A very worthwhile use of some of the tax revenues would be to promote
research and development specifically directed at making reprocessing techni-
cally and economically more attractive. Furthermore, research programs
directed at developing new applications for scrap materials obviously will be
very helpful to the reprocessor and should promote recycling.
Final Recommendations. The key programs that will reverse the trend
and promote the recycling of plastics will require legislation. We believe
that an incentive payment as discussed above can go a long way toward increasing
recycling at a minimal cost. This program can be initiated for plastics alone,
if that is desirable, but most importantly, this program does not require
auxiliary or supporting legislatve programs to operate effectively.
Providing easy financing for the reprocessor is similarly a program that
does not require other legislative programs; but this tactic will not be as
effective as the incentive payment in promoting recycling. However, its
administrative costs would be low.
All of the other taxation schemes described above require a number of
auxiliary tactics to be effective. And the rebatable tax and the tax on non-
recyclables must be levied together to achieve the desired effect. These two
tax schemes also have the further disadvantage of requiring extensive prelimi-
nary analysis; furthermore, once instituted, they will probably be expensive
programs to administer, as compared to the others.
ya792
U.S GOVERNMENT PRINTING OFFICt 1873- 759-552/1089 —18—
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.'5. Environmental Protection Agency
.. ;;?ion V, Library
230 South Dearborn Street .-
Cnicago, HISnois 606Q4 *-"'
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