All-in: demand a comprehensive producer responsibility for Hong Kong’s beverage packaging waste

A terrific new plan has appeared on EPD’s policy horizon: a producer responsibility scheme (PRS) for plastic beverage containers. The plan’s intent is good, and its overall outline is solid. I take, however, issue with its narrow materials scope. If HKSARG’s intent is to make a dent in the disposal of single-use packaging into Hong Kong’s rapidly filling landfills, why not cast its net wider? Why not ensure a larger share of beverage packaging is included? Take water and soda for example. Plastic bottles, the proposed focus of the new policy, make up only 65 percent of those packages on the market. With a wider scope that covers all single-use beverage packaging, an additional 750 million units of waste packaging would fall under the policy, annually. There are more good reasons for broadening the proposed scope. Under-scoped systems tend to suffer from 1) consumer confusion leading to low return rates; 2) poor or problematic economics; and 3) beverage producers and importers, retailers, and consumers shifting towards less recyclable choices for packaging. 1)    Potential issues around consumer confusion have been recognised and addressed by government when it comes to beverage types, with a scope that proposes to include all beverage types, including alcohol and dairy. We strongly suggest, however, that government expands its legal definition to cover all plant-based drinks, not just soy-based beverages. While the latter dominate the plant-based segment here in Hong Kong, alternatives like oat milk are one of the fastest-growing segments in the local beverage market. It would be prudent and efficient to already include them now. Consumers correctly identifying what is covered under the scheme will also be somewhat facilitated by the proposed inclusion of the four main plastic resins on our beverage packaging market (polyethylene terephthalate / PET, high-density polyethylene / HDPE, polypropylene / PP and polystyrene / PS), rather than only PET, which dominates the market. But why stop there? More comprehensive schemes, when carefully introduced, managed, and communicated tend to yield not only higher absolute collection volumes but also stronger collection rates. This is for example a strong argument in New York’s current deliberations on expanding the scope of its scheme. 2)    Moreover, creating regulatory certainty for investors is a proven necessity to attract sufficient investment into local processing capacity. Take MilMill, Hong Kong’s fledgling liquid carton recycling plant, which is quickly becoming a darling of Hong Kong’s citizens. Started with a government grant and plenty of entrepreneurial moxie, it will struggle to survive if long-term intake volumes cannot be guaranteed. In those jurisdictions that managed to develop extensive liquid carton recycling capacity, such as in Canada, it was government, by providing investor certainty through the inclusion of this packaging in PRS legislation, that provided the key stimulus. In Switzerland, on the other hand, where liquid cartons are the only beverage packaging type so far not included in its PRS legislation, a state-of-the-art facility had to drop its recycling activity because collection volumes were not sufficient to maintain operations. This against a backdrop of high collection rates for the other beverage packaging types: over 90 percent for cans and glass bottles, and over 80 percent for PET bottles. So, when HKSAR Government suggests in its consultation paper that it is too soon to include further materials in the bill because no local processing infrastructure exists, it is really putting the horse behind the cart: recycling infrastructure for low-value materials does not usually materialise spontaneously and hardly ever survives in an environment without PRS. 3)    An all in-approach is also required to avoid shifts towards unregulated and potentially less recyclable packaging types. Some of our local bottlers may have little scope to shift because of poor economics of fill line investments. But we should not forget that 40 percent of our beverages are imported, including a good number through parallel trades. Which products and pack formats are imported is often determined opportunistically rather than through long-term contracts. This agility makes the risk of shifts towards pack formats that are not covered by the scope of the PRS very real. Similarly, consumers could for obvious reasons be attracted by products whose price point is not impacted by the PRS. Providing a sufficiently wide scope for the PRS is also critical for guiding packaging and recycling innovation. Category managers and marketeers seeking to put new products onto the Hong Kong market, should stay away from nifty new packaging types that are not helpful from a recycling perspective. The paper bottle with a plastic liner that was recently touted by some as a great sustainability innovation, may not have seen the daylight if it had automatically been included in PRS schemes worldwide – the lack of ready recyclability would result in a higher recycling fee for companies putting it on the market. For all these reasons, I propose a comprehensive collection system along a clear, ambitious and predefined timeline. We should take confidence from what we see abroad: 9 out of 10 European incentive-based beverage PRS schemes, all American, Canadian, and Australian schemes, and 7 out of 8 schemes in the rest of the world are multi-material. Tellingly, all but 1 Canadian and all Australian schemes include liquid cartons, generally considered a more complicated waste stream from both a collection and a recycling perspective. Importantly, whatever the detailed implementation timeline might look like, all beverages and all single-use beverage pack formats, except for glass, which is already legislated, should be included from the start in the Primary Legislation. Failing to do so, could lead to long delays in the inclusion of other beverage containers and hence unintentionally provide incentives to shift to less recyclable packaging. Finally, in calling for an all-in scheme, I also wish to insist on a scheme that ensures broad participation. High packaging return rates require industry participation in a financed recovery system that goes far beyond those initiating or participating in today’s voluntary programmes. In the proposed legislated scheme, all producers and importers are to be included. A company’s obligation to participate in the scheme should not be tied to a minimum (aggregated) production, sales, or import volume. Similarly, for any pack format that is in scope, inclusion in the Scheme should not be subject to a minimum volume cut-off. We know from experience with for example Hong Kong’s imported food labelling scheme that any exemption mechanism quickly leads to loopholes to be abused. With a Producer Responsibility Scheme that is scoped and designed with an all in-approach we have the best chances to attract strong participation from citizens, the value chain, and investors. It is what Hong Kong needs.