The UK generates an estimated three million tones of fossil CO₂ annually from plastic waste incineration, a figure equivalent to the yearly emissions of cities like Manchester or Glasgow. Yet a new report by BB-REG-NET warns that the UK’s sustainability tax framework is inadvertently reinforcing reliance on fossil-based plastics rather than supporting the transition to bio-based alternatives.
The study, Fixing Fossil Market Failures: The Impact of UK Taxes on Bio-Based Plastics, finds that while bio-based plastics already cost two to three times more to produce than fossil-based equivalents, current policy adds further financial pressure. Under Extended Producer Responsibility (EPR) and the Plastic Packaging Tax (PPT), bio-based producers could face as much as £1,600 per tonne in additional costs. From 2026, polylactic acid (PLA) and similar materials classified as “hard to recycle” will attract doubled EPR fees of around £520 per tonne, raising costs by 20 percent or more.
Meanwhile, fossil plastics containing 30 percent recycled content are exempt from PPT, while bio-based alternatives remain subject to the full tax rate. This creates what the report describes as a “policy trap”: the most environmentally problematic plastics—films, single-use tableware, and sachets, which account for around 50 percent of plastic packaging waste—carry the highest cost premiums for bio-based alternatives.
Industry stakeholders argue that the current framework is undermining the very innovations needed to reduce plastic-related emissions. Kieran MacSweeney, Managing Director of Sphere Consumer Products, warned that the UK risks falling behind international competitors: “EU policies increasingly reward biogenic carbon savings and support scaling production, while the UK lags behind. Without reforms to level the playing field and back domestic manufacturing, UK ambitions for a circular economy will remain out of reach.”
Data from BB-REG-NET suggests that UK bio-based companies with international operations outperform domestic-only counterparts, generating 1.8 times higher median revenue and employing double the workforce. By contrast, fragmented UK regulation—spread across 56 different government bodies—creates barriers that stall commercialization, despite £450 million in taxpayer funding and £517 million in private investment flowing into bioeconomy R&D over the past five years.
The government’s plan to extend the UK Emissions Trading Scheme (ETS) to waste incineration by 2028 could introduce a partial corrective. Fossil plastic incineration would attract carbon costs of around £300 per tonne of CO₂, narrowing but not eliminating the price gap. Even with this measure, bio-based plastics would remain roughly twice as expensive as fossil-based counterparts.
The study points to alternatives already available at lower environmental cost. For flexible films, the FlexConnect project estimates recycling costs of £1,671 per tonne, compared to bio-based composting routes at around £100 per tonne through existing UK infrastructure. Yet without supportive regulation, these lower-carbon solutions remain economically sidelined.
International comparisons highlight the missed opportunity. In the United States, the BioPreferred Program has created stable demand for biogenic materials across sectors, while in France, the RE2020 building regulation mandates consideration of bio-based materials in construction. By contrast, the UK’s EPR and PPT mechanisms continue to treat bio-based products as if they were conventional fossil plastics, disregarding their lower lifecycle emissions and potential role in defossilizing the sector.
The BB-REG-NET report concludes that taxation alone will not drive the systemic change required. Without coordinated reforms to recognize biogenic carbon benefits and adjust fee structures, the UK risks both stalling domestic innovation and outsourcing growth to international competitors.
