Industry eyes $1B California recycling plan to stop plastics tax

An industry coalition in California is drafting a roughly $1 billion plan to have companies help pay for recycling in the state, pitching it as an alternative to a ballot referendum that would put a tax on plastics packaging.

While many details remain to be worked out, the coalition would likely be the largest industry-funded effort in the U.S. to address plastic waste. Organizers hope to introduce legislation in the California statehouse in early 2021.

"We want to make it as comprehensive as possible," said Gino DiCaro, spokesman for the Sacramento-based California Manufacturers & Technology Association, which is acting as the lead organizer. "We want to have something ready in the early part of the year."

Plastics and packaging industry lobbyists said the program would likely be managed by a consortium of trade associations, consumer product companies and packaging firms.

They say it would need to bring in the same amount of money as the potential referendum, planned for 2022, to be seen as a politically viable alternative.

A group of environmental organizations and business interests want to put a referendum on California's ballot that would ask voters to approve a tax of up to 1 cent on single-use plastics packaging. One estimate said it could bring in several billion dollars a year.

That referendum complicates the political calculus for businesses. In 2016, California voters passed a plastic bag ban in a statewide vote, and it's the possibility of this second, much broader referendum that has industry groups working on their counteroffer.

As well, plastic waste and recycling have been hot-button issues in the state legislature, with comprehensive bills that would set high recycling targets nearly passing in Sacramento in each of the last two years.

Lauren Aguilar, a Sacramento-based lobbyist with the government affairs firm Serlin Haley, which represents packaging industry groups, said details of the industry plan are still being worked out but several funding mechanisms from companies are under discussion.

"In the coalition alternative, they're going to have to bring some sort of funding along with it; that's been a huge, huge thing in California," she said. "They want the funding to come from producers."

Aguilar, who spoke on a Dec. 3 webinar organized by the Western Plastics Association, said funding options include a brand-based fee on single-use products sold in California or something based on tonnage of materials sold in the state.

"One of the most complicated parts of the bill is trying to figure out how are they are going to raise that much money in California from producers," Aguilar said, adding that state lawmakers have "no appetite" for a consumer-facing fee.

Referendum proponents have argued that weak markets for recycling contribute to plastic waste, and they say that fees on single-use packaging are needed to bring in enough money to fund recycling and pay for cleanup of existing plastic pollution.

The groups behind the referendum announced in August that they had collected 870,000 signatures, about 250,000 more than needed, to put it before voters in the November 2022 election.

Organizers initially wanted to put the measure on the 2020 ballot, but the pandemic delayed signature gathering.

Beyond putting a fee on single-use plastic packaging, the referendum would also ban expanded polystyrene food containers and set a target to cut the amount of single-use plastic sold in the state by 25 percent by 2030.

It would use the fee proceeds in part to fund recycling and composting facilities and environmental restoration of waterways.

A December 2019 analysis prepared by the state legislature said it's unclear how much money a single-use plastic tax could generate in California but estimated it's "possibly in the range of a few billion dollars annually in the near term."

Aguilar said the ballot initiative would bring in a billion dollars or more and said the industry talks are aimed generally at matching that.

"For the coalition proposal, they're going to have to bring in about the same amount of money in order to get the proponents of that initiative to pull the initiative off the ballot, if it does end up getting enough signatures," she said.

Beyond the referendum, she said industry groups also expect one of the main legislative authors of California's plastics proposals, state Sen. Ben Allen, to introduce a new version of his bill in 2021.

One plastics industry group had previously floated a similar but smaller fee for packaging to fund recycling.

In 2019, the American Chemistry Council's plastics division proposed to California lawmakers a fee of three-tenths of a penny on all single-use disposable foodservice items, not just plastics, and estimated it would raise about $100 million a year.