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Asia Business Development – Asia Business Consulting » The End of the Plastic Bag?

SpirE-Journal 2010 Q3

The End of the Plastic Bag?

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The End of the Plastic Bag?

While plastic bag use is being rolled back in much of the OECD, they remain pervasive in most emerging countries. But many have started to phase out this sea of disposable plastic, with China and India having banned some types of plastic bags in most cities. The fate of this effort says a lot about the preparedness of the Emerging World for the 21st century.

A return to the Pre-plastic age?

Before the advent of poly-ethylene (plastic) bags, people did shop, buy products and transport foodstuffs in the same way that they do now. The raw material for the bag was chosen by its usage.

Cloth bags were used for lighter items, while jute bags were used for voluminous and heavier goods. The cost did not justify the use-and-discard attitude. These bags were washable and reusable for six months to a year.

Phasing out Plastic

In the post-Kyoto Protocol world, there has been a global movement to reduce plastic bag usage, or at least to dispose of plastic bags soundly. The reasons for this are manifold and have been well documented. For example, plastic bags are effectively not biodegradable and when discarded in landfills may leech toxic chemicals into the soil, eventually contaminating water sources and agri-food. Plastic bag litter has also been known to cause flooding (by choking sewage pipes and storm drains), damage bio-diversity by endangering wild animals and plants and even endanger human health (25 children die each year in the US from suffocation from plastic bags – casualties outside the US are probably far higher).

Many countries (and retailers) are now beginning to enforce a Green policy in relation to plastic bags.

Some OECD countries have taken a clear stance in this regard. Ireland is a useful case study. Back in 2002, Ireland introduced a levy on plastic bags of 15 cents per bag. Its effect on the use of plastic bags in retail outlets was dramatic – plastic bag consumption dropped from 1.2 billion bags a year to less than 100 million, a 90% drop. Littering was also reduced.

Today, plastic sacks are taxed in Italy and Belgium. Spain, Norway, and now the UK are considering a ban or tax as well. British supermarket chain Tesco has switched to biodegradable bags, and in May 2010, Marks & Spencer food stores began to charge 5 pence (10 cents) per plastic bag, San Francisco became the first US city to ban plastic bags. In 2007, it barred the use of plastic bags at large supermarkets and chain drugstores.

Now it may expand that ban to all retailers, including hardware stores, bookshops, clothing boutiques and department stores. Los Angeles City Council followed, approving a ban that came into effect in July 2010. California was all set to become the first US state to ban plastic bags. However, though the bill was rejected by the California state assembly, the state has enforced a 25-cent fee on paper or plastic bags. Of the money collected, seven cents goes to the stores and 18 cents will be used to fund California’s anti-pollution and recycling programs.

In Asia, the degree of tolerance of plastic bags varies widely, but the general movement to reduce their use has begun.

Hong Kong charges a levy of HK $0.50 for each plastic bag provided to consumers. Hong Kong has supported plastic recycling in a major way and is today the largest importer of plastic waste in the world. Taiwan also taxes the usage of plastic bags. Singapore is moving to ban the distribution of free plastic bags while in Japan, major retailers have to report to the government on what they are doing to cut plastic waste.

In China, in one of the world’s most progressive state actions on the plastic bag issue, the government introduced a ban on plastic bags on 1 June 2008. The law banned production of ultra-thin bags under 0.025mm thick. It also banned the practice of supermarkets giving away free carriers. The move, which led to the closure of China’s biggest plastic bag manufacturer, was hailed by Greenpeace and other NGOs as going much further than what developed countries had done. According to a survey conducted by the China Chain Store and Franchise Association, the law succeeded in saving 40 billion plastic bags and the equivalent of 1.6 million tonnes of oil a year. Plastic bag usage among customers also reportedly fell by two thirds, in favour of reusable bags.

In Mumbai, a ban on plastic bags below 20-micron was imposed early on, so as to create recyclable value and reduce littering. Immediately after the 2005 floods, when plastic choked the city’s drainage system, Mumbai increased the limit to 50 microns and is now considering an outright ban in the city. In Delhi, organized retailers have already started offering re-usable bags to their customers. A law passed by the State Government of Delhi in 2009 to ban the use, sale and storage of all kinds of plastic bags has meant that customers, shopkeepers, hoteliers and hospital staff face a fine and a possible jail sentence for using non-biodegradable bags.

Plastic bags remain widely used in China and India, particularly among unorganized street retailers. But there can be no doubt that the public bans have drastically curtailed the reign of plastic in the world’s two most populous countries.

Tax or Ban?

Most European countries have tackled the plastic bag issue by levying taxes – for example, Ireland, Italy and Belgium. Initially these countries placed a ban on single use plastic bags and banned the free distribution of bags, making retailers charge for the bag. In Switzerland, Germany and Holland, retailers charge for plastic bags to encourage reuse.

Most environmental experts agree that the best way to tackle pollution is through the “polluter pays principle”. This means that whoever causes the pollution should have to pay to clean it up, one way or another. This is the principle in force when President Obama asked BP to pay for the damage caused by the oil spill in the Gulf of Mexico. In the case of plastic bags, both the consumer and retailer are the polluters, so even the retailer has to bear the cost instead of earning a profit from it.

Many Asian countries such as India and China have banned plastic bags based on thickness because of the lower recyclability of thinner bags. Most states in India have a threshold level of 0.030 mm and higher limits of 40, 50, or 70 microns. Since a 40-50 micron bag costs more than a 20 micron thick plastic bag, demand is always higher for the latter from medicine shops and small retailers.

However plastic bags remain widely used in supermarkets, “wet markets” and food outlets. The main impediment may be the unorganized nature of the retail sector and the weak infrastructure for the enforcement of environmental laws. This argues for the efficiency of gradually levying small taxes at the point of production of plastic bags, while at the same time taking steps to promote Green alternative materials.

Alternatives to plastic bags

The biggest beneficiary of the current backlash against plastic bags has been the paper industry. Most retailers worldwide have adopted paper bags as the next best alternative.

Critics have bashed paper usage due to the environmental cost of deforestation. However paper can in fact be produced using sustainable methods that conserve natural forests and bio-diversity, as has been done in the Scandinavian countries for decades. Few would quarrel with the Green credentials of paper bags made from sustainably produced paper, for example paper accredited by the Forestry Stewardship Council (FSC). But such paper is typically more expensive than mainstream, non-Green paper – shifting demand in this direction will be a big, long-term challenge.

Living with Plastic?

A Green method of plastic disposal is the burning of the bags and recovery of energy for power generation or heating. Plastics contain much of the energy potential of the petroleum from which they are made. Environmentalists and some NGOs have objected to this procedure, leading to legislative restrictions. This backlash has arisen, in part, because of the image of “old-fashioned” incinerators polluting the air with toxic fumes and ash. However, it is possible to construct a “high-tech” incinerator using carbon-capture technology that is energy-efficient and prevents carbon-intensive waste from entering the atmosphere.

Facilities for converting trash to energy in a Green way are at present not cost-effective. However, they are environmentally desirable and, if costs can be brought down, may help society to live with plastic bags for the long time it takes to eliminate them.

Conclusion: What does the fate of plastic bags tell us about the Emerging World?

Public policies on plastic bags are uneven across countries. Even within the OECD, the public stance varies widely, with some countries levying significant taxes and others not yet doing so.

Among emerging countries, the variance is even greater. Yet within the Emerging World, surprisingly, it is not the more economically developed countries that are leading the charge. China and India have gone further than almost any other country in outrightly banning most types of plastic bags in most places. And while these bans have reduced plastic bag usage massively, they remain widely used in the unorganized and informal retail sector.

As for economically mature countries like Taiwan and Hong Kong, taxes (rather than bans) on plastic bags have been or soon will be introduced, in response to the Green lobby and activism around Green and public health issues.

The impetus for the plastic bag bans in China and India came from the need to curb litter, which can damage public health and cause flooding. This is an understandable response, given the increasing levels of activism around public health concerns in both countries, not to mention higher incidence of urban flooding due to aberrant global weather patterns. The introduction of a ban rather than taxes may reflect the state’s impatience and lack of confidence in its tax collection and compliance infrastructure. However, the ban has not been perfectly enforced. In practice, its writ is limited to larger urban areas and to the organized retail sector. It has not been possible for the state to crack down on all production of banned plastic bags.

All this sheds light on how policies are developed and enforced in emerging countries. Where an urgent priority is identified, there is less faith in tinkering with market mechanisms. Rather, old instincts often prevail and the state uses command-and-control mechanisms.

However the effectiveness of this hard-handed approach is often frustrated by the unorganized and informal nature of large sectors of the economy, not to mention the insufficient resources being allocated to the enforcement of some types of laws. China, for example, maintains only a few hundred inspectors to enforce emissions standards across all of the factories on the mainland.

In emerging countries, there also tends to be less emphasis on using technology and innovation to find ways to “square the circle” – to solve problems in ways that benefit all stake-holders. An example might be investment in technologies to undertake Green plastic bag disposal.

Going forward, a major imperative for governments in the Emerging World might be to step up investment in law enforcement to ensure that laws that are passed are taken seriously – including environmental, intellectual property and tax laws which suffer what might politely be termed an “enforcement deficit”.

And a major imperative for the private sector might be to push technology-centric solutions to intractable national problems, and even to use such problems to launch new industries with export potential – so as to generate job-creating rather than job-destroying solutions to the dilemmas of the 21st century.

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