The fossil plastic industry is still being well looked after (deep dive into failing policy)

Even the plastic industry acknowledges that barely any progress is being made with circularity. Despite ambitions for a circular economy, the demand for plastic continues to grow and recycling is stagnating. The Dutch polymer levy and plastic standard were abolished under pressure from the plastic lobby, killing off instruments designed to narrow the price gap with fossil plastic. This article provides an overview of the key fiscal instruments affecting plastics in the Netherlands.

There is tariff differentiation, but it does not work

Under the Extended Producer Responsibility (EPR), producers of packaging, electrical appliances or clothing, among other things, are financially responsible for managing their waste. In return, they pay a fee per tonne of packaging to an EPR organisation that arranges collection and sorting for them. For (plastic) packaging, which accounts for some 35-40% of all plastic used, this EPR system is managed by Verpact in the Netherlands. In Belgium, Fost Plus is responsible for household packaging and Valipac for industrial packaging, meaning every European country has its own system.

Tariff differentiation rewards frontrunners with discounts on their Waste Management Contribution when they, as producers, use recyclate in products and make them easier to recycle, but it fails to compensate for the structural price advantage of virgin plastics. According to CE Delft, the current discount of 0.20 euros per kg of plastic packaging has not proved to be a decisive factor in making sustainable packaging choices.

In addition, the European Waste Framework limits the amount of financial incentives a producer responsibility organisation can offer: total revenues must not exceed the running costs of the executing organisation. Consequently, this leaves limited room for incentives large enough to be effective. A tax or levy on fossil packaging could therefore potentially be much more effective than tariff differentiation. Furthermore, EPR organisations set the tariffs themselves. As a result, in practice, only 7% of packaged material is made from recyclate.

Single-use tax is being abolished again

Another intended price incentive regarding plastic is the surcharge that consumers have to pay on single-use packaging, resulting from the European Single-Use Plastics Directive (SUPD). This directive states that member states must take measures to reduce the use of single-use packaging, which the Netherlands has translated into a surcharge whose amount shops and entrepreneurs can determine themselves. As a result, this varies by supplier, and a 2024 evaluation concluded that it does not create an effective behavioural incentive. This measure is an example of half-hearted steering instead of consistent circular policy and will furthermore be abolished again from 2027.

Up to 14 billion in fossil subsidies

The big money, however, lies in the 14 billion euros in tax exemptions for the petrochemical industry. The scale of these fossil subsidies is directly linked to the exceptionally large scale of this industry in the Netherlands, with plastics by far its largest market. 50% of total industrial gas consumption and 69% of total industrial oil consumption flows towards this plastic industry, supported by billions in excise duty exemptions that keep the pollution going.

These fossil subsidies still significantly boost the competitiveness of fossil plastic compared to circular plastic. For example:

Non-energy use of mineral oils (mostly petroleum product naphtha, used as a raw material for plastic) is currently still outside the scope of taxation frameworks, but could be regulated nationally in the Netherlands.

The non-energy use of LPG in steam crackers is exempt for an amount of 585 million euros (2025) under the Energy Taxation Directive (ETD; 2003/96/EC, Article 2, paragraph 4b) and can therefore not be priced nationally but must be regulated at a European level. Unfortunately, revisions of the ETD have failed multiple times.

Mineral oils produced and used within refineries are also exempt from excise duty under the ETD.

No impact from EU Plastic tax

For non-recycled plastic packaging waste, a levy of 0.80 euros per kg has been developed as a new source of revenue for the EU budget, amounting to a contribution of 235 million euros in 2024. This is not paid by plastic packaging companies, but by all of us. This contribution is intended to ensure the repayment of EU post-pandemic recovery funds and reduce dependency on contributions based on gross national income (GNI), as desired by the Netherlands and other wealthy countries. This contribution is supposed to incentivise member states to encourage recycling and implement stricter policies on plastic waste.

The European Court of Auditors states that member states have not sufficiently anticipated policies for this contribution. As a result, the levy does not yet have a steering effect on reducing non-recycled plastic packaging waste, which is precisely the goal. This is reflected in the minimal progress of recycling rates for plastic packaging in the Netherlands. Spain already partially passes on this levy through a tax on single-use packaging containing plastic, whether empty or filled, saving the state 571 million euros in 2024. They calculate this as 0.45 euros per kg of non-recycled plastic used in single-use packaging, paid by producers or importers. In Italy, discussions are still ongoing, and the United Kingdom was already ahead with this tax. The Netherlands has not yet taken appropriate measures for this, but a potential decision could still be made this spring.

Meagre investments in circularity

In 2025, research organisations or entrepreneurs could submit an application to the Netherlands Enterprise Agency (RVO) for the Circular Plastic NL Subsidy, aimed at stimulating circular plastic projects. A total of 42 million euros was made available, of which 4.5 million went to research projects in the field of plastic (recycling) and 37.5 million to sustainable entrepreneurs. Despite the interest, only 18 million has been spent on projects; the remaining amount should be spent in 2026. While this is a positive instrument for innovation and collaboration in recycling, the amount remains limited compared to the substantial subsidies the fossil plastic industry receives, underlining the skewed distribution of current policy.

Will there be a 'circular leverage'?

The Schoof government planned to introduce a plastic levy on the production of fossil plastic in the Netherlands, but a successful lobby for the abolition of this levy led to a budget gap of 567 million euros, and the bill for this was passed onto the waste sector. As a consequence, waste costs for citizens will rise. The plastic industry asked for alternative consultations, titled the 'plastic table', to come up with other policy measures that would be less intrusive.

The plastic table came up with a number of voluntary commitments, but there is also a promising proposal among them, namely the "Circular Leverage". This is a levy on the proportion of fossil plastic in products entering the Dutch market. By linking this to the European Digital Product Passport (DPP) introduced in the Ecodesign Regulation (ESPR)—a digital document containing information on, among other things, recyclability, material composition and environmental impact of products—a reliable basis is created to anchor the levy. Another positive aspect is that this creates a level playing field for Dutch and foreign producers, as it does not matter whether the product was manufactured in the Netherlands or in another country. Crucially, however:

• the share of fossil plastic must be explicitly included in the DPP reporting;

• the levy must be high enough to make fossil plastic less attractive;

• the revenues from this levy must be used for investments in circular solutions.

The waste sector revolted when it became clear that the plastic lobby was shifting the costs to their side. Subsequently, the "Waste Sector Working Group" was called upon to find alternatives to the generic increase in the waste tax and the CO2 levy for waste-to-energy plants. With a focus on 2030, they presented the cabinet with the following alternatives relating to plastic:

A plastic levy on all non-recycled plastic packaging placed on the Dutch market, directly linked to the 0.80 euros per kg that the Netherlands already pays to the EU. A logical step towards 'the polluter pays'.

A levy on specific single-use plastic packaging applied to producers and importers, with rates varying by type of packaging and proportion of recycled material. An exploration by Berenschot highlights risks of potential environmentally unfriendly material substitution that must be taken into account.

A levy on plastic beverage packaging of bottles and metal cans up to 3 litres, paid by producers and importers, with the rate adjusted downwards annually in line with increases in the collection rate, which aligns with our call for additional regulation due to targets not being met.

A levy on plastic-containing disposable cups and containers for immediate consumption ("to-go"), which can be charged either to the producer and importer or at the food service outlet. This can influence behaviour, but its effectiveness depends on consistent application and enforcement of uniform rates.

These proposals rightly make plastic packaging more expensive and increase the necessary demand for recyclate, but without being complemented by a cohesive policy on all fossil plastics, they will not eliminate the price advantage.

At present, there is a lack of policy in the Netherlands to reduce fossil plastic and accelerate the transition to a circular economy. It is also unclear what the new government will do. There is now an urgent task for Minister Stientje van Veldhoven: implement a consistent and decisive long-term policy that discourages fossil plastic and makes circular plastic the norm.