Managing controlled waste - code of practice: duty of care - business and regulatory impact assessment

4. Impact on business

Sectors/ Groups affected

The main group impacted by this proposal are businesses in the non-municipal household (NHM) sector that must now separate plastic film from residual waste and arrange for collection of this material for recycling.

It is estimated that there are approximately 200,000 Scottish businesses and public sector entities which would be in-scope of the proposal to separate plastic films for collection (Table 1). This is based on 2018 data from ONS for the Inter-Departmental Businesses Register (IDBR), using local unit counts. The sector scope of NHM businesses included is defined by a close examination of European Waste chapter codes and their mapping onto data sources such as Environmental Agency’s Waste Data Interrogator (WDI) and Incineration data^[28], Defra Refuse Derived Fuel (RDF), Defra Household data, Defra C&I study, Eurostat^[29], related-waste compositions and previous similar studies. This mapping allows us to determine which firms are producing household-similar waste per the Circular Economy Package (CEP) definition.^[30]

Source: Zero Waste Scotland from WRAP’s Business count based on the IDBR register from the Office for National Statistics (ONS) Totals may not add due to rounding.

There will also be an impact on the waste management sector for private organisations and, where applicable, local authorities that offer collections from business premises. Waste management operators will likely be required make some adjustment to vehicles or other logistical arrangements, though this will be dependent on operational decisions taken by waste service providers and is not mandated within the Duty of Care Code of Practice.

Waste receiving sites will likely be impacted by the proposed policy. Materials facilities (MFs) will be required to accommodate higher volumes of plastic film, and material recovery facilities (MRFs) may need to sort and recover this material for recycling. WRAP research identified several challenges for MRFs in the sorting of film, which in part explains the low coverage of services. One of the challenges of this material is the low weight and irregularity of size that makes it difficult to be detected by standard sorting equipment. It is very likely that MRFs will need to make some changes in order to accept plastic films. For example, they might need to invest in technologies such as air scythes or vacuum chutes to prevent films being wrapped around rollers.^[31] Separate materials facilities requirements relating to packaging EPR, including sampling for plastic films, are already in place following updates to the Waste management: code of practice on sampling and reporting at materials facilities in 2024^[32].

There will likely be an impact on businesses that reprocess plastic, including plastic films, due to an increased availability of raw material for reprocessing, and increased demand for reprocessing due to the requirements to recycle under the Code. Stakeholders have identified a potential shortfall in Scottish and UK capacity to reprocess plastic film from the point that new requirements commence in 2027^[33]. This is informing UK-wide policy to support the domestic reprocessing sector, though we also anticipate that market drivers resulting from new regulatory requirements will impact investment in plastic reprocessing capacity^[34].

Sites receiving residual waste such as Energy from Waste facilities, may see a reduction in residual waste volumes or calorific throughput as a result of reduced volumes of plastic film within the residual waste stream.

Producers obligated under packaging EPR will be impacted by policy proposals primarily as a result of any changes to the classification of plastic film packaging classed as household waste as recyclable. This will impact the modulated fees associated with the use of this packaging material.

Potential costs to businesses: available updates

The primary costs to NHM businesses result from any changes to waste collection costs associated with the requirement to separate and ensure collection for recycling of plastic films. This will incur one-off familiarisation costs for businesses associated with placing films in the dry mixed recycling stream as opposed to residual waste, (such as additional bins), though total tonnages will not change because this is a transfer of material between streams. There will also be changes to waste collection costs as a result of any changes made by waste service providers and increased gate fees at waste receiving sites. Potential new costs also featured in a number of consultation responses to the draft Duty of care code of practice for managing controlled waste.

The estimated costs associated with the separate collection and recycling of plastic films are set out in the 2021 UK Impact Assessment, and updated in subsequent UK IAs and Scottish Government BRIAs. There is limited additional evidence on indicative costs for services collecting plastic films, though “The future of recycling flexible plastic packaging in the UK FlexCollect Project Final report and blueprint” (“the FlexCollect report”) provides a recent analysis of potential costs and impacts associated with plastic film collections, with a particularly focus on collection from households.

The FlexCollect report estimates that the cost per tonne for plastic film collection and recycling is £1,671. This is significantly higher than estimated in the UK Impact Assessment and Scottish Government BRIAs; this figure was also referenced in consultation responses to the 2025 Duty of Care Code of Practice consultation. However, the FlexCollect Report highlights that costs are based on trial results, covering 5% to 25% of households within participating local authorities. The trials required operators to implement non-standard procedures at their sites and, as such, are expected to be higher per tonne or per household than a universal service.

Familiarisation

Consultation responses highlighted familiarisation costs to NMH businesses as a result of the need to separate plastic films from residual waste. These could include new collection receptacles (bins), and training, signage etc. Waste service providers will incur related familiarisation costs if any changes are required to collection vehicles or logistics, and through providing support and advice to their customers. Material recovery facilities may need to make changes in order to accept and process plastic films. Familiarisation costs for waste operators or material recovery facilities are assumed to be reflected in service costs and / or gate fees.

Collection and sorting

The FlexCollect Report provides a comprehensive summary of collection and sorting costs associated with UK trials of plastic films, though is focused on collections from household rather than businesses. The report highlights that collections costs are largely dependent on the approach to collecting flexible plastic packaging, for example whether it is separately collected from other materials or comingled. The central estimate of costs identified in the FlexCollect Report is £1,021 per tonne; this is significantly higher than initial impact assessment which estimated collection and sorting costs to be £210-£720 per tonne^[35]. However, it is critical to note that the two estimates are not directly comparable as FlexCollect costs are based on material being trialled rather than seeking to model the long-term costs associated with new requirements. There is an expectation based on trial results that savings are available (for example, associated with the type of collection bags or collection and sorting method) and that costs may decrease with commercial scale and long-term familiarisation of the service.

Gate fees

Gate fees cover the processing costs of collected material, and consider the operational cost of processing, material yield losses, the cost to dispose of material not recycled, and the value of the end product produced. The FlexCollect Report estimates that end market gate fees for plastic film collected by trials ranges from £80 to over £1,000 per tonne, with a central estimate of £650 per tonne.

The UK and Scottish Government impact assessments assume that the collection of plastic film will increase MRF gate fees by ~6%^[36], with an additional 10% uplift included as part of sensitivity analysis. According to WRAP Gate Fees Report 2024/25^[37], the median UK MRF gate fee was £84/tonne; a 6% uplift would therefore equate to a central estimate of £89. This figure is in line with the lower gate fee costs identified in the FlexCollect Report, but are significantly lower than the central and upper cost estimates. Once again, the two estimates are not directly comparable, since FlexCollect costs are indicative of trials, whereas impact assessments seek to quantify any additional costs associated with a full, UK-wide rollout of collections for households and businesses. The FlexCollect Report also highlights a number of important caveats to end market gate fee costs, including:

• Significant variability in gate fees depending on the volumes of materials presented, the uniqueness of the trial to the recycler (for example, whether the facility would usually process plastic films), the recycling markets, price of the PRN and virgin plastic packaging, as well as other facility specific factors.
• That the gate fees charged reflected the material was being trialled, and that commercial conditions would be expected to change due to the economies of scale associated with full roll-out of plastic film collections. Certainty of feedstock and further investment may bring reductions in gate fees.
• Instability to the plastics market during the project.

Any increase in gate fees at MRFs may be partially offset by reduced costs associated with the disposal of residual waste as plastic film is separated from the residual waste stream. According to WRAP Gate Fees Report 2024/25^[38], the median UK gate fee for Energy from Waste was £121/tonne, and the median cost per tonne for landfill (gate fee and landfill tax) was £152.15/tonne. There may be further savings following the planned expansion of the UK ETS to waste incineration, covered below.

Nevertheless, consultation response and the FlexCollect report makes clear that there is potential for significant cost to NHM businesses and waste operators associated with the introduction of new collection for recycling requirements. Costs remain highly uncertain and are dependent upon the approach to implementation, which is a matter for individual businesses and not determined by Duty of Care requirements.

As demonstrated by the FlexCollect report, costs will also be highly dependent on plastic end destination markets, including the price of virgin plastic, Packaging Recycling Note (PRN) prices, reprocessing capacity and demand for recycled material. Alongside wider market developments, these factors are linked to wider Scottish Government, UK Government and four nation policies including the Plastic Packaging Tax and PRN reform.

We will continue to keep costs under close consideration to identify if further measures are required as implementation of plastic collection requirements progresses. This should recognise the familiarisation requirements for NHM businesses and waste operators, account for changes to contractual arrangements, and allow for roll-out of collection, sorting and reprocessing infrastructure in Scotland and across the UK. Monitoring the costs of implementation will take place on a four-nation basis, recognising the UK-wide nature of this policy proposal.

The Code is underpinned by a consideration of ‘reasonableness’ . Duties related to recycling require, for example, that all reasonable steps are taken to ensure that waste is managed in a manner that promotes high quality recycling. This would take into account the availability of commercially viable recycling markets for a particular grade of material, or the significant variability of gate fees among other factors. This, in turn, would be supported by SEPA’s pragmatic and proportionate approach to enforcement.

Potential benefits to businesses: updates

UK Emissions Trading Scheme

In 2023, the UK ETS Authority, made up of the UK, Scottish Government, Welsh Government, and the Northern Ireland Department of Agriculture, Environment and Rural Affairs (DAERA) announced its intention to expand the scope of the UK Emissions Trading Scheme to waste incineration and energy from waste (EfW) from 2028. Expanding the scheme will support the waste sector to decarbonise in the most efficient way, reflecting the waste hierarchy.

Expansion of ETS to waste is expected to result in increased costs associated with the incineration of fossil-based material such as plastic film and flexible plastic, tied to the ETS carbon price. Flexible plastic is estimated to constitutes 5-10% of a typical household residual waste bin by weight, and is assumed to comprise a greater proportion of commercial waste^[39]. Removal of this material from the residual waste stream is therefore anticipated to reduce waste management costs for businesses by avoiding the need to pay higher gate fees as a result of the ETS. This impact is not quantified in this BRIA as final decisions on how ETS costs will be implemented have not been confirmed.

Extended Producer Responsibility for Packaging

Extended Producer Responsibility for packaging (pEPR) Regulations require producers, in addition to meet recycling obligations, to cover the collection and disposal costs of household packaging once it becomes waste. The scheme aims to ensure producers take financial responsibility for the environmental impacts of the packaging they place on the market and are encouraged to reduce these impacts, supporting a whole lifecycle approach central to Scotland’s circular economy strategy.

Packaging EPR disposal costs cover the costs of efficient and effective local authority management of household waste. There are direct costs to businesses obligated under pEPR that sell products in plastic film packaging that is classified as household packaging waste. There will be indirect costs to businesses and consumers purchasing products in plastic film packaging if pEPR costs are passed through to the total price of products. The costs associated with management of NHM packaging waste are not covered by pEPR, and remain the responsibility of NHM businesses.

Packaging EPR includes a requirement for the PackUK (the Scheme Administrator) to modulate producer fees based on environmental sustainability. To support fee modulation, PackUK must develop and maintain a recyclability assessment methodology (RAM) .This provides a standardised way for liable producers to assess packaging recyclability and underpins how producer fees are modulated. In order to be avoid being classes as unrecyclable (‘red rated’), an item of packaging or component must be collected by 75% of local authorities, or have a takeback option that is accessible to 75% of the UK population and provide evidence or recycling and traceability. If neither kerbside collections or the take back protocol apply, then the item of packaging or component is classified as red.

At present, plastic films have a collection rate of less than 14% and therefore fail to meet these criteria, meaning they incur higher fees. Some plastic films packaging types may progress via the take back route (for example returned to supermarket) if a valid scheme is available but are capped at ‘amber’ and pay the pEPR base fee for plastic packaging. It is anticipated that plastic films could progress to a ‘green’ classification in future years, and therefore receive a discount from the base fee, if they meet all stages of recyclability. This includes being widely collected at kerbside, meet the reprocessing threshold and no/minimal additional material which may reduce quality of recyclate produced.

Fee modulation applies to producer base fees from Year 2 of the scheme (2026/27) with Year 2 Illustrative Fees^[40] published in December 2025, with the base fee for plastic set at £455 per tonne. Fees are modulated based on the above recyclability criteria from Year 2 in line with PackUK’s modulation statement. Red-rated packaging incurs a 20% uplift in year 2, meaning that producers pay an additional £90 for plastic film that is red-rated compared to the base fee (£545 per tonne), and £130 per tonne compared to green-rated (widely recycled) packaging. The modulation factor will increase base fees by 60% in 2027/8 and 100% in 2028/9 for red rated packaging. Based on Year 2 base-fees, this would equate to an additional £270 per tonne in 2027/28 and £455 per tonne in 2028/29, in the absence of widely available plastic film recycling collections. The pEPR impact assessment and BRIA assume that 85% of these costs are passed on through the supply chain.