Environmental Protection (Single-use Plastic Products) (Scotland) Regulations 2021: business and regulatory impact assessment - final

5.0 Results

106. Table 3, below, summarises the cost impacts on each stakeholder group under the two scenarios assessed. It shows the NPV values under the baseline scenario and Option 1, for each impact and the affected stakeholder. The net benefit or cost is calculated by deducting the NPV under the baseline scenario from the NPV under Option 1. A higher NPV is represented as a benefit to society, therefore a negative change to the NPV represents an increased cost, and a positive change to the NPV represents an increased benefit. The table shows that the economy-wide impact of introducing the market restrictions, over a ten-year period, would be -£13.7 million compared to business as usual.

*The disamenity costs of beach litter could not be separated out into NPVs for the Baseline and Option 1.

107. The negative NPV is mainly driven by an increase in item costs of £16.0 million, reflecting the higher costs of some alternative items compared to the single-use plastic items. The model does not take into account any potential changes to alternative item costs over time. Scheme enforcement costs are also £1.2 million above the Baseline.

108. Another driver of costs is item weights. Alternative products are generally heavier than single-use plastic items. For instance, a paper cup weighs on average around 11g versus around 3g for its single-use plastic equivalent. The waste management costs are assessed on the basis of weight, meaning a higher cost for alternative products. The model does not take into account any potential changes in the weight of alternative products over the period analysed.

109. On the other hand, Option 1 has net carbon-related benefits of £1.0 million and net benefit of £5 million related to reductions in the indirect costs of littering, demonstrating the environmental benefits of the policy change.

110. Table 4 presents the net cost impacts as they affect each stakeholder group. The model estimates that the largest costs will fall onto society, which is mainly driven by the higher prices associated with the alternative items, while local authorities will face the smallest costs.

111. Table 5 shows how the economic impacts of market restrictions would be likely to vary by item.

Note: The table above excludes costs and benefits which cannot be separated out by individual item, so the columns do not add up to the total net NPV change seen in Table 3.

112. The model was found to have particularly sensitivity to the costs of EPS food containers and their alternatives, and as a result these were given additional attention.

113. Engagement with stakeholders (manufacturers, wholesalers and takeaway outlets) indicated that the most likely alternatives to EPS food containers were fibre-based containers (such as bagasse), which have very similar heat retention, grease and liquid resistant properties. Depending on the business models adopted by individual takeaway outlets, and the type of food sold, paper/card-based containers might also be considered. The choice of alternative container type will be largely influenced by prices. Currently, average prices for paper/card-based food containers are higher than those for fibre-based containers.

114. Under Option 1, fibre-based containers have been modelled as the most likely alternatives to EPS, due to their better functionality and lower price point than paper/card-based containers. In order to test what impacts might result if a share of businesses opted to use paper/card-based containers rather than fibre-based, a sensitivity analysis was undertaken. The results are presented in Table 6, below.

115. This shows that if 10% of the EPS food container market switched to the more expensive paper/card-based food containers rather than fibre-based, an additional £0.6 million would be added to the net NPV under Option 1. If 20% switched, £2.9 million would be added.

116. Presenting the results by item also allows identification of where the most significant differences lie in carbon impacts. These results are presented in Table 7.

117. In terms of carbon emissions, EPS containers lead to the greatest reduction under Option 1. Cutlery is the next most significant item when carbon reductions are considered.

118. Changes to the indirect costs of littering are a significant environmental benefit of the policy, and Table 8 below demonstrates how each item contributes to this.

119. The greatest economic benefit from reduced littering impacts comes from the restriction on EPS food containers, at nearly £3 million. A further £1 million results from restricting single-use plastic straws, and £0.9m from cutlery. There is a significant benefit in this cost category because non-plastic alternative items degrade much faster than the single-use plastics items they are replacing.

120. Many plastics, including EPS, are resistant to photodegradation and are buoyant, meaning that plastic litter eventually accumulates along coastlines, becoming an increasingly large component of marine debris. It is estimated that plastics contribute towards 50-80% of beach litter,^[52] and that food containers comprise 1% of plastic beach litter in the UK.^[53]

121. The analysis above demonstrates that while society is likely to face some additional costs from restrictions on EPS food containers and cups, these are also the items for which restrictions are expected to result in the largest environmental benefits.

122. Looking at the cost-benefit analysis more broadly, it is worth noting two limitations to the methodology, which mean that the costs of the policy change may be overstated while the benefits are understated.

123. First, the assumptions regarding the prices of alternative single-use products may be too high, particularly in the later part of the time period under consideration. This is because as market demand for alternative single-use products rises, their prices are likely to fall owing to economies of scale and product innovation. If the prices were to fall, the net NPV of Option 1 would become less negative.

124. Second, the indirect costs of plastic pollution (which are avoided through this policy change) are largely uncounted. Robust data and methodologies are lacking to enable cost estimates for the avoided damage to Scotland's terrestrial and marine natural capital, which has knock-on benefits for the tourism, transport and fisheries industries as well as human health.^[54]