This report commissioned by Fauna & Flora explores plastic credit schemes, including the scope of the market, the risks and uncertainties. We conducted an extensive literature review as well as interviews with stakeholders in the plastic credits sector, NGOs and waste picker associations as part of this research.  

Plastic credits have been gaining prominence in discussions relating to the United Nations Plastics Treaty as “innovative instruments” to channel funding towards tackling global plastic pollution.  

Plastic credit schemes have emerged as a way of channelling funds to projects that collect, recycle or manage plastic waste, particularly in low and middle income countries. The schemes work by issuing a plastic credit to a project for a specific amount (typically one tonne) of plastic waste collected, recycled or otherwise managed. A company that generates plastic waste can then buy this credit, so the funds from its purchase go to the waste management project. Plastic credits typically operate in the voluntary market, but some governments accept them as a way of demonstrating compliance with EPR and other regulations. 

The research identifies areas of concern, differences between EPR based on cost recovery and credits, and makes a number of recommendations.  

Areas of concern identified in the plastic credit scheme market include the following: 

• In the voluntary market, a challenge faced by a number of schemes relates to the question of additionality, where, for example, credits are being presented as only being issued to project developers for activities that go beyond ‘business as usual’, and that the activity wouldn’t have occurred without the incentive offered by the credit. However, our analysis shows that many projects have been up and running long before they are issued credits, and the lack of a guaranteed purchase means credits issued may never be sold.  

• Terminology used by some (but not all) credit schemes, such as ‘plastic offsets’ and plastic neutrality’, also creates the potential for consumers to be misled if the purchasing companies then use these labels to promote their products. Even if all costs of the underlying collection and management activities were covered (which is not the case under plastic credits where the price of credits depends on the balance of supply of and demand for those credits) and 100% of plastic waste were collected and appropriately managed, there would still be environmental impacts from production and end of life management. Use of words such as offsetting, or neutrality, however, conveys the impression that impacts are, indeed, fully offset or ‘neutralised’, which is not the case.  

• Because their price relates to supply and demand rather than the actual costs of managing waste, credits do not provide a reliable income stream for waste management projects; this can hamper the scaling up of systems and infrastructure, particularly in countries that need it most. 

The research concludes with a series of recommendations for policy makers, those operating credit schemes and potential buyers of plastic credits.