Will There Be A “Latte Levy”?

Trewin Restorick, CEO and founder of environment charity Hubbub, looks at the liklihood of a levy on disposable coffee cups – or a “Latte Levy” – being implemented, and what the implications might be for investment in recycling…

The government’s “war on plastic” is gaining momentum. Almost every week there is a new announcement or consultation. Will the plastic bag charge increase to 10p and extend to all shops? What will the promised deposit return scheme look like? How significant will be the reform of the PRN system?

Interested parties watch on uncertain what will end up being spin and what will be reality. All hope that whatever emerges will be joined together in a coherent policy framework rather than a mishmash of headline grabbing announcements.

One potential option is to announce a 25p ‘Latte Levy’ on hot drinks as proposed by the Environment Select Committee at the start of 2018. Decision-making on this encapsulates the complexity that policy-makers face in their desire to cut out single-use plastics. What will they need to consider?

Will a Latte Levy work?

Evidence suggests that whilst a levy can make a difference it is unlikely to be quite as impactful as the carrier bag charge. Plastic bags are easy to carry around and the charge moved them from being freely available to costing money. Different dynamics exist for coffee cups. Many chains offer a 25p to a 50p discount for reusable cups but this has only persuaded around 2% of customers to change behaviour.

The 5p ‘Latte Levy’ charge trial that Starbucks that ran in 36 stores in partnership with Hubbub saw a 150% increase in reusable cups. This is obviously a significant up-turn and should be core to any sound environmental approach but it does indicate that even if the Latte Levy is set at 25p reusable cups will not become the mainstream so we have to find the best environmental solution for disposables.

Will a Latte Levy hit investment in recycling?

There are now three sites within the UK that claim to have enough capacity to recycle all the disposable coffee cups used in the UK. This means that the challenge has shifted from creating recycling capacity to putting in place the infrastructure required to collect cups and educating people to use these recycling bins.

To make it financially worthwhile to introduce this new recycling infrastructure, Costa has committed to paying waste collectors £70 a tonne of cups on top of the £50 they currently receive. This is a considerable investment and it will be interesting to see if this commitment remains if a Latte Levy is introduced.

How would a Latte Levy fit with other policies?

The government is committed to introducing a Deposit Return Scheme subject to on-going consultation. Would a more effective way to collect disposable coffee cups be to include them in a DRS campaign? This could potentially make messaging to consumers easier and provide further investment for a DRS infrastructure.

As part of our #DriveDownLitter campaign Hubbub has been testing whether a recycling reward machine could encourage people to recycle coffee cups.

As part of our #DriveDownLitter campaign Hubbub has been testing whether a recycling reward machine could encourage people to recycle coffee cups. Uptake has been low to-date but the machine is delivery high quality uncontaminated cups https://bit.ly/2utYjjC

The government is also reviewing the PRN system. Whichever route is selected this seems certain to place a higher charge on companies – how will this additional cost link to the recycling of coffee cups and a proposed Latte Levy charge?

Will there be unexpected outcomes of a Latte Levy?

Government will have to be acutely aware of any unintended consequences. For instance, the financial pressure on our high street retailers is acute at the moment. A vibrant city centre requires high footfall. If a Latte Levy is introduced will it hit the number of people visiting coffee shops with a knock-on impact to the wider high street?

What would be the wider implications?

Hot drinks are not the only things that are consumed in disposable cups. In summer many people order takeaway cold drinks – will the Latte levy eventually be extended to cover these drinks as well? What criteria will the government use to decide what disposable items should be eligible for a tax and what aren’t? Could taxation be used to target a whole range of other products such as plastic straws and sandwich packaging and what would the impact of this on consumer opinion?

It will be intriguing to see how government works its way through these policy questions. What has to be hoped is that whatever decision is reached is driven by the best environmental outcomes rather than a money grab by the Treasury or through the wider personal political aspirations of Ministers.

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