How Plastic Credits can help reduce plastic pollution and increase recycling rates now

The second session of the Intergovernmental Negotiating Committee on Plastic Pollution delivers fresh hope for the establishment of a Global Plastics Treaty in 2024. While ultimately, we think there is a need for strong restrictions on single-use plastics, we still need to adopt solutions to the current situation. And, in this context, businesses with a genuine commitment to its goals, shouldn’t wait until then to take action.

There is already a proven mechanism in place to recover large volumes of plastic from the environment and see it recycled or properly disposed of, one which, done right, can also deliver social benefit to those most affected by the pollution.

When BVRio launched the world’s first Reverse Logistics Credits mechanism in 2013 for Brazilian FMCG producers, it was met with widespread enthusiasm. Crucially, it offered both a simple and affordable solution for producers to meet new EPR type legislation, and a way of increasing the wages of the countries million+ Catadores (waste pickers).

Since then, BVRio and Circular Action founder and Director, Pedro Moura Costa, has championed the use of ‘Circular Credits’, adapting systems and developing new technology to support projects in Brazil and worldwide. But, a decade on, and more action needed than ever, what have become widely known as Plastic Credits haven’t yet fully realised their potential.

Here he reflects on the challenge ahead, and the reasons he still believes credits offer a viable solution right now. 

Despite demonstrating the social and environmental benefit, and the scalability of this approach for over a decade now, we still see frequent downplaying of credits as a viable approach to the plastic waste problem. Developing clever organic packaging, banning single use items and imposing legislation is fantastic, but we also need to devise and deploy measures to solve the problem we have right now. A problem millions of informal waste pickers are ideally placed to help solve, if only they can be properly incentivised and remunerated.

The perception of credits being used as a greenwashing tool seems to be the biggest hurdle to get over before ‘Circular Credits’ can really take off (we prefer the term ‘circular credits’ as opposed to ’plastic credits’, as these can be used for a wider range of waste materials). It’s true that some schemes haven’t had the traceability that they should have, and that some producers have used them as a distraction and claimed ‘plastic neutrality’ while making no attempts to reduce their footprint or using alternative materials, but they should be the exception.

Run well, transparently, and with added social benefit, the use of Circular Credits could see millions of tonnes of waste recovered from the environment and properly disposed of in countries with little or no municipal waste provision. Alongside, the income and lives of millions of waste pickers could be improved. All that, and they’re a way of meeting increasingly stringent EPR regulations. What’s not to like?

Circular Credits Explained

A Circular Credit represents the service of recovery (collection, sorting) and appropriate destination of 1 metric tonne of waste material that could be inappropriately discarded, causing pollution of our natural environment. The use of Circular Credits enables companies and individuals to compensate for the volume of this waste that they are responsible for, through a one-in-one-out approach to reducing their waste footprint.

Circular Credits can be issued for any type of material, including plastics, beverage cartons, glass, paper, metals, e-waste, tyres, even organic material. All credits for the same material are fungible, but buyers may want to select them by country of origin, allowing for producers to tackle the waste created in the country it is generated.

The eventual destination of the waste material varies depending on the circumstance of the project or operation and the availability of economically viable options. In some cases, it may be a recycling plant; in others, where this option is not available, it could be the next best alternative available.

Not all credits are created equal

Contributing to the distrust of credits, and leaving the door open to abuse, is the fact that there is currently no industry standard. This means that not all schemes follow the same principles. The most robust of these schemes, including our own Circular Credits Mechanism, do adhere to voluntary credit accounting standards, disclosing their own principles, as well as providing third party validation.

Those who have looked critically and closely at the range of schemes available to buyers agree that there are three main areas which set some schemes apart: additionality, no-double counting, smart and inclusive logistics, and social benefit.

Additionality. The term ‘additionality’ was first used for GHG mitigation projects in the early 1990s. At that time, only a few projects were being developed with the specific objective of reducing GHG emissions (or promoting carbon sequestration in trees), and it was important then to demonstrate that these project activities would not have taken place ‘but for’ this new source of climate finance. The requirement of additionality aimed to prevent existing activities (e.g., reforestation) being re-labelled as GHG mitigation projects, giving the false impression that these were established to offset a rise in GHG emissions taking place elsewhere.

There is a risk that plastic credits are not generated from new and additional activity but are being awarded for already existing activities. This is certainly the case if existing waste management companies were to receive credits for activities that they are already conducting.

Some observers suggest that this is also the case of informal waste pickers that are already making a living out of collecting and selling recyclable waste materials – if they are already conducting this activity, it shouldn’t be considered “additional”. But, ask yourself how is this activity conducted? Waste pickers in many countries work in extremely poor living conditions, and relying on them to supply our basic waste collection needs systems for extremely low payments is, in our view, analogous to modern slavery. Furthermore, these waste pickers usually only receive remuneration for the waste materials sold, and not for the environmental service provided (waste collection). We do not consider these as acceptable baselines for the determination of additionality, as the perpetuation of these practices is unacceptable.

At the same time, selling credits in addition to selling recyclable materials, would help to change the current undesirable baseline. The result is higher take home payments, leading to better productivity. If these payments are channelled through waste picker organisations (e.g., cooperatives), this would incentivise them to attract additional workers, make investments to improve the safety of workers. If complemented by investment in infrastructure such as vehicles and warehouse machinery, this would result in increased collection and sorting capacity. We’ve seen just this with a recent project with a cooperative in Rio de Janeiro, which in less than a year saw its capacity increase by 300%. We see that as Additionality.

Another area where we see an opportunity for additional impact is by increasing the type of materials collected – i.e., providing plastic credits for the collection of materials that are not currently profitable to recover and recycle. By focusing on creating new markets for materials that are not usually recycled, we can ensure additionality. In Vietnam, for example, very few of the street collectors ever recovered used beverage cartons, as there was no market for this material. By working with Tetra Pak and PRO Vietnam, we were able to devise a way of connecting recyclers and aggregators with street collectors who received incentives to collect used cartons which were then separated and recycled into cardboard and composite building materials.

Read further guidance on Additionality

No Double Counting. The principle of No Double Counting prevents the recovery and destination of post-consumer waste being attributed to more than one entity. In practice, this means that credits cannot be issued for activities where this service has already been contracted and paid for. For example by municipal waste collection services that already get tax revenues to perform this activities. Similarly, the credits can only be used once, to compensate for the footprint of a specific entity.

Transparency of transactions is the key to mitigating this. For this reason, BVRio created a Transactions Registry within our Circular Credits Mechanism, to ensure transparency and prevent double counting. 

Read further guidance on No Double Counting 

Smart and inclusive logistics. One of the main challenges of recycling is to be able to obtain feedstock (recyclable waste materials) at scale. This is because of the challenges of the ‘reverse logistics’ required to collect and transport waste to recycling plants. This problem is particularly acute in developing countries with poor waste collection schemes and infrastructure. 

At the same time, there are more than 20 million informal waste pickers operating in the streets and rubbish dumps in these countries that could be better included in a solution to these shortfalls. The challenge is to coordinate and integrate their activities, so to gain efficiency and effectiveness.

In order to coordinate the activities of large number of individual waste pickers, as well as to ensure traceability and monitoring of waste flows along the supply chain, we developed a simple to use mobile phone app called KOLEKT.

Over the last 18 months KOLEKT has been tested in Brazil and Vietnam, and currently in Mozambique and Angola by a number of different initiatives, using it in slightly different ways. The smartphone app tracks waste collection sales throughout the supply chain using GPS and images to ensure transactions are transparent. Organisations purchasing credits can access a dashboard to monitor activities in specific countries or monitor transactions of specific materials.

Social benefit. Herein lies the main driver for our own activities. Through the creation of the Circular Action Hub, as part of the 3R Initiative, and a decade of working closely with the National Association of Catadores in Brazil, we have built a network of grassroots projects, and developed additional products and services to support and not compete with the informal sector. One of the main requirements of the Hub is that projects must provide fair payment to the waste pickers involved, preventing exploitation and promoting enhancements in their living conditions. For us, putting social benefit at the forefront of the projects we manage makes absolute sense and we believe that it will accelerate the circular economy.

However, informal organisations operating in developing countries, where the impact of uncollected waste is at its highest, are often not set up with the necessary infrastructure to participate in expensive plastic credit schemes. And, consequently, these barriers could stop vital funding getting where it’s needed most. In setting up our Circular Credits Mechanism, we created a streamlined project cycle to remove these barriers to entry and allow maximum inclusiveness of waste picker organisations.

A great example of this is our ongoing project in Rio’s Guanabara Bay, where a team of now 30+ fishers are spending two days a week collecting waste from the water and mangroves, and almost doubling their earnings. Of course they’d rather be fishing, but pollution has made that harder, and encouragingly they have reported seeing a return of wildlife in the areas they have cleared, so they are enthusiastic about the difference they are making. Imagine the impact if plastic credits could fund other fishers to do the same in coastlines all across the world?

We don’t have time to wait

We strongly welcome a Global Plastics Treaty and hope that it can lead to widespread change in the policies to regulate this sector including, potentially, a ban on single use plastics.

We also recognise that the use of plastic credits is of course not a long-term solution to the waste problem, but it’s a solution that’s ready to go today, and one which can deliver immediate benefit to communities and environments drowning in plastic. On the flip side of producers using credits as a greenwashing or PR tool, we’ve heard every excuse from producers not to invest in this area, but they simply cannot keep putting action off. Legislation is coming.

There’s an army of waste collectors across the world ideally placed to recover, sort and recycle waste from the environment. The financial mechanisms, validation processes, and technology is available now. What’s missing is the funding to scale.