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Mar 8 / Roson

Plastic Shopping Bags Levy Scheme in HK

Hong Kong (HK), a city of 1,104 km² (less than half the size of Greater Vancouver) has a population of 7 million people1 (more than triple of the population in Greater Vancouver2). HK  is one of the most densely populated areas in the world. Like other affluent economies, HK is facing the challenges of waste management, among which municipal solid waste (MSW) management is of top concern. In a formal and comprehensive study done by  GHK Ltd. (a consulting company) in March 2007, it shows that if the municipal solid waste disposal rate were not controlled,  the existing landfills in HK was expected to reach  full by 20153.  It is only sensible for any government to take serious steps to deal with a pressing matter like this.

 

Brief of Plastic Shopping Bags (PSBs) Levy Scheme

 

Political Origin & Goals

Having sensed the crisis of MSW management as well as aligning with the world’s environmental protection initiatives, the Environmental Protection Department (EPD) of the Government of HK set out the Policy Framework for the management of MSW in 2005. The Policy Framework suggests introducing producer responsibility schemes (PRS) as a key policy tool based on the “polluter pays” principle as one of a series of initiatives to help achieve MSW objectives3. MSW objectives include the followings:

  • use sustainable practices in MSW management
  • reduce the amount of MSW generated
  • increase recycling of MSW
  • reduce the disposal of MSW at landfills

Under this Policy Framework, Plastic Shopping Bags (PSBs) Levy Scheme was proposed by EPD  in May 2007.   It aims to provide a direct economic incentive to encourage the public to reduce use of plastic shopping bags.  Although less than 2% of the waste sent to the landfills come from PSBs, the government also hope to use the opportunities through this scheme to raise awareness and educate the public to make environment-friendly choices in their daily life.

 

Pricing

The PSBs Levy Scheme was set out to charge consumers 50 cents HKD ($0.07 in CAD) per bag they ask for at the cashiers of the prescribed retailers (to be listed). This PSBs levy directly targets the pollutant itself and the polluters. It should reduce the generation of the pollutant being targeted meaning less PSBs being produced/imported and less ending up in the landfill.  For the price of the levy, it was supported and believed to be the sufficient rate to effectively reduce use of PSBs. That’s by the majority of about 1000 survey takers from the general public during the  public consultation from June to July 2007.   This 50 cents per bag pricing seems to base on the public opinion of their willingness to pay for the pollutant instead of the marginal damage of the pollutant, disposal of the PSB. This raises questions about the cost-effectiveness of the levy.

 

Enforcement

In late 2008, the Plastic Shopping Bags Levy Scheme was made into a Regulation/ Ordinance4). In July 2009, the scheme was put in effect and guarded by legislation. The prescribed retailers would be penalized if they failed to follow the scheme.  This is important to ensure the effectiveness of the levy in terms of enforcement, compared to a voluntary scheme.

Use of Levy Revenue

The retailers return all the levy collected to the government on a quarterly basis.  The levy will go to the environmental fund to support environmental projects5).

 

In general, the proposal received considerable public support despite the opposition from the plastic bag Manufacturers and retailers5). However,  the levy would inevitably increase the consumption of the substitutes / alternatives. This was anticipated but the effect was underestimated.

  • For the plastic bags inside the supermarkets used for produces and bakery goods, for hygiene purpose, consumers don’t need to pay for them. This would encourage the consumers to use more of these bags.
  • For paper bags or laminated bags, they  simply are not plastic bags and they aren’t levied. If possible, the retailers, for better competitiveness, would probably switch to those bags so that their customers won’t bear the cost of the bags .
  • Likewise, the consumption of plastic bags for non-shopping purpose such as plastic garbage bags is believably to be increased, as people will have to use some kinda of carrier for their household garbage if not the used-to-be-free PSBs. In fact, it’s shown that the use of garbage bags went up by 63% since the beginning of the scheme to 20116).

The lower income group under this scheme is believed to be most negatively impacted with the charge imposed. They probably used more free PSBs since they probably never had money for garbage bags and so forth.

 

Sector Coverage

When the scheme was introduced and in the first 2 years of implementation from 2009 to 2011,  it targeted only the retailers which are the major supermarkets and shops7):

  • offer all of the following categories of goods for sale:
    • any food or drink
    • any medicine or first-aid item
    • any personal hygiene or beauty product
  • have 5 or more retail outlets;
  • or at least one retail outlet that has a retail floor area of not less than 200 square meters

In 2012, the government decided to extend the coverage to all retailers8). Thus, the small medium enterprises/businesses would be affected as well.

 

 

Conclusion:

There are quite a bit of loopholes in this PSBs Levy Scheme in HK.   It does reduce the use of PSBs; the goal at this is reached.  However, it encourages use of other types of bags by a lot which are more polluting in terms of size and weight.  Therefore, the overall effectiveness of reducing MSW is minimal or could result in negative effect.  Also, the pricing and the coverage of the levy makes it less cost-effective. The marginal cost of damage from the pollutant PSBs is still unknown. Even though the levy is in place for all retailers, it’s not in place for all bags. It would lack of cost-effectiveness considering the waste of other types of bags would be (further) increased.

 

References:

1.Wikipedia. (Mar 7,2013). Hong Kong. Retrieved from http://en.wikipedia.org/wiki/Hong_Kong

2.Wikipedia. (Mar 6,2013). Greater Vancouver. Retrieved from http://en.wikipedia.org/wiki/Greater_Vancouver

3. GHK Ltd. (Mar, 2007).“Assessment of Benefits and Effects of the Plastic Shopping Bag Charging Scheme” by GHK (Hong Kong) Ltd.  Retrieved from http://www.epd.gov.hk/epd/english/environmentinhk/waste/prob_solutions/files/GHK_study.pdf

4. EPD of Government of Hong Kong. (Dec, 2008). PRODUCT ECO-RESPONSIBILITY (PLASTIC SHOPPING BAGS) REGULATION. Retrieved from http://www.epd.gov.hk/epd/english/news_events/legco/files/LegCo_Brief_Environmental_Levy_Scheme_eng.pdf

5. EPD of Government of Hong Kong. (Aug, 2007). Public Consultation Report on the Proposal on An Environmental Levy on Plastic Shopping Bags. Retrieved from  http://www.epd.gov.hk/epd/english/environmentinhk/waste/prob_solutions/files/Consultation_Report_Levy_Eng.pdf

6.Toloken, Steve. (Aug, 2011). Consumers buy heavier bags; plastics use rises after Hong Kong taxes bags. Retrieved from http://www.plasticsnews.com/article/20110805/NEWS/308059988/consumers-buy-heavier-bags-plastics-use-rises-after-hong-kong-taxes-bags#

7. EPD of Government of Hong Kong. (Feb, 2010). The Environmental Levy Scheme for Plastic Shopping Bags – Latest Levy Income. Retrieved from http://www.epd.gov.hk/epd/english/boards/advisory_council/files/wmsc0210.pdf

8. Tam, Stephanie. (Oct, 2012). Hong Kong Plastic Bag Levy. Retrieved from http://rso.cornell.edu/rooseveltinstitute/hong-kong-plastic-bag-levy.html

 

7 Comments

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  1. mikeniu / Mar 10 2013

    Mainland China levied this PSBLS in the middle of 2008. According to the official statistics, up till the one year “anniversary” since the policy implemented, 40 billion plastic bags have been successfully reduced in consumption in supermarkets across China. Indeed, plastic bags in supermarkets have been saved, yet some problems still remain. Your analysis about the “side-effect” of this PSBLS is quite sensible, which shows us the warning one more time that policymakers should conduct comprehensive research before making any policy, especially when the policy is related to important issues which would affect everyone in the society.

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    • Roson / Mar 11 2013

      Hi Mike, thanks for sharing the China case of PSBLS. Thanks for the number showing its working. 40 billion less plastic bags were dumped in one year’s time. Considering a 1.3 billion population, that’s like each person used/dumped 30 less plastic bags during the one year’s time. That is a pretty good achievement. Some article says that this levy usually works most effectively in the first year and people would get used to the tax and care less. Of course, the opposite is wanted; hope the awareness raised by the scheme and the package would cause a permanent change in consumer behavior and replace the reckless consumption. Thanks again Mike.

  2. vickiyow / Mar 10 2013

    Hi Roson,

    With such a mass consumption economy, it is more sensible for the HK policy implementers to reform their plastic bag policy.. It might be a possibility that the government officials could extend tax levy on households’ garbage bag consumptions, and incentivze a higher market supply of bio-degradable bags. This would be a difficult process to induce consumers to buy these eco-friendly bags.. but I think the first step is to educate the public to be more environmentally-friendly. Thanks for sharing & have a productive rest of the weekend!

    Vicki

    • Roson / Mar 11 2013

      Hi Vicki,
      When the HK government roll out the plastic shopping bags levy scheme, they did make effort to educate the public about the importance of using less plastic bags or using 0 plastic bags. There are multi-dimension of things need be considered such as the public health. Would the limiting of all plastic bags increase food-borne diseases? … HK government took a phase approach with the levy scheme, first imposed it through the major retailers and extended it to all retailers. They have been monitoring the effect and there are issues like rebound effect they need to deal with.

      Bio-degradable bags should be a better alternative if they are disposed properly (into designated bins for bio / compostable trash), completely separated with plastics.. Otherwise, the “recycling” would be troubled and bring trouble.

      See what is the lesser of the evils?
      There are obstacles to overcome. The path to the dream of 0 plastic bag is mostly likely not gonna be a straight one.

      Thanks again for your comment.

  3. gabrielle / Mar 19 2013

    Hi Roson,
    Thank you for the info!

    Why not taxing the other types of bags as well?

    And yes people now have to buy more bags for garbage disposal, but the total plastic bag consumption should still be inferior to the previous situation, where some plastic bags were thrown away after one usage..

    Then why not banning non biodegradable plastic bags..

    ouf..

    • Roson / Mar 25 2013

      Hi Gabi, Thanks for your comments!

      Based on my understanding, when the scheme was first devised, their goal was to reduce the use of plastic shopping bags. They expected that move would create “incentives” for the public to use more of the other types of bags, thus, more of them would be disposed (just that the result was worse than what they first expected).

      Paper bags should be recyclable. At lest for the part that’s made from paper. Indeed they should taxed to discourage the one-time use of them, what they call indiscriminate use.

      Seemingly, HK government is taking a not so hard-on, phased approach by just taxing plastic shopping bags at the retail level (starting from partial coverage to now extended to full coverage at the retail level). They have been focusing a lot on education and using influences to help the public to change their habits and attitude towards consumption and the environment.

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