Case DK ECO tax

Although the environmental profile of aluminium – see figure below – has improved dramatically with the rise in recycling from 5% to 87% the industry is still paying the high tax on the 2000 basis calculations – 4,44 ?/kg aluminium.



The ”Potential environmental Impacts” expressed as the possible emissions per person if the political objectives were to be met in the year 2000 (Unit: mPEMWDK2000) is reduced from 2000: 4,2 MPEMWDK2000 to aproximately 1 mPEMWDK2000 in the 2006 update.

Background short

From 1. january 1999 to 31.3. 2001 fifteen product groups was covered by a material neutral but differentiated weight based tax, meaning that packaging of equal volume should be charged equally irrespective of packaging material. The fifteen product groups covered by the tax includes non carbonated softdrinks and water, juices and nectars, milk and dairy produce (except liquid milk), vinegar and salad oil, margarine, sauces, mustard, tomato ketchup, petfood, perfume, cosmetics, soap, detergents, cleansing agents, methylane spirits, paint, lacquer, pssticides subject to tax under the pesticide Tax Act, lubricant oil and other packaging of products taxed according to the Petrols Tax Act, antifreeze and windshield washing products, and chemical substances and products covered by the Order on classification, Packaging, Labelling etc. of Chemical Substances and products.

Allready when the Packaging Tax Act was debated in Parliament 1999 the governtment stated that it would like to supplement the tax with life cycle assessments of various packaging materials.

The LCA was carried out to investigate the environmental impact of packaging materials. The materials in the screening covered Paper/cardboard, Glass, Tinplate,/steel, aluminium and plastics (HDPE; LDPE, PP, PET, PVC, EPS and PS) – to be adabted for taxes on the above product groups. The result of the screening was presented to the stakeholders in august 2000 with initially 3 weeks to comment.


The introduction of the LCA concept

To reduce the various parameters to a ”manageable number” life cycle screening was employed and only the ”most” important environmental impacts were included. It was not scientifically possible to quantify all impacts related to the environment, ressources and waste and boil them down into a single figure. Therefore, some political choices had to be made – which choices was not openly and transparant to the public.

The life-cycle screening included all phases except the use phase, but the functional unit was 1 kg. of packaging material – and not a specific unit - therefor not allowing to mirror the specific benefit of a specific packaging funcionality eg. its benefit due to a 100 % barrier, longer shelf life, less spill of packed product etc.

The use of the LCA methodlogy was not in compliance with the international ISO standards eg. the External Critical Peer Review was decided not to be performed beforehand. The arguments was based on following consideration by the Danish EPA:
” We use very experienced LCA experts in the development of the methodology” and therefor the checking of the methodology was skipped untill after 3 years after and combined with the expected update of LCI data. A process which showed to be very delayed – since the process still has not been finalized. Also on other points the ISO standards for LCA was not followed.

On the basis of the screenng figures regarding -
· Global warming
· Acidification
· Ressources (Crude Oil) and
· Waste

- the political assessment of the results of above parametres were then converted into the following environmental indexes for primary materials:

The tax for 1 kg. aluminum went from ? 1,5 to 4.44 ?/kg with the new tax index!!!!!


The handicap for metal packaging in 2000

In Denmark 2000 metal packaging was not even part of the national waste legislation, no municipal scheme for metal packaging was in place (untill 2006) only voluntary industry driven schemes. Therefor only 5 % recovery of aluminium packaging was taken into account for the LCA calculations....


The – delayed – update..... !

In 2003 the revision process started with update of data and LCI figures and with several years delay we in august 2006 was presentet (un officially) to the draft update report: ”New calculations of parameters for environmental indexes for the weight based packaging taxation”.

Including the latest environmental succes of recovery of aluminium from bottom ashes – the Recycling scenario 2008 ended up counting 87,625% recovery of aluminium packaging into the new LCA calculations – but:
- still no revision of the tax rate in 2007, 2008 or 2009
- the old version of the tax model and original calculations still beeing copied and used to inspire other national policymakers, latest the unfortunate Belgian example..!

Hopefully other national policymakers prove to be more cautious in using the LCA instrument and Danish expirience for policymaking.

Steen Haustrup, Chaiman of Plus Pack A/S & Aluminium Denmark Associaton
March 2009