SINGAPORE - Plastic credits were mooted at United Nations talks as part of proposed ways to address global plastic pollution, but discussions on its use have so far been broad and preliminary, said the Ministry of Sustainability and the Environment (MSE).

Similar to how companies can purchase carbon credits to offset some of their greenhouse gas emissions, plastic credits allow companies to offset their plastic footprint by investing in plastic waste collection activities or in projects that help to develop or improve plastic recycling infrastructure.

In June, representatives from more than 170 countries met in Paris to negotiate a UN treaty to end plastic pollution, which will come into effect in 2024.

The treaty will address issues such as the life cycle of plastics and promote the sustainable production and consumption of plastics.

Singapore, which has been actively participating in negotiations, noted that countries are now deciding on a list of measures that can prevent plastic from leaking into the environment, by supporting a comprehensive waste management system globally.

“Singapore’s view is that the measures selected... should effectively address plastic pollution, be practical and science-based, and be nationally determined, to comprise solutions that would be relevant and effective for each country’s unique operating context,” said a spokesman for MSE.

He did not elaborate on whether the Government will be permitting companies to use plastic credits as a way of managing their plastic waste, as part of the Extended Producer Responsibility (EPR) framework, where businesses are held responsible for the sustainable end-of-life treatment of their products.

As part of the EPR scheme in Singapore, an extra 10 cents will be added to the price of bottled and canned drinks under the beverage container return scheme from April 2025, which can be refunded to consumers after they recycle them.

At least 80 per cent of plastic and metal containers will have to be collected as part of the beverage container return scheme; if not, a financial penalty will be imposed.

The National Environment Agency said in March that the scheme will ensure a clean stream of good quality plastic bottles and metal cans which can be recycled and help develop Singapore’s recycling industry.

Singapore’s plastic recycling rate has been at 6 per cent since 2022. Globally, more than 380 million tonnes of plastic is produced each year, of which only 9 per cent is recycled.

Singapore-based Plastic Credit Exchange (PCX) said in a position paper published in May that investments to the tune of US$1.2 trillion (S$1.6 trillion) will be needed by 2040 globally to develop the infrastructure needed for a circular economy – where waste is collected and reused in the production of new materials.

Finance could come in the form of plastic credits, regulatory action and multilateral development aid.

Plastic credits can help to accelerate the impact of EPR schemes, said PCX founder and chairman Nanette Medved-Po.

In the Philippines, for example, companies are required to take responsibility for 80 per cent of their plastic packaging by 2028, starting with 20 per cent in 2023, or they will have to pay the government a fine of between five million and 10 million pesos (S$121,000 to S$242,000) for a first offence.

They have the option of purchasing offsets from “waste diverters” who help to collect plastic waste and send them to recycling or processing facilities instead of landfills.

“Early signs are very encouraging, and offset purchases are already incentivising more investment in recycling infrastructure to meet Philippines’ growing demand,” said Ms Medved-Po.

More companies from Singapore have also been keen on using credits to offset their plastic use, as many want to play their part in stopping plastic pollution, she said.

PCX has at least 24 plastic credit projects listed on its platform, many of which support local waste collectors in their quest to prevent plastic waste from entering landfills or the environment, and to transport them to processing or recycling facilities, instead.

For example, a plastic credit project in Thailand’s Mueang Ranong region supports a local organisation which collects plastic waste in biodiversity hot spots. Each credit, measured by a tonne of collected plastic, is sold for US$635.

Ms Medved-Po told The Straits Times that the price of each credit covers the cost of labour, logistics and recycling the collected waste or converting it into useful materials. Recyclable plastic bottles are sent to recycling facilities. However, if such infrastructure is limited, the plastic bottles are instead sent to facilities that can help transform them into valuable products.

Most of the plastic credit projects which PCX offers today focus on end-of-life plastic or low-value plastics, as these are the most urgent part of the pollution problem, said Ms Medved-Po.

Some examples of low-value plastics include single-use shopping bags, condiment sachets and confectionery wrappers. These are difficult to recycle when they are soiled by food waste and are often left to rot in landfills.

As they do not degrade properly, they break up into microplastics which often contaminate soil and seep into waterways, and are ingested by wildlife and fish.

Clean-up organisation Seven Clean Seas, which has been selling plastic credits since 2018, said the market is “seeing a surge in popularity” globally.

It has ongoing projects in Indonesia’s Batam and Bintan, where funding from plastic credits go towards clean-up efforts in their rivers and seas, and building waste management sorting facilities to enhance plastic recycling and repurpose non-recyclable waste into useful materials.

Chief executive Tom Peacock-Nazil said a number of companies in Singapore have been purchasing plastic credits from Seven Clean Seas to fund waste management, though the largest uptake has still been in Europe and the United States.

For instance, it worked with real estate firm City Development Limited (CDL) in 2022 to get its 11 Tampines Concourse building certified plastic neutral, up until its lease ended in February 2023.

According to CDL, it first determined the scale of plastic waste produced from the building by its landlord and tenants, and then purchased eight credits – equivalent to eight tonnes of plastic – to offset the plastic consumption forecasted for 2022.

The company said it already has in place waste recycling infrastructure at all its managed buildings and assets.

“Despite these efforts, plastic waste may still enter the general waste stream, usually through products composed of mixed materials. Purchasing credits to offset the remaining plastic waste ensures that all plastic used and generated in the building are either recycled or neutralised,” said its spokesman.

Mr Peacock-Nazil said that its projects were also strategically located in Bintan and Batam to “maximise the potential benefit” to Singapore’s waters, as marine litter from the two coastal cities often float onto shores here.

“As we grow, we would love to see more Singaporean companies adopt plastic credits and plastic neutrality,” he added.

Dr Yvonne Lin, a materials expert at WWF-Singapore, stressed that plastic credits have to be transparent, otherwise, there is a risk of plastic being collected and exported elsewhere for processing or disposal without a known fate.

In addition, there is also a risk that a company might purchase credits for recovering different types of plastic that they are otherwise responsible for polluting.

For instance, low-value plastics are hard to collect and process, and make up the majority of plastic pollution. But companies that are responsible for this may purchase credits generated for recycling plastic bottles instead, which are generally easier to recycle. This would mean that the crux of the plastic pollution issue is not adequately tackled.

While good plastic credits could help with waste reduction, companies should still prioritise the switch to more sustainable re-use systems such as by substituting virgin plastic with recycled content and increasing recycling rates, said Dr Lin.

Global certification agency Verra, known for having reputable standards for carbon credits, said it has developed a Plastic Standard – which are stringent requirements that projects have to adhere to before they can be listed on Verra’s platform and start issuing plastic credits.

It also has rules in place to ensure additionality, which means collection or recycling activity would likely not have taken place if the project had not existed.

Its spokesman said that South-east Asia requires significant investment in plastic waste management, but the types of projects will vary depending on specific circumstances of the region.

“For example, in Singapore, most plastic waste is currently collected, but only a fraction of it is recycled. Therefore, projects may focus on developing the sorting and recycling infrastructure needed to increase the recycling rate,” he added.

He noted that several organisations have expressed interest in starting projects to supply plastic credits, though these have not yet been registered with Verra.