Plastic Credits

Also known as
  • Plastic credits
  • Plastic offsets
  • Plastic neutrality
Not to be confused with
  • Carbon offsets

A plastic credit is a tradable certificate that represents a certain amount (often one metric ton) of plastic waste that has been recycled, recovered as litter from the open environment, or prevented from entering the environment.

Credits are generated by projects that physically recover or prevent plastic waste, and are bought by companies that want to offset, or balance out, the plastic waste that they generate. For example, a company that produces single-use plastic water bottles in the United States could buy credits from a plastic “offset project” in the Philippines that uses the credit income to provide waste pickers with better equipment that allows them to collect more plastic waste, or a project that directly pays waste pickers in India to collect low-value plastic that would otherwise not be worth collecting. In this way, plastic credit buyers pay for the waste reduction efforts of credit generators, without necessarily reducing the amount of plastic waste they produce. Companies may use these credits as justification for claiming “plastic neutrality” or that they use “50% recycled plastic,” giving the impression that they have reduced the amount of plastic waste that they produce (or the part of it that ends up in the environment).

Third parties, most often private companies, are responsible for verifying offset projects to prevent fraud, tracking credits in special databases to avoid double counting, marketing credits to potential buyers, and brokering deals between buyers and sellers.

The plastic credits market is quite new, however, and there is no single, globally-codified standard for determining how a credit is defined, approved, generated, verified, or tracked. Instead, dozens of organizations have launched services aimed at the emerging plastic credits market, each with their own set of definitions and standards. This has resulted in an entirely privately-run plastic credits market, where private entities establish all the rules.


Bans & Restrictions

There are currently no bans and no restrictions by any countries or advisory from any UN agencies on the use of plastic credits.


Plastic credits do not reduce plastic production, and therefore do not contribute to a solution to the plastics crisis. At most, they are intended to balance out the plastic waste generated by credit buyers, allowing pollution in one location to continue as long as it is offset by reductions somewhere else.

This plastic “neutrality” gives waste generators – often large, consumer-facing companies – an eco-friendly image to market to consumers, without actually reducing the amount of plastic waste produced. This allows plastic producers to continue unsustainable practices while shifting responsibility to others. This effect, often called “greenwashing,” obscures the role that credit buyers play in producing plastic waste in the first place and erodes public pressure for solutions to plastic waste production. Beyond these conceptual flaws, plastic offset projects face significant implementation challenges, including how to establish additionality, match the impact of offset projects to the impact of waste production by credit buyers, and avoid creating new environmental or social problems.

Additionality is the principle that any plastic waste recovered or prevented through an offset project is additional to all efforts that would have happened if the project had never existed. In international carbon credit markets, which have served as the model for plastic credit markets and where credits represent carbon dioxide emissions instead of plastic waste, additionality was the source of intense debates. Its assessment led to significant delays in offset project approval, and was a major driver of the poor performance of the carbon market set up by the Kyoto Protocol’s Clean Development Mechanism.((Pearson, B. (2007). Market failure: why the Clean Development Mechanism won’t promote clean development. Journal of Cleaner Production, 15(2), 247-252., B.V., Bollerup, K. (2012). The Clean Development Mechanism and Its Failure in Delivering Sustainable Development. The Interdisciplinary Journal of International Studies, 8(1), 74-87. 

The current lack of agreed upon definitions or certification standards in the plastic credits market makes additionality an even greater challenge, and the lessons from carbon markets do not bode well for plastic credits. Additionality is vital to the functioning of a plastic credits market, but difficult to prove. That’s because additionality requires knowing the counterfactual, that is, what would have happened in the absence of the program, but didn’t because the program exists. Income from plastic credits, however, is only one possible driver of  plastic waste reduction or recovery programs. A neighborhood volunteer group might want to prevent plastic bags from clogging up their storm drains, for example, or a local fishing association might want to reduce plastic pollution in the waters that its members depend on for their living.

Once an offset project is established, however, it can never be known if other drivers would have led to similar efforts to reduce plastic waste. The closest a program can get to proving that is to make the argument that income from plastic credit sales is the deciding factor, among many others, for why an offset project exists.

Plastic credit programs also face the challenge of matching the impact of plastic pollution in the waste-generating location to the impact of waste recovery or prevention in the credit-generating location. There are many different types of plastic and plastic products, all with different physical and chemical properties that have different impacts in different environments. The recovery of one ton of plastic water bottles from an unmanaged urban dumping site, for example, might not balance out the risk to wildlife or microplastic pollution created by one ton of plastic soda rings littered in the ocean as a result of a credit-buyers’ operations. An effective plastic credits market, then, requires a whole new level of analysis and verification to match the impacts of waste generation and waste recovery, further complicating the system.

Moreover, none of the above precludes the possibility of new offset projects having direct negative impacts on their surrounding communities or environments. Projects that provide poor working conditions or insufficient wages, ignore human rights and other social safeguards, or compete with informal waste workers for plastic waste, for example, should obviously be avoided.

The current plastic credits market, however, offers no assurances towards that end. In the same way, there is no guarantee that plastic offset projects won’t have other environmental impacts. By some definitions, credits can be generated for plastic waste that is recovered, but then incinerated, converted into refuse-derived fuels, or even disposed of in open dumps.((World Wildlife Fund. (2021). WWF Position: Plastic Crediting and Plastic Neutrality. WWF. Nestle’s Costa Rica branch, for example, claims to have achieved ‘plastic neutrality’ by recovering and burning enough plastic waste as fuel in cement kilns to ‘offset’ the plastic they produce.((Nestlé. (2020, December 2). Nestlé Costa Rica neutraliza el equivalente al 100% de sus residuos plásticos posconsumo. Nestlé Centroamérica. As it stands now, the plastic credits market provides no guarantee that it will not create new problems where credit generation projects pop up.

Plastic credits could have further indirect impacts by establishing perverse incentives that discourage plastic waste reduction. A company that starts making money by collecting plastic litter for offset credits, for example, has a financial incentive to oppose a single-use plastic ban in their area. A manufacturer that generates plastic waste may postpone effective waste prevention activities because credits from an offset project may be cheaper. In other words, the very same financial incentives that can create an offset project intended to mitigate plastic waste pollution can also provide the incentives to keep the waste flowing. This exact issue has been observed in carbon offset markets, and in some cases even led to increased greenhouse gas emissions at offset project sites.((Schneider, L., Kollmuss, A. (2015). Perverse effects of carbon markets on HFC-23 and SF6 abatement projects in Russia. Nature Climate Change, 5, 1061-1063.

Finally, beyond the implementation challenges that offset projects face, the plastic credits market as a whole presents logistical and financial challenges. Already, dozens of actors are involved in the process of setting standards and definitions, developing offset projects, verifying these projects, creating credit-tracking systems, marketing credits, and brokering deals with buyers. Every link in the chain adds complexity and reduces transparency, resulting in a crisscrossed, international system that, as seen with carbon markets, is ripe for miscommunications, misrepresentation, and even fraud.((Badgley, G., Freeman, J., Hamman, J., Haya, B., Trugman, A.T., Anderegg, R.L., Cullenward, D. (2021). Systematic over-crediting in California’s forest carbon offsets program. bioRxiv., R., Böhm, S. (2014). Ten reasons why carbon markets will not bring about radical emissions reduction. Carbon Management, 5(4), 325-337. (2021). Reforming the voluntary carbon market: How to solve current market issues and unleash the sustainable potential. This in turn confuses and discourages consumers, reducing public pressure on companies to manage their plastic waste, and will require an incredible amount of regulatory oversight from both the private and public sectors, absorbing time and energy that could be spent on more effective solutions like actual plastic waste reduction.

Plastic credits are conceptually flawed, difficult to implement, and create a level of complexity that threatens to undermine other, real solutions to the plastics crisis.