The Next Economy
What Are Plastic Credits? A 4-Minute Explainer

What are plastic credits?

A plastic credit is a transferable certificate representing the collection of a specified weight (e.g. one kilogram, one metric ton) of plastic waste recovered or recycled that would otherwise have ended up in the natural environment.

Plastic credits must be measurable, traceable and verifiable; they can be purchased by organizations and other end users to take action on their ‘plastic footprint.’ For example, combined with accurate measurement, plastic credits can enable businesses to offset their plastic footprint and go Plastic Neutral by eliminating as much plastic waste from nature as they use.

Plastic credit funding can finance crucial infrastructure, and facilitate the recovery and recycling of plastic waste that would have otherwise ended up in the natural environment. Plastic credits are therefore a powerful financing tool to fund solutions to the global plastic pollution problem.

How do plastic credits work?

Plastic credits were created by rePurpose Global to incentivize the removal and recovery of plastic waste; but they are now issued in similar forms through several other plastic-waste recovery organizations including Seven Clean Seas, South Pole, Plastic Bank, Cleanhub and Plastic Credit Exchange.

Exactly how plastic credits work can vary between issuing organizations, but generally align with the following answers.

1. How are plastic credits created?

Projects working in partnership with credit-issuing organizations work on the ground to collect plastic waste that would otherwise not have been collected. This is called additionality in that only waste that — without the intervention — would have entered the natural environment, is counted. The collected plastic waste is recovered through efficient end-of-life management such as mechanical (or advanced) recycling, reprocessing, or co-processing. Anything that can be recycled will be recycled.

For each “additional” kilogram of plastic recycled or recovered by an impact project, a certified plastic credit can be issued.

2. Who buys plastic credits?

The plastic credits created and formally logged by the project can be purchased and used by businesses to meet their plastic-waste reduction or plastic-neutrality goals. For example, rePurpose Global provides support and tools for businesses to measure their unique plastic footprint and to calculate the number of credits needed to offset it.

Businesses that purchase the plastic credits equivalent to the removal or recycling of plastic waste that they generate each year can be issued a Plastic Neutral Certification. Many organizations stipulate that a commitment to reduce plastic use is also necessary to achieve this certification, as they are conscious that otherwise the certification could be perceived as a license to continue using plastic and keep contributing to the problem.

Image credit: rePurpose Global

3. How are plastic credits verified?

Accountability and impact verifiability are integral to the creation and use of plastic credits. Verra’s Plastic Waste Reduction Standard and Plastic Waste Collection and Recycling Methodologies act as industry standards. As the plastic credit market is still emerging, at this stage each issuing organization largely follows its own protocols that govern the process of creating credits. Often, this will involve collecting chain-of-custody documentation from all stakeholders involved in the supply chain; and recently, there have been active efforts to encourage audits and other verification from third-party auditors.

Why do we need plastic credits?

At present, there is limited action from businesses on plastic waste, despite the presence of the ‘Polluter Pays’ Principle — a widely accepted concept that suggests that producers of pollution should bear the costs of mitigating it. The difficulty of taking plastic action on their own often restricts businesses and compels them to choose the path of inaction instead.

By bridging the gap between businesses and environmental impact, plastic credits facilitate companies to take responsibility for their plastic waste. Plastic credits empower businesses to take immediate and tangible action, without the need for in-house expertise.

Plastic credits can accelerate the building and expansion of waste-management infrastructure. Approximately $30 billion of funding is needed every year to turn the plastic waste crisis around. Solutions such as plastic credits are filling this gap by financing the scale-up of existing underfunded solutions, developing waste-management infrastructure, and supporting circular innovations across the world.

In doing so, plastic credits also play an important role in empowering waste innovators on the ground who are desperately in need of financing. They have enabled waste entrepreneurs such as Daniel Paffenholz to scale up operations at Taka Taka Solutions — the first organization in Kenya to install and commission a recycling plant that handles single-use polypropylene (PP) containers.

“Plastic credits can push things that aren't viable to be more viable. It makes investing in recycling infrastructure possible for all,” Paffenholz says.

Using plastic credits funded by brands that offset their plastic use, Taka Taka facilitates the ethical collection of plastic waste, professional sorting at its sites, and the production of various waste-to-value products such as compost and recyclables in Nairobi — an area that previously had virtually no formal waste-collection infrastructure.

The Taka Taka example shows that solutions to the plastic waste problem exist but often lack financial support. A whopping 91 percent of plastic waste is not getting recycled at all, and infrastructure is often lacking where it is needed most.

Final thoughts

As the global plastic-pollution crisis continues to deepen, stakeholders — including policymakers, business leaders, sustainability practitioners, frontline innovators and waste workers — need to come together to find and fund solutions.

The good news is that it is not too late, and solutions exist. The introduction of plastic credits has brought with it a renewed cause for optimism. Neither limited by geography nor restricted by impact potential, plastic credits are an established enabler of plastic waste action and have proved successful in channeling private sector capital to underfunded solutions that boost plastic waste removal and recycling infrastructure.

Plastic credits must not, of course, be used for merely offsetting a business’s plastic footprint — they must be supplemented with consistent efforts to redesign products and reduce the use of unnecessary plastics in supply chains. Plastic credits help businesses to take that important first step.