The impact of green taxes on waste reduction – A case study of the impact of two Spanish taxes to support the transition to a Circular Economy

Abstract: The current global waste problem presents significant challenges worldwide, and Spain is no different. Factors such as rapid urbanization, population growth, intensive agriculture, linear production models, and changing consumption patterns contribute to the upward trend in waste generation. To address these challenges and meet EU requirements, Spain developed the Law 7/2022 on Waste and Contaminated Soils for a Circular Economy (LRSC) to establish a legal framework promoting waste reduction, reuse, recycling, and proper waste management. The LRSC includes green taxes on plastic and landfill waste, incineration, and co-incineration. This qualitative policy research investigates the drivers and barriers influencing Spanish small and medium companies (SMEs) in transitioning to a circular economy (CE) and evaluates the effectiveness of the LRSC in supporting this shift reducing the scope to packaging waste. The study also aims to assess the impact of the LRSC, particularly the two green taxes within it, and address any emerging issues. Through a literature review and interviews with ten SMEs, the research reveals challenges in waste management, low recycling rates, and high landfilling rates in Spain. Barriers to circular economic models include the need for EU-wide alignment of laws, consumer education, stagnation of recycling technology, lack of economic incentives, high prices of recycled plastic, greenwashing, and cost savings. Companies face challenges such as lack of availability of recycled plastic, concerns about food contact packaging approval if produced with recycled plastics, changing company values and workforce habits, lack of legislative harmonization which increase the system complexity, capitalist marketing strategies, investment requirements, and lack of education. However, drivers for transition include consumer choices, economic incentives, and market demand. Concerns about the LRSC’s effectiveness in reducing packaging waste and facilitating the transition to a CE, include late implementation, eco-design and circular economy foundation deficiencies, selective collection challenges, and the low availability of recycled plastics. The LRSC is believed to have potential positive impact for the environment, however further efforts are needed to overcome the challenges identified in the study.