Unlocking Financing to Combat the Plastics Crisis

Plastic pollution is a global crisis, with only 9% of plastic waste ever produced being recycled. To address this, policymakers, businesses, and communities are exploring innovative solutions, including plastic crediting. While there is currently no common definition of plastic credit, it is understood as a transferable unit representing a specific quantity of plastic collected, managed, recycled, or avoided, providing opportunities for a result-based financing approach to reduce plastic pollution. The World Bank's report, "Unlocking Financing to Combat the Plastics Crisis - Opportunities, Risks, and Recommendations for Plastic Credits” introduces the concept of plastic credits, describes the current state of play, analyzes its risks, challenges, and benefits, and offers recommendations.

As of December 2023, approximately 75,000 plastic credits have been issued across 160 projects, with growing uptake over the past four years. The report highlights the varied standards in the current marketplace and notes the importance of enhancing governance, establishing minimum requirements, common principles, and guidelines for responsible use of plastic credits. While plastic credits are primarily used voluntarily, some countries are integrating them into Extended Producer Responsibility (EPR) schemes as a regulatory instrument.

Plastic crediting, if used properly, can mobilize results-based financing toward environmental and social impacts and complement other instruments and efforts to reduce plastic pollution.

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Key Messages

The report identifies the following potential benefits of plastic crediting:

• Providing financing for activities that reduce plastic pollution and making the solutions economically viable and scalable.
• Placing a price or value on the reduction of plastic waste or consumption.
• Enhancing monitoring and reporting and increasing accountability and transparency.
• Promoting benefit sharing among all stakeholders, including marginalized groups such as people working in the informal sector.  

However, plastic crediting also poses the following challenges and risks:  

• Varying quality and robustness of programs; lacking common definitions, minimum requirements, and key principles.
• Potentially misusing credits and greenwashing in the absence of clear rules and guidelines on usage and claims.
• Overshadowing upstream plastic reduction efforts with a current focus on downstream activities like clean-up, plastic waste collection, and recycling.
• Hindering project uptake due to insufficient market demand and risks of low prices.
• Deterring project developers, particularly marginalized groups, and small businesses due to complexity and high transaction costs.  

To address these challenges and fully realize the potential benefits of plastic crediting, the report makes the following recommendations:

• Strengthen governance with minimum requirements, common principles, and guidelines for responsible use of credits.
• Address market dynamics and uncertainties and implement appropriate pricing to boost confidence.
• Provide technical assistance and capacity support to marginalized groups and informal workers on project development.
• Develop guidelines and provide policy support for integrating plastic crediting into EPR schemes.
• Explore methodologies and pilot projects that support upstream solutions to reduce plastic consumption and production.