Tackling Subsidies for Plastic Production

The document examines the role of fiscal incentives in driving plastic production and proposes that the future plastics treaty adopt the World Trade Organization's (WTO) Agreement on Subsidies and Countervailing Measures (SCM Agreement) definition of subsidies to ensure legal coherence and workability. It distinguishes between direct subsidies (e.g., grants for plants) and indirect subsidies (e.g., cheap fossil fuel feedstocks), recommending a form-based prohibition for the former and an effects-based prohibition for the latter. The brief emphasizes the need for transparency, binding elimination targets, and special and differential treatment for developing countries to facilitate a just transition.

• Plastic production is heavily subsidized, primarily through fossil fuel feedstocks, which artificially lowers costs and increases production. A 2022 IMF study estimated global fossil fuel subsidies at $7 trillion, or 7.1 percent of GDP, with the IEA estimating that fossil fuel subsidies reached a record USD$1 trillion in 2022.
• The author recommends that the plastics treaty adopt the WTO SCM Agreement's definition of a subsidy—requiring a 'financial contribution by a government that confers a benefit'—because it is a tested framework already incorporated into the domestic laws of 164 WTO Members.
• Direct subsidies for plastic production include grants, tax incentives, and concessionary loans. Examples cited include a CAD$408 million grant for a facility in Canada, USD$1.6 billion in tax breaks for one petrochemical facility, and $6.5 billion in development bank support for major petrochemical projects.
• Indirect subsidies reduce the cost of raw materials, particularly fossil fuels, which account for 99% of plastics. The document suggests an effects-based prohibition for these, targeting subsidies that result in lower input prices, price supports, or export restraints for domestic sale.
• The briefing proposes a form-based prohibition for direct subsidies, which would ban new subsidies for production infrastructure (such as steam crackers and polymerization plants), phase out existing tax incentives, and eliminate concessionary financing from multilateral development banks.
• To ensure enforcement, the document recommends that the plastics treaty include binding and measurable subsidy elimination targets, national annual reporting, and a compliance mechanism that can issue warnings or suspend treaty benefits.

APA

Behboodi, R. (2023). Tackling Subsidies for Plastic Production. Center for International Environmental Law. https://www.ciel.org/wp-content/uploads/2023/10/Tackling-Subsidies-for-Plastic-Production_FINAL.pdf

Chicago

Behboodi, Rambod. Tackling Subsidies for Plastic Production. Center for International Environmental Law, 2023. https://www.ciel.org/wp-content/uploads/2023/10/Tackling-Subsidies-for-Plastic-Production_FINAL.pdf.

Wikipedia

{{cite report |last1=Behboodi |first1=Rambod |title=Tackling Subsidies for Plastic Production |publisher=Center for International Environmental Law |date=September 2023 |url=https://www.ciel.org/wp-content/uploads/2023/10/Tackling-Subsidies-for-Plastic-Production_FINAL.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{behboodi2023tackling, author = {Behboodi, Rambod}, title = {{Tackling Subsidies for Plastic Production}}, institution = {Center for International Environmental Law}, year = {2023}, month = sep, url = {https://www.ciel.org/wp-content/uploads/2023/10/Tackling-Subsidies-for-Plastic-Production_FINAL.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }