Costa Coffee is pledging to recycle as many disposable cups as it sells by 2020 – and is urging others to follow suit.

The UK's largest coffee shop chain said it will recycle up to 500 million cups a year, including those from other retailers, to match the number it hands out.

Almost all of the 2.5 billion disposable coffee cups used in the UK every year are incinerated, exported or sent for landfill.

But Costa said it was a 'misconception' that the problem with recycling cups was because their plastic lining was difficult to separate from the cardboard, and was instead to do with their collection once customers had thrown them into recycling bins.

The company said it will pay waste collectors a supplement of £70 per tonne of cups they send to recycling plants, increasing the value of a bale by 150% to £125 – making it commercially attractive for them to put in place the infrastructure to collect, sort and transport the cups to specialist facilities.

There are currently three UK paper mills that can recycle the cups – James Cropper, ACE UK and DS Smith – and Costa said they had a combined capacity to process more than 4.5 billion every year.

Costa will pay another £5 per tonne to independent third party Valpak, which will audit the system and report on recycling rates.

The chain, which has 2,380 shops in the UK, has developed the plan in partnership with five national waste collectors – Veolia, Biffa, Suez, Grundon and First Mile.

It said the recycling move would work alongside its efforts to encourage customers to use reusable cups, including a 25p discount for those who bring their own mugs.

This incentive is already used in other coffee shops, including fellow chain Pret A Manger.

Costa managing director Dominic Paul said: 'By creating a market for cups as a valuable recyclable material, we are confident that we can transform the UK's ineffective and inconsistent 'binfrastructure' to ensure hundreds of millions of cups get recycled every year.

'One hundred million cups will be recycled this year alone following today's announcement, and if the nation's other coffee chains sign up, there is no reason why all takeaway cups could not be recycled by as early as 2020.

'At Costa we want to guarantee our customers that if they throw their cup into a recycling bin it will get recycled, and today's announcement is a major step towards that happening.'

The 25p charge was the standout recommendation from a cross-party committee of MPs, who said cash raised could pay for improved recycling facilities.