A new position paper from Recycling Netwerk Benelux (RNB), Minderoo Foundation, and other signatories encourages the revision of European legislation to improve Extended Producer Responsibility (EPR) measures and support waste prevention, separate collection, high-quality recycling, and reuse. In this article, we unpack the key points.
EPR holds producers responsible for the products placed on the market and any waste they subsequently produce. These producers then finance waste management as a public service – and, in theory, eco-modulation and other such instruments will encourage companies to lean towards products with smaller environmental footprints and facilitate a circular economy.
In the European Union’s view, EPR schemes involve “a set of measures taken by Member States to ensure that producers of products bear financial responsibility or financial and organisational responsibility for the management of the waste stage of a product’s life cycle”. As the paper points out, the Organisation for Economic Co-operation and Development (OECD)’s definition of “organizational mechanisms for the prevention and management of waste” is slightly different and underlines the importance of reducing the generation of waste in the first place.
Authors Janine Röling from RNB and Axel Darut from Minderoo highlight that EPR plays a key role in the European Commission’s environmental and industrial policy package, as well as its aim to achieve climate neutrality by 2050. It is reportedly essential to consider in pursuit of covering costs of end-of-life products, meeting targets for product performance and recycling, and improving resource management in accordance with waste hierarchy principles.
It is argued that the current state of EPR legislation and its ‘flawed’ implementation is holding the system back. Although it is said to have been ‘moderately successful’ in streamlining separate collection and recycling, it has not yet encouraged the prevention of waste or the manufacture of more sustainable products – and, the paper argues, producers are not yet held fully accountable for their environmental impact.
Röling and Darut state that waste management is not the only factor in overcoming the global packaging crisis, with reductions and the phase-out of environmentally harmful products also playing important roles. As such, they highlight that EPR is not a silver bullet in minimizing a product’s environmental impact throughout its life cycle, and that a complementary legislative framework is essential to its success.
Regarding the recent revisions to the Packaging and Packaging Waste Regulation and the Waste Framework Directive, the authors call for a ‘clear, ambitious vision for the future’ that considers the design and environmental impact of products according to the waste hierarchy. Improved governance, transparency, enforceability, and democratic inclusion for stakeholders are listed as requirements for a thriving circular economy and to unlock the true potential of EPR.
On paper, EPR functions on a polluter-pays principle, which places the onus on individual producers to organize and finance the pursuit of targets within an EPR scheme. This organization is often undertaken collectively in practice, with Producer Responsibility Organizations, or PROs, financing waste management costs with fees paid by producers per kilogram of product placed on the market.
Those that also take on the responsibility of organizing will work with municipalities and waste management companies to set up or partially fund collection and sorting infrastructure, the paper adds. Most European Member States offer a single PRO per product stream, but nations like Germany, Austria, Portugal, and Poland opt in for competitive schemes.
Röling and Darut note that EPR fees differ from taxes in that they are used directly by the PRO to fund waste management systems and are ‘closely linked to the waste placed on the market by an individual producer’. They do not require additional budgetary resources from the state and are not ‘absorbed’ into public spending.
Therefore, the authors underline that EPR fees should correlate directly with the system’s costs, be paid directly to the PRO, and be modulated to push for sustainability-minded design choices.
Currently, the progress of EPR schemes in reducing waste is thought to be hindered by the ‘flawed’ governance of PROs, alongside a lack of harmonization in Europe, the exclusion of non-European stakeholders, the issue of ‘free riders’, and the ‘inadequacy’ of cost coverage provision. The paper accuses PROs of utilizing their central positions in waste management schemes to influence further environmental policies and serve their own interests, while other stakeholders have less say in collection, reuse, recycling, the price of fees paid to municipalities, and similar processes.
This is thought to hold recyclers, municipalities, and environmental NGOs back from operating at their full potential. The European Recycling Industries’ Confederation (EuRIC) states that “EPR Schemes provide adequate representation of the waste management and recycling sectors as a minimum requirement. This will ensure that there is an appropriate balance of interest amongst the most relevant actors in the value chain”.
Municipal Waste Europe takes a similar stance in regard to EPR for textiles, arguing that schemes “should be designed within a collaborative framework and with strong, transparent communication between all the players involved in the value chain and in the decision-making process (national/regional governments, municipalities and municipal waste operators, producers, retailers, sorters, recyclers, citizens, charities, social enterprises, research institutions, etc)”.
The Netherlands Environmental Assessment Agency observes that, “while collective EPR offers advantages to producers, such as economies of scale and less free-riding, it dilutes eco-design incentives and may raise competition concerns”.
Röling and Darut suggest that, in developing the Waste Framework Directive, European legislators did not necessarily envision full harmonization, although a provision for implementing any desired or required acts to ensure harmonization was also provided. In practice, then, Member States – as well as other countries in the European Economic Area and EU trading partners – have incorporated the mandated basic principles of EPR schemes while operating under a range of schemes and rules.
As a result, there is inconsistency between countries when it comes to product scope, cost coverage, fee structure (in terms of categories and granularity), fee modulation criteria, and reporting requirements. A study led by Adelphi also indicates that access to waste is competitive, leading to high costs and inefficiencies when actors exceed their obligations and sell excess quantities to other PROs that would otherwise miss their collection quotas.
Consequently, the paper argues that the impact of implementing EPR policies has been limited and the administrative burden on producers – especially those selling their products on several markets across the EU – has only increased.
Recent studies by a.o. EEB and Utrecht University are cited in the authors’ suggestion that exports are affected when EPR schemes take on a national viewpoint rather than an international or continental one. Producers supposedly get a ‘free pass’ for any type of end-of-life management costs when products are shipped overseas, with end-of-life products frequently being described as ‘reusables’ for exportation purposes.
In these cases, the receiving country takes on the financial burden – a loophole that producers reportedly exploit to keep their own costs low, especially where EPR schemes are competitive. Second-hand products are often exported from EU to third countries, which prevents the importing countries from receiving the necessary financial support to collect, disassemble, repair, decontaminate, recycle, or dispose of the products adequately. Thus, the paper calls for inclusive policies to ensure the full effectiveness of a circular economy.
The OECD defines ‘free riders’ as “those producers who benefit from EPR systems without contributing their share of the costs” while benefitting from the collection and recycling of their products by law-abiding competitors who have financially contributed to waste management schemes. Free riders can under-report or fail to sign up to a national register or PRO in their failure to comply with EPR obligations.
Free riding is said to incentivize the avoidance of EPR compliance as a competitive advantage and lead to the overestimation of recycling rates due to inaccurate data reporting. Waste management systems may be underfunded as a result of free riding.
An OECD study foregrounded online multi-seller platforms as a ‘major contributor’ to free-riding, especially large and well-known platforms with fulfilment centres in the EU – a finding apparently backed by an unpublished study from Eunomia.
A variety of recent research has suggested that holding producers responsible for waste management and other external factors does not provide any additional encouragement to redesign products. In its own white paper, Ultrecht University argues that collection and recycling costs less than 2% – sometimes as low as 0.1% – of a product’s price.
However, Röling and Darut note that producers are only responsible for the fraction of waste that is separately collected, not that which ends up in residual waste. Even schemes that offer eco-modulated fees are not said to offer a significant enough difference in price to encourage real change.
For the most part, they explain, current EPR schemes do not account for this loophole, and Ultrecht University recommends that schemes should incentivize design changes by enforcing a reward system.
The authors add that the producer-pays principle is limited by the current cost coverage of EPR systems and the concept of ‘necessary costs’ when meeting regulatory collection and recycling obligations as per the Waste Framework Directive. By only including the costs incurred to improve recycling and collection, it seeks to drive down spending, but this is said to have lowered the EPR fee past the point of effectively holding producers responsible or encouraging them to design more sustainable products.
As such, it is recommended that EPR cost coverage, the overall price of the fees, revenue use, PRO governance, and new, ‘ambitious’ regulatory targets focused on preventing waste and reducing pollution are implemented into the Waste Framework Directive. This includes tackling governance issues to enhance the effectiveness, democracy, and enforceability of existing and future EPR
schemes. In turn, it is hoped to benefit the enforcement of EPR under the Packaging and Packaging Waste Regulation.
The paper calls for the governance structure of PROs to include a democratic and transparent system in which stakeholders have a say in policy processes, the set-up of contracts and fees, and strategic decisions. PROs should not leverage their strategic positions to lobby against environmental policies in their own interests, the authors assert.
National governments are encouraged to take greater control to ensure that more stakeholder are involved in policy design and that ‘more stringent’ criteria are placed upon PROs. Governments should have greater access to PROs’ data to ensure they are easy to monitor, and PROs should be discouraged from shifting responsibility onto consumers through clean-up campaigns, for example.
To prevent brands and distributors from becoming solely responsible for EPR and ensure its full enforceability, Röling and Darut state that the European Commission should establish a new definition of producers – improving democratic representation and cooperation between PROs, municipalities, waste companies, and civil society.
PROs should cover the full costs of EPR in line with the polluter-pays principle and relieve the financial responsibility from public authorities and taxpayers.
The cost-coverage scope should include collection, transport, and treatment costs for both separately and non-separately collected waste covered by EPR; public communication and awareness raising campaigns costs, such as reusability options, separate collection systems, and sorting instructions; and campaign costs for littering, prevention and awareness campaigns costs.
Costs for appropriate system control, including auditing and measures against free riders, and administrative costs from running the organization, data reporting, and enforcement activities, should also be included. It is also suggested that PROs dedicate a portion of their budget to help develop new circular economy sectors with a focus on reducing, reusing, and repairing, as is currently happening in France and is being discussed in various legislative revisions.
Harmonized principles for the fee structure of EPR and eco-modulation should be implemented, the paper says, and should adhere to the waste hierarchy. For instance, the authors gesture towards linking the granularity of the eco-modulated fees to the sustainability requirements of products as per the Ecodesign for Sustainable Product Regulation.
In turn, the design stage is expected to benefit from harmonized fee modulation, and it is recommended that the eco-modulation system should be simple in its design, practical to implement, and focused on prevention and reduction.
Progressive fees should be stipulated and linked to the number of new items placed on the market every year, the paper continues. This should involve an increasing marginal cost, and a specific threshold, for placing new items on the market; any bonuses tied to eco-modulated fees should then be cancelled if the threshold is passed.
The move would theoretically counteract overproduction, encourage leasing, repairing, and reuse for existing items, and serve as an additional step towards circularity.
A level playing field should be established for producer responsibility that includes imported goods sold online. Distinct obligations should be established for online marketplaces and platforms to ensure that their traders comply with producer responsibility rules or have liable economic operators within the EU or EEA before a sale can be processed. Enforcement on non-EU retailers
who sell directly to EU consumers should increase and parcels and/or vendor sites that do not comply should be blocked.
Deposit return systems (DRS) could be combined with other EPR policy instruments covering broader waste steams to achieve return rates as high as 90% by increasing collection rates and driving down litter – influencing consumer behaviour in such a way that other policy instruments do not always succeed in.
Eunomia suggests that European regulation should be clear about the product scope of a mandatory DRS in order to prevent unintended substitution effects. This should be based on product groups, as defining scope based on certain materials is feared to give producers leeway in changing materials and avoiding participation.
A linear ‘take-make-waste’ economy is currently thought to create an uneven playing field for circular business models, so the paper proposed fiscal instruments and other price-based measures, on both a national and an EU level, as complementary additions to improved EPR. In tandem, these are expected to improve circularity for the European economy and reduce consumption of resources in accordance with planetary boundaries.
Harmonizing these fiscal instruments across the EU is set to offer incentives for participation in the circular economy while safeguarding public revenue streams and ensuring social equity, according a study by Eunomia and the European Environmental Bureau. For instance, minimum tax rates could be harmonized for a wider range of resource uses outside of energy products, issue recommendations on revenue use, and develop such existing circular economic instruments as EU own-resource on non-recycled plastic packaging waste.
In terms of sustainability, the use of virgin resources should apparently be taxed to complement EPR measures, divert the market away from fossil-based substances, and account for negative environmental impacts. Again, fee modulation is expected to encourage the use of secondary materials in manufacturing, the adoption of eco-design, and a decrease in consumption.
Products containing recycled content, made from easily recyclable materials, or fulfilling other circularity criteria should be rewarded with lower VAT rates to drive sustainability-minded practice and lower the generation of waste. The paper acknowledges that these environmental benefits are not yet reflected in prices, but their popularity amongst consumer spending habits and public procurement could increase price competitiveness.
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Also, if you’re interested in packaging sustainability, you will want to attend our Sustainable Packaging Summit in Amsterdam on 14-15 November. The Summit brings together leaders and pioneers from across the industry to align strategically, learn, network, and create a critical mass to accelerate change. You can learn more by clicking here, and you can buy a ticket to attend here.
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