Picking up the tab

Extended Producer Responsibility (EPR) programs, under which producers take responsibility for their products and packaging in the postconsumer stage in certain countries, states or provinces, is gaining global traction.

The schemes shift some or all of responsibility (a.k.a. cost) for recycling and waste disposal from local governments or municipalities to private industry or the entities that put those products into the market.

These entities are the manufacturers, retailers and in some cases distributors, who are required to pay or subsidize the cost to recycle their goods put into certain markets. The idea behind EPR is a good one: to increase the recycling of products and packaging. And it works because the programs often contain mandated recycling targets.

As another benefit, EPR also is having an effect on how companies design and choose materials for their products and product packaging by creating an incentive for them to make products that are easier to recycle.

When it comes to product packaging, EPR rules have expanded and evolved in recent decades to a far greater level of complexity, and these changes are continuing. What follows is a review of recent trends for EPR when it comes to packaging, as well as some examples of newer requirements in specific countries and regions.
 

A global history of EPR

Since the 1990s, an increasing number of countries have implemented EPR programs. While they originated in Western Europe, today there are more than 50 EPR programs for packaging in place in parts of Asia, South America and Canada. This major worldwide expansion has included parts of the Middle East, Eastern Europe, South America, Canada, Asia and Russia.

Other trends include the use of higher fees for packaging that is difficult to recycle, more categories of materials and packaging types, more penalties, and for some countries, the addition of printed paper, such as technical manuals or instructional pamphlets as a material to be included, even though that material isn’t strictly product packaging. One glaring exception, however, is the United States, which has largely had nothing more than bottle deposit programs and/or litter/recycling fees in some states. And while the global state of EPR changed markedly from 2000 to 2015, it changed very little in the U.S. over that same time period. However model legislation for packaging EPR has been released in the U.S. and the idea of packaging EPR is gaining traction. (See the online sidebar, “EPR in America.”)
 

Trends in EPR

The biggest factor behind the growth of EPR is its influence on global manufacturers and brand owners to consider recycling costs and encourage them to design packaging to reduce those costs.

One of the most notable recent trends in packaging EPR has been requiring more data and information from producers. Under initial EPR programs, it didn’t matter whether a company was producing its plastic packaging from polyethylene terephthalate (PET) or polyvinyl chloride (PVC)—the rate paid for those materials often was the same.

For example, in Germany, when EPR programs began, producers paid one fee for plastic regardless of polymer or packaging type. While Germany’s EPR rules haven’t changed much over the years—the country continues to have a total of six material types to be reported on—this is not likely to be the case indefinitely, and it is not the case among newer programs.

Today, most recovery organisations are increasingly taking into account that some materials are much more difficult and costly to manage in those areas, and they are assessing higher rates for those categories.

The trend is referred to as “granularity,” whereby materials are further categorised by grade and/or type. For example, in British Columbia, there are more than 40 different material categories with varying fees. Even among plastics, EPR fees typically differ depending on the resin type and its form, whether a thermoform, film or a container, for example.

Increasing granularity is also evident in the classification of paper packaging. For example, in France, paper previously was considered paper, as long as it comprised at least 50% paper fibres. Today in France, however, paper must be 85% paper to be considered as such. Papers with a heavy laminate coating, therefore, will incur higher EPR fees.

For the most part, EPR programs are becoming more granular from year to year as they are updated. The fees also can change from year to year depending on market conditions.

In France, for instance, the national EPR scheme Eco-Emballages charges almost a penny less, in U.S. currency per unit, typically a kilogram, for the use of clear or light blue PET bottles, than for coloured PET bottles.

Similar fee differences are charged in both Belgium and in Ontario, Canada, where the fees are about five cents lower per unit. Belgium’s EPR scheme, managed by Fost Plus, also includes more categories for plastic bottles and charges producers a higher fee for coloured PET bottles.

Market-related price changes from year to year are not uncommon, and some countries even reduce fees when packaging materials have a better market value. Belgium’s Fost Plus, for example, in 2013 lowered its rates by 21% for clear/blue PET bottles.

Therefore if a PET bottle is the most valuable scrap commodity in a certain region, it may also have the lowest EPR fee. Those items that are difficult to recycle, or cannot be recycled, such as some plastic films, will have higher fees on a per kilo basis.

One of the packaging types that is associated with higher fees is glass. And as indicated, colour choice alone for a packaging material can also impact EPR fees for glass in some areas. For instance Stewardship Ontario charges much lower fees for clear glass (around 3 cents per kilogram) compared with coloured glass (around 5 cents per kilogram). In Japan, obligated companies are charged three times as much for coloured glass as they are for clear and amber glass.

More countries also are considering the use of penalties for packaging that is difficult to recycle. These “disruptor fees” have already been implemented in France, where additional charges apply for packaging that presents problems for recyclers. For example, glass bottles with attached ceramic or porcelain caps are subject to a fee or penalty of an extra 50%. Other targeted items include liquid food packaging made from paper or cardboard but comprising less than 50% fibre, or PET bottles with aluminium labels or inks, or those that have PVC sleeves. Nonrecoverable packaging, or packaging with sorting instructions even though there is no recycling stream, such as stoneware and PVC, are subject to a 100% fee.

On a similar note, the country also offers fee discounts for packaging that has been designed with sustainability in mind. For example, Eco-Emballages offers an 8% discount for the use of on-pack labeling that gives instructions for sorting and recycling.

The EPR packaging rules also vary from region to region in terms of how the packaging is distributed or used. In some countries, EPR rules only apply to packaging that ends up in households, not packaging for products used by commercial or industrial entities.

In France, for example, only packaging that ends up in households is covered. Packaging for foods and products believed to be consumed away from home, such as takeout coffee, are not subject to packaging EPR rules. Product producers in countries with these sorts of schemes must use detailed formulas to figure out the percentages of their products that end up in households.

Another key difference of various EPR programs is the assignment of responsibility, or who must pay for recycling and to what extent. In most countries, packaging EPR fees are to be paid by the packer/filler or the first importer of those products.

A notable exception is the United Kingdom, where manufacturers, distributors and retailers of those materials all must pay into the system. So while the U.K.’s packaging EPR scheme includes only seven categories of materials, the fees are shared across four different responsible party groups: packers/fillers, retailers, converters and packaging manufacturers. Some have argued that dividing EPR fees in this way offers no real incentive to brand owners to design their packaging in ways that makes it easier to recycle or more resource efficient.

System newcomers

Some of the biggest and most notable EPR legislation changes are occurring in Russia and in South America.

In December of 2014, Russia passed amendments to its Federal Law on Production and Consumption of Waste that introduced the requirement for product and packaging EPR. This September, Russia defined the specific products and packaging that will be subject to EPR requirements, when it passed a list of subject products and packaging. Covered packaging includes plastic, paper, paperboard, metal, glass and wood. Now, there are several draft laws in consideration that will provide further detail to the requirement.
 

Among them is a bill proposing that a fee of 1.5% of the cost of one tonne excluding value-added tax (VAT) be applied to paper, rubber, plastic, glass, metal and wood products and packaging. A second bill proposes different fees for different packaging types. For example, the bill proposes that plastic packaging would have a fee of 3,844 rubles per tonne (about US$61) while paper packaing would incur a fee of 2,378 rubles per tonne (about US$38).

A resolution approved by the government on 8 October requires that the fee covering the first nine months of 2015 was to be due by 15 October, with the remainder due by 1 February 2016. Beginning in 2017, the fee for all of the previous year would be due in April. However there has been little agreement on whether or not fees should actually be paid. Russia’s prime minister has ordered a moratorium on the introduction of fees until 2019, and the deputy prime minister has said that fees for 2015 will be set at zero. For 2016, it is unclear if the moratorium will be followed or if fees will be charged then.

Meanwhile, South America, which had no EPR requirements in 2000, now has several in development. In 2013, a bill was introduced into Chile which would establish mandatory EPR for nine categories, including printed paper and packaging. The bill has been passed by the House of Representatives and was adopted for consideration in the Senate on 6 June 2015, where it was to be reviewed and amended. Full approval is expected by early 2016.

In Brazil, the state of Sao Paulo has been working to implement EPR for several years. A resolution passed this summer requires that in six months, the Environmental Company of the State of Sao Paulo (CETESB) create recycling targets and guidelines for the implementation of EPR systems. These were expected to be announced in December of 2015. The requirements will apply to manufacturers and importers of packaging for a variety of products, including foods, beverages, personal hygiene products, cleaners, appliances and other consumer goods designated by the state.

On a global scale, there is still no clear message as to whether paper, plastic, glass or another material is preferable from jurisdiction to jurisdiction. However, environmental packaging and product stewardship consultants like Environmental Packaging International are seeing more and more brand owners studying the fees as associated with the cost of goods. As such, global brand owners, particularly those where the cost of the packaging is a larger share of the cost of the product itself, are increasingly paying attention to this rapidly changing arena.

Victor Bell is president of Environmental Packaging International (www.enviro-pac.com), a U.S.-based global environmental packaging and product stewardship consulting company headquartered in Jamestown, Rhode Island. Bell can be reached at 001-401-423-2225, ext. 800, or by email at vbell@enviro-pac.com.