How extended producer responsibility can accelerate the move towards a circular economy

By Sophie Degagny, Head of Australia at Eunomia Research & Consulting  September 13th, 2021

Planet Ark is proud to announce Eunomia as the latest Technical Supporter of the Australian Circular Economy Hub. To celebrate Eunomia's Head of Australia, Sophie Degagny, writes about the role of extended producer responsibility in a circular economy.

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Extended producer responsibility (EPR) is a system in which the producers of a product or packaging take financial responsibility, and sometimes operational responsibility, for its end-of-life management. This approach typically makes producers responsible for the costs associated with meeting specific targets in respect of collection and/or recycling of their products at the end of their life. This usually involves funding, in full or in part, the collection, sorting and recycling. In principle, the costs of products placed in the residual stream, and the costs of managing littered/illegally dumped products could be covered, but this is not yet widely seen.  

A long-standing aspiration for EPR is that being faced with the end-of-life costs will act as an incentive to brands to find ways to make their products more easily recyclable, and thus cheaper to manage at end of life. The way that fees are designed can also act as encouragement to engage in less resource-intensive practices, such as sustainable sourcing of raw materials and designing products to be longer-lasting. EPR fees can also provide funding for both the Research and Development and subsequent implementation of recycling technologies and associated collection infrastructure, effectively closing the loop and keeping resources and materials in circulation for as long as possible. 

Through careful guidance and targets set by the government, EPR pushes industry to use its efficiencies and economies of scale to provide a wide-ranging solution. Well-designed programs increase consistency of, and access to, services, while transferring costs and material price risk away from the public sector and towards producers, also incentivising them to design out waste – and ensure that what remains is more easily managed. Currently, in the absence of EPR, companies designing products that are more readily recycled at end of life must compete with producers who have not given such consideration to the design of their own products. EPR, along with other types of well-designed regulation, can thus provide a means to level the playing field, whilst encouraging better environmental outcomes across the board. 

EPR is not a new policy. European countries and Canada, among others, have already adopted EPR legislation for packaging waste and textiles, as well as other materials. In Australia, product stewardship schemes for products such as mobile phones, tyres, batteries, plastics and packaging, and TVs and computers exist, yet these don’t require producers to bear the costs for the product’s end-of-life management. 

EPR has benefits for producers, supporting their expressed objectives by providing the opportunity to optimise a reverse supply chain. This should be attractive to the many large producers that have made commitments in recent years to reduce waste, increase recycled content and make the packaging of their products more recyclable and/or sustainable. Some global producers already participate in EPR systems for product packaging in Europe and Canada. They can do so in Australia as well. 

Building support for EPR 

EPR remains a hard sell, despite being only a transfer of costs from the taxpayers to the manufacturers/retailer. Though it is increasingly accepted as a cost of doing business in Europe, it is inevitable that some producers in Australia will lobby against the increased cost and financial responsibility. But with the right conditions in place, EPR for packaging, textiles, and other valuable streams should become a reality. These conditions include: 

  1. Political will: legislators must be bold when trying to establish an innovative program. Waste management behaviours are deeply entrenched in both citizens and industry, and legislators must be willing to speak to the benefits of EPR and convince doubters. 

  2. Expert-level knowledge: legislation must be crafted to make the EPR system effective. This includes proper governance structures (a vision for which is provided in the figure below), high recycling targets for different materials, and considerations to protect small businesses from disproportionate impacts. 

  3. Stakeholder management: with many parties involved in recycling, everyone will need to be informed on the benefits of EPR and how they will be affected, including: 

  • Industry — if producers are brought into the planning process early, they can have input into its structure and are more likely to have buy-in or even become proponents. 

  • Municipalities — if producers have a bigger role in waste management, municipalities need to know what this means for them. Giving municipalities first right-of-refusal on collections or other services should be considered. 

  • Residents — any changes to residential waste management services need to be clearly explained. Education is essential to ensure that residents are invested in the success of the system, and to drive behaviour change.  

EPR systems have the power to ensure quality material is fed back into an increasingly circular economy, reducing our reliance on virgin material, and incentivising sustainable packaging design. But legislators should ensure policies are correctly designed as a poorly designed, loophole ridden EPR systems would be ineffective.  

Legislators considering EPR should ensure that it includes: 

  • High, measurable, material-specific recycling targets that incentivise high performance. 

  • Clear guidance on operational responsibilities and oversight so that the optimum systems can be developed and financed based on knowledge of future material flows. 

  • Clauses to safeguard and complement successful existing programs, such as bottle deposit programs. 

  • Provisions to ensure equal access to services for all residents. 

  • Monitoring by the government or a third-party regulatory enforcement agency; 

  • Transparent reporting on progress. 

  • Clear, stringent definition of recycling that does not include landfill or waste-to-energy. 

The other thing to point out is that in EPR systems going forward, products have to be scored against a set of criteria as part of a system called eco-modulation. Under eco-modulation, the fees paid by the producer vary according to specific criteria relating to aspects of their products’ environmental performance. The more ‘environmentally-friendly’ products are charged at a lower rate than those that are less ‘environmentally-friendly’ to incentivise eco-design. Our recent study for the European Commission sets out some of the key criteria to be used, improving durability, making products more repairable, and integrating reuse into business models.   

Making EPR a reality 

Eunomia has worked on EPR in numerous sectors including packaging, electronic and electrical items, batteries, end-of-life vehicles, carpets, and carried out ground-breaking research into the problems posed to EPR schemes through the growth in online sales, and the ways in which this issue can be addressed. 

Our study for the European Commission offers recommendations on how EPR schemes should operate. Eunomia’s experts are also adept at helping businesses to understand their obligations under EPR schemes (or similar) and explaining how they should prepare to meet these obligations, thanks to our in-depth knowledge of EPR and the policy landscape across the UK, Europe and beyond. 

 We are very excited to become a Technical Partner of the ACE Hub and we are looking forward to supporting its members and sharing our knowledge. We align with the Hub’s mission of facilitating the transition to a circular economy as we’ve been supporting the public and private sector through their move toward the circular economy for many years. The Hub offers us an opportunity to extend our impact and accelerate our development in Australia.   

To find out more about Eunomia's work on EPR and related topics, visit www.eunomia.co.uk or contact Sophie Degagny — Sophie.Degagny@eunomia.co.uk.  

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Sophie Degagny, Head of Australia at Eunomia Research & Consulting

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