Ontario is undertaking a transition to full extended producer responsibility (EPR) for packaging and paper products under the Resource Recovery and Circular Economy Act (the “RRCEA”). At their core, EPR policies seek to ensure that the pricing of products incorporates their social and environmental life-cycle costs, including end-of-life treatment and disposal. When products accurately incorporate such costs, industry is incentivized to design them in a way that considers their end-of-life environmental effects.
Decades of experience with mature packaging EPR systems in Europe, however, have not brought all the results that EPR intended to bring about. As Ontario undertakes its transition to full EPR under the RRCEA, there are lessons to be learned from Europe’s experiences with EPR.
European Packaging EPR Lessons on the Ground
In the European Union (EU), the Packaging and Packaging Waste Directive 94/62/EC (the “PPWD” or the “Directive”) creates the framework for implementing EPR programs in EU Member States. The Directive aims to reduce packaging and sets collection and recycling targets for packaging waste. The Essential Requirements provisions laid out in the PPWD provide criteria for packaging, such as weight and volume minimization requirements, hazardous substances levels and packaging reuse and recovery. It is notable, however, that while the Essential Requirements define the results to be attained, they do not specify or predict technical solutions, giving manufacturers the flexibility to meet the requirements of the Directive.
The PPWD has resulted in certain successes including an impressive increase in recycling rates for all Member States. By 2017, Member States achieved an average 42% recycling rate for plastics, well above the Directive’s requested 22.5%. There have likewise been improvements in individual packaging weight. On the other hand, the Directive has also had its shortcomings.
Vague definitions leave too much room for interpretation
Despite decades of packaging EPR in Member States, the European packaging market demonstrates a trend towards difficult-to-recycle packaging such as flexible multilayer composite packaging. Some trace this trend to a deficiency in the Essential Requirements in requiring design changes for re-use and recyclability and on definitions that leave too much room for interpretation, such as what qualifies as recyclable. Many producers have, as a result, tended to light-weight their packaging at the expense of its recyclability. At the same time, the amount of packaging waste generated in Europe continues to grow reflecting growth of global population and demand.
Enforcement left to Member States with varying resources
The vague and general formulations of the Essential Requirements also create enforcement challenges for Member States. Member States are responsible for reaching the national targets and ensuring good enforcement of the legislation. Authorities in Member States have expressed frustrations with judging which packaging is noncompliant with the Directive’s requirements. The Directive’s formulations are insufficient to enable a clear assessment of violations.
Many Member States do not have formal procedures in place to enforce or implement the requirements of the PPWD. Authorities also cite other priorities such as issues with food safety, or a lack of staff and finances. The few countries that have implemented measures and enforcement procedures for the requirements, including France and the UK, have delayed setting up systems to assess the effectiveness of their enforcement mechanisms.
Municipal costs are not fully covered
It should be noted that, despite producer responsibility for packaging waste, European municipalities generally remain in charge of waste management programs. Yet financial transfers from producers may not be covering the full amount of municipalities’ costs. A study of the cost coverage of packaging EPR programs in a number of European countries found that these programs failed to account for the full costs of the waste management of packaging. When excluding avoided costs (i.e., collection, landfilling, incineration, etc.) and subsidies (i.e., public grants), only 68% of the costs of packaging waste management in Portugal and 56% in France were being supported by industry in 2010. It bears mentioning that industry in France is obligated to cover 80% of local authorities’ “efficient costs” of collection and sorting.
Another study observed that producers’ motivation to improve waste management has also largely depended on the type of collection and management contracts that they establish with municipalities or on their dialogue with municipalities. Producers can tie their financial contributions to the municipalities’ collection or recycling rates, the quality of their collection or recycling, or on meeting requirements on the type of collection and treatment schemes to be implemented. When it comes to the fulsome reimbursement of municipal costs, the choice seems to be with Member States to determine what percentage of local authorities’ costs should be covered by packaging EPR. New amendments to European EPR laws, however, will ensure that industry will have to cover the full “necessary costs” of EPR schemes. Member States that wish to deviate from this requirement will have to justify their choices.
Europe Takes Action
In 2018, the EU reformed EPR rules in the context of its first Circular Economy Action Plan to require higher overall recycling targets for packaging (65% in 2025 and 70% in 2030) and higher material-specific targets (including 55% for plastics by 2030). At the same time, it moved the calculation of recycling targets based on the weight of municipal waste that enters recycling, removing any losses of materials due to sorting or other preliminary operations. The Directive now also requires Member States to establish “adequate” monitoring and enforcement frameworks to ensure that those responsible under the EPR framework carry out their obligations, use financial means properly and report reliable data.
As of June 11, 2020, the European Commission also published its plan for revising the requirements of the PPWD. The proposed changes will address the limited competitiveness of recycled materials relative to virgin feedstock, which is now even more inexpensive given the oil industry crisis brought about by the COVID-19 pandemic. The changes will also address the rise in public consumption of packaging driven by a shift from reusable to single-use disposable packaging, growing online sales and the over-packaging for goods.
The Commission has not been clear on whether the targets and measures under these upcoming changes will be general or set at the level of specific material or packaging formats, or whether they’ll be mandatory in nature. It is expected, however, that current and seemingly unenforceable definitions of terms such as “recyclable” or “reusable” will likely be updated.
Despite action at the EU-level, Member States appear to be lagging in their implementation of the 2018 update to the PPWD. Most missed the deadline to implement this Directive by mid-2020, some citing delays related to the COVID-19 pandemic.
At the same time, recycling markets were particularly impacted by the COVID-19 crisis. The crisis brought about safety concerns, employee shortages, manufacturing slow-downs and a historic drop to oil prices making virgin plastics much cheaper than recycled resin. European recyclers are encouraged by Europe’s recent focus on improving access to recycled resin as part of the EU’s Green Deal set of programs. However, they urge concrete actions such as mandatory recycled content rules in key products to ensure steady increases in the demand for recyclates.
It is unclear how many of these lessons will be implemented in the new printed paper and packaging regulation under Ontario’s RRCEA. Europe’s experiences demonstrate, however, the necessity of clear definitions, specific requirements for design changes for re-use and recyclability, adequate coverage of local authorities’ costs, and the allocation of resources to the oversight and enforcement of EPR programs. These practices help EPR programs better achieve their intended aims of ensuring that industry internalizes the life-cycle costs of their products and is incentivized to design products to account for their end-of-life environmental effects.