The government is planning to impose more onerous responsibilities for waste management on the UK packaging industry. Producers are bracing themselves for an increase in their cost base
When it comes to packaging, the principles of extended producer responsibility (EPR) might seem like common sense to anyone who saw the amount of litter strewn around the UK’s public spaces when the lockdown restrictions were relaxed last summer. In short, EPR states that those who make the mess should pay to clean up the mess.
The operative word here is ‘make’ — it is producers that are in the frame, rather than consumers who don’t dispose of used packaging responsibly. EPR is an established policy approach that incentivises the former into more sustainable decision-making by making them liable for the treatment or disposal of post-consumer products. It has been adopted successfully in Canada, South Korea, Japan and several European countries.
EPR is spread throughout the value chain from manufacturers to retailers. They accept varying degrees of responsibility for the environmental impact of each product and must then shoulder the associated waste-management costs at the end of its life. The theory is that they will make it easier and more commercially viable for materials to be reused, recycled or recovered if they are picking up the tab.
Overdue for review in the UK
The UK has had an EPR framework for packaging in place since 1997, but this is so old that it predates Westminster’s devolution of powers to Scotland, Wales and Northern Ireland. Fast-forward to 2021 and the Department for Environment, Food and Rural Affairs (Defra) has just ended its consultation on updating the rules.
Under new proposals, producers will be made liable for the full cost of managing the packaging that’s put on the market. The government estimates that this will total about £2.7bn in the first full year of operation.
Implementing the new regime will be a phased process that’s scheduled for completion in 2027. Landmarks along the way will include the introduction of a UK tax on plastic packaging and a deposit return scheme (DRS) for drink containers in Scotland next year, followed by the potential mandatory takeback of disposable cups (for large sellers) in 2023; and a DRS for the rest of the UK in 2024. Taken together, the whole range of forthcoming measures is expected to result in an overall recycling rate for EPR packaging of 73% by 2030.
The industry is generally supportive of the planned changes, according to Joe Cook, vice-president at Delta Global, a specialist in luxury packaging.
“Most producers back these proposals, having long accepted that there will be a rise in responsibility,” he says. “But some are, of course, dubious about the increase in cost, which is a worry for smaller players especially. This is why many agree that the success of EPR will depend on the incentives offered.”
Small packaging manufacturers are particularly concerned about the changes proposed to what are known as the de minimis exemptions. Producers that earn less than £2m in revenue and/or are responsible for less than 50 tonnes of packaging a year are currently free from most EPR obligations. One of the options published in Defra’s consultation document is to bring these exemption thresholds down to £1m and 25 tonnes.
Cogs in a circular economy
Taking a more systemic view of the circular economy, it’s clear that investments in new recycling infrastructure will be crucial to keeping the EPR machine’s cogs turning.
While the long-term viability of the recycling sector will be boosted by EPR, there are concerns about timing, suggests Julie Vaughan, senior environmental associate at international law firm Herbert Smith Freehills.
She explains: “Fees received from producers under EPR are supposed to grease the wheels, but these are payable only from 2024. For new recycling infrastructure to be delivered, government incentives may be required up front to start project development and meet construction costs.”
Another concern is that producers will be expected to assess the recyclability of their packaging and label it accordingly from 2026, Vaughan notes. “They’ll be required to consider not only whether their packaging can technically be recycled, but also whether the domestic infrastructure for recycling it is in place,” she says.
Picking up the tab for trash
When it comes to who foots the bill for all of this, Defra classifies producers into six categories: brand owners, importers, distributors, online marketplaces, sellers (“businesses that sell any filled packaging to the end user”, according to the consultation document) and service providers (businesses that supply reusable packaging for hire).
Mark Sayers, senior consultant at sustainability consultancy Anthesis, predicts that sellers are “likely to carry the biggest burden – more so where they sell their own branded goods. These businesses should engage quickly with this debate, prepare for change and start planning to mitigate the impacts.”
Cook believes that consumers may well end up shouldering some of the cost burden. “We know that a new demographic is willing to pay extra for sustainable packaging and delivery. Brands and retailers are aware of this. Any additional costs incurred via EPR will therefore be offset by increased product prices,” he says.
Another area of contention could be litter payments, set for implementation in 2024. As it stands, the idea is that producers whose packaging is most littered will pay the most. Cook thinks there is still hope for any business that can demonstrate its efforts to recirculate waste by, say, actively encouraging reuse among consumers.
“The government is open to cutting the costs for those that attempt to reduce the prevalence of their packaging, even if it falls into the ‘most littered’ category,” he says.
EPR will set a price, but a demonstrable commitment to sustainability should, in theory, get a discount.