Extended producer responsibility (EPR) regimes require producers or importers of equipment to finance the collection and treatment of the products they supply when they become waste.
In the last 12 months, the application of EPR principles to new waste streams has been widely discussed as a way of raising the UK’s faltering recycling rate. Recolight has looked at the principles of a good EPR regime from the producer’s perspective.
Although there are currently four EPR regimes in the UK, covering waste batteries, electricals, packaging and vehicles, there has been much discussion in the waste sector regarding possible new schemes covering other product groups, such as mattresses and furniture. So it is timely to consider the core principles that should underpin any EPR scheme – existing or new.
1: Control of costs
The clue is in the EPR name: if producers are to be responsible, they must be able to control the costs they are required to finance. That includes contractor selection and contract terms, and how collection, sorting, recycling and recovery are organised. Producers cannot be expected to deliver outcomes or fund activities which are outside their scope of influence. In short, there should be no costs that producers cannot negotiate in an open and competitive market.
One particularly naïve and ill-considered funding suggestion was that producers should pay a percentage of their turnover as EPR fees: that is not producer responsibility, it is simply a tax. But if producers are made financially responsible, they have an excellent track record in driving down costs and implementing effective operational models while still achieving good environmental outcomes.
2: Clear objectives
It is important from the outset that EPR systems should have clearly defined objectives, such as the reduction in waste and the retrieval of marketable secondary raw materials in an environmentally sound manner.
But there are some goals that do not sit well within EPR – these include product design and reuse. Product design issues are better handled in product standards now being drafted for the EU’s circular economy package; there should be no need for waste legislation to place additional, and potentially conflicting, requirements.
Reuse of products with value generally occurs before products are discarded, and therefore should not be dealt with via waste legislation.
3: Realistic targets
EPR systems need targets that are based on reliable data and evidence of the flow of waste through society. They should be set sufficiently far ahead so that there is a clear vision, and that compliance schemes and the waste industry can invest and develop systems in confidence. A five-year horizon, but with biennial reviews, would seem sensible. Target increases should be in a steady and evolutionary manner.
From a practical point of view, producers and importers will simply not know where in the UK a product is eventually sold. A company based in Wales could supply product to a distributor based in England, which will then be sold to a consumer based in Scotland, but which might arise as waste in Northern Ireland. Local or regional EPR schemes cannot work.
Economies of scale can be achieved by sharing administrative structures and reporting systems across the devolved administrations. And to ensure the harmonised approach necessary in a UK-wide system, all key decisions regarding EPR should be handled centrally and not by devolved administrations.
There is certainly merit in harmonising definitions and common principles for EPR schemes. But the detailed mechanics of the operation of a system may well need to vary, to reflect the differing barriers to collection and recycling that exist for different product groupings. For example, it is unlikely that the targets and compliance fee system used for waste electrical and electronic equipment (WEEE) would be effective for end-of-life vehicles. A ‘one size fits all’ approach may not work.
6: Genuine competition
It is essential that the design of any EPR system avoids conflicts of interest and does not facilitate market-distorting behaviour. The design of the original UK WEEE legislation, for example, created a must-buy market, in which producers were forced to buy WEEE recycling evidence, often at significantly above the true cost, in order to achieve compliance.
This problem has now been corrected, but the design of any EPR system must carefully eliminate any potential for profiteering.
Furthermore, operators of EPR schemes frequently have obligations to other stakeholders in the waste chain, particularly operators of household waste recycling centres (HWRCs), which can give rise to conflicts of interest. Accordingly, EPR system legislation should be drafted to eliminate such conflicts.
One of the most important ways of ensuring that an EPR market functions correctly is to ensure healthy competition, by avoiding the establishment of monopoly operators. A monopoly-based approach to EPR risks leading to higher prices and less incentive to seek and pass on cost savings.
7: Good enforcement
To be effective and ensure a level playing field, EPR legislation must be well enforced. That means the environment agencies and port authorities must be adequately resourced. Enforcement must focus on producers, collectors, transporters, recyclers and producer compliance schemes.
Any failure to achieve legally required outcomes must be enforced adequately to ensure the integrity of the system.
The relevant agencies must have the necessary legal powers and a sufficient range of penalties. As an example, a high proportion of refrigeration WEEE is currently received at recycling plants with the compressor removed. This illegal removal of the compressor releases refrigerant gases to the atmosphere, the capturing of which a key recycling objective of this WEEE stream. Yet little action is taken to prevent this from happening.
Legislation without effective enforcement of the entire system risks undermining the system and its environmental objectives.
8: Define cost responsibilities
EPR legislation must be very clear in defining which costs should be financed by producers. When commodity markets are strong, many waste streams have a positive value and there should be no need for EPR systems to intervene in such good functioning markets.
Automotive battery recycling is a good example because high levels of recycling are the result of the robust economic case to do so. In such cases, EPR should operate as a backstop, only stepping in when commodity prices, geography or other factors make existing collections uneconomic.
The point at which EPR starts is also important. Producers should take responsibility for the collection, treatment and environmentally sound disposal of EPR wastes that have been deposited at designated collection points such as HWRCs.
9: Open systems
EPR legislation should not require consumers or local authorities to hand waste to EPR schemes. Many products that are discarded by a consumer can be refurbished and resold, for example by a charity or an asset management company. To avoid inhibiting this free market activity that naturally occurs within the product and material value chains, consumers should not be mandated to hand in products to EPR collection points at the end of first life.
“If producers are to be responsible, they must be able to control the costs they are required to finance. That includes contractor selection and contract terms, and how collection, sorting, recycling and recovery are organised.”
10: Defined governance
Many organisations are involved in EPR and the responsibilities of each needs to be clearly defined. For example, retailers can be an important conduit of information to consumers, and can also provide effective take-back routes via in-store collection and reverse logistics.
The Government has an important role to play in defining these roles, along with the elimination of conflicting policies and competitive distortions. Local authorities are able to provide the means for collecting EPR waste from householders in an economically efficient way.
11: Cut red tape
Some existing EPR regimes retain a de minimis threshold for very small businesses and a simplified regime for intermediate producers. This is a useful way in which SMEs can be drawn into the sustainability culture without being burdened by excessive regulatory requirements. The continued use of thresholds and simplified regimes is appropriate.
Nigel Harvey is chief executive of WEEE compliance scheme Recolight