EPR for Packaging: Wrapped Up

A key pillar of the Government’s 2018 Resources and Waste Strategy (RWS), Extended Producer Responsibility (EPR) for packaging is finally coming to fruition after extensive consultations and significant pandemic delays. In March, the Department for Environment, Food, and Rural Affairs (Defra) published its consultation response, illustrating the shape that the policy is expected to take when implemented in 2024.

The scheme seeks to cover the full costs of disposing of packaging waste, shifting obligations from local authorities to producers – something that previous producer responsibility legislation, Defra asserts, has ‘never’ been able to achieve. It will do so through a system of payments from producers to local authorities, set to financially incentivise the use of less packaging. Where packaging is used, the system’s modulation of fees based on recyclability – to come into effect from 2025 – should encourage producers to keep sustainability in mind in the design stage.

All producers with a turnover of more than £2 million and handling more than 50 tonnes of packaging each year will be obligated, with a lower threshold established – £1 million turnover and 25 tonnes of packaging handled per year – for data reporting only.

Reporting data and making payments
Data reporting will form the foundation of the scheme, with the relationship between producers and local authorities bridged by the Scheme Administrator (SA), a public body yet to be set up.

“As a public sector function,” a Defra spokesperson explained, “the SA will meet all the governance and operational requirements of a public sector body. The SA will be set up and run in a manner that is transparent, and obligated producers, local authorities, and other stakeholders will be able to engage closely with the organisation.

“Defra and the Devolved Administrations will continue to engage with stakeholders as the detail of the SA’s functions is worked up,” they said.

Reporting on packaging facets such as category, components, and recycling disruptors/enablers, producers will provide data to the SA via a digital platform, with information used to calculate obligations.

This process will occur twice a year, in April and October, with local authorities, therefore, receiving payments to cover a six-month period, in arrears.

Producers will also be required to annually report where in the UK their packaging is placed on the market, with this data informing the modulation of fees from 2025. The SA is expected to begin incorporating this data into its recyclability assessments for modulation from the outset of EPR.

With a significant percentage of local authority services outsourced, Environmental Services Association (ESA) Executive Director Jacob Hayler noted waste management companies may also be required to collect, process, and provide ‘more granular’ data for material volumes and recycling rates for specific packaging formats – ‘particularly as modulated fees under EPR will be based on recyclability assessments and real-world performance’.

MRF regulations are expected to be amended to introduce more stringent sampling, measurement and reporting requirements for sorting facilities under EPR. These changes, Hayler said, ‘will undoubtedly require new systems, processes and personnel’ – a critical objective ahead of the implementation of EPR, he added, considering that ‘the success and measurability of the reforms will be intrinsically linked to the quality and availability of data’.

Adam Read, Director of External Affairs at SUEZ, added that data from waste management companies will be needed to ‘prove that materials are flowing back through the system, and to ensure that all parties can claim their payments for services provided.’

“Calculating the cost of collections and the volume/weight of target materials, contamination levels, system leakage (packaging in the residual stream), and materials flowing to reprocessors/end markets will all involve data capture and reporting from waste management companies,” he said.

Read continued: “The plans for digital waste tracking and revisions to the waste carriers, brokers, and dealers regs will also mean better data is captured and more organisations are capturing it, to ensure that all material flows are as transparent, trackable and robust as appropriate. This is good news for the sector going forward, driving up performance, leaving less to chance and ensuring the new system can evidence its improvements.

“There is plenty of work underway within SUEZ and the other waste management companies, comparing the data we already collect and report with the likely needs under the new regime.

“Without a doubt, we will need to invest in new IT systems that interface fully with the systems introduced by Defra and the SA, along with staff training etc. but equally we will need to invest time and effort at our sites to collect data samples and provide space at our facilities for regular sampling of material flows.”

‘Efficient and effective’ local authorities

EPR will see the performance of local authorities assessed by the SA, with Defra stating that those providing ‘efficient and effective’ systems for managing household packaging waste will be reimbursed in full. The SA will adjust costs accordingly for local authorities failing to meet requirements, as well as cover any additional necessary costs incurred by those exceeding their performance benchmarks.

The considerations the SA might make in assessing the efficiency and effectiveness of local authority systems are currently yet to be known – once the body has been set up, local authorities are expected to have a clearer picture of what the criteria and metrics may be.

“The detail is being developed,” Defra’s spokesperson said, “and is likely to create a number of archetypes based on situational factors outside an authority’s control, e.g. rurality and levels of deprivation, combined with scheme type and service configuration. Income from material sales will also be taken into account for each local authority. This will create benchmarked ranges for the costs of a local authority.”

“Because all things are not equal across local authorities, we intend to moderate this data-based assessment, taking a localised, evidence-based view of necessary costs, and whether the model-based assessment reflects the costs of an effective and efficient service for each local authority.

“This approach enables [the factors] outside the control of a local authority to be taken into account, but which are so specific that no model could be expected to account for them. The costs to be covered in each local authority will be summed and allocated to particular material types e.g. glass, cardboard.”

Managing business packaging waste

While EPR will revoke the current Producer Responsibility Obligations (Packaging Waste) Regulations 2007, similar provisions will continue for the collection and management of business packaging waste. Defra asserts that this will ‘simplify and de-risk delivery’.

An amended Packaging Recovery Note/Packaging Export Recovery Note (PRN/PERN) system will continue to cover the collection and management of non-household packaging waste, as well as the recycling of all packaging waste.

The ESA’s Hayler said that this was a ‘sensible outcome, which will provide some continuing support to UK reprocessors.’ However, he also highlighted concerns that the amended system will fail to ‘fully address the PRN/PERN distortion, which favours exports,’ saying, “we need all policy drivers to be aligned to promote the re-shoring of recycling and reprocessing activity.”

LARAC expressed disappointment at the omission of business collections, although John Coates, its Head of External Affairs, noted that ‘the lack of data for business collections would have delayed EPR getting started.’

He added: “Councils will be a key stakeholder in the EPR scheme and therefore must be at the heart of its design and discussions on its implementation and development. PRN will continue for business waste collections, and we need to know how council trade waste collections will interface with the new system and any changes that this brings.

“It would be unfortunate if omitting business waste collections from EPR meant councils having to restructure their trade waste collections if they currently co-collect from households and businesses. Again, we await greater clarity to help with these issues.”

SUEZ similarly appreciated the need for a ‘transition period’, but stated: “We are not in favour of PRNs being retained any longer than is necessary, because they are not part of the EPR reforms and are a distortion to the idealised system proposed through EPR. We cannot allow delays to full implementation of EPR.”

Ahead of the 2026/27 review, Defra stated that it would ‘continue to explore’ payments for business waste, establishing a task force, with the involvement of producers, local authorities and the waste sector.

Shaping up for EPR

So, what are local authorities doing to prepare for the implementation of EPR? According to LARAC, ‘not a lot’: “To make any changes now runs the risk of being caught out when the regulations and guidance are published on minimum standards for collections (including frequency, materials, and co-collection), the tests for TEEP and “Efficient and Effective” (consistency and EPR), and reporting requirements.”

For waste management companies, there’s been more movement. SUEZ has been ‘modelling different collection service provisions and discussing possible changes in service and contracts with its local authority customers’.

Read continued: “We have been modelling impacts on feedstocks at our MRFs associated with EPR initially and then the potential Deposit Return Scheme (DRS) to determine what equipment is needed and what new configurations might best suit changing feedstocks and sampling regimes.”

Alongside the DRS, other legislation, such as the plastics tax, has seen significant investment into new UK reprocessing infrastructure. The ESA’s Hayler explained: “Discussions with local authority clients have been ongoing for months, if not years now, anticipating the contractual, operational, planning, and delivery implications of the emerging reforms.

“We would, however, like to go further in implementing these changes and indeed this needs to happen rapidly now if the Government is to have any chance of meeting its RWS timetable – particularly given wider economic and global supply chain pressures.”

However, with details about the new consistency regime and DRS yet to be seen, Hayler warned that investment and operational decisions have been left ‘in continued limbo’ until the market understands ‘the economic implications of the RWS as a single joined-up system’.

SUEZ’s Read added:  “We continue to support sector-wide and value chain discussions about innovation, data needs, materials handling and performance expectations to ensure we are all better prepared for the changes that are coming.

“We are providing data to Government and engaging in open discussions about targets, services, performance, and policy reforms to reduce any unintended consequences of the current policy reforms.”

Changing the landscape?

The importance placed on ‘efficient and effective’ systems by EPR may see collections skewed away from comingled in the future, said LARAC’s Coates. “The requirement to collect the four dry recyclables (paper/card, plastic, metal, glass) separately has been present since the 2011 Regulations,” he said, “but the cost-saving of comingled collection has helped to maintain its popularity.”

“If EPR for packaging covers most items in the household recycling stream, and the cost of collections are covered by EPR, then it will be interesting to see if separated collections are seen as ‘efficient and effective’ by the SA and therefore attract the highest levels of funding.”

Robbie Staniforth, Innovation and Policy Director at Ecosurety, said that while EPR alone won’t be the thing that influences local authorities to change their collection systems, “the money that EPR brings, in conjunction with mandated consistent collections will work in tandem to set the landscape for what has to be collected from our homes in the future.”

ESA’s Hayler echoes this sentiment, asserting that the incoming collection-consistency reforms will be ‘the principal driver’ of the future shape of collection systems, including the range of materials collected, and collection methods. “It is intended that this will drive moves towards greater kerbside separation where practical,” he said.

“DRS, once introduced, will also have a significant impact on collection infrastructure, with thousands of new collection, transfer and consolidation points. The plastics tax is one of the principal drivers of investment in reprocessing capacity, and we have already seen considerable investment made in response to the tax, while EPR will support the whole system – with funds likely to be directed to parts of the system that yield the best recycling performance returns.”

SUEZ’s Read expects to see a ‘significant increase’ in the adoption of source segregated recycling, which, despite its reputation for being more expensive per household in terms of service provision, has ‘tended to deliver higher quality materials’.

This article was taken from Issue 103

“As EPR payments will pay for appropriate service costs and deliver higher quality material flows, these types of collections should get full funding in many locations,” he said. “In areas with higher density housing, multiple occupancy and narrow streets etc. a hybrid collection scheme will be more likely to evolve over time, keeping paper and other fibres away from packaging containers, to keep cross-contamination down.

“We are not expecting an increase in comingled collections going forward. This may be the most prevalent collection system right now but given the need for the entire supply chain to deliver more and better recycling, the costs incurred in handling unwanted materials and dealing with them at the MRF will start to drive attention towards more hybrid solutions that deliver less contamination and higher quality materials. However, until the regulations are in place this is only an interpretation of what is intended.”

Staniforth concludes that the Government’s proposals represent a ‘pragmatic approach’: “The recyclability and modulated fee criteria will have a big impact on how we see goods packaged. From that side, it’s a good step forward.”

He continued: “With the exclusion of business waste from EPR for now, they’ve chosen not to unpick the fabric of how transactionally people pay for the collection of waste in the UK.

“It would have been nice to be a bit more world-leading on things like PRNs, such as fencing off a certain proportion of them for reprocessing within the UK.

“More far-reaching proposals would have created a much better UK investment environment for reprocessing waste, onshoring the problem of dealing with our packaging waste,” he said.