Advisory note: packaging industry opposition to producer responsibility

Earlier this week I skimmed through an old Guardian article about ‘corporate welfare’ – which reported analysis suggesting that taxpayers hand businesses £93bn a year (more than £3,500 per household) in the form of subsidies, direct grants and tax breaks. While I didn’t delve too deeply, the thrust of the argument put me in mind of another example of UK taxpayers shouldering a burden that should not be theirs – producer responsibility for packaging.

Extended Producer Responsibility (EPR) is defined by the OECD as:

‘An environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle’.

The practical implications of this approach are that responsibility for collecting or taking back used goods, and for sorting and treating for their eventual recycling, lie with producers.

Limited liability

A report from the European Commission’s DG Environment states that:

‘EPR should aim at internalising environmental externalities and should provide an incentive for producers to take into account environmental considerations along the products’ life, from the design phase to their end-of-life. As such, EPR is to be considered as a major instrument in support of the implementation of the European Waste Hierarchy, and therefore for the increase of, by priority: prevention, reuse and recycling’.

In the UK, however, the way in which producer responsibility for packaging waste has been implemented is quite different from that practised elsewhere in Europe – by introducing the concept without extending financial responsibility, whether in full or indeed to any significant extent, to producers.

In fact, UK producer fees are estimated to cover only 10% of the costs of the system. While producers are indeed obligated to meet targets for recycling and recovery of packaging waste, most of the costs associated with collecting and recycling these materials fall upon local authorities.

Much obliged?

In effect, this means that the companies obligated under the Regulations avoid the associated financial responsibility. In turn this reduces the incentive (to prevent waste, for example, or to design for recyclability) that such financial responsibility might otherwise have had.

Furthermore, because local authorities provide the collection and sorting services, largely unsupported by those that put the products on the market, the costs are met through a combination of central and local taxation, resulting in the generality of tax payers paying to support the delivery of an obligation for which some of them may bear little or no responsibility. A straightforward opportunity for introducing a ‘polluter-pays’ instrument is, therefore, lost.

Should councils be grouchy about covering the cost of collecting packaging waste? Photo: Claire Rowland (CC BY 2.0), via Flickr.

The Commission’s recently adopted Circular Economy Package could, however, mean changes for the UK. The new Article 8a of the proposal for a revised Waste Framework Directive would introduce general requirements for extended producer responsibility schemes. In particular, Member States would have to ensure that financial contributions from producers cover the entire cost of waste management for the products they put on the market. The scale of the transfer of costs to UK waste producers could have been rather greater had the new proposal not dropped the element of the 2014 version requiring financial contributions from producers to support litter prevention and clean-up initiatives.

Design by committee

The slimming down of the obligations may have something to do with lobbying from industry. The Advisory Committee on Packaging submitted a paper in April 2015 commenting on the European Commission’s 2014 proposals, which makes a number of interesting and contentious observations. For example, it asserts – with no apparent irony – that the UK’s Packaging Waste (Producer Responsibility Obligations) Regulations that transpose the EU Packaging Waste Directive have been:

‘Extremely successful in achieving the EU targets at minimum cost to industry’

There is no mention of the overall cost, including the substantial chunk that is borne by local authorities.

The document also states that:

‘Targets are not necessary to stimulate ‘prevention’ or ‘reuse’ of packaging – commercial and sustainability drivers are strong enough and are assessed in relation to the nature of the product.’

ACP appears to be suggesting that the extent to which packaging is currently prevented, for example, is somehow ‘optimal’. From a societal perspective this is clearly not the case as there are a number of costs, associated particularly with littered packaging, that are borne by other actors in society. These costs, therefore, don’t influence the commercial decisions made by producers.

Big burden

Thirdly, the document insists that:

‘EPR must not apply unreasonable cost burdens on producers from end user behaviour over which they have no control, e.g. total cost of litter management, collection from households.’

Notwithstanding the significant contribution to collection costs from the majority of packaging EPR schemes in other Member States, it is understandable that producers would not wish to cover the total costs of litter management. These are, to a large extent beyond their control – although arguably not outwith, to some extent at least, their responsibility – as the approaches taken to litter management will vary from place to place. Also, it seems intuitive that the costs of clearing up litter will be greater than the costs of preventing it in the first place, so having argued that no additional stimulus for prevention is required, it is not surprising that the ACP should also disclaim responsibility for cleansing.

It is worth noting that while the paper was submitted in the name of the ACP (the membership of which includes local authority representatives) it was actually formulated by a sub-group of the ACP (the membership of which excludes the ACP local authority representatives, but comprises ACP members Valpak and British Glass, and additionally includes INCPEN, Packaging Federation, CPI and Plastics Europe). It is not clear whether this paper was reviewed and approved by the wider members before its submission.

Kerb your enthusiasm

It would be remarkable if it had been, as there’s an obvious inequity when local authorities bear a burden that should, in all fairness, be shouldered by producers. The severity of the cuts imposed on local government in recent years lends the issue increased urgency.

Packaging producers are getting away (nearly) scot free, so I couldn’t help but smile when I first saw the INCPEN/PRGS Let’s Kerb Deposits Campaign. Faced with the prospect of having to make a meaningful financial contribution via the proposed Scottish DRS, they have now taken on the role of cheerleader-in-chief for kerbside collections. Financially, it’s a bit of a no-brainer from the (non-contributory) perspective of the packaging industry, but an interesting position all the same for a group that has previously been less than complimentary about the quality of the material collected by local authorities.

Intriguingly, one of the stated motivations for the group’s campaign is the worry that local authorities may lose material revenue as a result of the implementation of a DRS. It’s a bit of a heart-warming novelty for the packaging industry to be so deeply concerned for the financial wellbeing of local authorities. Perhaps in the same spirit they might rethink their opposition to real EPR in the UK.