Extended Producer Responsibility (EPR) is now in place and obligated businesses must begin preparing for the first EPR data submission now.
The EPR system is designed to incentivise certain members of the supply chain to use easy to recycle materials for their packaging by making obligated companies responsible for the full net cost of the collection and recycling of the packaging waste they place onto UK markets.
What is Extended Producer Responsibility?
Extended Producer Responsibility is a system whereby obligated packaging producers will be required to fund the full net cost of the collection, sorting, treatment of packaging waste as well as the actual recycling of packaging. It is the principle that the direct cost of specific packaging recycling should be met by the those placing the packaging onto the UK market. Transferring the responsibility from the taxpayer and placing it onto brand owners and producers.
EPR will fund the collection, treatment and sorting costs of packaging waste through direct payments from producers. Alongside this, producers and importers will still fund the actual recycling of their packaging waste through the purchasing of Packaging Recovery Notes (PRNs).
Why is EPR being implemented?
In 2018 the UK adopted the Circular Economy Package (CEP) meaning that the UK is committed to keeping resources in use for as long as possible, minimising waste and promoting resource efficiency. EPR will support local authorities by funding kerbside collections and more effective management of packaging waste, it is the UKs answer to meeting the CEP and incentivises the use of easy to recycle and widely recycled materials.
When is EPR taking place?
There will be a phased introduction of EPR, beginning with the gathering of data from 1st January 2023 by producers for:
- Fibre-based composites
Registration under EPR and the first data submission will take place in Q4 of 2023, and in April of 2024 the billing for the first EPR payment will begin. By Q3 of 2024 brand owners and importers will need to gather more granular data in modulated categories such as polymer type and packaging format.
How will EPR work?
EPR will fund the full net cost of the collection, sorting and treatment of packaging waste through local councils by obligated packaging producers; the actual recycling of packaging waste will be funded by producers through the PRN system.
The collection and recycling of business packaging waste, for now, will be funded by the businesses that dispose of the packaging waste.
How will EPR impact businesses?
Producers and importers will be impacted by EPR. It is inevitable that costs will increase under an EPR system, with more complex data recording and an increased demand of submission requirements.
Producers, brand owners and importers who place over 50 tonnes of packaging on the UK market and have a turnover that exceeds £2 million annually are liable for the additional costs and data requirements under EPR.
Businesses who place over 25 tonnes of packaging but do not meet the 50 tonne threshold and have a turnover that exceeds £1 million annually will also be brought into the scope of EPR packaging compliance with a data reporting only obligation.
How much will EPR cost?
EPR will change the way that costs of compliance are spread throughout the supply chain.
Under the current producer responsibility system, costs are shared throughout the supply chain, with percentage responsibility allocated to different points:
- 6% to manufacturers of packaging materials
- 9% to businesses that convert those raw materials into packaging
- 37% to businesses that pack fill that packaging (primary, secondary, and transit)
- 48% to businesses that sell that filled packaging to end users (primary, secondary, and tertiary packaging)
EPR will replace all of the above with a single point of compliance that levies 100% responsibility for a piece of packaging onto one business – that business will be the brand owner or importer – most often this will be the pack filler, or the business that specifies the pack filling. For secondary and transit packaging, the brand owner will also be the reporting party, and where packaging is unbranded, reporting will be by the pack-filler.
100% responsibility will now sit with one company, this means that often a pack filler brand owner of primary packaging may see their share of cost move from 37% to 100%, almost 3 times increase in the volume of packaging they now need to fund the management and disposal of. For those companies that formally picked up the packaging manufacturer, converter, or seller of primary packaging, their responsibility for primary packaging will now be zero.
So, for the part of EPR that funds the recycling process through PRNs the biggest change is in the percentage responsibility for PRNs – previously pack fillers funded roughly 1/3 of primary packaging, and under EPR, those that are brand owners will fund it all. So, an increase for those companies in their recycling obligations.
How will Local Authority funding change after EPR?
Under EPR, producers will fund the full net cost of the collection, sorting and treatment of packaging waste, the costs of this are estimated at roughly £1.4bn. Once these costs are spread amongst those obligated under EPR, costs for these businesses are likely to exceed 5 times the cost of their current compliance. However, as the new system has a single point of compliance, obligated producers will now take 100% responsibility meaning that the real time costs could be as high as 13 to 15 times their PRN costs.
EPR is set to generate £1.8bn, with £1.2bn to be given to Local Authorities to fund the kerbside collection, treatment and sorting of packaging waste.
How to prepare for EPR?
To prepare for EPR and achieve a seamless transition to the new system you must:
- Review your packaging options, the recyclability and how widely recycled your chosen packaging materials are.
- Prepare resources for two submissions per year from October 2023.
- Begin recording packaging data by brand owner, and by 8 material types from the 1st January 2023.
- Begin preparing for granular reporting by polymer types and packaging formats for the second stage of EPR reporting in 2025.
- Speak to your Account Manager at Clarity to keep up to date with any developments on the timeline of EPR.