Extended Producer Responsibility: change on the horizon for the packaging waste regime

• United Kingdom

• Environment
• ESG

12-04-2022

On 26 March 2022 the government published its response to its second consultation on introducing Extended Producer Responsibility for Packaging (24 March 2021) (the “Consultation”).

Consultation proposals: EPR

The Consultation, which ran between March and June 2021, proposed to introduce an EPR scheme for packaging, moving the full net cost of dealing with packaging waste to packaging producers (“EPR”). The intention behind EPR is that producers will be encouraged to use less packaging and use more recyclable materials therefore reducing the amount of hard to recycle packaging placed on the market.

By way of background, currently under the Packaging Waste (Producer Responsibility) Regulations 2007 (“Packaging Waste Regulations”) obligated producers of packaging are required to register with the regulator (in practice via a compliance scheme) and report on and account for the amount of packaging that they handle. A company is obligated if it (or a group of which it is part) handled 50 tonnes of packaging in the previous calendar year and has a turnover of more than £2 million a year. “Handling” includes converting raw materials into packaging, importing packaging and selling packaged goods.

Under the current system, the obligation for a single item of packaging is shared across multiple businesses in the supply chain. In contrast, the government has proposed that EPR will introduce a single point of obligation i.e. a single producer will be responsible for the full net cost of managing a piece of packaging once it reaches its end of life, thus applying the “polluter pays” principle.

The government’s response- change on the horizon

Key elements of the government’s response to the Consultation include:

• EPR will be implemented in a phased manner from 2024 (rather than 2023 as originally planned) and will focus on payments for household packaging waste and packaging in street bins managed by local authorities, with such payments being determined from 1 April 2024;

• brand owners and Importers (in addition to other producers) will be obligated as proposed in the Consultation;

• modulated fees based on the recyclability of the relevant packaging materials will be implemented from 2025 (rather than 2024 as originally planned). A Scheme Administrator (“SA”) will be appointed and responsible for determining how fees are set;

• the 2022 packaging waste business recycling targets will be rolled over to 2023 for all packaging materials to provide continuity;

• annual recycling targets will be set for plastic, paper/card, steel, aluminium, glass and wood (initially) for each year from 2024 to 2030. These targets will be UK-wide with scope for recycling targets to be introduced for additional packaging materials in the future. The consultation sets out the targets for 2024 and 2030 and explains that targets for the intervening years will be set on a trajectory basis;

• the current thresholds for producer recycling obligations and disposal cost payments (i.e. £2m turnover and 50 tonnes of packaging handled) will be maintained and a new de- minimis threshold of £1m turnover and 25 tonnes of packaging handled each year will be introduced for producers so that those between the two thresholds will be obligated to report packaging placed on the market in 2024. This will be reviewed in 2026;

• obligated manufactures and importers of unfilled packaging will be obligated for such packaging unless it is sold to a producer with a disposal cost obligation;

• online Marketplaces (“OMPs”) will become obligated in relation to filled packaging sold in the UK via online platforms by businesses outside of the UK;

• mandatory recyclability labelling with a single labelling format will be implemented. All packaging types (save for plastic films and flexibles) must be labelled using the Recycle Now mark and relevant wording i.e. “recycle” or “do not recycle” from 31 March 2026;

• plastic films and flexibles must be labelled from 31 March 2027;

• there will be a requirement to label all compostable and biodegradable packaging with a “do not recycle” label;

• certain producers e.g. sellers, distributors, service providers, OMPs and importers will be obligated to report where packaging is placed on the market. In the first year the reporting deadline will be December 2024 for 2023 data. From 2025 onwards, this deadline will be July each year (for the prior year’s data)

• a mandatory takeback scheme for the collection and recycling of fibre-based composite cups including takeback and reporting requirements for certain sellers of such cups will be implemented;

• the SA will be responsible for distributing payments to Local Authorities for the full net disposal costs of managing household packaging waste;

• the Packaging Waste Recycling Note (“PRN”) and Packaging Waste Export Recycling Note (“PERN”) system will be retained and reprocessors and exporters will continue to require accreditation;

• producers are to cover the cost of communication activities aimed at preventing packaging from being littered and managing packaging likely to be disposed of in street bins;

• a monitoring and enforcement regime will be established with regulators given powers to use civil and criminal penalties to drive compliance and address non-compliance; and

• a taskforce will be established which will aid the review of the EPR.

What happens next?

The government will develop an EPR Statutory Instrument (“EPR SI”) in 2022, with a view to laying the SI in Parliament in Spring 2023 so that certain of the aforementioned proposals can be implemented. The EPR SI will be a single UK-wide SI made using powers conferred in the Environment Act 2021. The regulations are due to come into force in Summer 2023, subject to completing the parliamentary process.

To ensure EPR can be implemented from 2024, the government will also be developing a separate Data Reporting SI that will come into force on 1 January 2023 and will remain in force for one year. This will cover data collection and reporting obligations for producers for 2023 only. This will be repealed by the EPR SI which will contain identical provisions on data reporting which will apply from 2024. A review of the EPR will be undertaken in 2026-27.

PRN and PERN consultation

On 26 March 2022 the government also published a consultation on its proposed reform of the PRN/PERN system which enables packaging producers to demonstrate they have met their recycling obligations. The consultation which closes on 21 May 2022 includes a number of changes designed to address a number of perceived issues with the current PRN/PERN system.

Deposit Return Scheme consultation

The government launched a second consultation in March 2021 considering a deposit return scheme for single use drinks containers. The government states in its response to the Consultation that it is currently analysing responses and it is due to publish its full responses in due course. However, it appears that in England glass will be outside of the DRS.

Time to act - are you EPR ready?

We expect that further clarity and guidance will be provided in the lead up to the new regulations coming into force. Given that producers will have an increased financial incentive to use less packaging and more recyclable material, businesses handling packaging/packaged goods at any stage of the supply chain should now consider the impact of the EPR on their business and obligations and how they can plan to reduce the costs incurred under EPR. Equally, businesses should be considering this and their own environmental impact and strategies as part of ESG activities generally.