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Insight

New proposals to impose packaging waste costs on producers

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United Kingdom

The UK Government has introduced proposals under the Extended Producer Responsibility (EPR) Scheme to require producers to pay the full costs of dealing with the packaging waste that they produce. 

The aim is to incentivise recyclability and reusability of packaging by rewarding/penalising producers under a system of "modulated fees", based on the positive or negative aspects of the packaging they use.

Which producers will be affected?

The Government is looking to introduce a "single point of obligation" i.e. where a single producer is obligated to pay the full net costs of managing a piece of packaging.  Rules would apply to determine whether, for example, the brand owner, importer, distributor or online seller of any given product pays the costs of waste management depending on the context and their role in the supply chain.

The full net costs would include the collecting, sorting and recycling of packaging waste from households and businesses, along with litter and refuse management costs, including bin and ground litter.

It is expected that the bulk of the costs will fall on brand owners (i.e. manufacturers of products produced and packaged in the UK under a brand name, including 'own brand' products) and importers of packaged products, but businesses further down the supply chain will inevitably be impacted as producer costs are likely to be passed downstream.

How will payments be calculated and made?

Producers would pay modulated fees based on the tonnage of packaging they placed on the market in the previous calendar year.  Payments would be made quarterly, in arrears, to local authorities for the provision of waste management services for household packaging waste and to other waste managers and businesses for the collection and management of household-like packaging waste.

The Environment Agency (and equivalent regulators under the devolved administrations) would have the power to monitor, audit and enforce non-compliance (including powers to impose fines and criminal penalties, where appropriate).

What other requirements will businesses face?

Mandatory recyclability labelling is expected to be introduced as part of the new EPR Scheme, requiring manufacturers and importers to label packaging as 'recycle' or 'do not recycle'.  It will be up to the businesses themselves to self-assess their packaging to determine its recyclability.

The Government is also seeking views on whether a mandatory cup takeback and recycling requirement should be placed on businesses selling filled disposable paper cups, to provide for the separate collection of used cups. This could be through both in-store and front of shop collection points.

Business have until 4 June 2021 to respond to the Government's Consultation on the new EPR Scheme.

Along with the plastic packaging tax to be introduced next year, the new EPR Scheme is likely to have significant implications for all businesses handling plastic packaging.  In the first year alone under the new EPR Scheme, the Government estimates that the waste management costs of producers will be around £2.7 billion (equivalent to around ten times more than the costs they currently face).

Responding to the Consultation is an opportunity for producers to have their say and to influence the direction of the Government's proposals.  Producers should also begin assessing the sustainability risks associated with their packaging now in order to future-proof their business and their operations.

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