Weighing up Mandatory vs. Voluntary Extended Producer Responsibility (EPR)
As of today, some 40 nations have placed the responsibility for the collection of packaging waste or the payment of the waste collection costs with the companies that sell the products and packaging. This regulation, called Extended Producer Responsibility (EPR), is probably the most effective step taken in decades to generate more funds for waste management. The funds raised via EPR range from 5 Euro cents per KG of packaging waste, to in the Netherlands 1.3 Euro per KG of plastic packaging. It has brought the populations of these 40 countries cleaner environments, and by putting a price on packaging waste, it has also nudged the producer companies into being more proactive about waste recovery and redesign of their product’s packaging.
EPR regulations aren't a cookie cutter solution, they come in many forms. This series of articles about EPR aims to help policy makers choose the right options when drafting their EPR policies.
The focus of this article is whether a government should introduce mandatory EPR regulations from the outset, or maybe start with a more gradual voluntary EPR regulation. Spoiler alert… voluntary EPR regulations may do more harm than good! We’ll explain.
Decision Point 1: Mandatory or Voluntary EPR?
Mandatory EPR regulation means that producers/importers of goods need to; (a) declare the number of products sold or the weight of materials that they have put on the market; (b) declare if and how much of their own waste they have collected (often called an EPR target); (c) start declaring their materials from the date of the enforceable regulations - even though the regulation is mandatory, there can sometimes be a 1-2 year grace period; (d) pay their EPR Fees by a certain date; (e) agree to regular inspection; and (f) if not, face penalties or sanctions.
Voluntary EPR, means that producers or importers can voluntarily declare the tonnes sold and collected. They may or may not have to pay fees and they will definitely not have to face sanctions.
Mandatory EPR: The Forceful Hand
Mandatory EPR schemes, as the name suggests, leave little room for ambiguity. They establish clear legal obligations for producers, outlining specific responsibilities for the collection, recycling, and disposal of their products once they become waste.
Advantages of Mandatory EPR:
Higher Collection Rates: The most significant advantage is the potential for significantly higher collection rates. When participation is mandatory, all relevant producers are compelled to contribute, leading to a broader and more comprehensive collection infrastructure.
Level Playing Field: Mandatory systems create a level playing field for all producers within a specific product category. This prevents free-riding, where some companies benefit from the efforts of others without contributing their fair share.
Increased Recycling Targets: Governments can set ambitious recycling targets within mandatory frameworks, driving innovation and investment in recycling technologies and infrastructure.
Reduced Environmental Impact: By ensuring proper end-of-life management, mandatory EPR significantly reduces the environmental burden associated with waste, including landfilling and pollution.
Clear Accountability: Legal frameworks provide clear lines of accountability, making it easier to enforce regulations and hold producers responsible for their products' lifecycle.
Time to practice: Most mandatory EPR regulations have a one or two year grace-period baked into it, so that all companies (and the regulator, PROs) can get used to the new situation.
Disadvantages of Mandatory EPR:
Higher Compliance Costs: Implementing and complying with mandatory regulations can impose significant costs on producers, particularly smaller businesses. Businesses will naturally translate these costs into new product prices.
Potential for Bureaucracy: Overly complex or poorly designed mandatory systems can lead to bureaucratic hurdles and administrative burdens.
Less Flexibility: Mandatory schemes may be less flexible in adapting to rapidly evolving product designs and market dynamics.
Implementation Challenges: Establishing and enforcing a robust mandatory system requires significant government resources and expertise.
Compliance Lethargy: producers that were proactive before the EPR regulation, may think “why bother doing more, now that we comply with the regulation”.
Voluntary EPR: The Collaborative Approach
Voluntary EPR schemes rely on the willingness of producers to take responsibility for their products' end-of-life management. These initiatives are often driven by industry associations, individual company commitments, or market pressures.
Advantages of Voluntary EPR:
Flexibility and Innovation: Voluntary schemes can be more flexible and allow for greater innovation in how producers manage their products' end-of-life.
Industry-Led Solutions: Industry-led initiatives can leverage specific expertise and knowledge within a sector to develop tailored and potentially more efficient solutions.
Lower Initial Implementation Costs: The initial costs of setting up voluntary schemes may be lower compared to the establishment of a full-fledged mandatory system.
Potential for Early Adoption: Forward-thinking companies can demonstrate leadership and gain a competitive advantage by voluntarily adopting EPR principles.
Disadvantages of Voluntary EPR:
Lower Participation Rates: A significant drawback is the potential for lower participation rates, as not all producers may choose to participate, leading to uneven responsibility. Usually multinational companies will comply, but local companies usually opt out.
Risk of Free-Riding: Companies that do not participate can benefit from the efforts of those that do, undermining the overall effectiveness of the scheme.
Less Ambitious Targets: Voluntary schemes may set less ambitious collection and recycling targets compared to government-mandated ones.
Inconsistent Implementation: The effectiveness and scope of voluntary schemes can vary significantly depending on the level of commitment from participating producers.
Loss of authority: Governments that choose to implement voluntary schemes, will find it very difficult to reimpose mandatory EPR later. They may not be taken seriously, or industry may have found ways to lobby against or delay enforcement.
Countries with Voluntary EPR and Their Performance
While the trend is increasingly towards mandatory EPR, some countries have experimented with or still utilise voluntary schemes, often as a precursor to, or in conjunction with, mandatory regulations. Examples include:
Some initial initiatives in the United States: Historically, certain states in the US have seen voluntary EPR programmes for specific product categories like electronics or paint, often driven by industry associations. The performance of these programmes has varied widely. While some have achieved decent collection rates, others have struggled with low participation and limited impact. The lack of a consistent national framework has also hindered widespread adoption and effectiveness.
Early stages in some developing countries: In some developing nations, voluntary EPR initiatives might be the initial step due to resource constraints or a desire to build industry consensus before implementing mandatory regulations. The success of these initiatives often depends heavily on strong industry leadership and stakeholder collaboration.
How are they faring? Generally, the performance of voluntary EPR schemes has been less consistent and often less impactful than well-designed mandatory systems. While they can be a starting point for raising awareness and fostering industry engagement, they often struggle to achieve the same high collection and recycling rates as mandatory programs. The inherent risk of free-riding and the lack of a strong enforcement mechanism can limit their overall effectiveness in driving a significant shift towards a circular economy.
Our recommendation: if you do it, do it well. Why spend years with a voluntary scheme, when you can include a grace period in a Mandatory EPR regulation?