Who pays to clean up the waste? Making EPR work for your nation

Extended Producer Responsibility (EPR) is gaining traction globally as a vital policy tool to tackle the growing challenge of waste management. The principle is simple yet powerful: the companies that introduce products and packaging into the market should bear the financial and/or physical responsibility for their post-consumer fate. For policymakers considering EPR implementation, a fundamental question arises: who exactly should pay these EPR fees?

EPR Policy decision point 6: Who Pays?

The answer, at its core, aligns with the well-established ‘polluter pays’ principle. The entity placing the product on the market within your national borders is the logical point of responsibility for the EPR fee.

Consider the journey of a ubiquitous device like an Apple iPhone. While designed in California and manufactured by Foxconn in China, its arrival in your country likely involves an official Apple reseller acting as the Importer. This importer then channels the phones through various distribution networks – perhaps directly to retailers in smaller nations or via wholesalers and retail franchises in larger ones.

To establish who the responsible party is, we must introduce two key concepts in this EPR context: POM (Put On the Market) and PIBO (Producer, Importer or Brand Owner). The POM is the crucial point where the product enters your national market's consumption cycle. The PIBO encompasses all of the potential parties that put the waste on the market: the manufacturer (Foxconn), the importer (the official reseller), and the brand owner (Apple).

For efficient EPR implementation, minimising the number of entities responsible for fee payment is essential. Therefore, the most effective approach is to levy the EPR fee at the central in-country point where the product is Put On the Market (POM), before it disperses through subsequent distribution layers.

In a smaller nation, this POM might be a single official reseller, who could also be the importer. However, in larger countries with more federal-like national structures, like the USA, India, or Brazil, the POM party could potentially be at the state level distributor, if such a structure exists. India's policy offers an instructive example: if a PIBO's sales are confined to a single state, the state-level pollution control board manages the EPR fees. Conversely, if a PIBO operates across two or more states, the central pollution control board assumes responsibility at the national level.

Applying this logic to our Apple iPhone example, the official reseller/importer in your country, being the entity that first puts the product on the market for national consumption, would be the responsible party for paying the EPR fee. These are the parties who under EPR Regulation should be obliged to declare the total product units Put On the Market as well as the kilograms of material associated with the product that will eventually convert to waste. The Kolekt-EPR system allows governments and companies to register these products and weights and calculate the total EPR fees in a simple fashion. 

Ultimately, this is the core objective of EPR: to internalise the external costs associated with managing products and packaging at their end-of-life. By charging the companies responsible for placing these items on the market, policymakers can drive innovation towards more sustainable product design and packaging choices, fostering a more circular and environmentally responsible economy.