The future of EPR: how do we ensure less concentration of power and better governance?

Packaging, electronic devices, car tyres, batteries, textiles: there are many products that we as consumers deal with in daily life to which 'extended producer responsibility' (EPR) applies. And in the (near) future, this will only apply to more product groups, such as shoes and nappies. Yet there is a lot to criticise about the system. Although it often ensures better collection and covers the costs of this, what about making the products more sustainable? And who actually has the final say? Europe believes in producer responsibility There are currently several policy files being processed in Europe in which EPR plays a role. Firstly, the Packaging and Packaging Waste Regulation (PPWR): this discusses, among other things, the investments that producer responsibility organisations (PROs) should or should not make in, for example, reuse systems. It also looks at the mandatory eco-modulation (fee modulation based on sustainability criteria) for packaging. In addition, the Waste Framework Directive (WFD) is being revised. This 'Waste Framework Directive' determines, among other things, the waste hierarchy and the rules of the game for EPR systems and the corresponding PROs. An influential file, therefore. Part of the current revision is the mandatory introduction of EPR systems for textiles. The current version of the WFD already stipulates that member states must collect textiles separately from 2025. Now, therefore, producer responsibility is being added for textiles. No optimal EPR without system change One thing is clear: EPR is here to stay. Yet we have noted more than once (such as here and here ) that many things go wrong within EPR systems, much of which can be traced back to poor governance. The role of the government is too limited, many stakeholders feel sidelined, and enforcement is poor. The message that EPR is not functioning optimally has also reached the Dutch government. After State Secretary Heijnen presented her vision for EPR to the House of Representatives in April 2022, several motions were submitted and adopted. In response to this, the Ministry of I&W decided to start a process to come up with improvement proposals. These were published in October this year. In collaboration with Minderoo, Recycling Netwerk also made an analysis of the functioning of EPR systems. The results of this are included in a position paper published in November. How do we make EPR future-proof? But what is in both proposals? Below we look at the differences and similarities, in order to answer the question of how we can improve EPR in the future. The Dutch improvement plans: more circularity and cooperation The EPR improvement proposals focus on two main themes: better involving municipalities and building in more circularity. This is because current EPR systems are primarily successful in financing the collection and recycling of products when they become waste. But there is still room for improvement in both design and implementation. Clarification of the role of municipalities: establishing and funding a collection system is legally the responsibility of the producer. However, municipalities also have a legal duty of care, making them responsible for the correct collection of household waste. Producers often make use of the (existing) collection structure of the municipalities, making it unclear where the responsibility of both parties begins and ends. This leads to undesirable situations. The national government does not currently foresee a task for itself in this issue, but proposes to better anchor the legal role of municipalities in EPR legislation. Standardisation of collection systems: the many different collection systems lead to discussions about fees, cause lack of clarity for citizens and mixed compositions of waste streams. Therefore, the State Secretary proposes to harmonise the systems. This is currently being explored together with the municipalities. Requirements for producer responsibility organisations: although rules have been established that PROs must comply with, practice shows that this collective implementation of EPR leads to an undesirable concentration of power within these organisations. The Ministry therefore wants to focus on more transparency, more complete reporting, more fee modulation, improving cooperation in the chain, and aligning EPRs with competition rules. Circularity: currently, fee modulation (eco-modulation) is by no means applied everywhere. Where it is, it is mainly used to reduce waste management costs, instead of steering towards sustainability. Therefore, the State Secretary wants to explore how targets for reuse, repair, prevention and recycled materials, among others, can be included in the different

Packaging, electronic devices, car tyres, batteries, textiles: there are many products that we as consumers deal with in daily life to which 'extended producer responsibility' (EPR) applies. And in the (near) future, this will only apply to more product groups, such as shoes and nappies. Yet there is a lot to criticise about the system. Although it often ensures better collection and covers the costs of this, what about making the products more sustainable? And who actually has the final say?

Europe believes in producer responsibility

There are currently several policy files being processed in Europe in which EPR plays a role. Firstly, the Packaging and Packaging Waste Regulation (PPWR): this discusses, among other things, the investments that producer responsibility organisations (PROs) should or should not make in, for example, reuse systems. It also looks at the mandatory eco-modulation (fee modulation based on sustainability criteria) for packaging.

In addition, the Waste Framework Directive (WFD) is being revised. This 'Waste Framework Directive' determines, among other things, the waste hierarchy and the rules of the game for EPR systems and the corresponding PROs. An influential file, therefore. Part of the current revision is the mandatory introduction of EPR systems for textiles. The current version of the WFD already stipulates that member states must collect textiles separately from 2025. Now, therefore, producer responsibility is being added for textiles.

No optimal EPR without system change

One thing is clear: EPR is here to stay. Yet we have noted more than once (such as here and here) that many things go wrong within EPR systems, much of which can be traced back to poor governance. The role of the government is too limited, many stakeholders feel sidelined, and enforcement is poor. The message that EPR is not functioning optimally has also reached the Dutch government. After State Secretary Heijnen presented her vision for EPR to the House of Representatives in April 2022, several motions were submitted and adopted. In response to this, the Ministry of I&W decided to start a process to come up with improvement proposals. These were published in October this year.

In collaboration with Minderoo, Recycling Netwerk also made an analysis of the functioning of EPR systems. The results of this are included in a position paper published in November.

How do we make EPR future-proof?

But what is in both proposals? Below we look at the differences and similarities, in order to answer the question of how we can improve EPR in the future.

The Dutch improvement plans: more circularity and cooperation

The EPR improvement proposals focus on two main themes: better involving municipalities and building in more circularity. This is because current EPR systems are primarily successful in financing the collection and recycling of products when they become waste. But there is still room for improvement in both design and implementation.

Clarification of the role of municipalities: establishing and funding a collection system is legally the responsibility of the producer. However, municipalities also have a legal duty of care, making them responsible for the correct collection of household waste. Producers often make use of the (existing) collection structure of the municipalities, making it unclear where the responsibility of both parties begins and ends. This leads to undesirable situations. The national government does not currently foresee a task for itself in this issue, but proposes to better anchor the legal role of municipalities in EPR legislation.

Standardisation of collection systems: the many different collection systems lead to discussions about fees, cause lack of clarity for citizens and mixed compositions of waste streams. Therefore, the State Secretary proposes to harmonise the systems. This is currently being explored together with the municipalities.

Requirements for producer responsibility organisations: although rules have been established that PROs must comply with, practice shows that this collective implementation of EPR leads to an undesirable concentration of power within these organisations. The Ministry therefore wants to focus on more transparency, more complete reporting, more fee modulation, improving cooperation in the chain, and aligning EPRs with rules for competition.

Circularity: currently, fee modulation (eco-modulation) is by no means applied everywhere. Where it is, it is mainly used to reduce waste management costs, instead of steering towards sustainability. Therefore, the State Secretary wants to explore how targets for reuse, repair, prevention and recycled materials, among others, can be included in the different EPR systems. We have seen that for textiles, for example, this is already included in the basis. In addition to introducing new targets, the Ministry is also looking at options to increase existing targets.

Enforceability: improving transparency and intensifying the reporting obligation should also lead to better enforceability.

Broadening producer responsibility: the introduction of EPR for litter shows that the responsibility of producers can go further than the collection and treatment of waste. The State Secretary is also looking at how she can make producers contribute to the costs of fractions of their products that are not collected separately and therefore end up in residual waste and are incinerated. This can provide an extra incentive for the correct collection of products.

The future of EPR according to Minderoo & RNB

Recycling Netwerk, together with Minderoo, made its own analysis of the functioning of EPR systems. Although practical experience in the Netherlands provides valuable information, the analysis focuses more broadly on what we see in Europe. Based on this, we make concrete, ambitious policy recommendations to improve the EPR instrument, and thereby increase the positive environmental impact. We briefly discuss each recommendation below:

Strengthen governance and improve transparency: To address the concentration of power within producer responsibility organisations (PROs), all stakeholders (including consumer organisations, environmental organisations and waste management companies) must be part of the governing body. In this way, we separate strategic responsibility from operational responsibility.

Redefine the mission of producer responsibility organisations to go beyond waste management. We call on EU legislators to ensure that PROs cover the full costs and thereby correctly apply the 'polluter pays' principle. Municipalities are currently not fully compensated for the collection and processing of products covered by EPR. Which means that municipalities – and thus the taxpayer – bear the costs.

Ensure harmonised eco-modulation. Eco-modulation (differentiation in waste management fees based on, for example, materials used or the degree of recyclability) has an important role to play in steering towards sustainability of products. We must ensure a harmonised fee structure in accordance with the principles of the waste hierarchy, prioritising prevention, reusability and recyclability and avoiding undesired side effects as much as possible.

Tackle 'free riding' (especially in e-commerce). It is crucial that EU legislators ensure a level playing field, also for imported goods sold online. Online platforms must ensure that the merchants they host comply with EPR rules. Enforcement for non-EU retailers selling directly to EU consumers must be increased, with the possibility of banning their products from the European market if they do not comply.

Recognise mandatory deposit return systems (DRS) as part of EPR policy: DRS has proven to be effective in increasing collection rates and reducing litter. We therefore believe that DRS is a crucial tool for well-functioning EPR schemes. It is also a stepping stone to future reuse systems.

Combine the potential of EPR with other economic policy measures: EPR alone is not enough for the transition to a circular economy. Fiscal instruments, such as lower VAT rates on products made from recycled materials and higher taxes on virgin raw materials, can also reduce the demand for raw materials.

Conclusion: which path are we taking?

In many areas, both analyses seem to have the same goal in mind: improving producer responsibility so that it becomes a fairer instrument that achieves greater environmental benefits. We are pleased that the Dutch government recognises that producer responsibility organisations currently hold a lot of power, at the expense of other stakeholders and the effectiveness of the policy.

There also seems to be an awareness that leaving sustainability entirely to the business community is not by definition effective. Indeed, due to financial interests, reducing costs is often preferred over making products more sustainable. We therefore hope that the Dutch government will start working on clear guidance towards real circularity, putting an end to incremental targets that are difficult to enforce.

Unfortunately, the government's role in terms of the governance structure remains limited. Governance is mainly viewed by the State Secretary from the perspective of disputes. In doing so, a potential escalation role for the government itself is foreseen. However, governance is not just about a solution for incidents, but precisely about the way in which policy is drawn up and implemented. The governance issues within EPR are structural and will therefore not be solved by setting up an escalation level. We hope that this holistic way of looking at governance will be included in the revision of EPR. Setting up an escalation option is useful, but insufficient. The government should not take back responsibility, but it must take back control.