What Do We Want From EPR?

Last year two states, Oregon and Maine, enacted extended producer responsibility (EPR) for packaging laws. By the time you read this, Hawaii may have joined them. Several other state legislatures are still considering EPR, while others took no action this year. 

Oregon and Maine took different approaches. Oregon designed its law for that state’s unique system of local franchises in which most residents directly pay their hauler for recycling services. Maine, however, is typical of most states. Local governments use a mixture of options to pay for recycling. These include taxes, fees or residents directly paying their hauler for recycling. Maine also gave its state government a good deal of control over the EPR program.

Oregon is implementing its law while Maine starts in July. As a result, we are unlikely to see an operating statewide program for three years or longer.

This delay is caused by the complexities involved in setting up this new system that will now be responsible for residential recycling. Producers must form a “producer responsibility organization” to represent them. It must figure out how it will operate, including producer fees, collection options, contracting with collectors, selecting processors, etc. Existing recycling contracts need to expire or be broken. New MRFs must be built. They won’t spring up overnight.

Watching the EPR debate in several states, including my home state of Maryland, I’ve wondered if we are asking too much from EPR. Witnesses testifying in favor of a packaging law all place the most emphasis on money for local recycling programs. But they also want more easily recyclable packaging, a higher recycling rate along with recycled content, reuse and other goals. That’s a lot.

Clearly, EPR is an effective way to pay for local recycling programs. Producers instead of taxpayers or customers will cough up the money. But can it meet the other goals?

The National Waste and Recycling Association recently released a study by  Eunomia Research Consulting which analyzed EPR’s impact on recycling, recycled content, design for recycling and market values of recyclables in Germany, France and Italy. This may be the most straightforward and thorough analysis done on EPR’s impact. The study showed EPR increased recycling but did not increase market values or the use of recycled content and had no impact on design for recycling. 

Higher recycling rates are no surprise. More and better statewide advertising and education, along with a standardized statewide system for which packages are collected and how (which implies either single stream or dual stream collection statewide) should lead to more recycling. This is especially likely in states with low recycling rates.

The lack of impact on market values should also be no surprise. Recyclables are commodities and like all commodities their price is subject to a wide variety of factors, most of which have nothing to do with recycling. If anything, more recyclables due to EPR will have a negative impact on markets by creating more supply than demand. 

That is why recycled content requirements are included. Their goal is to increase demand. Recycled content is common today in paper packaging. As a result, plastics are the main target. Yet setting achievable goals, considering product loss during recycling, competing non-packaging markets for recycled plastics and realistic recovery rates, is tricky. Markets don’t get better just because legislators tell them to.

What about design for recycling and the impact of the extra cost of EPR fees? Supporters argue those fees give packaging companies the financial incentive to lower their costs and make their packages more easily recyclable. Foes say they just raise prices. In the Maryland debate, supporters insisted the fee on an individual package is too small to raise a product’s price.  Yet how can a fee that small be an incentive to change packaging? You can’t have it both ways. You can’t insist the extra cost is too low to raise prices while insisting it is high enough to change package design. 

In addition, because EPR fees are weight-based, they give lightweight plastic and flexible packaging an inherent advantage over heavier paper and glass packages. lt should be no surprise the amount of plastic and flexible packaging has soared in Europe over the last two decades.  

As the political debate on how to pay for recycling continues, we need to focus on EPR’s strength of providing money for recycling. We need to accept that it won’t stabilize recycling markets or change packages. Done properly, it can raise recycling rates and stabilize programs.

Every Paradise, however, comes with a snake. These laws significantly change recycling. They need to be carefully written to ensure these new producer groups do not create new problems. After all, they allow for the establishment of a monopoly that will control all aspects of residential recycling from collection to processing to selling recyclables. They also give antitrust protection to this monopoly.

States will find themselves challenged to prevent the abuse of this power. Producers will naturally want to limit their costs and maximize their control. Local governments will find themselves cashing a check with little, if any, control over recycling in their community. This will be a hard conundrum to resolve. In response, many bills create Advisory Panels, yet if those panels only have the power to advise, but not to consent, the producer group doesn’t need to pay attention to them.

Until we address these issues, states should proceed cautiously. We can’t afford to make bigger problems than those we are trying to resolve.