Embracing Circularity: EPR Clears the Path for a Sustainable UAE

The Extended Producer Responsibility (EPR) policy was popularized more than three decades ago by Swedish professor Thomas Lindhqvist , who placed the onus on producers for the end-of-life management of the products they put into the market. In 1991, Germany became the first country to adopt EPR as a waste management policy. Soon, Austria, Belgium and France followed suit. The policy then gained acceptance across the European Union and eventually across the globe. The idea has evolved over the years, with governments adding specifics and targets as per their domestic requirements.?

EPR has since emerged as an effective policy framework to facilitate a smooth transition to a circular economy. The adoption has led to multiple environmental benefits – from waste minimisation in landfills, resource efficiency to responsible sourcing of materials. Many countries, including the UAE which is soon to roll out the policy, are considering it a potential tool to address pollution and recycling challenges.?

What is Extended Producer Responsibility ??

The United Nations Environment Program (UNEP) defines EPR as a concept where producers of products bear a significant degree of responsibility for the environmental impacts of their product throughout its life-cycle. The umbrella term ‘Producers’ typically refers to manufacturers, importers, distributors, wholesalers and retailers. For added context, you can find the OECD definition of EPR here that we touched on last year . Some countries have exempted small businesses and charities from EPR duties. The policy could apply to a broad range of materials including packaging, plastic, paper, electrical and electronic equipment (EEE), batteries, tyres etc and individual requirements are defined in the legislation of the country.?

EPR systems are different in each country but have common basic principles. They are to :?

1. reduce waste reaching the landfills
2. improve product design and packaging for better recyclability or reusability
3. achieve material efficiency
4. reduce dependence on virgin materials
5. alleviate the cost burden on the governments

How EPR actually works: A Compact Overview

Producers are required to ensure that the products and their packaging get collected, processed, recycled and put back into the loop. They take financial and operational responsibility. Prior to the introduction of EPR, these costs were partly or wholly borne by local governments and municipalities.

Typically, the producers work with a system operator called the Producer Responsibility Organisation (PRO) to carry out their EPR requirements and the legal obligations attached to the policy. The PROs collect and manage EPR fees and should be exclusively used to fund waste management related activities.? The PRO can be operated by the producers themselves, by a third party they contracted, by a hand-over to the government or a mix. Some operators work with a single company, while others work for multiple companies within an industry.??

EPR system requires transparent data management systems for obligated companies and approved waste management operators (collectors, sorts, recyclers). The EPR framework often requires companies to submit a report on the collection and recycling data to a government agency and acquire compliance certification.? And the PROs handle these paperworks.?

Global Perspectives: EPR in Action

The Organisation for Economic Co-operation and Development (OECD) points out, “While other policy instruments tend to target a single point in the chain, EPR seeks to integrate signals related to the environmental characteristics of products and production processes throughout the product chain.”??

Although EPR initially was intended to deal with the post-consumer stage of a product’s life cycle, over the years the policy lent itself to focus on the upstream impacts as well. EPR is one way to fight planned obsolescence. The framework provides incentives for manufacturers to produce resource-efficient and low-impact products. It has led to environmental considerations in the designing of products; selection of materials for the products; and responsible sourcing of raw materials. The bonus benefit is its impact on the life cycle emission. It also generates a flow of finance to expand collection, sorting and recycling infrastructure.

Many recent legislative proposals broaden the scope of cost coverage to encompass outreach and educational initiatives, and the advancement of end-market opportunities for recycled materials. Some policies extend to include collection rate targets, carbon footprint declaration, minimum content of recycled materials, and performance and durability requirements. Emerging EPR regulations are complemented by other regulatory measures such as Deposit Refund System, landfill surcharges, mandatory recycling and material bans.

Success factors?

Not all countries that have adopted EPR have seen the desired result. The program's success depends on several factors. Firstly, developing a comprehensive and effective legislative framework can be challenging. Even when designed and implemented well, various problems can occur with EPR. Inadequate waste management infrastructure poses a significant challenge. The fees paid by producers often fall short of covering the complete expenses associated with waste management. Lack of transparency in the functioning of EPR schemes, and insufficient monitoring mechanisms are the other obstacles. Striking the right balance between industry interests, environmental concerns, and economic feasibility is crucial to ensure compliance. Absence of awareness among the stakeholders prevents them from actively participating in the programmes.?

Who should pay for EPR?

The debate on cost allocation underlines EPR's complexity. At present, there is no single standard for EPR schemes, resulting in wide variation in practice and performance. It is yet to be announced which approach the UAE will adopt. The policy, when implemented, will evolve from time to time, adding another level of complexity for businesses - particularly those that have a global reach.

The three most most common EPR models are:

1. The "Full Producer Responsibility" Model:

• Producers bear the full cost of EPR: This implies manufacturers and importers cover all expenses for collection, sorting, recycling, and treatment of waste from their products, throughout their lifecycle.
• Advantages: Strong incentive for producers to design eco-friendly products, use recycled materials, and invest in innovative recycling technologies. Promotes increased recycling rates and reduced environmental impact.
• Disadvantages: Can be challenging for small and medium businesses (SMBs) with limited resources. May lead to higher product prices as costs are passed on to consumers.

2. The "Shared Responsibility" Model:

• Costs are shared between producers, consumers, and possibly government: Producers generally cover a significant portion, but consumers contribute through fees or deposits at purchase or disposal. Government might provide subsidies or support infrastructure development.
• Advantages: More balanced approach, potentially mitigating burden on smaller producers and consumers. Encourages consumer participation and awareness.
• Disadvantages: Determining fair cost allocation between stakeholders can be complex. Risk of free-riding by consumers if incentives are not well-designed.

3. The "Hybrid Model:

• Combines elements of both previous models: This allows for flexibility and tailoring based on specific product categories or sectors.
• Advantages: Offers adaptability and potential for innovative solutions.
• Disadvantages: Increased complexity in implementation and administration. Requires careful design and coordination to ensure fairness and effectiveness.

Additional Factors to Consider:

• Product categories and waste streams: Different products have different life cycles and waste management needs. The cost allocation model should be adapted accordingly.
• Existing infrastructure and logistics: Availability of waste management infrastructure and logistics capabilities influence feasibility and cost allocation.
• Public awareness and participation: Consumer understanding and engagement are crucial for the system's success. Cost allocation can be used to incentivize responsible behavior.
• Equity and social impact: Protecting vulnerable groups and ensuring the EPR system doesn't disproportionately burden specific economic sectors are essential considerations.

Ultimately, the most effective approach to cost allocation in EPR will involve a transparent and consultative process involving all stakeholders. It's important to analyze the specific context, consider different models and their trade-offs, and prioritize fairness, effectiveness, and environmental sustainability as guiding principles. MoCCaE UAE is leading efforts to develop a national framework in the UAE. A pilot EPR policy will be announced in the coming months.

EPR in the UAE: A Glimpse into the Future

Based on available information, a full UAE EPR policy will be introduced by 2026. Pilot of the policy will start by summer 2024. This is handled at the federal level under the leadership of the UAE ministry of Climate Change and environment (MOCCAE). We can speculate that Emirate will also do implementation and supervision at the federal level, and not. This supports the assumption that EPR in the UAE will be closer to the European model of shared responsibility with a central approach.

For Producers: Adapting to an EPR World

• Gain a holistic view of the EPR policies and identify approach to operation and commercial efficiency??
• Understand regulatory and legal implications for the different jurisdictions where you operate
• Train your staff to familiarize themselves with EPR changes?
• Ensure transparency in data gathering and compliance information?
• Work with local governments to support the introduction of EPR?
• Collaborate with stakeholders across the supply chain to ensure effective implementation??

Potential Benefits of EPR for your Business:

EPR can positively impact your business beyond compliance, including:

• Enhanced brand image and reputation as a sustainable company.
• Cost savings through reduced waste disposal fees and resource efficiency.
• Access to new markets and customer segments who value sustainability.
• Innovation opportunities in eco-design and resource recovery.

• Provide concrete examples of how your company can benefit from EPR, considering your specific products and waste streams.

Reverse Supply Chain for EPR Implementation in the UAE

Implementing EPR in the UAE presents exciting opportunities for a circular economy, but also brings potential challenges in the reverse supply chain. Here are some key areas to consider:

Infrastructure and Logistics:

• Sorting and processing facilities: sorting and processing diverse waste streams generated from EPR-covered products is costly and time intensive. Building and operating such facilities requires significant investment and planning.
• Collection systems: Legacy waste collection systems might not be suitable for handling diverse product types and components, requiring adaptations or investments in specialized collection infrastructure.?
• Reverse logistics network development: Establishing an efficient network for transporting collected waste back to designated processing facilities is crucial and potentially resource-intensive.

Consumer Awareness and Participation:

• Public understanding of EPR: Many consumers might not be familiar with EPR principles and their responsibilities within the system, impacting participation and effectiveness. Comprehensive public awareness campaigns are essential and will be necessary as PER is introduced.
• Return systems: Setting up accessible drop-off points or collection systems for different product types is crucial for encouraging consumer participation. This could involve collaboration with retailers, waste management companies, and community centers.
• Non-compliance and free-riding: Potential for consumers to discard EPR-covered products through traditional waste streams or informal channels could undermine the system's effectiveness and fairness. Effective enforcement mechanisms and compliance incentives will be needed.

Financial and Economic Considerations:

• Cost allocation and burden sharing: Determining fair and transparent cost allocation mechanisms for producers, consumers, and waste processing companies is crucial to ensure system sustainability.
• Investment needs and funding mechanisms: Significant upfront investments are required for infrastructure development, technology adoption, and operational costs within the reverse supply chain. Public-private partnerships, innovative financing models, and potential producer funding contributions should be explored.
• Impact on small and medium businesses (SMBs): EPR implementation could pose challenges for smaller companies with limited resources to follow regulations and manage waste streams effectively. Support mechanisms and tailored solutions are needed to ensure fairness and inclusivity.

Regulatory and Policy Framework:

• Evolving regulations and uncertainties: As the national EPR framework is under development, uncertainties regarding specific regulations, compliance requirements, and future changes will present challenges for businesses planning and adapting their operations at first. This will gradually fade as understanding and awareness increases.
• Coordination and collaboration: Effective collaboration between different stakeholders – producers, consumers, waste management companies, and government agencies – is essential for smooth implementation and efficient coordination within the reverse supply chain.
• Monitoring and evaluation: Robust monitoring and evaluation mechanisms will be needed to assess the effectiveness of the EPR system, identifying areas for improvement, and ensuring continuous optimization.

While these challenges will present hurdles, they will also represent opportunities for innovation and collaboration. Overcoming them will require a proactive approach from all stakeholders, including:

• Investing in efficient and sustainable reverse logistics infrastructure.
• Raising public awareness and promoting active consumer participation.
• Developing fair and transparent cost allocation mechanisms.
• Providing support and capacity building for SMEs.
• Establishing a stable and predictable regulatory framework.

Looking Ahead: How can Ehfaaz help you??

If you are already enjoying Ehfaaz solutions, you are ready. All our solutions are EPR compliant. Over the past 5 years, we have built and deployed the most complete circular economy ecosystem for our consumer packed goods partners in the UAE - from legal compliance, operations management, to numerous data collection and reporting. This is in addition to the most extensive portfolio of products made from materials that were destined for lanfills until we intervened.

If you are getting ready to be fully compliant, our team is well-equipped to guide you through the complex landscape of EPR. At Ehfaaz, we strongly advocate circularity principles and can help you understand your role in product lifecycle management. We closely work with advocacy and policymakers and would be glad to provide expertise on compliance to legal and regulatory requirements .?

Until then, let's keep the circular momentum going