Looming EPR Legislation Means High Compliance Costs. Here’s What Companies Need to Consider to Stay Ahead

Extended Producer Responsibility (EPR) for packaging has landed in the US and is likely to cover all of the states by the end of this decade, catalyzed by the Global Plastics Treaty. The cost of using virgin plastic is likely to double in the near future, and carbon and import duties are quickly coming down the pipeline as well. Companies can potentially expect compliance costs in the hundreds to thousands of dollars per ton of packaging if they continue to use virgin plastic.?

First, let’s briefly dive into the current state of EPR legislation.

An Intro to the EPR Landscape

Extended Producer Responsibility (EPR) legislation essentially holds producers liable for the lifecycle of their products, becoming a critical policy instrument to help address plastic waste.?

Even though EPR was introduced over three decades ago, the landscape of EPR schemes across the globe and in the US lacks standardization. This fragmented legislation leads many producers to wonder what exactly they need to do to avoid hefty compliance costs.?

Currently, over 70 countries have some form of plastic EPR legislation in place or under development globally, including 26 of the 28 EU member states. In the US, to date, four states (Maine, Oregon, Colorado and California) have adopted EPR laws for packaging while an additional 11 states proposed EPR legislation in 2023, including three states (New Jersey, Washington, and Connecticut) which have mandated minimum post-consumer resin content requirements for packaging.?

The Global Plastics Treaty, supported by 175 nations, slated to be adopted in 2025, is expected to mandate establishing EPR systems, making producers and importers accountable and subject to fines for producing plastic pollution across international supply chains.

2025 is around the corner; companies need to be ready.

What’s Next? Looking to the EU and Eco-Modulation

While each state is in the process of developing its own scheme, with fee levels and structure still to be defined, similarities are emerging across schemes, EU regulation serves as a bellwether EPR scheme in the US, where laws are expected to be implemented as early as 2025.??

Manufacturers can expect to see aggressive targets. The most ambitious targets set to date are for single-use plastic packaging in California, with recycling rates of 65% by 2032, post-consumer recycled (PCR) content requirement of 50% by 2030, and source reduction rate of 25% by 2032.?

All four states will use eco-modulation to establish fee structures. Under an eco-modulation system, for example, hard-to-recycle materials and hazardous substances will be penalized with higher fees, while fees will be reduced where recycled content is used.

Producers would be smart to look ahead and consider eco-modulation impacts. However, the lack of awareness and integration of lifecycle impact consideration in packaging R&D and procurement departments is a significant barrier to adopting sustainable strategies. Companies that use PCR material and make more environmentally friendly choices will see lower fees.

Looking Ahead?

Manufacturers need to get ahead of the game to prepare for and minimize the financial impact of EPR legislation.

Moving to post-consumer resin now can literally save millions of dollars in fully loaded material costs, not to mention improve the environmental and health impacts associated with packaging waste. While states move ahead on specifics of their EPR schemes, producers can prepare for implementation by making the following no-regret moves:

1. Understand their current packaging portfolio and gather data on the material used
2. Assess opportunities to improve the packaging portfolio, by eliminating hard-to-recycle materials, reducing packaging units and weight, and replacing virgin plastics with recycled content
3. Work with stakeholders along the value chain to reduce complexity, secure recycled materials, and reduce future cost of compliance?

Producers moving toward better material and design choices stand much to gain, not only by ensuring compliance when EPR schemes come into effect but also by reducing compliance costs, negative environmental and health impacts. Furthermore, consumers want companies to make these changes and will reward eco-friendly brands by buying their products.?

With so much at stake, there is no time to lose.

Stay tuned for our next EPR installment and read our blog Plastic legislative landscape – EPR schemes in the U.S. to go into more detail.