Extended Producer Responsibility: A Primer

By Pat Franklin
Executive Director
Container Recycling Institute

Presented on November 18, 1997, at the Take it Back! '97 Producer Responsibility Forum

"The responsibility, that the waste generated during the production processes could be taken care of in a proper way, from an environmental and resource-saving point of view, should primarily be of the manufacturer. Before the manufacturing of a product is commenced it should be known how the waste which is a result of the production process should be treated, as well as how the product should be taken care of when discarded.

These words, which appeared in an official statement by the Swedish Government in 1975, ushered in the age of Extended Producer Responsibility (EPR). While Germany's Ordinance on the Avoidance of Packaging Waste (Verpackungsverordung) introduced in 1991 is certainly the most well-known EPR mandate, two pieces of Swedish legislation and several other European laws and regulations predated the German Packaging Ordinance.

The first of Sweden EPR laws was a recycling mandate for aluminum cans which was enacted after PLM announced plans to build a can manufacturing plant in Sweden in 1979. The National Board for Technical Development announced that using aluminum cans for single-serve beer and soft drinks would be wastefulness of the first order unless there was a system for reclaiming the cans. In 1982 the Swedish government threatened to ban the use of aluminum beverage cans for beer and soft drinks unless they achieved a recycling rate of 75 percent by 1985.

After trying several collection schemes, including curbside recycling programs, the aluminum industry determined that the only way they could achieve a 75 percent rate was through a deposit/refund system. The aluminum can recycling rate was 63 percent when PLM introduced the voluntary system in March 1984. By 1987 the recycling rate had increased to 75 percent, and in 1995 the rate was 92 percent, 30 percentage points higher than the U.S. rate. (Fig. 1)

Figure 1

The idea of EPR is much older than any of the European laws. The deposit refund system for refillable glass beer and soft drink bottles, adopted by the beverage industry in the U.S. nearly 100 years ago, is perhaps the earliest form of EPR system.

WHAT IS EPR?

While there are many definitions of EPR, it is generally described as a pollution prevention policy that focuses on product systems rather than production facilities. Thus responsibility for product is broadened beyond the emissions and effluents generated by the extraction or manufacturing processes to the management of the product once it is discarded. EPR is based on the premise that the primary responsibility for waste generated during the production process (including extraction of raw materials) and after the product is discarded, is that of the producer of the product.

WHAT IS THE GOAL OF EPR?

The ultimate goal of EPR is sustainable development through environmentally responsible product development and product recovery. The theory is that by making producers pay for the waste (wasted resources AND post consumer waste) and pollution they create, they will have an incentive to incorporate a broader range of environmental considerations into both their product design and choice of materials, thereby reducing consumption of resources at the various stages of the life-cycle of a product or package. Cleaner production and waste prevention are the goals.

WHAT ARE THE VARIOUS TYPES OF PRODUCER RESPONSIBILITY?

Thomas Lindhquist, sometimes referred to as the father of EPR, has identified five basic types of producer responsibility:

• Liability - producer is responsible for environmental damage caused by the product in question
• Economic responsibility - producer covers all or part of costs for collection, recycling or final disposal of products he manufacturers, and may charge a special fee
• Physical responsibility - manufacturer is involved in physical management of the products or of the effect of the products. This can range from merely developing the necessary technology, to managing the total "take back" system for collecting or disposing of products he has manufactured for which he may charge a fee
• Ownership - producers assumes both physical and economic responsibility
• Informative responsibility - producer is responsible for providing information on the product or its effects at various stages of its life cycle

It is important to note that take-back schemes generally combine both economic and physical responsibility.

HOW ARE THESE RESPONSIBILITIES IMPLEMENTED?

There are three categories of policy instruments that can be initiated by government to encourage product responsibility.

Regulatory Instruments: mandatory take-back; minimum recycled content standards; secondary materials utilization rate requirements; rates and dates; energy-efficiency standards; disposal bans and restrictions; materials bans and restrictions; and product bans and restrictions.

Economic Instruments: advance disposal fees; virgin materials taxes; removing subsidies for virgin materials; deposit/refund systems; and environmentally preferable products procurement.

Informative Instruments: seal-of-approval types of environmental labeling (Green Seal, Blue Angel); environmental information labeling (energy efficiency, CFC use, recycled content); product hazard warnings; product durability labeling.

WHAT EPR INSTRUMENTS ARE IN USE TODAY?

A number of instruments are currently being employed to shift responsibility for product and packaging waste from government and taxpayers to producers and consumers. Four policy instruments and examples of each are as follows:

• Deposit refund systems: Deposit refund systems can encourage reuse, but at the very least they provide a monetary incentive to the consumer to return the product or package, and an infrastructure for its collection and recycling. Ten states and one US city, most Canadian provinces and many European nations have enacted beverage container deposit laws. Deposit refund systems also exist for batteries and some hazardous wastes.
• Product charges: Product charges influence the choice of materials used. An eco-tax levied in Belgium reduced consumption of PVC.
• Advanced disposal fees: These fees are designed to influence the choice of materials used, and can generate substantial funds which may or may not be used by government for environmental projects. They are sometimes refunded to consumers, but generally the consumer is unaware of the fee. Austria has implemented such a fee for refrigerators and refundable disposal fees are required on automobiles in Sweden.
• Voluntary agreements tied to mandatory regulations: These agreements are used to phase out undesirable materials, encourage design for recylability or ensure high rates of reuse or recycling. The voluntary deposit system for aluminum cans in Sweden enables the aluminum industry to achieve the government mandated recycling rate, but the stick that drives the deposit system, is the promise of a ban if the rates fall below the recycling rate set by government.

WHY IS NORTH AMERICA SLOW TO ADOPT EPR?

Reid Lifset of Yale University School of Forestry and Environmental Studies, cites several factors that have blocked EPR policies in North America: -- Absence of the precautionary principle as a foundation for environmental policy: Northern European environmental policy is founded on the premise that strategies for environmental protection should err on the side of caution, while American environmental policy analysis emphasizes the weighing of costs and benefits.

• Increasing use of cost-benefit criteria for government regulation: EPR is far more difficult to measure in cost-benefit terms than other environmental policies, since high levels of waste recovery, or product redesign are the outcomes sought. While these outcomes may be achieved, they may not necessarily be related to the implementation of a particular law.
• Mobilization of opposition groups: The materials, manufacturing, retail and distribution industries have recognized that EPR could shift the burden of achieving many environmental goals to them, and not surprisingly, have invested money and effort in opposing such policies.
• Political climate: Recent elections have brought a new wave of conservatives to the U.S. Congress, and many legislatures and governorships. The conservative climate does not foster environmental regulation in general, and EPR is perceived as particularly burdensome by those sympathetic to concerns of the business community.

Lifset contends that many elected officials, having made commitments to reduce taxes and privatize government, may view EPR as an attractive means of fulfilling promises while reducing government involvement and costs. He also notes that there is continued public support for environmental protection.

"The future of EPR in the U.S.", says Lifset, "will depend on the political fate of conservative attempts to limit environmental regulation - and of the reaction to those initiatives."

WHY SHOULD PRODUCERS BE RESPONSIBLE FOR THEIR PRODUCTS?

It is the manufacturer who develops and designs the product or package, and it is the manufacturer who chooses the materials for that product or package. Therefore, the most efficient and effective point at which to reduce waste and encourage reuse, reduction and recycling, it is at the product development stage. It is at that point in the product's life cycle that decisions can be made to minimize the environmental impact of the product. Thus the manufacturer is the logical entity to assume responsibility for incorporating environmental considerations into the product.

Under our current system of residential waste management, government, i.e., taxpayers, foot the bill for disposal and recycling. In the words of one disgruntled taxpayer, "Producers reap the reward for selling their products and consumers get stuck with the bill. Then our tax dollars pay for disposal and recycling programs to get rid of it" EPR shifts the costs of managing post consumer products and packaging from the public to the private sector.

Internalizing the external costs through a combination of economic and physical responsibility provides an incentive to manufacturers to design products that have minimal environmental impact throughout their lifecycle, and maximum reuse, recycling and reduction opportunities. This can only be achieved if internalization of the externalities is accompanied by an obligation to reuse or recycle.

CAN THE WORLD'S MANUFACTURERS SURVIVE IN A SOCIETY THAT VALUES ITS RESOURCES?

While some manufacturers see clean production and waste minimization as a disadvantage, others see it as a business opportunity. Each individual producer will make that decision. In Australia, for example, the Coca-Cola company made the decision not long ago, to use recycled content in its PET soda bottles, closing the recycling loop. They have also opted to make their own bottles, thereby reducing the costs associated with the technology of manufacturing recycled PET bottles. Unfortunately, Coke (and Pepsi) have refused to take this step towards environmental stewardship in the U.S.

Not everyone would agree that waste reduction and conservation of resources are goals worth achieving. The mantra of the anti-recyclers is that "there is also no shortage of landfill space" and "there is no present or prospective shortage of raw materials, so there is no need to conserve them". This philosophy is short sighted and irresponsible. It is a philosophy that supports AND even advocates wasting.

What responsible CEO would run his or her corporation based on such a principle? A CEO worth his or her salt exercises careful use of the resources put in his or her trust. Conservation of human, physical and economic resources is a high priority for any successful corporation, small business or government agency that wants to sustain itself. In the words of Peter Coors, -- "All waste is lost profit."

Sustainablility is what those who support producer responsibility and oppose wasting want to achieve. Sustainability is both a goal and a process. Developing and designing products that minimize total environmental impact is one way of achieving sustainability. All too often, the pollution costs, resource and energy consumption costs, and disposal costs are subsidized by government, and are therefore, not reflected in the price of a product. EPR corrects that imbalance by internalizing these externalities, and in so doing, shifts these costs from government and taxpayers to producers and consumers.

Protection and conservation of our natural world is a conservative idea. We live in a natural world which has an inherent value. What is the value of nature? Recently, a group of economists and scientists attempted to put a price tag on nature. They calculated the value of ecosystem functions and services and came up with a price tag ranging from $16 to $54 trillion -- a staggering figure, particularly when compared to the world GNP of $18 trillion.

HERE ARE A FEW QUESTIONS FOR THE ANTI-RECYCLERS AND WASTE PROMOTERS, AND OTHERS WHO OPPOSE MAKING MANUFACTURERS RESPONSIBLE FOR THEIR WASTE.

• Do you see an intrinsic value in the natural world, and if so, do you think it should be respected and conserved?
• Do you as an individual, or as part of a larger entity, feel a fiduciary responsibility to preserve our world's natural resources?
• Can we afford to waste our valuable resources?

As Dr. R. Fenton, an economist at the University of Winnipeg, points out, "as human beings with unique powers of reason, we share responsibility for exercising stewardship - fiduciary responsibility - over the biosphere and its systems. It is time for industry to step up to the bat and assume its responsibility for the environmental impact of its products and packaging."

NOTE: In this paper, 'waste' is used in the broad sense of the word. Waste is more than what we throw away, it is the material resources squandered, the environmental degradation and the lost opportunity costs of unspoiled land, air and water resources.

REFERENCES:

1. The International Institute for Industrial Environmental Economics at Lund University, "Product Research - Extended Producer Responsibility as a Strategy to Promote Cleaner Production", Sweden, 1997.
2. "Successful Deposit System for Aluminum Cans," ENVIRO, No. 12, November 1991.
3. Lindhquist, Thomas, Extended Producer Responsibility as a Strategy to Promote Cleaner Production, Proceedings of an invitational expert seminar, Sweden, May 1992.
4. Op. cit, "Extended Producer Responsibility as a Strategy to Promote Cleaner Production."
5. Greenpeace Briefing, Strategies to Promote Clean Production - Extended Producer Responsibility, 1995.
6. Lifset, Reid, Extending Producer Responsibility in North America: Progress, Pitfalls, and Prospects in the Mid-1990s, Proceedings of the symposium on Extended Producer Responsibility, Washington, DC, November 1994.
7. Ibid.
8. Fenton, Dr. R., University of Winnipeg Economics What is Sustainability?" Praire R's, 1997.