Less waste and more resources: how extended producer responsibility works within the context of a circular economy

The situation with Ukraine’s waste is critical. Lots of waste is dumped into landfills, with some sites already filled with household waste to 80-95% capacity. However, there is a way out of this situation: waste recycling. To this end, governments guided by circular economy principles implement a strategy of extended producer responsibility (EPR). This article explains the EPR concept, how it works in the EU, and why it should be implemented in Ukraine.

What is a circular economy or circularity?

Circular economy (circularity) is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products as long as possible. The product life cycle is extended in a circular economy, and waste is minimized.

The World Economic Forum defines a circular economy as restorative or regenerative by design.

The circular economy is based on three principles. The first is to reduce the amount of waste or eliminate it altogether. Products must be durable and optimized for recycling and reuse to achieve this. They must be made from high-quality materials. 

Second, products and materials must be continually used in the ecosystem. Biological materials such as food or clothing made of natural fibers return to the ecosystem naturally through decomposition. Artificial materials such as plastic are recovered in the eco-chains through reuse, repair, or recycling (e.g. “refurbishing” your old smartphone instead of buying a new one).

Third, the energy used in a circular economy must be renewable. This reduces dependence on finite resources (e.g. oil) and enhances the system’s sustainability.

Overall, a circular economy can contribute to economic prosperity. It reduces the cost of human and energy resources in goods production. Carbon emissions throughout the supply chain are also reduced. Circularity also makes the economy more stable in the long run.

Despite circularity’s many advantages, it also carries some risks. Among them is the uneven distribution of benefits across countries. After all, a circular economy requires an enormous investment in developing new technologies and substantial public awareness, something that many countries cannot boast of. In addition, it is more profitable and convenient for many companies to work “as always.” Next, we will look at other advanced countries’ waste recycling experiences.

How is solid waste recycled in the EU?

Solid waste is nearly the main object of a circular economy. This category encompasses various types of packaging, paper and cardboard, wood, glass, metal, plastic, textiles, broken or obsolete household appliances, and agricultural and municipal solid food waste.

EU Directive 2008/98 on waste determines the desirable waste hierarchy. The first level is waste prevention, which is the best for the country, region, company, or consumer. Then comes preparation for reuse activities. The next levels are the actual waste recycling or recovery. The last and least desirable option is to dump waste into landfills. It is usually only used when nothing else can be done. In addition, there is waste incineration. In a circular economy, energy from incineration must be used to advantage, e.g. to heat buildings. Otherwise, it will be the same as waste burial. 

Waste recycling is particularly important as it saves resources. Therefore, if you make a regular newspaper from waste paper, you will use nearly ten times less wood, two times less water, and five times less electricity than if you make a new one. And by recycling glass, we use ten times less water, two times less electricity, and significantly reduce the amount of wastewater. It is advantageous to recycle metal (i.e. using scrap metal) as this saves a lot of resources.

The problem with plastic is that much of it is produced, but hardly any is recycled. According to the World Economic Forum and Ellen MacArthur Foundation, up to 14% of the 78 million tons of plastic produced annually are collected for recycling, but only up to 2% end up getting recycled. However, savings resulting from plastic recycling are considerable. We save at least five times as much gas and twice as much electricity, while also saving oil, water, and other resources.

According to CEWEP, Germany’s recycling performance is the best. 67% of household trash is recycled there. Slovenia recycles as much as 59% and Switzerland 53%. All EU member states are currently seeking to increase their share of recycled waste. In Ukraine, 94% (!) of the waste is buried. 

Economic incentives as the basis for waste management

One of the economic incentives for waste recycling and circularity in general is the sumptuary tax. It increases the price of harmful products, thus making environmentally friendly products more competitive.

Other incentives include green public procurement (GPP). The European Commission defines green public procurement as a process, whereby public authorities seek to procure goods, services, and works with a reduced environmental impact throughout their life cycle when compared to goods, services, and works with the same primary function that would otherwise be procured. In this way, the state can support producers of eco-friendly products.

Public procurement in the EU amounts to around 14% of GDP (EUR 2 trillion per year). In Ukraine, this figure reaches about 13% of GDP. Therefore, public procurement can play an important role in achieving environmental goals.

In addition to the incentives, there are fines. In most EU countries, waste disposal fees are very high. For instance, the waste disposal fee is about EUR 160 per ton in Sweden, EUR 140 in Germany, and EUR 120 in Italy. If you send garbage to recycling, you do not need to pay the fee.

By using such economic initiatives, governments encourage waste recycling.

What is extended producer responsibility (EPR)?

Usually, producers are responsible for their products’ safety, compliance with quality standards, and paying taxes. Extended producer responsibility (РВВ) means that producers handle recycling or disposal of the waste from their products after consumption.

As a rule, the EPR strategy is adopted by governments, which makes it binding in the countries concerned. The EPR strategy has several main goals. First, it promotes the eco-design of products. That is, the manufacturers design products that are easier to dispose of, reuse, and recycle. As a result, the products’ impact on the environment diminishes, stimulating waste prevention.

Second, the producers sticking to EPR principles encourage consumers to sort out waste to facilitate recycling. Third, the EPR policy aims not just to dispose of waste but to create new methods of recycling and spread them in society. EPR also raises people’s level of education and awareness on environmental issues.

The basic principle of the EPR policy is the same in most countries. The producers or importers pay a fee for disposing of their goods’ packaging to the state or an authorized EPR operator. There are special producer responsibility organizations (PROs) in most EU countries. Such organizations collect funds from packaged goods manufacturers and use them to recycle and dispose of waste. By the way, a similar organization called Ukrecoresursy also operated in Ukraine. The enterprise was established in 2001 and liquidated in 2015 because of engaging in corruption schemes in recycling waste. Ukrecoresursy would collect funds from companies but fail to dispose of any waste. Because of this, many business associations filed complaints against the organization.

Exceptions to the EPR policy are some types of packaging materials used to make industrial or shipping packages. Their suppliers immediately take them back after handing their products over to consumers.

In the European Union, the EPR strategy encompasses recycling batteries, accumulators, and vehicles. The packaging production system also operates based on EPR principles. In EU member states, producers must ensure that systems are set up to collect and recycle packaging waste. EU manufacturers are responsible for disposing of tires, waste oil, paper and cardboard, and construction waste. EPR covers farm plastics, medicines, medical waste, plastic bags, photo-chemicals and chemicals, pesticides, lamps, light bulbs, and fittings in some EU countries.

Germany and Sweden were among the first countries to adopt extended producer responsibility policies in the 1990s. As of now, 26 of the 27 EU member states have adopted the EPR strategy. Poland is the one country that has not yet fully embraced the strategy. However, it is also gradually implementing EPR because EU law requires all member states to fully implement this policy.

How does EPR work in EU countries?

Manufacturers can independently collect and recycle waste left over from their products (so-called end-of-life management). However, manufacturers in Europe often delegate this function to specific organizations that do it professionally for many manufacturers.

These organizations are called Producer Responsibility Organizations (PROs).

One of the PROs’ tasks is establishing a monitoring system for packaging quantities placed on the market and collected and recycled later.

PROs are funded by fees from producers or industry associations’ membership fees. Governments must ensure that only organizations with secure finances can receive a license.

PROs cooperate with local authorities. PROs have financial and organizational responsibility for recycling waste in some EU countries. However, they mainly have organizational and only partly financial responsibility in others.

Here are some examples of countries that have taken a responsible approach to solve the problem of waste.

Germany 

Until 1990, waste was a severe issue for Germany. Many dump sites reached capacity, and incinerator plants were not enough to recycle the country’s household trash. Packaging waste accounted for about half of the waste at landfills.

To address this issue, the government approved the Packaging Ordinance in 1991. It was the world’s first piece of legislation to incorporate the EPR concept. According to the Ordinance, manufacturers and distributors of products had to take back, reuse, or recycle their packaging. Anyone who did not return the packaging to their store or failed to recycle it had to pay a disposal fee. This fee was included in the product’s price, reducing its competitiveness.

German law enshrines EPR policy goals. Germany initially focused on making waste sorting mandatory. Later, after achieving this goal, the Germans started to focus more on recycling and disposal.

The last amendments to the EPR policy were made in Germany in January 2019, after the new Packaging Act (Verpackungsgesetz) came into force. Until then, there had been only one non-profit PRO in Germany. In contrast, the country now has several competing commercial PROs. PROs are funded by obliged companies who have joined a central register, have a special Green Dot license, and pay fees to a PRO of their choice. The fees paid by manufacturers and importers depend on the amount of packaging they have “brought” onto the German market.

Germany currently ranks second in waste recycling after Austria. Germany recycles 62% of waste (Austria 63%), with the share of recycling plastic being slightly below 50%. All costs associated with collecting, sorting out, and processing packaging waste are included in the fees paid by the companies. PROs manage these fees and contract with waste management companies and municipalities.

Another significant change in Germany in early 2000s was the deposit refund system for beverage packaging. This system has developed rapidly over the last two decades and is now part of the Packaging Act.

Czech Republic

The Czech Republic became the first Eastern European country to implement the EPR concept. Approximately 16% of all waste is recycled in the Czech Republic. The country’s recycling rate for plastic packaging is one of the highest in the EU, amounting to nearly 60%. Thanks to a transparent and efficient system, the country is among the best in the EU, both in terms of recycling packaging waste and financial costs for sorting out and processing waste per capita per year.

In the Czech Republic, EKO-KOM recycles over 80% of waste. EKO-KOM has established partnerships with 6,000 municipalities, where 99% of citizens live. EKO-KOM was established by household and industrial packaging industries.

Spain 

Spain’s recycling rate is 33%, with plastic packaging recycling amounting to 50%, like in Germany. The Spanish PRO is called Ecoembes. Packaging companies and those engaged in packaging production and distribution founded it in 1996 as a non-profit organization. Ecoembes’ primary function is financing, with the municipalities being responsible for waste collection.

Ecoembes finances various related businesses by paying fees in proportion to the amount of packaging they place on the market. The funds are then transferred to local and regional authorities to cover the additional costs of collecting lightweight packaging and paper waste.

Belgium

Belgium has one of the highest recycling rates in the EU, namely 58%. About 45% of plastic is recycled there.

In Belgium, each region handles waste management separately: Flanders, Wallonia, and Brussels. Therefore, each region has its own recycling policy. The three regions concluded a joint agreement on EPR. Municipalities are responsible for collecting and recycling household waste, but they have delegated their powers to two inter-municipal companies acting on their behalf: Fost Plus and VALIPAC. Fost Plus is responsible for collecting and handling household waste, and VALIPAC for recycling industrial packaging. Belgian businesses and companies fund both organizations.

And what about Ukraine?

In 2017, Ukraine adopted the National Waste Management Strategy until 2030 as part of the EU-Ukraine Association Agreement. The Strategy must be implemented in three stages: the first stage in 2017-2018, the second in 2019-2023, and the third in 2024-2030. The Strategy’s goals are aligned with several EU Directives, including requirements for production standards, waste recycling, packaging design, etc. For instance, Ukraine must recycle 70% of all packaging on the market, 55% of plastic, and 85% of paper and cardboard by 2030.

Therefore, 800 new facilities will be created by 2030 to recycle, dispose of, and compost bio-waste. The amount of household waste disposal must be reduced from 95% to 30% by 2030, and the total amount of landfill waste from 50% to 35%. In addition, Ukraine will have a network of 50 regional landfill sites operating in line with the requirements of the EU Directive. Ukraine currently has only over 6 thousand landfills and dump sites with a total area of ​​almost nine thousand hectares. Of these, more than a thousand landfill sites have either exceeded capacity or do not meet safety standards. The country needs to create over 300 more landfills.

In July last year, Verkhovna Rada passed a waste management bill in first reading. This bill is important because it establishes the EPR concept within the context of waste management. Therefore, Ukraine should have producers responsible for collecting and recycling packaging, batteries, accumulators, electrical and electronic equipment, etc. The bill also introduces the ‘polluter pays’ principle, meaning that those who produce pollution should bear the costs of managing it. It should work in the following manner: the owners or users on whose territory waste has been found should inform the local authorities. The local authorities then determine the source or owners of the waste based on the information provided by landowners, citizens, companies, organizations, media, etc. If the waste’s owners are identified, they must reimburse all costs and compensate for the damages to the environment. If such owners are not identified, the negative impact on the environment will be eliminated at the expense of state or local budgets.

However, to give it legitimacy, the law must be passed in its entirety by Parliament and signed by the President. 

Even though Ukraine does not officially have EPR legislation yet, this year, eleven world-renowned companies, in cooperation with the American Chamber of Commerce in Ukraine and the Ukrainian Packaging and Environmental Coalition (UPEC), have begun the process of establishing the first extended producer responsibility organization (EPRO). The companies that have joined the initiative include AB INBEV EFES Ukraine, CANPACK, Carlsberg, Coca-Cola Beverages, Danone, METRO Cash & Carry, Nestle, PepsiCo, Procter & Gamble, Tetra Pak, and ELOPAK-FASTIV.