Key element #7: Extended producer responsibility financing
Extended Producer Responsibility (EPR) is defined as an “environmental protection strategy to reach an environmental objective of a decreased total environmental impact from a product, by making the manufacturer of the product responsible for the entire life-cycle of the product and especially for the take-back, recycling and final disposal of the product.”1
Producers taking responsibility for the packaging waste they sell is a key element of any high-performing deposit return system (DRS). Beverage producers manage the take-back of packaging and cover the costs of the system, while also reinvesting the unredeemed deposits and the sale of the returned container materials (or “commodity revenue”) within the deposit system. If the system’s costs exceed these revenues, the difference is covered by producers. When producers manage the deposit system through a centralized organization, they can agree to pay this net cost in the form of an “EPR fee”. (This is not to be confused with a “handling fee”, which is a payment from the Central System Administrator to redemption providers, such as retailers, for container redemption and storage services.) These EPR fees can be set based on the full cost of handling and recycling the material type that the producer chooses to place on the market (e.g. plastic, glass, aluminum, and/or liquid paperboard). This is known as an “eco-modulated” fee. It ensures no producer is cross-subsidizing for another and has the added incentive for producers to use packaging that is designed for recyclability (see Figure 1), in both cases ensuring they have direct responsibility for the packaging they produce.