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 echo-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:
- The International Institute for Industrial Environmental
Economics at Lund University, "Product Research - Extended
Producer Responsibility as a Strategy to Promote Cleaner Production",
Sweden, 1997.
- "Successful Deposit System for Aluminum Cans," ENVIRO,
No. 12, November 1991.
- Lindhquist, Thomas, Extended Producer
Responsibility as a Strategy to Promote Cleaner Production,
Proceedings of an invitational expert
seminar, Sweden, May 1992.
- Op. cit, "Extended Producer Responsibility
as a Strategy to Promote Cleaner Production."
- Greenpeace
Briefing, Strategies to Promote Clean Production - Extended
Producer Responsibility, 1995.
- 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.
- Ibid.
- Fenton, Dr. R., University of Winnipeg Economics What
is Sustainability?" Praire
R's, 1997.
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