Costs to soar under new packaging waste legislation

The latest government consultation on packaging waste shows huge costs for producers. Steve Gough, CEO of Valpak, warns that brands need to start collecting data now to prepare for 2024.

The clock is ticking. Retailers and brands have just under a month to respond to the government’s final consultation on Extended Producer Responsibility for Packaging Waste and, with the launch of the policy document, the full scale of the approaching costs became clear. By 2024, we will be working with a completely new – and much more costly – system.

Not surprisingly, it is these costs which are grabbing people’s attention. Where costs for UK producers stood at £230 million in 2020, the new system sets the price of compliance at £2.7 billion.

By 2024, producers will take responsibility for the full cost of collecting and recycling packaging waste. This covers household and commercial and industrial waste. As well as footing the bill for local authority household collections, obligated businesses will be liable for funding the management of litter. Our current understanding is that EPR part-payments will be made in 2023, attributed to sales data collected in 2022.

The changes are a result of the UK’s commitment to the latest Circular Economy Package. The package calls for packaging producers to take responsibility for the ‘full net cost’ of recycling. Unlike the current system, which spreads costs throughout the supply chain, the new EPR model will place compliance with brands and non-UK based brands placing packaged products onto the UK market – the businesses which have the most influence over packaging design.

The aim is to drive more sustainable packaging, so it’s not surprising that it will include incentives to replace the most problematic materials, such as hard-to-recycle coloured plastics, with more ‘environmentally friendly’ items.

The government is already exploring modulated fee systems like those in place in France. The French approach penalises products that are difficult to recycle, and awards a discount to those producers that use easily-recyclable packaging, or products that contain a percentage of recycled material.

The greatest challenges will be cost and data management. The rise in expenditure will be tough. However, just as testing will be the requirement for a far more complex range of data.

In Spain, instead of reporting on broad material types – paper, cardboard, aluminium, steel, glass, wood and plastic – producers are already tasked with describing individual plastic polymers. Some polymers are harder to recycle than others, and we can expect these to face a higher fee under a UK modulated system.

While product redesign will be driven by modulated fees, in the short term at least, the challenge will be to collect data across the whole supply chain. To benefit from the new modulated system, producers need to start collecting data now. This is no mean feat when even simple items such as fruit packaging may include multiple elements such as inserts and labels.

Valpak’s EPIC database, with 33 million SKUs, shows that much needs to be done to become EPR-ready. Timescales are short, and those which prepare now will benefit from commercial advantage when EPR arrives.

In the meantime, it is important to add your views. The government’s consultation on EPR closes on 4 June. To add your voice, visit: https://consult.defra.gov.uk/extended-producer-responsibility/extended-producer-responsibility-for-packaging/

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