Extended Producer Responsibility for Packaging Island Communities Impact Assessment

Background

12. Over 10 million tonnes of packaging waste are produced every year in the UK. A substantial share of this ends up in landfill, though almost two-thirds of it could be recovered, meaning that there are avoidable environmental costs. ^[4]

13. Extended producer responsibility (EPR) schemes extend producers’ responsibility for their products to the post-use phase. This includes financial responsibility and can apply to, for example, the necessary costs of efficient and effective waste management services for the products they place on the market. This incentivises producers to design for key circular-economy outcomes such as reduced consumption of resources, reuse, repair, and recycling.

14. A UK-wide producer responsibility system for packaging has been in place since 1997. It is currently governed by the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 (as amended).^[5] Under these regulations, organisations which produce or fill packaging or sell packaged goods are obligated to contribute towards the cost of recycling and recovery of this packaging. The objectives of this system are to:

• Reduce the amount of packaging produced;
• Reduce the amount of packaging waste going to landfill; and
• Increase the amount of packaging waste that is recycled and recovered.

15. Businesses currently prove they have met their recycling obligations through the purchase of Packaging Waste Recycling Notes (PRNs) and/or Packaging Waste Export Recycling Notes (PERNs) which are sold by accredited reprocessors or exporters. Obligated businesses must buy sufficient PRNs/PERNs to offset their obligations, in line with the ‘polluter pays’ principle.^[6] PRNs and PERNs act as evidence that an equivalent amount of similar packaging has been recycled.

16. The current producer responsibility system for packaging has helped drive recycling while keeping the cost to businesses low. However, it does not give packaging producers full financial responsibility for the end-of-life management of their packaging or any of the environmental externalities created.

17. It is estimated that the current system covers only around 10% of the total cost of managing post-use packaging waste,^[7] which means that most of the cost is borne by local authorities, other public authorities and businesses who consume packaged goods. Additionally, there is significant fluctuation of revenue raised through PRNs. The current system therefore does not meet the polluter-pays principle or provide sufficient financial stability to encourage investment in infrastructure to meet environmental objectives.

18. Other issues highlighted within previous public consultation proposals are:^[8],[9],[10]

• Concerns over system transparency, including the fate of materials and producer visibility of PRN fee use.
• An uneven playing field for domestic reprocessing due to an over-reliance on export markets.
• Limited direct consumer communications to encourage recycling.
• A lack of producer incentive to design for greater recyclability or reuse, as the price of PRNs is not linked to recyclability or environmental impacts of materials. This means that materials are often reprocessed into much lower-value goods or lost to landfill or incineration after just one use.
• A lack of granularity in data reported by producers, as this currently only includes the type of material and does not include the packaging or polymer type.

19. Therefore, the Scottish Government is introducing EPR for packaging along with the other governments of the UK. The four governments are working to deliver a single UK-wide scheme that reflects local needs and priorities.

20. The objectives of the new scheme are:

• Producers are responsible for the full net cost of managing their packaging efficiently and effectively at end-of-life;
• Unnecessary packaging is avoided;
• More reuseable packaging is used, replacing single-use;
• More packaging is designed to be recyclable;
• The Recycling rate of packaging placed on the market increases to 76% by 2030;
• The quality of packaging materials presented for recycling improves and is more widely used in higher-value secondary applications

21. The regulations place obligations on actors across the packaging supply chain. Producers, as defined in the regulations, will be required to:

• Fund the full net costs of efficient and effective waste management services for household packaging. These costs will be allocated to producers based on their share of each packaging material type placed on market each year. From 2026 onwards, fees will be ‘modulated’ based on environmental factors such as recyclability to incentivise more sustainable use of packaging.
• Meet packaging recycling targets through the purchase of evidence notes from accredited reprocessors and exporters. The evidence requirement will be based on the total tonnage of packaging producers place on the market and national recycling targets.
• Report data on the packaging they place on the market.
• Label all packaging as recyclable or non-recyclable to help householders correctly dispose of packaging after use. Guidance will be published to ensure labelling is used in a standardised way and is legible and understandable for individuals. This requirement will take effect from 2027.

22. Producers’ precise obligations will depend on factors including their turnover and the tonnage of packaging they place on the market each year. See the Business and Regulatory Impact Assessment (BRIA) for further details.^[11]

23. The fees raised from producers will fund:

• The full net costs of efficient and effective local authority household packaging waste collection and disposal services;
• Information provision for members of the public and businesses on the reuse of packaging, recovery (including recycling and disposal) of packaging waste, and prevention of packaging litter; and
• The operating costs of a scheme administrator which oversees the scheme and is responsible for meeting the stated outcomes.

24. Providers of household recycling and waste services will be funded for efficient and effective household waste collection and disposal services. This will take into account factors specific to local areas, such as rurality, levels of deprivation, and policies on waste management in each nation.

25. The scheme administrator will be a public body, tasked with ensuring the efficient and effective delivery of the scheme, including guidance for all actors on their roles and responsibilities, financial payments to local authorities and meeting the scheme outcomes and targets.

26. Producers’ costs are estimated to total approximately £1.7 billion each year for the UK wide-scheme. An estimated £1.2 billion of this relates to household packaging recycling and waste services (£800 million for household recycling services and recycling centres; £300 million for household residual waste).^[12] In addition, producers will contribute an estimated £300 million through purchase of evidence notes, and £100 million in administrative costs for the Scheme Administrator, communications and regulatory activities.^[13]

27. The policy is focussed on businesses, rather than individuals, but has the potential to impact on all individuals and households in Scotland as it concerns packaging in all forms. It is a UK-wide policy. This policy change can be considered to be strategic given the strong links to a wide array of environmental and wider policy objectives for Scottish Government.