How Does EPR Work?
Extended Producer Responsibility (EPR) for packaging and printed paper would require brand owners to pay for the cost of collecting and sorting household recyclables. Currently, consumers pay for this cost through taxes or utility bills. Under EPR, brand owners create one or more nonprofit organizations -a producer responsibility organization (PRO)- to calculate how to allocate the overall cost of recycling to each brand owner according to sales, recyclability of their products, and other factors. Brand owners then internalize the cost of EPR fees into the price of new products. The PRO then contracts with waste haulers, recycling facilities, and municipalities to cover their cost for collection. Over time, the PRO can find efficiency in the recycling system to help reduce costs.
Why Would EPR Be Cheaper?
EPR for packaging and paper would lower overall costs to society for recycling. By managing costs at the state level using more accurate data, a stewardship organization representing brand owners can improve collection efficiency, increase quality and value of collected materials, and create economies of scale to reduce expenses.
Recycling measurement in the U.S. is inadequate and inconsistent. States generally rely on local governments to report how much material is collected-often using different methods for measurement. The margin of error can be significant and accumulate to the point where statewide recycling rates are often inaccurate. Brand owners need accurate numbers in order to correctly allocate costs. Better data leads to better decision making, and brand owners will be able to pinpoint efforts to improve performance if they can identify areas with poor recycling rates.
Many recycling programs in the U.S. rely on outdated collection methods that discourage consumer participation, pose risks to collection workers, and cost too much. Since the brand owners will be paying for collection services, they will have the ability to push recycling programs to adopt more efficient collection, transportation and processing methods. In many cases, decisions about public collection infrastructure are political rather than economic; hence efficiencies achieved through EPR have the ability to lower costs.
Quality Control and Value
Many end markets are concerned about the quality of recyclables coming from recycling centers where curbside materials are mixed together. Experience has shown that quality control is highly dependent on planning and management of materials recovery facilities (MRFs). An EPR system encourages higher quality control through investment in high technology sorting and transportation equipment and higher revenue through its method of setting fees. Higher quality control can result in lower fees while MRF operators would see higher income for cleaner, less contaminated baled materials.
Economies of Scale
Through a stewardship organization in an EPR system, brand owners will have the ability to see cost structures on a statewide basis and recommend changes that will increase collection and processing efficiency. For example, two adjacent towns may have their own MRFs running one shift each. The stewardship organization, since it is paying for the cost of recycling, has some leverage to encourage or require the consolidation of the two MRFs into one that would run two shifts and double market share. The result would be lower cost and higher revenue.