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Extended Producer Responsibility, Packaging Waste Reduction and Eco-design

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Abstract

The main policy addressing the packaging waste issue in the countries of the European Union has been to define recycling objectives along with Extended Producer Responsibility (EPR). With EPR, producers finance the recycling and management of waste generated by their products. Within this framework, they are expected to internalise waste management costs and engage in eco-design of their packaging, i.e., use less packaging and increase packaging recyclability (e.g., through substitution of materials). EPR has been extended worldwide over recent decades and applied to various waste streams. In this paper, by exploiting temporal variation of an original panel dataset of EPR compliance costs from 25 European countries (1998–2015) and four packaging materials, I evaluate for the first time whether these costs have led to packaging waste reduction and substitution of packaging materials. I find that the EPR financial incentive has resulted in very little (though statistically significant) packaging reduction and no systematic substitution effects between packaging materials.

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Notes

  1. Defined in the European Waste Framework Directive (Directive 2008/98/EC).

  2. See Article 5 in Directive 2018/852. Packaging waste was initially regulated under Directive 1994/62/EC and later amended by Directive 2008/98/EC and Directive 2018/852 .

  3. Directive 1994/62/EC , Annex II; Directive 2008/98/EC , Art. 8.

  4. Fleckinger and Glachant (2010) show that individual EPR is akin to a Pigovian tax, whose rate equals the producer’s marginal cost of waste disposal when waste management is provided competitively.

  5. Other aspects of recyclability (e.g., glue, ink) are not usually addressed.

  6. Other incentives to improve product circularity were not considered in collective EPR at the time (with the exception of France for some substances; please refer to Joltreau (2018)). Design for recycling is essential to develop the economy’s circularity (Zotti and Bigano 2019). Circularity aspects are to be considered more comprehensively in EPR in the future. You can refer to the EU Commission guidance on the eco-modulation of EPR fees for a document on the matter (European Commission 2018).

  7. Directive 2008/98/EC , Art. 8.

  8. Austria (AUT), Belgium (BEL), Bulgaria (BGR), Cyrpus (CYP), Czech Republic (CZE), Estonia (EST), Finland (FIN), France (FRA), Germany (DEU), Greece (GRC), Hungary (HUN), Ireland (IRL), Italy (ITA), Latvia (LVA), Lithuania (LTU), Malta (MLT), The Netherlands (NLD), Poland (POL), Portugal (PRT), Romania (ROU), Slovakia (SVK), Slovenia (SVN), Spain (ESP), Sweden (SWE) and the United-Kingdom (GBR).

  9. Prices may be negative when treatment costs are greater than values of recycled content. Therefore perfect recycling markets may not be so “perfect” as they would encourage illegal dumping for some products.

  10. Except when a Pay-As-You-Throw (PAYT) approach is in place. However, PAYT usually accounts for only half of the costs, and the other half is paid through fixed fees to avoid illegal dumping and cover fixed costs. Also, products are binarily differentiated whether or not they are recyclable, but not according to their degree of recyclability. Last but not least, recyclable packaging is usually collected free of charge. For more details, see Tojo et al. (2008). Some municipalities in various EU countries have adopted PAYT (e.g., Besançon in France, Innsbruck in Austria, and Treviso in Italy).

  11. This signal may only be transferred to consumers if producers pass on their compliance costs to product prices. Note that cost pass-through from producers to consumers may be incomplete and averaged across the producer’s various products.

  12. First, while European harmonised recycling and collection targets exist (Directive 2018/852), countries are free to introduce higher national objectives (e.g., in Germany, da Cruz et al. 2014).

  13. In perfect and efficient markets, incentives for final producers through to upstream producers are transmitted along the value chain without friction. Therefore, splitting the responsibility would mean greater compliance costs for actors further up the value chain than for downstream actors.

  14. A firm may nevertheless choose an individual EPR (single recycling loop), but such cases are unusual.

  15. In this context, producers can still benefit from the service of PROs, which handle the purchase of certificates for firms. In Poland, the purchase of recycling certificates to recyclers is made by the PROs (Faolex 2014), and upstream producers pay compliance fees to the PRO. Hence, it can be considered as a PRO-based EPR.

  16. Note that in Hungary less than one-third of the tax revenue is allocated to waste management (OECD 2018), thus corresponding only to a partial interpretation of EPR.

  17. Note that many values are missing before 2004 when a few countries had already implemented such schemes.

  18. This result averages the fee for five materials: paper, glass, PET, aluminium and steel.

  19. Patterns of cost-sharing between producers and public services (e.g., in Germany the PRO bears the full cost of recycling, while there exist a cost-sharing system in other countries; Massarutto 2014), different pricing methodologies (in theory, the producer’s fees are meant to reflect waste management costs, but in general, the pricing methodology is not transparent; also, for example, in the Netherlands, the tax has been designed as a carbon tax (Sevenster et al. 2007)), additional membership fees or unit-based fees, different waste treatment costs (competition between recyclers, costs of labour, available technologies, and infrastructure), different national recycling targets and the remaining efforts needed to achieve them, the number of firms contributing to the PRO... I leave this topic for further research.

  20. For example, a firm exporting products of one ton of equivalent packaging in Germany and one ton in Poland will bear an average compliance cost of €275. This figure is based on the assumption that the importer (who is legally responsible for complying with EPR) passes EPR costs on to the foreign producer.

  21. Note that I use an annual average for the UK, but prices of recycling certificates are marked by strong intra-year variations. However, firms contracting to a PRO can benefit from fixed rates.

  22. For example, in the case where 1 \(m^3\) of glass or plastics are used to produce the same amount of packaging, 250 kg of glass and 130 kg of plastics would be needed.

  23. Equivalent to packaging placed on the market each year, normalised per capita.

  24. The dimension PET is very similar to the dimension Plastics since many PROs do not distinguish between plastic resins during the period 1998-2015. The same argument holds for paper and cardboard and paper and cardboard including composites.

  25. Directive Directive 1994/62/EC , Art. 12.

  26. E.g., Citeo, the French PRO for household packaging, provides a website where members can share their packaging reduction actions (http://reduction.ecoemballages.fr/catalogue/produit/).

  27. This research is limited to the impact of financial incentives provided by EPR and does not analyse in detail other interactions provided by the institutional framework, although its heterogeneity is controlled through country-material fixed effects. I leave institutional economics of EPR as a topic for future research (e.g., see Micheaux 2017 for Waste from Electrical and Electronic Equipment).

  28. Use of importation prices: primary materials for glass and cardboard, secondary materials for plastics, aluminium and steel.

  29. The variable alcoholic_bev\(_{i,t}\) is missing for Malta and the Netherlands.

  30. The log transformation contributes to the smooth the EPR variable distribution. A log-linear model and a linear model were used without significant results for the squared EPR variable (taken in addition to the EPR variable). In addition, column 3 of Table 5 already eliminates high values of EPR, without any significant change in the results. Therefore, the search for a convex effect from the EPR variable does not seem justified.

  31. Taking the log of EPR excludes the few zero values of the variable EPR: in Greece (1998-2000) and Finland in 1998, when no EPR was implemented.

  32. The hypothesis “panels contain unit roots” is rejected with a p-value=0. We consider year>2004 because the test requires a balanced panel.

  33. Except in Greece (1998-2000) and Finland in 1998, when no fees were charged.

  34. Note that if different fees are available for a given year, I have used an annual average.

  35. However, counter-intuitively in the data, Table 3 shows a positive close-to-zero correlation between material prices and the variable EPR.

  36. Fuel prices are linked to material prices. In particular, if fuel costs increase, it is more costly to extract and transport materials.

  37. A 100cL milk brick, as in Eco-Emballages (2015).

  38. Potentially, enterprises aim to reduce input costs and increase competitiveness no matter how expensive materials are. Moreover, country-specific material prices are not relevant if packaging is produced abroad. Prices of substitutes may matter as much as prices of material themselves. Even if fees are small as compared to the packaging cost, they call for strict monitoring. In turn, monitoring leads to internal indicators and indicators to internal strategy, etc. Monitoring and paying for packaging that will become waste may raise awareness among firms of their negative externality on the environment and packaging reduction possibilities (e.g., feeling of guilt about damaging the environment, opportunistically decreasing production costs by reducing packaging use).

  39. The fee of year \(t-2\) is statistically significant when adding the sectoral consumption variables. However, this coefficient may also be the effect of the fee of year \(t-2\) on the fee in t, which in turn affects packaging waste per capita.

  40. The joint null hypothesis of the J test is that instruments are valid, i.e., uncorrelated with the error term.

  41. \(ln(EPR_{t-3})\) may have an effect on \(ln(EPR_{t-2})\).

  42. Belgium, Germany, Estonia, Ireland, Spain, France, Italy, the Netherlands, Austria, Portugal, the United Kingdom.

  43. A rule of thumb is that a VIF under 4 indicates moderate multicollinearity. If VIF(\(\beta\))=4, this means that the standard error of \(\beta\) is twice as large as it would be if the predictor was uncorrelated with other predictors.

  44. Subsidised recycling is not the most environmentally-sound option and can lead to perverse effects on the environment (D’Haultfœuille et al. (2014) for an example in the vehicle sector). The study by Antoni and Marzetti (2019) qualifies this reasoning and shows that curbside collection programmes tend to reduce waste generation in Italy.

  45. In its Directive on single-use plastics, the EU considers ten items to be banned from 3 July 2021 if sustainable alternatives are available/affordable. This ban will apply to cotton bud sticks, cutlery, plates, straws, stirrers, and sticks for balloons. It will also apply to cups, food, and beverage containers of expanded polystyrene. However, this is a waste prevention measure for plastics/expanded polystyrene, but regardless of the materials, waste generation may not be affected (e.g., material substitution).

  46. Directive 2008/98/EC 2008, Art. 29; including different waste streams, depending on the country; EEA (2017).

  47. At the exception of Germany, Duales System Deutschland since 2010; Malta, GreenPak since 2013; Slovakia, ENVI-PAK since 2011.

  48. Prior to 2012, glass packaging in Ecoembes (Spain) was only subject to unit-based fees.

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Acknowledgements

I thank Stéphanie Monjon, Daniel Herrera, Matthieu Glachant, Damien Dussaux, Sophie Bernard, Philippe Delacote and the anonymous referees for helpful comments as well as the seminar participants at the 33rd annual congress of the European Economic Association and the 71st European Meeting of the Econometric Society (EEA-ESEM, University of Cologne, 2018), the seminar participants of the German Institute for Economic Research, Climate Policy (2018), the economics lab. of University of Paris-Dauphine (2019) and Ecole des Mines Paristech (2019). The usual disclaimer applies.

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  1. Laboratoire d’Economie de Dauphine (LEDa), CGEMP, PSL Research University, Université Paris-Dauphine, Paris, France

    Eugénie Joltreau

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Appendices

Appendix 1: Implementation of EPR in the Europe of 28

This annex tries to provide an overview of EPR compliance schemes for packaging and packaging waste legislation in the EU-28.

Column (1) lists the ISO code of the 28 countries members of the European Union. In the empirical analysis, 25 countries are considered: Austria (AUT), Belgium (BEL), Bulgaria (BGR), Cyprus (CYP), Czech Republic (CZE), Estonia (EST), Finland (FIN), France (FRA), Germany (DEU), Greece (GRC), Hungary (HUN), Ireland (IRL), Italy (ITA), Latvia (LVA), Lithuania (LTU), Malta (MLT), The Netherlands (NLD), Poland (POL), Portugal (PRT), Romania (ROU), Slovakia (SVK), Slovenia (SVN), Spain (ESP), Sweden (SWE) and the United-Kingdom (GBR).

Column (2) provides the name of the legislation in force concerning packaging waste management.

Column (3) describes the form of EPR implementation.

Column (4) gives the start date of EPR.

Column (5) gives the number of collective schemes, implying the presence of competition if this number is greater than one (col. (7)). Note that this number may evolve quickly.

Column (6) reports the name of the PRO that I have considered when constructing the dataset. The methodology is thereafter explained in “Appendix 2”.

Table 12 Overview of EPR implementation for packaging waste in Europe Wikiwasteschemes, European Commission (2014), own interviews, Institute for European Environmental Policy (IEEP), Valpak’s Quick Guide to Packaging Legislation
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Appendix 2: Construction of the EPR Variable

Table 12 lists the PRO considered for each country. In some countries several PROs compete in the same waste stream. I assume that fees charged by the different PROs are similar. In fact, I have mostly considered PROs belonging to PRO-Europe, the umbrella organisation for European packaging recycling schemes using the trademark “The Green Dot”. PRO Europe diffuses reports on their members’ commercial policy, which have been used for constructing the dataset.

Commercial policies of PROs go to very simple (one fee per material: cardboard, glass, plastics, metals) to very detailed: e.g. differentiation between plastic resins, differentiation between aluminium and steel, additional fees for composite packaging and non-recyclable materials, industrial vs. household packaging, function of the packaging (primary, secondary, tertiary), etc.

For plastics, I decide to create a dimension PET either equal to the PET fee when existing, or to the plastic fee. Often, PROs distinguish between “PET” and “other plastics”. Some PROs only have a category “plastics”. In addition, I create a dimension Plastics, which is a weighted average of the different plastic resin fees when existing, or equal to the plastic fee. The weighting given to each criterion relies on numbers found in Fost Plus (2004): 40% PET, 5% HDPE, 55% other plastics.

For metals, I create two dimensions Aluminium and Steel. Following the same reasoning, the Aluminium fee is either equal to the aluminium fee when existing, or the metal fee. Therefore it happens that both dimensions, Aluminium and Steel, are redundant.

For paper and cardboard, it happens that PROs distinguish between paper and cardboard and composite paper and cardboard (e.g. juice carton with an aluminium component). I therefore create a dimension Paper and Cardboard equals to the paper and carboard fee, and a Paper and Cardboard including Composites which is a weighted average, calculated as follows: 90% Paper and cardboard, 10% drink beverages. The weighting given to each criterion relies on numbers found in Fost Plus (2004). When no distinction exists between paper and cardboard, and composite paper and cardboard, both dimensions are redundant.

For glass packaging, I simply use the glass fee.

To further ensure comparison between countries, the construction of the variable EPR only encompasses:

  • Household packaging

  • Packaging being the closest to the product to be packaged (e.g. sales packaging, primary packaging) if fees are differentiated according to the packaging type.

  • Weight-based component of the contribution (i.e., I exclude unit-based fees and participation/membership fees)

Annual membership fees do not provide incentives to eco-design of packaging. Hence, excluding them from the database is not a problem. Nevertheless, unit fees provide incentives to remove group packaging. It is very complicated to control for unit-based pricing since the pricing methodology is not constant overtime. For example in France, the unit-based pricing was first differentiated according to the packaging volume, then to the weight-based contribution (lighter packaging have lower unit-based fee). As unit fees are solely used in three countries (Greece, France, Spain), removing these countries from the econometric sample as robustness check is sufficient.

The EPR variable does not include national VAT.

The main data source is PRO-Europe reports, where PROs usually report their commercial policyFootnote 47 and personal communication with PROs.

Data stem from the following sources: Austria: ARA Recycling; Belgium: Fost Plus, PRO-Europe; Bulgaria: PRO-Europe; Cyprus: PRO-Europe; Czech Republic: PRO-Europe; Estonia: PRO-Europe; Finland: Finnish Packaging Recycling RINKI; France: Citeo (former Eco-Emballages); Germany: PRO-Europe; Great Britain: The Environment Exchange; Greece: PRO-Europe; Hungary: PRO-Europe and RSM Hungary Tax and Financial Advisory Services; Ireland: Repak Limited; Italy: CONAI Consorzio Nazionale Imballaggi; Latvia: PRO-Europe; Lithuania: PRO-Europe and Žaliasis taškas; Malta: PRO-Europe; Netherlands: Afvalfonds Verpakkingen and PRO-Europe; Poland: Rekopol and PRO-Europe; Portugal: PRO-Europe; Romania: PRO-Europe; Slovakia: PRO-Europe; Slovenia: PRO-Europe; Spain: PRO-Europe; Sweden: PRO-Europe.

All data are converted in euro when needed using yearly averages of exchange rate from the European Central Bank.

Appendix 3: Construction of the greenvote Variable

Green votes are a valuable indicator for citizens’ environmental concerns (Schumacher 2014). I collect data from the Norsk Senter for Forskningsdata (NSD), which provides data on results for several elections (presidential, parliamentarian, European) for 34 countries (mostly EU members) between 1990 and 2013.

I choose to consider parliamentarian elections, because not every country held presidential elections. In parallel, in presidential regimes, these elections may be concentrated around charismatic figures rather than parties or ideas. I exclude European elections because of the low turnout.

Table 13 lists parties that I identified as “green” in parliamentary elections. Share of votes allocated to green parties are then compiled under a same share “green votes”.

Green parties sometimes form coalition with other parties. For example, in Portugal, the Green party is associated with the Communists so that it is impossible in the data to distinguish green voters from communists. While some green voters may have been dissuaded from voting for this coalition if they do not share communist ideas, I decide to still include coalitions’ election results as green votes.

In addition, there exists farmer and peasant movements, which have some ecological claims. However the movements seem to specifically call for more consideration for farmers and peasants. I therefore decide to exclude peasant movements when they are not in coalition with more general green parties, because they seem specific to one category of the population. If there are several rounds, I use results from the first round (except for Germany where the second round corresponds to the round where citizens choose a party, while in the first round people vote for a personality).

The imputation strategy for missing values between two election dates that is used, is to replace missing values with the latest available value (most recent election). This strategy corresponds to the assumption that people do not change their mind between two election dates, and only think about whether they want a greener society during the election time. While this can be considered a strong assumption, I believe that it is less strong that assuming that citizens linearly increase or decrease their green preferences between two elections. Also, this would introduce more within variations, which could affect the coefficients.

Table 13 Green parties identified in Parliamentary elections
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Fig. 8
figure 8

Green Votes (%) in Parliamentary Elections in 2013 and 1998

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Figure 8 displays election performances of green parties in European countries in 2013 and 1998. Top countries, whose green parties collect more than 8% of the votes are Austria, Latvia, Belgium and Germany. For Austria and Latvia, this score represents quite a substantial evolution as compared to 1998. Some other countries, (i.e., Spain, Slovakia, Poland, Malta, Hungary and Bulgaria) experience 0% of votes for green parties. Note that I did not include the peasant party for Poland (that accounts for around 8% of the votes).

Appendix 4: Construction of the Material price Variable

Material prices are proxied by import unit value (€/t) from the BACI database, provided by the CEPII. To get unit values, import flows in US dollars (USD) are divided over the same flows in tonnes. USD are then converted to euros, using exchange rates annual data from Eurostat (year average). I use the product classification established by Dussaux and Glachant (2014) to target flows of materials.

I use imports because I believe that it represents a better proxy of material prices than export prices, which rely on domestic production capacity. I assume that if countries want to produce packaging, they will either use materials produced nationally (for which price information is not available) or import materials, whose prices are competitive with national prices.

For aluminium and steel, I use prices of secondary materials because primary materials exhibit too extreme variations. This should not be a major issue since recycling of metals do not alter the metals’ properties (Wernick and Themelis 1998). Accordingly, recycled and primary metals should be close substitutes and present similar price evolution.

For plastics, I also use prices of secondary materials because primary materials are not available in the database. This may be more of a problem, since unlike metals, the properties of plastic resins cannot be fully restored through recycling (Wernick and Themelis 1998). Prices of secondary plastics may sometimes decorrelate from primary materials. However, price of primary plastics should be linked to fuel prices, that are included in the econometric regression.

As shown in Fig. 9, there exist important differences between material prices that are likely to affect decisions on product design. Malta is excluded from the graphic, because it has extreme values.

Intra-country variations are very large, in particular for plastics and glass, which may question the accuracy of import unit value.

Fig. 9
figure 9

Material prices (€/t), year 2005–2015, excluding Malta

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Appendix 5: Simulations

Simulations of EPR compliance costs are run for several commonly consumed products, in order to grasp how expensive are EPR compliance costs to firms. I rely on items given as examples in Eco-Emballages (2015) and 2015 EPR compliance costs, when available.

  • 370g jam in glass jar with steel lid (Table 14)

  • 1.5 l mineral water in PET bottle with HDPE stopper (Table 15)

  • 33 cl aluminium can (Table 16)

These simulations rely on the assumptions that sale prices are identical across European countries. Unit fees are used in the simulations. Unit fees are charged per item of packaging and are used in Greece (HE.R.R.C.o; 0.04 €cent), France (Citeo, from 0.01-0.07 €cent) and Spain (Ecoembes, 0.28 €cent for glass only). along with a weight-based fee.Footnote 48 Eco-Emballages (2015) reported in 2015 that unit fees would reach 25% of firms’ total financial contribution at most.

Table 14 370g jam in glass jar with steel lid
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Table 15 1.5 l mineral water in PET bottle with HDPE stopper
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Table 16 33 cl aluminium can
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Joltreau, E. Extended Producer Responsibility, Packaging Waste Reduction and Eco-design. Environ Resource Econ 83, 527–578 (2022). https://doi.org/10.1007/s10640-022-00696-9

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