Extended Producer Responsibility
Attributing waste responsibility correctly and ensuring that all market stakeholders are contributing to waste recovery is a fundamental challenge in the recycling economy. Who should pay for what and how much? What about those who aren’t contributing anything at all? If there is one thing that is clear, it is that current government-centered, centralized systems are failing us. Waste is ending up in landfills and incinerators and municipalities don’t have the financial resources, technical expertise or technology to manage the problem by themselves. Businesses and individuals don’t contribute according to the amount of waste generated by their operations, or use, thereby having no incentive to waste less, and the cost of hauling, landfilling and burning is being offloaded onto taxpayers. Increasing taxes on businesses and consumers without addressing waste performance is unfair and ultimately bad for business and the economy at large, leading to inequities across sectors and income groups. It also has no direct effect on pollution. A combination of Pay-As-You-Throw and Extended Producer Responsibility mechanisms, along with a new incentive structure ($CARROT) being proposed by the Carrot Foundation will address this problem.
Extended Producer Responsibility (EPR) is a waste offset solution to require product manufacturers (Producers) and suppliers to contribute to paying for the cost of recycling and reducing the negative effects of their business operations. EPR compliance is usually managed by individual companies or by Producer Responsibility Organizations (PRO) that represent companies in a similar industry and work to cooperate on implementing EPR solutions. EPR waste offset compliance typically targets only the waste that is not verifiably recovered by a company, thereby not penalizing companies that implement reuse and recovery programs, or those who provide product-as-a-service offerings with verified recycling. In a recycling offset market, companies report the amount of waste they produce by waste type and purchase a percentage of recycling offsets, of the same material type, much like carbon credits are purchased to compensate for their greenhouse gas emissions. Some EPR systems, like the Environment Exchange in the UK,[40] target only packaging waste. Other EPR solutions include products such as electronics, batteries, fluorescent bulbs, paints, lubricants, oils, pharmaceutical products and many more. As an example, companies that produce paper, plastic and steel packaging waste in the state of São Paulo, Brazil are required to purchase 22% in offsets in a recycling market that offers purchase receipts of recycled materials as proof of compensation[41]. The offset requirements for purchasing Packaging Recover Notes (PRNs) in the UK are determined by the activity the company performs in the manufacturing of each product. See table below for percentage requirements, The offsets, or PRNs, are backed by receipts of material sales by recyclers, much like the São Paulo exchange.
Unfortunately, an offset system that uses purchase receipts as validation is limited, centralized and untrusted. A marketplace for purchase receipts can easily be manipulated as more than one receipt for the same waste mass is often sold by participants acting in poor faith. Receipts can be sold between stakeholders and multiple receipts can be generated on the same waste mass and submitted to EPR regulators in different municipalities and states. Attempts to store receipts on blockchain do nothing to actually eliminate the double counting. Coordination between municipalities, states and the federal government lead to immense bureaucracy, poor data quality and inefficient use of resources. Another fundamental problem is that the rewards from the sale of a recycling receipt only benefit the final operator in the supply chain of waste, as there is no way to establish a chain of custody for a material mass. The assumption is that value captured will trickle down to the contributors in the recycling market, including pickers in poor countries. This is simply not the case. The Carrot Foundation Foundation proposes a new approach for EPR through its waste codification protocol (see section on codifying waste) that solves the fundamental problem of double counting and centralization, enabling rewards to be distributed directly to all market participants who verifiably contribute with the work of recovering, sorting, hauling and recycling, without intermediaries. Such a rewards distribution works as an incentive mechanism rather than a penalization scheme to corporations, helping all participants collaborate on the objective of diverting waste from landfills and incinerators.
The seeds have been planted for EPR. Much like the carbon credits markets, both voluntary and involuntary, offsetting waste with EPR will become a regular part of doing business. As identified by the World Bank, EPR is shown to be effective due in large part to lower costs for producers and governments as well as success in diverting waste from landfills[42]. Major corporations have endorsed EPR as evidenced by the signatories to the Ellen MacArthur Foundation’s EPR initiative on packaging waste and pollution[43], which count L’Oreal, Walmart and Coca-Cola among the more than 100 other leading companies.
40. The Environment Exchange (t2e) in the UK
42. World Bank-What a Waste 2.0 : A Global Snapshot of Solid Waste Management to 2050
43. Ellen MacArthur Foundation - Extended Producer Responsibility, A necessary part of the solution to packaging waste and pollution.
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