Experts warn EPR may bring big changes to plastic packaging

National Harbor, Md. — California may be hitting pause on implementing its extended producer responsibility law, but four other states with packaging EPR are moving ahead, and that's going to keep governments pushing for changes in how plastics and packaging are used.

At least that's how experts were seeing the landscape at the recent Plastics Recycling Conference, held March 24-26 in National Harbor, just outside Washington, D.C.

Among the changes they said will be coming are eco-modulation fees, which essentially charge companies more to use packaging that's less recyclable in municipal systems, such as expanded polystyrene.

"All states are going to have some form of eco-modulation. It's built into the DNA of EPR," said Jason Bergquist, vice president of U.S. operations at EPR consulting firm RecycleMe. "The fees are driven by the relative recyclability or non-recyclability of the item. That's where you see paper being the estimate of a penny a pound and vs. [foam] being close to five bucks a pound."

As well, experts said, the EPR programs will include incentives to use recycled content and to boost reusable and refillable packaging, an area they predicted will get a lot of attention as EPR takes shape in states over the next several years.

Colorado, Maine, Minnesota and Oregon have all passed packaging EPR laws, and legislatures in other states, including New York and Washington, are in deep debate. Typically it takes states several years to write implementing regulations after laws are passed.

Officials see EPR as a tool to improve recycling systems and shift financial responsibility to companies putting hard-to-recycle packaging on the market.

Oregon, which will be first out of the gate when its plan starts to roll out July 1, is looking at giving discounts on EPR fees for using refillable packaging, Bergquist said.

"We all know in the world of sustainability there's a huge amount of focus on bringing back to life refill programs," he said. "The idea is if we look at the overall recycling chain, we all know, you bring refill in the middle of that, it's highly successful."

Anne Bedarf, director of packaging and plastic sustainability at Colgate Palmolive Co., similarly noted major interest in reuse, even if there's uncertainty about what consumers want.

"I'm encouraged, as imperfect as it is, by the California focus on reuse, and there's some other policy levers that will help create a level playing field," she said. "There have been so many individual pilots, and there's a widespread view that consumers say they want reuse but they're not willing to put in the work for it."

Still, Bedard noted work to build reuse systems by industry-oriented groups like the Consumer Goods Forum and the global network of plastic pacts.

She called reusable and refillable packaging a "key lever for reduction that brands haven't cracked yet."

Bergquist said Oregon's program includes two key levers to encourage companies to lower the environmental footprint of their packaging, including using recycled content.

"The first is, if you conduct a life cycle assessment on one or more of your SKUs, you'll get essentially a 10 percent discount, just for doing it and reporting it," he said. "If you do it and then act on it, either by lowering the weight, increasing the amount of post-consumer recycled content, changing the material, then there's a second reduction in fees there."

Other speakers at noted that the EPR rules being developed in Minnesota, Colorado and Oregon all encourage recycled content.

Mark Watts, associate director of sustainability at consumer goods maker Church and Dwight Co. Inc., recommended that companies design greener packaging now to avoid EPR eco-modulation fees later.

"Companies that are hesitant about making the move, the payback is going to hit them when eco-modulation kicks in and they're not at the levels they should be, they'll end up paying at the back end rather than the front end," Watts said. "Let's do the right thing and do it upfront, rather than pay later."

Church and Dwight, owner of the Arm & Hammer brand, is "very supportive of what EPR will bring to the industry," Watts said.

"It's an unmet need," he said. "Once that money starts rolling in and infrastructure starts getting improved, we'll be able to deliver more meaningful impact."

He argued EPR has the potential to "open up the bandwidth" of recycling systems to handle lighter-weight flexible plastic packaging.

"They're not recycled today but when you look at the mass of material in a flexible vs. a rigid container, you've got to ask yourself 'Why aren't we in more flexibles?" he said.

"It's a double-edged sword at the moment. It's the best thing do for material reduction. It's the worst thing for recyclability," Watts said. "So let's fix those things with extended producer responsibility."

California Gov. Gavin Newsom made waves in the EPR community when, in early March, he ordered the agency CalRecycle to redo its proposed EPR regulations, saying what had been developed would be too expensive for families and small businesses.

But some experts at the conference don't expect that to foreshadow similar delays or rethinking of EPR in other states.

Kate Bailey, chief policy officer at the Association of Plastic Recyclers, said California's law is "strikingly different" than the other four states because it includes measures like a 25 percent source reduction target for plastic packaging and a $5 billion plastics pollution mitigation fund.

"That's pretty unique — those pose huge challenges in California that are not reflective of the other states, both in terms of costs and other challenges," she said.

She and others also said Newsom's EPR decision may be connected to expectations that he will run for president in 2028.

Bailey said the other states are moving ahead with writing their own detailed implementation regulations.

"The message I would like to share is Oregon is on track, Colorado is on track, Minnesota, Maine, these states are moving forward," she said. "That conversation is not going to change."

Some recycling companies and environmental groups may not be happy with Newsom's decision, Bailey said, "but I don't think it sets us back across the country."

Anja Brandon, director of plastics policy at Ocean Conservancy, said on a PRC panel that while California's 2022 law, known as Senate Bill 54, has been delayed, the timelines in the law remain in place.

"SB-54 was not pulled back, we had a regulatory delay," Brandon said. "The law is the law. Those timelines are still coming."

Bailey said other states are starting to fill in details. Colorado, for example, has released a lengthy proposed plan.

"We're looking at what does the next five years actually look like," Bailey said. "How do we collect more tons? How do we reduce contamination? How do we drive design? How do we build end markets?"

Globally, many countries are moving forward with packaging EPR. Bailey said Canadian provinces, for example, are shifting their existing packaging EPR laws to a more producer-funded model.

"Canada has pretty widespread EPR but they are making a fundamental transition toward a more fully funded and managed producer program," Bailey said. "It is actually a big shift, even though a lot of these laws have been on the books for some time. It will be interesting to see how this evolves in the context of the U.S. landscape."

As well, the European Union's new Packaging and Packaging Waste Regulation (PPWR), the "preeminent multinational EPR" program, will start to phase in over the next 18 months, said Matthew Slutzker, a PET and recycled PET analyst with the consulting firm Wood Mackenzie.

Implementation will vary widely across European nations but PPWR will build on previous EU legislation in areas like recycled content in plastic bottles and product bans like polystyrene restrictions that some European nations have already adopted, he said.

Slutzker predicted that reusable packaging will be a key part of regulations to meet PPWR goals of reducing packaging waste by 15 percent by 2040, from a 2018 baseline.

"It's very ambitious. We are going to see a lot of reusability and refillables," he said, as well as more container deposit return schemes.

Overall, he said the EPR programs will lead to more questions being asked about packaging choices and a drive toward simplification.

"We are going to see a minimization of packaging to get to kind of the bare bones essentials of what this is going to be, and have a lot of reporting on those standards," Slutzker said.

He predicted the PPWR will focus on four key levers: reuse quotas, packaging bans, packaging minimization and quotas for recycled content.

Wood Mackenzie research shows PPWR could reduce plastics demand in packaging, for both virgin and recycled resins, by 15 percent by 2030 and 30 percent by 2040, with the largest single impact from reuse quotas, he said.

That includes reusable packaging in transport and industrial packaging as well as beverage containers.

"Looking at reuse targets, Wood Mackenzie is estimating that these are going to have the biggest impact on polymer demand from the packaging sector," he said.

Much remains unclear, however, as implementation of the PPWR will continue to be hotly debated in European nations, and impacts on demand for specific resins or sectors could change, he said.

Reuse targets and packaging bans are among the more politically sensitive parts of PPWR, he said.

APR's Bailey said other research shows recycled-content mandates having the biggest impact.

She pointed to a November study from the University of California that looked at eight policy options for reducing plastics waste as part of the global plastics treaty.

"They concluded that the most effective policy for reducing virgin plastic production was a minimum 40 percent recycled content requirement," Bailey said. "Recycled content directly replaces virgin. They looked at bans, they looked at EPR, and they said recycled content is going to have the most meaningful impact."

Speakers said U.S. states are looking at EPR debates in other countries for ideas.

They noted that the U.S. states are also trying to align EPR their policies with each other when they can, such as around lists of materials covered by producer responsibility fees.

Bergquist said state working groups, for example, will invite speakers in from other states to compare notes, although he said it will take time to build harmonization into efforts in the U.S.

"There's a lot of work happening behind the scenes, and I think that's not to be discounted," he said. "There's so much work to be done to actually get this set of black and white, concrete rules that we all want. It's going to be a process."