Extended Producer Responsibility

Below are a series of articles on EPR, written by Wayne Rifer in late 1999.
 
EPR 101
EPR Part 2
EPR Part 3

Extended Product Responsibility 101

What’s in a name? In this case a rather interesting story. On this side of the Atlantic, we say "Extended Product Responsibility". In Europe they say "Extended Producer Responsibility". I’ll call them EPtR and EPerR.

The concept of EPR got its start in Europe. The idea is simple: If you make it, you should take responsibility for it. Or thinking it through a little more: If you make it, you should be responsible to internalize the environmental costs of its entire life cycle, from cradle to grave, or hopefully, from cradle to cradle. Thus the producer is incentivized to design his/her products and processes for environmental responsibility. We call this DfE, or Design for Environment.

Here in America we believe in sharing responsibilities. Or at least we don’t believe in pointing the finger too sharply at manufacturers. Whereas those radical Europeans insist on putting the responsibility on the manufacturing industry, which, they argue, has the greatest influence over reducing life cycle environmental impacts.

So now you know what’s in this name. In Europe they say EPerR, while in America we have changed the name and altered the concept somewhat to EPtR.

In fact, wherever it is practiced, EPR is a shared responsibility. Even the hallmark of all EPR initiatives, the 1991 German Packaging Ordinance - called Green Dot or Duales System Deutschland - shares the responsibility for package recycling amongst the producers, retailers and consumers of consumer products.

What is this "responsibility" that everyone seems eager to share? Typically speaking this is the responsibility for disposal, that is, recycling or disposal of the product and/or the product’s packaging. More generally speaking it is responsibility for the entire life cycle of the product. So if the making of a product requires extraction of heavy metals from the earth (like my computer here), the producer (Dell) should accept responsibility for the environmental friendliness of that extraction process.
Perhaps Dell could require an EMS of their suppliers; or even select their suppliers based on their environmental programs.

So that’s the basic idea of EPR. One last point: EPR generally consists of three basic attributes:

1. Extension of responsibility for environmental impacts to where it now does not reside

2. A focus on all the life stages of the product system, with feedback to product designers, and

3. A sharing of responsibility amongst links in the product chain, with a defined onus (or onuses) of that responsibility.

Keep your eyes peeled for EPR. It is the emerging principle for a new generation of recycling systems. Perhaps for my next computer I will buy a 10-year computer-use license. Dell will deliver me a computer; keep it updated; and take it back when obsolete. You can bet that future generation of computers will be recycled much better than this generation.

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Extended Product Responsibility - Part 2

This is the second in a series of articles that Recycling Advocates intends to print regarding a new initiative that represents a critically important shift in how and why we recycle. In last month’s article we defined Extended Product Responsibility (EPR) as consisting of three basic attributes:

1. Extension of responsibility for a product’s environmental impacts to where it now does not reside.

2. A focus on all the life stages of the product system, with feedback to product designers.

3. A sharing of responsibility amongst links in the product chain, with a defined onus of that responsibility.

At AOR in Seaside last month, four speakers addressed EPR in two sessions, making it THE major topic of the conference. Derek Stephenson of Enviros-RIS, a UK consultancy, has been working on EPR in Canada and Europe for many years, often retained by industries that are under a take-back or bottle bill gun. Helen Spiegelman is with the Society Promoting Environmental Conservation in Vancouver, B.C., and has been a prominent proponent of the B.C. bottle bill and their new EPR program. Lynn Scarlett heads up the LA-based Reason Public Policy Institute and has been a prominent advocate for private-sector approaches to environmental responsibility. Michele Raymond publishes Recycling Laws International and has reported for years on EPR and all the other solid waste issues.

Some interesting debates ensued including one between Derek and Helen. Derek defined their common ground that the vision of a sustainable, circular materials economy is widely shared. The question is who is responsible for getting us there, and how. He is especially conscious of the complexity of the issue, and the inefficiencies and inequities that can be created by crude policy initiatives. He advocates a comprehensive policy approach that shares responsibilities broadly – one that has not yet been discovered. A system recently developed in the UK is one of the best so far, though still fatally flawed. In the UK packaging compliance costs are shared among the whole chain; compliance certificates can be bought and sold; and the recovery system operates under an escalating landfill tax with revenues being invested in market development. Yes, it is complex.

Helen advocates the B.C. system, which is designed around the bottle bill concept. Individual products are taken on one at a time, with retailers responsible for establishing a take back system based on a consumer deposit. B.C. has expanded its deposit system to include polycoat containers and liquor bottles, and they are expanding take back requirements into paints, toxics, pesticides, and others. A much simpler system, but not as comprehensive.
Helen believes that municipal recycling systems perversely subsidize the producers’ ability to be wasteful. The community, e.g. the public works agency, should not be forced into the center of that chain of ownership. A bottle bill like Oregon’s has the retailer playing the role of the recycling collector. The public doesn’t pay for it - through taxes or fees anyway. Perhaps through prices.

While sharing much of the common vision, Derek and Helen strike a sharp division on strategy. The message is that this is an issue where the devil is in the details. Its fine to promote the end result - that producers should take responsibility for the life cycle of their products. But it’s totally another matter to create a system that works in our complex global economy.

Another interesting debate occurred around Lynn Scarlett’s contention that government intervention into this issue can be more destructive than helpful. "Mandates ossify", she states, and what we need most is creativity, innovation and discovery. She points to numerous voluntary industry initiatives that are emerging. Dell licenses computer services, and takes back their obsolete machines to be remanufactured. Xerox recycles and refurbishes their copiers. HP takes back and recharges their cartridges. Interface takes back and recycles their commercial carpets into new. Even our local Nike takes back old sneakers and makes them into athletic surfaces.

Voluntary programs, she says, spring up wherever 1) there is high risk in improper disposal, 2) there is high value in the product, 3) there is a low transaction frequency, or 4) specialty high-end products depend on customer loyalty.

But others felt that voluntary programs move way too slowly, and that public policy, even public mandates, will be needed to move corporations off the dime. But what public initiative, and by whom? No consensus there! Germany, Netherlands, UK, Denmark, European Union, and Japan have all tried different approaches. The systems are getting better, but our own federal government shows no movement in any direction.

So if B.C. took it on, why not Oregon? We’re the innovators, right? So lets get started talking. At least then we’ll get a legion of industry lobbyists filling our hotel rooms.

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Extended Product Responsibility - Part 3

By Wayne Rifer
Let’s talk money.
In two previous issues (September and October) we explored the basic concept of EPR and some of the issues inherent in the name. This month we explore some of the financial drivers as they have been playing themselves out in Europe.

The Organization for Economic Co-operation and Development defines EPR in financial terms. "EPR is a means to reducing the need for government outlays associated with waste management" (OECD, "Phase 2 Framework Report on Extended and Shared Producer Responsibility", (www.oecd.org/env/lists4.htm). In Europe this means that the producer of a product holds the "ultimate" responsibility for the waste management costs.

This, in concept, will drive producers to manufacture products with their end fate in mind and to maximize end-of-life value. "A significant result of EPR is that a considerable portion of post-consumer products are diverted from final disposal." (OECD)

Figure 1 illustrates an important point. Value is created in manufacturing and selling a product, and then that value is used up during the use phase. All these value- positive processes occur in the private sector. Extractors, manufacturers and retailers are happy to make money off products when their value is positive. But when the value of the product falls below zero, we call in the government. Government picks up the tab at the product’s end-of-life (E.O.L.). If the product is landfilled, the public pays. If the product is recycled, a public investment lifts the value back up above the 0-value axis.

Let’s look at this conundrum another way. Notice that in figure 2, the consumer is the direct source of all the money that drives both production through purchasing products and recycling and/or disposal through paying fees or taxes. In the Portland area we pay for recycling and disposal through our hauler. But a franchised hauler is really acting as an agent of government, since government establishes both services and prices. Neither proper disposal nor curbside recycling services would be provided if government didn’t say so.

The critical point here is that the part of the product chain that receives most of the value from the product, the production system, has no responsibility for the financial burden of the end fate of the product.

Europe, and other parts of the world, has been experimenting with systems that assign a shared responsibility to all actors in the product chain, and place the primary responsibility on the manufacturer. So how does this work?

Most commonly, manufacturers create a new entity, a "Producer Responsibility Organization" (PRO), that pools and shares responsibility amongst those who gain the most from the value of the product. For example, the 1991 German packaging law (Green Dot) requires producers to take back their packaging unless they belong to a PRO that collectively performs its members’ responsibilities. This is similar to the way the City of Portland allowed local haulers to provide curbside recycling services. In fact in the German model the PRO must handle the collected packaging independently of the public waste system, which is why it is called the Duales System Deutschland.

Figure 3 shows how this would work. The PRO assesses each member a portion of the E.O.L. costs. These revenues may totally replace local funding for waste management of the designated products, or the PRO may make a financial contribution to help support the public waste system. This later approach was voluntarily adopted by packaging manufacturers in Ontario, CN in order to stave off passage of a bottle bill. (Horrors!)

Of course there is no free lunch. In truth the E.O.L costs will be incorporated into the price of the product. But that’s the point. That provides an incentive to the manufacturer to design products with cost-effective disposal in mind, and with a little urging from government that means more recycling. Or perhaps manufacturers will design products for a longer life, making a less steep slope in figure 1. It also signals consumers about the full costs of their consumption habits, perhaps making stuff-intensive or low-durability products somewhat more expensive.

Perhaps such a system would be a small step toward our ultimate goal: More Value, Less Stuff

Find further information on EPR:
U.S. Environmental Protection Agency site on EPR:
http://www.epa.gov/epr/.