2. EPR IN THEORY
2.1 The Concepts of EPR
Extended producer responsibility is a political and today even a legislative term supporting circular economy and life cycle analysis of a product. In 1992 the Swedish professor Thomas Lindhqvist introduced the idea of responsibilities for waste management which are to be shifted to producers of products instead of customers and authorities. He later defined EPR as “…an environmental protection strategy to reach an environmental objective of a decreased total environmental impact from a product, by making the manufacturer…
responsible for the entire life-cycle of the product… (EPR) is implemented through administrative, economic and informative instruments…”.44
Since Lindhqvist there have been many researchers defining EPR by adding some ideas to the original one referring to certain period of time, however, the main idea has stayed the same. The commonly used definition is by the Organisation for Economic Co-operation and Development (OECD). The organization started its EPR definition process in 1994 by defining EPR as a responsibility of producers to the post-consumer stage of products’ life cycles. Four years later the definition covered products’ entire life cycle.45 Today, the OECD defines EPR as “…an environmental policy approach in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle”.46 In the Commission’s report on EPR the principle is defined as a guiding principle “…which stipulates that the waste producer and the waste holder should bear the costs of waste management…”47. The thinking behind EPR is based on knowledge that producers know the best which changes are required to minimize environmental impacts of their products48.
44 Lindhqvist 2000, p. ii.
45 Lindhqvist 2000, p. 55-56.
46 Extended Producer Responsibility OECD 2016, p. 21.
47 Development of Guidance on Extended Producer Responsibility (EPR) 2014, p. 7.
48 Quinn and Sinclair 2006, p. 64, Filho et al. 2019, p. 552, Pouikli 2020, p.493.
It has been stated that “EPR is a policy principle to promote total life cycle environmental improvements of product” systems49. The Commission defined EPR as “…an approach to ensure that producers contribute financially to the costs of waste management…” and through the costs EPR, as an economic instrument, producers are stimulated to better design in order to reduce the costs50. However, EPR’s role in a life cycle has been criticized as not being the one and only tool to improve effectiveness of the life cycle of a product51. Historically, waste has been dumped in landfills or deposited in waste incinerators which cause vast amounts of air, water, and soil pollution as well as, additionally, increase green house gas emissions52. Among other countries the EU has also exported mainly waste outside of the Union which has created problems elsewhere: in 2017 China refused to import, for example, plastic as a part of the country’s environmental program53. In 2016, the EU exported 1.4 million tonnes of plastic to China and after the ban the EU exports of plastics were down to 14 000 tonnes54. The action put exporting countries into a global political crisis55 requiring a new plan from the exporters. Perhaps due to the ban, the fact that in Europe there is not enough land to be filled anymore and the need to reduce green house gases according to the Paris agreement the Union accelerated its policy options and the concept of circular economy started to achieve support among politicians.
The EU introduced “circular economy as a concept for a new Europe” in the Union’s Seventh Environmental Action Programme in 201356. The program focused on planet’s ecological limits and highlighted “…circular economy where nothing is wasted and where natural resources are managed sustainably…”57. Additionally, as moving towards circular economy the program aimed to move internal barriers for environmentally-sound recycling activities by reviewing legislations and raise public awareness. The Commission stated that the linear pattern referring to a pattern “take-make-use-dispose does not provide producers
49 Lindhqvist 2000, p. V and 29.
50 COM(2019) 91 final, p. 13.
51 See e.g. Salah 2007, p. 13-14.
52 Austin 2013, p. 222.
53 WTO Notification July 2017.
54 EU exports of recyclables to China fallen sharply.
55 Five WTO members (e.g. the US and the EU) questioned China’s import ban. See China’s import ban on solid waste queried at import licensing meeting.
56 Turunen 2018, p. 17.
57 Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ Annex point 1.
with sufficient incentives to make their products more circular” and therefore “building on the single market the circular economy can strengthen the Union’s industrial base”58.
The Union’s Seventh Action Programme included EPR as one solution to turn waste into a resource in accordance with the idea of circular economy59. Farmer states that in circular economy “a key policy element in the delivery of management of waste and materials in products is EPR” but the European Environmental Agency provided for the role of EPR financing among enabling factors of circular economy60. Financial issues seem to be the most important dimension of EPR in the EU since the Commission points out that “EPR puts an obligation on producers to take operational or financial responsibility for the end-of-life phase of their products”61. More of these obligations in the subchapter 2.2 and in chapter 3.
In general, EPR has been seen as an environmental policy which relies on market incentives:
it can be viewed as “an ecological extension of product liability law”62. EPR focuses on shifting responsibility to producers and on giving them incentives to incorporate environmental considerations on their products63. Whereas corporate social governance engaging companies to account environmental, social, and economic factors in the company’s processes are usually voluntary providing reputational impacts, EPR can be seen as a stimulating support tool for it. However, the fundamental argument has been the extension of EPR regulatory frameworks since, after all, they act as a level playing field for companies to implement sustainability activities: the “primary objective of EPR is to promote environmental aspects”.64
58 COM(2020) 98 final, p. 2-3.
59 Decision No 1386/2013/EU of the European Parliament and of the Council of 20 November 2013 on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ Annex point 40.
60 Farmer 2019, p. 401 and Circular economy in Europe. Developing the knowledge base 2016, p. 11.
61 COM (2019) 91 final p. 14.
62 Sachs 2006, p. 53.
63 Pouikli 2020, p. 493.
64 Hickle 2017, p. 116.
2.1.2 Responsibilities of EPR
Lindhqvist distinguished between four types of producer responsibility which are vital in understanding producer responsibility: liability, economic responsibility, physical responsibility, and informative responsibility65. According to Quinn and Sinclair if these key policy elements are addressed and responsibilities are carried out successfully there are advantages not only reducing waste but also environmental benefits, such as lowering energy consumption, green house gases and litter abatement, and increasing recycling rates66. The figure one shows the responsibilities and their relationships with each other.
Informative responsibility
Figure 1. Responsibilities of EPR after Lindhqvist67.
At the core of these elements is ownership of the product or property rights of the product as the researchers after Lindhqvist have called the core element. For Lindhqvist the ownership of the product was important since according to the main idea of EPR a manufacturer of a product retains that ownership throughout the “product’s life cycle” and is therefore “linked to environmental problems caused by the product”. Property rights, on
65 Lindhqvist 2000, p. 38.
66 Quinn and Sinclair 2006, p. 64-65.
67 See Lindhqvist 2000, p. 38.
Liability
Economic
respon-sibility
Ownership
Physical respon-sibility
the other hand, may be relevant under other responsibility schemes: for example, property rights in waste can affect treatment of waste and therefore property rights are considered more appropriate in EPR elements.68
The economic or financial responsibility can be understood as a producer covering “all or a part of the expenses” regarding, “for example, collection, recycling or final disposal of products”: Lindhqvist stated that the expenses can ”be paid directly by the producer or by a special fee”. The physical responsibility characterizes a system where a manufacturer is involved in the management of the product and its effects throughout the life cycle.69 As can be noticed EPR is focusing on the “post-consumer stage of a product’s life” although, under the ownership, a manufacturer should be responsible for the product for its entire life-cycle:
most of the existing EPR programs highlight the end-of-life management costs. This is an issue of which EPR has also been criticized for. Sachs argues that EPR forgets product design which would make environmental considerations a core element and, in addition, by focusing on post-consumer stage of a product’s life there are increasing logistical challenges for manufacturers70.
The informative responsibility refers to product labelling. A manufacturer is required to provide information on the product and on its environmental effects. Such information can be material or component lists. The liability refers to responsibility proven environmental damages caused by the product manufactured by a producer. Damages in question may occur in different stages of the product’s life cycle including use and final disposal. The extent of liability is determined by legislation, and therefore researchers after Lindhqvist have started to call liability as legal responsibility71.72
68 Lindhqvist 2000, p. iii and Steenmans 2019, p. 114.
69 Lindhqvist 2000, p. ii and 38- 39 and Steenmans 2019, p. 113-114.
70 Sachs 2006, p. 63-64.
71 See e.g. Quinn and Sinclair 2006, p. 64.
72 Lindhqvist 2000, p. ii and 38-39 and Steenmans 2019, p. 113-114.
2.1.3 Principles Affecting EPR
EPR as an environmental protection strategy relies mostly on polluter pays principle. The principle states that the costs of measures to deal with pollution should be borne by the polluter who causes the pollution. The principle is one of the cornerstones of European environment policy and today, it can be found in the Treaty on the Functioning of the European Union73.74 Manufacturer should pay either for preventing the pollution in advance or for compensating for the harm afterwards75. In the EU, the principle has taken different functions: an economic integration function referring to harmonizing internal market, a redistribution function referring to cost internalization, a preventative function and a curative function referring to damage reparation. EPR provides a practical application for the two last mentioned functions stating that harms can be prepared in advance or afterwards. EPR aims
“to ensure that the cost of a harm” is carried out by those who are responsible for the harm and that the “burden does not rest on taxpayers”.76
EPR refers to a producer of a product, but like Kalimo et al. state “there is a wide range of actions of other stakeholders along the product’s life cycle”77: who is actually the polluter?
Kalimo et al. and Sachs provide an answer: “the most obvious polluter is the consumer when at the end discarding the product”. Whereas the producer makes a product useful, the consumer makes it waste at some point and therefore it is the consumer who causes environmental impacts. Due to the impact of consumer in product’s life cycle Sachs suggests consumer-oriented taxes or ‘pay as you throw’ disposal charges. Since polluter is most likely a consumer instead of a producer there is no causal connections between environmental harm and producer in product policies.78
There are also other views on who is the polluter. Malcolm notes that the concept EPR is problematic. She says that in the EU it refers mostly to take-back schemes (see subchapter 2.2.2) but extended producer responsibility can be used to refer the life cycle of a product
73 TFEU art. 191(2)
74 Jans and Vedder 2012, p. 49.
75 Kalimo et al. 2015, p. 43.
76 Maitre-Ekern 2021, p. 6.
77 Kalimo et al. 2015, p. 43.
78 Kalimo et al 2015, p. 43 and Sachs 2006, p. 65-66.
and therefore also includes consumers. However, as she argues, the product is the source of the problem: “if the product did not exist, then the consumer could not pollute the environment by using it”.79 However, since responsibility is producers’ they “tend to pass on” at least some of “the EPR costs onto consumers through sale prices”80.
Responsibility can be considered as the other side of the coin when it comes to befitting.
Beneficiary pays principle refers to equity and to the issue that those who benefit from a specific activity should be responsible for the activity’s environmental consequences81. The principle differs from polluter pays since under beneficiary pays principle both a producer and a consumer can benefit and therefore both can be responsible for environmental harms:
the producer receives profit from selling the product and the consumer benefits from using the product.
In addition, there are also other principles linked to EPR and to circular economy, however, they do not have as much weight as the above-mentioned principles. The prevention principle addresses to risks which are known and likely to occur while carrying out a certain activity. Having its origin in waste and pollution legislation the prevention principle seeks to find a relationship between probability and the extent of damage. Once the environmental impacts are identified along the product’s life cycle, steps to reduce or eliminate impacts can be taken.82 The precautionary principle, although a central principle both in the international and in the EU environmental laws, has not an explicit definition, but, yet, it is a legal tool used to achieve environmental goals83. In the Union the European Court of Justice has clarified the principle in its decisions84 and, for example, the European Environmental Agency clarifies the principle in short as “…it is better to prevent that repair” allowing action to be taken to protect the environment at an early stage85. Whereas precautionary principle provides a possibility for a public authority to intervene before damage is likely to
79 Malcolm 2019, p. 215.
80 Maitre-Ekern 2021, p. 7.
81 Kalimo et al. 2015, p. 43.
82 Van Calster and Reins 2017, p. 34, Jans and Vedder 2012, p. 47, Malcolm 2019, p. 214.
83 Van Calster and Reins 2017, p. 30.
84 e.g. C-180/96 United Kingdom v Commission (EHR- I-226) and T-13/99 Pfizer Animal Health v Council (ECR II-226).
85 Prevention principle.
take place, in the regulation on waste it creates a preventative dimension that lies behind the additional control measures86.
In addition, eco-efficiency and principles of industrial ecology are linked to EPR. The first states that while a producer takes environmental matters into consideration in production the costs are kept to a minimum and even to be shared with others in the value chain of the product87. The latter refers to a producer’s responsibility of manufacturing products:
according to the principle producers create a desire amongst consumers to consume that product which then leads to pollution88.
2.2 Elements of EPR Legislation