Future 500 | Finding common ground between uncommon allies

How EPR can boost recycling rates

This is a cross-post from Triple Pundit Blog originally posted here.

About three years ago conversations around recycling started heating up, with various pressures and interests converging around the need to increase stagnant recycling rates. While various groups had long been clamoring for an overhaul of our country’s recycling infrastructure, this recent push has been driven primarily by a small group of companies. Domestic manufacturers faced critical shortages of metals, glass, plastics, and paper. To deal with the shortages as well as the high costs of these inputs, they began to take riskier political positions, sometimes at odds with their customers, out of business necessity.

EPR Dialogue

Over the past two years, my organization, Future 500 – a stakeholder engagement group – has facilitated dialogues with the intention of achieving buy-in around specific policy mechanisms that would boost recycling performance. From these, a series of options have emerged, from strictly voluntary measures to deposit systems and now to Extended Producer Responsibility (EPR). Through these discussions, we have found that EPR satisfies the broadest set of stakeholder interests, and has now gained sufficient traction and support to take legislative form.

My post will outline the current state of the EPR debate, look at the key players and argue why we have to continue working towards a comprehensive approach that meet the needs of a broad set of stakeholders.

Internalize externalities

Recycling rates in the U.S. are embarrassingly low and stagnant. There are strong drivers to improve these, including: (1) compelling need by domestic manufacturers for more high-quality recycled materials, especially plastic, paper, metal, and glass, to avoid further loss of jobs and markets to foreign competitors; (2) compelling need by local governments to reduce waste management costs, particularly for materials that have low recycling value; and (3) larger trend to shift certain responsibilities from the public to the private sector, and hence privatize externalities.

At present, the marketplace benefits of packaging are privatized, but the back-end costs are socialized, picked up by local government and ratepayers with little control over the design or generation of the waste. There is no realistic way, or incentive, for consumers to choose to minimize packaging or product waste. They receive no incremental benefit for doing so, so producers continue to downplay end-of-product-life concerns in designing packaging. EPR shifts the costs and benefits of recycling to producers, who can realize savings by making design changes that either reduce the weight or increase the recycling value of their packages.

Landfill Solutions

Key Stakeholders

Among major brands, Nestle Waters North America has been a key advocate for EPR. They look at the risks from long-term supply chain volatility and see EPR as a mechanism to ensure a robust supply of high-quality, low-cost material for their packaging. As You Sow is the leading shareholder advocate on waste issues, and is the leading voice urging companies to take responsibility for their post-consumer packaging and waste. They believe EPR is a proven policy, effective at pushing up recovery and recycling rates, and are looking for increased corporate support of EPR. Key recycling advocates such as the Cradle 2 coalition, Product Stewardship Institute, state Product Stewardship Councils and several others are also doing excellent work in this arena. Many municipalities and local governments are actively seeking relief from the burdens of managing the increasingly complex infrastructure around waste diversion. Other stakeholders such as haulers, manufacturers, labor, etc. have differing perspectives but many have expressed interest in discussing EPR at some level.

The Trend Toward Producer Responsibility

EPR is an established policy instrument in different European contexts, as well as in Canada. Recycling rates have gone up and costs have gone down over time, and that is encouraging for EPR advocates in the US. That said, it is important not to place too much emphasis on success in other countries. American politics is like nothing else in the world. Plus, each state recycling system differs from the next in significant ways, and it will take a lot of hard work to find the ideal policy for each context. However, it is hard to ignore the growing trend in favor of product stewardship and producer responsibility here in the US, as seen with the passing of e-waste and other product take back legislation in several US states.

The Dialogue

EPR LegislationOver the past 18 months, we have convened four Dialogues on recycling, and the group has coalesced around a strategy to develop and promote model EPR policy that would cover multi-material packaging and paper. From this process, the stakeholders have identified key barriers and opportunities, found alignment among key interests, identified prospective states, created a roadmap for those states, and developed model policy and a white paper on EPR. Legislation will be introduced in 2013 and 2014 in selected states.

While the introduction of legislation might be seen as a final phase, it is more often a beginning step. Once the prospect of legislation is real, stakeholders tend to become more motivated to map out their preferred paths and come up with constructive solutions.

Compared to 18 months ago, there is undeniable forward momentum to improve the U.S. recycling infrastructure. There is noticeable buzz behind EPR, for which both support and opposition is solidifying. What is less clear is what people are supporting or opposing. EPR is a set of three letters. The precise meaning often depends on which stakeholders you speak with.

Most important is to focus on three core principles on which there is broad consensus both inside and outside our dialogue: internalized costs, producer responsibility, and producer management.

EPR could improve performance and drive up recycling rates while minimizing costs. The status quo is driving a continuing loss of domestic jobs, while increasing the burden on local governments. While EPR is the most effective policy option that has been developed by stakeholders to date, it does not preclude other policy options, such as Pay As You Throw, and in fact those policies may be mutually reinforcing.

The question is not whether EPR will be adopted, but what it is, what it will cover, and when it will happen. To assure that there is movement in a two-to three-year time frame, some of our Dialogue process stakeholders will be pushing for active legislation in 2013 and 2014. Both in the short and long term, we are actively trying to engage all parties in this arena. While our formal dialogues may be over, the constructive phase of the conversation is just beginning.

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