What are Eco Modulated Fees and what does it mean for Businesses and their Packaging?

Introduction

The updated Waste Framework Directive requires the modulations of financial contributions to Extended Producer Responsibility Schemes in order to minimise waste contribution and facilitate the recycling of materials. Our blog explains why eco fee modulation for packaging is necessary and what it means for packaging businesses in Ireland.

The EU Circular Economy Package

At present we operate a mostly linear economy. This means that we generally extract materials from our planet, make something from those materials and when we are finished with what we have made, we dispose of it. The reasons for this disposal are multi-faceted however how we design our products and packaging can play a significant role in their premature demise. Ultimately this loss of valuable materials from our economy is both wasteful and costly and it is now well recognised that it is no longer sustainable as we move forward.

In 2015 the European Union launched its vision for a Circular Economy in Europe, where resources continue to add value for as long as possible and where virgin material usage and the generation of non-recyclable waste are both minimised. Within this vision, all products are designed at the production stage to be suitable for reuse and high quality recycling.

Given recent environmental concerns, the EU’s Circular Economy Package has also resulted in a strategy for plastics specifically in order to better manage these materials to ensure that they do not end up as marine litter. However this strategy also aims to ensure that all plastic packaging placed on the market in the EU is recyclable by 2030. In order to support this transition to a Circular Economy, the European Union approved a number of directives in 2018 and 2019 in the form of an

• Updated Waste Framework Directive
• The Packaging & Packaging Waste Directive
• The Single Use Plastics Directive

What does all of this mean for Packaging Companies?  

There are a number of key points to note within these different strategies and directives that impact on how Repak, on behalf of its Members, must operate as a Producer Responsibility Scheme.

Reporting Packaging Placed on the Irish Market

Fee modulation is a feature of the EU’s Plastic Strategy, and forms part of an effort to drive more manufacturers and retailers to use plastic packaging that can be recycled on their products. In addition, the new Single Use Plastics Directive contains separate collection targets of 77% by 2025 and 90% by 2029 that are specific to plastic beverage bottles.

For Repak, this creates two important issues for how producers of packaging report to us: -

1. We must understand and separate plastic packaging placed on the market that can be recycled at present from material that cannot be recycled.
2. We must understand beverage versus non beverage plastic bottles placed on the Irish market.
3. As we also know that in some cases the source of plastic packaging waste is an important factor in whether or not it can be recycled, we must also take that into account in our reporting structure.

The definition of composite packaging or packaging composed of more than one material, also now forms part of the Packaging & Packaging Waste Directive (see EU Commission Implementing Decision 2019/665). Any material where the main material makes up less than 95% of the packaging must be reported as a composite.

All of these considerations have resulted in a new reporting structure for plastic packaging and composite packaging.

In addition this directive also requires information on the amount of sales packaging that is reused which must be collated and reported to the EU by the Environmental Protection Agency. Source: Packaging & Design for the Circular Economy.

Ireland’s Packaging Recycling Targets

In 2020 the Irish Government transposed the new Packaging & Packaging Waste Directive into Irish Law. This legislation sets out new recycling targets for all packaging with 65% to be achieved by 2025 and 70% by 2030. Targets have also increased for individual packaging materials. One of the most challenging targets for Ireland will be to meet the plastic packaging recycling rates. 

At present, Ireland achieves a 31% recycling rate for plastic packaging. This exceeds the previous target of 22.5%. However Ireland will need to achieve a plastic packaging recycling rate of 50% by 2025 and 55% by 2030. To achieve this first 2025 target, additional funding will be required to increase recycling rates by an additional 4% per annum up to 2025.

Ireland's EU Recycling Rates Compared with Targets for 2025 and 2030

What are Net Necessary Costs?

Repak fees for plastics that can be recycled increased in 2021 to €117.37 per tonne reflective of net necessary cost principles being applied.What this means in practice is that the producer will pay 80% of any costs left over after the income from the sale of a waste packaging material is taken into account. The consumer will then pay the remaining cost.The Waste Framework Directive was transposed into Irish Law and states that producers must pay 80% of the Net Necessary Costs of recovering packaging waste. These costs include operational costs such as the collection, treatment / processing and management of packaging materials.

However as there is usually a cost rather than an income associated with materials that cannot be recycled, Repak fees for non-recycled plastics and composites are being adjusted in a phased basis to reflect the necessary cost. Therefore, non- recyclable plastic fees from July 1^st 2021 will increase to €175 per tonne. Further increase will come into effect in 2022 reaching the current 80% net necessary cost estimation of €271 per tonne by 2023. Fee’s are subject to annual approval by the Board of Repak.

At Repak we are preparing for net necessary cost application for all other materials to be implemented by 1^st January 2023 as per the Waste Framework Directive requirements.

Resources and Supports

If you require information on what these changes mean for your business, please do not hesitate to get in touch with us below  or call us on 01 467 0190.