East Asia and Pacific Region: MARINE PLASTICS SERIES The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC January 2022 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Copyright © by International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of staff at The World Bank with external contributions. The findings, interpreta- tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Citation: World Bank. 2022. The Role of Extended Producer Responsibility Scheme for Packaging towards Circular Economies in APEC. Washington DC. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover image: Shutterstock/Darrenp Cover design: Sarah Hollis The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Contents Acknowledgments.........................................................................5 Acronyms..................................................................................... 6 Executive summary....................................................................... 8 Section 1. Introduction...................................................................12 Section 2. Status quo: EPR in APEC................................................. 14 Section 3. Implementing and improving EPR................................... 22 3.1 Characteristics of well-functioning EPR systems...........................................................................22 3.2 Insights from APEC ..........................................................................................................................25 3.3 Recommendations for EPR in APEC ................................................................................................30 3.3.1 Phase I – Initial start (nascent EPR regulation)............................................................................................ 32 3.3.2 Phase II – Transition towards a mandatory scheme.................................................................................. 33 3.3.3 Phase III – Implemented and operationalized EPR schemes................................................................. 36 Section 4: Case Study: Accelerating EPR in Malaysia........................ 38 4.1 Status of EPR in Malaysia.................................................................................................................38 4.2 Next steps for Phase II: Addressing challenges to develop a legal framework for EPR..............39 4.3 Case study conclusion......................................................................................................................40 References.................................................................................. 41 Glossary...................................................................................... 43 LIST OF FIGURES Figure ES.1: Insights from the APEC context to accelerate EPR implementation................................................ 10 Figure 1: Circulation of packaging material....................................................................................................................... 14 Figure 2: The role of the PRO for circulating packaging material as part of the EPR scheme.......................... 16 Figure 3: Overview status quo of EPR in APEC.................................................................................................................. 20 Figure 4: Collective EPR schemes with PRO....................................................................................................................... 22 Figure 5: Overview of the three phases and recommendations................................................................................ 31 LIST OF TABLES Table 1: Comparing mandatory and voluntary schemes...............................................................................................15 Table 2: The status quo of EPR legislation for packaging in APEC..............................................................................18 Table 3: EPR criteria......................................................................................................................................................................23 Table 4: APEC members grouped into three phases.......................................................................................................30 Acknowledgments The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC combines lessons learned from global case studies with insights from APEC members to outline a series of recommendations for accelerating EPR implementation and operationalization in APEC member economies. The report was prepared by a team from cyclos – Jana Brinkmann, Stephan Löhle, Thilo Vogeler and Nicola Drotos. The work was managed by a World Bank team comprised of Anjali Acharya, Kate Philp, and Nainika Singh, under the leadership and guidance of Firas Raad, Mona Sur, and Klaus Sattler. Suiko Yoshijima and Rieko Kubota provided peer review. Cover and report design undertaken by Sarah Hollis. The report has been enabled and supported by the Ministry of Environment and Water, Malaysia, with guidance provided by Dr. K. Nagulendran and his team – Jamalulail Abu Bakar, Eddy Mazuaansyah Mohd Ali Murad, Nor Haswani Kamis, Nur Hidayah Hasnan and Ilya Najha Jazari. The study team would like to thank the participants of the two-part webinar series on The Role of Extended Producer Responsibility Schemes for towards Circular Economies in APEC, held virtually in December 2020. Specifically, the study team would like to thank Agnes Bünemann, Jan Møller Hansen, Yong-Chul Jang, Monika Romenska, Edwin Seah, and Ashwin Subramaniam for their participation in the webinar series and inputs to this report. This report builds on work undertaken by the PREVENT Waste Alliance (launched in 2019 by the German Ministry for Economic Cooperation and Development (BMZ)) on developing an EPR Toolbox and by the World Wide Fund for Nature (WWF) on assessments of potential EPR schemes for plastic packaging in several ASEAN Member States. Funding for this report and the webinar series was provided by PROBLUE, an umbrella multi-donor trust fund, administered by the World Bank, that supports the sustainable and integrated development of marine and coastal resources in healthy oceans. Acronyms APEC Asia-Pacific Economic Cooperation CE circular economy DRS Deposit-refund system EPR Extended Producer Responsibility ESR Extended Stakeholder Responsibility LEP Law on Environmental Protection MPP Malaysia Plastic Pact MPR Material Packaging Reporting PRO Producer Responsibility Organization PS Product Stewardship “An effective EPR system should be country-specific and supported by evidence-based knowledge, incentives, strong commitment and collaboration between private sector, government and consumers. EPR is a natural and integrated part of any sustainable society and an important element of effective circular economy and waste resource management.” Jan Møller Hansen, International Portfolio Manager, Ministry of Environment, Denmark “EPR is one of the key elements to driving a circular economy for plastics, packaging and other materials. A well designed EPR system will stimulate progress towards reuse, refill and new delivery models, as these would be more cost effective than recycling single use plastics. Where single use packaging is the only option, eco-modulation will encourage businesses to use more recyclable packaging, as industry will be required to pay a higher fee for lower-value, non-recyclable plastics as compared to higher value, recyclable plastics. A well designed EPR system will boost the recycling value chain and the domestic recycling industry.” Ashwin Subramaniam, GA Circular “For EPR to be truly effective in Asia, it must be designed from a country-specific, informa- tion-based and data-driven perspective. It should not act as a standalone or isolated policy to solve a country’s waste management problem or drive circularity. An EPR must also be implemented in tandem with adequate waste management and recycling infrastructure, and a mindset of collaboration between the government, industry and consumers.” Edwin Seah, Head of Sustainability Food Industry Asia Executive summary T he enormous amount of plastic waste – especially litter from plastic packaging – that leaks into the natural environment each year is a global concern with severe environmental consequences, particularly for marine life and human health. Limitations in waste collection and waste treatment systems exacerbate the issue. Ensuring proper collection and management of plastic packaging waste is critical for building a reuse and recycling system that enables a circular economy (CE). However, despite the efforts of APEC members, the recycling rate of post-consumption plastic packaging remains relatively low in most APEC member economies. Extended Producer Responsibility (EPR) for packaging aims to reduce the environmental and economic burdens of plastic waste management for municipalities by extending producer responsibility to the end-of-life stage. EPR has been widely implemented in European countries and has led to improved waste collection and increased recycling rates. In APEC member economies, however, EPR implementation varies widely. Some members have enacted mandatory EPR schemes while others only recently adopted or proposed legislation for voluntary initiatives. This report combines lessons learned from global case studies with insights from APEC members to outline a series of recommendations for accelerating EPR implementation and operationaliza- tion in APEC member economies. Given the variation in APEC members’ current EPR practices, recommendations are divided into three phases, as shown in Figure ES.1. Phase I: The focus of this phase is to put EPR on the political agenda and pave the way for emerging legislation. Progress in this phase Initial start requires effective, goal-oriented discussions with stakeholders (nascent EPR to create an in-depth and aligned understanding of the situation regulation) and its associated root-causes. This should be done transparently through broad stakeholder inclusion from the beginning with an emphasis on capacity building. Alternative regulatory solutions should also be explored, along with improvements to packaging waste management, which would benefit EPR policies once implemented. Voluntary, industry-driven initiatives could also provide important insight into member economy-specific experiences. Phase II: This phase focuses on the development and implementation of a member economy-specific legal framework for EPR. A mandatory Transition to scheme requires a holistic approach that focuses not only on the a mandatory system architecture created by the legal framework, but also on EPR scheme the impact of the actual operationalization. Crucial elements to 8 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC consider for the system architecture are unambiguous roles and respon- sibilities, balancing ambitious yet practical targets, and integrating the informal sector. From the perspective of system operationalization, the establishment of a systematic and reliable structure for management of packaging waste (regardless of its value) and strategies to promote the value chain and recycling industry are key aspects to incorporate. The right strategies and adaptation options often require trial and error approaches and build on existing initiatives, pilots and programs in cooperation with businesses. Additionally, monitoring and enforcement as part of the ‘system enforcement’ help complement the EPR scheme to ensure that all involved stakeholders are assuming their responsi- bilities as outlined and the system is appropriately operationalized. Adequate resources in enforcing ministries, such as sufficient staff and training, create a reliable data basis. Implementing standards in waste management are needed for this. Phase III: This phase emphasizes evaluation and adaptation to ensure the EPR system remains relevant and suitable for the member economy Implemented concerned. Actions include creating resilient packaging waste and management structures, guaranteeing stable institutional structures operationalized and investing in communication to inform about changes and provide transparency to the process and system. In addition, the potential of EPR schemes the EPR system to contribute to the CE transition should be assessed, especially in countries with systems set up when this transition was not as important. In Section 4, these insights and recommendations are applied to Malaysia, as a case study, highlighting critical steps and considerations for the successful development and adoption of the legal framework for a mandatory EPR system for packaging. Malaysia is one of the APEC members with emerging legislation and is currently developing EPR legislation for packaging as part of its Twelfth Malaysia Plan, 2021-2025. Additionally, in January 2021, the Malaysian Recycling Alliance (MAREA) – a voluntary, private, industry-led Producer Responsibility Organization (PRO) – was founded to push for mandatory EPR implementation. Malaysia has a reliable foundation for mandatory EPR implementation, achieved through multi-stakeholder engagement, capacity building and shared understanding. This groundwork is complemented by Malaysia’s twin-track approach through actions from the public and private sectors, as well as the broader contextualization of EPR in the overarching transition to a CE. Critical issues for the future progress of the implementation are achieving alignment between involved ministries and agencies, translating objectives into workable requirements and targets outlined by the legal basis, and setting appropriate incentives to increase the recycling of low- and non-valuable plastics. Executive summary 9 FIGURE ES.1: Insights from the APEC context to accelerate EPR implementation PHASE I PHASE II PHASE III Initial start Transition towards a Implemented and operationalized (nascent EPR regulation) mandatory scheme EPR schemes Putting EPR on the political agenda How to implement EPR Evaluating and adapting EPR systems Explore System alternatives enforcement System operationalization Initiate Solid discussion foundation Assess potential for CE Understand situation Stable institutions EPR as part of Communication broader context System Create architecture resilient system KEY ACTIONS TO TAKE: KEY ACTIONS TO TAKE: KEY ACTIONS TO TAKE: • Initiate e ective, goal-oriented • Focuses not only on the ‘system • Evaluation and adaptation of the discussions with all stakeholders architecture’, created by legal system to ensure that the EPR system involved, framework, but also on the impact of remains relevant and suitable for the • Creating an in-depth and aligned the actual operationalization. country concerned. understanding of the situation and • Discussed what kinds of monitoring • Create resilient packaging waste its associated root-causes. and enforcement are needed to management structures • Alternative regulatory solutions ensure proper operationalization. • Guaranteeing stable institutional should be explored and improve- Important are the clear de nition of structures and ments in packaging waste manage- roles and responsibilities of all stakeholders in the system involved • Invest in communication to inform ment utilized, which would bene t about changes and give transparency EPR once implemented. as well as an unambiguous legal framework. to the process and system. • The establishment of voluntary, • Assess the potential of the EPR industry-driven initiatives is also an • Establish a systematic and reliable structure for management of system to contribute to the CE important contribution to gain transition especially in countries with country-speci c experiences. packaging waste regardless of its value, and the use of a variety of systems set up when this transition strategies to promote the value chain was not as important. and recycling industry. • Build on existing initiatives, pilots and programs and to cooperate with businesses. 10 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC SECTION 1. Introduction T he enormous amount of plastic waste – especially litter from plastic packaging – that leaks into the natural environment each year is a global concern with severe environmental consequences, particularly for marine life and human health. Approximately 4.8 to 12.7 million tonnes of plastic enter the world’s oceans every year. A lack of sound waste collection and treatment systems exacerbates plastic packaging waste leakage into the environment. In 2012, the World Bank reported the global generation of 1.3 billion tonnes of solid waste in one year, equivalent to 1.2kg of solid waste per person per day. With rapid population growth and improvement of household incomes, waste generation is expected to increase to 2.2 billion tonnes by 2025 (Hoornweg and Bhadatata, 2012). The annual cost of waste management is expected to rise from US$205 billion to US$375 billion, an increase of almost 83%. 4.8 to 12.7 million tonnes On a global scale, 32% of packaging waste ends of plastic enter the world’s up in the environment. In low-income countries, oceans every year. waste management costs represent on average of 19% of the municipal budget, compared to only The annual cost of waste management is expected 4% in high-income countries (The World Bank, to rise from US$205 2018). Low- and middle-income countries often billion to US$375 billion. face budget shortfalls for waste management. Ensuring proper collection and management of On a global scale, 32% of plastic packaging waste is critical for building a packaging waste ends up reuse and recycling system that enables a circular in the environment. economy (CE). In APEC member economies, overall waste contains significant amounts of Waste management costs represent on average of plastics and plastic packaging. Despite the efforts 19% of the municipal of APEC members, the recycling rate of post-con- budget in low-income sumption plastic packaging remains relatively countries. low. 12 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Governments worldwide seek to move towards a CE to increase resource efficiency, mitigate climate change and prevent pollution. At the same time, private sector stakeholders increasingly recognize their role in tackling plastic pollution. Extended Producer Responsibility (EPR) for packaging is one such tool for transitioning to a CE. Respective steps and measures have been or are being introduced in a growing number of countries (PREVENT Waste Alliance, 2020a). EPR for packaging aims to reduce the environmental and economic burdens from municipalities of waste management by extending producer responsibility to the end-of-life stage. EPR for packaging has been widely implemented in European countries and has yielded positive results (PREVENT Waste Alliance, 2020a). In APEC member economies, the implementation of EPR for packaging varies widely: some countries have mandatory, long-established EPR systems, while others only recently adopted or proposed legislation for voluntary initiatives. To assess the role of EPR for plastic packaging towards circular economies in APEC, Section 2 of this report focuses on the status quo of packaging EPR implementation in all APEC member economies. Section 3 provides recommendations to accelerate and/or improve the packaging EPR scheme implementation and operationalization based on recent EPR studies from the region and expert input from the two-part webinar series “The Role of Extended Producer Responsibility (EPR) Schemes Towards Circular Economies in APEC”, which was held jointly with the Malaysian government.1 Section 4 summarizes these insights to outline the acceleration of EPR implementation in Malaysia. 1 This two-part webinar series was hosted in December 2020 by the World Bank and the Malaysian Ministry of Environment and Water. Section 1. Introduction 13 SECTION 2. Status quo: EPR in APEC T he CE is an economic model that promotes a more efficient use of resources by applying the three guiding principles of reduce, reuse and recycle to create a circular value chain. Contrary to the traditional and linear models in which resources are extracted, processed, distributed, consumed and disposed of, the concept of the CE encourages a circular life cycle for resources within the economy. It is a promising concept for improving the current treatment of packaging, particularly of plastic packaging, in many countries worldwide (see Figure 1). The proper management of waste to enable actions – such as closed-loop recycling to fully preserve the material’s value, as envisioned in the CE concept systems – has therefore become a central element in discussions. EPR is increasingly recognized as a key concept for “closing the loop” in the packaging value chain through obliging producers to assume responsibility for their products (PREVENT Waste Alliance, 2020b). FIGURE 1: Circulation of packaging material Packaging Packaging Users Manufacturers importers, brand owners, fillers Raw Material Retail Suppliers Traders shops, distributors PACKAGING MATERIAL CIRCULATION Private Recycling User of the packaged goods Sorting Collection 14 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC EPR is defined as an “environmental policy approach in which a producer’s responsibility for a product is extended to the waste stage of that product’s life-cycle." In practice, EPR involves producers taking responsibility for the management of products after becoming waste, including: collection; pre-treatment (e.g., sorting, dismantling or de-pollution); preparation for reuse; and recovery (e.g., recycling and energy recovery) or final disposal. EPR systems allow producers to exercise their responsibility by providing the financial resources required and/or by taking over the operational aspects of the process from municipalities (Basel Convention, 2018, p. 3).2 EPR schemes can be organized on a mandatory or voluntary basis, depending on whether a corresponding legal framework is enforced. In some cases, a voluntary system acts as a provisional scheme until a legal framework requires mandatory participation. Many countries that have mandatory EPR systems transitioned from an initial voluntary scheme (PREVENT Waste Alliance, 2020c). However, these voluntary and mandatory schemes differ greatly in their ability to finance packaging waste management (EMF, 2021) and their overall effectiveness (see Table 1). TABLE 1: Comparing mandatory and voluntary schemes Criteria Mandatory EPR systems Voluntary EPR initiatives Financial aspects Precise definition of producers and importers Each company decides for itself whether, how much and sustainability who must assume responsibility in a legal and for how long it voluntarily wants to invest in a framework, creating a reliable basis for the project. On the basis of voluntary initiatives, there is no permanent coverage of running costs in long-term security to cover the running costs. which payments can be demanded if needed. The financial contribution of each company is low The EPR system involves financial compared to the contributions companies have to pay contributions from all companies that sell in a mandatory EPR scheme. packaged products (i.e., several thousand or more). Competition Since all companies bringing packaged Only a few companies participate in voluntary goods onto the market are obliged to pay for measures and might have competitive disadvantages. the EPR system, the system does not distort competition. The rules apply equally to all obligated companies. National systems With a legal basis, a nationwide EPR system It is not possible to establish a nationwide collection can be implemented. system covering all packaging waste based on voluntary measures. Activities usually concentrate in urban areas while rural areas are not included due to associated high costs. Monitoring The compliance with legal requirements can Aside from self-disclosures and self-declarations, be precisely controlled if sufficient capacities there are no official monitoring systems for whether for supervision by public authorities exist. the voluntary initiatives fulfill set targets. There is no reliable planning capability. Results It is possible to develop a sustainable waste The results are very limited, usually to a few types management system with characteristics of packaging waste that are profitable and/or easy such as comprehensive collection systems to collect and forward to recycling. A voluntary throughout the entire member economy, initiative is not a reliable element for sustainable waste implementing a recycling infrastructure with management as it cannot be demanded/claimed. This recycling at a high-quality, profitable level. means that projects are often discontinued after the project has finished or the funding period has lapsed. Source: Table is modified after PREVENT Waste Alliance (2020c). 2 EPR can be applied to various products and waste streams requiring different institutional and operational set ups. In this report, the focus is exclusively set on EPR for packaging and particularly on EPR for plastic packaging. Section 2. Status quo: EPR in APEC 15 EPR can be put into practice in several ways, leading to different forms of EPR implementation and operationalization. APEC member economies have implemented a variety of EPR strategies. While some members have industry-led schemes where the private sector takes responsibility, others have opted for state-led systems where producers transfer their responsibility to a public agency. Some schemes require producers to assume individual responsibility, whereas collective schemes involve a third party Producer Responsibility Organization (PRO) that coordinates and carries out the collection, sorting and recycling of packaging waste on behalf of the producers (see Figure 2). Looking at the status quo of EPR schemes in APEC, implementation varies greatly ranging from several members with well established, mandatory schemes, to members that recently passed legislation, to those with emerging legislation. Yet there are also member economies in which EPR is nascent or where only voluntary initiatives exist. This report uses the following categories for EPR development across APEC (see Table 2): 1. No EPR 2. Voluntary EPR 3. Emerging EPR legislation 4. EPR legal framework passed but not yet enacted 5. Mandatory EPR FIGURE 2: The role of the PRO for circulating packaging material as part of the EPR scheme Packaging Packaging Users Manufacturers importers, brand owners, fillers Cash Flow Design Retail Raw Material Suppliers Traders shops, distributors PRO Communication Private Recycling Waste User of the packaged Management goods Sorting Collection 16 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Although grouped together in the “No EPR” category, Papua New Guinea and Brunei Darussalam did not mention EPR at all, while Peru and Thailand have had discussions but have not yet taken concrete action to implement it. Members in the “Mandatory EPR” category also vary in regard to how the EPR systems are set up (i.e., establishment of a PRO and the corresponding operationalization). The timelines for EPR implementation also vary significantly across APEC. Some members – such as Japan (1995) and South Korea (2003) – introduced mandatory EPR in the 1990s and early 2000s, while others have not yet taken any significant steps towards a legal basis, such as Thailand (WWF, 2019). Nevertheless – as a whole – EPR implementation has gained momentum and made significant progress across APEC in the recent years and months. APEC EPR implementations also vary depending on interpretations of how the concepts of EPR and Product Stewardship (PS) relate. The PS approach is commonly defined as an “[…] act of minimizing health, safety, environmental and social impacts, and maximizing economic benefits of a product and its packaging throughout all lifecycle stages. The producer of the product has the greatest ability to minimize adverse impacts, but other stakeholders, such as suppliers, retailers, and consumers, also play a role.” (PSI, 2012). The approach has many similarities with EPR as both are based on the idea that a producer has to assume responsibility for their product. Although similar, these concepts are still quite distinct. Most notably, the responsibility of the producer is defined differently. Under EPR, the producer bears responsibility through the life-cycle of the packaged goods it places in the market (Basel Convention, 2018). But under PS, the packaging producer, while still a responsible stakeholder, is just one of several stakeholders that plays a role in minimizing the product’s adverse impacts (NZPSC, n.y.). Additionally, financial flows seem to be organized differently as payments (Seldman, 2020). On a broader level, there is no consistent understanding of how the concepts of PS and EPR relate. Some institutions argue that EPR is a form of PS but is narrower in its approach (e.g., PSI, 2012), some use the terms interchangeably (e.g., CalRecycle, 2020) and others argue that EPR is broader due to the scope of materials (e.g., The Packaging Forum, 2020). Another opinion, as argued by Curtis et al. (2014), suggests “PS was possibly introduced by industry as a way to dilute the EPR concept and share responsibility rather than have all responsibility fall to the producers.” This lack of clarification between PS and EPR is further compounded by the absence of an overarching, globally accepted document for EPR (such as the Basel Convention for the waste trade, 2018)). In APEC, all of the above concepts of EPR and PS are in circulation, showing the heterogeneity of the member economies. Indonesia and the Philippines also use the term Extended Stakeholder Responsibility (ESR) in addition to EPR and PS. The concept is similar manner to PS and reiterates that every stakeholder has a responsibility for the proper manufacturing, handling and management of packaging and packaging waste. Following the objective to synthesize recommendations for accelerating the transition towards circular economies, subsequent discussions in this report will not distinguish between EPR and PS, but rather indicate if an APEC member uses the term EPR or PS (or both). Section 2. Status quo: EPR in APEC 17 TABLE 2: The status quo of EPR legislation for packaging in APEC EPR APEC No Voluntary Emerging Mandatory framework member EPR EPR legislation EPR in effect Comment passed Australia* PS has been introduced in a legal framework through the Product Stewardship Act (PS Act) in 2011 allowing for three types of PS: voluntary, co-regulated together with the respective industry and mandatory. Plastics and packaging are subject to a co-regulated PS in which the government sets a legal framework and the industry is responsible for delivering the targets and requirements laid out (DEWA, n.y.). In December 2020, the Australian government passed the Recycling and Waste Reduction Bill, which reforms the PS regulations and will replace the PS Act to broaden its reach and impact (Parliament of Australia, n.y.). Brunei Darussalam Canada* 81% of the Canadian population has access to EPR, but it is only in a few greater provinces (British Columbia, Manitoba, Quebec, Ontario, Saskatchewan) (Bell, 2020). There are discussions in Alberta to also introduce EPR. The term PS and EPR are often used interchangeably and in a synonymous fashion. Chile Mandatory EPR for packaging entered into law in March 2021 (Government of Chile, 2021). China EPR packaging legislation is under development with focus on ecological design, the use of recycled materials, standardized recycling and expansion of information disclosure (Hassey et al., 2021). Hong Kong, EPR legislation emerging for glass and plastic beverage containers (EPD, n.y.). China Indonesia Regulation on EPR is under formulation, but not yet issued and implemented. EPR has been highlighted as the tool for the Five-Year Action Plan for Plastic Waste Reduction in Indonesia (2020 – 2025) (Ministry of Environment and Forestry, 2020). Japan A new Plastic Resource Circulation Promotion Law was just passed (METI, 2021). Republic of Mandatory EPR since 2003 (WWF, 2019). Korea Malaysia In its forthcoming Twelfth Malaysia Plan, 2021-2025, Malaysia has recognized the introduction of CE principles, which should be achieved through, among others, EPR (WWF, 2020a). 18 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Mexico One state (of 31 total) has made plans to implement EPR on a sub-national level (State of Quintana Roo, 2019). New Currently drafting a general framework for a number of future product stewardship Zealand* programs and provides some regulation as a backstop, including plastic packaging (NZPSC, 2021). There is also an ongoing discussion around a container deposit-refund system. Papua New Guinea Peru The waste legal framework only states that the introduction of an EPR system is possible, but no further steps towards actual development and implementation have been taken. Philippines Two bills containing sections on EPR are pending in the House of Representatives (WWF, 2020b). The Department of Natural Resources has publicly supported EPR policies, including the current bill pending in the House. Russia Policies are currently under revision to optimize and increase effectivity (WWF, 2021). Singapore Gradual introduction of EPR by 2025, including a deposit-refund system for beverage packaging (Seah, 2020). Chinese System with state-led PRO in effect (WWF, 2021). Taipei Thailand Several alliances were formed to advocate for an EPR scheme (WWF, 2020c). United EPR legislation is passed on a state-by-state level, which is why the status quo of EPR States* legislation varies greatly across the US (WWF, 2019). EPR legislation for packaging is currently developed in several states and passed in very few (e.g., California, Hawaii and Oregon). However, there are also several states without any EPR for packaging (Bell, 2020). The term PS and EPR are often used interchangeably or in a synonymous fashion. Viet Nam EPR has been included in the recently passed amended Law on Environmental Protection, which is scheduled to enter into force by 2022 (WWF, 2021). * Product Stewardship; although with different forms of implementation. Note: Table data correct as of April 2021. The information provided therein is derived from research involving a plethora of sources from websites, policy documents, direct engagement with stakeholders from the authors’ network. Also refer to Bibliography. Section 2. Status quo: EPR in APEC 19 FIGURE 3: Overview status quo of EPR in APEC Mandatory EPR Framework Passed Emerging Legislation Voluntary EPR No EPR 20 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC SECTION 3. Implementing and improving EPR T his section of the report highlights the characteristics of well-functioning EPR schemes as well as potential challenges to help public and private decision-makers quickly assess which criteria they fulfill and where weaknesses exist (see section 3.1). This is complemented with specific insights from APEC members, provided through four recently published studies on EPR scheme assessments for Malaysia, the Philippines, Thailand and Viet Nam. The two-part webinar series on EPR is also used to conclude relevant insights for EPR implementation. Combining the APEC status quo from the previous section, the characteristics of well-functioning EPR systems and the APEC member insights, recommendations will be given for: (i) the initial start, when EPR is nascent from a regulatory perspective (“No EPR” and “Voluntary EPR”); (ii) the transition towards mandatory schemes (“Emerging legislation”); and (iii) implemented and operationalized EPR (“EPR framework passed” and “mandatory EPR”). 3.1 Characteristics of well-functioning EPR systems Implementing an EPR scheme means that the producers are responsible for all waste management related tasks such as the collection, sorting and recycling of waste. In most countries, EPR systems are implemented on a national level and the ‘producers’ comprise of both the domestic producers as well as the importers to ensure the level playing field between all companies. These companies are also referred to as the obliged companies. To assume their responsibility, the obliged companies can either carry out the waste management tasks themselves or assign a PRO as a third party, financed through EPR fees paid by the producers and importers (see Figure 4) (PREVENT Waste Alliance, 2020b). FIGURE 4: Collective EPR schemes with PRO Cash ow PRODUCER AND PRO IMPORTER Organization of all systems tasks n tio ica Packaging u n m Cash ow ow m Co CONSUMER WASTE MANAGEMENT Packaging ow Purchases through distributor OPERATORS and later disposal Collection and recycling 22 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC The PRO enables the obliged companies to assume responsibility by combining their efforts and jointly managing the packaging waste. The PRO collectively organizes and finances all take-back and treatment of the waste on their behalf. In this system, the PRO is the most important element for establishing and operating the EPR scheme (PREVENT Waste Alliance, 2020d). As EPR systems are rather complex and involve a plethora of public and private sector stakeholders at all stages of the value chain, their institutional and regulatory settings – their architecture – are crucial for setting the boundaries for the day-to-day operationalization and long-term success. To ensure the participation of all stakeholders and their compliance, strong monitoring and enforcement systems are required. Without these, it will be extremely challenging to maintain, evaluate and adapt the EPR scheme. The role of monitoring and enforcement is usually fulfilled by a public agency (PREVENT Waste Alliance, 2020b). Additional criteria with corresponding positive and negatives impacts on EPR schemes are highlighted in Table 3 (WWF, 2019). TABLE 3: EPR criteria Criteria for successful EPR scheme Challenges to EPR scheme Regulations and monitoring • The scope of producer responsibility is unambiguously • The responsibilities and tasks are not clearly defined defined and regulated in law • Competing legislation of the involved ministries and • The monitoring agencies are experienced with control agencies and development of verification documentation • The fees are not spent on EPR tasks but spent as part of • Certifying, controlling and monitoring systems are the general public expenses or as part of public funds established • Monitoring agencies are not experienced with • Extensive information provided to the public document verification and control of verifications • Regulators are consistently conducting controls and • Undeveloped certification schemes penalizing actions that are not conforming to the • No transparency to the public existing law • No monitoring and controlling in place • Cooperation with industry associations • No cooperation with the industry • The individual actors are collaborating well • Individual actors are quarrel and compete with each • The public actors are not corrupt and actively fight other corruption • Corrupt public actors and decision makers Producer responsibility organization (for waste management subject to EPR legislation) • PRO fulfills all its tasks • PRO does its work insufficiently • Employs enough staff and is well equipped in regard to • No experience regarding databases, balances, tenders hardware and software and contracts • Experienced with databases, balances, tenders and • Is corrupt and accepts corruption payments contracts • Does not or insufficiently builds up the EPR system • Successfully implements the EPR system and thoroughly • Does not control any services or tasks of the involved controls the services and tasks of the other involved actors actors Section 3. Implementing and improving EPR 23 Producers and importers • Operations adhere to environmental and social welfare • The companies do not regard existing recycling standards capacities in their packaging and/or product design, • Are well informed about the existing recycling thus putting goods on the market that cannot be possibilities and capacities within the respective recycled within the respective member economy member economy and consider them in their packaging • Do not work within environmental standards and/or and/or product design social welfare standards • For EPR systems: all obliged companies are registered • For EPR systems: The obliged companies are not with the PRO registered and do not pay their fees • For EPR systems: the obliged companies know the • The companies do not know the quantities and exact exact quantities and material fractions, and pay the material fractions of their packaging corresponding amount of fees to the PRO • Companies import illegally • There are no illegal imports • For EPR systems: Corrupting the PRO to pay less fees for waste subject to EPR legislation Waste management operators – collection, recycling • The collection points are clear and accessible, and a • The collection points are unclear and hardly accessible good infrastructure is set up • Do not build up a good waste infrastructure • Waste management companies fulfill their contracts • Do not fulfill their contracts • Waste management operators inform the public about • Corrupting the PRO the waste management system • Do not inform the public • Work within the environmental standards and social • Do not work within environmental standards and/or welfare standards social welfare standards • Conduct transparent and appropriate mass flow • Do not conduct or conduct false mass flow balances balances • Informal sector is not integrated and works “against” or outside the system Consumer – purchases through distributor and later disposal • High levels of public awareness and education related to • No environmental awareness or education environmental impacts • Low level of education • All residents have access to the collection system • No access to collection systems • All residents are well informed about the system • Not informed about the system and separate their waste according to the system’s regulations Eventually, EPR schemes can only be implemented and operationalized if they are both locally suitable and relevant, which is why local context is crucial. To bring in this prerequisite, APEC relevant EPR studies and presentations are discussed in the next section and key insights for EPR implementation are summarized. 24 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC 3.2 Insights from APEC From September 2020 to February 2021, the WWF published four studies on EPR assessment for Malaysia, the Philippines, Thailand and Viet Nam. The main objective for each study is to generate an evaluation framework to accelerate EPR implementation in the member economy concerned. The evaluation framework is built on a thorough analysis of the members’ waste management systems and recycling markets for plastic packaging waste, which serve as the foundation for the proposed EPR scheme, triangulated from contextual conditions and international experiences. Ultimately, the findings from each study provide references and support to local governments and other involved stakeholders for future EPR legislation. In December 2020, in support of the APEC 2020 priority area of “Driving Innovative Sustainability,” Malaysia — in collaboration with World Bank — organized a two-part webinar series to study the role of EPR schemes in accelerating the transition towards circularity in the region. Study on EPR Scheme Assessment for Packaging Waste in Malaysia The report finds that high-value recyclable packaging is already being separated from household waste and transferred to recycling systems. This applies especially to rigid HDPE, PP and PET plastics. Extraction is largely informal and the subsequent value chain is based on a functioning market. However, previously removed high-value recyclables reduce the value of the remaining material for formal collection, which leads to underfunded collection and recycling operations for the remaining household waste. Malaysia’s recycling capacities are sufficient for the above-mentioned, locally generated, high-value recyclables, but many recyclers and aggregators import and process imported recyclables, occupying large capacities. So far, there is no fully traceable documentation of the imported material. Low-value recyclables and non-recyclables (e.g., flexibles like films, sachets and composites) are mostly disposed of and collected together. At present, there is no systematic separation and recycling of low-value recyclables. Depending on the locally prevailing collection and disposal system, all of these end up in sanitary landfills, dumpsites or are littered in the environment. The capacity of suitable disposal options via sanitary landfills is not sufficiently available across the member economy (WWF, 2020a). To build up a reliable and systematic system, the report proposes a mandatory EPR scheme that provides a financial basis for large-scale systematic collection, sorting and recycling of all packaging materials, regardless of their value. While the legal framework for such a system is not yet developed, a voluntary pre-PRO should be established on a non-profit basis to facilitate its development. Within a five-year time frame, the EPR should be rolled out and the voluntary scheme and PRO should be transformed into a mandatory system (WWF, 2020a). INSIGHTS FOR APEC “Transition through systematic and reliable structures” → Build up a reliable waste management system regardless of the packaging’s value to ensure that waste management services are provided. → Focus on systematic and comprehensive waste segregation, collection and sorting including low- and non-valuable packaging to ensure appropriate waste treatment and create economies of scale. → Ensure transparency in the waste management chain to ensure takeover of responsibilities by obliged parties and clearly distinguish between domestic and imported waste. Section 3. Implementing and improving EPR 25 EPR Scheme Assessment for Packaging Waste in the Philippines The report shows that high-value recyclable packaging is separated from household waste and transferred to recycling systems only to a limited extent. Extraction is largely built on informal channels and depends on available markets. However, a significant amount is still disposed of at landfills or leaked into the environment. Existing recycling capacities are insufficient for high-value recyclables and almost nonexistent for low-value plastics, contributing to the Philippines’ low plastic recycling rate of 9%. The report further estimates that the Philippines leaks about 35% of plastic waste into the environment. Low and non-valuable plastic waste is predominantly collected with and disposed of as residual waste. To address these challenges, the report proposes a mandatory EPR scheme for all product packaging with a three-year transition phase. Central in the implementation is the non-profit PRO with strict monitoring carried out by the government (WWF, 2020b). With the goal of having an established mandatory EPR framework and corresponding organizations in the next three years, the implementation plan for the proposed EPR scheme requires two initial main steps: (i) create a foundation for EPR with a focus on capacity building, and (ii) stimulate a holistic, basic waste management system that can be reorganized according to the EPR scheme once in place (WWF, 2020b). As the Philippines is an archipelago, EPR operationalization might differ across islands due to strong socio-economic differences as result of islands size, island population, distance to larger islands and similar factors. Thus, it is recommended for the Philippines to leave room for adaptation in EPR operationalization reflecting on such differences. INSIGHTS FOR APEC “Accelerate EPR development through alignment” → Create an aligned understanding of EPR and its roles and responsibilities as foundation. → Provide capacity building for all involved stakeholders. → Leave room for adaptations based on differences due to influences of geography. Scaling up Circular Strategies to Accelerate Zero Plastic Waste in Thailand The report highlights that Thailand’s plastic waste management situation is exacerbated by inefficient collection schemes and disposal methods: low household waste separation, overstretched waste collection services and low economic incentives for waste separation and recycling. Thailand’s plastic packaging waste is dominated by just two products: plastic bags and bottles. Together, they account for some 60% of all plastic packaging waste. While the mass of plastic bag waste (including mono-layers and shopping bags) is almost double that of plastic bottle waste, very few bags are collected for recycling because they are lightweight and often too contaminated for recycling. However, household waste separation can significantly increase the efficacy of recycling, even for bags. The disconnects between product/packaging design, business models and waste management capacity, including complex governance and lack of funding, are root problems of Thailand’s waste management. Although there are plans and ambitions to move towards more circularity (e.g., banning critical items and 26 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC shifting to eco-design of packaging and products that facilitate recycling), EPR is not currently explored in these initiatives (WWF, 2020c). While the ultimate goal would be to establish a mandatory EPR scheme in Thailand, the report reveals that the initial focus should be to maximize participation and standardize reporting and data collection. Once the legal and organizational structure of the scheme is in place, it can begin to effectively combat packaging waste by collecting contributions and diverting funds to critical hotspots in the waste system (WWF, 2020c). INSIGHTS FOR APEC “Incorporate EPR in circular economy strategies for initial start” → Push for improvements in packaging waste management data gathering on waste figures and relating costs, which would also benefit a future EPR scheme (e.g., informal sector integration, improved separation at source). → Focus on broad stakeholder engagement in initial phase. → Map complex interactions of root causes contributing to plastic litter as preparation for circular strategies. Assessment of Extended Producer Responsibility (EPR) for Plastic Packaging Waste in Viet Nam High-value recyclable packaging is already separated from household waste and transferred to recycling systems to a limited extent, often through informal channels. However, the recycling capacities of Viet Nam are insufficient for the locally generated and high-value recyclables, especially with the growing middle class and the expected increase in per capita packaging consumption. For low- and non-valuable packaging, no systematic separation and recycling structures exist, and these products are usually disposed of with residual waste. Lastly, packaging waste management systems vary significantly across Viet Nam, most notably between urban and rural areas. A transition to a sustainable packaging waste management system requires an approach that is flexible enough to account for all differences and directs investments and actions tailored to the need of each region. While this report was developed, the Law on Environmental Protection (LEP) was under revision and eventually was passed, outlining a mandatory EPR for all packaging materials (WWF, 2021). To overcome these challenges, the proposed scheme emphasizes interplay and cooperation of state- and industry-led organizations, which need to be met with effective and strict monitoring tools like registers, simple reporting schemes and a focus on improving waste management infrastructure (WWF, 2021). INSIGHTS FOR APEC “Establishing organizational structures capable of effective and efficient management” → Keep fraud and free-riding low by disallowing competing options to assume producer’s responsibility. → Ensure clear responsibility within the government and among ministries. → Focus on implementing standards for waste management operators to ensure operations are aligned with technical, environmental and social-welfare standards. Section 3. Implementing and improving EPR 27 Two-part EPR webinar series3 “Lessons learned and Building a case for EPR for packaging – examples from Europe experiences with EPR in Denmark and a → Consider the entire value chain for a transition to a CE. case presented with a Twin-track approach of reducing waste volumes and increasing successful nation-wide recycling can effectively accelerate transition to CE. take-back system for → Include all stakeholders in the system. To create a robust system, beverage packaging and collaborate with all stakeholders to implement an effective and recycling (Danish Return practicable system. System)” Jan Møller Hansen, International Portfolio Manager DEPA, Ministry of Environment Denmark “EPR systems require Recycling of packaging waste through an EPR scheme continuous evaluation in South Korea to increase performance and respond to new → Include and cooperate with businesses to accelerate a shift challenges” to increased recycling. To carry out effective packaging waste management under EPR, expertise from businesses helps to optimize, Dr. Stephan Löhle, Managing as for instance through their knowledge on suitable points to set Director Cyclos up collection points or waste segregation, which are perquisites for increased recycling. → One single PRO can be more effective and efficient compared to multiple. Maintaining effective, results-oriented EPR schemes involves interactions between numerous stakeholders, both public and private. Especially from their perspective, engaging not with one PRO but with multiple at the same time can be quite time-intensive and demanding. “EPR must drive Setting up PROs in the region – experiences, opportunities and producers to make more challenges reusable and recyclable packaging; boost and → Utilize a variety of strategies to boost value chain and recycling stabilize the value chain; industry. Initiatives include “pull initiatives” focused on increasing and build scale to the local recycling infrastructure, development of local end-use recycling industry” markets to enhance collection-for-recycling at scale, and use of price incentives and/or price floors in order to constantly increase Ashwin Subramaniam, GA Circular collection-for-recycling rates and protect against market instability. Complementary, “push initiatives” incentivize more material being forwarded into recycling structures (e.g., through establishing common collection points and informal sector integration). Other initiatives include communication and advocacy to educate and incentivize behavior change. → Build on existing initiatives. Many countries have private industry-led EPR schemes. Building on such initiatives when developing the legal framework for a mandatory system allows for tailored systems built on existing experiences. 3 The presentation of “Study on EPR scheme assessment for packaging waste in Malaysia” is not included here as the study’s insights are presented in the previous part of the chapter. 28 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC → While high-value packaging, such as PET bottles, usually have established recycling value chains (albeit volatile and in need of improvement), low-value and no-value packaging, like flexible and mixed plastics, do not currently have notable recycling value and are often collected and disposed of with residual waste. Two efforts are critical: 1) EPR eco-modulation is critical to move businesses towards more recyclable packaging. 2) There is a need to develop a value chain for low-value/no-value packaging (for example through price incentives) and to develop or utilize existing infrastructure to recycle/recover such packaging (e.g., use of existing cement kiln infrastructure or development of large-scale pyrolysis). “Setting up and operating Setting up a PRO – EU a PRO is context-specific and requires interactions → Focus on reliable data, registers and reporting schemes for with all stakeholders” successful data operations. To successfully operate the system, the PRO needs reliable data from both the producers as well as waste Agnes Bünemann, Managing management operators to ensure all costs are covered and fees can Director Cyclos be allocated in a fair manner. Registers and reporting schemes are key elements for the sound data management. → The PRO is central for operating the EPR scheme and interacts with all stakeholders in the value chain. In addition, the PRO also interacts with public agencies and local authorities, which are traditionally in charge of waste management. To facilitate its work and said interactions, clearly defined roles and responsibilities in the legal framework are crucial. → Invest in communication and awareness. Successful EPR schemes require the participation of the citizens and good interactions with companies throughout the value chain. Communication and awareness raise education and acceptance, and eventually contribute to successful operations (e.g., increased separation at source by consumers). It also promotes environmentally friendly behavior in general. “Taking a holistic Mandatory packaging reporting on way to EPR – Singapore approach to the development and → Contextualize EPR within a broader waste management implementation of framework. EPR is effective but it is not the only policy approach EPR in supporting the or solution. EPR must be supported by a comprehensive waste development of circular management and recycling strategy, working in unison with economies” packaging innovation and reduction, and consumer awareness and acceptance. The relevant supporting waste and recycling Edwin Seah, Head of Sustainability infrastructure should also be considered. Food Industry Asia → Explore alternative regulatory solutions first. Before considering mandatory EPR, jurisdictions should consider other efficient and cost-effective regulatory approaches including introducing minimum recycled content in packaging and mandatory source segregation. These approaches will not only benefit the overall transition towards CE but also increase the effectiveness of EPR once it is implemented, and drive better awareness, availability and usability of post-consumer packaging and wastes. Section 3. Implementing and improving EPR 29 → Reliable data is essential. To develop a context-relevant and member economy-specific EPR, reliable data is essential as it discloses waste flows and the strengths and weaknesses of the current situation. Understanding such insights from data enables developing tailored approaches, such as setting relevant and reasonable targets and timelines, ensuring a level playing field and preventing free riders to the system. 3.3 Recommendations for EPR in APEC The lessons learned from global case studies, along with insights from APEC members, inform a series of recommendations for accelerating EPR implementation and operationalization in APEC member economies. Given the variation in APEC members’ current EPR practices, recommendations are divided into three phases (Figure 5). APEC members are grouped into one of those phases (Table 4) based on the status quo of EPR legislation identified in Table 2. Refer to Table 3 for a detailed overview of the criteria that lead to successful EPR schemes as well as criteria leading to challenges. TABLE 4: APEC members grouped into three phases Voluntary EPR Mandatory APEC No EPR Emerging legislation EPR passed EPR in effect member Phase I Phase II Phase III Australia a Brunei Darussalam Canadaa Chile China Hong Kong, China Indonesia Japan Republic of Korea Malaysia Mexico New Zealand Papua New Guinea Peru Philippines Russia Singapore Chinese Taipei Thailand United Statesa,b Viet Nam a Designated as PS, although with different forms of implementation. b In the United States, EPR legislation is passed at the state-level, which is why the status quo of EPR legislation varies greatly across the US. EPR legislation for packaging is currently developed in several states and passed in very few. However, there are also several states without any EPR for packaging. 30 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC FIGURE 5: Overview of the three phases and recommendations PHASE I PHASE II PHASE III Initial start Transition towards a Implemented and operationalized (nascent EPR regulation) mandatory scheme EPR schemes Putting EPR on the political agenda How to implement EPR Evaluating and adapting EPR systems Explore System alternatives enforcement System operationalization Initiate Solid discussion foundation Assess potential for CE Understand situation Stable institutions EPR as part of Communication broader context System Create architecture resilient system KEY ACTIONS TO TAKE: KEY ACTIONS TO TAKE: KEY ACTIONS TO TAKE: • Initiate e ective, goal-oriented • Focuses not only on the ‘system • Evaluation and adaptation of the discussions with all stakeholders architecture’, created by legal system to ensure that the EPR system involved, framework, but also on the impact of remains relevant and suitable for the • Creating an in-depth and aligned the actual operationalization. country concerned. understanding of the situation and • Discussed what kinds of monitoring • Create resilient packaging waste its associated root-causes. and enforcement are needed to management structures • Alternative regulatory solutions ensure proper operationalization. • Guaranteeing stable institutional should be explored and improve- Important are the clear de nition of structures and ments in packaging waste manage- roles and responsibilities of all stakeholders in the system involved • Invest in communication to inform ment utilized, which would bene t about changes and give transparency EPR once implemented. as well as an unambiguous legal framework. to the process and system. • The establishment of voluntary, • Assess the potential of the EPR industry-driven initiatives is also an • Establish a systematic and reliable structure for management of system to contribute to the CE important contribution to gain transition especially in countries with country-speci c experiences. packaging waste regardless of its value, and the use of a variety of systems set up when this transition strategies to promote the value chain was not as important. and recycling industry. • Build on existing initiatives, pilots and programs and to cooperate with businesses. Section 3. Implementing and improving EPR 31 3.3.1 Phase I – Initial start (nascent EPR regulation) The problem of insufficient packaging waste management has been widely recognized in all APEC member economies and by various actors. To initiate EPR implementation when EPR is nascent from a regulatory perspective (e.g., countries without EPR or countries with only voluntary initiatives), the focus must be putting EPR on the political agenda to pave the way towards emerging legislation. The recommended actions can be initiated by both private and public stakeholders (see Box 1 for an example) Starting an effective, goal-oriented discussion and cooperation. Successful EPR systems include stakeholders from the public and private sectors, from all steps of the value chain, as well as NGOs, academia and civil society. Focusing on broad stakeholder engagement from the very beginning ensures an aligned understanding on the purpose of EPR, its impact on the packaging waste management and a suitable and relevant set up of such an EPR system. As there could be knowledge gaps between stakeholder groups or misconceptions about EPR, providing capacity building for all groups involved is important to enable equal participation of everyone involved. This process may be quite time intensive and cumbersome, however, focusing on this from the start helps to gain broad support and will increase the chances that the discussions will lead to legislating EPR. Excluding some stakeholders at the beginning might delay discussions later on and could slow down the process due to interventions from unengaged stakeholders. Broad stakeholder discussions also significantly increase the transparency of the process as well as trust, which is crucial for successful EPR schemes that require every stakeholder to assume responsibility. Investing in communication and education early on is an important driver for effective, goal-oriented discussions and cooperation. Box 1: Thailand In Thailand, EPR is currently nascent from a regulatory perspective. Nevertheless, goal-oriented discussions have already started. For instance, several alliances have been formed to advocate for a national EPR scheme, such as PPP Plastic and the Thailand Institute of Packaging and Recycling Management for Sustainable Environment (TIPMSE). In these discussions, stakeholders from various sectors and fields are provided with the opportunity to discuss their views on sustainable plastic waste management and corresponding approaches. Moreover, TIPMSE, which is an industry-led initiative, is currently setting up an EPR working group to prepare a proposal for an EPR model for packaging waste as well as pilot projects that will provide Thailand-specific insights for a relevant and suitable scheme. Lastly, the ‘Roadmap on Plastic Waste Management 2018-2030’ was approved by the cabinet on 15 February 2021, which outlines the phase out and ban of certain plastic items, like foam food containers and plastics straws from 2022 onwards. Many of the named measures and targets would benefit an EPR system, when implemented and vice versa. 32 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Lastly, having many stakeholders engaged allows for various perspectives and insights on the current situation and helps develop an in-depth understanding of the status quo, which is another important driver for gaining momentum towards emerging legislation. Create in-depth understanding of the plastic packaging waste situation. Understanding the root causes of mismanaged plastic packaging waste and how they interact and exacerbate the challenge is crucial to creating a relevant, effective EPR system. Since these root causes are manifold, having broad stakeholder engagement is very important here. It is also important to understand the baseline data and parameters surrounding the plastic waste context at hand. Information on the amount of plastic leakage or mismanaged waste, available recycling capacities within the member economy concerned or access to proper waste management services provide context to the status quo and disclose strength and weaknesses of the current situation. Even more, it facilitates developing tailored approaches, such as setting relevant and reasonable targets and timelines, ensuring a level playing field and preventing free riders to the system in the next phase. Explore alternative regulatory solutions and utilize improvements in packaging waste management, which would benefit EPR once implemented. Implementing a mandatory EPR and entering it into force are eventually also processes that can take months or even years. Leveraging other regulatory solutions and actions that will increase the effectiveness of EPR once it is implemented would start making an impact much earlier, and provide additional experience and insights to improve the prospective EPR system when the discussion about operationalization occurs. Such actions could include mandatory source segregation, minimum recycled content in packaging or a register for waste management operators and/or services they are qualified to perform, as well as gathering better data. These will drive awareness, availability and usability of post-consumer packaging and wastes. Likewise, founding voluntary initiatives from the industry, which are ideally embraced by the public side, provide EPR specific experiences that give valuable insights for the coming stages of emerging EPR legislation and subsequent implementation. 3.3.2 Phase II – Transition towards a mandatory scheme The second phase for countries with emerging legislation focuses on how to implement EPR. The objective is to develop and eventually pass a legal framework. Due to the very nature of the objective, these recommendations cater particularly to public stakeholders and decision-makers. Nevertheless, private stakeholders can actively pursue several of these recommendations to support the legal framework development as well (see Box 2 for an example). Ensuring a solid foundation for the actual discussions and development is substantial. In particular, this means broad stakeholder engagement from all sectors and an aligned understanding of mandatory EPR in practice and its value for the member economy concerned. (At this point, the lack thereof can significantly slow down the process while a strong foundation can act as a driver for both efficiency and effectiveness of the entire process). Another important aspect is high familiarity with underlying problems associated to plastic packaging waste management as well as the strength and weaknesses of the system (or, if this is not available, a thorough investigation is required). Furthermore, investing in communication and awareness significantly increases education and acceptance from all involved stakeholders. Section 3. Implementing and improving EPR 33 Box 2: Singapore Singapore is currently in the process of implementing a mandatory EPR that will enter into force by 2025. In 2020, Singapore introduced mandatory packaging reporting (MPR) set to commence in 2021. As a second step for 2022, a deposit-refund system (DRS) is planned (Seah, 2020). As outlined in the MPR, companies that supply packaged goods subject to the legislation into the Singapore market and retailers will be required to report on the amount of packaging used annually. They will also need to develop 3R plans for packaging (i.e., plans to reduce, reuse or recycle packaging). Through the MPR, waste flow data for packaging waste will be gathered and will serve as foundation for the EPR for packaging and familiarity with the problem. Following the MPR implementation, a DRS for beverage containers will be implemented in 2022. The DRS is planned to cover beverage containers such as metal cans, plastic bottles, beverage cartons and glass bottles. The National Environmental Agency is now seeking views from industry players on details for establishing a DRS including the approach, operations, establishment of PRS operator(s), regulations and supporting infrastructure required, as well as financing to develop a cost-effective framework suited for Singapore, thereby including stakeholders from various sectors in the process. With this in mind, creating the legislation for an EPR system that is quick and easy to implement, yet robust enough to work is key in this phase. When designing the EPR legal framework, it is important to fully understand how the system architecture, which is put in place through the legal framework, will impact the actual operationalization and what kind monitoring and enforcement is needed to maintain it. For the system architecture, an explicit legal framework and the clear definition of roles and respon- sibilities for all stakeholders are indispensable. In particular, this includes balancing ambitious and practical targets, as well as ensuring clear responsibilities within the government and among ministries to set and enforce the legal framework of the EPR. Complementary to enforcement, it is necessary to adequately staff the enforcing ministries and agencies – both in terms of total staff number as well as in training. Since the legal framework for the EPR system will not exist on its own but within a system of other policies, regulations and other legal framework elements, it is also important to ensure alignment with existing policies. This is particularly important if these other policies directly impact the EPR system. Furthermore, regional experience advises to start with only one PRO instead of multiple to keep fraud and free-riding low on the producers’ side by disallowing competing options to assume producer’s responsibility and ease future interactions between the PRO and other stakeholders (engaging with more than one PRO at the same time can be time-intensive and demanding). 34 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Lastly, system architecture should also focus on integrating and/or formalizing the informal sector into packaging waste management if and where appropriate. Shifting to the system operationalization, the discussions expand to how the current packaging waste management situation should be improved within the frame set by the system architecture. The objective is to establish a systematic and reliable structure for managing packaging waste, regardless of its value. Creating such structures, regardless of the value, guarantee that basic services of collection and further treatment of packaging waste are available to fundamentally reduce littering and packaging waste mismanagement, even with global developments, such as changes to the plastic waste trade, and crises, such as the COVID-19 pandemic. Looking at the status quo of packaging waste management shows that there are oftentimes structures – both formal and informal – for collecting and recycling high-value plastic packaging (e.g., PET bottles and HDPE rigids) while low- and non-value plastic packaging (e.g., films and mixed plastics) are usually disposed of with residual waste and are rarely separated and recycled. To address this situation, APEC members should utilize a variety of strategies to boost the value chain and recycling industry. Initiatives include “pull initiatives,” focused on increasing the local recycling infrastructure and developing local end-use markets to enhance the collection for recycling at scale. Complementary “push initiatives” also incentivize more material being forwarded into recycling structures (e.g., through establishing common collection points and informal sector integration). Since several APEC members span large territories with very different geographic challenges, it is important to leave room for adaptations. Finding the right strategies requires trial and error. Members should build on existing initiatives, pilots and programs launched in other APEC member economies. The initiatives can be adapted to the local context and can build on knowledge by cooperating with businesses to carry out effective packaging waste management under EPR and leveraging their knowledge to optimize it. For example, businesses are aware of suitable points to set up collection points or waste segregation, which are perquisites for increased recycling. To complement the system architecture and operationalization, thinking about proper enforcement is crucial. An important prerequisite is reliable data as it discloses waste flows and allows assessing the status quo to improve the system. In light of the challenges of improper recycling practices, which still exist in several APEC member economies, focusing on implementing standards for waste management operators ensures that operations are aligned with technical, environmental and social-welfare standards. Lastly, it is important to contextualize EPR within a broader waste management framework. EPR is effective but cannot be applied to all waste streams nor is it the only approach available. Ideally, various complementary strategies are used to create an overall effective waste management as accelerator for the transition towards a CE, for instance to reduce waste volumes while increasing recycling. This phase ends with successfully passing a legal framework for a mandatory EPR system. Section 3. Implementing and improving EPR 35 3.3.3 Phase III – Implemented and operationalized EPR schemes In the third phase, the focus shifts to APEC members that have passed a legal framework or have opera- tionalized mandatory EPR systems. In this phase, continuous adaptations are necessary to ensure the EPR system remains relevant and suitable for the member economy concerned as global, national and local contexts are ever changing and could impact the EPR system and its performance. Insights from countries with active EPR schemes indicate that, once enacted, EPR systems require continuous evaluation and adaptation to address unanticipated problems and challenges, developments and changed conditions (see Box 3 and Box 4 for examples). A global factor that could influence the success of a national EPR scheme is fluctuation in virgin material prices, which impacts the entire value chain, particularly the recycling industry. National level disruptions or challenges could also result from socio-economic or political changes that impact the prioritization of policies supporting plastic waste reduction and reuse, changes in consumption patterns or the introduction of complementary tools to influence the member’s transition to a CE. To enable existing EPR systems to respond and adapt to outside influences, APEC members must create resilient packaging waste management systems. These systems should be built around systematic structures in collection, sorting and recycling, and operate independent of the value of the packaging so that fluctuations on the recycling market do not impact waste management services. Without these structures, the system could be affected by market instabilities, leading to sustained or increased littering and associated environmental consequences. In addition, utilizing a combination of strategies to support the value chain and recycling industry and define environmental standards for waste management operationalization is key. Resilient and sustainable waste management systems are also significant accelerators in the transition towards CE practices. EPR creates reliable and systematic structures for handling packaging waste and is a key approach of sustainable waste management, but it is not guaranteed to influence a transition toward a CE. Several early adopters of EPR systems set up schemes when the concept of CE Box 3: Republic of Korea The Republic of Korea enacted its EPR system for packaging in 2003 following a policy paradigm shift from the safe treatment of waste to resource circulation (Jang, 2020). EPR was introduced to promote recycling of waste by encouraging producers to consider the environment through the whole process of product design, manufacturing, distribution, consumption and disposal (OECD, 2014). While the EPR system originally consisted of six different PROs to manage packaging, they have since merged into one unified PRO (Jang, 2020). The EPR program is both effective and efficient at raising recycling rates, which sets the target recyclability rate every year (OECD, 2014). Current challenges arise from the need to increase the recyclability of packaging through enhanced design for recycling of the packaging itself, increasing material recycling, and reducing the waste that is still disposed of in landfills or incinerated (Jang, 2020). These challenges highlight the need to adapt long-established EPR systems to harness EPR’s potential to contribute to the CE. 36 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Box 4: Vietnam In Vietnam, the Law on Environmental Protection (LEP), amended in November 2020, entails a mandatory EPR scheme. As outlined, the LEP allows producers to choose between three different options to fulfill their respon- sibilities: individually, collectively through an industry-led PRO or through a state-led organization (WWF, 2021). The Law will come into force by 2022. In mid-2021, the decrees related to guidance for implementation and enforcement of the law, including EPR, were drafted and published. Consultations will soon take place to finalize of the decrees. By 2022, the new regulations will take effect – though it remains open whether all of these regulations will be enforced at once. Private sector stakeholders are also driving several voluntary actions and initiatives pushing for improved plastic waste management and the implementation of an EPR. In the most prominent case, several multi-national companies teamed up to establish Packaging Recycling Organization Vietnam (PRO Vietnam), an organization that boosts packaging collection and recycling, and advocates for a mandatory EPR system. PRO Vietnam was founded in June 2019 and has received support from the government (WWF, 2021). was less present and understood. Therefore, long-established EPR systems should be assessed and potentially adapted to harness EPR’s potential to contribute to the CE transition. Some adaptations could include modulation of the EPR fees paid and/or the implementation of deposit-refund systems. To address developments on a national level, emphasis should be put on guaranteeing stable institutional structures. EPR systems are framed through their institutional setup in the member economy concerned and are impacted by structural and political changes. Stable institutional structures with clear responsibilities are essential to preventing too many impacts on the system – for example, upon changes in the responsible ministerial setup (e.g., when a ministry is split, two ministries are merged or responsibilities are given to other ministries). Lastly, just as with the two previous phases, communication is important. It provides transparency to the processes and developments, which is a crucial factor for all involved stakeholders. Communication and transparency are also important for maintaining the stakeholder trust in the system’s operationaliza- tion, ensuring longevity of the EPR scheme. EPR implementation is gaining momentum within APEC and beyond. In the next section, this report demonstrates how the recommendations for EPR implementation can be synthesized and applied at the member economy-level, using Malaysia as a case study. Section 3. Implementing and improving EPR 37 SECTION 4: Case study: Accelerating EPR in Malaysia I n this section, the report will focus on Malaysia – an APEC member grouped into the designation of “Emerging EPR Legislation” in Section 2. Below, the insights from the previous sections are applied to outline steps for accelerating EPR implementation in Malaysia. 4.1 Status of EPR in Malaysia In its Five Year Plan (2021 – 2025, 12th Plan), Malaysia recognizes the importance of CE principles in production and trade along the waste hierarchy. Strategies to accelerate the transition to a CE focus on various components such as recycling market development (e.g., reducing barriers and stimulating post-consumer recycling content in products), the gradual introduction of EPR and bans on certain single-use products. EPR is also highlighted as one of the main action plans under the Malaysia Plastics Sustainability Roadmap, 2021 – 2030. The implementation of an EPR scheme covering plastics is planned in a phased approach; it is currently on a voluntary basis and is becoming a mandatory scheme by 2026. To develop an EPR scheme with an aligned understanding between the public and the private sectors, Malaysia formed several technical working groups headed by the Economic Planning Unit, one of which is explicitly focused on EPR policy support. The private sector is also taking voluntary actions to accelerate EPR in Malaysia. The Malaysian Recycling Alliance Berhad (MAREA) was officially launched in January 2021. MAREA is a voluntary PRO organization backed by several multi-national companies in Malaysia. MAREA is also engaging in the Economic Planning Unit technical working groups, collaborating with ministry representatives on the development of a suitable EPR scheme. Altogether, Malaysia’s progress towards EPR implementation is based on a solid foundation created through a combination of factors such as broad stakeholder engagement, capacity building and familiarity with underlying problems, strengths and weaknesses of the current system. A broad range of stakeholders were included in discussions on EPR from an early stage. In September 2019, the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) announced the establishment of the Malaysia Plastic Pact (MPP), designed to drive efforts in developing the CE roadmap. The MPP is a multi-stakeholder platform where public and private stakeholders in the plastic value chain come together to commit to actions and goals to shape a circular plastics economy by building a national plastics collaboration network. MPP lays out concrete actions to reach its targets and build a research and development agenda for circular plastics. In the course of this work, an additional working group for EPR was established (WWF, 2020a). 38 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Several studies were also conducted on behalf of various actors to understand the Malaysia-specific context and the factors shaping its packaging waste management. These studies inform capacity building on EPR and enhance education and awareness on the need and benefits of EPR for Malaysia. EPR is part of the member economy’s broader transition to CE. Several pilot projects and initiatives shed light on how to refine EPR implementation to make it most suitable and relevant for Malaysia. For example, Nestlé cooperated with the municipality for a pilot on segregation of packaging waste and waste collection at the household level. 4.2 Next steps for Phase II: Addressing challenges to develop a legal framework for EPR The objective of this phase is to develop and pass a legal framework for EPR, but the current status of development is still in the early stages in Malaysia. There are several overarching challenges that Malaysia will need to address to make further progress in this phase. Translating the consensus into a clear and explicit legal framework Public and private sector participants have been engaged in discussions to define roles and responsi- bilities, and there is a degree of agreement and consensus. However, there are still several decisions to be made. Especially critical is alignment between the multiple ministries, most notably the Ministry of Environment and Water, the Ministry of Housing and Local Government and departments at the federal, state and local levels involved in the Malaysian waste management and recycling sector. Establishing collection and recycling requirements Critical decisions on requirements still need to be made. These requirements, such as those for collection or recycling, act as guiding principles for the system operationalization and must be met by the producers (or via the PRO). Currently, rigid plastics such as PET, HDPE and PP are readily collected, and rigid mono-materials have a high recycling rate. Observations in selected recycling and collection centers, high-rise residential properties and landfills throughout Malaysia confirm that rigid plastic materials are regularly collected and separated for recycling, especially as prices for these materials are high and there is a ready market. While rigid plastics and its material flow stream is relatively well understood, flexible plastics and multi-layer materials have a very poor recycling rate. Secondary aggregators and processors within Malaysia reject most of these materials directly (e.g., soiled plastic bags from households) with the exception of clean LDPE films, which are largely provided by industrial and commercial customers (WWF, 2020a). The challenges for system operationalization also center around providing appropriate incentives to recover and recycle flexible plastics while reducing the amount of non-recyclable materials. There are several, sometimes competing ideas about suitable strategies to improve the current situation. To get more clarity, more pilots for various strategies are needed. On the other hand, this requires clear input from the legal frameworks on requirements that will have to be met by the system. Section 4: Case study: Accelerating EPR in Malaysia 39 Including the informal sector in emerging legislation The informal sector is currently the backbone of the Malaysian recycling sector, ensuring the primary collection and sorting of plastic waste. As a result, an EPR scheme should include the informal sector and provide the appropriate incentives to increase the collection and recycling rates, while also improving livelihoods and working conditions. Neglecting the informal sector would most likely have a negative effect in the medium-term on the entire recycling sector and could significantly reduce the recyclable materials in the market (WWF, 2020a). There are few examples of successfully including informal sector participants and most of them are just project-based. A similar approach would be needed in Malaysia to test out different models that work in the context of the member economy as a whole, and even in different areas of Malaysia (e.g., Act vs. non-Act States). Ensuring traceability of collected recyclables Traceability of collected recyclables is also a critical challenge. The development from 2016 to 2018 has shown that imported feedstock volumes can increase rapidly and enter the domestic value chain. While it can be beneficial for the overall processing sector to have access to high quality imported plastic waste, there is a risk that the EPR scheme would not only subsidize the local collection and recycling, but also imported plastics. As a result, an EPR scheme would have to be designed to ensure traceability of the plastics from the point of collection up to processing (WWF, 2020a). From the perspective of developing the legal framework, this means that the element of traceability must be explicitly included and cooperation between ministries and departments at the federal, state and local government must be guaranteed. 4.3 Case study conclusion In summary, the crux of Malaysia’s further development towards a mandatory scheme is to ensure clear responsibility within the government while continuing its broad-base stakeholder discussions to find the appropriate balance between an ambitious yet practicable legal framework. KEY TAKE-AWAYS: MALAYSIA → Reliable foundation for mandatory EPR implementation through the inclusion of various stakeholders, capacity building and shared understanding → Twin-track approach through actions from both the public and private side → EPR is contextualized within a broader transition to a CE → Critical to achieve alignment between involved ministries and agencies → Crucial to translate objectives into practicable requirements and targets outlined by the legal basis and set appropriate incentives to increase recycling rates of low- and non-valuable plastics 40 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC References Basel Convention (2018). Draft practical manuals on Extended Producer Responsibility and on financing systems for environmentally sound management. 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Scaling Up Circular Strategies to Achieve Zero Plastic Waste in Thailand. [pdf] Available at: https:// wwfint.awsassets.panda.org/downloads/zero_plastic_waste_in_thailand_en.pdf WWF (2021). Assessment of Extended Producer Responsibility (EPR) for Packaging Waste in Viet Nam, WWF, Viet Nam. [pdf] Available at: https://wwfint.awsassets.panda.org/downloads/20210208_epr_scheme_assessment_for_ packaging_in_vn__final.pdf 42 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC Glossary Circular Economy (CE) The circular economy is defined as an economic model in which resources like plastics are used more efficiently through the three guiding principles of “reduce, reuse and recycle” to close the loop. Shifting to such a system has economic, social and environmental benefits through reduced import dependency, employment creation, reduced littering, less resource extraction and improved human health conditions. Deposit-Refund A system in which a surcharge is added to the price of certain products System (DRS) and containers. When consumers return these containers or products after they have become waste, the surcharge is refunded. Extended Producer An environmental policy approach in which a producer’s responsibility Responsibility (EPR) for a product is extended to the post-consumer stage of a product’s life cycle (i.e., when packaging becomes waste in an EPR scheme for packaging). When putting their packaged products on the market, producers and importers are responsible for the later treatment of their packaging waste. Producers/importers pay a fee upfront when their packed goods are placed on the market. The fee is used for collecting, recycling and disposing of the packaging waste and other costs arising from maintaining the system. It is not used as a contribution to the general public budget of a state. Free riders Producers and importers that enjoy the benefits of the EPR system without paying the corresponding fees, including those that under-declare their volumes. Informal Sector Individuals engaged in services with the primary objective of generating employment and income to the individual concerned, and typically operate with a low level of organization without formal contractual arrangements. May include individuals who are formally employed but engage in side activities to supplement income on top of formal employment. Obliged companies Companies that are obliged to pay a fee within a running EPR system. To ensure the level playing field, these are often domestic producers and importers introducing packaged products to the market. Polluter Pays Principle The waste producer or owner is the potential polluter and carries responsibility (including financially). The “polluter pays” principle creates the necessary incentives for environmentally friendly conduct and the required investment. Producer Companies that use packaging for their products when placed on the market. Glossary 43 Product Stewardship Act of minimizing health, safety, environmental and social impacts, and maximizing economic benefits of a product and its packaging throughout all lifecycle stages. The producer of the product has the greatest ability to minimize adverse impacts, but other stakeholders, such as suppliers, retailers and consumers, also play a role. Waste Prevention Measures taken before a substance, material or product becomes waste, in order to reduce quantities of waste (also includes re-use of products and the extension of the lifespan of products). Waste prevention also reduces the amount of hazardous substances used and the adverse impacts of the generated waste on the environment and human health. Producer The central element for the organization of all tasks associated with the Responsibility EPR system. Allows producers and importers to assume responsibility Organization (PRO) by combining their efforts and jointly managing the arising waste through collective responsibility. The PRO is the most important stakeholder (organization) and is responsible for setting up, developing and maintaining the system as well as the take-back obligations of the obliged companies. The PRO is also referred to as system operator. Recyclables Materials that still have useful physical or chemical properties after serving their original purpose and can be re-manufactured. Some are of positive economic value as well (e.g., rigid PE, PP or PET bottles). Recyclates A product that has passed through its life-cycle and subsequently a recycling process, which means it is made from used materials (e.g., plastic regranules). Recycler Companies that recycle pre-processed waste streams (e.g., sorted rigid PE plastics) by washing, flaking, agglomerating and regranulating. With these actions, an economically marketable output product is reached. Source Separation The segregation of specific materials at the source for separate collection. Source separation is not considered to be part of recycling. 44 The Role of Extended Producer Responsibility Schemes for Packaging towards Circular Economies in APEC JANUARY 2022