The basic idea behind extender producer responsibility (EPR) is to require packaging manufacturers to pay for the systems that manage their packaging waste. And EPR programs can be enhanced by giving companies financial incentives to continually evolve packaging through eco-design while imposing penalties on packaging that hinders circularity efforts. Those incentives and penalties are the core concepts of eco-modulation.
How eco-modulation works was the topic of the final segment of a six-part webinar series titled “Packaging EPR Has Arrived in the U.S.—Now What?” sponsored by AMERIPEN—the American Institute for Packaging and the Environment.
The webinar—“Influencing Packaging Design through Eco-Modulation”—on July 12 included presentations by Geneviève Dionne, director of eco-design and circular economy for Éco Enterprises Quebec (EEQ), and Reid Lifset, research fellow and resident scholar for the Center for Industrial Ecology at the Yale School of the Environment. The discussion was moderated by Dan Felton, executive director of AMERIPEN, a trade association that focuses on advocacy and public policy for the U.S. packaging industry.
“We get a lot of questions about what it is and how it works,” Felton says at the start of the webinar. “But eco-modulation is the financial aspect of EPR programs that helps to incentivize design to align with an EPR program’s key objectives. In short, I like to say my view of it is that producers are paying into a system for EPR for packaging—typically based on the material type and the weight of that packaging—to some level and that fee can be adjusted upward or downward depending on certain attributes of the packaging.”
Because EPR programs vary in different jurisdictions, the incentives and penalties will vary, too, he adds. In the U.S., California, Colorado, Oregon, and Maine have implemented EPR programs in recent years, and the details of those programs are still being developed. “It’s an issue that AMERIPEN is paying particular attention to as we now start to move into implementation and learn more about how the fees might be established,” Felton says.
Lessons From Quebec
Dionne notes that EEQ became a producer responsibility organization (PRO) in 2022 in Quebec. But since 2005, the nonprofit also has worked with packaging companies and others on their financial responsibilities with curbside recycling. And since 2009, it has been involved with various eco-design projects and initiatives.
Under the Quebec EPR program, packaging producers are assessed a fee based on several factors, including the type of material used and the weight. The fees then can be adjusted up or down based on eco-modulation.
For example, companies that design packages that reduce the unit weight of a package can receive a 20% bonus. Companies can get a 20% credit for obtaining and integrating recycled content. And there is a 20% credit for recyclability, such as eliminating a problematic material or improving recyclability potential. Other credits include a 20% credit for communication efforts, such as offering sorting instructions on packaging, and a 10% bonus for conducting a case study.
The maximum bonus is 50%.
“The objective is to reward companies that are proactive in leading the transition and place penalties on those that place problematic materials on the market,” Dionne says.
EEQ has been conducting detailed studies to determine how well eco-modulation has worked since it developed an eco-modulation road map in 2021. As stakeholders get more information, the road map will be adjusted along with the bonuses and penalties, and a new road map is expected by 2025. “Companies are jumping in for different reasons and motivations,” Dionne says. “But it will be necessary to carry out surveys and follow up with further research.”
Detailed Information Needed
Lifset, who published the first academic research article on EPR in 1993, points out that Quebec is a leader in eco-modulation, partly because it is doing extensive research into what is working and what is not. But overall, he adds, there is a lack of significant research into eco-modulation, which all stakeholders should demand. “The problem is we’re not doing our homework,” Lifset says.
The overall goal should be to decrease greenhouse gases and improve water and air quality, he suggests, so circularity alone should not be the primary goal. “I would argue rather strongly that recycling or circularity is a means to an end. It’s an intermediate goal,” he says. “What we should be doing here is trying to reduce things like greenhouse gas emissions or air and water toxicity. And our policies should ultimately reflect whether we’re achieving those reductions.”
In Europe, where EPR programs and eco-modulation have been underway for years, the research has been opaque, which makes it difficult for stakeholders implementing programs elsewhere to learn and adjust, Lifset says. Some ideas might extend the life of an appliance but that means the appliance is not being replaced by something more efficient, he says as an example. “Sometimes, increased product lifetime is not a good idea, and they are not making the distinction. They are not going to the next level and saying, ‘Most of the time it is a good idea, but there are some situations where it is not,’” Lifset says. “It is not doing the homework that I find problematic.”
In the U.S., Oregon has taken a lead by requiring studies and rewarding research, he also says.
“Getting the right data so we know what is going on is crucial. We need to know not just what is happening to the recycling rate, but also the number of rewards and penalties awarded and the number of rewards that were denied,” Lifset says. “And we need to know what’s happening on an aggregate level in the market—how the changes in the materials used and the packaging design changed overall.”
Thorough analysis would then determine if the programs were changing the carbon footprint, says Lifset, who was one of the authors of a research paper published this summer titled, “Restoring the incentives for eco-design in extended producer responsibility: The challenges for eco-modulation.”
Eco-modulation is an attempt to correct a flaw in how initial EPR programs were implemented, he says. With packaging companies paying into EPR programs, the assumption was that they would have the incentive to pursue eco-design. However, the PROs that manage and run EPR programs set fees based on the market share of the packaging company. “Unfortunately, that means that if the packaging is redesigned to be more recyclable and stays in the same category, and the market share stays the same, the producer’s fees don’t go down,” Lifset says. “This dynamic reduces the incentive for companies to invest in eco-design—what I think of as a clear rationale for EPR. So, eco-modulation is, in my view, a response to this problem. It is an effort to restore the incentives that haven’t been there under collective EPR.”
Until stakeholders gather and distribute more data, he adds, policymakers need to be careful about how they implement programs. One issue is that the various states are developing different programs and criteria, which makes it difficult for packaging companies to comply. “We need to start slow and do this bit by bit and figure out what parts are working right and what parts are not,” Lifset says.
More From the AMERIPEN Series
For more coverage on this series, click on the following links:
- Panel Discusses End-Market Solutions for Recyclables
- Webinar Explores Compostable and Hard-to-Recycle Packaging Issues
- AMERIPEN EPR Series Continues With Looks at Producer Responsibility Organizations
- AMERIPEN’s Extended Producer Responsibility Series Kicks Off With a Look at Europe
Thomas A. Barstow is senior editor of FlexPack VOICE®.