Boosting Circularity with Eco-Modulation
One of the big benefits of Extended Producer Responsibilty (EPR) is the fact that, because the responsibility of product packaging waste lies with the producers, it gives them an incentive to really consider the products they create and put out into the world, from initial design and production, all the way through to waste management and beyond.
Enter: Eco-modulation. Eco-modulated EPR fees incentivize packaging recyclability criteria and the percentage of recycled content. It has the potential to improve the economic performance of the entire value chain.
What is Eco-Modulation?
Eco-modulation rewards producers who use sustainable materials over less environmentally friendly materials. Those rewards can come in the form of lower tax and free reductions for products. At the same time, eco-modulation puts producers who develop products with less sustainable materials at a financial disadvantage by making them pay higher tax for their products. The worse the material is for the environment, and the less recyclable it is, the higher the fees.
Incentivizing Eco Design
Eco-modulation incentivizes eco-design by reducing fees for packaging that have lower waste management and recycling costs. EPR assigns producer fees based on how products were initially designed. More specifically, if they are made with sustainability front-of-mind. It also considers how much recycled content those products are made from. Mono-material or mono-layer packaging, for example, is easier to sort and recycle, so if products are made using that kind of material, producer fees will be low.
Ultimately, eco-modulation incentivizes producers to take a look at the higher-ranking options in the waste hierarchy: reduce, reuse, recycle. These options are, of course, more financially rewarding than the lower ranking options, like incineration.
Two Examples of Eco-Modulation in Action
1. Sociedade Pontoverde (SPV) introduced penalty fees in 2019 for three types of packaging that ‘disrupt the recycling process’. The types of packaging included are PET bottles with metal caps, glass bottles with non-removable stoppers, and PET bottles with PVC labels. Fees for all of these materials were increased to incentivize producers to take eco-design more seriously in the future.
2. CONAI sets fees for materials used in their four different bands – packaging with an effective recycling process (industrial), packaging with an effective recycling process (household), packaging with a developing recycling process (industrial), and packaging with a developing recycling process (household) – with lower fees for those that are more recyclable.
Eco-modulation is not Limited to Packaging and EPR
We have used packaging as an example in this blog post but think about eco-modulation for all products. Think about higher tax for car brands, for example – lower fees for electric vehicles, higher fees for diesel.
Eco-modulation has the potential to improve the way products and packaging are designed, produced, and disposed of. The potential to start shaping a more sustainable, and more rewarding future – for everyone.
Read more on EPR, here.