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How EPR and eco-modulation fees impact the recycling and packaging industries

In the U.S., these policies are designed to eliminate waste and improve recyclability at the manufacturing level

A large square of recyclable plastics
Extended producer responsibility (EPR) for packaging is set to reshape the US packaging industry. AdobeStock

Governing bodies around the U.S. have been introducing new laws and fees to reduce the creation of new single-use items. One of the most notable policies — extended producer responsibility (EPR) — can reshape the packaging industry by beginning at the point of manufacturing and design. 

EPR is a regulatory framework that requires packaging producers to take on the financial and logistical responsibilities for managing the waste and environmental impacts that their products generate. This goal is typically achieved by joining and paying fees to a producer responsibility organization (PRO). Currently, five laws exist in the U.S. that focus on EPR packaging and containers in Maine, California, Oregon, Colorado, and Minnesota. 

While many producers and packaging companies are concerned about the new obligations, these groups can expect to see benefits through eco-modulation programs, such as a reduction in EPR fees and other compliance costs to reward producers who innovate to make their packaging systems more sustainable. 

What is eco-modulation in EPR?

Many in the packaging industry think of EPR as a regulatory burden with increased compliance costs, reporting requirements, and material-specific fees. However, firms that use sustainable materials and minimize impact starting at the product concept stage will be rewarded with lower fees and other incentives. 

The practice of assigning adjusting fees is known as eco-modulation; it encourages producers to enact system-wide change and create more sustainable, recyclable, or compostable products instead of merely paying a fee to cover recycling costs and continuing with business as normal. 

Unfortunately, the environmental impact of producing new items often outweighs the impacts of disposal that recycling alone cannot mitigate. Often, some recyclable items may cause even more harm than non-recyclable alternatives, even when the full benefit of recycling is used.

Oregon enacted its EPR program for packaging through the Plastic Pollution and Recycling Modernization Act (SB 582) in August 2021. Katie Musial/Unsplash

EPR and eco-modulated fees in Oregon

In August 2021, Oregon enacted its EPR program for packaging through the Plastic Pollution and Recycling Modernization Act, which aims to streamline recycling for consumers, broaden access to recycling services, improve sorting facilities, and generate environmental benefits by mitigating issues like plastic pollution.

Beginning in July 2025, PROs will set the criteria and calculations to adjust and lower fees in accordance with the eco-modulation system to encourage sustainable packaging and product design that lessens the burden on material recovery facilities and Oregon's waste management system.

Oregon's Department of Environmental Quality states: "Even if recycling was conducted flawlessly throughout the nation, it could only deliver 31% of the needed 90% greenhouse gas reduction from that sector." 

Several strategies have been introduced to reduce the impacts of food service packaging, printing, and writing paper such as shifting to green energy production and reuse and closed-loop systems, minimizing material and right-sizing packaging, and prioritizing design changes that reduce eco-toxicity and externalities in the environment. 

Colorado's EPR and eco-modulated fees

Colorado introduced its EPR legislation for packaging — the Producer Responsibility Program for Statewide Recycling Act — in June 2022. This law creates a system where "companies that sell products in packaging and paper products" contribute financially to a statewide recycling initiative to handle specific materials.

The covered materials include packaging materials and paper products regardless of material or recyclability that is used in the facilitation of single or short-term use related to the containment, protection, handling, or delivery of products to consumers. Packaging material includes:

  • Paper
  • Plastic
  • Glass
  • Metal
  • Cartons
  • Flexible foam
  • Rigid packaging

Similar to Oregon's program, Colorado's EPR plans on including an eco-modulation system. The goal of the Colorado government is to reduce the creation of new packaging materials, enhance recyclability, use higher levels of post-consumer recycled material, and make all containers reusable and refillable.

Maine became the first state in the US to implement an EPR law for packaging with the passage of its Stewardship Program for Packaging (S2145) in July 2021. Stephen Walker/Unsplash

Maine becomes first state to implement EPR for packaging

With the passage of its Stewardship Program for Packaging in July 2021, Maine became the first state to implement an EPR law for packaging. The law aims to reduce packaging waste, lower toxicity, and boost recyclability, as outlined by Maine's Department of Environmental Protection.

The program requires producers to contribute funds through a stewardship organization (SO), which will reimburse municipal recycling costs, enhance recycling infrastructure, and educate residents on effective recycling practices. 

The program's exemptions cover certain producers, such as those with annual revenues below $2 million, those selling less than 1 ton of packaging in Maine, or producers generating more than half of their revenue from salvaged goods. 

Section 13 also outlines the full reduction of fees for producers who use recycled content, lower toxicity, reduce the amount of material used (right-sizing), reduce waste from packaging, increase reuse of materials, and use recycled content in and increase the recyclability of the material. 

In June 2022, California introduced an EPR program for packaging with the signing of the Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54) by Governor Newsom. Megan Clark/Unsplash

EPR and eco-modulated fees in California

In June 2022, California introduced an EPR program for packaging with the signing of the Plastic Pollution Prevention and Packaging Producer Responsibility Act

The law aims to reduce packaging waste and increase recycling to support California's environmental goals, with three major targets for 2032:

  • Ensure 100% of single-use plastic packaging and foodware is recyclable or compostable
  • Achieve a 65% recycling rate for single-use plastic packaging and foodware
  • Reduce single-use plastic packaging and foodware use by 25%

To help support these goals, CalRecycle appointed the Circular Action Alliance (CAA) as the program's PRO. The state expects to see eco-modulated fees similar to Colorado and other states where the CAA is a designated PRO. CalRecycle estimates that around 13,615 producers will participate, compared to roughly 1,000 in other state EPR programs. These producers are expected to contribute $5 billion over ten years, starting with annual payments of $500 million in 2027.

California will add fees for the presence of hazardous materials as well as toxic heavy metals, pathogens, or additives, and lower fees for reduction related to right-sizing, actions taken to improve consumer recycling practices, and the increased use of renewable materials for items wrapped in plastic.

Minnesota's EPR and eco-modulated fees

Minnesota became the latest state to pass an EPR law with the Packaging Waste and Cost Reduction Act. The goal of the act is to reduce the impacts on human health and the environment by the creation and the lifecycle of consumer materials. 

The program ultimately aims to invest in public education, expand infrastructure jobs, reduce the costs associated with creating more refillable, reusable, recyclable, and compostable packaging, and produce fewer packaging materials going forward. 

Aside from these goals, the program also aims to have all packaging, food packaging, and paper products either refillable, reusable, recyclable, or compostable by the year 2032. The program will be managed by the Minnesota Pollution Control Agency.

Like all other active EPR for packaging laws in the US, Minnesota's bill makes clear mention of plans to include eco-modulated fees to incentivize sustainable decisions at the design stage

Specific goals for this stage include eliminating toxic substances, reducing the amount of paper in packaging, increasing the use of post-consumer materials in package designs, and using more materials from sustainable sources.  

Dive deeper into EPR for packaging programs

Staying ahead of new EPR laws begins with a thorough understanding of your packaging's sustainability impact and expertise in conducting life cycle assessments. 

With all current U.S. EPR for packaging programs — including eco-modulation programs that incentivize sustainable packaging design — conducting life cycle assessments can help you map your product/packaging system and value chain, understand key impact areas, and optimize design for reduced impact at the concept phase. 

For a closer look at EPR programs in your region, explore the Packaging School's collection of guides:

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