Rethinking EPR – why net cost and fairness are key to Europe’s circular future

Extended Producer Responsibility (EPR), the policy approach whereby product producers are made responsible for the end-of-life of their products, is one of the EU’s most important tools for delivering a circular economy. But as discussions at "Shaping Europe's Circular Future", Steel for Packaging Europe’s recent event, made clear, its effectiveness depends on getting the fundamentals right.

At the heart of the debate is a simple principle: EPR fees should reflect the real net cost of managing packaging at end-of-life.

This means accounting for the costs of collection, sorting, and recycling, and  for the value of the recovered material, considering that for some packaging types and/or materials this value might be negative. When this net cost principle is applied correctly, it creates a powerful incentive system - rewarding materials that are efficiently recyclable and encouraging better design choices.

However, in practice, this principle is not always fully implemented.

Peter Kirchesch Chair of Steel for Packaging Europe’s Sustainability Working Group, highlighted the current German EPR fees for packaging as an example of how some systems fail to properly credit the value of materials such as steel, resulting in cross-subsidisation between different packaging materials. This can result in high-performing materials effectively subsidising those with lower recyclability - a situation that risks undermining both fairness and efficiency.

As highlighted during the panel discussions, this is not just a technical issue. It has significant implications for competition, innovation, and the credibility of circular economy policies.

Felipe Watanabe of Trivium Packaging noted that if EPR-fees do not reflect real costs, eco-modulation - the adjustment of fees based on environmental performance - loses its meaning. Instead of incentivising better design, the system can inadvertently protect less sustainable choices.

The solution lies in strengthening two core pillars: net-cost-based fees and effective eco-modulation.

Net-cost-based fees ensure that each material is responsible for its own end-of-life costs, creating transparency and accountability. Eco-modulation, when properly designed, builds on this by rewarding materials that demonstrate high recyclability, by design and real recycling at scale, and circular performance.

But achieving this in practice is not straightforward.

One major challenge is fragmentation. Across Europe, EPR systems vary significantly in structure, cost, and implementation. Arnaud Warusfel of Bonduelle highlighted how this creates complexity for businesses operating across multiple markets and can lead to significant cost disparities – up to six times more in Germany than in France for a can of corn, in the example he cited

At the same time, and as highlighted by Monika Romenska of EXPRA, complete harmonisation may not be feasible, given differences in geography, infrastructure, and national systems. The goal, therefore, should be consistency rather than uniformity - ensuring that core principles are applied across all systems, even if implementation details vary.

Another critical issue is governance. There was strong support for EPR systems to operate as non-profit entities focused on delivering a service of general interest, rather than generating profit. This aligns incentives with public policy objectives and helps build trust among stakeholders.

Equally important is the role of data. Transparent, detailed, and audited information is essential to ensure that fees are calculated correctly and that systems are functioning as intended. Without reliable data, it is difficult to assess performance or identify areas for improvement.

Finally, collaboration along the value-chain remains key.

As highlighted by Steve Claus in his concluding statements for Steel for Packaging Europe, EPR systems sit at the intersection of policy, industry, and waste management. Their success depends on alignment across all actors - from brands and retailers to recyclers and regulators.

The message from the event was clear: if Europe is serious about building a circular economy, EPR systems must evolve.

They must become more transparent, more consistent, and more closely aligned with real-world performance. Most importantly, they must reward - not penalise - materials and systems that already deliver circularity.

Because in the end, a fair and effective EPR system is not just a regulatory tool. It is a foundation for a more competitive, resilient, and sustainable European economy.