ACR+

One of the key objectives of Extended Producer Responsibility (EPR) is to instigate design for the environment. In collective EPR schemes, the fee schedule set by Producer Responsibility Organisations (PROs) is typically quite simple and provides weak incentives for design change by producers. Fee modulation, changing fees paid by producers in a collective EPR scheme based on product design, can provide producers with stronger design incentives, but can lead to a number of issues, including an increased administrative burden. An extensive literature review and expert consultations with stakeholders from early-adopting EPR schemes in Europe, North America, and Asia are the basis for insights and exante policy recommendations presented in this paper.

The paper defines a classification for fee modulation (by criteria and methodology) and discusses potential issues and considerations. Advanced fee modulation, using criteria beyond weight or product type, offers many opportunities, but adds complexity to EPR schemes. As well, the amplitude of fee modulation requires careful consideration. Fee adjustments that go beyond observable end-of-life cost differences provide further incentives for design for environment, but can lead to a sense of arbitrariness, loss of transparency and divergence from the polluter pays principle. Additionally, the paper places advanced EPR fee modulation in the context of a broader policy mix. It considers complementary and alternative policy tools for instigating desired design changes. The paper concludes with key policy insights that can further stimulate this emerging policy approach.