How could the Packaging and Packaging Waste Regulation change the economy? | In Principle

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How could the Packaging and Packaging Waste Regulation change the economy?

EU member states’ tardiness in implementing environmental directives has consequences. It has led to a proposal of an EU regulation on packaging and packaging waste, to harmonise the internal market and eliminate the overproduction of packaging waste in the European Union. This article discusses certain aspects of the proposal that could significantly affect both businesses and consumers.

Where the legislative process stands

Issues of production and management of packaging and packaging waste have a long regulatory history in the EU. Currently, the principal legal act in this area is the Packaging and Packaging Waste Directive (94/62/EC). But the European Commission found that despite multiple amendments, the directive has not greatly reduced the problem of excessive packaging and packaging waste generated in the EU, and a new legislative initiative was required.

On 30 November 2022, the Commission published its Proposal for a Regulation of the European Parliament and of the Council on packaging and packaging waste, amending Regulation (EU) 2019/1020 and Directive (EU) 2019/904, and repealing Directive 94/62/EC. As the use of a directive had proved inadequate, the Commission decided to pursue adoption of a regulation, applied directly, without implementation by the parliaments of the member states. The explanatory memorandum for the Commission’s proposal points out that despite the introduction of specific measures, the current legislation has failed to achieve its environmental and internal market objectives. Different approaches of member states to transposing directives, and unilateral packaging policy measures taken by individual countries, have led to uneven national regulatory frameworks. This mainly involves slow or late implementation of directives. For example, Poland still has not enacted adequate provisions on extended producer liability, even though the deadline passed last year. Such shortcomings have greatly reduced the chances for achieving environmental objectives, and the Commission has identified this as a threat to effective functioning of a circular economy.

The adoption of new provisions in the form of a regulation is expected to lead to even fulfilment of obligations by all member states. It should also ensure legal certainty and create a uniform competitive environment for business within the EU. In practice, this means that businesses need to follow the proposed changes before they are adopted. Numerous requirements may come into force in the near future, relating in particular to the production of new packaging.

The next step in the legislative procedure was for the Council and the European Parliament to adopt their positions. The Parliament did so in November 2023 and the Council in December 2023. On this basis, further negotiations began, resulting in adoption of a provisional political agreement on the planned regulation, as announced in a press release on 4 March 2024. Later in March, the draft was approved by the Committee of the Permanent Representatives of the Governments of the Member States to the European Union (Coreper), which means that soon it should be formally passed by the Council. In turn, the regulation was adopted by the Parliament on 25 April 2024. After final approval by the Council, it will be published in the Official Journal of the EU.

What will the new regulation cover?

The regulation is intended to cover the entire life cycle of packaging. The idea is that environmental requirements should be taken into account already at the packaging production stage. Also, the proposal identifies packaging labelling issues and sets reduction targets. Each member state will be required to reduce the packaging it produces by at least:

  • 5% by 2030
  • 10% by 2035
  • 15% by 2040.

Both manufacturers and entities placing reusable packaging on the market, and recyclers, must be prepared for the changes.

Packaging composition

Generally, all marketed packaging will have to be recyclable. In practice, this means that the packaging must meet the following conditions, listed exhaustively in Art. 6(2):

  • It is designed for recycling (applicable as of 1 January 2030)
  • It is effectively and efficiently separately collected
  • It is sorted into defined waste streams without affecting the recyclability of other waste streams
  • It can be recycled so that the resulting secondary raw materials are of sufficient quality to substitute the primary raw materials
  • It can be recycled at scale (applicable as of 1 January 2035).

Binding guidelines clarifying these conditions will be published in the coming years by the Commission.

The regulation also sets a required minimum of recycled content in plastic packaging (any part of packaging that is made of plastic).

Most likely from 1 January 2030, the minimum will be:

  • 30% for contact-sensitive packaging made from polyethylene terephthalate (PET) as the major component
  • 10% for contact-sensitive packaging made from plastic materials other than PET, except single-use plastic beverage bottles
  • 30% for single-use plastic beverage bottles
  • 35% for other plastic packaging.

From 1 January 2040, the requirements would become more stringent, with a minimum recycled content of:

  • 50% for contact-sensitive plastic packaging made from PET as the major component
  • 25% for contact-sensitive packaging made from plastic materials other than PET
  • 65% for single-use plastic beverage bottles
  • 65% for other plastic packaging.

However, there are exceptions to these requirements, particularly for compostable plastic packaging and packaging in which the plastic component makes up less than 5% of the total weight. Also, the provisional agreement includes a clause obliging the Commission to review the implementation of the 2030 targets and reassess the feasibility of the 2040 targets. Therefore, some changes cannot be ruled out in this regard.

The provisional agreement on the proposed regulation also calls for a total ban on the marketing of food-contact packaging containing “forever chemicals” (per- and polyfluoroalkyl substances—PFAS) above certain thresholds, with the aim of increasing food safety.

Reusable packaging

The proposal sets ambitious packaging reuse targets for 2030 and establishes indicative targets for 2040. These targets cover diverse types of packaging, for items such as dairy, alcoholic beverages (excluding wine) and non-alcoholic beverages, transport, commercial and bulk packaging. The targets depend on the type of packaging, with cardboard packaging generally exempt. Importantly, the targets can also be met by forming pools of up five entities within a group of final distributors.

The requirements for reusable packaging will affect a significant group of businesses—among others, the HoReCa sector, i.e. businesses offering commercially packaged ready-to-eat takeaway food. According to the proposal, by 2030 at least 10% of such products would have to be offered in reusable packaging. The HoReCa sector would also have to allow consumers to use their own food containers free of charge—they could order a takeaway product and collect it in their own packaging.

There will be some exceptions to these rules. The agreement introduces a general renewable five-year derogation from attainment of the reuse targets under specific conditions, including that:

  • The exempting member state exceeds by 5 percentage points the recycling targets to be achieved by 2025 and is expected to exceed by 5 percentage points the 2030 recycling targets
  • The exempting member state is on track to achieve its waste prevention targets
  • Operators have adopted corporate waste prevention and recycling plans that contribute to achieving the waste prevention and recycling objectives set out in the regulation.

At this point, however, it is unlikely that Polish companies will be able to take advantage of the foregoing derogation. Indeed, it appears unlikely that Poland would exceed the established recycling targets in the coming years.

The packaging reuse provisions will also not apply to micro-enterprises. Because this segment is not responsible for very much of the problem of excessive packaging, the new regulations would be an excessive and disproportionate burden on this group.

Packaging adapted to the volume of goods

The regulation would also ban oversized packaging. Under the Commission’s proposal, economic operators who supply products to a final distributor or an end user in grouped packaging, transport packaging or e-commerce packaging would have to ensure a maximum empty space ratio of 40%. Under the provisional agreement of the Council and the European Parliament, this rate was raised to 50%.

In this context, the concept of empty space means the difference between the total volume of a package and the volume of the commercial packages contained in that package. Space occupied by filling materials, such as paper cuttings, air cushions, bubble wraps, sponge fillers, foam fillers, wood wool, polystyrene or Styrofoam chips, would be considered empty space.

The empty space requirements will not extend to protected packaging patterns, if protection is obtained before the effective date of the regulation.

Labelling, marking and information requirements

The proposal foresees numerous duties involving labelling of packaging. In principle, packaging will have to be marked with a label containing information on its material composition. The current proposal provides that this obligation does not apply to transport packaging other than e-commerce packaging. This obligation will also not apply to packaging covered by the deposit-refund system. This obligation is to come into effect within the next few years, but no sooner than three and a half years after enactment of the regulation.

Moreover, packaging will have to bear a label on packaging reusability and a QR code or other type of digital data carrier that provides further information on packaging reusability, including the availability of a reuse system and collection points, and facilitates the tracking of the packaging and the calculation of trips and rotations. Additionally, reusable commercial packaging should be clearly marked and distinguished from single-use packaging at the point of sale. Businesses will have at least four years to fulfil this obligation.

In this regard, the Commission is to adopt an implementing act defining the appearance of the required labels, with the goal of fully harmonising the labelling rules.

Ban on marketing

The agreement reached between the Council and the European Parliament also calls for a ban on marketing of certain single-use plastic packaging. Among other things, this includes:

  • Packaging for unprocessed fruits and vegetables
  • Packaging filled on-site for food and beverages consumed in cafés and restaurants
  • Packaging of disposable portions of condiments, sauces, cream, sugar and the like
  • Packaging for small cosmetic and toiletry products
  • Film used at airports to wrap luggage
  • Plastic bags with a thickness of less than 15 microns (except for bags necessary for hygienic reasons and bags used as food packaging to prevent food from going to waste).

There are some exceptions to these bans. For example, it will be permissible to provide single-use portions of condiments in plastic packaging in places where there is a health-related reason, such as in hospitals.

But in practice, individual packets of sugar, salt, pepper, sauces and the like will soon disappear from food service locations. Vendors will have to switch to forms such as a sugar bowl, salt shaker, or ketchup dispenser. The service of securing luggage by wrapping it in plastic foil will disappear from airports, but suitcase covers could be an alternative. At the same time, there is no doubt that all of these provisions will significantly impact businesses, particularly where food service is involved. The ban would take effect on 1 January 2030. And the list of products covered by the marketing ban could be expanded in later years.

Assessment of the regulation

The proposed regulation may cause a revolution in the world of packaging. The changes are comprehensive and apply to packaging manufacturers as well as all other businesses using packaging in their operations. The new rules will also affect consumers. Significantly, the new provisions will take effect without having to be transposed into national law. Therefore, foot-dragging by the Polish parliament would not save local businesses from the need to adapt to the new requirements.

Some solutions, such as proper labelling, should not be problematic from a business perspective. But others would require significant changes in social habits. This primarily means a shift from individual, single-use plastic packaging to widespread use of reusable or shared packaging.

Recyclers will be pleased to note that to some extent, packaging will have to come from recycling. This should drive growth in the recycling industry. It is also an important step for reducing the production of unnecessary packaging, generally meaning more efficient use of available resources.

For a long time, whether the regulation would ultimately come into effect remained an open question. More than a year passed after the European Commission’s proposal, and it was only in early March that a political agreement was adopted between the Council and the Parliament. Contrary to some predictions from the packaging industry, work on the draft clearly accelerated. Adoption of the bill by the Parliament before the approaching EP elections was a crucial step, as it is hard to say whether a majority for such solutions could be found in the new composition of the European Parliament. Now the regulation is only awaiting final adoption by the Council, which should be a pure formality.

Karol Maćkowiak, Environment practice, Wardyński & Partners

Article updated 8 May 2024