Exploring the Current Landscape and Challenges of Extended Producer Responsibility
Extended producer responsibility programs have been developing across North America in recent years, and while strides have been made to implement more post-consumer recycled materials into the packaging process, challenges remain. Here’s a deep dive into the current EPR landscape, key challenges EPR is currently facing, and how we think the industry needs to move forward.
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What happens when plastic packaging reaches the end of its life? Under extended producer responsibility (EPR) programs, the onus falls to the producer to be responsible for this lifecycle, making for a more sustainable system of packaging management.
These EPR programs have been developing across North America in recent years, and while strides have been made to implement more post-consumer recycled (PCR) materials into the packaging process, challenges remain.
At EFS, we work with producers directly to close the loop on plastics and packaging, offering recycling services that can help producers meet these regulatory requirements—but recyclers like us can only go so far. Here’s a deep dive into the current EPR landscape in North America, key challenges EPR is currently facing, and how we think the industry needs to move forward.
The EPR Landscape in North America
While one U.S. state (Oregon) has launched an EPR system and conversations continue to unfold across the country, Canada leads the way in terms of implementation, with provinces like Ontario and Québec already well into their EPR programs.
Additionally, Canada has had more advanced discussions around supply security. From a processor’s perspective, the Canadian set-up provides greater security since PROs manage the supply stream, enabling long-term supply agreements that are essential to building the infrastructure needed for broader PCR integration.
Current Challenges with EPR
Curbside Collection
Currently, one of the most pressing challenges with EPR is finding solutions for the growing share of flexible plastics collected curbside. For rigid plastics, infrastructure already exists to handle collection; therefore, many of these same facilities could be upgraded to accommodate higher volumes of both rigid and flexible plastics.
Eco-Modulation and Penalty Mechanisms
To encourage the incorporation of recycled content into packaging, there is also a need for strong eco-modulation, which reduces EPR fees for brands if compliance is met, as well as other mechanisms like standalone recycled content requirements. If these mechanisms are too weak, producers would rather pay fees, and PCR integration will lag behind expectations, undermining the purpose of EPR. The strongest language currently comes from California’s SB54, which stipulates that certain plastic types will be banned by 2032 if recycling targets are not met.
Quality of PCR Supply
While we use extensive databases, lab analysis, and compounding to achieve consistently high-quality PCR, no batch is ever identical when it comes to mechanical recycling, which transforms waste through a physical process as opposed to a chemical one. Mechanical recycling offers a lower environmental impact, but we cannot fully control additives, barriers, or process aids introduced during virgin production or product manufacturing.
That’s why we support the Consumer Goods Forum's Plastic Waste Coalition of Action (PWCoA) Golden Design Rules and the Association of Plastic Recyclers’ Design® Guide. Broad industry adoption of these practices would deliver a more consistent, recycle-ready feedstock. For flexible plastics in particular, reducing the use of paper and labels is essential, as paper residues negatively impact odour, printability, and bubble integrity in blown-film processes.
Fragmented Supply Chain
Beyond consistency in PCR supply, a larger issue is the fragmented supply chain itself. As it stands, long-term supply agreements are rare, leaving a system with many brokers and generators that prefer the spot market to maximize rebates. PROs managing the supply chain in EPR systems could solve this problem by providing stable, contractable material flows.
Disconnect Between Producers and Recyclers
There also remains a disconnect between the perception and reality of PCR supply: brands often say there is not enough PCR available, while PCR producers struggle to place all of their resin at sustainable prices. Costs factor into this problem, as PCR typically trades above virgin once processing and margin are included, and quality concerns and food-grade requirements further limit demand.
Breaking this cycle requires long-term supply agreements facilitated by PROs with fair rebate structures, strong eco-modulation within EPR regulations to offset PCR’s cost disadvantage versus virgin, penalties strong enough to discourage brands from simply paying fees instead of using PCR, a reassessment of whether food-grade PCR is always necessary (many non-food applications, such as pallets, crates, barrels, liners, bundling films, pallet wrap, still have little to no PCR integration and represent “low-hanging fruit”), and a greater adoption of plastic credits such as VERRA and RMS, which can support PCR producers while enabling food companies to offset usage when resin is diverted to lower-value markets.
Investment and Trust in the Recycling Industry
A few years ago, private equity showed strong interest in recycling projects, but later slowed down as investor cautiousness increased. While it hasn’t entirely disappeared, investors have certainly become more disciplined. One reason for this is that many initial business plans did not deliver the expected returns, in part because brand recycling and virgin reduction goals were missed or scaled back. There is also more knowledge today about the realities of supply markets.
Investors now require firmer commitments, such as supply or offtake agreements, to de-risk projects. However, given current market conditions, brands and waste generators are increasingly reluctant to provide such commitments.
The withdrawal of funding has created a higher level of caution amongst recyclers. Commercial due diligence is more detailed than in the past, and investors are less likely to commit without clear evidence of both feedstock and offtake security. Luckily, there is still a strong interest in investing in recycling, as it is seen as both necessary and inevitable.
Competing With Virgin Plastics
What’s missing is a clear blueprint for how PCR can compete with virgin resin in today’s market, which is experiencing unprecedented oversupply and price dumping of prime materials. For brands, PCR can often be a tough sell. For one, it adds cost to something that consumers don’t directly value, that being packaging and not the product itself. Secondly, PCR can often lead to inconsistency in appearance.
Luckily, PCR competes on cost when virgin resin prices rise, as PCR then offers brands savings and less volatility. Additionally, some regions have legislation that mandates minimum recycled content, such as Washington and New Jersey, ensuring PCR demand.
As a trusted PCR supply partner, it’s important that we remain flexible in order to stay competitive. When demand in certain end markets declines, we adapt procurement and processing strategies, even though such shifts take time. Ideally, we would work under long-term contracts with pricing models tied to both recycled and virgin resin indices. In some cases, we have successfully developed such models with customers, and we are working to expand these partnerships to highlight the value of PCR as a stable, less volatile alternative over time.
Looking Forward
For the foreseeable future, legislation will be the primary driver. Legislators hold the key through well-designed EPR frameworks and stricter regulation of virgin resin production. With the right policy signals, investor confidence will return.
With that said, innovative business models can also create momentum if they build strong consumer and retailer stories around sustainability, and vertical integration is another path forward.
Our Exi-Plast division manufactures durable goods with high PCR loadings, sometimes up to 100%. Products like floating docks, dumpster lids, and parking grids are already gaining traction with major hardware and outdoor retailers.
To us, there’s an opportunity in partnering with industry leaders to demonstrate what’s possible with PCR. Creating awareness at trade events and through industry associations is key, as is shaping the policy conversation alongside PROs and legislators to build a sustainable blueprint for growth.
Learn more about our client-tailored, cost-effective recycling services that can help producers meet regulatory requirements, achieve recycled content goals, and advance the circular economy here: https://www.efs-plastics.ca/plastic-recycling-services
