Can extended producer responsibility fees and EU regulations help tackle the challenge of single-use packaging waste? What makes reusable packaging better for the environment and business? Hungary is about to find out.
Can ERP fees reduce single-use packaging waste?
In the fight against single-use packaging waste, could Monday, July 31, 2023, go down in history as an important date in Hungary?
This was the day that Hungary’s Extended Producer Responsibility (EPR) fee on single-use packaging came into force. It is levied on businesses that use single-use packaging as well as on the use of rigid containers that are not reused or recycled in an efficient way.
Which is why IFCO customers can sit back and relax. Our IFCO reusable packaging containers (RPCs) and SmartCycle pooling system are firmly rooted in the principles of the circular economy. Our focus is on the efficient sharing, reusing and recycling of IFCO RPCs.
Single-use packaging waste continues to rise at an alarming rate. According to Plastic Oceans International, a non-profit based in the US, over 10 million tons of such plastic is dumped in our oceans every year. The most recent data from the OECD on plastic waste management shows that the world is producing twice as much plastic waste as it was only two decades ago — and is only recycling 9%.
Single-use packaging waste is a problem not only for marine life and our environment, but it’s a disaster for waste management in general. The world’s throw-away mindset has led to single-use packaging waste clogging up our waste-management systems in every country around the world. Dealing with it costs taxpayers and our environment dearly.
Extended producer responsibility regulation isn’t only about increasing government funds by introducing new types of fees or taxes. Essentially, the primary goal is not actually to increase the budget for dealing with waste, but to get rid of it. Until single-use packaging is significantly reduced, one outcome of the EPR fee in Hungary will be increased tax revenue. The additional funds should go into improving the infrastructure for waste management.
However, there’s an even better reason for the EPR fee, as Gabriel Andronescu, Head of Central and Eastern Europe, Sales, at IFCO explains: "The ERP fee in Hungary is primarily about bringing awareness to the wider community about the environmental benefits of switching to reusable packaging solutions," Andronescu says. "Primarily, it also incentivizes whole industries to phase out single-use packaging more rapidly."
What does it mean for your business and the fresh grocery supply chain? Our short Q&A below will help you better understand its impact.
In a nutshell, if you are using single-use packaging to transport your fresh products on the domestic market in Hungary, you should expect to pay this EPR fee. For fresh products that are exported abroad, it is possible to obtain a fee exemption if certain conditions are met that are set out in the new legislation.
It depends. As well as affecting producers and retailers who use single-use packaging, the EPR fee in Hungary will also affect the users of certain types of rigid crates that are not pooled in an efficient way. If reusable packaging containers are registered with the waste management authority, their use is exempted from the EPR fee. Only a one-off EPR fee is payable for such crates, but not on their subsequent use.
Although the EPR fee in Hungary came into force in July 2023, it’s never too late to start! Take a pragmatic approach and draw up a plan for how to implement the types of packaging that can be reused many times over into your supply chain.
The actual regulations can get quite complicated, which is why we recommend you seek expert advice from your tax advisor to be on the safe side.
Understand the cost impact of reusable packaging and consider what would be the best option for you financially.
Prepare different strategies according to the kind of packaging you require. Are you looking at the first packaging around your product (primary packaging), for instance, or transport packaging (secondary or tertiary packaging)?
Work together with companies who provide reusable packaging for your specific needs. It’s most likely to be more efficient and cost-effective for you to work with an international supplier. One that offers a larger pool of standardized and specialized reusable packaging options and has the advantage of a wide network of service centers.
Consider the additional benefits that reusable packaging offers, such as the ability to implement track and trace systems as well as digital solutions that help you understand your customers and product flows even better.
The Hungary EPR fee affects the users of single-use packaging or one-way containers that are deemed likely to end up in landfill or pollute the countryside and our waterways.
If you are a producer or retailer that has already switched to IFCO RPCs to transport your fresh products along the global fresh grocery supply chain, you have already made the sustainable choice. Our packaging solutions are designed for reuse, not single use.
"Our share-reuse-reduce model, the IFCO SmartCycle pooling system, therefore supports the goal of making the reuse of sustainable packaging the norm in Hungary," highlights Andronescu. "We have a closed loop of sharing, reuse and recycling."
Each customer is required to check their own circumstances and fee or tax liabilities. IFCO continues to work hard to ensure our solutions meet the highest standards for reusable and recyclable packaging. This approach ensures that our customers benefit from our circular model for reusable packaging and may be able to reduce ERP fees and green taxes.
For instance:
Our approach is primarily designed to significantly reduce greenhouse gas emissions across the fresh grocery supply chain. In 2022 alone, with the help of our customers, IFCO saved over 614,000 tons of CO2-e emissions along the fresh grocery supply chain, the equivalent of driving to the moon 8,900 times.
In the EU, there are already other environmental taxes, EPR fees and regulations in place. One of the more specific environmental goals set by the EU for member states comes from the EU Packaging and Packaging Waste Regulation (PPWR), which will require businesses to switch to a certain proportion of reusable and recyclable packaging to meet the new EU PPWR targets by January 1, 2030.
This EU regulation is aimed at reducing packaging waste and speeding up the transition to a circular economy model for packaging in line with European Green Deal. Thanks to our circular economy model for pooling reusable packaging containers, IFCO will not be affected by the PPWR’s ban of certain single-use packaging. That includes packaging for fresh fruit and vegetables, which is expected to come into force by 2030. We are confident that we already comply with the future regulations.
In Hungary, the existing environmental taxes will continue to be imposed and the EU PPWR is still highly relevant. Nothing changes there. Instead, the EPR fee in Hungary will penalize the continued use of single-use packaging where more sustainable alternatives are available already in 2023. There is no honeymoon period until 2030.
The changes to the EPR fee in Hungary and the EU PPWR are just two examples of how the tax landscape is acting as an incentive for businesses to adopt sustainable business practices that are rooted in the principles of the circular economy.
As we are a pioneer in reusable packaging containers (RPC) for the fresh grocery supply chain, we are already experts in implementing sustainable packaging solutions. In fact, we have been on a global mission to tackle packaging waste since 1992!
This puts us in an ideal position to support suppliers, growers, producers and retailers who need to make the rapid transition now from single-use-packaging models to a future-oriented circular business model.
With our SmartCycle pooling system and digital innovations around track and trace and supply chain efficiency we make sure the switch is smooth, efficient and sustainable. It’s actually one good reason to reduce costs.
Get in touch if you’d like to learn more about our circular model for reusable packaging and how it can improve your business.
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