Description of Policy Options Being Considered in the Packaging Impacts Decision Regulation

Description of policy options being
considered in the Packaging Impacts
Decision Regulation Impact Statement (RIS)

Contents

Summary of options

Option 1 – National Packaging Waste and Litter Strategy

Option 2a – Australian Packaging Covenant replaced by co-regulatory product stewardship under the Product Stewardship Act 2011

Option 2b – Industry Packaging Stewardship

Option 2c – Extended Packaging Stewardship

Option 2d – Beverage Container Stewardship

Option 2e – Extended Australian Packaging Covenant

Option 3 – Advance Disposal Fee

Option 4a – Boomerang Alliance Container Deposit Scheme

Option 4b – Centralised Container Refund Scheme

Option 4c – South Australian Container Refund Scheme

The options descriptions in this document have been prepared for consideration in the Packaging Impacts Decision RIS. The descriptions do not represent a policy of the Australian, state or territory governments and have not been considered by ministers at this level of detail.

Page 1

Summary of options

On 24August2012 the Standing Council on Environment and Water (SCEW) agreed to develop the Packaging Impacts Decision RIS, following extensive public consultation earlier in the year on the Consultation RIS.

SCEW agreed that ten options be considered in the Decision RIS—the seven options analysed in the Consultation RIS, and three new options developed in response to consultation feedback:

Table 1: Summary of options to be considered in Decision RIS.

Approach / Option / Summary of option
No new regulation / 1 / National Packaging and Litter Strategy / A nationally coordinated government initiative targeting packaging recycling and litter
Co-regulatory product stewardship / 2a / Australian Packaging Covenant replaced by co-regulatory product stewardship under the Product Stewardship Act 2011 (PS Act) / An industry run co-regulatory product stewardship scheme under the PSAct to replace the existing Covenant
2b / Industry Packaging Stewardship / An industry run co-regulatory product stewardship scheme under the PSAct based on the National Bin Network proposal developed by companies in the packaging and packaged goods industries
2c / Extended Packaging Stewardship / An industry run co-regulatory product stewardship scheme under the PSAct that goes beyond the commitment from industry groups under option 2b
2d / Beverage Container Stewardship (new option) / A co-regulatory product stewardship scheme under the PSAct that makes the beverage industry responsible for achieving an 80percent national beverage container recycling rate by 2025
While modelled for beverage containers this option has the potential to adopt a broader definition of ‘beverage container’ than Option 4, reflecting the prevalence of drink cups in litter.
2e / Extended Australian Packaging Covenant (new option) / A co-regulatory scheme modelled on the existing Australian Packaging Covenant with a greater financial commitment from industry
Mandatory product stewardship / 3 / Advance Disposal Fee / An advance disposal fee on all packaging materials that generates revenue to fund packaging recycling and litter programs
4a / Boomerang Alliance container deposit scheme / A national container deposit scheme proposed by Boomerang Alliance with a tencent upfront deposit (payable by domestic producers and importers of sealed beverages) and a tencent refund for redeemed containers
4b / Centralised container refund scheme / A container refund scheme managed by a single national coordinator which allows consumers to receive a ten cent refund when they return their containers to an approved depot
4c / South Australian container refund scheme (new option) / A national container refund scheme based on the South Australian scheme which allows consumers to receive a ten cent refund for eligible containers they return to approved depots

Summary of option scope (liable products):

Several options target all packaging used for consumer goods, which is consistent with the scope of the existing Australian Packaging Covenant. Other options have a narrower scope, specifically target beverage packaging. See Figure 1.

Figure 1: Scope of policy options - product classes
Packaging Impacts Decision Regulation Impact Statement

Non-regulatory

Option 1 – National Packaging Waste and Litter Strategy

Brief description:

A national packaging waste and litter strategy funded from additional government resources.

Scope:

All packaging materials and littered items.

How it works:

The strategy coordinates jurisdictional actions to increase recovery and recycling of packaging waste and reduce litter. It will lead to improved use of current infrastructure by providing targeted information and advice to consumers and greater sharing of information across governments.

Elements of a national packaging waste strategy may include:

the development of a national litter methodology for measurement and monitoring of litter rates
national programs to increase away-from-home recycling at mass consumption areas
coordinated litter campaigns
consistent labelling of recycling bins
development of voluntary standards for end products and packaging labelling to highlight recyclability, and
a national education initiative aimed at litter prevention.

Governance:

The national packaging waste and litter strategy does not include any additional regulatory requirements. It is funded by governments and facilitated by a national body made up of representatives from Commonwealth, state, territory and local governments.

The strategy includes collaboration between government, industry (packaging manufacturers, grocery and beverage industries and retailers), environment groups and local government.

Co-regulatory Product Stewardship

Overview

This section describes the co-regulatory options 2a, 2b, 2c, 2d and 2e in general terms. Full descriptions of the sub-options appear below Table 2.

Common features of co-regulatory options 2a—2d

Options 2a—2d would be implemented by making Regulations under the Product Stewardship Act 2011 (‘PS Act’), activating the co-regulatory provisions in Part 3 of the PS Act with respect to:

Defining the product classes (generally all consumer packaging, but option 2d is limited to beverage containers)
Defining the liable parties as constitutional corporations who manufacture, import distribute or use relevant products (including appropriate small business exemption thresholds)
Obliging liable parties to become a member of an approved co-regulatory arrangement (CA)
Defining the outcomes and requirements which CAs must meet.

Co-regulatory option 2e

Option 2e would be implemented by the National Environment Protection Council (consisting of federal, state and territory environment ministers) agreeing to amend the existing Used Packaging Materials National Environmental Protection Measure (NEPM)[1], if necessary, to support a new Australian Packaging Covenant agreement between government and industry, with a substantial increase in industry’s collective financial contribution. Any change to the Used Packaging Materials NEPM is likely to require amendments to the state and territory legislation which implements its terms.

Key differences between the co-regulatory options

The five co-regulatory options differ in relation to the classes of products to which they would apply and the recycling obligations of co-regulatory arrangements. The table below sets out these key differences and the forecast national recycling rate outcomes they are expected to contribute towards.

Table 2: Key differences between co-regulatory options

Option / Product class / Recycling target
% product class consumption
(estimated tonnes) / Preliminary forecast of national recycling rate for product class / Litter outcomes / Design outcomes
2a / Consumer packaging / 2% annually
(0.1m tonnes) / 75% by 2020 / Packaging litter plan (education, clean-up, product design) / Sustainable packaging design standards
2b / 10% by 2020
(0.5m tonnes) / 77.5% by 2020
2c / 16% by 2020
(0.8m tonnes) / 80% by 2020
2e (new) / No regulated target / 80% by 2020
2d (new) / Beverage containers / 72.5% by 2020
80% by 2025
(0.9m tonnes in 2020) / 72.5% by 2020
80% by 2025 / Beverage container litter plan / Beverage container design standards

Co-regulatory Product Stewardship

Option 2a – Australian Packaging Covenant replaced by co-regulatory product stewardship under the Product Stewardship Act 2011

Brief description:

A co-regulatory product stewardship scheme under the Product Stewardship Act 2011 (PSAct) to replace the existing Australian Packaging Covenant (APC). Under the scheme, an industry product stewardship organisation (co-regulatory arrangement) must meet outcome requirements specified in regulations relating to sustainable packaging design, packaging recycling and litter reduction. The packaging recycling target is 2percent per year of packaging materials brought to market by members, achieved by supporting increased at home and away from home recycling.

Scope (liable products):

Under this option, the class of products subject to regulation is[2] as:

All consumer packaging.

Liability of a party under the regulation is based on the amount of consumer packaging materials brought to market by the manufacturer, importer, distributor or user of the consumer packaging. Only one such party in the supply chain will be identified as liable in relation to an item of consumer packaging. Only constitutional corporations who exceed a defined threshold will be liable (purpose is to exempt smaller businesses while capturing most packaging).

How it works:

Regulations under the PS Act establish the co-regulatory scheme, including liable parties and outcomes. The scheme replaces the current activities of the APC.

Corporations that produce and/or import packaged consumer products must join an approved co-regulatory arrangement (CA). The CA (or CAs) must achieve outcomes and other requirements based on the amount of packaging materials that their members bring to market.[3] The outcomes and requirements that the CA must achieve are:

oblige members to develop a sustainability action plan and report annually against it
demonstrate members’ commitment to sustainable packaging design
achieve packaging recycling targets – recycling 2percent of the packaging materials its members bring to market every year, and
develop and implement a litter reduction plan, incorporating education, infrastructure and clean-up actions.

Failure to take reasonable steps to achieve these outcomes and requirements can lead to a CA’s approval being revoked, which would expose its members to financial penalties for every day they are not a member of an approved CA. The regulations will not set out the specific actions that need to be undertaken to achieve the outcomes. Rather, it is the role of the CA to come up with a cost-effective means of achieving them.

The CA’s recycling obligations are limited to its target - it is not obliged to ensure that the national packaging recycling rate reaches a certain level on a certain future date, as this rate is impacted by a multitude of other factors and other parties.

Action Plan

As under the current APC, liable parties under the scheme are obliged to develop an action plan outlining what actions they will undertake to support the objectives of the scheme (outlined in the regulations) and to report annually against it. Actions will include:

implementing sustainable packaging guidelines (developed by CA)
establishing on-site recovery systems for used packaging
implementing a ‘Buy Recycled’ policy, and
undertaking product stewardship actions – such as supply contracts that require take-back and recycling.

Sustainable packaging design

Under the co-regulatory scheme regulations, the CA must demonstrate the commitment of member companies to sustainable packaging design. This can be achieved by requiring members to implement sustainable packaging guidelines, and reporting annually on members’ actions to optimise packaging for successful recycling and reuse and use fewer and more readily recyclable materials.

Packaging recycling

Under the scheme, the CA is responsible for a quantitative recycling target, modelled on the current APC commitment, to stimulate increases in packaging recycling rates in Australia. Recognising that parties outside the packaged goods industry (e.g.local governments, business consumers) already recycle a lot of packaging, the scheme makes the CA responsible for additional recycling on top of existing recycling efforts. It is expected that these other parties will continue to undertake recycling activities independently of the activities of the CA.

The CA’s target is to recycle 2percent of the packaging its members bring to market every year (see Figure 2 below). This is calculated on the commitment which is estimated to be required from the packaged goods industry to result in an overall 75percent national packaging recycling rate by 2020.

Figure 2 – Co-regulatory scheme recycling targets – option 2a

The CA must prove that its actions lead to additional recycling. For example, it could invest in projects to improve the output of existing recycling infrastructure, with the CA partnering with commercial operators to achieve its outcome targets. While projects can continue over multiple years, only the new recycling generated from the project each year can count towards the outcome target in that year (i.e. if a CA’s project generates 200,000 tonnes in year 1 and 250,000 tonnes in year 2, the CA can only count 50,000 tonnes towards its target in year2).

Litter reduction

The CA is obliged under the scheme to reduce the impact of litter in Australia by developing and implementing a litter reduction plan, incorporating education, infrastructure and clean-up actions. To be approved, the plan would need to meet specified assessment criteria, including:

a focus on locations where litter has high environmental costs (such as waterways and stormwater which flow to sea and coastal environments)
containing clearly measurable litter outcomes
mitigating impacts in all Australian states and territories
managing litter in cooperation with local governments (and if there are multiple CAs, avoiding duplicating other CAs’ efforts).

Governance:

The Australian Government (AG) is responsible for: developing regulations to establish the coregulatory scheme; assessing and approving CAs; and monitoring and enforcing compliance, which involves pursuing and potentially prosecuting liable companies that do not join a CA and ensuring that a CA fulfils its obligations under the scheme. The AG must also report annually to the Australian Parliament on the operation of the scheme.

Under the PS Act, an approved CA needs to take reasonable steps to achieve the specified outcomes and requirements of the scheme. The CA and its liable party members need to keep adequate records and make the records available on request. The CA must report regularly to the AG on its performance. The AG can issue an improvement notice to the CA or direct it to undertake an audit. If the CA’s performance is unsatisfactory, the AG can cancel its approval.

Co-regulatory Product Stewardship

Option 2b – Industry Packaging Stewardship

Brief description:

An industry run co-regulatory product stewardship scheme under the Product Stewardship Act 2011 (PSAct) based on the National Bin Network (NBN) proposal developed by companies in the packaging and packaged goods industries. Under the scheme, an industry product stewardship organisation (co-regulatory arrangement) must meet outcome requirements specified in regulations relating to sustainable packaging design, packaging recycling and litter reduction for packaged consumer products brought to market. The packaging recycling target for 2020 is 10percent of packaging materials brought to market by members, achieved by supporting increased at home and away from home recycling. The recycling target will include a beverage container sub-target.

Objectives to be achieved are:

Packaging design —members of a co-regulatory arrangement (i.e. producers and importers of packaged consumer products):
using the Sustainable Packaging Guidelines for design or procurement of packaging
with formal processes in place to improve packaging design and recycling
demonstrating other product stewardship outcomes for packaging.
Packaging recycling — co-regulatory arrangement will support increased at-home and away-from-home recycling. This is expected to contribute to achieving a national packaging recycling rate of approximately 77.5percent by 2020. Recycling of beverage containers would comprise a substantial component of this contribution, projected to deliver a 70percent beverage container recycling rate by 2020 and 80percent by 2025 (up from 52percent in 2010-11).
Litter reduction — co-regulatory arrangement will take actions that are reasonably expected to contribute to a 10percent reduction in all litter by volume by 2020.

Scope (liable products):

Under this option, the class of products subject to regulation[4] is:

All consumer packaging.

Liability of a party under the regulation is based on the amount of consumer packaging materials brought to market by the manufacturer, importer, distributor or user of the consumer packaging. Only one such party in the supply chain will be identified as liable in relation to an item of consumer packaging.Only constitutional corporations who exceed a defined threshold will be liable (purpose is to exempt smaller businesses while capturing most packaging).

How it works:

Unlike option 2a, under option 2b the coregulatory arrangement (CA) faces rising recycling targets,as well as a packaged beverage container recycling sub-target(that is, beverages in sealed containers).

In addition, the CA may continue to support recycling activities over multiple years and count the ongoing recycling performance of those activities towards outcomes in the year in which the recycling occurs.

PS Act co-regulatory provisions

Regulations under the PS Act establish the co-regulatory scheme, including liable parties and outcomes. The scheme replaces the current activities of the Australian Packaging Covenant (APC) and includes increased commitments, particularly for beverage containers.

Producers and importers of packaged consumer products must join an approved CA. The CA (or CAs) must achieve outcomes and other requirements based on the amount of packaging materials that their members sell into the Australian market.[5] The outcomes and requirements that the CA must achieve are:

demonstrate its members’ commitment to sustainable packaging design;
achieve packaging recycling targets – e.g. by 2020 the CA needs to be recycling 10percent of the packaging materials its members bring to market (consisting of recycling not previously occurring); and
take actions that are reasonably likely to contribute to a 10 per cent reduction in all litter (measured by volume).

Sustainable packaging design

Under the co-regulatory scheme regulations, the CA must demonstrate the commitment of member companies to sustainable packaging design. This would be achieved by requiring members to implement Sustainable Packaging Guidelines and reporting annually on members’ actions to optimise packaging for successful recycling and reuse, and use fewer and more readily recyclable materials.