Research and analysis

Extended producer responsibility for packaging: illustrative base fees (August 2024)

Published 15 August 2024

Introduction 

Extended producer responsibility (EPR) for packaging is a cornerstone of tackling waste in the UK. This document provides information on initial illustrative base fees for year 1 of EPR for packaging. It relates to fees that would be charged to obligated packaging producers by the Scheme Administrator (SA). It does not cover: 

• regulator fees and charges paid to the Environment Agency, the Scottish Environment Protection Agency, the Northern Ireland Environment Agency, and Natural Resources Wales
• costs associated with meeting packaging recycling targets e.g. through the purchase of Packaging Waste Recycling Notes (PRNs). 

This document is being published on behalf of the UK Government, the Department for Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland, the Scottish Government, and the Welsh Government. The term ‘Government’ herein refers to all four administrations. 

Background 

Fees will be incurred from 1 April each year, based on packaging supplied by registered producers for the preceding calendar year. The deadline for reporting data on RPD is 1 April. As a result, fee rates for the first year of EPR for packaging (2025/26) won’t be known until after 1 April 2025. Allowing for relevant checks to be carried out and billing approvals to be obtained, it is expected that the SA will issue invoices in early summer each year. Invoicing in the first year of EPR for packaging may operate to a different timetable because the SA may still be in the process of being formally established. 

Each obligated producer’s fees will be calculated by the SA using the fee formula built into the Fees and Payments Calculator (FPC). The legal provisions for the fee formula are set out in the draft Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations.  

In advance of 2024 packaging data being supplied by producers, and in response to industry calls for greater clarity about the costs they are likely to incur, illustrative base fees for 2025/26 have been calculated for each of the eight packaging categories. The illustrative fees have been calculated using different datasets to those the SA will use to calculate actual fees. They are being shared to provide as much information as early as possible, to best support producers.  

The illustrative base fee have been calculated using weights of household packaging placed on the market in 2022, taken from the ‘PackFlow Refresh 2023’ reports.^{[footnote 1]} These data represent estimates of past packaging, standing in as a proxy for future packaging. Work was undertaken to classify the packaging as closely as possible to the new EPR for packaging reporting obligations, however these will not match exactly.  The data submitted by producers in the Report Packaging Data (RPD) online portal have not been used due to identification of anomalies which require rectification. The fees in Table 1 include estimations of Local Authority (LA) packaging waste management costs by the Waste & Resources Action Programme (WRAP). Illustrative base fees are being provided separately for glass (Table 2) as these were estimated using a separate methodology to ascertain LA costs being developed by Defra, which will be used to calculate final EPR for packaging base fees. At this stage, this methodology is still under development and therefore has not been applied across all materials, but it was used for glass because it is considered to be more robust for this specific material. These estimates have been included to provide as much information as possible to producers, and to form the basis for ongoing engagement with industry on the underpinning methodological assumptions in advance of the next release of illustrative base fees.  

Important caveats 

These illustrative fees are our first estimate, based on the best available evidence to date. They are not final fees. Government recognises that obligated producers may wish to use the higher or lower estimates to assess worst and best case scenarios. This is not recommended. While these illustrative base fees can help industry with early preparedness, these figures are still subject to significant uncertainty and will change in future.^{[footnote 2]} Given the significant data limitations, Government intends to publish refined figures for the illustrative base fees in September 2024, once the data received via the Government’s RPD online portal has been further reviewed and evaluated. Illustrative fees are also subject to the 2024 spending review.   

Modulated fees to be introduced from 2026    

From year 2 of EPR, fees will be modulated to ensure packaging materials that have a lower environmental impact will be the least expensive for producers to use. By introducing a modulated fee structure into the market, the use of unsustainable packaging materials will decrease, serving to reduce waste going to landfill and to reduce CO2 emissions. 

The types of packaging which will be subject to higher or lower (“modulated”) fees from Year 2, and the consequential sub-categories of packaging that would need to be reported in 2025 will be released in Autumn 2024. 

Illustrative base fees for 2025/26 

Table 1. Illustrative EPR for packaging base fees rates for 2025/26 for all packaging materials except for Glass packaging 

Material	Lower (in £/tonne)	Intermediate (in £/tonne)	Higher  (in £/tonne)
Aluminium	£245	£495	£655
Fibre-based composites	£410	£525	£655
Paper or board	£185	£260	£350
Plastic	£355	£515	£610
Steel	£170	£295	£420
Wood	£225	£265	£330
Other	£225	£265	£330

Table 2. Illustrative EPR for packaging base fees rates for 2025/26 for Glass packaging.  

Material	Lower (in £/tonne)	Intermediate (in £/tonne)	Higher (in £/tonne)
Glass	£130	£260	£330

Glass fees are provided separately as these were estimated using a separate methodology to ascertain LA packaging waste management costs being developed by Defra, which will be used for the final EPR for packaging fees.   

Explanation of the difference between material fee rates 

There are three main reasons for differences in illustrative base fees between materials, which will persist in the actual fees for 2025/26: 

1. There are differences in the resale values of the different packaging categories. This value is subtracted (“netted off”) from the disposal costs. For example, fibre-based composites have a higher fee due to the relatively low resale value of this material.  

2. There are differences in the proportion of each packaging category recycled and disposed of as residual waste. Different costs are associated with these different ways of managing packaging waste, resulting in different fees. For example, glass fees are based mostly on recycling costs due to the high levels of glass recycling, whereas aluminium fees will be based almost exclusively on residual waste disposal costs due to low recycling rates for aluminium foil and non-drinks containers.  

3. Under the current data sets, there are discrepancies between estimates of the amount of each packaging category occurring as waste and the amount estimated to have been placed on the market by obligated producers, for example for plastic and aluminium packaging materials. This may reflect more recent changes in packaging placed on the market unaccounted for in the 2017 waste composition estimates used in WRAP’s LA costs calculations. Most significantly, it likely reflects the difference between empty packaging registered as ‘placed on the market’ and the partially filled and contaminated packaging which LAs must dispose of. This latter effect is most clearly visible for lighter materials. 

Owing to a lack of robust data, the fees for wood and ‘other’ packaging have been assigned an identical fee rate based on the assumption that they are disposed of as residual waste.  

Next steps 

Producers had an obligation to report their full set of 2023 household packaging data by 1 April 2024 and may face enforcement action if they failed to do so by 31 May 2024. Government plans to release the next set of illustrative base fees in September 2024 once more data has been reported and subsequently checked by regulators. The robustness of this data and the size of the range will be dependent on sufficient, high quality, producer data being submitted on time. The next deadline for reporting 6 months of 2024 household packaging data is 1 October 2024.  

Calculation method 

Summary 

The illustrative intermediate fee across both tables is estimated by dividing the intermediate estimated costs for that material by the intermediate estimated weight of that packaging material placed on the market, rounded to the nearest £5. The illustrative lower fee for each packaging material category across both tables is estimated by dividing the lower estimated costs for that material by the higher estimated weight of that packaging material placed on the market, and the illustrative higher fee is estimated by dividing the higher estimated costs for that material by the lower estimated weight of that packaging material placed on the market. Higher, intermediate, and lower fee estimates are the result of uncertainties in disposal costs, material revenue prices and the estimated weight of household packaging placed on the market within individual packaging material categories.  These uncertainties will reduce in the next iterations of EPR for packaging illustrative base fees as Government transitions to using RPD-reported packaging data and Defra’s LA packaging waste management costs model, which uses more up-to-date inputs.  

Detailed explanation 

Illustrative base fees are calculated by dividing LA packaging waste management costs (for household packaging waste) by the total estimated amount of household packaging placed on the market. The result is a rate which is expressed as fee per tonne of packaging placed on the market. The following calculation is carried out for each packaging category separately:  

Numerator (1) Costs incurred by LAs managing waste of that packaging category (household packaging waste only) minus revenues from material sales plus (2) Category’s share of other costs such as SA costs and debt provision costs (see below)

Denominator Total weight of that packaging category placed on the market (household packaging only)

Although the best available information has been used, there are a broad range of uncertainties associated with the estimates which are set out below, alongside the methodology for their calculation. 

To note that for the first year of EPR for packaging (2025/26), costs associated with the management of public bin waste and litter will not be included in the numerator. However, the denominator will include both household packaging and packaging reported as ‘commonly binned or littered items.’  

The numerator: costs 

LA costs 

In Table 1, the illustrative base fees calculation takes estimated LA household packaging waste management costs, net of revenues from material sales (based on price averages across WRAP’s Material Pricing reports),^{[footnote 3]} and adds estimated costs associated with the SA’s information service and the SA’s administration fee; this is the numerator (the top of the fraction).  For Table 1, the most recent (2019) estimate of the costs incurred for managing kerbside-collected packaging waste have been estimated by WRAP based on LA residual waste collection frequencies, recycling collection systems and levels of rurality and deprivation (unpublished). These estimates have been adjusted using the Retail Price Index from the Office of Budget Responsibility’s November 2024 Economic and Fiscal Outlook^{[footnote 4]} to reflect forecast prices in 2025/26 and adjusted for composition data (see below). The cost of managing packaging waste at Household Waste Recycling Centres (HWRCs) has been taken from the 2022 EPR for packaging Impact Assessment,^{[footnote 5]} originally estimated by WRAP in 2019 and inflated to 2025/26 prices. 

In Table 1, the weights of packaging material waste arisings used to calculate LA household packaging waste management costs are based on pre-pandemic waste composition data based on LA-level field studies synthesised to produce national estimates of waste composition.^{[footnote 6]} Because this data may not reflect latest trends in packaging placed on market, adjustments have been made to align the data. Note that, to calculate the lower bound of waste arisings, the lower of: 

• the lower 99% confidence interval for the projected 2017 waste composition data and 
• an estimate of the weight of packaging placed-on-market by producers in 2022 from the ‘PackFlow Refresh 2023’ reports 

was used for packaging tonnages. This is because the uncertainty in the projection from pre-pandemic data and the possibility of waste composition data being systematically higher than placed on market due to contamination, e.g. food residue, mean either could represent the lowest possible tonnages.  

In Table 2, LA household packaging waste management costs are based on initial estimates from the ‘Local Authority Packaging Cost and Performance’ (LAPCAP) model that is still being developed and will be used by the SA to calculate LA costs for 2025/26. This uses updated material prices, local authority cost estimates and waste arising tonnages. This model is still under development and hence has not been used for all estimates. 

Other costs 

The current estimate of the likely costs of the SA’s administration and information services are included, with SA administrative fees apportioned in proportion to a material’s share of LA disposal costs and SA information service fees apportioned in proportion to a material’s share of packaging weight. An illustrative 6% was added as ’bad debt provision’. The bad debt provision is in line with requirements on all Government bodies (and as part of good financial management) to make provision for invoices which the SA may be unable to collect, despite all reasonable efforts^{[footnote 7]} (e.g., if producers become insolvent). 

The denominator: weight of packaging placed on the market 

The weights of household packaging placed on the market in 2022 were taken from the ‘PackFlow Refresh 2023’ reports.^{[footnote 8]}  

The new definition of household packaging in Regulation 7 of the amending statutory instrument ‘The Packaging Waste (Data Reporting) (England) (Amendment) Regulations 2024’^{[footnote 9]} was used as far as practicable at the time. Future iterations of the illustrative base fees will fully incorporate the updated definition of household packaging.  

Higher and lower estimates were calculated to account for variations in how packaging may be classified as ‘household’ packaging. The intermediate estimate of household packaging was based on summing the weight of ‘consumer’ packaging and the weight of hospitality sector ‘take-away’ packaging reported in PackFlow. A higher estimate was produced by taking PackFlow’s estimate of the total weight of consumer and hospitality sector packaging to simulate possible errors arising from classifying all hospitality sector packaging as ‘household’ packaging. A lower estimate was calculated by subtracting the indicative percentage error associated with the consumer packaging weight estimated for each category. 

To support investment in the Deposit Return Scheme (DRS) Deposit Management Organisation(s), aluminium, steel, and PET plastic drinks containers in scope of DRS are excluded from EPR for packaging disposal cost fees. Glass drinks containers will be covered by EPR for packaging. Welsh Government intend to include glass in the scope of DRS and it will eventually be excluded from EPR for packaging disposal cost fees. If DRS has not been established by 1 January 2028, producers of drinks containers meeting the definition of DRS packaging material will be subject to the full range of EPR for packaging obligations, until a DRS is operational.  

Footnotes

1. Valpak and WRAP (2024) PackFlow Refresh 2023 Reports ↩

2. The illustrative base fees contained in this document are not intended to amount to advice or information on which Producers should rely (including for business planning purposes). Government will not be liable for any financial loss should producers use these illustrative base fees in this document for planning or other purposes. ↩

3. WRAP (2017) Materials Pricing Report  ↩

4. Office for Budget Responsibility (2024) Economic and fiscal outlook   ↩

5. Extended Producer Responsibility Impact Assessment (2022)  ↩

6. WRAP (2017) Quantifying the Composition of Municipal Waste   ↩

7.  HM Treasury (2023) Managing Public Money   ↩

8. Valpak and WRAP (2024) PackFlow Refresh 2023 Reports ↩

9. The Packaging Waste (Data Reporting) (England) (Amendment) Regulations 2024 ↩