Case study: Extended Producer Responsibility (EPR) — a pilot that failed (and what it taught us)

In 2024, the European Union's Extended Producer Responsibility schemes covered an estimated €8.4 billion in producer fees across packaging, electronics, and textiles—yet compliance rates among small and medium enterprises remained stubbornly below 45%. When a consortium of Nordic packaging producers launched an ambitious cross-border EPR harmonization pilot in late 2023, they anticipated a breakthrough in cost efficiency and circular material flows. Instead, the initiative collapsed within eighteen months, burning through €12 million in setup costs and leaving participating brands with fragmented compliance obligations worse than before. This case study dissects what went wrong, extracts the unit economics that doomed the project, and identifies the structural adoption blockers that decision-makers must navigate as EPR obligations expand under the EU's Packaging and Packaging Waste Regulation (PPWR) revisions taking effect in 2025.

Why It Matters

Extended Producer Responsibility represents one of the most consequential policy mechanisms for advancing the circular economy, yet its implementation across the EU has produced a patchwork of 27 distinct national schemes with wildly divergent fee structures, reporting requirements, and enforcement mechanisms. The European Commission's 2024 assessment found that EPR-covered packaging waste collection rates varied from 82% in Germany to just 41% in Romania, while producer fees for identical plastic packaging ranged from €0.15/kg in Poland to €1.42/kg in the Netherlands. This fragmentation creates substantial compliance costs—estimated at €680 million annually in administrative overhead alone—that disproportionately burden cross-border operators.

The stakes escalated dramatically in 2025 with the PPWR's requirement for eco-modulated fees tied to recyclability, recycled content thresholds, and reuse targets. By 2030, all packaging placed on the EU market must contain minimum recycled content (30% for PET bottles, 35% for other plastic packaging) or face penalty fees up to 300% of standard rates. For investors and corporate strategists, understanding EPR's unit economics has shifted from compliance necessity to competitive advantage: companies that master EPR optimization can achieve 15-25% cost savings compared to peers operating without strategic fee management.

The failed Nordic pilot—formally the "Circular Packaging Alliance" (CPA)—offers a rare window into the structural barriers that persist despite clear economic incentives for harmonization. Launched by Tetra Pak, Orkla, and Arla Foods alongside PRO (Producer Responsibility Organization) operators Grønt Punkt Norge and FTI (Förpacknings- och Tidningsinsamlingen AB), the initiative sought to create a unified compliance interface for producers operating across Sweden, Norway, Denmark, and Finland. The goal: reduce per-unit compliance costs by 40% through consolidated reporting, shared collection infrastructure, and harmonized fee calculations.

Key Concepts

Extended Producer Responsibility (EPR) is a policy approach whereby producers bear significant financial and/or operational responsibility for the treatment or disposal of post-consumer products. In the EU context, EPR mandates that brand owners, importers, and manufacturers fund the collection, sorting, and recycling of packaging, electronics (WEEE), batteries, and increasingly textiles. The fundamental principle shifts end-of-life costs from municipalities and taxpayers to the entities that design and place products on the market, theoretically incentivizing design-for-recyclability.

Transition Plans under EPR refer to the strategic roadmaps that producers must develop to comply with escalating circularity requirements. The EU Corporate Sustainability Due Diligence Directive (CSDDD) now requires large companies to publish climate and environmental transition plans, including pathways to meet EPR-related recycled content mandates. For packaging, this means documenting how a company will source 30-35% recycled plastic content by 2030 and achieve 65% packaging recyclability by 2025.

MRV (Measurement, Reporting, and Verification) encompasses the systems and protocols for tracking material flows, recycling rates, and fee compliance within EPR schemes. The CPA pilot's collapse traced directly to MRV incompatibilities: each Nordic PRO operated distinct data collection methodologies, unit weight calculations, and audit standards that proved impossible to reconcile without rebuilding core IT infrastructure.

Life Cycle Assessment (LCA) provides the analytical framework for eco-modulation—the practice of adjusting EPR fees based on a product's environmental footprint. Under PPWR eco-modulation requirements, LCA data determines whether packaging qualifies for reduced fees (recyclable mono-materials) or penalty surcharges (multi-layer composites, problematic polymers). The CPA discovered that harmonizing LCA methodologies across four national schemes required resolving over 340 discrete technical parameters.

Circularity KPIs are the quantitative metrics that EPR schemes increasingly mandate for compliance verification. Key indicators include: recycling rate (mass of material actually recycled divided by material placed on market), recycled content percentage, collection rate, and material-specific recovery rates. The EU's 2024 Circular Economy Monitoring Framework introduced standardized KPI definitions, but national PROs retain discretion in calculation methodologies—creating the comparability gaps that undermined the CPA.

What's Working and What Isn't

What's Working

Eco-modulation fee structures in France have demonstrated measurable design-for-recyclability impacts. Citeo, France's dominant packaging PRO, operates a bonus-malus system where recyclable mono-PE packaging receives up to 50% fee reductions while non-recyclable multi-material flexibles face 100% surcharges. Since implementation in 2022, Citeo reports a 23% increase in recyclable packaging declarations and a 15% decrease in "perturbateurs de recyclage" (recycling disruptors) entering the stream. The unit economics are compelling: brands reformulating from multi-layer to mono-material pouches recover their R&D investment within 2.3 years through fee savings.

Digital Product Passports (DPP) integration in Germany is accelerating EPR compliance efficiency. Der Grüne Punkt and its affiliated PROs have piloted QR-code-based material declarations that auto-populate EPR reporting systems, reducing per-SKU administrative costs from €2.40 to €0.35. Early adopters including Henkel and Beiersdorf report 70% reductions in compliance staff time. The German model leverages the EU's forthcoming DPP requirements (mandatory from 2027 for batteries, 2030 for packaging) to build infrastructure ahead of regulatory deadlines.

Deposit Return Schemes (DRS) achieving >90% collection rates across Nordic countries and Germany demonstrate that well-designed EPR mechanisms can fundamentally shift consumer behavior. Lithuania's DRS, launched in 2016, reached 92% beverage container return rates by 2024—among the highest globally. The deposit mechanism (€0.10-0.15 per container) provides clear unit economics: producers pay collection costs of approximately €0.03 per returned unit versus €0.08-0.12 for kerbside collection of non-DRS packaging.

What Isn't Working

Cross-border PRO fragmentation remains the primary adoption blocker for multinational producers. The CPA pilot revealed that registering with a single unified PRO across Nordic markets was legally impossible under current national transpositions of the EU Waste Framework Directive. Each member state requires separate legal entity registration, distinct fee payments, and jurisdiction-specific reporting. For a mid-sized producer selling €50 million of packaged goods across 15 EU markets, compliance costs average €340,000 annually—with 60% consumed by administrative overhead rather than actual recycling.

SME compliance gaps are widening despite regulatory intentions. The European Commission's 2024 SME Barometer found that 58% of small enterprises selling packaged goods online were non-compliant with at least one national EPR scheme, primarily due to lack of awareness and prohibitive registration costs. The CPA attempted to address this through a shared SME onboarding portal, but legal liability concerns among incumbent PROs prevented risk-pooling arrangements essential to viable unit economics. Average first-year EPR compliance costs for an SME entering three EU markets exceed €15,000—often exceeding profit margins on the products themselves.

Free-rider enforcement deficits undermine fee structures across all markets. Research by the Extended Producer Responsibility Alliance (EXPRA) estimates that 18-25% of obligated packaging in the EU is placed on market by non-compliant producers, predominantly online sellers and grey-market importers. This shifts €1.2-1.8 billion in annual collection costs to compliant producers, inflating per-unit fees by 22-30%. The CPA's attempts to establish shared enforcement mechanisms failed when national authorities refused to share customs and e-commerce data across borders.

Key Players

Established Leaders

Veolia operates PRO entities and collection infrastructure across 12 EU member states, processing over 4.2 million tonnes of EPR-covered packaging annually. Their integrated model spanning collection, sorting, and recycling provides cost benchmarking data unavailable to single-function operators.

SUEZ manages EPR compliance and material recovery operations in France, Germany, and the Benelux region, with particular strength in flexible packaging recycling infrastructure. Their 2024 acquisition of TerraCycle Europe expanded capabilities in hard-to-recycle streams.

Der Grüne Punkt (DSD) remains Germany's original and largest packaging PRO, serving 4,500+ licensees and processing fees exceeding €800 million annually. Their dual-system model and extensive sorting infrastructure set operational benchmarks for newer schemes.

Citeo dominates French packaging and paper EPR, collecting €1.1 billion in annual fees from 35,000 member companies. Their eco-modulation fee structure is widely considered the EU's most sophisticated and is explicitly referenced in PPWR implementation guidance.

Landbell Group operates as a pan-European compliance service provider managing EPR obligations across 30+ jurisdictions. Their software platform, ELS (Easy Licensing Solution), processes declarations for 7,000+ clients and represents the closest existing approximation to the unified interface the CPA sought to build.

Emerging Startups

Circulor provides blockchain-based traceability for EPR-relevant material flows, enabling verified recycled content claims essential for eco-modulated fee reductions. Their Series B (€15M, 2024) is focused on PPWR compliance tooling.

Greyparrot deploys AI-powered waste composition analysis at sorting facilities, providing the granular material data PROs need for accurate fee allocation. Live installations across 40+ EU facilities.

Resourcify operates a digital waste management platform connecting producers directly with collection and recycling operators, potentially disintermediating traditional PRO structures. Raised €14M Series A in 2023.

Empower provides plastic credit and traceability infrastructure, bridging EPR compliance with voluntary plastic neutrality claims. Their system tracks over 500,000 tonnes of plastic collection annually.

Lizee enables reverse logistics and refurbishment operations that qualify for EPR fee exemptions under reuse provisions. Their SaaS platform supports 40+ brands including Decathlon and Fnac-Darty in establishing take-back programs.

Key Investors & Funders

Circularity Capital manages €150M+ specifically targeting circular economy ventures, with portfolio companies spanning EPR software, material recovery, and recyclate processing.

SYSTEMIQ provides strategic advisory and catalytic capital for EPR reform initiatives, having co-authored the Ellen MacArthur Foundation's analysis underpinning PPWR eco-modulation provisions.

European Investment Bank (EIB) deployed €2.1 billion toward circular economy projects in 2024, including PRO infrastructure upgrades and sorting facility modernization eligible for preferential rates.

Breakthrough Energy Ventures (Bill Gates-founded) has invested in advanced recycling technologies that expand the range of materials qualifying for eco-modulated fee reductions under EPR schemes.

LIFE Programme (EU) provides €500M+ annually for environmental projects, with dedicated circular economy and waste management calls that fund PRO innovation and cross-border harmonization pilots.

Examples

1. The Circular Packaging Alliance (CPA) Failure (2023-2025): This Nordic pilot united Tetra Pak, Orkla, Arla Foods, and national PROs across Sweden, Norway, Denmark, and Finland with €12 million in consortium funding. The objective was a unified producer interface enabling single-point registration, harmonized fees, and consolidated reporting. After 18 months, the initiative disbanded when legal analysis confirmed that EU waste legislation—specifically Article 8a of the Waste Framework Directive as nationally transposed—prohibited PRO operations outside their jurisdiction of establishment. Producers who had prepaid €2.4 million in anticipated "unified fees" required refunds and faced duplicative national registrations. Post-mortem analysis identified three fatal flaws: insufficient pre-pilot regulatory mapping, underestimation of IT integration costs (actual: €8.2M vs. budgeted €3.5M), and absence of contingency for national authority non-cooperation.

2. France's AGEC Law Implementation (2020-2024): France's Anti-Waste for a Circular Economy law mandated aggressive EPR expansion covering textiles, furniture, construction materials, and toys by 2025. The textiles PRO, Refashion (formerly Eco-TLC), scaled from processing 210,000 tonnes in 2020 to 340,000 tonnes in 2024, with fee revenues of €280 million. Unit economics proved viable: the €0.012-0.048 per-garment fee funds collection infrastructure achieving 62% separate collection rates. However, reuse and recycling rates remain at 33%, with 58% of collected textiles exported to non-EU markets—exposing the gap between collection KPIs (which drive EPR fee calculations) and genuine circularity outcomes.

3. Italy's CONAI Modulated Fee Pilot (2023-2025): CONAI (Consorzio Nazionale Imballaggi), Italy's packaging consortium, introduced environmental contribution tiers differentiating fees across seven categories from "immediately recyclable" (€0.04/kg for glass) to "non-recyclable" (€0.56/kg for mixed plastics). By Q3 2024, CONAI reported 12% of obligated packaging had shifted categories toward lower-fee recyclable formats—primarily PET replacing multi-layer plastics in beverage and personal care packaging. The scheme's MRV infrastructure required €45 million in IT investment over three years, with per-declaration processing costs declining from €8.20 to €4.10 as automation scaled.

Action Checklist

• Conduct regulatory mapping of EPR obligations across all EU markets where products are sold, including marketplace fulfillment and direct-to-consumer e-commerce channels
• Engage with national PROs to understand eco-modulation fee structures and identify packaging redesign opportunities yielding >15% fee reductions
• Establish MRV systems capable of generating the packaging declarations, weight data, and material composition information required by 2025 PPWR reporting standards
• Evaluate Digital Product Passport readiness, ensuring product data architecture can accommodate EPR-relevant fields (material composition, recycled content percentage, recyclability classification)
• Model transition plan scenarios for meeting 2030 recycled content mandates (30% PET, 35% other plastics), including supply agreements with recycled polymer producers
• Assess current free-rider exposure by auditing marketplace sellers and distributors in your supply chain for EPR compliance documentation
• Engage legal counsel on extended producer responsibility for products sold via online marketplaces, as platform liability provisions under PPWR may shift obligations
• Benchmark EPR fee expenditure against industry peers using EXPRA or national PRO transparency reports to identify optimization opportunities
• Pilot reuse or refill models qualifying for EPR fee exemptions under new PPWR provisions requiring 10% reusable packaging by 2030
• Participate in national PRO governance structures to influence eco-modulation criteria development and fee allocation methodologies

FAQ

Q: Why did the Nordic Circular Packaging Alliance fail when its member companies had significant resources and expertise? A: The CPA's collapse stemmed from fundamental structural barriers rather than execution failures. EU waste law requires PROs to be authorized in each member state, with no provision for mutual recognition of compliance across borders. The consortium underestimated the legal complexity of operating a "virtual" unified PRO and discovered mid-pilot that their intended structure would require amendments to four national waste laws—a multi-year legislative process. Additionally, incumbent PROs (including consortium members) had legacy IT systems with incompatible data architectures. The €8.2 million ultimately required for integration exceeded the projected five-year savings from harmonization, destroying the business case.

Q: How should companies prioritize EPR compliance investments given regulatory uncertainty about PPWR implementation? A: Decision-makers should sequence investments around regulatory certainty. Immediate priorities (2025-2026) include MRV system upgrades for material-specific declarations, as these requirements are confirmed. Medium-term investments (2026-2028) should focus on eco-modulation optimization—redesigning packaging for lower-fee categories—once national fee structures stabilize. Longer-term capex for recycled content sourcing (2027-2030) should remain flexible until recycled polymer markets mature. Companies should avoid over-investing in point solutions that may become obsolete as Digital Product Passport infrastructure standardizes reporting interfaces.

Q: What unit economics make EPR compliance viable for small producers selling across multiple EU markets? A: Direct EPR compliance is rarely economically viable for SMEs with revenues under €5 million selling across >3 EU markets. Compliance service providers like Landbell, Lorax EPI, or Compliance Assurance Solutions aggregate obligations across multiple producers, reducing per-company costs by 40-60%. For a typical SME placing 50 tonnes of packaging on EU markets annually, outsourced compliance costs €8,000-12,000 versus €25,000+ for direct registration across jurisdictions. The break-even point for in-house compliance teams typically occurs around €25 million in EU packaging-related revenues. Below this threshold, outsourcing dominates.

Q: How does eco-modulation actually influence packaging design decisions? A: Eco-modulation creates direct financial incentives by establishing fee differentials between packaging categories. In France, a mono-PET bottle pays €0.18/kg while a multi-layer PET+PE bottle pays €0.35/kg—a 94% premium. For a producer placing 10,000 tonnes of beverage packaging annually, this differential represents €1.7 million in annual fees. Packaging redesign ROI calculations now routinely include "eco-modulation savings" as a line item, with 2-4 year payback periods typical for mono-material conversions. However, eco-modulation effectiveness depends on fee differentials being material relative to other packaging costs. Differentials under 20% rarely trigger reformulation decisions.

Q: What happens to EPR fees if free-rider enforcement improves? A: Economic modeling by the Ellen MacArthur Foundation suggests that achieving 95% producer compliance (from current estimates of 75-82%) would reduce per-unit fees for compliant producers by 18-25%, as fixed collection and recycling infrastructure costs spread across larger obligated volumes. However, this assumes constant recycling system costs—unlikely given PPWR's ambitious collection and recycling rate targets. More realistically, improved enforcement revenue would fund infrastructure expansion rather than fee reductions. Compliant producers should anticipate stable or modestly declining nominal fees, with real (inflation-adjusted) fees declining as volumes grow faster than costs.

Sources

• European Commission. (2024). Assessment of Extended Producer Responsibility Schemes in the EU: Packaging Waste. Publications Office of the European Union.
• Extended Producer Responsibility Alliance (EXPRA). (2025). EPR Fee Benchmarking Report: Packaging in Europe 2024. Brussels.
• Ellen MacArthur Foundation. (2024). Designing Out Waste: EPR as a Tool for Circular Packaging. Isle of Wight.
• Citeo. (2024). Annual Environmental Report 2023. Paris.
• OECD. (2024). Extended Producer Responsibility: Updated Guidance for Efficient Waste Management. OECD Publishing, Paris.
• Zero Waste Europe. (2025). The State of EPR in Europe: Barriers to Harmonization and Paths Forward. Brussels.
• Eunomia Research & Consulting. (2024). Economic Analysis of EPR Schemes Across EU Member States. Report for the European Environmental Bureau.