Trend watch: extended producer responsibility (epr) in 2026

Extended Producer Responsibility schemes now cover 478 million tonnes of materials annually across the European Union, representing a 34% increase from 2022 levels according to the European Environment Agency's 2025 assessment. Yet compliance rates vary dramatically—from 92% in packaging to just 47% in textiles—revealing that EPR's promise of shifting end-of-life costs to producers remains unevenly realized. For engineers designing products, managing supply chains, or implementing compliance systems, understanding which metrics predict EPR success has become essential as the EU's Packaging and Packaging Waste Regulation (PPWR) and expanded Waste Framework Directive take effect in 2025-2026.

Why It Matters

EPR fundamentally reshapes how engineers approach product design, material selection, and manufacturing processes. Under traditional waste management, end-of-life costs were externalized to municipalities and taxpayers. EPR internalizes these costs, creating direct financial incentives for design-for-recyclability, material reduction, and closed-loop systems.

The financial stakes are substantial. The OECD estimates that EU producers collectively pay €12.4 billion annually in EPR fees, with packaging accounting for 58% of total contributions. For a mid-sized consumer goods manufacturer, EPR fees typically represent 1.5-3.2% of packaging costs—a material line item that responds directly to engineering decisions about material choice and recyclability.

More critically, the regulatory trajectory is accelerating. The EU's PPWR mandates that all packaging be recyclable by 2030 and include minimum recycled content thresholds (30% for plastic bottles by 2030, rising to 65% by 2040). The revised Waste Electrical and Electronic Equipment (WEEE) Directive targets 65% collection rates. The new EU Textiles Strategy introduces EPR for fashion by 2025. Each expansion creates new compliance obligations—and new opportunities for engineers who understand the underlying metrics.

The Corporate Sustainability Reporting Directive (CSRD) compounds these pressures by requiring companies to disclose circularity metrics. What was once an operational concern buried in waste contracts now surfaces in annual reports reviewed by investors, customers, and regulators.

Key Concepts

EPR Fee Modulation

Fee modulation—adjusting EPR contributions based on product characteristics—has become the primary mechanism linking design decisions to financial outcomes. France's CITEO system pioneered aggressive modulation, with fees varying by 50% or more based on recyclability criteria. Germany's Zentrale Stelle Verpackungsregister now applies similar principles, while Spain and Italy are implementing modulation frameworks in 2025-2026.

For engineers, modulation transforms abstract "design for recyclability" guidance into concrete specifications. A PET bottle with a PP label sleeve faces higher fees than one with a PET label. A flexible pouch with an aluminum barrier layer pays more than a mono-material alternative. These differentials compound across production volumes, creating measurable ROI for material substitution projects.

Collection and Recovery Rates

EPR schemes track several interlocking metrics:

Collection Rate: Percentage of placed-on-market products captured for processing
Recycling Rate: Percentage of collected materials actually recycled (excluding energy recovery)
Recovery Rate: Broader measure including energy recovery
Recycled Content: Percentage of secondary materials in new products

The EU Circular Economy Action Plan establishes targets across these dimensions, with the Packaging Directive requiring 65% recycling of all packaging waste by 2025 and 70% by 2030.

Producer Responsibility Organizations (PROs)

PROs serve as collective compliance vehicles, pooling producer contributions to finance collection, sorting, and recycling infrastructure. In competitive markets like Germany (10+ licensed PROs), fee competition drives efficiency but complicates quality assurance. In monopoly markets like France's CITEO, centralized coordination enables long-term infrastructure investment but reduces price pressure.

Engineers interface with PROs through registration systems, fee declarations, and increasingly, recyclability assessments. Understanding your PRO's methodology matters—two schemes may classify the same product differently, affecting both fees and reported circularity performance.

Sector-Specific KPIs and Benchmark Ranges

EPR performance varies dramatically by product category, driven by material complexity, collection infrastructure, and end-market demand for recyclates. The following benchmarks draw from 2024-2025 data across major EU markets.

Packaging EPR Metrics

KPI	Bottom Quartile	Median	Top Quartile
Collection Rate	<55%	65-72%	>80%
Recycling Rate	<45%	52-60%	>70%
Fee per kg (€)	0.08-0.15	0.18-0.28	>0.35
Recycled Content	<15%	25-35%	>50%
Modulation Discount	0%	10-20%	>30%

Driver analysis: High performers concentrate on mono-material designs and participate in deposit-return systems (DRS) where available. The 25-30 percentage point gap between collection and recycling rates reflects sorting losses and contamination—a key engineering opportunity.

Electronics (WEEE) EPR Metrics

KPI	Bottom Quartile	Median	Top Quartile
Collection Rate	<40%	45-52%	>60%
Recycling/Recovery Rate	<70%	78-84%	>90%
Fee per unit (€)	0.50-2.00	2.50-5.00	>8.00
Critical Material Recovery	<30%	45-55%	>70%
Design for Disassembly Score	<40/100	55-65/100	>80/100

Driver analysis: Small electronics (category 6) show the largest collection gaps due to hoarding behavior. Critical material recovery—particularly rare earths and cobalt—is emerging as a differentiated KPI as the EU Critical Raw Materials Act takes effect.

Batteries EPR Metrics

KPI	Bottom Quartile	Median	Top Quartile
Collection Rate (portable)	<40%	47-55%	>65%
Recycling Efficiency	<50%	60-70%	>80%
Lithium Recovery	<35%	50-60%	>70%
Cobalt Recovery	<85%	90-94%	>97%
EPR Fee (€/kg)	1.20-2.00	2.50-3.50	>4.50

Driver analysis: The EU Battery Regulation's 2027 collection target of 63% for portable batteries (rising to 73% by 2030) is driving aggressive infrastructure investment. Lithium recovery lags cobalt due to process economics, creating technology development opportunities.

Textiles EPR Metrics (Emerging)

KPI	Current State	2027 Target	2030 Target
Separate Collection Rate	22-28%	50%	70%
Fiber-to-Fiber Recycling	1-3%	12%	25%
Extended Use (resale/repair)	8-12%	20%	30%
Fee per garment (€)	0.02-0.08	0.10-0.25	TBD

Driver analysis: Textiles EPR is nascent, with France's ReFashion the most mature scheme. The gap between collection and recycling reflects limited fiber-to-fiber recycling capacity—a significant infrastructure bottleneck that engineering innovation could address.

What's Working

Eco-Modulation Driving Design Changes

Concrete evidence links fee modulation to material substitution. CITEO's 2024 impact report documented a 23% reduction in non-recyclable packaging formats since 2020, with the sharpest declines in multi-material flexibles (down 31%) and dark-colored PET (down 47%). German data from the Zentrale Stelle shows similar patterns, with recyclable packaging share rising from 78% to 86% between 2021 and 2024.

Engineers report that eco-modulation provides clear internal business cases for redesign projects. When fee differentials translate to €200,000-500,000 annually for a mid-sized brand, material science investments become self-funding.

Digital Product Passports Enabling Traceability

The EU's Digital Product Passport (DPP) requirements, phasing in from 2026, are creating infrastructure that strengthens EPR systems. Battery passports, mandatory from February 2027, will track composition, carbon footprint, and recycled content through product lifecycles. Textiles and electronics passports follow.

For EPR, DPPs address a fundamental data gap: knowing what's actually in collected waste streams. Current sorting relies on imprecise automated detection; DPPs enable composition-aware processing that should improve recycling quality and reduce downcycling.

Deposit-Return Systems Achieving Superior Recovery

Where implemented, deposit-return systems dramatically outperform curbside collection. Germany's Pfand system achieves 98% return rates for deposit bottles. The Netherlands and Scandinavian countries show similar performance. As more EU members implement DRS (Ireland, Portugal, and Austria all launched in 2024-2025), beverage container recovery is converging toward near-complete circularity.

The engineering implication: designing for DRS compatibility (standardized formats, scannable labels, material specifications) increasingly determines market access in high-performing recycling jurisdictions.

What's Not Working

Textile Recycling Infrastructure Gap

Despite growing collection mandates, textile recycling capacity remains fundamentally inadequate. The Ellen MacArthur Foundation estimates that less than 1% of textiles globally are recycled into new fibers. EU collection schemes are capturing material that often ends up exported, downcycled, or landfilled due to processing limitations.

The technical challenges are real: blended fibers resist separation, dyes and finishes contaminate recyclates, and mechanical recycling degrades fiber quality. Chemical recycling technologies exist but operate at limited scale. Engineers designing for textile EPR compliance face a system that collects promises it cannot yet keep.

Free-Rider and Reporting Gaps

Compliance rates in some EPR schemes remain problematic. WEEE collection in several member states falls short of the 65% target, with estimates suggesting 30-40% of electronics bypass official channels. Online marketplace sellers and non-EU importers present particular enforcement challenges.

The European Commission's 2024 review of EPR implementation identified systematic underreporting of placed-on-market quantities, with discrepancies of 15-25% between producer declarations and waste arisings data. This undermines fee equity and distorts performance metrics.

Recycling Quality vs. Quantity Tension

Current EPR metrics overweight volume (collection rates, recycling rates) and underweight quality (recycled material specifications, contamination levels, actual reuse in new products). A scheme might report 65% recycling while producing recyclates that struggle to find markets because they fail to meet application specifications.

The PPWR's recycled content mandates partially address this by creating demand signals, but engineers report that meeting 30% recycled content targets for food-contact packaging remains challenging given available food-grade recyclate supply.

Key Players

Established Leaders

CITEO (France) — Europe's largest PRO by revenue, pioneering aggressive eco-modulation and investing €200M+ annually in sorting infrastructure.
Der Grüne Punkt (Germany) — Historic dual system operator now adapting to competitive market dynamics while maintaining extensive collection networks.
Fost Plus (Belgium) — Achieves among the highest packaging recycling rates in Europe (84.8% in 2023) through integrated municipal partnerships.
WEEE Ireland — Leading WEEE compliance scheme achieving 62% collection rates, among the highest in the EU.
Ecoembes (Spain) — Managing packaging EPR for 12,000+ companies, now implementing modulation frameworks aligned with PPWR.

Emerging Startups

Circulor — Blockchain-based supply chain traceability enabling recycled content verification for EPR compliance.
Greyparrot — AI-powered waste characterization providing the data infrastructure for smart sorting and EPR auditing.
Resortecs — Smart stitching technology enabling design-for-disassembly in textiles, directly addressing recycling infrastructure gaps.
Searious Business — Consultancy and technology platform helping brands navigate EPR compliance with recyclability optimization tools.
Plastic Energy — Chemical recycling technology provider with SABIC and Total partnerships, addressing hard-to-recycle plastics.

Key Investors & Funders

Circularity Capital — Scotland-based PE fund with €230M under management focused on circular economy infrastructure.
European Investment Bank — Providing preferential financing for recycling infrastructure through the Circular Economy Initiative.
Closed Loop Partners — US-based investor increasingly active in EU EPR infrastructure through recycling technology investments.
Horizon Europe — EU research funding supporting textile recycling R&D and digital product passport development.

Examples

Nestlé's Packaging Redesign Program: The food giant committed to making 100% of its packaging recyclable or reusable by 2025. Key engineering changes included transitioning Smarties from plastic to paper tubes (first in the UK, then globally), removing non-recyclable multi-layer laminates from Maggi products, and redesigning Nescafé refill pouches as mono-material structures. Nestlé reports €50M+ in annualized EPR fee savings from modulation benefits, with the packaging team treating eco-design as a profit center rather than compliance cost.

Philips Circular Electronics Initiative: The Dutch electronics manufacturer operates take-back programs across 50 countries, achieving 89% of products designed for circularity against a 2025 target. Their healthcare division implemented modular MRI system designs that extend equipment life and enable component-level refurbishment. Philips reports 15% reduction in WEEE-related EPR costs through design-for-disassembly improvements, with secondary benefits in service revenue from refurbished equipment sales.

Inditex (Zara) Textile Collection and Recycling Pilot: Facing incoming textile EPR in Spain and France, Inditex launched in-store collection across 2,000 European locations, recovering 40,000 tonnes of textiles in 2024. Partnering with Lenzing for chemical recycling trials, they're developing Tencel fibers from post-consumer cotton waste. Early results show fiber-to-fiber recycling yields of 45-50% for cotton-dominant streams, though economics remain challenging without scaled infrastructure.

Action Checklist

Audit current product portfolio against each applicable EPR scheme's recyclability criteria and modulation framework
Calculate baseline EPR fees per product line and model impact of material substitution scenarios
Implement material specification tracking to prepare for Digital Product Passport requirements
Establish relationships with recyclers and PROs to understand actual recyclate specifications and contamination issues
Design new products with explicit collection pathway in mind (DRS compatibility, disassembly instructions, material marking)
Build internal carbon and circularity dashboards aligned with CSRD disclosure requirements
Monitor PPWR implementation timeline and prepare compliance roadmap for 2030 recyclability and recycled content mandates
Engage with industry consortia on pre-competitive recycling infrastructure development

FAQ

Q: How do EPR fees compare across EU member states for the same product? A: Fee variation is substantial. A standard PET bottle might incur fees of €0.12/kg in Poland, €0.22/kg in France, and €0.35/kg in Germany. Differences reflect collection infrastructure costs, modulation intensity, and PRO market structure. Engineers should model fees market-by-market rather than assuming EU averages.

Q: What's the timeline for textile EPR implementation across the EU? A: France implemented textile EPR in 2007 via ReFashion. The revised Waste Framework Directive requires all member states to implement textile EPR by 2025, with separate collection mandates already in effect. However, implementation timelines vary; Germany targets full operational EPR by 2027, while several Eastern European states are still developing frameworks. Plan for a 2025-2028 rollout window.

Q: How should we prepare for Digital Product Passport requirements? A: Start with data infrastructure. DPPs require traceable, verifiable information about materials, manufacturing, and chain of custody. Batteries face the first deadline (February 2027); textiles, electronics, and construction products follow. Assess current material data systems against Commission specifications, identify gaps, and build integration plans with ERP and PLM systems. Early movers are using blockchain-based solutions to establish provenance records.

Q: Do EPR fees qualify for any sustainability-linked financial instruments? A: Yes. Several banks now offer sustainability-linked loans with EPR performance covenants—typically tied to recycled content percentages or recyclability scores. EPR fee reductions from eco-modulation can be modeled as recurring cost savings in green bond frameworks. The EU Taxonomy's circular economy criteria also reference EPR compliance, potentially affecting access to Article 8 sustainable finance products.

Q: What's the best approach for small-to-medium enterprises with limited compliance resources? A: Leverage collective schemes and compliance service providers. Most PROs offer simplified registration for SMEs with standardized fee structures. Software platforms like Ecoveritas and OPRL provide packaging recyclability assessments without requiring in-house expertise. Prioritize high-volume SKUs for optimization; the Pareto principle applies—20% of products typically represent 80% of EPR fees.

Sources

European Environment Agency, "Circular Economy in Europe: State of Play 2025," January 2025
OECD, "Extended Producer Responsibility: Updated Guidance for Efficient Waste Management," September 2024
European Commission, "Proposal for a Regulation on Packaging and Packaging Waste (PPWR)," November 2022, with 2024 amendments
CITEO, "Annual Performance Report 2024: Eco-Modulation Impact Assessment," March 2025
Ellen MacArthur Foundation, "A New Textiles Economy: Redesigning Fashion's Future," 2024 Update
Zentrale Stelle Verpackungsregister, "Annual Report on Packaging Recycling Performance in Germany," 2024
European Commission, "Digital Product Passport Technical Specifications: Batteries and Electronics," June 2024