Legal alerts / 24.02.2021

A new policy on improving an extended producer responsibility concept in Russia

On December 28, 2020, the Government of the Russian Federation approved a new policy (the “Policy”) on improving an extended producer responsibility (“EPR”)[1].

The implementation of the Policy will require the adoption of a large number of regulations/amendments to existing legislation. As at today’s date, this process has not yet been launched. The relevant “road map”, which was expected by February 15, 2021, has not yet been approved. Nevertheless, an analysis of the Policy will allow business to understand the vector of legislative development in the field of waste recycling and to prepare for the coming amendments.

The Policy improves the current EPR model and involves the development of new rules that would allow the creation of a more efficient system of waste management, focused as much as possible on recycling.

The implementation of the Policy presupposes the following measures:

  1. 1. Building a system of recycling target figures by each waste group

The current waste recycling rates determine the individual level of a producer’s responsibility and are not target figures. The main goal of the target figures system is to determine the level of waste recycling as a benchmark for the long-term development of EPR. Thus, at the first stage it is proposed to determine target figures for the following groups of goods:

  • packaging of goods;
  • electronics;
  • batteries;
  • tyres;
  • oil products.
  1. 2. Methods to improve the fulfilment of EPR

The Policy is aimed at increasing the interest of producers/importers in the creation of separate waste collection systems and the development of recycling facilities.

In this regard, for the purpose of achieving methods for the fulfilment of EPR it is proposed to:

  • Preserve the following methods for the fulfilment of the waste recycling rate[2]:
  1. self-sufficient recycling, i.e. recycling with the use of one’s own waste collection, accumulation and recycling facilities, as well as the conclusion of direct contracts with recycling companies;
  2. the payment of an environmental fee.

Owing to the low demand for waste recycling through associations of producers/importers, the transfer of responsibility for fulfilment of the waste recycling rate to such associations does not seem viable, according to the Policy’s authors.

  • Develop a mechanism to confirm that the obligation to recycle waste has been fulfilled, as well as to regulate what is recognized as waste recycling for each group of goods/packaging of goods.
  • Develop, for imported goods, a mechanism that would guarantee the fulfillment of obligations to recycle waste from such goods prior to their sale, for instance, by providing a bank guarantee or surety, which can be presented by the recycling company.
  • Increase the waste recycling rate for all types of goods, except packaging, by at least 10 percentage points per year in stages.
  • Provide for simplifications for small and medium-sized businesses that produce a small volume of goods by establishing a fixed amount of the environmental fee and/or simplification in terms of reporting.
  • Provide that if the payment of the environmental fee is chosen as a method for fulfilling EPR, the amount of the environmental fee should be calculated based on double the waste recycling rate (in order to encourage companies to recycle waste, not just to pay funds to the state budget). If the waste recycling rate is not achieved, the amount of the environmental fee must be calculated based on the difference between the waste recycling rate and the actual volume of recycled waste with this amount then doubled.
  1. 3. Enhancement of the principles for the calculation and spending of the environmental fee

For the purpose of achieving these goals, it is suggested that:

  • The rates of the environmental fee should be calculated according to the principle that the less environmentally friendly and more difficult to recycle goods (packaging) are, the higher the rate of the environmental fee should be.
  • It should be ensured that the amount of the environmental fee is consistent with the characteristics of a particular product, including the length of its service life, the ability to repair it, the presence of hazardous substances, and its suitability for recycling.
  • The production of certain types of goods (packaging) should be prohibited or significantly limited if they cannot be recycled.
  • Operating costs (e., costs for the separate collection of waste, its transportation and processing) and investment costs (i.e., costs for building waste management infrastructure) should be taken into account when calculating environmental fee rates.
  • Funds from the environmental fee should be directed towards the creation and development of waste collection and recycling infrastructure.
  1. 4. Improvement in the regulation of packaging and waste from packaging

According to statistics, waste from packaging currently amounts to 50% of solid household waste, and this volume will only increase in the future, including owing to the active development of online commerce and delivery services.

For the purpose of the more effective regulation of packaging recycling, it is suggested that:

  • Packaging should be recycled in its entirety because it contains a high percentage of recyclable materials;
  • From January 1, 2022 a 100% recycling rate for packaging that is released into circulation should be introduced;
  • With regard to packaging that is an independent product (e.g., bags, foil, paper/plastic cups) and that is sold for different purposes (for the packaging of food, coffee, products, goods) it is proposed to shift the responsibility for its recycling to its producers. Currently, it is the producers/importers of goods inside such packaging that are responsible for the recycling of this type of packaging.
  • Responsibility should be stipulated for the recycling of combined packaging with the establishment of independent target indicators for such packaging, as well as higher rates of an environmental fee.
  1. 5. Improvement of the administration of EPR and control processes

For the achievement of this purpose, it is suggested, in particular, that:

  • An information system should be created, which will be integrated with the state information system of solid household waste management, as well as with other state information systems that would allow the tracking of the production of goods and packaging that fall under the EPR.
  • The following registers should be created and maintained in such information system:
  1. A register of the list of packaging and packaging materials;
  2. A register of producers and importers of goods (packaging);
  3. A register of recycling companies, including information on their capacities;
  4. A register of places of separate waste collection as well as waste processing facilities.
  • A requirement for reporting at least twice a year should be stipulated (currently a report must be submitted once a year).
  • It should be determined that the obligation to fulfill the waste recycling rate begins from the moment when goods are released into circulation, or the moment of their production or importation.
  • The possibility should be established of submitting reports to the information system only in electronic form.
  1. 6. Adoption of measures to incentivize the recycling of waste from the use of goods

For the achievement of this purpose, it is suggested, in particular that:

  • It should be obligatory to use only packaging created with use of a certain percentage of recycled materials;
  • The use should be prohibited of certain types of goods and packaging that cannot be recycled;
  • Recommendations should be drawn up for retail chains to introduce recyclable packaging in sales areas, including biodegradable packaging;
  • The administration should be simplified of VAT on transactions for the sale of waste between waste collectors and recycling companies;
  • Digital platforms and services should be introduced that allow modern behavioral patterns to be formed of the rational use of goods.

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In view of the approval of the Policy, we recommend tracking the relevant changes in waste recycling legislation.

[1]     As a reminder, an EPR is a mechanism of economic regulation according to which producers/importers of goods must ensure that they are recycled after they have been used and have lost their consumer properties by meeting the established waste recycling rates. In Russia the EPR mechanism has been operating since 2015, but, according to the authors of the Policy, during its existence it has not shown significant environmental and economic results, while nor has there been an actual increase in the amount of recyclable waste and an increase in producers’ interest in using more environmentally friendly materials.

[2]     As a reminder, according to the current version of Clause 24.2 of Federal Law No.89-FZ dated June 24, 1998 “On Production and Consumption Wastes”, one of the following methods can be used to ensure that a producer/importer of equipment meets the waste recycling rate:

  • arranging its own facilities for the recycling of waste from the use of the equipment;
  • concluding agreements with companies that recycle waste from the use of the equipment;
  • concluding an agreement with an association created by producers/importers of goods for the purpose of enforcing the waste recycling rate;
  • payment of an environmental fee.
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