The UK's Extended Producer Responsibility (EPR) scheme for packaging, which came into effect in October 2025, is intended to make producers financially and operationally responsible for the packaging they place on the market and its end-of-life management. However, a recent analysis by Aquapak suggests that the current framework may be distorting packaging costs, resulting in some unintended consequences for the packaging industry.

The scheme operates by applying fees per tonne of packaging materials placed on the market, with rates based on material categories. From 2026, a new red, amber, and green classification will be introduced under the Recyclability Assessment Methodology, which aims to incentivize the use of recyclable materials by offering lower fees for more recyclable packaging formats. However, despite the scheme's objective of reducing plastic use, Aquapak’s analysis reveals that some plastic packaging formats could attract lower fees than paper-based fibre composites, which runs counter to the aim of encouraging less plastic use.

One of the key issues highlighted is the evolving definition of recyclable paper-based packaging. While paper alternatives have been increasingly replacing plastic in recent years, the current interpretation of recyclability is based on material composition rather than the actual recycling performance. According to the Department for Environment, Food and Rural Affairs (DEFRA), paper-based packaging containing more than 15% plastic is considered non-recyclable and unsuitable for widespread household collection. This definition has led to many modern paper-based formats, which incorporate thin plastic coatings for moisture, grease, or sealing purposes, being categorized as mixed-material packaging under the EPR scheme.

For instance, under EPR guidelines, packaging is considered paper-based only if it contains at least 95% fibre by weight. Anything above 5% non-fibre content is categorized as a fibre composite, even if these materials can be effectively recycled and repulped. Aquapak’s review of EPR guidance indicates that fibre composites often face higher fees than some plastic packaging formats, despite the fact that the recycling processes for both materials are largely similar. This could result in paper-based packaging with minimal non-fibre content incurring higher compliance costs than plastic alternatives, creating a financial disincentive for the use of sustainable materials.

The complexity of the EPR framework, combined with evolving definitions and provisional fees, has created uncertainty for packaging producers and material developers. According to Aquapak, a more consistent approach to recyclability assessments—one that is based on fibre recovery and actual recycling performance rather than material composition—could help align EPR costs with actual recycling outcomes. This would provide clearer incentives for packaging innovation and greater confidence in the supply chain.

The EPR scheme, while well-intentioned, may require further refinement to ensure that it encourages truly sustainable packaging choices. As it stands, the scheme could inadvertently reward less sustainable packaging options and create inefficiencies in the recycling process. To move towards a circular economy, it will be crucial for policymakers to continually assess and adjust the EPR framework to better reflect the recycling performance of various materials.