As extended producer responsibility (“EPR”) programs unfold in several U.S. states, Environmental General Counsel is using its international connections within IR Global – a multi-disciplinary professional services network – to understand EPR in a global context and better serve its international clients.
Environmental General Counsel CEO and Founder Catherine W. Johnson recently interviewed SangYeol Park, CEO and Managing Partner of ELPS Law, specializing in environmental law among other commercial practice areas in South Korea. Mr. Park has over four decades of legal experience and is a leading practitioner of South Korean environmental law, including within EPR issues.
In addition to operating its own robust EPR program, South Korea is involved in the global effort to manage plastic pollution and recently hosted the UN Environment Programme’s Intergovernmental Negotiating Committee Fifth Session (“INC-5”). ELPS was actively involved in the INC-5 sessions by gathering expert opinions from various domestic sectors, reviewing domestic and international research materials, and providing evidence-based resources necessary for inter-country negotiations.
In the following interview with Ms. Johnson, Mr. Park discusses INC-5, an overview of South Korea’s EPR program, and the global context of EPR and plastics.
Question: Does ELPS's involvement in INC-5 and the support it provides to South Korea's government pertain at all to developing EPR or commercial issues?
Mr. Park:
- Although INC-5 ended without reaching a conclusion, the main cause of the deadlock was disagreements over restrictions on the production of plastic raw materials. However, the need for establishing an EPR system was widely agreed upon by most countries.
- Since INC-5 is an agreement covering the entire lifecycle of plastics, it addresses not only the upstream production of plastic raw materials, primarily represented by the petrochemical industry, but also the midstream aspects such as the design of plastic products using recycled materials, and downstream issues such as the EPR for plastic waste. Therefore, the EPR-related tasks discussed at INC-5 did not just include the development of the EPR system or commercial aspects only.
- Regarding EPR, the main issue discussed at INC was how to achieve a "just transition" to EPR systems in developing countries where such systems have not yet been established. Experts involved in the development and implementation of Korea’s EPR policy are proud of the country’s EPR system and are eager to promote it internationally. They believe that, based on the experiences of countries like Korea, they can help any nations, in the local or national government, establish their own EPR systems.
Question: What are the goals of South Korea's EPR program?
Mr. Park:
- The legal basis for Korea's EPR (Extended Producer Responsibility) program is Article 16 of the Act on the Promotion of Saving and Recycling of Resources[1] (also referred, and hereinafter, to as the "Resource Recycling Act"). The purpose of this law, as outlined in Article 1, is to facilitate the use of recycled resources by means of controlling the generation of waste and facilitating recycling, which is relevant to increasing recycling rates.
- Regarding packaging, Article 16 of the Resource Recycling Act stipulates the collection and recycling of waste generated from packaging materials, as a part of the obligations of producers. Additionally, for design changes related to packaging, i.e. eco-friendly packing, source reduction, and related matters, there are guidelines provided by the Ministry of Environment for each product type.
Question: Who are the regulated parties?
Mr. Park:
- The Korean EPR system is supervised by the Ministry of Environment (MoE) of Korea, and its affiliated agency, the Korea Environmental Corporation (KECO). In the EPR sector for packaging, KECO is responsible for recording producers' production or import data, establishing guidelines for the recycling process, and monitoring and verifying the recycling performance of "producers obligated to recycle".
- The legal responsibility for waste recycling is assigned to the producer, but this does not mean that the producer is solely responsible for the entire process from collection to recycling. In fact, the responsibilities are shared among consumers, local governments, producers, and the government. Though, the producer, who has the greatest power in decision-making during the production process and design and selection of packaging materials, plays a central role in the recycling system.
- Since the EPR system is based on the Shared Responsibility System (SPR), the responsibility of producers is expanded, along with the responsibilities of the government and consumers. The government's role is to take overall responsibility for treating non-recycled waste and for ensuring that recyclable waste is collected and processed. Consumers ultimately bear the cost of collection and recycling, which is passed on by the producer, and play a role in making waste easier to collect through proper separation and disposal.
- [Below is a table of parties and stakeholders in South Korea’s EPR System, and flowcharts of their activities and responsibilities]
Table 1. Parties and stakeholders in EPR System[2]
|
Parties
|
Role
|
|
Consumers
|
· Strictly separate and dispose of recyclables
- Packaging materials with separation disposal labels should be disposed of according to the separate collection system in each district (city, county, or district).
- Separate disposal of plastic films such as snack and ramen noodle bags, as well as fluorescent lights and paper cartons.
- Since 2010, packaging materials for paper products, clothing, rubber gloves, film and sheet-type packaging for electrical appliances, and single-use bags and shopping bags to be separated and disposed of.
|
|
Producers obligated
to recycle(Recycling Business Mutual Aid Association/ Support Centers for Distribution of Recyclable Resources)
|
· Fulfill collection and recycling obligations (sign transparent recycling outsourcing contracts)
· Efforts to improve the material structure of products and packaging
· Implement the separate discharge mark for packaging
· On-site verification and investigation of collection and recycling businesses
|
|
Local Governments
|
· Separate collection of EPR-targeted items
· Establish recycling systems for each local government according to separation collection guidelines
|
|
Korea Environmental Corporation (KECO)
|
· Receiving and approve production/import quantities and plans to fulfill recovery and recycling obligations for each producer
· Receiving reports on the outcomes of fulfilling his/her recovery and recycling obligations
· Enforce other system-related matters such as the recycling dues
· On-site verification and investigation of recycling businesses
|
|
Ministry of Environment
|
· Overall operation of the system, including legislation and amendments
· Announce recycling obligation rates by item
· Coordinate roles between entities
|
Source: Economic Research Institute for ASEAN and East Asia (ERIA)[3]
Source: Korea Resource Circulation Service Agency (KORA)[4]
Question: How are producer fees determined? Are there different base material category fee rates? Are there eco-modulated fee incentives?
Mr. Park:
- Producers obligated to recycle waste under Article 16 must either directly collect and recycle certain waste according to the recycling targets set by the government each year, or pay a designated contribution to the Recycling Business Cooperative to outsource the recycling tasks and fulfill their obligations.
- Every producer obligated to recycle waste under Article 16 of the Resource Recycling Act should pay contributions as set by their Recycling Business Mutual Aid Association (established as a form of producer responsibility organization for sectoral companies according to specific product categories targeted by the EPR system, such as lubricants, automobiles, batteries, etc.) to jointly fulfill the recycling obligation.
- If the producer fails to meet the annual recycling target, they must pay not only the cost of recycling the waste corresponding to the unmet target but also an additional surcharge of 15–30% of that amount. The annual recycling target is set by the Ministry of Environment.
- "Packaging Material Composition and Structure Evaluation System" (Effective since December 25, 2019): Based on Article 9-2 of the Resource Recycling Act ("Improvement, etc., of the Quality and Structure of Packaging Materials"), this system aims to promote the ease of recycling packaging materials by encouraging consumers to purchase products and differentiating contribution fees. It encourages consideration of recyclability from the design and composition during the production stages. Under this system, contribution fees are differentiated based on the recyclability of packaging materials. In addition to the existing evaluation factors (material, color, ease of separation from the whole product), the Korean system introduces the world's first "weight" criterion.
- "Recycled Material Reduction System”: Based on Article 17 of the Resource Recycling Act and Ministry of Environment Notice No. 2023-269, “Notice on Procedures for Reducing the Amount of Obligation of Producers of Recycling Using Waste Plastic Recycled Raw Materials”, the producers who use recycled plastic materials in products or packaging must submit relevant documentation. If the use is recognized, they can receive a reduction in their recycling obligations in accordance with the Ministry of Environment’s notice. When proving the use of recycled materials, the system allows for a contribution fee reduction of up to 10%, based on the 2023 shipment volume.
Question: Does South Korea's EPR program require minimum usage of post-consumer recycled content? Are there third-party verification requirements?
Mr. Park:
- The short answer for both is no for now. As of now, the use of recycled content in Korea is a recommendation.
- There is a relevant system for labeling the percentage of recycled content used, which is regulated under Article 33-2 of the Resource Recycling Act and Article 23-3 of the Enforcement Rules of the same Act. The detailed guidelines for verifying and labeling the recycled content percentage used in products and containers are outlined in the Ministry of Environment notice titled "Recycled Content Labeling Standards and Methods." According to this notice, products can display the label if a certain percentage of recycled content is used (e.g., 10% for PET bottles, 20% for electronic products, and 10% for other products and containers).
- A program to promote the purchase of products and containers with recycled content by local governments is scheduled to be implemented by March 29, 2025.
Question: How is producer noncompliance addressed? What are the enforcement mechanisms, and which entity/entities possess enforcement power?
- Specifically, under the Resource Recycling Act, there are criminal penalties outlined in Article 39 and the following articles, including the joint penalty provision in Article 40 and the fine provisions in Article 41.
- The criminal penalty provisions apply to individuals or entities that fail to submit the required documentation, or to producers of packaging materials who violate relevant laws. This includes those who fail to undergo the material and structure evaluation of packaging, those who obtain evaluation results through fraudulent or dishonest means, or those who fail to display the material and structure evaluation results on packaging or display false information. Additionally, criminal penalties apply to producers with recycling obligations who fail to pay handling fees or contribution.
- Waste charges are imposed on producers who fail to meet recycling obligations. As discussed earlier, if a producer outsources recycling tasks but fails to meet the recycling target, they must pay not only the cost of recycling the waste corresponding to the unmet target but also an additional surcharge of 15-30% of that amount.
- Administrative fines are imposed on producers who fail to submit their recycling performance reports for the annually set recycling targets.
- The government leads the verification and monitoring of recycling performance for the annually set recycling targets. However, in addition to establishing a recycling business mutual aid cooperative, various compliance methods for producers (e.g., direct collection and recycling, individual outsourcing contracts) are allowed.
- The government leads investigations into shipment and import performance, waste classification and contamination ratios, and recycling performance, continuously monitoring the appropriateness of contribution payments.
- Opportunities for private stakeholders to participate are provided in the process of calculating and operating contributions through the communication channels.
Question: Does ELPS have any insight into how multinational companies approach compliance with South Korea's program in addition to other EPR programs with which they comply, for example in Europe, Canada, and certain American states?
Mr. Park:
- Korea has a relatively robust EPR system in place.
- However, the Recycling Business Mutual Aid Association (established as a form of producer responsibility organization for sectoral companies according to specific product categories targeted by the EPR system, hereinafter “PRO”) functions as the agency that represents the obligations of producers in the EPR system. These organizations are typically established and operated as non-profit entities.
- Under the current system, the PRO represents producers by using the recycling obligation fees (contribution fees) collected from producers as funds to support recycling businesses in carrying out recycling activities. Unlike the EU’s recommendations regarding PRO cooperatives, the exclusivity of the PROs in Korea has led to the following issues being raised.
1) Large corporations in each sector dominate the decision-making within the PRO.
2) The cost is passed on to consumers at a price higher than the contribution fees, reducing consumer utility.
3) In the recycling market, PROs exploit their purchasing power by buying collected and sorted waste at prices below market value and selling it to recyclers at higher prices, thus generating monopoly profits.
4) There is no incentive to recycle beyond the annually set recycling obligations, and therefore, the PRO has very little motivation to improve or enhance the efficiency of the EPR system.
- Additionally, in terms of recycling methods, looking at plastic as an example, according to 2020 national statistics, the overall waste recycling rate in Korea is about 70%. However, more than two-thirds of this is energy recovery, and the used plastic material recycled as raw materials and then reused rate, or material recycling, is estimated to be 18%. (The global average for material recycling is 9%, 16% for OECD member countries, and 34.5% for Europe.)
- In the case of Germany, the official plastic recycling rate is 47% as of 2019, and when energy recovery is included, it reaches 99.4%.
- The reason for this difference is that, when setting policies, major advanced countries like Germany do not include energy recovery in the calculation of the recycling rate. Instead, they focus solely on material recycling when measuring plastic recycling statistics.
- ELPS has experience conducting research on local EPR systems in other countries for overseas operations of several large Korean multi-national companies, including packaging materials and lubricants.
