Novel packaging waste handling regulations
Author: Miha Hočevar
Packaging waste as a current and growing problem
Packaging waste has long been considered an acute global challenge. In the European Union, from 2007 to 2017, its quantity increased by as much as 6.6 million tonnes (9.3%).1 The European legislator has addressed the situation by adopting several directives, including Directive 2018/852 amending Directive 94/62/EC on packaging and packaging waste2. Its recital highlights the need to improve waste management and tighten the recovery and recycling targets for packaging and packaging waste in the EU. The new targets thus prescribe raising the lower limit of the weight percentage of all recycled packaging waste from the current 55 to 65 by the end of 2025 and to 70 by the end of 2030.
For Slovenia, such a change does not seem particularly relevant, as according to Eurostat database, we already reached a level of 70.1% in 2017 and were thus ranked above the EU average in terms of the share of recycled packaging. The problem of packaging waste is reflected elsewhere, namely in the anomaly of the regulation of the circle of persons liable for packaging waste handling and in the (traditionally) delayed procedures for the implementation of European directives, also from the relevant field.
Persons liable for packaging waste handling
Both the economy and households cause large amounts of packaging waste to be generated on a daily basis. The latter needs to be collected, treated and disposed of, which means that it ultimately poses a relatively large burden on the environment. The basic idea of environmental regulations is based on the polluter pays principle, so it is necessary to use this concept to identify the addressee of liability for the environmental damage in question.
Packaging means all products that surround goods as a means of preserving, protecting or transporting them. Once its purpose is exhausted, the packaging consequently becomes waste. Although packaging waste is actually generated by the end user, the polluter must be considered to be the entity that first placed the packaging or packaged goods on the relevant market. Such an approach seems appropriate according to the standard theory of externalities. Business entities place packaging on the market because of their commercial activities, which means that this packaging is a harmful side effect of such activities. Pertinent business entities should therefore also cover the costs of handling their packaging when it becomes waste. The question of whether they further pass on these costs to the end users is not relevant from the regulatory point of view.
In addition to the umbrella regulation, the Environmental Protection Act3 (hereinafter “ZVO-1”), packaging waste handling in Slovenia is in detail regulated by the Decree on packaging and packaging waste handling4 and the Decree on the environmental tax on packaging waste pollution5. The said decrees lay down rules for the management of packaging waste and related obligations. The essential circumstance for determining the addressee of the latter is the first placing on the market. The essential circumstance for determining the addressee of the latter is the first placing on the market. A person liable for prescribed obligations is any legal person or sole trader established in the Republic of Slovenia who places packaging or packaged goods on the market for the first time in the Republic of Slovenia and is: (i) a packer, (ii) a purchaser of packaged goods, (iii) a manufacturer of packaging intended for filling at the point of sale, or (iv) the acquirer of packaging intended for filling at the point of sale.
The liable person must report its business activity to the Financial Administration before commencement and is onwards obliged to keep records of packaging placed on the market, to perform periodic payment of environmental tax and to ensure the prescribed packaging waste handling, which in practice means paying a packaging fee to the packaging waste handling company (hereinafter referred to as “DROE”).6
However, the existing regime also provides for an important exception, namely the quantitative threshold of 15 tonnes. Entities that do not reach such annual quantities are not obliged to handle packaging waste as prescribed nor to pay an environmental tax. It can be concluded that such an exception is unreasonable, as it contradicts the polluter pays principle. An arrangement that bypasses “minor” pollutants on the basis of an empirically unjustified exception can only mean complications in practice, as a certain amount of packaging waste is not included in the waste management system. In addition, this is not a negligible amount at all. In 2015 the Court of Audit established that it together represents as much as 53.2% of all packaging placed on the Slovenian market.7
As a result, disputes have arisen regarding the quantities of waste collected by the DROE. The latter collect their share of packaging waste from municipal undertakings and use the collected packaging fee to cover its transport, sorting and incineration. The State authorities were of the opinion that the DROE are also obliged to collect the accumulated quantities of “minor” pollutants, for which they do not receive any packaging fee. In that regard, the Administrative Court has made it clear that, in accordance with the fundamental principles, the responsibility for waste management lies with the polluter, which is certainly not the case with the DROE. The latter are thus obliged to collect (only) such a quantity of waste as the persons liable for the packaging waste handling, with whom they have concluded contracts, have placed on the market.8
In response to the complications, the Ministry of the Environment and Spatial Planning prepared a long-awaited proposal of the Decree amending the Decree on packaging and packaging waste handling. The latter is intended as an implementing regulation of the recently adopted amendment of the ZVO-1 and for transposition of Directive 2018/852. The draft regulation was submitted to the Inter-Ministerial coordination procedure on 10 July 2020. It should be noted that the Republic of Slovenia is again late in transposing the said directive, as well as two related directives, i.e. Directive 2018/8509 and Directive 2018/85110. The transposition deadline for all three expired on 5 July 2020. The Republic of Slovenia received a Letter of Formal Notice under Article 258 of the Treaty on the Functioning of the European Union from the European Commission on 8 October 2020 and has until 8 December 2020 to submit a response. Given the perceived normative activity, it can be expected that the mentioned directives will be implemented without further complications.
If the envisaged changes are adopted, the regulations on packaging waste handling will be thoroughly intervened. Namely, the amendment envisages the abolition of the quantitative threshold for the occurrence of the obligation to pay the costs of packaging waste handling.11 A new exception is also envisaged, namely the payment of a flat-rate amount for those companies that place less than 1,000 kg of packaging on the market in the Republic of Slovenia annually. It is provided that such an amount is determined by the DROE, and it is also implicit in the wording of the provision that the exemption is offered to companies only as an option rather than an obligation.
The changes are expected to take effect at the beginning of 2021. If this is the case, a large number of entities will soon be subject to the payment of a packaging fee, and as a result the DROE will be able to cover the collection of significantly larger quantities of packaging waste. Thus, we can expect a notable improvement of the situation at landfills, while the expected burden for an individual entity is relatively low. According to the informative calculation, the annual amount of packaging for a business entity that puts 10 tonnes of sales plastic on the market would amount to around EUR 1,950 (VAT excluded) this year. On average, these are not the amounts that would have a material impact on the business results of individual liable persons, but together they will have a significant impact on environmental protection.
 Packaging waste statistics (2 November 2020).
 Directive (EU) 2018/852 of the European Parliament and of the Council of 30 May 2018 amending Directive 94/62/EC on packaging and packaging waste.
 Environmental Protection Act (Official Gazette of the Republic of Slovenia, No. 39/06, as amended).
 Decree on packaging and packaging waste handling (Official Gazette of the Republic of Slovenia, no. 84/06, as amended).
 Decree on the environmental tax on packaging waste pollution (Official Gazette of the Republic of Slovenia, No. 32/06, as amended).
 Regarding all of the above, it is necessary to take into account the various exceptions provided by regulations, e.g. in relation to returnable packaging, long-life packaging, PVC packaging, etc.
 Audit report Municipal waste management no. 321-5 / 2011/132 dated 2 September 2015.
 Judgment and Decision of the Administrative Court No. I U 242/2018-9 dated 4 December 2018.
 Directive (EU) 2018/850 of the European Parliament and of the Council of 30 May 2018 amending Directive 1999/31/EC on the landfill of waste.
 Directive (EU) 2018/851 of the European Parliament and of the Council of 30 May 2018 amending Directive 2008/98/EC on waste.
 While the proposal of the Decree amending the Decree on the environmental tax on packaging waste pollution, which is also in the process of Inter-Ministerial coordination, does not provide for the abolition of the quantitative limit on the obligation to pay environmental tax.