Unpacking the EPR Legislation for Textiles
Will the EPR regulation create incentives for a more circular textile industry?
Alexander Sustal, Lawyer at Redeker Sellner Dahs, explains how Extended Producer Responsibility (EPR) will change the economics of textile collection, sorting and recycling in Germany. The episode covers the status quo, the actors and financing flows an EPR scheme introduces, and the wider legal questions an EPR scheme raises.
What you’ll hear in this episode:
- How the current market based system for used textiles is financed, why it is under pressure, and what an EPR scheme changes about who carries responsibility and who pays.
- The roles of producers, Producer Responsibility Organisations (PROs), registries and supervising authorities, and how fees are collected, calculated and distributed among them.
- Why eco modulation links fees to eco design criteria such as durability, repairability and recycled content, and why the level of the fees may matter as much as the criteria themselves.
The episode also covers end of waste criteria, and harmonisation across Member States.
Video Impression
People
Alexander Sustal, Lawyer at Redeker Sellner Dahs
https://www.linkedin.com/in/alexander-sustal-5ab89018b/
Patrick Hypscher, Circular Business Strategist, PaaS Expert
https://www.linkedin.com/in/hypscher/
Chapters
00:00:00 Intro
00:04:46 Who funds today’s collection and sorting
00:09:03 What EPR actually means
00:10:17 Who has to pay the fees
00:13:03 Who collects the fees
00:15:53 What products the scheme covers
00:22:08 Eco-modulation: rewarding better design
00:27:16 Will competition undercut eco-modulation
00:31:59 How fee money gets divided and spent
00:35:51 Why EPR fees don’t follow exports
00:37:40 Can the EU harmonize 27 EPR schemes
00:43:41 Outro
About
Since its foundation in 1929, Redeker Sellner Dahs has grown to become one of the most important independent German law firms and today operates nationwide and internationally at six locations.
Further Links
Revised Waste Framework Directive:
https://environment.ec.europa.eu/news/revised-waste-framework-directive-enters-force-2025-10-16_en
Transcript
[00:00:00] Intro
Alexander Sustal: Actually, it’s all about sorting. The better and the earlier you sort your products, and the more you are involved in this process, the lower your EPR fees are, right?
Jingle: My name is Patrick Hypscher, and this is circularity.fm, the podcast about understanding, building, and managing circular business models.
Patrick Hypscher: Hey there. Good to have you back for our Textile EPR series. After Louisa Hoyes from TOMRA gave us her view on the challenges in collection, sorting, and recycling, we continue today with the legal perspective the textile EPR scheme will have an effect on business practices. While of course we focus on textiles, the patterns are similar across other EPR schemes too. So please enjoy this episode. It might get a bit technical, and you might appreciate the one-page summary of this episode. Just sign up for the circularity.fm newsletter, which you find at www.circularity.fm.
Patrick Hypscher: He’s a lawyer since 2018 and joined Redeker Sellner Dahs about five years ago, where he focuses on legislation in the areas of products, the environment, supply chain, compliance, and the circular economy. He’s advising public authorities, multiple federations, and companies that are affected by the textile EPR legislation. I have the pleasure to know him already for quite some years, and finally he made it to circularity.fm. Welcome, Alexander.
Alexander Sustal: Hi, Patrick. Thanks for having me finally. Yeah, we had a long time, we had a plan, but now we realized it. I’m happy to have a deep dive today with you on this beautiful topic, and I’m curious what you will ask.
Patrick Hypscher: Yeah, definitely. I couldn’t look for any better guest than you for this topic. We start with a private question. Since you have a background in law and you’re involved in many different, European legislations, my question is, if the European Commission were to offer you the chance to revise a piece of legislation, which one would you pick?
Alexander Sustal: To my perspective, the most crucial piece of legislations are, end-of-waste criteria. And frankly said, the commission have already started, and came up with a couple of regulations, which address this issue, but still not enough because we have a lot of input materials where it’s really unclear whether they have a waste status or not. And this can be really cumbersome to get such inputs over the border and the classification of waste and the transport over the border, they are connected to some part and that makes a trade with recycled content really. And for this reason, my wish would be more end-of-waste criteria or kind of a principle of mutual recognition of recycled content classifications of the member states. Yeah.
Patrick Hypscher: Okay, let’s stay tuned, whether this will be picked up by the Circular Economy Act later this year. Maybe we have another topic, to discuss about, in autumn then. Coming back to the extended producer responsibility, on textiles, and now, also wanna give the listeners a bit of an overview, because, it might be confusing for some people. The way, Alex and I will structure our conversation now is that we first look a bit at the status quo, what’s the system, right now and what is broken, and then give you an introduction into EPR, the different actors, how it works, how fees are collected and spent, and what the effect on circularity will be, just to close off with some international, remarks. So following that structure, Alex, what is currently the situation when it comes to legal incentives for manufacturers or producers, to follow certain circular practices in Germany?
Alexander Sustal: Yeah, actually there aren’t any circular ones beside a few sustainability and supply chain requirements, but that are not real incentives. This is more a compliance issue. From product law, there’s no such thing as a real incentive.
[00:04:46] Who funds today’s collection and sorting
Patrick Hypscher: Okay. Could be more and certainly will be more. Now another aspect of this EPR conversation is about funding the existing collection, sorting and recycling infrastructure. If we look at the status quo right now, is there any legal system in place that finances this infrastructure of collection and recycling for textiles in Germany?
Alexander Sustal: There’s no statutory law or mandatory law, which regulates the financing as it is the case with packaging, for instance. So if you mean whether there’s a EPR system, that’s not the case. It’s a market-based system, which now is almost collapsed because it has to handle lot of, clothes coming from countries like China, it’s really, really an exhausted system, but there is no mandatory requirement at this point in time.
Patrick Hypscher: And when you say it’s a market-based system, what are the one, two, three main revenues that fund these operations?
Alexander Sustal: The main revenue is the one if a collector collects, some reusable clothes and then, they are, either sold, intra-EU or most of them sold extra-EU, um, some global south countries or other countries, and then the collectors and, they make their revenue, from, selling these clothes to such countries, right? And yeah, now, if they get more clothes which are not reusable and they are filling their collection points, then the system is, somehow not feasible anymore and the margins and the calculations doesn’t work.
Patrick Hypscher: Yeah. Gotcha. And we talk about Germany, but of course the European Union so what we just said is true for Germany, but, when we look into other European countries, are there any textile EPR systems already?
Alexander Sustal: Yeah, you have always some frontrunner countries in the European Union, and indeed there are some countries, for instance, France. Yeah, they have, one, monopoly system with Refashion as a PRO. You have Netherlands, you have Hungary, I think also Latvia, so there are some countries who have already implemented such a system, and this, of course, shapes the legislative process because apart from the JRC study, you have, of course, best practices these systems, which can be, assessed and where you can make some implications from.
Patrick Hypscher: Okay, so basically, if I now buy a T-shirt in Berlin or Paris, in Berlin I don’t have any regulatory incentive, for it to be circular, nor does the price I pay at the counter include any fee for the collection and recycling, whereas in Paris, this is, already covered.
Alexander Sustal: Yeah, exactly. And in France, you already, pay as– a, a very small amount on top of the base fee. You know, the base fee would be a fee which covers the cost for the collection and for the infrastructure following the connection, like the sorting processes and so on and so forth. But on top of it, you have already a small fee which connects the sustainability and the eco-design of your clothes, with, with the, with the amount of the fee you have to pay. But it’s very, very small. It’s in a cent area, euro cent area.
Patrick Hypscher: Yeah. On a side note, not mentioning any names, but throughout the conversation I, heard from some producers and retailers who, are active in the French market, they just pay the maximum, because the administrative, effort to calculate the specific amount is just too high in relation to the, still small fee even at the maximum price point. I agree with you. It’s also what I heard. Yeah, I have no information now from other countries, a little bit from Netherlands, but, for instance, in Hungary, the fees are quite high and, they seem to be paid. Maybe we should also have a focus one day together on Hungary.
Alexander Sustal: It would be interesting what’s going on there.
[00:09:03] What EPR actually means
Patrick Hypscher: So by now we explored a bit of status quo, and let’s turn to, EPR. We already used the term without really, looking into that. I, did three episodes already on it, what does EPR actually stand for and, what does it mean?
Alexander Sustal: EPR means, as the name says, that if you place a product on the market for the very first time and you make a margin of this product, then you have responsibility for the processes happening at the end of life of such product. Means the collection and the sorting and so on, you know, because you benefit from placing it on the market, then it means you also have to carry the responsibility. The background, the legal background is, is the polluter pays principle, which stems from European law. The idea is also, to incentivize, producers and retailers to place products on a market which are more eco-designed, more sustainable, to take responsibility for them, particular if connected with eco-modulation, which we will discuss later.
[00:10:17] Who has to pay the fees
Patrick Hypscher: Okay, then let’s look at the actors involved. So who are the parties who need to pay these fees?
Alexander Sustal: Yeah. Good question. Um, party who needs to pay the fees is, in a nutshell, someone who’s placing a product on the market in a member state for the very first time. And it’s a abbreviation what I use now because you can place it on the market in many ways. It’s not just the first or B2C contract, but this can also be, a distance, contract, via e-commerce. It can be also, if somebody sells products wh-which were produced by some other company, under its own brand or label. So there are, certain routes how, you are labeled as a producer, and hence have to fulfill this EPR obligation.
Patrick Hypscher: Okay, just to make it specific, so we had, Schöffel already part of this series. So if Schöffel sells its, jackets and shirts via its own online shop, Schöffel definitely is the producer and needs to pay, the fees. And even if they then use any retailer, be it, Otto, be it Decathlon, be it Amazon, then still Schöffel, like in Germany, on the German market, then still Schöffel needs to pay for the fees.
Alexander Sustal: Yeah, that’s correct. If you go down, the tier or at, at, at the very first sales process, you have a first B2B contract where something is placed on the market. And for this reason, they, Schöffel has to pay the fees. It would be different when Schöffel would be a- abroad and, someone would import it to Germany from Schöffel. That would be different perspective. But in the case you made, Schöffel is responsible.
Patrick Hypscher: And then just making the other case, let’s take Patagonia, a, a brand that is not, originally from Germany. But of course they have, stores here, they have flagship stores, and they s-sell via retailers. Does then still Patagonia have to pay the fees, for putting these products on the market?
Alexander Sustal: It depends a bit on the constellation, but in this case, I would say it’s the retailer. Yeah, because it’s not Patagonia, placing a product on the market, but there it depends a bit on the import constellation, who is actually, importing the product which way.
Patrick Hypscher: Okay. The retailer will then probably charge or use it as a negotiation with the manufacturer, or the producer in that case, and the ultimate effect will be similar, more or less.
Alexander Sustal: Yeah. They would set off the amount when negotiating, the sales prices B2B.
[00:13:03] Who collects the fees
Patrick Hypscher: Okay, wonderful. So now, we know who pays the fees. Who is actually the body to collect these fees?
Alexander Sustal: Yeah, um, that’s, that’s an interesting question. We have different players involved, and we have a middleman, which is called PRO. It’s a producer responsibility organizations. are who, who do, instruct collectors, sorters and recycling companies, so a- actually waste management, stakeholders, and they pay them for it. So producers don’t just– don’t do this alone. You have the PRO in the middle. And in order to have a refinancing, the PRO collects the fees from the producers.
Patrick Hypscher: And, is there anybody who will supervise, this constellation?
Alexander Sustal: Um, yes, you have to have, an authority who is somehow checking your system and reviewing whether, everybody is, behaving according to law. But then have also something a registry. This is, one body, where the producers have to register with the volumes and the weights and the products they sell. And, they have to, they have to observe these numbers in order that you have no free riders which are placing products on the market, which wouldn’t be allowed. So here you have the registry and you have the obligation as a producer to register yourself there. So this registration body that’s not necessarily public, as we know the packaging law. So you need this registry body, and this registry body can also, but not necessarily monitor the PRO, these producer organizations, they are fulfilling tasks correctly. So the producer organizations, the ones who are instructing the collectors and so on, they have certain tasks which are stipulated in the EPR law. And then you of course need to someone who supervises them, and this can be either this registry or it can be also a, a state body at the top, like the UBA, the German Environment Agency. So that would be the monitoring you have in such a system.
Patrick Hypscher: So this was pretty abstract and, of course, every EPR scheme has its own features. Um, but I guess more or less these are different kind of actors you find in many EPR schemes. Let’s now zoom into textiles. First of all, what’s the scope in terms of products that are affected by the upcoming legislation?
[00:15:53] What products the scheme covers
Alexander Sustal: So the products which are affected by the legislation are, used textiles, textiles related products and shoes. And to make it more specific, there’s an annex, at the end of the Waste Framework Directive, whi-which is the basis for the EPR. Products are listed, according to their custom codes. So you have, for example, apparel, clothing, accessories, knitted or crocheted. Then you have bed linen, table linen, toilet linen, hats and other headgear. Yeah, to make an example. And, from the shoe side, yeah, you have, for instance, waterproof footwear with outer soles and uppers of rubber or plastics and so on. Other footwear with outer soles, uppers of rubber, plastic. So you see it’s a quite, a quite specific, catalog, which, defines, which products are included and which are, exempted. Apart from this, we have some further exemptions. For instance, protective gear and work wear will be, to the most part, excluded. So this won’t be in. And then also, which is very interesting, if, someone collects, let’s say, Schöffel or Decathlon, they would collect products, their, collection points, in-store. And a-at this collection point, the product would be classified as, usable. Yeah. Right at this collection point, then such product wouldn’t be included in the EPR would be classified as a reusable product, which can be sold at the secondhand market. And for such products, you wouldn’t have to pay EPR fees.
Patrick Hypscher: Nice. So that’s technically an incentive for the secondary market.
Alexander Sustal: Absolutely, and we discussed it with producers and retailers because actually, it’s all about sorting. The better and, and the earlier you sort your products, and the more you are involved in this process, the lower your EPR fees are, right? So if you have such a product stream, of course, this, provides that you somehow have a very good, quality, in your reverse stream. But, yeah, there are some pilot projects now where retailers are test- testing this actually.
Patrick Hypscher: The, different examples from the Waste Framework Directive, you also separate, textiles and shoes. And of course they are different, not only in their use, but especially also in their durability, composition, materials, and so on. I know this affects also the collection and recycling, processes. So how could this difference be acknowledged by the EPR scheme?
Alexander Sustal: It could be acknowledged in two ways. One way would be that, in all these bodies and, and institutions which are involved in the EPR scheme, could have one part which represents, the textile producers and retailers, and one part which represents the shoe producers and retailers. So they can the rules which, stem from EU law but have to be specified also national level, and bring in the expertise, in order to have a really, specific and really appropriate, fee collection and also, as a– in engineering and steering of the material flows. To make it more specific, you are a shoe producer, then you know very well the materials of your shoes and you know, the soles of the shoes and, then you can, set up, a reverse logistics system which somehow ensures that the sole material in the end maybe can even be used closed loop for your shoe. Yeah, because you know the material quality. Same applies to textile. So that would be very beneficial and from the other perspective, when it comes to eco-design criteria. So criteria, like, durability, like recyclability, like reparability of products, such criteria are relevant for EPR fees. But they differ really a lot between textiles and shoes. That’s some are very clear for a shoe. A shoe is i-in many cases more durable than a T-shirt and, for a T-shirt, you, need other requirements. And this is where also textile producers and shoe producers could, participate with their different knowledge, and that should be treated separately. And also when it comes to the collection, the very collection of shoes and textiles, then it really makes sense to, to collect and to sort separately because usually shoes are heavier than textiles. They consist of different materials, this has a relevance on EPR schemes. If you would mix everything together the risk is there that, the shoes maybe could cross-finance the textiles because they are, for instance, heavier, yeah? And you would say, yeah, the EPR fees also are, um, are calculated according to weight. Yeah, let’s make this case then. The heavier shoes would finance the textiles. This is not a constellation you really want because, it’s obviously not completely fair, and it would also bring conflict to the system. So you need to find a way somehow to separate the s- the material flows, the product flows, and then, as a consequence, also the fee schemes and the fee calculation connected to such flows.
Patrick Hypscher: Curious to see w-what the regulation will look like, related to different kinds of products and then probably also what kind of PROs will be created, maybe with a focus on different product types. Now let’s continue. And we initially also said one thing is the funding of the collection sorting recycling infrastructure, but the other thing is also that, the goal of the EPR system is to give an incentive to design more for circularity. So this could be done via the fee, but Alexander, how could this look like?
[00:22:08] Eco-modulation: rewarding better design
Alexander Sustal: So let’s start the components of a fee. Obviously if you collect, textiles and shoes, then it makes of course sense connect the fees with, either the volume, the amount or with the weight bec-because you have to have some metrics, which somehow cover, the amount or the weight of the clothes or shoes placed on the market. So this must be part of the EPR fee. But then you have another part which comes on top now, which is called eco-modulation, and this is the incentive part. The EU legislator had the idea, to say, if you have a product which is produced to certain eco-design criteria, which is durable, repairable, recyclable and so on, the better you fulfill such criteria, the less you have to pay. And that, that should sa- incentivize to place such products on the market which fulfill this criteria in such case, you have to pay less fees. Now comes the next question: Where comes this criteria from and do we calculate such a system? These criteria, they come from eco-design regulation, which, is the basis for, certain criteria products must fulfill in future. And such criteria, as I said, repairability or durability, will be stipulated for different product groups in two thousand twenty-seven for textiles, and later on, we don’t know exactly now for shoes. So we will have an act, a legal act, which will state an, T-shirt is eco-designed if, let’s say, twenty percent of the fibers are stemming from recycled content, or if it lasts, a minimum, fifty washing circles, yeah, or it lasts two years. So we can imagine different parameters. There are some studies now about this, and the same applies to shoes. Yeah. And now the next, idea kicks in, and is– this is as follows: If you have such a legal act, let’s say the T-shirt law, T-shirt law say every T-shirt which must be placed the European market must have thirty percent recycled content, otherwise it can’t be on the market. The question would be, how can we now, consider this aspect in the fees? Because if every T-shirt needs to have this thirty percent now, okay, then everybody fulfills this and would have to pay the same fee. The idea is now that we say this thirty percent of recycled content is just the baseline. You have a recycled content, let’s say of fifty percent, in such case, you would have to pay less fees. Yeah. So let’s say if you pay the thirty percent recycled content ten euro cent fees on top of the base fee, then if you have fifty percent, you would just have to pay three euro cent. Yeah. That would be the delta. That would be such a system called Bonus-Malus-System, where we have this eco-modulation incentives. And the interesting aspect is that the European law just says, member states, you have to connect your EPR fees with this eco-design criteria. You have to consider this. But, the European law does not say how to do this in detail. They just say if the T-shirt legal act comes or a shoe act comes, then you have to cos-consider this criteria. But, um, we could also have another idea. We could also say the state will, um, set the prices for different materials and for different, categories of T-shirts, and we have a state price system. Yeah. Where we have a big, uh, matrix and where any T-shirt and trouser and shoe would be included. Obviously, something like this is extremely cumbersome to, to construct and hence not very realistic in a system which will be implemented in Germany, where we will have a competition between PRO. So we would rather have a kind of system where the PRO will have to some extent a discretion on the amount of the, of the EPR fees, and maybe they would have, an option for such Bonus Malus system, as I explained earlier, that you have, either this, three euro cent fee for a T-shirt with fifty percent of recycled content, or you have a fee of ten euro cent for the thirty, percent recycled content shirt. So these are options. How this will be done, we will see, end of September when the first draft for the German textile law, will enter the legislative process.
[00:27:16] Will competition undercut eco-modulation
Patrick Hypscher: And that is probably a sort of, the reference to the European, legislative act, on the eco-design, this is the opportunity and for many also the hope to have rather standardized eco-modulation across European member states. It’s not sure, but this is, where it could happen.
Alexander Sustal: Yeah, absolutely. Patrick, this is a very crucial point and little bit also disputed because, let’s say in the first very rough draft of the German government, it could be constructed in a way that, that Germany already starts with eco-modulation now. Yeah, so already once the textile law is passed, we will eco-modulate. But the problem is from our perspective, and this is also the fear of many companies, they say if member states could already now start with the eco-modulation independent from this T-shirt law or the shoe law which will come in two thousand and seven and later, then we have twenty-seven member states, twenty-seven different eco-modulation and eco-design criteria which are already implemented now and which would have to be realigned once the special laws are passed. And this is really a problem which must be somehow clarified and I’m really curious how the legislator will handle this question. From our opinion, say, that the member state should really stick to the law and in-interpret the Waste Framework Directive in such a way that it should really harmonize such eco-design criteria and align them with the EPR fees and that it’s not allowed to do a, special member state Germany or a, a French, eco-modulation system up front of, of that what is coming in two thousand and twenty-seven and later.
Patrick Hypscher: So just as a reminder, we are tackling the question how to incentivize circularity in, in textiles here specifically of course, and you explained a bit the mechanic, of eco-modulation. At the same time, we also have to talk about the fees, as we already said before, about France, when the fees itself are super low, in the end, even for the let’s say least sustainable item and after a complicated, eco-modulation, setup, if the fees are super low, then, there won’t be a substantial steering effect. Is there already a- any indication about the height of the fees?
Alexander Sustal: Yeah, that’s really, kind of a problem and still an open question because, if you ask, is there an indication of the height of the fees, that implies that there would be someone is stipulating the fees, who’s saying, let’s say in a matrix, the fees have to such an amount, a specific amount. But we will have in Germany, and that will be quite sure, we will have a competition system with different PROs entering into competition. Yeah. We want, actually that the most efficient and the best PRO, will, will have a respective market share. Yeah. Because we have the idea that the co- competition is good. If you were in a mandatory way obliged a PRO to stick to a certain, eco-modulation fee, that would be, not really, in sync with such a competition system. We would rather assume that, the will have to some part discretion on the amount of the eco-modulation part of the fee. We are we are not so sure about it, but it really makes sense. And then is the question, there be something like a baseline fee, a baseline eco-modulation, let’s say, for instance, 20 euro cent, for every, piece of a certain category, yeah? And on top you have competition or you will have absolute discretion in the end, some kind of ex-post market control, provided by authorities or courts. That could also be an option. This is really unclear because the risk is that, if the, PROs, enter into fierce competition, then they could try to somehow really minimize this eco-modulation part of, the fees, and you have– would have a situation like in France, where this, part of the fees is very low and too low to have a steering effect. Yeah. So this is unclear now, and I just wanted to draw the problem, the legislative process, is still ongoing.
[00:31:59] How fee money gets divided and spent
Patrick Hypscher: Mm-hmm. To me it seems to be coming back to one of the main motivations, which is, is, financing the, collection, sorting, recycling infrastructure that you probably do like a cost up, a calculation that a PRO that is responsible for a certain region or scope, basically after some time we’ll see what are the absolute, costs for that. And then there might be some additional, funding areas. We’ll talk about that in a minute. And then they more or less divide it, by the number or the weight of the products, from the producers that are part of, this PRO. So let’s say in an absence of any external threshold baseline, as you described, you would probably do it cost-based and then, ask that specific fee producer pays, based, from the producers. Yeah, absolutely. Mm-hmm. Since we talk about fees and money, you already mentioned, a couple of times that, ultimately the organizations involved, when it comes to end of life t- of the textiles are the ones who kinda get paid, from this money, from this fund, so to say. At the same time, there’s also the ambition to facilitate innovation in circular textiles. So, h- how can this fee distribution be organized so that it actually fuels innovation, in the collection, recycling, and maybe even, product design?
Alexander Sustal: That’s a very, important and in this point of time, unresolved question. When we read the Waste Framework Directive, there are some sections which state that the fees must be used for recovery of costs. That’s very clear. But apart from this, it’s also possible to use the fees for certain objectives which are clearly specified in the Waste Framework Directive. And one of these objective would be the scaling up, or ramping up of, recycling and of, of also business models who are, driving sustainability of textiles and of shoes further. And then the question is, if you collect the fees and you have the funds somewhere on your account, then, how should such funds, apart from the recovery, used and organized in order to foster such R&D corporations? Or, how could such funds be used to, to foster a ramp up of recycling? And there, are potentially there could be the different models. For instance, you could set up, something like a fund structure, in which the PRO, co- contribute where they part of the s-structure is financed by the PRO, and then, the– such structure would, foster certain projects, relating to R&D regarding recycling and so on and so forth. The other question would be if such funds should be used directly to subsidize the ramp up of recycling plants. Yeah, it could be also an option, but maybe also rather critical because it could distort competition. But theoretically, it could be also an option. So the question is, which objectives do we have and how do we finance this? Because we will have many PROs. Maybe we have one registry. How will the finance flows will be dispersed from, from the PROs, maybe also steered over the such registry or other body in order to be used for other objectives. That’s an open question, there are different solutions for it.
[00:35:51] Why EPR fees don’t follow exports
Patrick Hypscher: Okay. So let’s move on to the final category, international dimension while sticking to the topic of, fee distribution. We know that textiles and fashion is a highly global market, even when it comes to secondary use.
Alexander Sustal: Yeah.
Patrick Hypscher: And then of course also if fashion items that have been, used, in, in Germany and other member states, then get exported to other continents, Africa for example, ideally are worn there again but, will reach end of life there and will cause collection and recycling costs there. So will the fees collected from producers who bring products to the German market, will these fees also follow the flow of textiles to fund, the infrastructure in outside of Germany or the European Union?
Alexander Sustal: Currently, there’s just one answer, and the answer is no. This aspect was discussed in the legislative process for the Waste Framework Directive, and there has been a proposal, but it’s, it didn’t make its way, to be enacted in the end. So not everybody agreed with that, and which means at this point in time, we have no global dimension of EPR fees. It’s a real intra-EU thing, which doesn’t mean that the legislator would or could implement something like a Global South levy. Yeah, that could be theoretically maybe something which, could be implemented apart from EPR fees. But, in the EPR system as such, no use of funds for the Global South.
[00:37:40] Can the EU harmonize 27 EPR schemes
Patrick Hypscher: Okay. And if we stay in Europe and look once again at the level of harmonization and the risk of very different EPR schemes and criteria, during a time, I mean, we’re talking 2026 now, where like the Circular Economy Act is coming up. One of the biggest discussions in Europe is always about harmonization, standardization, and now we have, a Waste Framework Directive that allows m- member states to come up with individual solutions. So what are the opportunities, for textile EPR to be harmonized, across the EU?
Alexander Sustal: Yeah, very good question. And actually it’s a really a pain for many producers and retailers currently. It’s part of all the discussions and, there are many aspects, to this topic. One aspect is, really organizational, and still very important, it’s the registry. Yeah. So if you to register currently in every member state and you don’t have a consolidated monitoring and a consolidated system where you can say, “Okay, I will register in one state and all the registries are somehow connected,” then you have, to implement a really cumbersome, registration process in twenty-seven member states if you operate there, as a big corporate, yeah? As a big corporate retailer or producer. One big, topic now is, something like a one-stop shop where we can say, wouldn’t be there an option to a-administer all this in, in, in one member state or that we have one responsible person and where all these processes are consolidated and then somehow the information and all the other things will be distributed to the other member states. In particular for group structures, yeah, where you have big groups, big retailers or producers, makes really a lot of sense that the whole process is steered, by one of the topcos, let’s say by the management topco, and you have a monitoring there and such topco is helping the daughter companies, in the member state. Because from an operational perspective, it’s really hard to align such a system is rolled out in so many member states and with so many nuances and to have an alignment. This is a really cumbersome procedure for a big structure, so such one-stop shop would be, very beneficial from operational perspective. The other aspect is the eco-design and PRO aspect. It would be a real nightmare if you would have, theoretically in every member state, let’s say ten PRO and each of those PRO could, however, at its discretion modulate, the EPR fees according to really own, eco-design criteria. I mean, the eco-design criteria are set. They will come in the delegated, acts, but then how you calculate your fees on the basis of such criteria. This can be really different b-because you have a discretion there. So for this also a solution would be needed. Actually, the solution is already included in the Waste Framework Directive because in Article 22C I guess it’s Section 6, there it stated that if we have something like a jungle of equity, eco-modulation EPR regimes, and the commissions, comes to the conclusion, this is extremely, detrimental for, cross-border trade, then, the commission is empowered or is competent to pass a legal act which somehow, aligns the eco-modulation in every member state. It would be rather logical to somehow upfront have an alignment between the member states and appear all there. But, unfortunately, the- Waste Framework Directive gave the member state, dis-discretion at some part in the implementation of the directive. Yeah. Just what I want to say, and this is important to note, the directive really had the idea also to harmonize, to harmonize EPR systems and eco-design criteria. The legislator saw that we already have some EPR systems, let’s say in France and Netherlands, other states not, and it also had the idea to align such systems. Yeah. That was a very important idea because it’s a common market law idea here. We want to have a common market with EPR systems and it should be somehow aligned. And then for this reason, this aspect, should be really, addressed at the EU level. It would be very good if the legislator, during the course of the Circular Economy Act process, would pick up some of these topics, would have an eye on that, and would address that with, really some scrutiny in order to avoid to have such a cluttered and divergent EE- EPR scheme, which is really, different o-o-over whole Europe.
Patrick Hypscher: Okay, and we will probably know in about one year, one and a half years when almost all member states, spelled out their specific configuration. Once again, I will send you an invite, for, December 2027. We can review the national systems and see, what’s the result and what kind of cleanup is necessary. Hope not a lot of clean up, yeah, me too. Um, Alex, thanks for navigating, us through, the world of textile EPR in Germany, Europe and, parts of, rest of the world. That was really insightful. Thanks for that.
Alexander Sustal: Yeah, likewise, Patrick. Pleasure’s all mine. I’m very happy.
Patrick Hypscher: Awesome.
[00:43:41] Outro
Patrick Hypscher: You just finished the fourth episode of the Textile EPR series. If you want to check on the essentials, sign up for the circularity.fm newsletter. In the next episode, Carina Hofmann-Wellenhof from Circular Republic and I will wrap up this Textile EPR series. Carina led an initiative with 20 different organizations suggesting how the EPR system for Germany should look like. You can learn about those recommendations in the upcoming episode. Until then, I wish you every success in advancing a profitable circular economy. And please don’t forget, the most abundant renewable resource is your imagination.
Jingle: My name is Patrick Hypscher, and this is circularity.fm, the podcast about understanding, building, and managing circular business models.
