Viwat Supatham* discusses how glass manufacturers can minimise the impact of the Extended Producer Responsibility (EPR) fee on their business.
In this article, I will discuss the first draft of Extended Producer Responsibility (EPR) for glass packaging in Thailand, and how glass manufacturers should be prepared to manage the potential impact of the EPR fee.
EPR fees are typically paid by Producer Responsibility Organisations (PROs) to EPR operators on a regular basis, often per ton of packaging put on the market (POM). There are two parts of the EPR fee, the marginal cost and the operation cost of PRO, where the operation of PRO includes staff, infrastructure, IT and communications.
As set in the first draft, the Thai EPR fee calculation is as follows: the service fee of any packaging material is calculated from the marginal cost of the material received from the recycler (A – B), plus the expenses of managing of a PRO (C), and any other expenses as per legal need (D) relative to the total amount of POM (Q) in previous year.
The first draft of such fee calculation formula is below.
Fi = (max 0,(𝐴𝑖 – 𝐵𝑖)/ 𝑄𝑖)× (1 – 𝑢i)) + (𝐶 + 𝐷)/ ∑𝑖=1-𝑁𝑄i
The components are as follows: F = fee rate of packaging i (unit = THB/kg); A = cost of collecting and recycling packaging i (unit = THB); B = value of the recycled materials from recycling packaging i (unit = THB); Q = quantity of packaging i put on the market in previous year (unit = mt); u = reuse rate of packaging i; C = administration cost of PRO (unit = THB); and D = other legal obligation cost of PRO (unit = THB).
Viwat Supatham, Former Glass Operation Head at Siam Glass.
Thailand has not yet defined which sizes of companies must follow the new EPR rules for glass containers. However, since the country puts in over 2.2 million tonnes of glass packaging on the market each year (not including imports), it is better for all producers in the EPR system to prepare for the impact.
In the UK, from October 1st, the EPR base fee for glass is £192 per tonne. A typical business, one that has a turnover of £2 million and handles more than 50 tonnes of packaging annually, will be responsible for paying the full cost of the EPR fee.
Thailand’s EPR fee for glass packaging is much lower than the UK’s. According to the latest draft, Thailand plans to charge a maximum of 0.67 THB/kg (approximately £16 per tonne). This is more than 10 times lower than the EPR fee in the UK. In Thailand, it is estimated that glass containers will contribute around £20-25 million to the total EPR fee – around 50% of the total amount that the PRO will need to manage.
For example, in Thailand, a low-price beverage company that places 100,000 tonnes of glass containers on the market will need to pay an EPR fee of 67 million THB or £1.6 million. This represents around 2% of the company’s annual net profit margin.
Even though Thailand’s EPR fee is much lower than the UK’s, it will still have an impact on producers. Most are likely to shift the cost onto glass manufacturers, since passing the full fee to consumers is unlikely given limited pricing power and strong market competition.
There are immediate implications for producers, especially those selling small bottles at low consumer prices. Beverages packaging in containers under 150 ml - including energy drinks and local whiskey – in this highly competitive market will be affected. Glass containers will be subject to EPR fee proportional to their weight. The impact of such EPR fee will be around 2% on their net profit, as said above.
Managing EPR costs
As mentioned above, low-cost consumer beverages will need to absorb this 2% impact to their net profit. Rather than accepting these costs as unavoidable, beverage producers (or glass manufacturers) could implement the following solutions to help reduce EPR impacts:
- Increase pack to melt ratio. No matter how high at your pack to melt ratio now, it must increase. Glass experts know hundreds of possibilities to improve your pack to melt. A more technological forming technique with gob monitoring with gob weight, gob temperature control, and automatic ware spacing for a faster speed are recommended to replace human error.
- Lower bottle weight. It is clear that the EPR fee, in this first phase, will rely on glass weight or POM. Modern lightweight glass containers deliver the same appeal and sustainability benefits while reducing the EPR fee and other costs, e.g. transport. This lightweight glass technology in Narrow Neck Press and Blow (NNPB) process can reduce container weight by 15 to 30% without compromising strength or appearance.
Other cost reductions are as follows:
- Increase cullet ratio. Providing you have a ‘clean’ cullet, e.g. ceramic, stone, porcelain (CSP) and metal/aluminium is less than 2g / 100 kg cullet. In amber glass, the cullet ratio can be increased up to 90% - with each 10% cullet increase, energy will reduce by 2.5 to 3.5%. The cullet treatment line needs a CSP sorter, with separation of cullet size and dryer for a smaller size of cullet < 7 mm.
- Increase bottle reuse. With a special coating at the cold end, for example, a cold end coating brand Bohemi P4000 EN, which is designed to be more scratch resistant, your bottle can be used for more return trips with less scuffing marks. Consequently, less new bottles need to be produced, and returnable bottles cost roughly half of new bottles.
- Increase furnace life span. Each furnace has a depreciation of $1-2 million for the container furnace. Increasing such life needs a highly reliable furnace management system that maximises this asset. The system can monitor the operational parameters, especially the furnace refractory thickness where the conventional furnace audit could not do the job.
A digital furnace management system with advanced Artificial Intelligence (AI) and radar sensors are available, and can extend furnace life for a few more years with a maximum confidence in safety.
On the other hand, your insurance tax can be reduced by installation of such system, as the risk of business interruption from furnace or fire incident from glass leak is much less.
- Encourage government to include ECO Modulation in the next phase of EPR’s fee calculation. Aspects such as increasing the recycle content, Recyclability Assessment Methodology (RAM), etc., should be included. A modification of EPR’s calculation for this fee incentivises sustainable packaging choices that align with circular economy, reducing waste and improving recyclability.
Modulation fee = Weight of Material * Base fee per Material * Recyclability Factor, whereas Weight of Material = total weight of glass containers that producers put on market.
Base Fee Material = the fee set by regulator (PRO).
Recyclability Factor = adjust of the fee based on how easily the packaging material can be recycled (RAM).
- Clarify the PRO’s operation and CAPEX with as these are the majority of EPR fee. The EPR concept has proven to be an effective instrument for holding producers accountable for the environmental impact of their products. In established and well-functioning systems, the financial contributions of producers typically cover the costs required to achieve a high level of material circularity.
By contrast, in less developed or emerging EPR systems, implementation has delivered only limited improvements in recovery performance and is often perceived by producers as little more than an additional regulatory burden or environmental tax.
This perception is particularly concerning in the current context, where sustainability appears to have slipped down the strategic agenda of global decision makers.
To avoid stagnation or regression, it is therefore of the utmost importance to ensure that EPR systems are properly designed and implemented, so that they evolve from a perceived cost centre into a catalyst for meaningful environmental and economic impacts.
*Former Glass Operation Head, Siam Glass Industry, Thailand,
References:
- EPR – Smart regulation or stealth tax? – Roland Berger / Extended Producer Responsibility.
- Economic impacts to consumers from extended producer responsibility (EPR) regulation in the consumer-packaged goods sector by Satyajit Bose Professor of Practice Program in Sustainability Management 2929 Broadway, 5th floor New York, NY 10025. Columbia Climate School
- EPR Fee Setting Methodology: Framework and Formula: Associate Professor Dr. Panate Manomaiwibul, International College Burapa University, Thailand, July 2025
