Financing and Enforcing EPR in Nepal: A Strategic Guide for Producers, Importers, and Brand Owners

The proposed Extended Producer Responsibility (EPR) framework in Nepal focuses on mechanisms for sustainable financing and robust enforcement, drawing on the principle that the producer is responsible for the entire lifecycle of a product, particularly for post-consumer waste management.

Here is a comprehensive overview of how the EPR framework is proposed to be financed and enforced in Nepal:

Financing Mechanisms

The core financial strategy is shifting the cost burden of end-of-life (EOL) management from local governments and society to the Producers, Importers, and Brand Owners (PIBOs).

1. Producer Responsibility Funding

The proposed mechanism is based on making PIBOs financially accountable for the volume of devices placed in the market.

• EPR Recycling Fee/Eco-fees: The cost of collection, recycling, and disposal should be covered by PIBOs, who pay fees to collectors and recyclers based on the volume or weight of waste collected, recycled, and disposed of. Small eco-fees added at the time of sale can help fund future recycling efforts.
• Incorporating Costs into Product Price: Producers generally recommended incorporating recycling costs into the product’s retail price to ensure financial viability, suggesting consumers should contribute since they are the end-users benefiting from sustainable practices. The regulatory body can allow PIBOs to partially increase product costs.
• CSR Funds: The mandatory Corporate Social Responsibility (CSR) funds required for industries in Nepal could potentially contribute toward eco-fees if facilitated by government regulation.
• E-Waste Management Fund: It is recommended that a dedicated fund be established for e-waste management, with financial contributions coming from manufacturers, producers, importers, and distributors.

2. Fund Utilization and Investment

The financial flows are intended to support the entire ecosystem:

• Expenditures: Funds will cover collection, recycling, and disposal costs, as well as administration and monitoring, infrastructure development, and research and development (R&D).
• Infrastructure Support: Financial resources should be dedicated to establishing appropriate mechanisms and infrastructure for collection, recycling, and disposal. This includes supporting the development/upgrade of R&D facilities related to recycling technology.
• Capacity Building: Funds are needed for the capacity building of collectors, including integrating the informal sector into the formal value chain.

3. Incentives and Subsidies

The framework proposes various incentives to encourage participation and investment:

• Incentives for Consumers: Encouraging participation through mechanisms such as trade-in programs, discounts, vouchers, or buy-back options when purchasing new devices.
• Incentives for Producers: Providing recognition (certification/awards) for exemplary EPR performance, reduced tariffs on imported recycling equipment, and tax deductions for investing in eco-friendly designs.
• Incentives for Recyclers: Offering performance-based payments based on the volume and quality of materials recycled, facilitated access to low-interest loans for expansion, and subsidized financing schemes for state-of-the-art infrastructure development.
• Incentives for Informal Workers: Providing financial incentives to informal collection channels to motivate them to collect all kinds of e-waste, rather than engaging in "cherry picking" (collecting only valuable materials).

Enforcement and Monitoring Strategies

Effective monitoring and enforcement are critical to ensure all stakeholders comply with their EPR obligations and to prevent environmental harm.

1. Regulatory Authority and Oversight

A strong regulatory body is necessary for implementation and monitoring:

• Designated Authority: A regulatory authority must be designated, potentially the Ministry of Forest and Environment, the Department of Environment, or a newly formed apex body.
• Legal Framework: The government must enact dedicated EPR legislation and develop specific guidelines and Standard Operating Procedures (SOPs) for collection, recycling, and disposal.
• Licensing and Authorization: The regulatory authority must license and authorize collectors, refurbishers, dismantlers, and recyclers, ensuring they adhere to environmental and safety standards.
• Inter-Agency Collaboration: Fostering collaboration among government agencies, local bodies, and international organizations to strengthen enforcement capacity is crucial.

2. Monitoring and Data Systems

Transparency and accountability are maintained through rigorous data management and monitoring:

• Digital Tracking System: Implementation of an electronic or digital tracking system is necessary to monitor the lifecycle of e-waste from generation to disposal/recycling, similar to India's model.
• Centralized Database: A national e-waste database should be created to consolidate and centralize data on e-waste generation, collection, and processing. In the early phases, basic data recording (e.g., in spreadsheets) can be used until full IT infrastructure is developed.
• Reporting Requirements: PIBOs, importers, collectors, and recyclers must be mandated to submit periodic reports (e.g., quarterly or annual returns) on product sales, waste collection, and recycling achievements to demonstrate compliance with EPR obligations.
• Audits: Independent third-party agencies should conduct annual audits to verify reported data and assess compliance with EPR obligations.

3. Penalties and Compliance Measures

Effective mechanisms must be in place to deter non-compliance:

• Imposition of Penalties: Companies that fail to follow the rules should face fines or penalties. Effective, proportionate, and dissuasive penalty provisions must be developed and enforced. Fines may be levied for non-submission of reports or failure to meet recycling targets.
• Prohibited Activities: Highly punishable offenses include illegal practices like burning e-waste (cables, circuit boards) or performing acid leaching to extract precious metals.
• Revocation of Licenses: The regulatory authority can revoke licenses or impose restrictions on stakeholders found engaging in illegal disposal or improper recycling practices.
• Environmental Compensation (EC): PIBOs could be required to pay EC based on their performance in waste management, with these funds supporting waste management infrastructure and awareness programs.

4. Integration of the Informal Sector

Enforcement must also address the dominant informal sector by formalizing their activities:

• Formalization: Informal waste collectors and recyclers should be formalized through licensing, training, and certification programs.
• Monitoring and Regulation: Their activities must be monitored to ensure alignment with formal EPR processes and adherence to safe handling guidelines set by the regulatory body.