The Weekly Pulse | 2nd – 7th April | Hungary Requirements for Circular Products & More

What’s HOT in our Regulatory World

What are our clients looking at?

This week’s trending sources in C2P

• Singapore: Energy Conservation (Energy Management Practices) Regulations, GN No. S 246/2013 – Amendment – (on energy efficiency opportunities assessments for specified power generation activities) Regulations No. S 177/2023
• Japan: Priority Assessment Chemical Substances (PACs), List, 2011 – Amendment – (on additional 6 substances) Notice No. 3, 2023
• Morocco: Approval of Moroccan Standards, Decision No. 479-23, March 2023

What is our Content Team talking about?

Hungary publishes detailed requirements for Circular Products subject to Extended Producer Responsibility – Michelle Walsh

On 14 March 2023, the Hungarian Government published Decree 80/2023 setting out detailed rules for the operation of the Extended Producer Responsibility (EPR) system in Hungary.

The decree is quite complex and imposes several new obligations for extended producer responsibility (EPR) across numerous product sectors.

Here is a summary of some of the main provisions. 

Scope

The Decree applies to “circular products” which are the list of products contained in Annex 1. The products are listed along with identification codes. The codes are eight-digit Customs Tariff Codes for each category.  The product categories include packaging, electrical and electronic equipment (EEE), batteries, textiles, office paper, cooking oil, motor vehicles, and wooden furniture.

Manufacturer must meet EPR requirements through individual performance or collective performance

Manufacturers may fulfil their extended producer responsibility requirements individually through “individual performance” or collectively through “collective performance using a “concession company”.

1.  If the manufacturer chooses collective performance, then before submitting its’ registration, it must submit the information contained in point 1 of Annex 3 to the concession company. (Section 6)
2.  If the manufacturer chooses individual performance, it must enter into a subcontract agreement with the concession company. This contract must contain at least the information listed in Annex 5.

Manufacturer may appoint an authorized representative

A manufacturer established abroad who markets a domestically circulated product may fulfil its obligations through an authorized representative who is established in Hungary and has a Hungarian tax number and is appointed with a written power of attorney. (Section 10).

Those manufacturers established abroad who place a circular product on the market through distance selling must appoint an authorized representative. (Section 10(2))

Registration

• Registration – 1 April 2023 – For collective performance, the manufacturer must register on the electronic interface of the concession company by this date. [Note the obligation to pay the extended producer responsibility fee will start from the date of this registration]
• Registration – 1 May 2023, manufacturer or authorized representative must apply for registration with the National Waste Management Authority and submit the information in Annex 3 before starting activities with a circular product (Section 23(1))
• Registration – 31 May 2023 – The manufacturer placing circular products on the market at the date of entry into force (1 April 2023) must submit its application for specific registration by this date. (Section 37(1)

Other Compliance deadlines:

15 April 2023: Compliance deadline for the manufacturer (placing products on the market at the date of entry into force (1 April 2023) when fulfilling the obligation individually) to initiate the conclusion of the subcontract on the electronic interface operated by the concession company (Section 37(2)

20 May 2023: Compliance deadline for the manufacturer (placing products on the market at the date of entry into force (1 April 2023) when fulfilling the obligation individually) to conclude the sub-contract with the concession company. (Section 37(2))

Payment of Extended Producer Responsibility Fee

Chapter 5 of the Decree requires the payment of an EPR fee when placing a circular product on the market.

The amount of the EPR fee per unit using the fee codes in Annex 2 will be set out in separate implementing Decrees. (Section 19)

For collective performance, the amount of the fee will depend on the quantity of the circular product placed on the market which is provided in the data for the quarter in question and the unit fee. For individual performance the fee will be determined based on the sub-contract concluded with the concession company and the unit fee.

The EPR is paid on a quarterly basis based on the invoice issued by the concession company, within 15 days of receipt of the invoice.  (Section 21)

Other Requirements:

• Keep Records.  The manufacturer must keep records for at least 5 years. (Section 26)
• Reporting information: Data must be reported to the National Waste Management Authority quarterly by the 20th day at the end of each quarter. (Section 27)
• Manufacturers are obliged to include specific information and wording on the invoice regarding the extended producer responsibility fee. (Section 21)

The Decree entered into force on 1 April 2023, however, most provisions apply from 1 July 2023 or the specified dates mentioned above. 

What are our Knowledge Partners talking about?

Where’s best for product MEPS? New global review reveals EU leadership, but not in every respect – Rina

An energy efficiency non-profit, CLASP, has identified the world economies in which appliance and electrical equipment minimum energy performance standards (MEPS) are most stringent.

CLASP – the Collaborative Labeling and Appliance Standards Program – found that “some large economies have ambitious MEPS, with many others right on the cusp… [but] the global community is still off-track to deliver the promises of the Paris Agreement”.

Dating to 2015, the Paris Agreement is an international climate change treaty. It seeks to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and pursue efforts “to limit the temperature increase to 1.5°C above pre-industrial levels”. It is notable that, since the Agreement entered into force in 2016, many world leaders have come to stress the need to limit global warming to 1.5°C by the end of the 21st century. As the United Nations (UN) explains(ii), this is because “the UN’s Intergovernmental Panel on Climate Change indicates that crossing the 1.5°C threshold risks unleashing far more severe climate change impacts, including more frequent and severe droughts, heatwaves and rainfall”. Furthermore, “to limit global warming to 1.5°C, greenhouse gas emissions must peak before 2025 at the latest and decline 43% by 2030”. Among the assorted policy instruments that different governments use to reduce greenhouse gas emissions, many employ energy efficiency measures – not least legislating for MEPS. To put that in context: electric motors, air conditioners, refrigerators, and lighting account for more than 40% of global electricity consumption. Doubling the aggregate efficiency of these appliances would avoid over two gigatons of carbon dioxide emissions per year in 2030.

To offer further insight and “identify opportunities to drive ambition”, CLASP evaluated and ranked the stringency of MEPS requirements for the six highest energy-using appliance categories – air conditioners, electric motors, lighting, refrigerators, space heating, and water heating – across ten of the world’s highest carbon-emitting economies. These economies are Brazil, Canada, China, the European Union (EU), India, Indonesia, Japan, South Africa, the UK, and the USA.

For each appliance category evaluated, CLASP highlighted the economies in which MEPS levels met or approached meeting international targets. Said targets are the recommended efficiency and energy consumption levels identified in United for Efficiency’s Model Regulation Guidelines (https://united4efficiency.org/). In the absence of applicable Model Regulation Guidelines (e.g., as is the case for space heating) CLASP performed a market analysis and analyzed best available technologies to develop its own benchmark. The infographic that follows – reproduced from CLASP’s research report – summarises the ratings it made.

Reflecting upon its ratings, CLASP recommends that:

At a minimum, all economies should align their MEPS requirements for air conditioning, electric motors, lighting, and refrigerators with United for Efficiency’s (U4E) Model Regulation Guidelines.

Beyond aligning their policies with U4E Model Regulations, economies should take the following product-specific actions:

• Air conditioners: The technology and supply chain needed to enforce stricter MEPS in alignment with U4E air conditioner model regulations exist. Most air conditioners are either produced in China or made from components sourced in China. As a result, economies have the ability to enforce the same air conditioner MEPS as China, which aligns with U4E’s recommendation (ISO CSPF 5.1 Whiii/Wh).
• Electric motors: Beyond setting motor MEPS at IE3iv, policymakers can further reduce the energy consumption of motor systems through requirements for variable speed drives and additional applications such as pumps, fans, and air compressors.
• Lighting: Economies should set technology-neutral MEPS at 90 lm/Wv to enable a full transition to LEDvi lighting. LED lighting is 50% more efficient than fluorescent lighting and does not contain mercury, a harmful neurotoxin. Economies with stringent lighting MEPS should strive for even better policies and set new standards at 120 lm/W.
• Refrigerators: At a minimum, all economies should set MEPS at 279 kWhvii/year or lower. Economies that have already achieved this target should increase their stringency to match U4E’s intermediate target of 223 kWh/year or less.
• Space heating: Policymakers in cold climate economies should require electric heat pumps and condensing minimum efficiency levels for space heating, including requiring all air conditioners to have reversible operation. Using air conditioners for heating (i.e., a reversible heat pump) involves a lower up-front cost than having two separate units, and can displace significant fossil fuel use and associated emissions. In addition to increasing the efficiency within fuels, policymakers should look for opportunities to promote electrification.
• Water heaters: Electric storage heat pump water heaters and condensing fossil fuel water heaters have efficiencies of more than 100% and 86%, respectively, and represent step changes in efficiency.

Policymakers should target these technologies to make significant reductions in water heating energy consumption. Since heat pump and condensing technologies can have significant up-front costs, labeling policies and incentives may be a first step to grow the market in places where those technologies are not yet cost-effective. In addition to increasing the efficiency within fuels, policymakers should explore opportunities to promote electrification.

For more information and to obtain a copy of CLASP’s research report, see: https://www.clasp.ngo/research/all/worlds-best-meps/

What are our clients asking about?

“Regarding the scope of the tax on plastic packaging in Spain, must the packaging be made entirely of recycled materials or a proportion of recycled materials ?” 

Answer by  Freida Gubbins

Details on the Spanish plastic tax can be found in;

Spain: Special Tax on Non-reusable Plastic Containers, Order HFP/1314/2022
Spain: Waste and Contaminated Soils for a Circular Economy, Law No. 7/2022

The Tax does not appear to be linked with recycled materials.

As set out in Article 67 of Law No. 7/2022, the special tax on “non-reusable plastic containers/packaging” is a tax of an indirect nature that falls on the use, in the territory of application of the tax, of non-reusable containers that contain plastic, whether they are empty or containing, protecting, handling, distributing, and presenting merchandise.

1. The scope of this tax includes:

• Non-reusable containers containing plastic. For these purposes, all articles designed to contain, protect, handle, distribute, and present merchandise are considered containers, including those defined in article 2.m) of this law, as well as any others that, not finding fit in said definition, are intended to fulfill the same functions and that can be used in the same terms, unless said items form an integral part of a product and are necessary to contain, support or preserve said product throughout its useful life and all its elements are intended to be used, consumed or disposed of together.
  
  Containers are considered non-reusable when they have not been conceived, designed, and marketed to carry out multiple circuits or rotations throughout their life cycle or to be refilled or reused for the same purpose for which they were designed.
• Semi-finished plastic products intended to obtain the containers referred to in letter a), such as preforms or thermoplastic sheets.
• Products containing plastic intended to allow the closure, marketing, or presentation of non-reusable packaging.

2. For the purposes of the previous section, the material defined in article 2.u of this law is considered plastic.

3. Those products referred to in section 1 of this article that, being composed of more than one material, contain plastic, will be taxed by the amount of plastic they contain.

Exemptions to the above are set out in Article 75 and extend to packaging for medicines, medical devices, medical/special foods, preparations for infants for hospital use or hazardous waste of sanitary origin.

Lastly, “Single-use plastic product” are defined as a product made entirely or partially from plastic and that has not been conceived, designed, or placed on the market to complete, within its lifetime, multiple circuits or rotations by returning it to a producer to be filled or reused for the same purpose for which it was designed.

However, requirements for recycled materials in packaging can be found in “Spain: Packaging and Packaging Waste, Royal Decree No. 1055/2022”. The Decree specifies that packaging may be marked to denote the presence of recycled materials (this is voluntary) and that the presence of recycled materials will impact the financial contribution payable by packaging producers (potentially reducing the amount to be paid). Article 11 of the Decree contains minimum recycled content values for packaging as follows;

• By 2025, packaging made from polyethylene terephthalate (PET): at least 25% recycled plastic, calculated as an average of all PET packaging you place on the market.
•  In 2025, plastic packaging not subject to the obligation of point a): at least 20% recycled plastic, calculated as an average of all packaging of this type that you place on the market.
•  By 2030, plastic packaging: at least 30% recycled plastic, calculated as an average of all the plastic packaging you put on the market.

Notwithstanding the foregoing, producers must comply with the provisions of sections 2 and 3 of article 57 of Law 7/2022, of April 8.

4. To promote compliance with the objectives of section 3, in 2030 product producers will try to ensure that the containers made with non-compostable plastic that they put on the market reach the following percentage of recycled plastic content per container:

• 35% for jars, carafes, and similar plastic items up to 5 liters in capacity, including their caps and lids in the total calculation of the container.
• 15% for boats, jars, tubs, trays, baskets, and other similar plastic items.
• 15% for plastic films used in primary packaging applications, including bagging, lining, peelable lids, or wrappers, among others.
• 30% for plastic films used in secondary or tertiary packaging applications, such as shrink wrap, liners, bags, bubble wrap, and envelopes, among others.
• 60% for wholesale pallets, boxes, drums and storage containers, and other similar plastic items.”

Furthermore, “…containers made with non-compostable plastic must incorporate the amount of recycled plastic that allows the packagers to meet the objectives established in articles 11.3 and 11.4 for each time horizon, according to their type.

For the purposes of this provision, the amount of recycled plastic contained in the products must be certified by an accredited entity to issue certification under the UNE-EN 15343:2008 “Plastics. Recycled plastics. Traceability and conformity assessment of the recycling of plastics and recycled content” or the standards that replace them. In the case of chemically recycled plastic, said quantity will be accredited by means of the certificate issued by the corresponding accredited or authorized entity for such purposes.”

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