0:03 Welcome back to the Sustainable Design Lab podcast brought to you by Veritiv. In this podcast, we explore the big ideas that are reshaping the future of packaging. My name is Chris Bradley, and I lead the sustainable design lab for Veritiv. This episode is part three of our EPR for packaging master class series. We are assuming you have listened to the EPR overview as well as part one, the fundamentals, where we discussed how EPR works, ecomodulation fees, PROs, covered materials categories, and a host of other important topics, as well as part two, which was the specific deep dive for Oregon.

0:46 If you're not familiar with these topics or have skipped ahead, we strongly encourage you to listen to those episodes sequentially before continuing on with this class as the content in this episode builds on the progressive knowledge that you're expected to gain by listening to the series in order. Okay. Let's dive in. Given that we've just reviewed Oregon's program, we're gonna use that context to review Colorado. And so what I mean is we're gonna review the Colorado program and attempt to share where it is similar to Oregon and where it differs from the Oregon approach.

1:23 As we've indicated earlier, these state programs are similar and that they are both EPR programs for packaging. However, they each have some distinct, um, differences and many unique attributes. So for Colorado, once you join the PRO and you sign the producer agreement, you will gain access to a 210 page program document. This document outlines the complete program in detail, including all of the feed schedules, which are called dues in Colorado terminology, and all of the other details you're gonna wanna know. Now I've read this full program document several times now.

2:07 And today, we're gonna be reviewing the highlights of what is included and what you need to know as a packaging producer. Similar to what we did with Oregon, I'm not gonna review every single detail of what is included in that program. I am just gonna highlight the areas that I believe are different enough, um, from Oregon or are important enough for producers of packaging to wanna take note. So Colorado is just slightly larger than Oregon in square mileage, and both states are quite diverse with lots of rural communities and densely packed cities, tribal nations, but they take, um, very different approaches to EPR in a few key areas. Now one of the first things that is apparent as you review the Colorado and Oregon plan side by side is that Colorado has more of a focus on composting, specifically calling out certified compostable packaging and making commitments to increase the infrastructure and acceptance of this type of packaging in the state. . Now one of the first things that is apparent as you review the Colorado and Oregon plan side by side is that Colorado has more of a focus on composting, specifically calling out certified compostable packaging and making commitments to increase the infrastructure and acceptance of this type of packaging in the state.

3:14 In fact, they will be providing per ton incentives to composting facilities that will readily accept compostable packaging. Now compostable packaging is also treated differently than recyclable materials under Colorado's EPR program when it comes to producer dues or fees. So unlike recycling, the law or the the program doesn't require the PRO to cover the full cost of composting services like collection and processing for compostable packaging. It does on the recycling side. So instead, for compostable materials, all of the fees are really gonna collect and make targeted investments like grants and incentives to help compost facilities accept and process more compostable packaging.

4:08 One of the biggest issues with composting is that compostable packaging, most of the compost yards do not want it. And so Colorado is actually going out of its way to make sure that compostable packaging is widely accepted, um, across the state. Compostable materials will also share some of the indirect cost like program management, education, and some of the outreach program so that all of the packaging types within the state contribute fairly to the system's overall operations. Um, but I guess to break it down, compostable packaging will pay less than recyclables in some areas within Colorado. And, again, if you contrast that to Oregon, it's completely different.

4:56 Oregon is much more weighted towards recycling. In fact, as we reviewed in the Oregon deep dive in the last episode, they actually require by law, um, that the EPR fees for nonrecyclable packaging, and that does include compostable packaging in the way they've defined it, must be at least 5¢ more expensive per pound on average than recyclable materials. So I would go so far as to say that Oregon's program significantly penalizes compostable packaging with higher fees, whereas Colorado takes a very different approach. Colorado plans to focus on enhancing the recovery and processing of certified compostable packaging while also extending effort to reduce contamination within compost through education and outreach. Colorado's program also highlights, uh, and indicates some very strong interest and focus on reuse and refillable packaging models and plans to provide incentives through ecomodulation to really drive change in this area. while also extending effort to reduce contamination within compost through education and outreach. Colorado's program also highlights, uh, and indicates some very strong interest and focus on reuse and refillable packaging models and plans to provide incentives through ecomodulation to really drive change in this area.

6:04 In fact, some reusable and refillable packaging systems are completely exempt from producer fees, um, in the Colorado systems as long as they meet certain criteria. So for example, if it's returned from home, packaging that's picked up from a consumer's home via, like, um, a pickup or logistics service and then clean and reuse by a business or provider is completely exempt. Return on the go, so packaging returned to an in store drop off location or refill on the go where consumers would, say, bring their own container to a store or refill condition. Um, what's not exempt are refill at home systems. So if you go buy a giant bottle of hand soap and you are refilling at home, that would still be covered under the EPR program because that would rely on additional disposable packaging.

7:01 Oregon also plans to add a bonus for reuse, um, but details of that bonus system haven't been released yet. So we're hopeful that there'll be more of a re reuse play in Oregon in the future. But, um, Colorado seems to be a bit more committed. And in fact, they've outlined a plan to create a reuse community of practice, which would consist of different parties that wanna make packaging more sustainable by studying and implementing reusable and refillable options, um, and encouraging consumers in the state to participate. Now one of the really cool features of the Colorado plan is their really, um, big focus on PCR or post consumer recycled material.

7:50 Now they've set minimum PCR goals by material category, and they plan to grant ecomodulation incentives for producers who exceed these targets. And so some of these targets, um, should be fairly easy to hit so you can get some early wins and, uh, really get lower fees. They also plan to ensure that producers, uh, can gain competitive access to these PCR feedstocks that are produced in the state. Because one of the challenges that we all expect in the future is that these PCR feedstocks are gonna be hard to come by as each of these states starts ratcheting up, um, the minimum required PCR content. So here are some of the PCR targets by material class that are outlined in the Colorado program.

8:39 Rigid plastic packaging, they have a proposed 2030 target of 20%. So you can get an ecomodulated discount if you exceed 20%. So if you put 30% PCR into your rigid packaging, you would be eligible, um, as long as you can show proof of of chain of custody that that's real PCR. You'll be able to actually get, um, a a nice discount on your bill. Flexible packaging, they have a proposed target of 5% by 2030. omodulated discount if you exceed 20%. So if you put 30% PCR into your rigid packaging, you would be eligible, um, as long as you can show proof of of chain of custody that that's real PCR. You'll be able to actually get, um, a a nice discount on your bill. Flexible packaging, they have a proposed target of 5% by 2030.

9:13 So if you can, um, build film or create, um, a multilayer film that has recycled, um, materials in it, and you can now readily get, um, 30% PCR films. And so this is another way that I think you could get some some nice incentives. And, um, you know, there are also targets for paper packaging at 40%, metal packaging at 40, and glass at 30. Again, um, those are realistic targets for PCR. You should be able to figure out ways to get, um, higher levels of PCR into your products and, again, um, qualify for some of these incentives.

9:54 Now the overall goals in the Colorado program for recycling rates, um, were based on their initial kind of, um, assessment or needs analysis, and they showed a baseline recycling rate when they did that in 2022 of 25%. And so they have a goal to increase from 20 five to 41% by 2030 and fifty five percent by 2035. So similar to Oregon, Colorado has plans for lots of community outreach and education about how their new EPR program is gonna work with the goal of increasing recycling and composting rates while reducing contamination in the system. Okay. Before we go into the fee schedules or the dues, again, as they're called in Colorado, I wanna explain where Colorado is, um, in the rate setting process.

10:53 Now they're a bit further behind than Oregon, um, but they have published a set of interim fee schedules, which we will review in a few minutes, Um, that is based on estimates that they created at the beginning of the program. Um, but we are expecting to see some updated rate sheets that will be published, um, by Halloween or October thirty first of twenty twenty five. So producers in the state of Colorado are required to submit a full year report on all of the tonnage of the different packaging that you shipped into the state of Colorado in 2024, and that deadline is gonna be July thirty first of twenty twenty five. The PROO, the Circular Action Alliance, will then take all of that data that everyone submits. They'll analyze and compare it to the original estimates they made, and they will be releasing an updated fee schedule again by Halloween. lorado in 2024, and that deadline is gonna be July thirty first of twenty twenty five. The PROO, the Circular Action Alliance, will then take all of that data that everyone submits. They'll analyze and compare it to the original estimates they made, and they will be releasing an updated fee schedule again by Halloween.

11:54 So the rates that we will review now are likely to change, but these rates will certainly shed some lights into how the Colorado program operates, and it will certainly give us a view of what to expect because it is a bit different than the Oregon program. Now similar to Oregon, there is a flat fee option for small producers. Colorado is using a de minimis threshold, meaning that producers below $5,000,000 in gross revenues are exempt and don't have to pay EPR dues at all. Otherwise, if you if you are a low volume producer and they're calling a low volume producer someone who supplies 10 tons of packaging, um, or less per year into the state, There is an option to pay a simple flat fee instead of going through the full reporting requirements. Now these flat fees are based on how many tons of business supplies, and it's you don't have to break it down by the different categories.

12:59 You can just add up the weight of all of the packaging materials that you shipped. And if it is less than 10 tons, um, they have a graduated fee schedule from one ton starts at, like, $600, and it goes all the way up to $4,000 if you have just under 10 tons. So the final dues of and these these rates will be set in late twenty twenty five, again, by Halloween, after the state gets, um, better data on how many small producers they should anticipate or expect to enter the program. Okay. So now let's review some of the key definitions in Colorado.

13:40 Each EPR program has slightly different definitions of the way that they classify materials. Now you may remember that in Oregon, they had their uniform statewide collection list or the USCL, which is a standardized list of materials that had to be collected by all Oregon communities. Now Colorado has something similar, but they call it the MRL or the minimum recyclable list. And while Oregon had their PRO recycling acceptance list, which was the broader list of materials that the PRO, um, opted to manage, um, and create additional programs for. Colorado has something similar, but, again, they have a different terminology for it.

14:27 They call it the additional materials list or the AML. So, again, in both of the states, you have covered material classifications. In Colorado, they're calling it the minimum recycled list or the MRL. That is the widely accepted list of materials that are probably gonna have the lowest fees. And then there will be the additional materials list. materials list or the AML. So, again, in both of the states, you have covered material classifications. In Colorado, they're calling it the minimum recycled list or the MRL. That is the widely accepted list of materials that are probably gonna have the lowest fees. And then there will be the additional materials list.

14:52 This is the broader list. It's gonna have higher fees, but the PRO is gonna step in and create ways and pathways for those products to be recycled. So both states have goals to try and move items that are not being recycled today or being collected, um, onto that are on the AML, um, this additional material says, and then ultimately to get them from the AML onto the MRL or the minimum recycled list. So we now, um, can look at some of the rates. Now the first thing you'll notice when you compare the rates from Oregon to Colorado is, in general, the rates appear to be a bit lower across the board in Colorado than they were in the Oregon program.

15:41 So for things like paper products, in the way that they have, um, provided the rates is they provided a rate, um, range from, like, different scenarios, low, medium, and high. And so when I go through, I'll I'll be picking the medium rate as kind of the the average price that you would expect. So for things like paper products, corrugated, things like that, it's gonna be 4¢ a pound in Colorado. Uh, if you remember in Oregon, it was 3¢ a pound. So somewhat similar.

16:15 Um, glass will also be 4¢ a pound. Um, it was 10¢ in Oregon. And, uh, ceramics, 42¢, uh, pretty similar to I think it was in the in the low fifties in Oregon. Now aluminum containers, aluminum cans are are gonna be around 4¢ in Colorado, and I think they were around 7¢ in Oregon. So, again, you do see some differences.

16:41 And when you start to get into the plastics, uh, some of those big numbers that we were seeing in Oregon, like $2.57 or a dollar 98 a pound, we're not seeing those yet in the Colorado program. Most of the fees for, um, rigid plastics and different types of materials range anywhere from 18¢, say, up to, um, 77 or 80¢ a pound. And so and then for the certified compostable packaging, that's coming in around 15 to 27¢ a pound, which is a stark difference from Oregon. Again, if you remember, as we were talking about compostability, compostable bioplastics like PHA and and PLA and other materials, um, were quite expensive in the Oregon program, um, way up there, like, a dollar 50 a pound. And in the, um, Colorado program, they're down around 27¢ a pound.

17:42 So because of these discrepancies between the two different programs, and you're really gonna have to navigate that to look at what are the materials, how much product do I ship into each state. And, of course, we're all super hungry to understand what is gonna happen in the biggest state of all, California, s b 54, when they release their program. We expect it to be modeled after both the or the Colorado and the Oregon program. You're gonna have the same PRO. So in some cases, they're gonna be applying some of the same methodologies. super hungry to understand what is gonna happen in the biggest state of all, California, s b 54, when they release their program. We expect it to be modeled after both the or the Colorado and the Oregon program. You're gonna have the same PRO. So in some cases, they're gonna be applying some of the same methodologies.

18:17 Um, but all eyes are on California to see where they fall out. They're likely, um, from what we're hearing, to fall out somewhere in between Colorado and Oregon as far as rates, um, with a lot of plastics somewhere in that 70 to a dollar 50 a pound. At least that's what we're expecting at this point. Okay. Let's look at ecomodulation incentives in the Colorado program.

18:46 Now remember, ecomodulation is really where you would just produce for producer fees based on how sustainable the packaging is. And they're really these ecomodulation incentives are put in place to try to have the goal of influencing behavior and getting producers to make better design choices. So there are some, um, specific incentives built into the Colorado program, and that means lower fees for things like source reduction. So if you can show that you're using less material, you're gonna be incentivized for that. Improved recyclability or commodity value.

19:26 Um, again, Colorado has a lot of components of the program focused around high post consumer recycled content. If you can show chain of custody and you can show a high content, you're gonna get a much lower, um, fee structure under the Colorado program. And then, um, there's definitely some nice incentives built in for packaging that's been designed for reuse and refill. Although, they do have a lot of components of the regulation, which are really gonna ensure that you can prove that those reuse or refill models are being effective. And so they'll be looking at actual recycling and refill rates.

20:05 Now what is also interesting about the Colorado program that, again, is different than what we saw in Oregon is there are specific malices, um, or disincentives. These are high fees that they've specifically designed in, um, for any type of packaging that increases recycling or composting cost. If they can identify that, they can actually impart penalties, uh, to that supplier. Any packaging that disrupts other recycling streams or use of materials that are not on this minimum recycle bull list, the MRL. So they really wanna try to drive as much of the material into these common sets of materials that have responsible end markets. hat, they can actually impart penalties, uh, to that supplier. Any packaging that disrupts other recycling streams or use of materials that are not on this minimum recycle bull list, the MRL. So they really wanna try to drive as much of the material into these common sets of materials that have responsible end markets.

20:52 So within the ecomodulation incentives designed into the Colorado program, they have two implementation paths. The first, I will call a material level ecomodulation. This is approach one, and it's basically different, um, cost adjustments built into the fee schedules based on recyclability, sortability, or whether a material is on that MRL. Now they have, um, some really exciting components that that are really these producer specific incentives, and they haven't gone into a lot of details yet, um, because they're currently working on these, and they plan to release full details of what these producer specific incentives are gonna be and how they're gonna operate when they release the fee schedule on October thirty first of twenty twenty five. Um, but what they what you can read from going through the program document is that they're gonna provide specific intent incentives for design choices like high PCR use, reuse use, verified through producer submitted documentation.

22:07 So you're gonna be able to put together a documentation pack that says, hey. This is what my packaging was before, and I made these changes, and these are the impacts. And you're gonna be able to submit that on a per SKU or package type basis through Colorado's, um, specific portal. Um, and then, you know, again, these incentives are totally optional, and they apply to individual SKUs or packaging types. They don't seem to have as many, um, limitations as they do in the Oregon program, so I'll be very interested to see how this program fleshes out.

22:44 Um, but here are some of the eligible incentive categories that have been specifically called out in the Colorado program. If you can prove source reduction, so incentives for using less material per product, rightsizing, things like that, if you can prove that, you're gonna be able to get an incentive. If you can show that you are using high PCR above the state targeted rate, um, and it will vary by material type, but you and you can prove chain of custody or third party verified data, you'll be able to get, um, a bonus, um, in a future program. And then they have a section on innovation and design enhancement that I'm really excited to learn more about as they flesh out the program. And they basically say that for new designs that improve recyclability or the commodity value of that recovered material, um, and you can show this by improved recovery rates at the MRF, for example, um, then you'll be able to get a really nice incentive. eally excited to learn more about as they flesh out the program. And they basically say that for new designs that improve recyclability or the commodity value of that recovered material, um, and you can show this by improved recovery rates at the MRF, for example, um, then you'll be able to get a really nice incentive.

23:52 So one thing to know about the Colorado incentive structure is these incentives are one time per SKU or package type. They will allow you to come back and get renewed bonuses or additional bonuses after three to five years, but you're really only gonna be able to apply for some of these bonuses one time. It's not like you can do small incremental changes every year and keep getting the bonus. Uh, the other important thing to note is only producers of covered materials are eligible for these bonuses, um, and you can only use it to basically reduce the amount of the base fees that you owe. Now as we talked about in Oregon with their incentives, there were incentives that were available this year in 2025.

24:41 Um, but the way that the Colorado program, it's gonna be a little bit more delayed than that. They created a technical committee in 2025 where they're gonna give, um, some initial guidance, and they're gonna publish a full set of how to how to really apply for these incentives. So it's really not gonna be until 2026 that, um, producers will be able to submit really good data for incentives. So this means that you're probably not gonna be able to get a lot of those benefits until 2027, but that is right around the corner. Now both Colorado and Oregon share the core intent of ecomodulation.

25:20 They both offer it in their programs, um, and it's really to financially incentivize environmentally preferable package. However, their implementation programs differ. So, again, Colorado really doesn't begin full implementation until 2027, but Oregon is beginning this year in 2025. However, Oregon is more limited in scope. Oregon does have some nice things with the LCAs.

25:48 It'll be very easy to be able to apply for those bonuses. Colorado is applying malices or disincentives. They so they got the carrot and the stick. Whereas Oregon is taking, um, is not using malices. They are only doing positive incentives as part of their ecomodulation program.

26:09 So here are my final thoughts as we wrap up this episode on the Colorado packaging EPR deep dive. Um, both Oregon and Colorado are early leaders. They're shaping the future of packaging and this whole world of extended producer responsibility regulations for packaging. But the priorities and philosophies of these two states are noticeably different. Again, I can't wait to get my hands on the California program to really see what's being driven, um, in the Golden State. shaping the future of packaging and this whole world of extended producer responsibility regulations for packaging. But the priorities and philosophies of these two states are noticeably different. Again, I can't wait to get my hands on the California program to really see what's being driven, um, in the Golden State.

26:47 But as we look at the two that we do have data for now, Oregon was the first to launch, and I would say they came out with a very recycling focused or recycling first EPR model. Its system is entirely focused on modernizing and strengthening the recycling infrastructure within the state of Oregon, um, and especially within underserved communities. And the state is investing heavily in building material recovery facilities or these MRFs and expanding access to curbside recycling. However, in doing so, in the way that they're doing it, composting is taking a huge back seat in Oregon. Um, and compostable packaging is not currently embraced in Oregon's CPR program.

27:37 And in fact, if you look at the fee schedule, I would dare to say that it they are treating it as if it is a contaminant and something that should be avoided rather than embraced. Now Colorado, by contrast, I would say is taking a much more balanced and circular approach to the way that they are doing EPR. Its EPR program is intentionally composting inclusive with direct in with direct funding for compost infrastructure, contamination reduction, and consumer education. And compostable packaging is treated as a legitimate recovery pathway. I personally believe that it should be.

28:20 There's certain types of packaging, say food contact, food service wear, where it's gonna be really difficult to ever recycle it. So we need, um, we need a composting pathway as one of the options if we're really gonna address the waste crisis. So, again, Colorado is embracing it. It's not just tolerate tolerated, and they are doing some legitimate investment in planning. Colorado is also one of the first states to build ecomodulation penalties directly into its program.

28:55 So they are charging much higher fees for hard to recycle or non compostable materials, and they were gonna reward significantly better design, including reuse and refill systems. So in practice, I would say Oregon is all in on recycling, and Colorado is investing in both composting and recycling, sending a clear signal that a true circular economy or circular system includes organics alongside these traditional materials. Both of these states are making bold moves, but they're charting slightly different paths. Oregon is prioritizing infrastructure and access, while while Colorado is really focused on systems change and material innovation. Now it's really too early to tell in both of these programs for us to really draw any big conclusions. of these states are making bold moves, but they're charting slightly different paths. Oregon is prioritizing infrastructure and access, while while Colorado is really focused on systems change and material innovation. Now it's really too early to tell in both of these programs for us to really draw any big conclusions.

29:48 We still don't have final fee schedules and fully baked fully baked incentive programs, but we do have enough information to know where we can employ innovation and sustainable design to to find cost savings. So the first thing that I did was scour these programs to understand how do they work, where are the the aspects of the program that we can employ sustainable design. And there really are some sweet incentives built into both of these programs that we can exploit with design to reduce our total cost. So that's it now for our Colorado deep dive. I hope you found it interesting.

30:31 I strongly encourage you to tune in to our next and final episode in our four part master class on packaging EPR. In this next episode, we're gonna dig into advanced strategies and sustainable design that will really enable you to maximize your incentives under these different programs and ecom ecomodulate your fees down as far as possible. We'll be looking at how you can better employ lightweighting techniques, how you can jump on this whole paperization bandwagon, and convert some of your plastic packaging into lower cost paper alternatives. And we're gonna focus on helping you find ways through sustainable design to gain competitive advantage for your company in this new era of extended producer responsibility. Thank you again for tuning in, and I look forward to continuing the