ewaste business model

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Abstract E-waste business model evolves from recycling

industry operating under policy and regulatory framework in a

country. In India, environmental policy and regulatory

framework is emerging from pollution control to pollution

prevention with an increasing implementation of business model

under public private partnership. In this context, an assessment

of conventional E-waste recycling under the existing regulatory

and emerging extended producer responsibility (EPR) regime

with an option of public private partnership (PPP) as an interim

intervention in the state of Maharashtra has been carried out.

Further, mechanism of its establishment and operation both

during short and long term have been identified for complete

transition to EPR based regulatory regime.

I.

INTRODUCTION

-waste has grown as a major waste stream in India during

current decade. Year 2005, national level E-waste

generation estimate is about 146180 tons per year, which

is expected to exceed 400,000 tons per year by 2011 [1].

Geographically, Mumbai Metropolitan Region (MMR) and the

state of Maharashtra had been identified as the highest E-

waste generator in the country with current projections

ranging from 18,963 tons to 137,417 tons in MMR and from

56,901 tons to 292,157 tons in Maharashtra till 2020 [2].

Indian scrap and E-waste recycling industry mapping using

tracer technique indicated that E-waste recyclinginfrastructure in MMR region consists of E-waste dismantlers

in informal sector, who are linked to informal metal recyclers

operating in other cities in India [2] [3]. These operations are

leading to emissions of toxics, occupational hazards,

economic losses and leakage due to inefficient management

and recycling of E-waste. The geographical distribution of

informal sector recycling industry over a vast area without

organized E-waste collection and transportation system leads

to inefficient E-waste management resulting in economic

losses due to loss of material in the material flow chain.

Further, the toxic footprint and occupational hazard also gets

geographically distributed whose intensity depends on the

scale and extent of recycling [4]. Therefore, strengthening of

policy and regulatory regime and creation of compliant E-

waste recycling infrastructure, which can arrest and control the

geographical distribution of toxic footprint, has been identified

as the primary need for E-waste management in a given

geographical region. In this context, establishment of a

scientifically designed E-waste recycling facility in

1Author is with IRG Systems South Asia Pvt. Ltd., 103 Thapar House,

Community Centre, Gulmohar Enclave, New Delhi , 110049, India. phone: 91-11-41759510; fax:91-11-41759514; e-mail:[email protected]

Maharashtra was identified as the next step during 2006-07

[2]. An assessment of viable business model for the E-waste

recycling facility consisting of conventional E-waste recycling

under the existing regulatory regime and extended producer

responsibility (EPR) regime with an option of public private

partnership (PPP) as an interim intervention was carried out

considering current and emerging policy and regulatory

regime in the country. The objective of this assessment was to

concurrently identify a combination of viable policy,

regulatory and market based interventions for establishing

environmentally sound recycling infrastructure for E-waste

management.

II. APPROACH AND METHODOLOGY

At first, existing policy and regulatory regime was reviewed

and evaluated in terms of expected future trends. This

evaluation is followed by identification of business risks.

These risks have been quantified and used for sensitivity

analysis of different recycling scenarios based on parameters

like internal Rate of Return (IRR) and Net Present Value

(NPV) obtained from cash flow analysis to arrive at optimum

scale of E-waste management operations. The next step

included summary mapping of the sensitivity analysis

versus the three business models under the discussed

regulatory regime. Further, standard strategic evaluationtechnique of Strength, Weakness, Opportunities and Threat

(SWOT) analysis has been used to identify the business model

for implementation.

III.

RESULTS AND DISCUSSIONS

Year 2005 E-waste inventory generation trends shown in Fig.

1 indicate significant increase in E-waste generation beyond

year 2011 resulting in six year period for policy and regulatory

interventions and establishment of E-waste management

infrastructure in the country [1]. An evaluation of policy and

regulatory environment shows declaration of National

Environment Policy in 2006 followed by publication of E-

waste guidelines in 2008 and amendment of Hazardous Waste

(Management, Handling and Transboundary Movement)

Rules [1] [5] [6]. National environment policy emphasizes

development of an action plan for development and

implementation of viable models of public-private

partnerships for setting up hazardous waste management

systems in India. E-waste was partly included in the schedule

IV of Hazardous Waste (Management, Handling and

Transboundary Movement) Rules 2008 [6]. The existing rules

require authorization from respective state pollution control

E-waste Business Model, Policies and

Regulations in India

Amit Jain1

E


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board under Air; Water Act and Hazardous Waste

(Management, Handling and Transboundary Movement)

Rules 2008 and environmental impact assessment (EIA)

clearance from ministry of environment and forest (MoEF),

Government of India for establishing E-waste recycling

facility. This regulatory intervention has triggered legal

establishment as a registered recycler of an E-waste

dismantling and recycling facility in India.

In Maharashtra, E-waste generation estimates from personal

computers (PC) is expected to increase from 9,135 tons in

2008 to 81,448 tons in 2020.The total E-waste generation from

PC in MMR is expected to increase from 5,260 tons in 2008 to

46,903 tons in 2020. Any recycling facility cannot be designed

on 100% E-waste capture rate of E-waste generation.

Assuming 50% E-waste capture efficiency, it is expected that

E-waste generation from Maharashtra will range from 4568

tons in 2008 to 40,724 tons in 2020. This provides the basis of

designing first and second level E-waste recycling facility at

MMR with a capacity of 5,000 tons per year during first phase

and an additional capacity addition of 5,000 tons per year

during second phase after two years. ELCINA, industry

associations for electronics have estimated thatservice/commercial sector accounts about 80% of the total

market penetration of computer and IT hardware in India.

ELCINAs report on consumers behavior for E-waste

summarize that at household level, 65% of the individuals

look for best monetary or exchange value for their old

products. Only 2% of individuals think of the impact on

environment while disposing off their old electrical and

electronic equipment. At corporate/ business level, 60% of the

companies/ offices look for best monetary value for their old

computers while only 6% of the organizations were found to

be disposing off their computers in environmentally friendly

manner. 11% of the replaced computers enter E-waste stream

through scrap dealers, 21% of the replaced computers enter E-waste stream through second hand market while 48% of the

replaced computers enter E-waste stream exchange and buy

back scheme [7]. Therefore, the major E-waste items, which

are expected to drive the development (planning / design /

implementation) of E-waste management system in India will

be personal computers. Since 50% of the computers (E-waste)

replaced through exchange and buy back scheme lands up in

formal sector at the retail outlet, therefore, this quantity can be

easily captured and recycled in the formal sector. As the

chances of prevention of leakage are higher at the retail outlet

in the E-waste material flow chain, E-waste collection system

should start at this point. This analysis indicates that 50% E-

waste collection efficiency under B2B (Business to Business)in service/commercial sector can initially support recycling

plant design capacity of 25 tons per day with 100% capacity

expansion in the fourth year and 100 tons per day in the tenth

year. Three types of E-waste collection mechanism at

household, commercial, corporate levels and in cyberspace

have been proposed to capture 50% E-waste considering

consumers preference to get the best value of their old

products. Initially, collection mechanism of recyclers will

drive the E-waste collection and transportation system to

minimize its leakage, which is expected to be gradually

supported by collection mechanism for households and

commercial sector under emerging EPR regime.

The proposed E-waste recycling system as per E-waste

guidelines will consist of first, second and third level of

treatment technology, where third level treatment is limited to

precious metal recovery. A gap analysis of treatment

technology indicates that precious metal recovery technology

from E-waste recycling is lacking in India.Option analysis ofsmelting and hydrometallurgical based technology options,

which are available for precious metal recovery under the

existing circumstances in Maharashtra/India, has been carried

out and summarized in table 1. This analysis indicates that a

high capital intensive and large scale of operation is required

for smelting of E-waste fraction. Literature cites that one of

such facility in Europe has treated about 300,000 tons per

annum of input raw material and has posted 3.8 billion

turnover during year 2007 [8]. In this facility, E-waste is one

among 200 different types of input raw material and

contributes only 10 % of the total input. The input E-waste

raw material to such facility is in the form of printed circuit

board. It may be noted that even in the best of E-waste

collection scenario with 90% collection efficiency, India willbe able to generate about 3,60,000 tons of E-waste. If printed

circuit board constitutes about 10% of the E-waste collected

then only 36,000 tons of raw material is available for recycling

in the best case scenario. This amount is not adequate to

sustain smelting based metal recovery facility, which will

require other different types of metal waste along with E-

waste for recycling. Further, 90% E-waste collection

efficiency has not been achieved even in best of E-waste

management system elsewhere. In such scenario, if the

decision criteria are applied to only E-waste management in

India then second option of hydrometallurgical/

electrowinning for precious metal recovery appears to be

viable. Even in such scenario, the scale and timing ofestablishment of such facility needs to be determined. This

will be linked to E-waste inventory and availability of raw

material.

Financial viability (IRR/NPV) for two scenarios with scenario

1 consisting of first and second level of treatment and scenario

2 consisting of first, second and third level treatment

considering business risks show week viability with IRR value

lower than 25% and a payback period of 9 to 10 years. The

project is most sensitive to land prices followed by interest

rates, customs duty, subsidy and octroi with an incremental

IRR improvement ranging from 5 % to 25 %. This analysis

also indicates that if lower quantities of PC are dismantledthen financial viability goes down significantly, thereby

recommending higher incentives to white goods recyclers.

Financial viability is also sensitive to input raw material and

output price fluctuations.

At operational level, conventional E-waste recycling model

and EPR based model are the two extreme models with PPP

model falling as an interim intervention [9] [10]. SWOT

analysis of both the extreme models shows that regulatory

intervention and government participation is required in their


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implementation. Further, potential of leakage exists in all the

three models. Though EPR system offers the potential of

reduction of leakage of waste to informal sector, it is not

100% foolproof. The major difference in the implementation

of the two models is the money flow i.e. who pays

whom. In Indian context, the implementation of EPR system

will require a complete shift in consumer behavior.

Summary mapping of sensitivity analysis versus the three

models is shown in table 2. The mapping indicates that a cleartrade off is required between the government participation

in terms of land/ subsidy/ customs duty & octroi waiver/

income tax rebate/ interest rate rebate and input raw material

cost, rights to sell recovered material and recycling fee.

Further, the timing of this trade off is linked to time taken to

shift consumer behavior from money receiver to money

payer. This provides the basis for either supporting the

conventional recyclers for a particular time period or lead to

development of PPP model.

IV.

CONCLUSIONS

The major factor for implementing PPP model is the level

of government participation, which can be in terms of

provision of land on concession basis and/ or equity

partnership. Further, user fee or service fee collected by

the government under this model can be in the form of annuity

transferred from the government to the recycling project

operator every year. The recovery of this fee can come either

from tax collected or from the revenue retained by the

company or a combination of both. The possible options for

levying this user fee can be the point of transaction/ sale,

which will prevent its leakage to informal sector. This will

also deter business/ commercial/ formal sector to sell E-waste

to informal sector. The collected user fee can be transferred toa fund specially created for E-waste recycling, which is either

managed by the government agency or an independently.

Money from this fund can be transferred to the recycler as per

approved annuity, based on statement of accounts submitted

by the recycler to regulator. One of the major advantages of

this mechanism could be that this user fee can also be levied at

the time of sale of brand new electrical and electronic

equipment and transferred to the same fund in case of

implementation of EPR regime. The timing of this transfer

will be in line with PPP contract conditions, when government

entity prefers to exit from the model and transfers all its roles

and responsibilities to other entity in EPR regime. A rough

estimate of this exit has been estimated to be eight to ten years

in India. Therefore, PPP model can serve as a viable transition

mechanism to an EPR based regime for E-waste management

in Maharashtra and India.

REFERENCES

[1] Central Pollution Control Board (CPCB). Guidelines for

Environmentally Sound Management of E-Waste. CPCB,

Ministry of Environment & Forests, Delhi, India, 2008.

[2] Maharashtra Pollution Control Board, Report on

Assessment of Electronic Wastes in Mumbai Pune Area,

Mumbai, India, March 2007.

http://mpcb.gov.in/ewaste/ewaste.php

[3] Amit Jain and Rajneesh Sareen; E-waste assessment

methodology and validation in India, Journal of Material


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Cycles and Waste Management, Volume 8, Number 1 /

March, 2006, Springer-Verlag.

[4] Chapter 3: Current Practices of WEEE/E-waste

Management,E-waste, Volume II, E-waste Management

Manual, UNEP, DTIE,IETC, Osaka/Shiga, Dec 2007

[5] Government of India, Ministry of Environment and

Forests, National Environment Policy 2006, Delhi, India. 18th

May 2006. http://www.envfor.nic.in/nep/nep2006e.pdf

[6] Hazardous Wastes (Management and Handling) Rules (asamended on 6/1/2000,21/5/2003 and 2008).The Gazette of

India, No. 465, 28/7/1989, 1989.

[7] ELCINA Electronic Industries Association of India. Study

on Status and Potential for E-waste Management in India,

Department of Scientific and Industrial Research (DSIR),

Government of India, India, February 2009.

[8] Johri Rajesh, E-waste: Implications, Regulations and

Management in India and Current Global Best Practices,

TERI Press, 2008

[9] Extended producer responsibility in a non-OECD context:

The management of waste electrical and electronic equipment

in India, Panate Manomaivibool, Resources, Conservation and

Recycling 53 (2009) 136144.

[10] PF II Division, Department of Expenditure, Ministry ofFinance, Government of India, Guidelines for formulation,

appraisal and approval of Public Private Partnership (PPP)

Projects costing less than Rs.100 Crore, India.

http://www.pppinindia.com/pdf/guidelines_projects_lessthan_

hundred_crore.pdf

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