Some Learning’s from the establishment of the first pan-European WEEE Compliance

Scheme

Hans A. Korfmacher, Vice President External Relations, ERP

Director Environmental External Relations Gillette GBU, P&G

PSI Conference, San Francisco30th May, 2007

ERP 6-2006

Thanks for the opportunities

I would like to thank all the people involved in the development of ERP in the last five years.

Thanks to the innovative power and creative spirit of the different ERP teams in many European Countries, the energy and confidence of the founding and member companies to support the new pathways with financial and human resources, it was possible to create and discover a new pathway to operate take back structures. The great work and investment of the General Contractors to ERP enabled the success of implementation and paved the road.

This presentation is made with the purpose to share the experiences of five years innovation with those, who face the same or similar challenge on WEEE related subjects and who have the desire of continuous sustainability for the benefit of consumers, the society , the environment and the economy.

ERP 6-2006

Agenda

1. ERP Mission & Objectives

2. WEEE Take Back Scheme Options

3. ERP Organisation, Business Model and Achievements

4. Key Learnings

5. Sustainable Waste Resource Management

ERP 6-2006

ERP Mission

The activities we start now will impact

companies for a long time.

We need maximum flexibility to enable

best business practice and to allow mistakes

to be corrected.

ERP 6-2006

Scope of EU WEEE Directive

All electrical appliances which could end up in a municipal waste stream or which are non-industrial, but professional equipment and who need electricity to performe their primary function:■ 10 product categories such as

Large Domestic Appliances (LDA) = dish washers, washing machines, oven, heater

Cold Appliances = fridges, airconditioner, freezer Small Domestic Appliances = hairdryers, toothbrushes, shavers,

coffemaker etc. IT and Telecom= PCs, server, monitore, telefone, fax, all

assecories etc CE= Audio, Video, TV Gardening, Toys, Sports, Medical, Control devices, automatic dispenser

ERP 6-2006

Treatment & Recycling

Households Transport

Municipalities / Retailer

Reportingto Government

Responsibility of producer

Monopolistic

Consortium(national *)

very often run by associations

WEEE Take Back Process from Private Households

Operational alternatives: old- fashion way

National Monopolistic Consortia are less efficient and

Have no interest to improve process, service and cost.

ERP 6-2006

Treatment & Recycling

Households Transport

Municipalities / Retailer

Reportingto Government

Responsibility of producer

Monopolistic

Consortium(national *)

very often run by associations

WEEE Take Back Process from Private Households

ERP-Take Back System

WEEE-Take Back System B

WEEE-Take Back System A

Competition between Compliance Schemes makes the

market forces available for continues improvement of

process, services and prices.

Operational alternatives: innovative way

ERP 6-2006

0 €

50 €

100 €

150 €

200 €

250 €

300 €

350 €

400 €

FY

199

9

FY

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FY

200

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FY

200

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FY

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FY

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FY

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5E

stim

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€ / t

End of ‚

Green D

ot‘ Monopoly

Example: Packaging Take Back Cost in Germany

ERP 6-2006

Scope: 10 countries, 5 WEEE categories, 480.000 tons

*

Conclusions:

A pan-European take back system increases competitive pressure to all compliance schemes with the result

Reduction of operational cost: > 30%

Reduction overhead cost: 70-80%

Conclusions:

A pan-European take back system increases competitive pressure to all compliance schemes with the result

Reduction of operational cost: > 30%

Reduction overhead cost: 70-80%

Business Case Analysis 2004 by Accenture

ERP 6-2006

ERP outsources all operational activities to two “General Contractors”.

ERP General Contractor achieve always the best competitive price (per country/ product group).

ERP applies and holds license to be a registered “WEEE Compliance Scheme”.

In order to maintain competition between take back system ERP will never be dominant in any market.

ERP WEEE Compliance Schemecreated in November 2004

as a branded, totally outsourced, first everpan-European WEEE compliance scheme.

ERP Principles

ERP 6-2006

ERP Service in ALL Europe

Agent Model operated byOne-WEEE Service

ERP affiliated country Operated by NERA

France

Spain

UK

Geodis Operation

CCR Operation

Germany

Austria

Italy

Poland

Ireland

Portugal

European Recycling Platform as first ever pan-European Take Back System established.

2006: 7 countries in operation, > 800 User companies, > 100.000 t WEEE processed.

Limited company based in Paris.Shareholder: P&G Braun, Electrolux, HP, Sony

2007: All Europe in operation, > 1000 User companies, > 200.000 t WEEE processed.

ERP 6-2006

ERP Board

GCs

Coordination office (BRU)

Other vendors

Umberto Raiteri

Christophe Pautrat

CEO

COON. Magaraggia

Country G.M.s

CFO

Management Structure

ERP 6-2006

Key Learnings

I. Products with value are managed by the market and don‘t need compliance schemes.

ERP 6-2006

Value is managed by the market

■Large Domestic Appliances are managed by the market (scrap dealers and shredder companies) and compliance schemes are de-facto not involved.

> 90% of LDA in Germany are sold by the municipalities to scrap dealers for approx 100 €/t

> 95% of LDA in Spain are managed by the metal industry

E-Waste contains significant material resources, which establish a value in the global raw material market. With establishment of

Competitive market structures – limited administration, technology,recycling capacity, infrastructure -

the market enables effective and competitive recycling take back operations financed out of the material value.

E-Waste contains significant material resources, which establish a value in the global raw material market. With establishment of

Competitive market structures – limited administration, technology,recycling capacity, infrastructure -

the market enables effective and competitive recycling take back operations financed out of the material value.

ERP 6-2006

Waste Resource Strategy

■ Waste with a value follows the money

Metal: global steel market demand has created a situation of selling metal scrap material (cars, washing machines, etc) > 100 $/ton.

GSM have a value of > 2$/pc due to precious metals and Co in Li-Ion-battery

PC and Laptop, Copy machines have high re-use value – which needs to be certified

Silveroxid button cells (watches) have high value due to Ag

Political and operational objective should be to set rules, which allows to increase value of material and allow to manage waste with

market instruments.

Political and operational objective should be to set rules, which allows to increase value of material and allow to manage waste with

market instruments.

ERP 6-2006

Waste with Value

Households

e.g.•Cars•LDA•Computer•Copiers•GSM•Li-Ion battery

Collection

Production

Quality Control

FinanceValue pays

for the processFree market

Sustainable Waste Resource Management

ERP 6-2006

Key Learnings

II. Professional and sufficient recycling capacities in a competive recycling industry are necessary to achieve sustainable performance.

ERP 6-2006

Competitive Recycling Capacity necessary

■ Example Fridge Recycling France has had no fridge

recycling operations in 2006. All fridges had to be exported to other countries to ensure propper CFC recovery: concequence: high cost for fridge recycling 2006: 260 €/t

■ Germany has sufficient recycling capacity with competition between recycling companies: consequence: low cost with high quality for fridge recycling:

130 €/t

Only when sufficient recycling capacities - which enableeffective and competitive recycling - are available inthe market, take back operations can be effective.

Only when sufficient recycling capacities - which enableeffective and competitive recycling - are available inthe market, take back operations can be effective.

ERP 6-2006

Key Learnings

III. Some E-Products contain environmentally critical substances. The management of these requires quality management with legislative

frame conditions.

ERP 6-2006

Management of critical substances

■Removal of CFC from fridges is important to protect the climate.

■CRT glasses contain hazardous substances, which need to be removed and treated.

■Rechargeable batteries contain relevant substances (Cd, Co, Pb) which requires management

Quality control and enforcement are important to achieve sustainable performance of take back operationsand to have same market condition for all players

Tide quality control mechanism with regulative backing is importantto manage critical substances in E-Waste.

Quality control and enforcement are important to achieve sustainable performance of take back operationsand to have same market condition for all players

Tide quality control mechanism with regulative backing is importantto manage critical substances in E-Waste.

ERP 6-2006

Management of critical substances

■The Restriction of Hazardous Substance Directive (RoHS) requires not to use certain critical substances. ■This enables to develop further markets for the recovery of „clean E-

Waste“. ■To design products, which fit best into integrated waste management

structures using market forces, is an incentive for producers.

To ban substances where technically possible is a goodapproach to „clean“ products and future E-Waste and to move

towards „sustainable products“.

It would be good to achieve same RoHS conditions around the globe.

To ban substances where technically possible is a goodapproach to „clean“ products and future E-Waste and to move

towards „sustainable products“.

It would be good to achieve same RoHS conditions around the globe.

ERP 6-2006

Waste Resource Strategy

■ Its important to implement a strategy that increases the value of waste

Waste need to be „cleaned“ from materials, which decrease value of waste.

Infrastructure need to be developed in order to enable the recovery of value from waste

■ Hazardous materials need to be kept out of stream by Ban and substitutiuon Seperate collection of materials, in which substances can not be

substituted

ERP 6-2006

CFC containg products

■CFCs and similar cooling agents in refridgerators, airconditioners and other cooling appliances have a significant impact on climate.

■CFC containing products need to be seperatly collected and treated in order to seperate, recover and minimize emissions of CFS.

Large quantities are available for collection (fridges, airconditioners)

■Sustitution of CFCs is technical standard. Promotion can be done by awarding „non collection obligation“ or public procurement.

ERP 6-2006

Hg, Pb, Cd- Management:

■Limit use of Hg, Cd, Pb in same applications as the EU RoHS Directive and Battery Directive ( e.g. Appliances, fluorescent & energy saving lamps, switches, thermometer, temperature control devices, button cells, rechargeable batteries)

■Create „Hg containing product waste“ , „Pb- containing product waste“ and „Cd-containing product waste“ stream“ with mandatory seperate collection in the responsibility of producers.

■Promote sustitution of heavy metals by awarding „non collection obligation“ or public procurement to those producer and products, who have „cleaned“ their products based on the principle of individual producer responsibility.

ERP 6-2006

Individual Producer Responsibility (IPR)

■WEEE Directive stipulates, that each producer shall be responsible for the take back of its own products – sold after 8-05- only.

■Such individual producer responsibility is important to promote design changes towards sustainable product design, as it will allow to use „natural“ market forces. It provides producer with better designed products and competitive advantage.

ERP promotes the principle and the development of the IndividualProducer Responsibility. IPR requires development of

new innovative processes.

We ask all countries to focuss on IPR concepts and to help to eliminate the virus of „collective systems“.

ERP promotes the principle and the development of the IndividualProducer Responsibility. IPR requires development of

new innovative processes.

We ask all countries to focuss on IPR concepts and to help to eliminate the virus of „collective systems“.

ERP 6-2006

Households

GovernmentalControl

Collection

Ban of substances or separation of Waste Streams

e.g.A) Hg products •Hg button•Hg thermom.B) BulbsC) Pb-productsD) Cd-productsE) Hazardous Chemicals

Production

Finance Producer Responsibility

Sustainable Waste Resource Management

ERP 6-2006

Key Learnings

IV. Logistic Optimization is key in the process to increase efficiency of process and minimize

transport and transport emissions.

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Collection Optimization

■Seperate collection of items such as paper, wood, plastic, oils, appliances, batteries, tyres, .... Creates significant transportation emission, which can outblance the environmental benefit from the resource recovery.

■Collection of waste from consumer and households needs to be optimized to generate high quality of material stream and large quantities (Integrated Waste Management).

■Municipalities and Retailer play an important role in the collection process of such „integrated materials stream“ in order to generate large quantities.

Municipal drop-of center , retail out-lets, gasoline stations and other location, to which citizen travel by car „naturally“ are ideal drop off point to minimize transport efforts (CO2 emissions) and to consolidate material streams

ERP 6-2006

Integrated Waste Collection

■ Examples for material streams to be collected together:

Fe/Zn waste: Fe-scrap, Zn plated products, Alkaline batteries, washing machines, cars

Cu waste: Cu containing metal scrap Paper/ Cardboard Plastics: seperated or mixed Bio-Organic: gardening, food

■With increasing raw material demand the market price of the collected material will finance major part of collection and recovery.

■ Integrated Waste Management Systems are best to be operated by or on behalf of public waste authorities.

ERP 6-2006

Households

Collection

Integrated Waste Streams

e.g.A) metal scrap•Appliances•Alkalines•Metal productsB) PlasticC) PaperD) Organic

Production

Way of treatmentDepend on local technology

Finance

Sustainable Waste Resource Management

Value pays for the process

Free market

ERP 6-2006

Key Learnings

V. Competition between take back schemes ensure continues improvement of service

levels, high quality and best price

ERP 6-2006

Take Back Schemes

■Take Back Schemes are only necessary for those type of products, which are not handled by

Market drive process Integrated Waste Management Structures

■Regulations / Laws are necessary to regulate the producers take back obligations and the collection responsibilitiy of municipalities and retailer, the compliance obligations, registration and reporting of producers.

■Regulations should promote the competition between take back schemes and not intervene in the financing mechanism.

ERP 6-2006

ERP has create Competition between Take Back Schemes

Number of Take Back SchemesCountries

> 10 expectedUK

8 systems Spain

2 systemsPortugal

2 systemsPoland

7 expectedItaly

2 systemsIreland

> 20 service systemsGermany

3 systemsFrance

4 systems Austria

ERP 6-2006

Competition to drive cost down e.g Austria

Q205 Q305

0.10 €

0.50 €

avg

. co

st p

er k

g

sold

Austria 1

Austria 2

ERP Austria

0.30 €

Q405

Austria 3

* For Small Appliances < 50 cm

0.20 €

0.40 €

0,14 0,16

0,16

0,11 0,098

Q106 Q306

0,075

Q107

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Key Learnings

VI. Financing process should follow market conditions and should not be centralized.

ERP 6-2006

■Any centralized funding, trading, commercial price fixing process limits / destroys the competition between compliance schemes and needs to be avoided:

Central fixed fees per unit sold (e.g. Ireland, France) block the full competitive dynamic between schemes.

State fund systems, where producer pay a fee to the government create only administrative burden and provide no efficiency.

Governments should not be involved in price finding, as they slow down market dynamic.

Financing

ERP 6-2006

Key Learnings

VII. Legislation is required to define the same conditions for all producers who need to be

identified (registered) and whose compliance is monitored.

ERP 6-2006

■ If take back for certain products becomes mandatory, registration of producers is key to ensure same market conditions for all producers.

■ Registration organizations should be independent from take back organization (avoid conflict of interest) and should have power for enforcement (penalize non-performing producers)

■ Each producer’s obligation should be based on a weight related market share.

■ Producer or their compliance scheme need to report their compliance performance (collection tonnage, recycling targets)

Registration

ERP 6-2006

Summary : Sustainable Waste Resource Strategy

■Waste is a potential resource for raw materials.Waste with value follows money flow.

■ Value of waste needs constantly to be improved to maximize resource production.

■ Hazardous materials need to kept seperately to enable waste resource recovery.

■ Collection operations needs to be optimized to generate good quality and high quantity of waste resources.

■ All operations should follow competitive and market principles.

■ Competition between compliance schemes is best management practise.

ERP 6-2006

Products with Value

Households

e.g.•Cars•LDA•Computer•Copiers•GSM•Li-Ion battery

GovernmentalControl

Collection

Integrated Waste Streams

Ban of substances or separation of Waste Streams

e.g.A) metal scrap•Appliances•Alkalines•Metal productsB) PlasticC) PaperD) Organic

e.g.A) Hg products •Hg button•Hg thermom.B) BulbsC) Pb-productsD) Cd-products

Production

Way of treatmentDepend on local technology

Quality Control

FinanceValue pays

for the processFree market

Producer Responsibility

Value pays for the process

Free market

Sustainable Waste Resource Management

ERP 6-2006

Waste Resource is strategic global capital

■Global demand and lack of new sources for resources make waste a strategic global capital (such as crude oil).

Limitation of Resources is a limitation of industry production.

■Political objective should be to promote and develop innovative technlogies and creation of new companies / markets for resource recovery from waste.

Export of waste into developing countries is a loss of capital Intelligent solutions need to be developed with universities,

technology centers etc.

ERP 6-2006

Waste Resource Policy Development

■Up to now waste was a cost factor to the public. Governmental stratgies have been to impose cost via industry to consumer and to claim tax reduction program (which never happened).

■To become a „sustainable waste resource country“ governments need to shift focus towards „mining the resource opportunities“.

■Producers role needs re-definition in order to promote design of products, which fit into a „sustainable waste resource strategy“. The old „European Producer Responsibility“ of making producer only a „money transfer station“ is not sustainable.

ERP 6-2006

Key Learnings

Final Recommendation:It took 4 years to develop and implement

operational structures of ERP. It is important to be flexible, because mistakes will be made.

ERP 6-2006

■Website: www.erp-recycling.org

Thank You !Thank You !