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STUDY ON THE PROGRESS OF THE IMPLEMENTATION AND IMPACT OF DIRECTIVE 94/62/EC

ON THE FUNCTIONING OF THE INTERNAL MARKET:

FINAL REPORT

Volume I – main report

6 May 2005

David Perchard Perchards, Gill Bevington St Albans, UK Fred Soomers FFact Management Consultants, Kees Wielenga Rijen, The Netherlands Raphael Veit SAGIS Ltd,

Sliema, Malta


ON THE FUNCTIONING OF THE INTERNAL MARKET:

FINAL REPORT

INDEX

VOLUME I EXECUTIVE SUMMARY I. INTRODUCTION … … … … … … … … i II. OVERALL CONCLUSIONS … … … … … … … ii III. IMPACT OF THE DIRECTIVE ON RECYCLING, REUSE AND WASTE

DISPOSAL … … … … … … … … … iii

Recycling rates and tonnages for disposal Cost of meeting the targets

The impact of measures to encourage reuse IV. MARKET ACCESS ISSUES … … … … … … … vii

The Essential Requirements and the CEN standards Infringement proceedings and other possible trade barriers and distortions of

competition V. SPECIAL MEASURES FOR BEVERAGE CONTAINERS … … … ix

How successful have market intervention measures to protect refillables been? Market share quotas for refillables Mandatory deposit systems for non-refillables The German arrangements

Environmentally advantageous (and disadvantageous) packaging VI. INTERNAL MARKET IMPLICATIONS OF DIFFERENT NATIONAL

APPROACHES TO IMPLEMENTATION OF THE DIRECTIVE … … xiii

VII. PACKAGING TAXES (OTHER THAN BEVERAGE CONTAINER TAXES) xiv VIII. ECONOMIC IMPACT OF THE NATIONAL RECOVERY ORGANISATIONS xv Recovery organisations and the Internal Market Producer responsibility and competition policy Matching the supply of recyclate with demand IX. COSTS AND BENEFITS OF FURTHER HARMONISATION … … xvii

Support for reusable packaging Anti-litter measures Does “one size fit all”?

MAIN REPORT 1. INTRODUCTION 1.1 Background … … … … … … … … … 1 1.1.1 The Directive … … … … … … … … 1 1.1.2 Terms of reference for this study … … … … … 3 1.2 Scope of the report … … … … … … … … 5 1.3 Structure of the report … … … … … … … 6 2. IMPACT OF THE DIRECTIVE ON RECYCLING AND WASTE DISPOSAL 2.1 Background … … … … … … … … … 8 2.2 Development of recycling before and after introduction of the Directive … 9 2.3 The Directive’s impact on recycling rates up to the 2001 deadline … … 11 2.3.1 Methodology … … … … … … … … 11 2.3.2 The scenarios … … … … … … … … 12 2.3.3 Rationale for our hypothetical recycling rates and tonnages … … 13 2.3.4 Assumptions … … … … … … … … 20 2.3.5 Outcome of the scenarios … … … … … … 21 2.4 Likely future impacts of the Directive … … … … … … 24 2.4.1 Methodology … … … … … … … … 24 2.4.2 The baseline scenarios … … … … … … … 25 2.4.3 The no-Directive scenarios … … … … … … 26 2.4.4 Projected impact of the Directive 1997-2008 … … … … 27 2.5 National measures to encourage reuse systems … … … … 29 2.5.1 The policy options … … … … … … … 29 2.5.2 Impact on reuse … … … … … … … 30 2.5.3 Impact on recycling and disposal … … … … … 31 2.6 Packaging prevention and substitution … … … … … 33 2.7 Economic impacts … … … … … … … … 34 2.7.1 Introduction … … … … … … … … 34 2.7.2 Methodology and results … … … … … … 34 2.7.3 Distributional consequences … … … … … … 36 2.8 The impacts of cross-border shopping … … … … … 42 2.8.1 Introduction … … … … … … … … 42 2.8.2 Impact of taxes and duties on retail prices … … … 43 2.8.3 Impact of cross-border shopping on deposit systems… … … … 44 2.8.4 Impact of cross-border shopping on recovery and recycling … … 44 2.8.5 Cross-border shopping elsewhere in the Community … … … 46

3. MARKET ACCESS ISSUES 3.1 The Essential Requirements and the CEN standards … … … … 47

3.1.1 Background … … … … … … … … 47 3.1.2 Enforcement of the Essential Requirements … … … … 48 3.1.3 Possible trade barriers arising from different legal obligations … … 50 3.1.4 Impact of the Essential Requirements on producers … … … 54

3.2 Trade barriers and distortions of competition … … … … 56 3.2.1 The notification procedure … … … … … … 56 3.2.2 Infringement proceedings … … … … … … 56

3.2.3 Measures subject to infringements and measures amended during the notification procedure … … … … … … … 57

3.2.4 Belgium … … … … … … … … 60 3.2.5 Czech Republic … … … … … … … 62 3.2.6 Denmark … … … … … … … … 63 3.2.7 Finland … … … … … … … … 66 3.2.8 Germany … … … … … … … … 67 3.2.9 Ireland … … … … … … … … 72 3.2.10 Italy … … … … … … … … 72 3.2.11 Luxembourg … … … … … … … … 73 3.2.12 Malta … … … … … … … … 73 3.2.13 Netherlands … … … … … … … … 74 3.2.14 Norway … … … … … … … … 76 3.2.15 Portugal … … … … … … … … 77 3.2.16 Slovakia … … … … … … … … 78 3.2.17 Spain … … … … … … … … 78 3.2.18 Sweden … … … … … … … … 79 3.2.19 Marking requirements … … … … … … … 79

4. NATIONAL RULES SPECIFIC TO BEVERAGE CONTAINERS 4.1 Policy objectives … … … … … … … … 81 4.2 Market share quotas and other refill protection measures … … … 82

4.2.1 Germany … … … … … … … … 82 4.2.2 Portugal … … … … … … … … 85 4.2.3 Austria … … … … … … … … 86

4.3 Deposit systems for beverage containers … … … … … 89 4.3.1 Introduction … … … … … … … … 89 4.3.2 Deposit systems for refillables … … … … … … 89 4.3.3 Deposit systems for non-refillable beverage containers … … … 90

4.4 Assessment of deposit systems for non-refillables from an Internal Market perspective … … … … … … … … … 103 4.4.1 Criteria … … … … … … … … … 103 4.4.2 Cost of deposit systems for non-refillables … … … … 103 4.4.3 Administrative burden for producers and importers … … … 107 4.4.4 Marking requirements … … … … … … … 108 4.4.5 Restrictions on pack design … … … … … … 109 4.4.6 Distortions of competition within national markets which arise from mandatory

deposits on non-refillable beverage containers … … … … 110 4.4.7 Evidence of barriers to trade arising from mandatory deposits on non-refillable beverage containers … … … … … … … 113 4.4.8 Refill protection and cross-border trade … … … … … 116

4.4.9 Impact of cross-border shopping on deposit systems for non-refillable beverage containers … … … … … … … … 118

4.4.10 Impact of deposit systems for non-refillable beverage containers on consumers 120 4.4.11 Impact of deposit systems for non-refillable containers on packaging recovery

organisations … … … … … … … … 121 4.4.12 Risk of fraud … … … … … … … … 122

4.5 Conclusions … … … … … … … … … 124 4.5.1 Applicability of the Nordic model to other countries … … … 124 4.5.2 Deposit systems for non-refillable beverage containers and competition … 125 4.5.3 Potential future impact of competition on deposit systems for non-refillable

beverage containers … … … … … … 128 4.5.4 The principal objections to mandatory deposit systems for non-refillable beverage containers … … … … … … … 129 4.5.5 Proportionality … … … … … … … … 130 4.5.6 Mandatory deposits for non-refillables – a possible way forward … … 134 4.5.7 Potential for international co-operation between deposit systems for non-refillable beverage containers … … … … … 139

5. IMPACTS ON THE INTERNAL MARKET OF DIFFERENT NATIONAL

APPROACHES TO IMPLEMENTATION OF THE DIRECTIVE 5.1 Legal requirements for recovery and recycling … …. … 142 5.2 Impact on the Internal Market of the non-mainstream legal structures … 143

5.2.1 Denmark … … … … … … … … 143 5.2.2 Netherlands … … … … … … … … 144 5.2.3 UK … … … … … … … … … 144 5.2.4 Conclusions … … … … … … … … 147

5.3 Taxes on packaging … … … … … … … … 149 5.3.1 Introduction … … … … … … … … 149 5.3.2 The objectives of packaging taxes … … … … … 149 5.3.3 Review of selected national taxes on packaging … … … … 149 5.3.4 Italian tax on polyethylene … … … … … … 153 5.3.5 Danish tax on PVC … … … … … … … 153 5.3.6 Taxes on certain carrier bags in Denmark and in Ireland … … … 154 5.3.7 Eco-taxes on non-refillable beverage containers in Belgium … … 155 5.3.8 Hungarian “product fee” on packaging … … … … … 159 5.3.9 Other packaging taxes in the new Member States … … … … 164 5.3.10 Conclusions on packaging taxes … … .. … … … 165

6. EVALUATION OF PRODUCER RESPONSIBILITY SYSTEMS 6.1 Evaluation of the systems in EU-15 … … … … … … 167 6.2 Impact of different legal requirements on the role and operation of packaging

recovery organisations … … … … … … … … 168 6.2.1 Producers’ legal obligations … … … … … … 168 6.2.2 Differences in national coverage … … … … … 175 6.2.3 Differences between the roles of the various national recovery organisations 177 6.2.4 The implications of these differences … … … … … 178

6.3 The fees charged by national recovery organisations … … … … 179

6.3.1 Overview of fees … … … … … … … 179 6.3.2 Impact on different players … … … … … … 181

6.4 The impacts on producers of inconsistent data reporting requirements … 185 6.4.1 Data reporting … … … … … … … … 185 6.4.2 Definition of packaging … … … … … … … 186 6.4.3 Differences in the scope of the recovery organisations … … … 187 6.4.4 Composites … … … … … … … … 189 6.4.5 Different material categories … … … … … … 195 6.4.6 Reusable packaging … … … … … … … 195 6.4.7 Different data formats … … … … … … … 196 6.4.8 The party responsible for reporting data … … … … … 197 6.4.9 Conclusions – recovery organisation reporting requirements … … 198

6.5 The impacts on producers of inconsistent marking rules … … … 200 6.5.1 Recovery organisation marking requirements … … … … 200 6.5.2 Difficulties arising from mandatory marking of the Green Dot … … 201 6.5.3 Difficulties arising for countries with no Green Dot organisation … … 202 6.5.4 Recovery organisation requirements for industrial packaging … … 203 6.5.5 Other marking requirements … … … … … … 204 6.5.6 Conclusions – marking requirements … … … … … 205

6.6 Recovery organisations and competition policy … … … … 206 6.6.1 Competition between recovery organisations … … … … 206 6.6.2 Improving competition within recovery organisations … … … 209 6.6.3 Conclusions – competition … … … … … … 211

7. IMPACT OF NATIONAL RECOVERY SYSTEMS ON THE WASTE MANAGEMENT

AND RECYCLING SECTORS 7.1 Introduction … … … … … … … … … 213

7.1.1 Household packaging waste … … … … … … 214 7.1.2 Transport packaging waste … … … … … … 215

7.2 Early impact of the German Packaging Ordinance … … … … 216

7.2.1 The creation of managed markets … … … … … 216 7.2.2 Paper and board … … … … … … … … 216 7.2.3 Plastics … … … … … … … … … 218 7.2.4 Glass … … … … … … … … … 218 7.2.5 Response by Germany’s neighbours … … … … … 218

7.3 Developments since the Directive was adopted … … … … 220

7.3.1 Overview … … … … … … … … 220 7.3.2 Targets exceeding the Directive’s maxima … … … … 220 7.3.3 Current market issues – paper & board … … … … … 222 7.3.4 Current market issues – metals … … … … … … 223 7.3.5 Current market issues – plastics … … … … … … 223 7.3.6 Current market issues – glass … … … … … … 224 7.3.7 Conclusions … … … … … … … … 228

7.4 Impact on energy recovery facilities … … … … … … 233

8. COSTS AND BENEFITS OF FURTHER HARMONISATION OF IMPLEMENTATION OF THE DIRECTIVE 8.1 Overview … … … … … … … … … 234 8.1.1 Where the Directive might do more to increase harmonisation … … 234 8.1.2 Possible omissions from the Directive … … … … … 235 8.1.3 Ensuring that the Directive remains compatible with other policy developments 236 8.1.4 The limits of harmonisation – does “one size fit all”? … … … 236 8.2 Measures to encourage reuse … … … … … … … 237

8.2.1 Quantifying packaging reuse … … … … … … 237 8.2.2 Amending Article 5 of the Directive … … … … … 239

8.3 Implications of a unified producer responsibility regime … … … 245

8.3.1 The Commission’s ideas … … … … … … 245 8.3.2 Model A: adapting the existing arrangements to EU/EEA targets directly

binding on companies … … … … … … … 245 8.3.3 Model B: companies to acquire tradable permits to comply with

EU/EEA targets … … … … … … … … 246 8.3.4 Model C: EU/EEA targets traded between Member States … … 249 8.3.5 Bilateral trading between national recovery organisations… … … 250

8.4 Impact of a switch from product-based targets to material-based targets … 251 8.5 Should all Member States be aiming for the same recovery and recycling targets? 253

8.5.1 Targets and derogations … … … … … … 253 8.5.2 Repak’s position … … … … … … … 253 8.5.3 The response of other stakeholders… … … … … … 256

9. STAKEHOLDERS’ VIEWS AND ARGUMENTS 9.1 Introduction … … … … … … … … … 257 9.2 Attendees at the stakeholder meeting … … … … … … 258 9.3 Material submitted by stakeholders on the interim report … … … 259 9.4 Summary of views expressed by stakeholders … … … … … 261 9.4.1 Environmental NGOs … … … … … … … 261 9.4.2 General industry associations … … … … … … 262 9.4.3 Packaging material manufacturers and packaging converters … … 264

9.4.4 Packer/fillers … … … … … … … … 267 9.4.5 Packaging waste compliance organisations … … … … 268

9.5 Material submitted by stakeholders on the draft final report … … … 271 9.6 Summary of stakeholder views on the draft final report… … … … 272 9.6.1 Environmental NGOs … … … … … … … 272 9.6.2 General industry associations … … … … … … 272 9.6.3 Packaging material manufacturers and packaging converters … … 273

9.6.4 Packer/fillers … … … … … … … … 275 9.6.5 Packaging waste compliance organisations … … … … 276

INDEX TO FIGURES Fig, 1 Glass recycling 1991-2001… … … … … … … … 9 Fig. 2 Aluminium and steel recycling 1991-2001 ... ... ... ... ... ... 10 Fig. 3 Paper & board recycling 1991-2001 ... ... ... ... ... ... 10 Fig. 4 Recycling rates 1997-2008 in EU-25 ... ... ... ... ... ... 28 Fig. 5 Germany – market share of refillable beverage containers (litres sold) … … 30 Fig. 6 Portugal – market share of refillable beverage containers (by number of containers sold) 30 Fig. 7 Sweden – market share of refillable beverage containers (in %) … … … 31 Fig. 8 Reasons for cross-border shopping by Belgian consumers … … … … 44 Fig. 9 % market share of refillable beverage containers in Austria, 2000-2003 … … 87 Fig. 10 Direction of beverage container flows … … … … … … 98 Fig. 11 Comparison of 2001 glass recycling rates in Denmark, Finland and Sweden with those in 5 non-deposit states … … … … … … … … 133 Fig. 12 Comparison of 2001 metal recycling rates in Denmark, Finland and Sweden with those in 5 non-deposit states … … … … … … … … 133 Fig. 13 Comparison of 2001 plastics recycling rates in Denmark, Finland and Sweden with those in 5 non-deposit states … … … … … … … … 134 Fig. 14 Impact of taxes, duties and Green Dot charges on mineral water prices in Belgium and neighbouring countries … … … … … … … 156 Fig. 15 Comparative prices for 1.5 litre spring water (private label) … … … 157 Fig. 16 Comparative prices for 1.5 litre soft drink (private label) … … … … 157 Fig. 17 Beer exports from Germany to Hungary (in hl), by pack type … … … 163 Fig. 18 Prices for Old Corrugated Cardboard in France, Germany and the UK, 1991-2004 (in £) 222 INDEX TO TABLES Table 1 Glass recycling … … … … … … … … 20 Table 2 Metal recycling … … … … … … … … 20 Table 3 Plastics recycling … … … … … … … … 21 Table 4 Paper & board recycling … … … … … … … 21 Table 5 Impact of Scenarios 2 and 3 on tonnages recycled in EU-15 … … … … 22 Table 6 EU population as at 1 January 2001 … … … … … … 22 Table 7 Impact of Scenarios 2 and 3 on tonnages recycled in EU-8/15 … … … 22 Table 8 Impact of Scenarios 2 and 3 on tonnages landfilled or incinerated without energy recovery in EU-15 … … … … … … … … … 23 Table 9 Impact of Scenarios 2 and 3 on tonnages landfilled or incinerated without energy recovery in EU-8/15 … … … … … … … … … 23 Table 10 Comparison of tonnages landfilled or incinerated without energy recovery in EU-15 under the three scenarios… … … … … … … … 23 Table 11 Comparison of tonnages landfilled or incinerated without energy recovery in EU-8/15 under the three scenarios… … … … … … … … 23 Table 12 Comparison of per capita tonnages landfilled or incinerated without energy recovery under the three scenarios, 2001… … … … … … … 23 Table 13 Projected recycling rates under the Directive (tonnes) … … … … 26 Table 14 Projected recycling rates without a Directive (tonnes) … … … … 26 Table 15 Impact of the Directive against no-Directive Scenario 2 … … … … 27 Table 16 Impact of the Directive on recycling tonnages and rates … … … … 27 Table 17 Impact of the Directive on disposal tonnages and rates … … … … 28 Table 18 Impact of the Directive on future recycling rates in the ten new Member States … 28 Table 19 Total financing need for packaging waste management for EU-15 … … … 35 Table 20 Overview of costs and benefits to particular sectors … … … … 37 Table 21 Public/private sector shares of collection and sorting costs for household packaging waste, 2001 … … … … … … … … … … 39 Table 22 Used packaging recovery tonnages funded by producers … … … … 40 Table 23 Expenses of the recovery organisations … … … … … … 41 Table 24 Relative price levels in Estonia and neighbouring countries, 2003 … … … 43

Table 25 Examples of retail prices in Finland and Estonia … … … … … 43 Table 26 Recycling tonnages required to meet Estonia’s 2012 targets … … … 45 Table 27 Issues where the Directive brought about changes in national policy in favour of free movement 58 Table 28 Issues resolved in favour of the Member States concerned … … … … 59 Table 29 Issues where the Directive or other EU legislation has failed to bring about change in national

policy in favour of free movement of goods … … … … … … 59 Table 30 Issues unresolved/cases still proceeding … … … … … … 60 Table 31 Market share of refillable beverage containers in Germany, 1991-2002 … … 83 Table 32 Portuguese market share quotas for refillables sold to households … … … 85 Table 33 Deposit system requirements for non-refillable beverage containers, 2004 … … 93 Table 34 Comparison of charges per non-refillable drinks container – deposit system versus recovery organisation costs … … … … … … … … 106 Table 35 Market share of beer production by container type, 2001 … … … … 113 Table 36 Market share of carbonated soft drinks by main container type, 2001 … … 114 Table 37 Breakdown of market in Germany for non-alcoholic drinks by container type, 2002-4 … 115 Table 38 Market share of imported beer (by volume) … … … … … 116 Table 39 Comparison of per capita beer consumption with the balance of trade … … 117 Table 40 Balance of trade in beer in EU-15 Member States, ranked according to per capita consumption … … … … … … … … … 117 Table 41 UK targets 2004-2008 … … … … … … … … 145 Table 42 Overview of taxes on packaging charged by EU-25 Member States … … … 150 Table 43 Belgian beverages – Price evolution per product and pack type since March 2004 … 158 Table 44 Evolution of Hungarian packaging tax rates, 1998-2005 … … … … 160 Table 45 New Hungarian unit-based packaging taxes … … … … … 160 Table 46 Targets related to individual compliers’ exemption from the product fee … … 161 Table 47 Conditions for exemption from the product fee for Öko-Pannon members … … 161 Table 48 Market share quotas for producers, 2005-2010 … … … … … 162 Table 49 Additional market share quotas for distributors … … … … … 162 Table 50 Evolution of beer exports from Germany to Hungary, 2000-2004 … … … 163 Table 51 Legal obligations for meeting recovery targets for packaging waste, and compliance requirements in practice (excluding deposit systems for beverage containers) … … 170 Table 52 Interseroh’s maximum and minimum waste management costs for transport packaging, 2003 184 Table 53 Beverage cartons and other composite packaging – legal requirements and recovery organisation rules … … … … … … … … 191 Table 54 Infringements and challenges to national legislation on marking in relation to Directive 94/62 and Commission Decision 97/129 … … … … … … 204 Table 55 Belgian targets for 2001-3 … … … … … … … 224 Table 56 Belgian glass recycling, 1997-2001 … … … … … … 225 Table 57 Belgian trade balance for cullet, 1995-2002 … … … … … 225 Table 58 Forecast UK glass tonnages, 2008 … … … … … … 227 Table 59 Reuse of packaging in Finland … … … … … … … 238 Table 60 Use of reusable packaging in Belgium … … … … … … 238 Table 61 Types of reusable packaging used in Belgium … … … … … 238 Table 62 Protection of refillable containers – some proportionality issues … … … 240 Table 63 Ktonnes additional packaging to be recycled under the proposed material-specific targets (2006 compared to 1998) … … … … … … … 249 Table 64 Deadlines to meet the recovery and recycling targets … … … … 253 Table 65 Origin of packaging placed on the Irish market (1999 data) … … … 254 Table 66 Attendees at the stakeholder meeting, 7 December 2004 … … … … 258 Table 67 Responses received during the consultation process … … … … 259 Table 68 Responses received on the draft final report … … … … … 271

VOLUME II CHAPTER 2: IMPACT OF THE DIRECTIVE ON RECYCLING AND WASTE DISPOSAL Annex A: Impact of the scenarios on tonnages Annex B: Economic and social impact assessment from the Pira/Ecolas study Annex C: Neighbouring countries with particular potential for cross-border shopping CHAPTER 3: MARKET ACCESS ISSUES Annex D: Summary of findings of Perchards and FFact reports on how companies have been

implementing the Essential Requirements for packaging Annex E: Infringements & challenges to national legislation in relation to Directive 94/62 Annex F: Infringements & challenges to national legislation on marking in relation to

Directive 94/62 and Commission Decision 97/129 CHAPTER 5: IMPACTS ON THE INTERNAL MARKET OF DIFFERENT NATIONAL

APPROACHES TO PRODUCER RESPONSIBILITY Annex G: Evolution of PRN and PERN prices in the UK Annex H: Recovery organisation and legislative reporting requirements CHAPTER 6: EVALUATION OF PRODUCER RESPONSIBILITY SYSTEMS Annex J: Overview of fees charged by packaging recovery organisations Annex K: Recovery fees – a “shopping basket” of typical products Annex L: Currency conversions

i


ON THE FUNCTIONING OF THE INTERNAL MARKET

EXECUTIVE SUMMARY

I. INTRODUCTION This study aims to address the following questions: • What impact has the Directive had on the Internal Market from an economic and social

point of view?

In particular, we were asked to examine trade barriers and distortions of competition created by national implementation measures, especially those relating to Article 5 (encouragement of reuse systems). We were also asked to compare current packaging and packaging waste management arrangements with those that might have existed in the absence of a Directive.

• Have the various national measures resulted in discrimination between domestic producers and importers of packaging?

• What are the costs of producer responsibility having been imposed only in some Member

States? • What are the costs and benefits of a further harmonisation of producer responsibility from

an Internal Market perspective?

This report is intended to complement the report which Pira International and Ecolas N.V. have completed for DG Environment, and should be read in conjunction with it. Its analysis is based on the legislative situation that existed in the EU on 31 April 2005, but currency conversions have been expressed at the rates effective on 28 September 2004.

ii II. OVERALL CONCLUSIONS We believe that in most respects, the Directive has worked very well. It has brought about a significant convergence between Member States’ recycling rates, and the notification procedure governed by Directive 98/34/EC has resolved many Internal Market issues before they became a real problem. While some national measures aimed at beverage containers have undoubtedly resulted in discrimination between domestic producers and importers of packaging, we have seen little evidence of this outside the beverage sector. However, there have been and still are serious Internal Market issues relating to beverage containers legislation, and industry stakeholders are very concerned that the growing trend to use taxation to drive packaging policy has serious potential to disrupt the Internal Market.

A report focusing on the Internal Market aspects of the Directive and on the market impacts of national implementation measures will almost by definition conclude that national interventions to influence choice of beverage packaging are unhelpful; it is for others to weigh these findings against the environmental issues involved and come up with an overall conclusion. The beverages sector has experienced a long period of legal uncertainty as a result of the lack of clarity of Article 5 of the Directive. Two European Court of Justice (ECJ) judgements delivered in December 2004 have laid down further ground-rules, but only time will tell whether this guidance is sufficient to resolve the existing problems and avoid future issues. We received very strong representations from industry stakeholders, drawing attention to the danger that Member States will see taxes as a way to introduce measures that give rise to barriers to trade or distortions of competition without risk of legal action from the Commission. There is already evidence that taxes are undermining the Internal Market objectives of the Directive, by protecting local producers or undermining rather than helping recycling efforts. Industry is urging the Commission to re-examine the impact of the packaging taxes that have been introduced, to determine whether these measures are indeed justified by the environmental objectives claimed, but the Commission services stress that its powers are limited, since Member States do not have to justify setting taxes at a particular level.

iii III. IMPACT OF THE DIRECTIVE ON RECYCLING, REUSE AND

WASTE DISPOSAL Recycling rates and tonnages for disposal The impact of the Directive on recycling has increased year by year and will continue to do so. By 2001 it had already led to a convergence between the packaging recycling rates in the front-running Member States and the other EU-15 countries, and convergence will continue as Member States work towards the second-stage targets set by Directive 2004/12/EC. The Directive is also prompting a big increase in recycling in the ten new Member States and in the other countries seeking EU membership.

The Directive required all Member States to take steps to ensure that recycling systems were set up and developed. Legislation had already been adopted in a few of them, and in others proposals were already under discussion. Data for the period before 1997 is extremely sketchy, but it is clear that even in 1991, when work on the Directive started, there was already a high level of recycling of transport packaging, and in some Member States recycling of glass and metal beverage containers also. For a variety of political and economic reasons, recycling developed further between 1991 and 1997. Most of the packaging recycling that took place during the 1990s cannot be attributed to the Directive, as more than two-thirds of it took place in seven Member States that either had legislation or would have introduced legislation anyway. 1 However, since implementation of the Directive began, recycling rates in the remaining EU-15 Member States and in the ten new Member States have been converging on the rates achieved by the front-runners:

• Thus, although the Directive increased recycling levels in EU-15 in 2001 by no more than 10%,

recycling rates rose by up to 30% in those eight Member States (“EU-8/15”) whose policies were stimulated by the Directive.

• Our projections to 2008 indicate that the tonnages recycled in EU-15 will continue to be about 10% higher than they would have been in the absence of a Directive.

• Meanwhile the ten new Member States must increase their combined recycling rate from 23% in

2002 to 40% by 2008 if they are to be on course to meet their second-state targets on time (assuming straight-line progress to their deadline dates, which range from 2012 to 2015, and weighting them according to population).

1 These seven Member States – Austria, Belgium, Finland, France, Germany, the Netherlands and Sweden – represent almost exactly half the population of EU-15.

iv Figure ES-1: Comparison of tonnages recycled in the Member States where the Directive has had little effect on recycling rates (EU-7/15) and those where it has had most effect (EU-8/15)

05000000

10000000150000002000000025000000

1997 2001

EU-7/15 actual EU-7/15 Scenario 2EU-8/15 actual EU-8/15 Scenario 2

We estimate that in 2001, the Directive resulted in a reduction of 10% in the tonnage of packaging waste for final disposal in EU-15. The reduction in packaging waste sent for disposal in EU-8/15 was perhaps closer to 15%. By 2008, even if the energy recovery rate remains constant, we would expect the Directive to have resulted in landfilling and incineration without energy recovery in EU-15 being 14%-15% lower than it would have been in the absence of a Directive. Figure ES-2: Comparison of tonnages disposed of in the Member States where the Directive has had little effect on recycling rates (EU-7/15) and those where it has had most effect (EU-8/15)

0

5,000,000

10,000,000

15,000,000

20,000,000

1997 2001

EU-7/15 actual EU-7/15 Scenario 2EU-8/15 actual EU-8/15 Scenario 2

Cost of meeting the targets Pira International and Ecolas 2005 have estimated that the additional costs of meeting the Directive’s targets, compared with no recycling at all, were € 0.27 bn in 1997 and € 0.61 bn in 2001. Since a large amount of recycling would have taken place even without the Directive, the incremental cost of the Directive would have been a maximum of € 50 million in 1997, rising to some € 230 million in 2001.

v Pira and Ecolas estimate the total cost of packaging waste management in the absence of recycling to be € 6.17 bn in 2001. In the absence of the Directive (i.e. taking into account the recycling which would have happened for economic reasons and as a result of national policy measures), the total cost of packaging waste management is estimated at € 6.6 bn. The actual cost in 2001 is estimated at € 6.8 bn. They estimate the incremental cost of the Directive (i.e. the additional costs for packaging waste management as a direct result of the Directive) at € 227 m. Without the Directive, waste management costs would of course have been distributed differently. Out of the total cost of € 6.8 bn for packaging waste management in 2001, € 3.7 bn corresponds to the financing need for packaging recycling. Out of this, around € 2.8 bn was paid by industry via producer responsibility. This does not take into account internal administration costs for businesses, which could be significant, particularly for small and medium sized enterprises which will find it more difficult to allocate (specialised) staff to such tasks.2

Like any other business cost, these costs are likely to be reflected in consumer prices and thus will ultimately be paid by consumers. If there had been no recycling, roughly the same amount would have to be spent for disposal, a cost which would have been paid by local government and ultimately householders. The division of financing between producer responsibility and financing by municipal authorities varies considerably between the Member States. In some Member States (Austria, Belgium, Germany), all costs for collection and recycling are paid by producers, whereas in other Member States municipalities pay all or part of the cost of collection and recycling of packaging waste from household sources. Although there are significant differences between producer responsibility costs in the various Member States, these costs are paid in any given Member State in the same way for domestic and imported products from other Member States. Therefore, these differences are unlikely to have created Internal Market distortions or distortion of competition between domestic and imported products.

The impact of measures to encourage reuse We were asked to consider a scenario based on universal application of national measures designed to encourage reuse systems (for beverage containers). We assumed that all Member States took action to implement Article 5, but we also assumed – to keep the scenario realistic – that many would have chosen an option that allowed fillers to opt for increased recycling as an alternative, i.e. either a combined reuse/recycling target, or a tax on non-refillable beverage containers with an exemption for members of an approved recovery organisation or for materials which achieved a specified recycling rate.

2 The cost to a major multinational of employing one or two extra people per country will not be significant, and a small company with a simple product range may not have incurred much cost; but for a medium-sized company producing goods in a variety of packaging formats or importing them from outside the Community, the burden may have been substantial.

vi We believe that it is unlikely that any requirements pursuant to Article 5 would have resulted in an increase in beverage containers reuse. None of the national measures actually taken in response to Article 5 were able to counterbalance the market shift from reusable beverage containers towards one-way alternatives. Even the refill quotas imposed in Germany and Portugal failed to arrest the decline in the demand for refillable beverage containers, and Austria’s voluntary agreement was also unsuccessful in preserving the market share of refillables.

vii IV. MARKET ACCESS ISSUES

The Essential Requirements and the CEN standards The Directive says that Member States shall ensure that from January 1998 packaging may be placed on the market only if it complies with the Essential Requirements listed. Member States shall not impede the placing on the market of packaging which complies with the Directive. All Member States have duly transposed the Essential Requirements into their national legislation, but only three – France, the UK and more recently the Czech Republic – have put an enforcement mechanism in place. Member States are free to decide for themselves how they ensure compliance with the Essential Requirements, but the French and UK authorities have recommended close adherence to the CEN standards mandated by the Commission, and Czech law currently provides for no alternative means of compliance (which conflicts with the Directive and is a potential barrier to trade). In principle, there has always been a possibility of barriers to trade and distortions of competition arising from conflicting national interpretations of the Essential Requirements. Since so few Member States have been enforcing them, this danger has been much reduced, and there have been no such problems in practice.

The references to the CEN standards were not published in the Official Journal until 19 February 2005. Publication of the references triggered the application of Article 9(2)(a) of the Directive, which says that packaging and packaged goods produced in conformity with harmonised standards is deemed to be in compliance with the Essential Requirements. Now that the references have been published, more Member States may decide to enforce the Essential Requirements. This is not a necessary consequence of publication, but it is a possibility, since some officials have previously said that the EU framework would not be complete until the standards had been endorsed by the Commission through publication of the references. If more Member States enforce the Essential Requirements, the result could be a wider range of legal provisions, and this may generate conflicts between different sets of national rules which have not existed up to now. If this proves to be a practical problem (and at this stage we do not know whether it will be a problem or not), a Directive setting out a conformity assessment procedure may be needed.

In this study we report on two small-scale studies on the impact of the Essential Requirements on producers. EEB and EUROPEN have both called for a deeper investigation into the implementation and impacts of the Essential Requirements, including the necessary and available resources, and we support this request.

viii Infringement proceedings and other possible trade barriers and distortions of competition In general, we believe that the notification procedure set up under 83/189/EEC and now governed by Directive 98/34/EC has worked very well. The system of prior notification has enabled many Internal Market issues to be resolved before they became a real problem. However, fundamental disagreements over the legality and appropriateness of national refill protection measures for beverage containers have led to prolonged legal uncertainty in the beverage sector. Industry is also concerned about the growing trend to use taxation to drive packaging policy, as this has serious potential to disrupt the Internal Market.

In December 2004 the European Court of Justice (ECJ) delivered two rulings which have clarified to a greater extent what national refill protection measures are allowable, but it remains to be seen whether this will be sufficient to avoid future difficulties in this area. Certainly industry stakeholders remain sceptical. As noted in Section II above, the Commission’s powers to challenge national taxes are limited unless there is a clear breach of Article 90 of the Treaty. There is no proportionality limit in Article 90, so Member States do not need to justify why they set taxes at a particular level. The Commission has challenged packaging taxes on very few occasions. Under Article 15 of the Packaging and Packaging Waste Directive and Article 90 of the Treaty, it only has the right to intervene in the case of taxes that discriminate de facto between imported and domestic products. The Commission has accepted that member states are entitled to give fiscal advantages to certain product groups over other product groups on the basis of objective criteria, such as environmental considerations, and provided these advantages are given irrespective of the origin of the goods.

ix V. SPECIAL MEASURES FOR BEVERAGE CONTAINERS ECJ rulings indicate that proportionality is the key consideration. This depends on balancing economic and environmental considerations. Any conclusion as to whether any reuse support system is acceptable or not, falls outside the scope of this study. Decisions will be made by the EU authorities. However, we have set out in this report some information and arguments to offer suggestions on how proportionality issues might be addressed, and we support the proposal from some industry stakeholders that Article 5 of the Directive should be amended to outlaw “hardcore” restrictions to competition (negative harmonisation). At a second stage, consideration might be given to which, if any, reuse support measures might be appropriate.

How successful have market intervention measures to protect refillables been? Experience suggests that any form of intervention to protect refillable beverage containers which is mild enough to avoid market distortions is unlikely to achieve its intended goals in the face of powerful market forces such as consumer choice.

• The market share of refillables has been in decline, even in Germany and Portugal where a

certain share of the market has been reserved by law for refillable containers – and despite the existence in Germany of a legal sanction, mandatory deposits, which industry has always been anxious to avoid.

• There is no evidence that mandatory deposits improve the efficiency of recycling systems –

collection arrangements for non-beverage packaging are still needed, and one system is cheaper to run than two. The results reported by the EU-15 countries show that deposit systems are not necessary for the achievement of high recycling rates.

• The Belgian eco-tax has not succeeded in improving the price-competitiveness of refillables, since

the intended price signal has not been fully reflected in retail prices (the cost having been redistributed across the entire product range, both refillables and non-refillables). The main effect has been to raise the price of all Belgian drinks, which in turn has encouraged cross-border shopping by Belgian consumers, with consequent losses to economic operators and to tax revenues.

The only measures which have been effective in protecting refillables have been the Danish can ban and the Dutch arrangements, which were more or less a prior approval system for companies wishing to replace refillable containers with non-refillables. Both were eventually withdrawn following legal challenges. The situation in Germany is a special case, a unique set of circumstances that will not be repeated. The introduction of mandatory deposits has caused a great deal of disruption in the market, and one type of non-refillable container – the beverage can – has virtually disappeared. The German government is in the process of amending the legislation to take account of the ECJ’s rulings of 14 December 2004, but it intends to maintain mandatory deposits.

x Market share quotas for refillables Market share quotas for refillables clearly affect trade patterns and/or the location of production. It is generally accepted that refilling makes better sense when distribution distances are short, so measures reserving a large share of the market will inevitably restrict competition from more distant producers, especially foreign companies. According to the principles laid down by the ECJ in the Danish bottles case (Case 303/86), measures may be permitted even if they give rise to barriers to trade, on condition that • the measures are justified by an environmental objective, • the environmental benefit is proportionate to the restriction, and • the measure must be necessary. To be necessary, the Member State must demonstrate that the

objectives could not be achieved through other, less restrictive, measures. On 14 December 2004, the European Court of Justice concluded, in two cases relating to Germany’s refill protection measures (Cases C-463/01 and C-309/02), that: • the Directive does not prevent the adoption of reuse measures, provided that they are consistent

with the Treaty, but • the Directive does not establish a hierarchy between the reuse of packaging and the recovery of

packaging waste – i.e. reuse is not automatically superior. However, the ECJ did not specifically say whether or not refill quotas are acceptable.

Mandatory deposit systems for non-refillables The beverage container deposit systems in the Nordic countries are stable and relatively uncontroversial. However, they started operating before there were recovery organisations for non-beverage packaging. Grafting beverage containers legislation onto a mature recycling system for all packaging appears to be much less successful. In the Nordic countries, deposit-bearing non-refillables coexist with refill systems, so the infrastructure and consumer habit was there – it would be very difficult to rebuild a beverage container return system once it has disappeared. Thus, Member States wishing to set up a deposit system for non-refillables would not necessarily be able to replicate the Nordic model. In all mandatory deposit regimes, distortions arise between (a) materials or (b) products which are caught by the deposit system but compete with products which are not. The differences between the scope of each of the existing deposit systems indicates that there is no clear and logical border between products and packaging materials that are appropriate to handle through deposit systems and those that are not. Thus deposit systems do give rise to some problems in the Internal Market, and as was noted above, overall recycling rates in Member States with deposit systems are not higher than those of comparable EU countries where there are no special arrangements for beverage containers.

xi Deposit systems for non-refillable beverage containers currently operate in four EU member states – Denmark, Finland, Germany and Sweden – and in Norway which, as a signatory to the Treaty on the European Economic Area, must also comply with the Directive. Deposit systems typically handle metal cans, and PET bottles. Aluminium and tinplate cans are among the easiest and cheapest containers to recycle, and the PET bottle is by far the easiest type of plastic to recycle and the polymer for which recycling facilities are most readily available around Europe. If these easy-to-recycle materials are handled through a deposit system, they are excluded from the scope of packaging recovery organisations. These organisations may have to meet the recycling targets using other packaging waste of the same material, which reduces economies of scale and probably increases the cost of meeting the target for any given material. The extent of the impact on the packaging recovery organisation of beverage containers being handled separately depends on how the targets that it must meet are structured and how high they are – but the diversion of this material from the recovery organisation to the deposit system is unlikely to have a significant effect on overall recycling rates to compensate for the loss of system efficiency. The deposit systems in the Nordic countries are stable and relatively uncontroversial. Even so, we have identified a number of ways in which the administrative arrangements and marking requirements associated with deposit systems are easier for domestic producers to cope with than for producers exporting to the deposit state. We suggest that a Member State wishing to impose a mandatory deposit should set out clear and detailed requirements in legislation for the establishment and operation of deposit systems. The proposed legislation should be notified to the Commission as a technical regulation, providing the Commission and other Member States with an opportunity to comment on the proposals and identify any problems. We consider that the legislation should cover the following issues: • clear requirements for the operation of the deposit system; • clear approval requirements and procedures; • arrangements for competing deposit systems, where relevant; • a realistic transition period; • clear legal obligations for economic operators; • a clear indication of the pack types and products to be subject to the deposit; • the proposed rates of the deposit for each pack type/size; • how unredeemed deposits should be allocated; and • rules for marking deposit-bearing containers.

The German arrangements A recovery organisation, DSD, started to handle all categories of sales packaging ten years before the deposit took effect. Mandatory deposits were triggered by a provision in the 1991 Ordinance, and were a penalty for failure to maintain the refill quotas. There is as yet no national deposit system in Germany. There are a few open deposit systems which accept each other’s containers and refund the deposit, but they have only a small market share. Some companies, particularly discount retail chains, operate ‘island solutions’. Since these chains specify a unique design of container for their own-brand drinks, they are not obliged to accept containers from other suppliers.

xii The judgements announced by the European Court of Justice on 14 December 2004 included the following rulings: • the German deposit requirements are a barrier to trade for imported mineral water, since they

compel foreign producers to adapt their packaging for the German market; • the German measures are disproportionate because they did not allow a sufficient transitional

period to enable producers and distributors to adapt to the requirements of the new system; but • deposit systems for non-refillables do contribute to environmental protection.

The ECJ said that a deposit system must have an adequate network of return points so that consumers can redeem their deposits at any store, which calls into question the ‘island solutions’, and in December 2004 Germany notified proposed new deposit legislation which will amend the provisions that have permitted “island solutions”. The link between refill quotas and deposits will be broken, at least until the results of the new policy are reviewed in 2010. Instead, a deposit will be imposed on all beverage containers not deemed “environmentally advantageous” – “environmentally advantageous” beverage containers being defined as refillables, beverage cartons and certain laminated pouches. Environmentally advantageous (and disadvantageous) packaging Germany’s unilateral definition of environmentally advantageous packaging creates a danger of new distortions of competition or barriers to trade. If other Member States were to do the same, they might well have different views on what types of pack are environmentally advantageous or disadvantageous. The result could be a patchwork of market interventions (mandatory deposits, taxes or other measures) which give no clear signal to producers operating on a European scale, and place at a disadvantage companies based in one Member State which wish to export to another Member State which has a different view on what are the environmentally disadvantageous packs that should be discouraged.

But why apply this distinction to beverage containers if it is not applied to other packaging? Given the different distribution and usage patterns of various products, beverages or non-beverages, is it practicable to impose such a rigid classification on the packaging for either? The answers to these questions are outside the scope of this report, but we point out the difficulties that would occur if a number of member states made such distinctions on the basis of their own research findings. Differences between pack types can be marginal and depend on the specific measurements made. The pattern of trade may differ from one Member State to another, and different assumptions may be made about system boundaries, transport distances and so on. Each national LCA may be defensible in its own terms, but if this practice were to spread it could only lead to further market distortions. In any case, some Member States and other stakeholders have complained that it is not appropriate for Germany to unilaterally introduce definitions which do not appear in the Packaging and Packaging Waste Directive.

xiii VI. INTERNAL MARKET IMPLICATIONS OF DIFFERENT

NATIONAL APPROACHES TO IMPLEMENTATION OF THE DIRECTIVE

The basic framework of an industry organisation or organisations funding or partially funding segregated collection of used packaging from households is common to most of the 25 Member States, though the legislation in a number of them has additional features such as mandatory deposits or packaging taxes. Rather different structures are in effect in Denmark, the Netherlands and the UK. These approaches might be classified as a unique form of producer responsibility in the UK, limited producer responsibility in the Netherlands, and no producer responsibility in Denmark. We conclude that whilst any distorting effects of subsidies paid by individual national recovery systems (the “Green Dot” model) cancel each other out to some extent, problems can emerge in countries where there is a different funding arrangement. These differences in national approaches have had only a limited impact on the Internal Market. There do seem to be practical advantages in all Member States adopting a broadly similar approach, but on grounds of subsidiarity, it may not be necessary or appropriate for the Directive to specify what type of recovery organisation or funding regime each Member State should establish.

xiv VII. PACKAGING TAXES (OTHER THAN BEVERAGE CONTAINER

TAXES) Leaving aside beverage container taxes which have been discussed above, there are currently taxes on packaging in eight Member States – five of the ten new Member States (Hungary, Latvia, Lithuania, Poland and Slovakia), and three of the EU-15 countries (Belgium, Denmark and Ireland). The taxes in the new Member States are all linked to achievement of the targets in some way, by offering an exemption or a discounted rate if certain targets are met. In some cases, these taxes have been set lower than the recovery organisation fees. Thus participation in the recovery organisation in effect competes with paying the taxes, and the recovery organisations have to set their fees to take account of the taxes rather than of the cost of meeting the targets. In this situation there is a risk that the fees charged by recovery organisations will not be sufficient to ensure that the targets are met. In our view it would be more effective policy if the legislation simply imposed a penalty on the recovery organisation(s) or individual operators that did not meet the targets. Recovery organisations could then determine what is needed to meet the targets and set their fees accordingly. We recognise that packaging taxes can play a useful role in encouraging producers to establish recycling systems. However once recovery organisations have been established, the need for taxes is greatly reduced.

Belgium is alone in taxing packaging of solvents, glues and inks for professional use; Ireland taxes plastic shopping bags, and Denmark both plastic and paper shopping bags (to avoid discrimination between materials). Denmark also taxes consumer packaging used for a wide range of products. The stated objective of the taxes in several Member States was originally to raise revenue for environmental purposes. However, in some Member States it is not ring-fenced for this purpose. There is a danger that once a Member State creates a tax, it becomes a useful source of state revenue regardless of the future environmental impact of the taxed items.

xv VIII. ECONOMIC IMPACT OF THE NATIONAL RECOVERY

ORGANISATIONS Recovery organisation rules and the Internal Market National legislation is different in every member state, and the national recovery organisations were set up as national solutions to specific national problems. Differences in recovery organisation fees are inevitable, and we do not believe that they create any significant distortions of competition. Distortions could arise if fee structures favoured domestic producers, but we have found no evidence of this.

However, poor enforcement can create distortions of competition between competing companies, when some operators bear the costs of complying with the legal requirements and some do not. Inaccurate reporting can also cause distortions by affecting the quantity of packaging that a recovery organisation needs to recycle in order to meet its targets. There are significant differences in national reporting requirements, and these give rise to serious administrative costs and thus to barriers to trade for imports. Reporting requirements should be simplified and approximated, so producers can use a single packaging database to generate the necessary data for all member states.

Use of the EU material codes and any other recycling logos should remain voluntary, since differences in national interpretations could give rise to barriers to trade if they were made mandatory. Producer responsibility and competition policy Some national competition authorities have been trying to inject some competition into their national producer responsibility arrangements. This has not always been successful, sometimes because the legal framework was not amended appropriately and the operating conditions for newly established competitors were not the same as for the original recovery organisation. Following discussions with the competition authorities, DSD’s competitors in Germany will be allowed access to the tonnages of packaging waste collected that they need to meet the targets on behalf of their customers, and will negotiate a price for this with the dominant player (the “shared use” concept). The practical effects of this remain to be seen, but at this stage it seems likely that there will continue to be a single dominant recovery organisation in most Member States, particularly in the smaller countries where the waste services market is smaller.

xvi “Shared use” should result in cheaper compliance for obligated companies, at least in the short to medium term. However, if liberalisation makes it easier for service providers to offer their services across borders, the long-term result might be concentration of ownership and therefore less competition. We also fear that if there is more competition on national markets, the system will become less transparent. Another very likely outcome is an increase in shipments of plastics to Asia, and redundant capacity in Germany.

National recovery organisations with a dominant position in the market have traditionally been very open in reporting their fee tariffs, costs and achievements, but we have found it very difficult to obtain equivalent information from recovery organisations in those Member States where they are operating in competition. In a competitive situation, this information is commercially confidential. DSD has worked with the plastics sector to develop recycling capacities within Germany and has made sure that these are fully utilised, but the restructuring of the German recycling system to allow more competition will mean that systems will seek the best economic option. Asian recyclers have been offering prices far higher than those available from German recyclers. Matching the supply of recyclate with demand Member states are allowed to exceed the maximum targets laid down in the Directive provided the Commission and the other member states are satisfied that this will not create distortions or hinder their own achievement of the targets. We show that higher targets have had potential to give rise to distortions and imbalances in the markets for secondary raw materials, but member states are unlikely to make any further requests to go beyond the EU targets, as Directive 2004/12 sets the upper limit for recycling as high as 80%.3

It makes sense to export a certain amount of packaging waste for recycling in Asia, as Europe is a major importer of packaged goods from Asia. But there is a risk. Large-scale exports of recyclable materials could threaten the future of European recycling plants, particularly for paper and plastics. These recycling activities may need subsidies to survive, but subsidies from recovery organisations may decrease or cease completely in a more market-based scenario in future. And as Asian countries develop their own recycling legislation, they may no longer want so much European packaging waste as a feedstock. By that time, Europe will have lost some of its recycling capacity and it could become difficult to meet the Directive’s targets.

3 Though it cannot be ruled out that the very high material-specific targets under discussion in Germany may require permission to exceed the overall 80% recycling target. In 2002, Germany achieved a 74.4% recycling rate.

xvii IX. COSTS AND BENEFITS OF FURTHER HARMONISATION Support for reusable packaging Data is poor, but overall, the share of reusable business-to-business packaging appears to be increasing. These systems are used where they make economic sense, and we see no need for any legislative support for them. The use of refillable beverage containers is in decline, but as we have already remarked, any form of intervention to protect refillables which is mild enough to avoid market distortions is unlikely to achieve its intended goals in the face of powerful market forces such as consumer choice. Anti-litter measures Our interim report questioned whether the market distortions that result from singling out certain types of packaging or other key components of litter are justified by the results, and asked whether litter should be regarded as a behavioural problem best addressed by measures aimed at reducing the incidence of all litter. It suggested that littering is a behavioural issue which needs to be addressed holistically through concerted action by central and local government and by producers and retailers of products likely to be littered. There was a consensus among stakeholders that littering is not an issue that should be addressed within the framework of packaging and packaging waste legislation, so this section of the report has been deleted. Does one size fit all? We have considered whether uniform targets – albeit with different deadlines for achieving them – are appropriate for a few small member states which are at a permanent structural and geographical disadvantage, in particular the three small island nation-states and possibly also the Baltic states. Studies tend to rely on European averages or data obtained from “mainstream” member states. We therefore support calls for a Commission study on “non-mainstream” countries in order to • indicate whether the same targets should be applied to all member states, • develop criteria to measure equivalence between the member states in terms of economic and

environmental costs and benefits of recycling targets, and • establish what degree of flexibility (if any) is needed to assure equivalence.

.

1


ON THE FUNCTIONING OF THE INTERNAL MARKET

1. INTRODUCTION

1.1 BACKGROUND 1.1.1 The Directive Directive 94/62/EC on packaging and packaging waste 4 had twin objectives, one economic and the other environmental:

“This Directive aims to harmonize national measures concerning the management of packaging and packaging waste in order, on the one hand, to prevent any impact thereof on the environment of all Member States as well as of third countries or to reduce such impact, thus providing a high level of environmental protection, and, on the other hand, to ensure the functioning of the internal market and to avoid obstacles to trade and distortion and restriction of competition within the Community.”

It required Member States to • set up systems to recover at least 50% of packaging waste and no more than 65% by 30 June 2001

and to recycle at least 25% and no more than 45% of packaging materials, with no material recycled at less than 15%;5

• ensure other preventive measures are taken; • encourage, “where appropriate”, the use of materials recovered from recycled packaging waste in

the production of new packaging and other products; • ensure that from January 1998, packaging is allowed on the market only if it complies with certain

“Essential Requirements”, which include minimisation of packaging weight and volume to the amount needed for safety and consumer acceptance of the packed product, and suitability for reuse, material recycling, energy recovery or composting;

• limit heavy metals content to 600 ppm by 30 June 1998, 250 ppm by 30 June 1999 and 100 ppm

by 30 June 2001; • allow free access to packaging complying with the Directive; • notify the Commission of measures adopted or to be adopted; and • report on progress and set up national databases so implementation can be monitored.

4 European Parliament and Council Directive 94/62/EC of 20 December 1994 on packaging and packaging waste (OJ No. L365, 31.12.94). This is the measure in question to when this report refers to “the Directive”. 5 Because of their specific geographical, demographic and economic situations, Greece, Ireland and Portugal were allowed until the end of 2005 to achieve these targets. By the 30 June 2001 deadline they only had to achieve 25% recovery.

2

Additionally, Member States may • encourage reuse systems for packaging “which can be reused in an environmentally sound

manner”, provided they do not conflict with the EC Treaty; • introduce economic instruments to implement the objectives of the Directive provided they are in

accordance with the principles governing Community environmental policy; • set themselves higher recovery and recycling targets, but only if they had appropriate

recycling/recovery capacity and provided the measures taken do not distort the internal market or hinder other Member States’ ability to comply with the Directive. They must pre-notify the Commission, which must verify that the proposals will not constitute arbitrary discrimination or a disguised restriction to trade.

Directive 94/62 contained provision for a review to set further recovery and recycling targets for a second five-year phase, and new targets (and certain other changes) were established by Directive 2004/12/EC. 6 At the behest of the European Parliament, Article 6.8 of Directive 2004/12 also set out the scope of the Commission’s report on progress so far and further measures that might be considered:

“The Commission shall, as soon as possible and no later than 30 June 2005, present a report to the European Parliament and the Council on the progress of the implementation of this Directive and its impact on the environment, as well as on the functioning of the internal market. The report shall take into account individual circumstances in each Member State. It shall cover the following: (a) an evaluation of the effectiveness, implementation and enforcement of the essential requirements; (b) additional prevention measures to reduce the environmental impact of packaging as far as possible without compromising its essential functions; © the possible development of a packaging environment indicator to render packaging waste prevention simpler and more effective; (d) packaging waste prevention plans; (e) encouragement of reuse and, in particular, comparison of the costs and benefits of reuse and those of recycling; (f) producer responsibility including its financial aspects; (g) efforts to reduce further and, if appropriate, ultimately phase out heavy metals and other hazardous substances in packaging by 2010. This report shall, as appropriate, be accompanied by proposals for revision of the related provisions of this Directive, unless such proposals have, by that time, been presented.”

6 Directive 2004/12/EC of the European Parliament and Council of 11 February 2004 amending Directive 94/62/EC on packaging and packaging waste (OJ No. L47, 18.2.2004).

3

To provide background information for the Commission’s report, DG Environment commissioned Pira International Ltd and Ecolas N.V. to carry out a study on the environmental, economic and social impacts of Directive 94/62 7, and DG Enterprise has commissioned Perchards, Ffact Management Consultants and SAGIS Ltd to: • evaluate the impact of the Directive on the Internal Market from an economic and social

perspective; • evaluate the effects on the Internal Market of the decision of some Member States to implement

the Directive through different producer responsibility schemes; and • summarise stakeholders’ views and argument on these issues. 1.1.2 Terms of reference for this study According to the Terms of Reference, the tasks to be undertaken in the study are as follows: Evaluation of the impact of the Packaging Directive 94/62/EC on the functioning of the Internal Market The consultant shall give an overall evaluation of the impact of the Directive on the internal market from an economic and social point of view. A specific attention shall be paid to trade barriers and distortions of competition raised from the measures adopted by national authorities to implement the Directive and in particular the measures provided for in Article 5 (Reuse systems). Where possible, this may be done on the basis of available information and appropriately reasoned extrapolation. The evaluation of the impacts of the Directive shall be done on the basis of a comparison of current packaging and packaging waste management with the following scenarios: • No packaging recycling and recovery and no other national measures on packaging and packaging

waste management8 • A baseline scenario with recycling and recovery rates as well as other national measures that

would have been likely in absence of the Directive. This baseline shall be established on the basis of estimates and extrapolations and shall be split into sub-scenarios to test the sensitivity of assumptions.

• A scenario with any national measures adopted to encourage reuse systems on the basis of Article

5 of the Directive. In this framework, the consultant should quantify as far as possible the consequences of the eventual distortions raised from the implementation of national measures.

7 Study on the implementation of Directive 94/62/EC on Packaging and Packaging Waste and options to strengthen prevention and re-use of packaging, PIRA International Ltd and ECOLAS N.V., final report, 21 February 2005 [http://www.europa.eu.int/comm/environment/waste/studies/packaging/050224_final_report.pdf] 8 It was subsequently agreed that as a substantial amount of recycling was already taking place before the Directive was adopted, a zero-recovery scenario was not necessary for this study.

4 Producer responsibility Contrary to more recent directives (ELV, WEEE), the Packaging and Packaging Waste Directive does not contain any obligation to introduce producer responsibility. Nevertheless most Member States have implemented the directive through some form of producer responsibility. The study shall: • assess the current situation with a particular attention to (a) the eventual discriminations that the

producer responsibility systems raise between domestic producers and importers of packaging; (b) the costs induct by the implementation of the producer responsibility only in some member States;

• assess the costs and benefits of a further harmonisation of the producer responsibility from an

internal market perspective. The methods to be used by the consultant were specified as follows: The study shall focus on establishing a synthetic picture of available information rather than spending too much time on generating new data. This will include, however, verifying and linking various data sources. For certain items, it may be necessary to complement existing information with own work. Furthermore, for some issues it may be appropriate to base work on interviews with government actors and stakeholders. The offers shall contain proposals for a methodology to address the above tasks. Further details shall be agreed on the basis of the work programme to be submitted as part of the inception report. The geographical coverage was specified as follows: In principle, the geographical coverage shall be EU-25. However, the consultants may choose to select a number of countries to be studied in more depth wherever particular information seems to be available. Extrapolations to other countries shall be appropriately reasoned and their validity must be checked. A number of countries with particular geographical conditions and differing levels of packaging consumption, both within EU-15 and the new Member States, shall be studied in more depth. A choice of such countries (a minimum of three) shall be proposed in the offers and agreed in the work plan to be submitted together with the inception report.

5 1.2 SCOPE OF THE REPORT Most of this report relates to the 15 countries in membership of the EU between 1997 and 2001 (“EU-15”). However, Iceland, Liechtenstein and Norway are also part of the European Economic Area and as such were required to implement the Directive: • Norway has similar arrangements in place to EU-25, with a Green Dot recovery organisation and a

deposit system for beverage containers. • Iceland, which imports all its packaging and so has no recycling facilities, has adopted taxes on

certain packaging types, and has a deposit system for beverage containers. • Liechtenstein has adopted relevant legislation. However in practice Liechtenstein, which has only

30,000 inhabitants, has aligned its packaging waste management system with that of neighbouring Switzerland, which is not bound by the Directive.

We have not considered Iceland or Liechtenstein, but we have taken account of Norwegian measures where they relate closely to those of EU members. This means in particular the cross-border implications of the Nordic deposit-and-return systems for beverage containers. We also consider the impacts of the Directive on the ten countries that joined the EU on 1 May 2004, and offer some comments relating to the members of the enlarged EU (“EU-25”).

6 1.3 STRUCTURE OF THE REPORT Chapter 2 contains an estimate of the impact of Directive 94/62 on recycling and waste disposal. Two hypothetical scenarios were developed on how public policy on packaging and waste might have evolved in the absence of a Directive. The impacts of these scenarios on the amount of packaging placed on the market, on recycling rates and on the tonnages for ultimate disposal were then calculated against the baseline of the official data submitted by the Member States for 1997-2001, and we went on to consider the likely impacts of the Directive up to 2008. Next, we considered what the impacts might have been if Member States had all taken specific measures to protect packaging reuse. Finally, an estimate was made of the annual cost of the increased recycling activity which we believe has resulted from implementation of the Directive. Chapter 3 deals with market access issues. The first question addressed is the impact of the Essential Requirements, and of possible trade barriers arising from differences in how they have been transposed and enforced. We also considered to what degree they have been respected by producers. Chapter 3 continues with an analysis of the trade barriers and distortions of competition which have arisen from the different ways in which Member States have transposed the Directive. These have been classified so as to demonstrate how far national initiatives have created Internal Market problems, and the effectiveness of the procedures in place to resolve such issues. Many of the infringement cases that have arisen in respect of Directive 94/62 relate to beverage containers, and Chapter 4 considers national rules specific to packaging for these products. It considers first the impact of refill protection measures in Germany, Portugal and Austria, including quotas reserving a certain proportion of the market for refillable beverage containers, and then considers the mandatory deposit systems on non-refillable containers in the Nordic countries and Germany. The relationship between deposit systems in neighbouring countries is considered in the context of the impact of beverage containers legislation on the Internal Market, and with a view to the possible extension of deposit systems to other Member States. The applicability of the Nordic model in other countries is discussed, and a possible way forward is outlined. 12 of the 15 countries in membership of the EU before 1 May 2004, and all ten of the countries which joined on that date, have in place a producer responsibility system based to a greater or lesser extent on the model first developed in Germany in 1991. Denmark, the Netherlands and the UK met the 2001 targets using very different approaches. Chapter 5 considers whether these different legal structures have created any distortions of competition or any disproportionate costs for the producers that have to comply. It goes on to consider the impact of national packaging taxes. Chapter 6 considers the producer responsibility systems in EU-15. Although the same concepts are common to most of them, there are important differences of detail, and Chapter 6 considers whether these differences create trade distortions, and if so, whether these distortions are unacceptable or whether they are the inevitable consequence of a Single Market consisting of a large number of quite diverse economies. Chapter 7 discusses the impact of national recovery systems on the waste management and recycling sectors. It describes the changes that took place as a result of the German Packaging Ordinance and the response of Germany’s neighbours, outlines developments since the Directive was adopted, discusses current market issues for each packaging material and draws some conclusions. Chapter 8 considers the costs and benefits of a further harmonisation of producer responsibility rules. It looks first at where more might be done to increase harmonisation, with a particular focus on the implementation of Article 5 (encouragement of reuse). In this chapter we also consider possible omissions from the Directive, before reviewing the possible implications for the structure of packaging legislation that might arise from broader EU waste management policy, in particular the Thematic

7 Strategy on Waste Prevention and Recycling, and finally discussing an issue raised by one stakeholder – has harmonisation already gone too far? Chapter 9 describes stakeholders’ participation in the consultation process, and summarises the views they put forward. The Annexes in Volume II provide supporting detail.

8

2. IMPACT OF THE DIRECTIVE ON RECYCLING AND WASTE DISPOSAL

2.1 BACKGROUND In 1988 the European Court of justice ruled9 that the admitted restrictions on the free movement of goods involved in Denmark’s ban on non-refillable beer and soft drinks bottles were a price worth paying for the environmental benefits claimed to result. This opened the way for a stream of unilateral national measures aimed at packaging – all different in scope, in the obligations imposed on manufacturers and retailers, in the recycling targets laid down and even in how recycling was defined. Existing European Community law did not make it clear where the balance should lie between protection of the environment and the free movement of goods. The Commission first tried to remedy this by amending the loosely-worded Liquid Food Containers Directive of 1985 to fix quantitative objectives for waste prevention and reduction, but it eventually decided to merge the liquid food containers amendment within an overall Packaging and Packaging Waste Directive. Work began in earnest around the beginning of 1991 and the Commission adopted its proposal in July 1992. The Directive was adopted at the end of 1994 and the deadline for transposition was 30 June 1996. In the first half of the 1990s, however, the text that had the greatest influence on the development of packaging recycling across the Community was the German Packaging Ordinance of June 1991. This established a recycling system template – producer responsibility, collective funding of recycling by industry, and material-specific targets – variations on which have been adopted by the vast majority of countries in Europe. The Directive allowed for other options, but only Denmark and the Netherlands chose to deviate fundamentally from the model first devised in Germany. When the German Packaging Ordinance first appeared, there was great concern that it would have the effect of destroying embryonic recycling activities in neighbouring countries. The German system required used packaging to be collected and taken back by the reprocessor free of charge. The German collection targets were very high, and the vast quantities of material collected could not all be absorbed by the German recycling market. The surplus was exported, and reprocessors in other countries who had previously had to pay for material collected locally, were now able to take in German material at a low or even negative price. Some neighbouring countries decided that the best means of defence against this was to adopt legislation setting their own national targets to ensure that local packaging waste was still collected and that local reprocessors were not driven out of business by their subsidised German competitors. Some people of course felt that the German Ordinance was a good idea anyway, and deserved to be emulated. The EC Packaging and Packaging Waste Directive restored some order by ensuring that all Member States took steps to ensure that recycling systems were set up and developed. The question for this part of the report is how far this would have happened if the Directive had never been adopted. Would these defensive measures, and the general Zeitgeist in favour of more recycling, have meant that recycling would have developed the same way in the absence of a Directive, or would the status quo have continued in some countries?

9 In Case C-302/86.

9 2.2 DEVELOPMENT OF RECYCLING BEFORE AND AFTER

INTRODUCTION OF THE DIRECTIVE Waste paper has long been recycled for economic reasons. From the 1970s, the waste paper collection and recycled papermaking industries expanded rapidly in response to technological advances that opened up new markets for recycled papers. Collection rates were governed by demand from the papermakers, demand being fixed by the recycling capacity of the paper mills and regulated by the price mechanism. In turn, the demand from the papermakers was limited by the demand for recycled paper products. Plastics film has also been collected from commercial and industrial end-users for economic reasons. The recycling of post-consumer packaging involves much higher collection costs, and was not originally initiated for economic reasons. Glass recycling, and later post-consumer can recycling, began in the 1970s as a response to criticism of the decline of refillable beer and soft drink bottles in favour of non-refillables. It obviously made sense to maximise economies of scale by encouraging consumers to deposit non-beverage containers also. Figures 1 to 3 give an indication of the rate at which these developments occurred in the years before and after adoption of the Directive. These estimates are drawn from a variety of sources and are not complete. Also, we do not have data for plastics recycling in 1991 – there was little or no collection of household plastics packaging for recycling, and no need to collect data on the amount of plastics film from commercial and industrial sources that was being recycled. Nevertheless, these charts do demonstrate rough orders of magnitude.

Figure 1: Glass recycling 1991-2001

0%10%20%30%40%50%60%70%80%90%

Belgium

Denmark

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German

y

Greece

Irelan

dIta

ly

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1991 1997 2001

10

Figure 2: Aluminium and steel recycling 1991-2001

0%10%20%30%40%50%60%70%80%90%

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Belgium

Denmark

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d

France

German

y

Greece

Irelan

dIta

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ands

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al

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A l 1991 Fe 1991 M etal 1997 M etal 2001

Figure 3: Paper & board recycling 1991-2001

0 %1 0 %2 0 %3 0 %4 0 %5 0 %6 0 %7 0 %8 0 %9 0 %

1 0 0 %

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1 9 91 19 9 7 2 00 1

11

2.3 THE DIRECTIVE’S IMPACT ON RECYCLING RATES UP TO THE 2001 DEADLINE

2.3.1 Methodology To quantify the impacts of the Directive on recycling and disposal rates, we have compared three scenarios: • Scenario 1 – the situation as reported • Scenario 2 – pre-existing legislation, but no new legislation in the other Member States • Scenario 3 – pre-existing legislation, plus the legislation in those Member States that opted to set

stricter targets than those in the Directive. We assume that these were committed to increasing packaging recycling rates.

The analysis is based on the tonnages and recycling rates for 1997-2001 which were reported to the Commission by the Member States as required by Article 17 of Directive 94/62. We have assumed that the Directive had no effect on the market before 1997, and 2001 is our cut-off point as this was the deadline for achievement of the targets laid down. The Member States have only harmonised their data collection methodologies to a limited extent, so these national returns are not necessarily comparable with each other. 10 Furthermore, since national methodologies have been refined over time in the light of the experience gained, national data may not always be comparable from one year to the next. We have been advised by the Commission not to spend time considering the accuracy of the existing official data, so for the purposes of this report “actual data” and “reported data” are synonymous. So that our hypotheses can be easily related to the actual data, we have reproduced in our scenarios any deviations from the 1997-2001 trend (peaks or troughs in particular years), on the assumption that these are either statistical quirks which would have happened anyway or the result of market factors which are mostly independent of the Directive. Even before the Directive was adopted, considerable quantities of commercial and industrial packaging waste were being recycled for economic reasons. The Directive created a need to measure and report on these tonnages for the first time. Metal drums, for example, have a relatively high scrap value, and it is unlikely that the collection rate for reuse or recycling would have been much different in the absence of a Directive. However the Directive has led to a considerable increase in the recycling tonnages reported (in Ireland, there was a jump in the reported metals recycling rate from 4% in 1998 to 25% in 1999). Industry has developed protocols so that the amount of metal packaging waste in mixed metal scrap can be included in these tonnages. To avoid introducing distortions arising from changes in reporting conventions rather than changes in recycling rates, we are assuming that these changes in reporting would have taken place even in the absence of a Directive. Taking the Irish example above, if the metal recycling rates would have been unchanged in the absence of a Directive, we assume that these would still have been reported as 4% in 1998 and 25% in 1999, even though in practice the protocol would probably not have been developed and the reported 1999 rate would have been considerably lower.

10 This issue is discussed further in Pira and Ecolas 2005 and in section 8.1.1 of this report. Also, one stakeholder asked us to draw attention to CEN standards EN 13439:2003 (Packaging – Rate of energy recovery – Definition and method of calculation) and EN 13440:2003 (Packaging – Rate of recycling – Definition and method of calculation).

12 2.3.2 The scenarios

Scenario 1 – the situation as reported This represents the data submitted by the Member States in accordance with Commission Decision 97/138. We have excluded wood from this analysis, as it was only reported by nine Member States. Scenario 2 – pre-existing legislation, but no new legislation in the other Member States We have taken account of the targets set in Germany (1991), the Netherlands (Covenants I and II, 1991 and 1997), Austria (1992) and France (1992), and have projected from what was already being achieved by voluntary action in the other Member States or future Member States. We have used our own judgement on how far sectoral measures predating the Directive, beverage containers legislation for instance, would have affected developments. We have also made our own judgements on whether national measures which were challenged as a breach of Single Market rules and subsequently abandoned, would have survived in the absence of a Directive. It was noted above that some countries adopted producer responsibility legislation for packaging as a defence against local material being driven off the market by imported packaging waste whose collection had been mandated by legislation in the country where it had been collected. We have assumed that for the most part those countries affected by waste imports were those which introduced legislation of their own. Of those countries that did not legislate, the largest were Spain and the UK. The UK plastics and paper & board sector complained about subsidised imports from Germany. As a result of increased collection rates, Germany’s share of the Community waste paper market had risen from 21% in 1989 to 34% in 1991 and the UK’s share had fallen from 13.3% to 8.9%. As the German system matured, however, Germany increased its own recycling capacity and shifted the export of packaging waste surpluses eastwards rather than to other Member States. We have assumed therefore that by 1997 the market had adjusted and that recycling rates in Spain and the UK were only marginally affected. Scenario 3 – pre-existing legislation, plus the legislation in those Member States that opted to set stricter targets than those in the directive When Belgium, Finland and Sweden transposed the Directive in 1997, they set targets higher than the minimum allowed. On the assumption that these Member States showed a clear commitment to establishing recycling programmes of their own, we have used the actual recycling rates they achieved. We have also developed alternative hypotheses for some other Member States. Where Scenarios 2 and 3 differ, the higher recycling rates always appear in Scenario 3. We have assumed that there would have been no changes to the tonnages placed on the market, except in the case of Ireland, Portugal and Spain under Scenario 3. Our hypothetical recycling rates for the other Member States are as in Scenario 2.

13 2.3.3 Rationale for our hypothetical recycling rates and tonnages 2.3.3.1 Austria No hypotheses were made, as Austrian legislation predated the Directive and was not significantly changed by it. 2.3.3.2 Belgium An eco-tax law was adopted in June 1993. There would be a tax of FB 15 (37 euro cents) per container on all non-refillable beverage containers unless fillers could show that 80% of their non-refillable glass and metal containers, and 70% of their non-refillable plastics, were being recycled, or that they were members of a recycling organisation recognised by the Regional Governments which met those conditions. FOST Plus was set up in 1994 to promote, co-ordinate and ensure financial support for selective collection and sorting of household packaging waste. Because of the tax exemption rules, FOST Plus was successfully recruiting beverage producers long before the Directive was transposed. There were also voluntary agreements with the three Regional Governments to develop packaging recycling, and FOST Plus also addressed these. Without the Directive, there would have been no Inter-regional Co-operation Agreement. This was the instrument for transposing the Directive, and without it each Region would have been free to set its own policies. It is probable that the Regional voluntary agreements would have been given statutory backing if the Regional Governments had not been happy with the progress made. Scenario 2 – Glass: Industry estimated that the glass recycling rate was 55% in 1993 and 67% in 1995. This is consistent with the official estimate of 70% for 1997. The voluntary agreements in the Flemish and Brussels Regions set an 80% target for all glass recycling by 2000 (and in Wallonia, 75% by 1995). The original criterion for exemption from the beverage containers eco-tax was 80% recycling of non-refillable glass beverage containers. In 1996 the target was relaxed to 55% in 1996, rising to 80% in 2000, but it was later decided that beverage producers in membership of FOST Plus would be exempt from the tax if FOST Plus met its own targets. We have assumed that glass recycling would have increased from 70% in 1997 to 80% in 2001. Scenario 2 – Metals: According to industry estimates, steel can recycling was at 30% in 1994 and 1995, but the Government reported a 70% recycling rate for all cans in 1997 and fluctuations thereafter between 66% (1998) and 81% (2001). In the absence of a Directive, the drivers for metals recycling would again have been the rules for exemption from the tax (originally 80% recycling, but amended in 1996 to 40% in 1996, rising to 80% in 2002) and the regional voluntary agreements (80% by 1995 in Wallonia, and 80% in the other two regions by 2000). We have assumed an increase from 50% in 1997 to 60% in 2001.

14 Scenario 2 – Plastics: Industry estimated that 13% of packaging plastics was being recycled in 1995. The beverage container tax exemption rules would have led to refillable PET rather than providing a stimulus for plastics recycling, so we are assuming that the main driver would have been the Walloon voluntary agreement’s targets of 30% recycling by 1995 and 60% by 2000. We have assumed a considerable shortfall from these voluntary targets, resulting in 18% recycling by 1997, rising to 22% by 2001. Scenario 2 – Paper & board: We have no data on paper and board recycling rates before 1997. The Walloon voluntary agreement aimed at 25% recycling by 1995 and 60% by 2000, and we have assumed a growth rate for Belgium as a whole along these lines. Scenario 3: We assume that the legislation introduced in 1997 would have happened even without the Directive, and that the recycling rates reported would have been achieved irrespective of whether the Directive had been adopted or not. 2.3.3.3 Denmark Denmark has not established specific producer responsibility legislation or an industry funding system; its principal means of meeting the Directive’s targets has been its voluntary agreements on transport packaging. Under the original 1994 agreements, the recycling of paper & board transport packaging was to rise from 62% to 80% by 1998, and the recycling of plastics transport packaging was to reach 80% by 2000. The targets were revised in 2000, and are now 80% recycling for paper & board transport packaging and 40% for plastics transport packaging. Scenarios: We assume that these agreements would not have been developed had the Directive not existed, but for economic reasons recycling rates for transport packaging are usually high. In Scenario 2 we have reduced the plastics recycling rate by two percentage points and the paper recycling rate by four percentage points; in Scenario 3 we have reduced these rates by one and two percentage points respectively. 2.3.3.4 Finland The Government has long used the tax system to discourage the development of non-refillable beverage containers – there is a lower tax on beverage containers which are part of a deposit system. As a result, there were no non-refillable glass or PET bottles, and cans had only a small share of the beverage market. Thus beverage can recycling did not begin until 1996, and beverage containers did not provide a critical mass for metal and plastics packaging collection systems. Industry estimated that 46% of glass was recycled in 1993 and 50% in 1995, 6% of plastics were recycled in 1995, 4% of metal packaging was recycled in 1994 and 44% of paper and board. Scenario 2 assumptions: For glass and paper/board, we assume no change from the actual recycling rates as recycling facilities were already available.

15 For plastics, we have taken as our baseline the available pre-Directive recycling data and have assumed that the recycling rate grew only slowly; for metals, we have assumed an accelerating rate of increase from a slow start. Scenario 3 assumptions: We assume that the legislation introduced in 1997 would have happened even without the Directive, and that the recycling rates reported would have been achieved irrespective of whether the Directive had been adopted or not. 2.3.3.5 France No hypotheses were made, as French packaging recycling legislation predated the Directive and was not changed by it. 2.3.3.6 Germany No hypotheses were made, as German legislation predated the Directive and was not significantly changed by it. 2.3.3.7 Greece We have no pre-Directive recycling data. The Directive was not transposed until 2001 and the national recovery organisation did not start operating until 2003, but for the purposes of Scenario 2 we assume that if there had been no awareness of the need to meet the full EU targets by the end of 2005, the pilot schemes developed between 1997 and 2001 would have been rather less extensive. In Scenario 3 we assume no change from the reported recycling rates. 2.3.3.8 Ireland Since Ireland imports most of its packaged goods, it has only had a small recycling industry and, therefore, relatively few recycling outlets for packaging waste. Industry estimated that 32% of glass was recycled in 1993 and 39% in 1995; other recycling rates were 2% for plastics in 1995 and 16% for metal packaging in 1994. Scenario 2 assumptions: In the first phase of its activities, Repak, the packaging recovery organisation, concentrated on maximising the collection and recycling of commercial and industrial packaging and of glass bottles from pubs, hotels and clubs. For reasons unconnected with the Directive there was a fall in the collection of household glass in the late 1990s, which counterbalanced that development. We are therefore assuming that there would have been less glass recycling in the absence of the Directive. We assume that the actual metal packaging recycling rate would have been little changed in the absence of a Directive (though, as explained above, the reported recycling rate would have been lower). We assume that in the absence of a Directive, plastics recycling would have been confined to commercial and industrial pallet wrap, where it was economic to collect it, and would have grown very slowly.

16 Paper recycling has developed for commercial reasons, to feed Ireland’s one paper recycling plant, and it is likely that without the Directive the rates achieved between 1997 and 2000 would have been unchanged. However, the big increase in 2001 would have been unlikely to occur. Scenario 3 assumptions: Assuming that the Landfill Directive would have been adopted even if the Packaging Directive had not been, Ireland would have been concerned about its landfill shortage, and keen to protect its ailing glass producer (which has now closed) which was the largest indigenous recycling outlet for used packaging. We suspect there might have been legislation designed to encourage the use of glass (mandatory deposits or a tax on beverage containers that did not achieve a certain recycling rate). For the purposes of this scenario, we assume that producers would have chosen to pay the tax or set up the deposit system rather than set up a recovery organisation that would have had to export all the collected cans and plastic packaging for recycling abroad. Thus for the purposes of Scenario 3 we assume a 33% reduction in the number of metal and plastics beverage containers sold, with a corresponding increase in the literage sold in glass. We assume the same recycling rates as in Scenario 2. 2.3.3.9 Italy In the absence of a Directive, recycling would have been driven by the 1988 law which required separate collection of liquids packaging from 1990. It set recycling targets of 50% for glass and metal containers for liquids, and 20% of plastics covered by the law, to be reached in 2002. From April 1993, non-refillable container types which did not meet the targets were to be subject to a small tax. With work on the Packaging and Packaging Waste Directive well underway, this tax was never imposed, but it is reasonable to assume that it would have been imposed and increased had the Directive not appeared. Scenarios: Industry estimated that glass recycling advanced rather slowly, from 40% in 1988 to 49% in 1990 and 54% in 1994. The official figures reported to Brussels were considerably lower, rising from 33% in 1997 to 48% in 2001. We have taken 33% as our 1997 baseline, and have assumed in Scenario 3 that the 1990-1994 growth rate would have continued. In Scenario 2 we assume that the glass recycling rate would have been almost static. Industry estimated that 32% of beverage cans were recycled in 1993, but the official recycling rate for all cans in 1997 was only 5%. Without a Directive, we doubt that the huge increase to 44% in 2001 would have happened, but, as in Ireland, we assume that protocols covering the drums and strapping collected with mixed metal scrap are a significant factor in the quantities reported. We have therefore simply reduced the 2000 and 2001 estimates to bring them into line with the Irish figures. Industry estimated that 7% of plastics packaging was recycled in 1995. The beverage containers recycling law will have provided some stimulus for recycling, but in Scenario 3 we assume a slower rate of progress. In Scenario 2 we assume that the plastics recycling rate would have been almost static. We assume that paper & board recycling would have developed more slowly in 2000 and 2001.

17 2.3.3.10 Luxembourg A beverage containers law was due to come into effect in 1995, but was postponed and eventually abandoned in 1996 following a warning from the Commission that the provisions promoting refillables breached Single Market rules. Had the Directive not been adopted by this time, we can assume that its recycling targets would have come into force, together with the eco-tax to be imposed if they were not met. These targets were 70% for glass and 20% for the other beverage container materials, and were to be achieved by 1996. Scenarios: We assume that in the absence of a Directive, glass recycling would have advanced more slowly, and that the growth rates for metals and plastics materials would have been much more modest, particularly in the later years. We have left the recycling rates for paper & board unchanged. 2.3.3.11 Netherlands No hypotheses were made, as the Dutch system predated the Directive and was not significantly changed by it. 2.3.3.12 Portugal The measures introduced to transpose the Directive included special provisions on beverage containers. It is arguable that beverage containers rules might have been introduced in the absence of a Directive. For the purposes of Scenario 3 we have assumed that they were, but in Scenario 2 we have assumed that they were not. Industry estimated that recycling rates in 1995 were 42% for glass, 1% for plastics and 17% for aluminium cans. Scenario 2 assumptions: In the absence of a Directive, we have assumed that the 1998-2001 glass recycling rates were unchanged (we have interpolated a 1997 rate), that metal recycling rose much more slowly and that plastics recycling remained at its modest 1998-2000 rate. SPV, the packaging recovery organisation, reports that in 2003, 31.4% of the paper & board packaging it licensed was recycled, and 17.5% of the total on the market. Since SPV only has a small involvement in the commercial and industrial sector, it can be inferred that most of the paper & board recycling reported by the Government comes from non-household sources. We have assumed that in the absence of a Directive, there would have been little difference in the recycling rate for non-household paper & board packaging, but that little or none would have been collected from households. Scenario 3 assumptions: Thus for the purposes of Scenario 3 we assume that market share quotas designed to encourage the use of refillable beverage containers were introduced even in the absence of a Directive. The result would have been a reduction in the overall tonnage of beverage container material placed on the market, and a higher share for glass and PET at the expense of metal cans. We assume the same recycling rates as in Scenario 2.

18 2.3.3.13 Spain In the absence of a Directive, we assume that Spain would have introduced legislation later, with similar priorities and targets as France but with a later deadline (possibly 2005). We would expect that some of the Autonomous Regions would have introduced their own legislation, so national measures would have been necessary for the sake of the Spanish internal market. The export of packaging waste from neighbouring countries for recycling in Spain would have had an adverse impact on the collection of used Spanish packaging, and this would have provided an additional motivation for legislation. The Canary Islands legislation banning beverage cans, which was adopted in 1999 but never implemented, would have contravened Article 28 of the Treaty forbidding quantitative restrictions on imports, but in the absence of a Directive there would have been no Essential Requirements for packaging. It is possible therefore that infringement proceedings may not have begun had the Directive not been in place, and if the Canaries’ can ban had come into force similar measures might have been taken in the Balearics. Later, half-litre PET could also have been banned. It is difficult to quantify the effect on the market and on recycling tonnages, but we have rounded down the metal packaging tonnage in Scenario 3 for 2000-01 and have added the same amount to the glass packaging tonnage to take into account these possible developments. Industry estimated that recycling rates in 1995 were 32% for glass, 6% for plastics, 14% for aluminium cans and 17% for steel cans. Scenarios: Glass recycling was only one percentage point higher in 2001 than in 1995, so we have assumed that in the absence of a Directive the 1997-2001 glass recycling rates would have been unchanged. We have assumed a slower growth rate for metals, plastics and paper/board recycling, particularly in the latter years when the national recovery organisation’s activities have clearly had a major effect. 2.3.3.14 Sweden Legislation predating Sweden’s entry into the Community set high material-specific recycling/reuse targets to be achieved by 1997. When the legislation was amended in 1997 to take account of the Directive, some of the targets were changed but they were still set on a material-specific basis. This makes comparison relatively easy. Scenarios: The targets for glass in the Ordinance transposing the Directive were the same as in the previous measure, so we assume no changes in the glass recycling rates. The beverage can recycling targets remained unchanged (90%) when the legislation was brought into line with the Directive, but the targets for other metal packaging were increased from 50% to 70%. The recycling rates reported fluctuated somewhat, and we have assumed no change other than in 2001, where we suggest that the big increase from 43% to 69% would not have happened. The PET beverage container reuse/recycling target also remained unchanged (90%) when the legislation was brought into line with the Directive, but the recycling target for other plastics packaging was increased from 30% to 40%. In practice, the plastics recycling rate peaked at 25% in 1998 before falling back to 17% in 2001, so we have assumed no change. The target for corrugated board remained unchanged (65%) when the legislation was brought into line with the Directive, but the recycling target for other paper & board packaging was increased from 30% to 40%. We have assumed a slight reduction in the recycling achievement after 1997.

19 Scenario 3 assumptions: We assume that the legislation actually introduced in 1997 would have happened even without the Directive, so the actual recycling rates would have been achieved anyway. 2.3.3.15 UK In the absence of a Directive, we believe that the recycling rates promised in 1992 by COPAC (the Consortium of the Packaging Chain) would have been the basis for a voluntary agreement. We do not believe that these targets would have been achieved without statutory backing, but we doubt whether the agreement would have been replaced by legislation before 2001. Scenarios: Under the COPAC plan, as revised in 1993, glass recycling would have increased from 19% in 1991 to 33% in 1995 and 58% in 1999. The actual rate increased from 19% in 1997 to 35% in 2001. Without legislation, we would have expected a much slower growth rate after 1997. COPAC promised an increase in metals recycling from 10% in 1991 to 20% in 1995 and 45% in 1999. The actual rate increased from 24% in 1997 to 35% in 2001. Again, we assume a much slower growth rate. COPAC promised an increase in plastics recycling from 5% in 1991 to 7% in 1995 and 19% in 1999. The actual rate increased from 6% in 1997 to 16% in 2001. Again, we assume a much slower growth rate. COPAC promised an increase in paper & board recycling from 44% in 1991 to 47% in 1995 and 49% in 1999. This was much closer to reality – 41% in 1997, 49% (as predicted) in 1999 and 53% in 2001 – and the COPAC commitment did take into account the impact of German waste paper exports to the UK. Thus we conclude that in the absence of a Directive, recycling rates would have been just two to four percentage points lower. 2.3.3.16 Stakeholder comment on these assumptions The only challenge to these assumptions came from PRO Europe, which takes the view that we have underestimated the impact of the Directive. Whereas we believe that the principal influence on Member States’ thinking was the German Packaging Ordinance, PRO Europe argues that the national measures which came into force before the Directive were formulated during the discussions about the Directive in the knowledge that there would be a Community Directive on packaging in the near future. If these discussions had not taken place, there may have been no legislation in many countries, in which case the Directive’s effects on recycling and recovery rates and on the costs of packaging waste management would have been considerably greater. We take note of this point of view, but it does not accord with the impressions that we gained when monitoring this issue in the early 1990s.

20 2.3.4 Assumptions In the following tables, the actual reported rates appear in black type and our hypothetical rates in red italics. None of the stakeholders offered specific alternative assumptions.11

Table 1: GLASS RECYCLING

Actual Scenario 2 Scenario 3

1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

Austria 77% 80% 77% 97% 82% 77% 80% 77% 97% 82% 77% 80% 77% 97% 82%

Belgium 70% 66% 75% 80% 85% 70% 66% 73% 76% 80% 70% 66% 75% 80% 85%

Denmark 61% 75% 85% 81% 76% 61% 75% 85% 81% 76% 61% 75% 85% 81% 76%

Finland 50% 63% 78% 64% 50% 50% 63% 78% 64% 50% 50% 63% 78% 64% 50%

France 42% 45% 50% 50% 51% 42% 45% 50% 50% 51% 42% 45% 50% 50% 51%

Germany 84% 85% 85% 85% 85% 84% 85% 85% 85% 85% 84% 85% 85% 85% 85%

Greece 25% 21% 19% 24% 24% 22% 18% 16% 21% 21% 25% 21% 19% 24% 24%

Ireland 34% 32% 32% 29% 39% 31% 28% 28% 24% 31% 31% 28% 28% 24% 31% Italy 33% 37% 40% 47% 48% 33% 33% 33% 34% 34% 33% 34% 35% 36% 36%

Luxembourg 71% 80% 76% 83% 91% 70% 73% 71% 73% 76% 70% 76% 73% 76% 80% Netherlands 75% 85% 80% 80% 78% 75% 85% 80% 80% 78% 75% 85% 80% 80% 78%

Portugal - 42% 44% 38% 34% 36% 42% 44% 38% 34% 36% 42% 44% 38% 34%

Spain 37% 37% 38% 31% 33% 37% 37% 37% 30% 32% 37% 37% 38% 31% 33%

Sweden 76% 84% 84% 86% 84% 76% 84% 84% 86% 84% 76% 84% 84% 86% 84%

UK 19% 23% 30% 39% 35% 19% 19% 20% 21% 20% 19% 20% 21% 25% 24%

Table 2: METAL RECYCLING


1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

Austria 34% 38% 38% 49% 61% 34% 38% 38% 49% 61% 34% 38% 38% 49% 61%

Belgium 70% 66% 72% 70% 81% 50% 48% 54% 53% 60% 70% 66% 72% 70% 81%

Denmark 16% 40% 35% 49% 40% 16% 40% 35% 49% 40% 16% 40% 35% 49% 40% Finland 8% 15% 19% 28% 42% 8% 10% 13% 17% 22% 8% 15% 19% 28% 42%

France 49% 45% 45% 49% 52% 49% 45% 45% 49% 52% 49% 45% 45% 49% 52%

Germany 82% 83% 82% 78% 79% 82% 83% 82% 78% 79% 82% 83% 82% 78% 79%

Greece 13% 11% 11% 11% 10% 10% 8% 8% 8% 7% 13% 11% 11% 11% 10%

Ireland 5% 4% 25% 24% 37% 4% 3% 21% 20% 33% 4% 3% 23% 22% 35% Italy 5% 5% 11% 45% 44% 5% 5% 11% 20% 33% 5% 5% 11% 22% 35%


Portugal - - 1% 15% 24% 1% 1% 1% 2% 4% 1% !% 1% 3% 5%

Spain 23% 22% 24% 34% 38% 23% 22% 22% 23% 24% 23% 22% 24% 24% 26% Sweden 45% 77% 50% 43% 69% 45% 77% 50% 40% 50% 45% 77% 50% 43% 69%

UK 24% 23% 38% 42% 35% 24% 23% 24% 25% 24% 24% 23% 25% 28% 26%

11 PRO Europe suggested that to measure the effects of the Directive, only household packaging should be taken into account. We agree that it would have been valuable to have shown the development of household recycling rates separately, but we were not able to obtain this information.

21 Table 3: PLASTICS RECYCLING


1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

Austria 20% 27% 25% 26% 29% 20% 27% 25% 26% 29% 20% 27% 25% 26% 29%

Belgium 25% 26% 24% 25% 28% 18% 19% 18% 19% 22% 25% 26% 24% 25% 28%

Denmark 6% 7% 11% 12% 14% 4% 5% 9% 10% 12% 5% 6% 10% 11% 13%

Finland 10% 10% 13% 14% 15% 5% 6% 7% 8% 9% 10% 10% 13% 14% 15%

France 6% 8% 9% 11% 14% 6% 8% 9% 11% 14% 6% 8% 9% 11% 14%

Germany 61% 59% 59% 53% 52% 61% 59% 59% 53% 52% 61% 59% 59% 53% 52%

Greece 3% 4% 3% 3% 3% 2% 2% 2% 2% 2% 3% 4% 3% 3% 3%

Ireland 2% 3% 4% 9% 12% 2% 2% 2% 3% 4% 2% 2% 2% 3% 4% Italy 10% 11% 16% 16% 19% 9% 9% 10% 10% 11% 9% 10% 11% 13% 15%


Portugal 4% 4% 4% 9% 2% 4% 4% 4% 4% 2% 4% 4% 4% 5%

Spain 7% 9% 14% 17% 18% 6% 8% 8% 9% 9% 6% 8% 9% 10% 12% Sweden 14% 25% 20% 14% 17% 14% 25% 20% 14% 17% 14% 25% 20% 14% 17%

UK 6% 7% 13% 15% 16% 5% 6% 7% 8% 9% 5% 6% 7% 8% 9%

Table 4: PAPER & BOARD RECYCLING


1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

Austria 85% 84% 88% 87% 81% 85% 84% 88% 87% 81% 85% 84% 88% 87% 81%

Belgium 78% 83% 70% 82% 86% 39% 55% 46% 60% 60% 78% 83% 70% 82% 86%

Denmark 47% 58% 59% 62% 65% 43% 54% 55% 58% 61% 45% 56% 57% 60% 63%

Finland 57% 57% 61% 62% 58% 57% 57% 61% 62% 58% 57% 57% 61% 62% 58%

France 59% 61% 59% 59% 61% 59% 61% 59% 59% 61% 59% 61% 59% 59% 61%

Germany 88% 88% 87% 90% 91% 88% 88% 87% 90% 91% 88% 88% 87% 90% 91%

Greece 67% 66% 67% 67% 68% 63% 62% 63% 63% 64% 67% 66% 67% 67% 68%

Ireland 17% 15% 14% 17% 24% 17% 15% 14% 17% 17% 17% 15% 14% 17% 17% Italy 36% 37% 39% 46% 52% 36% 36% 37% 37% 38% 36% 37% 39% 41% 44%

Luxembourg 45% 49% 35% 37% 59% 45% 49% 35% 37% 59% 45% 49% 35% 37% 59%

Netherlands 65% 70% 71% 71% 65% 65% 70% 71% 71% 65% 65% 70% 71% 71% 65%

Portugal - 48% 52% 47% 57% 36% 38% 40% 32% 41% 38% 40% 42% 34% 43%

Spain 52% 52% 54% 58% 64% 50% 50% 51% 51% 52% 50% 50% 52% 56% 58% Sweden 66% 84% 72% 63% 69% 66% 81% 69% 60% 65% 66% 84% 72% 63% 69%

UK 41% 47% 49% 50% 53% 37% 42% 44% 45% 48% 39% 44% 46% 47% 50%

2.3.5 Outcome of the scenarios 2.3.5.1 Impacts of the Directive on recycling rates From our two scenarios we conclude that in the absence of a Directive, the tonnages of packaging likely to have been recycled in EU-15 would have amounted to the following percentages of the actual reported recycled tonnages:

22

Table 5: IMPACT OF SCENARIOS 2 AND 3 ON TONNAGES RECYCLED IN EU-15 1997 1998 1999 2000 2001 Glass 98% 98% 95%-96% 92%-94% 92%-94% Metals 99%-100% 98%-100% 92%-94% 84%-87% 88%-92% Plastics 96%-97% 95%-97% 85%-87% 84%-88% 82%-88% Paper & board 98%-100% 97%-98% 96%-98% 94%-97% 92%-96% Total 98%-99% 97%-98% 95%-97% 92%-95% 91%-94%

It is clear that the two sets of assumptions used produce only marginal differences. This is because we believe that implementation of the Directive had little effect on the recycling rates achieved in 7 of the 15 Member States – Austria, Belgium, Finland, France, Germany, the Netherlands and Sweden. Since these were among the countries with the highest recycling rates, and since they account for almost exactly 50% of the population of EU-15, their contribution to the overall EU recycling tonnages outweighs the rest.

Table 6: EU POPULATION AS AT 1 JANUARY 2001 EU-8/15 Population (‘000) EU-7/15 Population (‘000) Denmark 5 359 Austria 8 132 Greece 10 591 Belgium 10 286 Ireland 3 839 Finland 5 188 Italy 57 948 France 59 191 Luxembourg 441 Germany 82 333 Portugal 10 024 Netherlands 16 039 Spain 41 117 Sweden 8 894 UK 58 800 Total 188 119 Total 190 063

It is more interesting to examine the effects of the Directive on the convergence of recycling rates. We believe that those Member States that would not have had legislation in place by 2001 in the absence of a Directive (“EU-8/15”) would have achieved the following percentages of the actual recycled tonnages. This achievement is significantly lower, particularly for the lightweight fraction:

Table 7: IMPACT OF SCENARIOS 2 AND 3 ON TONNAGES RECYCLED IN EU-8/15 1997 1998 1999 2000 2001 Glass 100%-101% 92%-95% 83%-88% 74%-80% 75%-82% Metal 99%-100% 99%-100% 74%-78% 57%-62% 70%-75% Plastics 87% 84%-89% 59%-64% 58%-67% 55%-68% Paper & board 95%-97% 93%-95% 92%-95% 86%-92% 82%-89% Total 96%-98% 93%-95% 86%-90% 79%-85% 77%-84%

2.3.5.2 Impacts of the Directive on tonnages remaining for final disposal We have calculated the effects of the Directive on the packaging waste landfilled or incinerated without energy recovery by subtracting the tonnages recycled from the tonnages generated, and applying to the residual waste the energy recovery percentages reported by the Member States. Comparing the amount of packaging waste landfilled or incinerated without energy recovery from our scenarios with the actual data indicates that for EU-15, the Directive resulted in a reduction of around 10% in the used packaging not recovered in 2001 and that the Directive was having an increasing impact year by year:

23

Table 8: IMPACT OF SCENARIOS 2 AND 3 ON TONNAGES LANDFILLED OR INCINERATED WITHOUT ENERGY RECOVERY IN EU-15 1997 1998 1999 2000 2001 Glass 100%-101% 102%-103% 105%-106% 109%-111% 108%-110% Metal 100%-101% 100%-102% 100%-102% 114%-118% 109%-113% Plastics 101% 101% 104% 104%-105% 101%-104% Paper & board 102%-106% 103%-106% 103%-107% 106%-113% 110%-119% Total 101%-102% 102%-103% 104%-106% 107%-110% 108%-111%

The reduction in used packaging not recovered in those 8 Member States whose recycling performance has been most affected by the Directive is perhaps closer to 15%:

Table 9: IMPACT OF SCENARIOS 2 AND 3 ON TONNAGES LANDFILLED OR INCINERATED WITHOUT ENERGY RECOVERY IN EU-8/15 1997 1998 1999 2000 2001 Glass 100%-101% 104% 108%-110% 115%-117% 113%-116% Metal 100% 100% 104%-106% 122%-126% 113%-116% Plastics 101% 101% 105%-106% 106%-108% 101%-107% Paper & board 102%-104% 103%-106% 105%-107% 109%-115% 115%-125% Total 101%-102% 103%-104% 106%-107% 111%-115% 112%-115%

The impacts on the tonnages not recovered are as follows:

Table 10: COMPARISON OF TONNAGES LANDFILLED OR INCINERATED WITHOUT ENERGY RECOVERY IN EU-15 UNDER THE THREE SCENARIOS 1997 1998 1999 2000 2001 Tonnes not recovered (actual) 24,366,166 24,206,085 23,455,063 22,108,500 21,651,119Additional tonnes not recovered (Scenario 2) 552,012 810,032 1,312,550 2,316,235 2,299,934Additional tonnes not recovered (Scenario 3) 238,934 475,535 860,192 1,568,689 1,673,209

Table 11: COMPARISON OF TONNAGES LANDFILLED OR INCINERATED WITHOUT ENERGY RECOVERY IN EU-8/15 UNDER THE THREE SCENARIOS 1997 1998 1999 2000 2001 Tonnes not recovered (actual) 16,655,245 16,812,375 15,905,983 14,554,520 13,952,622Additional tonnes not recovered (Scenario 2) 272,521 603,747 1,184,130 2,128,057 2,075,361Additional tonnes not recovered (Scenario 3) 207,755 462,065 925,192 1,568,689 1,673,209

The population of EU-15 was 378,181,000 in 2001 and the population of EU-8/15 was 188,119,000. On this basis, we estimate that by 2001 the Directive had reduced the amount of waste landfilled or incinerated without energy recovery by 5-6 kg per capita per annum in EU-15, and by 9-11 kg per annum in the eight Member States where the Directive has had most effect.

Table 12: COMPARISON OF PER CAPITA TONNAGES LANDFILLED OR INCINERATED WITHOUT ENERGY RECOVERY UNDER THE THREE SCENARIOS, 2001 (kg) EU-15 EU-8/15 Tonnes not recovered (actual) 57 74 Additional tonnes not recovered (Scenario 2) 63 85 Additional tonnes not recovered (Scenario 3) 62 83

24 2.4 LIKELY FUTURE IMPACTS OF THE DIRECTIVE 2.4.1 Methodology In section 2.3, we concluded that the Directive had resulted in a reduction of around 10% in the used packaging not recovered in 2001, and that it was having an increasing impact year by year. We have modelled the likely impacts in 2008 in order to demonstrate this. In June 2003, the European Commission Joint Research Centre (JRC), in collaboration with the European Science and Technology Observatory, published Scenarios of household waste generation in 2020. This assumed a 55% increase in GDP between 1995 and 2020, an increasing number of dependants (children and pensioners) relative to the number of people of working age (15-64), and a 10% increase in the number of households over this period. A 55% increase over 25 years is equivalent to a 6.8% increase over eight years. In the JRC’s baseline scenario, this translated into an increase in demand between 1995 and 2020 of 10% for food and drink and its packaging, and a 55% increase in other categories (recreation, information and entertainment, housing, care (incontinence products for babies and the elderly, medicines and cosmetics) and clothing.12

Overall, the report suggested that household waste would increase by 42.5%, but that packaging tonnage would increase by only 14% – which is roughly equivalent to a 3.5% increase over eight years.13 There is no mention of lightweighting or material substitution, so it is not clear whether this was factored in. We asked Pira International for their packaging growth rate forecast. Pira work on the assumption that packaging will grow at half the rate of increase of GDP – i.e. by 3.4% between 2001 and 2008. In other words, their assumption is more or less the same as the JRC’s, but Pira have certainly taken account of lightweighting activities. We assume that non-household packaging will display a similar growth rate. Changes in demand patterns will lead to changes in the packaging mix by 2008, but we have not modelled these. Our 2008 scenarios relate to overall packaging tonnage. The detailed calculations are set out in Annex A.

12 There are physiological limits to the amount of food and drink that can be consumed. On the other hand, the fragmentation of families into separate, smaller households, and the fragmentation of eating habits within the household, will mean that a greater number of product items will be sold, albeit in smaller pack sizes. Packaged non-food products (consumer durables, personal care items etc) will grow at a faster rate. The average UK household (2.3 people), purchases 4,300 items a year – 2,850 food and drink items, 470 clothing and personal care items, 180 home and interior items, and 800 items connected with education, leisure and transport (INCPEN, 2001). 13 There are a number of alternative scenarios based on different assumptions about wider social change, but as these variables are not relevant to this study they have been disregarded.

25 2.4.2 The baseline scenarios Table 13 below compares the actual results achieved in EU-15 in 1997 and 2001 with two forecasts for 2008. Both forecasts assume a 3.4% growth rate between 2001 and 2008, but the forecast recycling rates differ: Scenario A Scenario A assumes that the 55% recycling targets were met in each EU-12 Member State, but that those countries which in 2001 were achieving recycling rates higher than the Directive’s 2008 targets, maintained those higher rates. Scenario B Scenario B assumes that the national brandholder-funded recovery organisations (the “Green Dot” systems, CONAI and PYR) lose their effective monopoly in household waste collection, and that competition between rival systems means that each EU-12 country limits its efforts to what is needed to meet its legal obligations.14 The “Green Dot”-type organisations for household packaging have operated as public interest bodies, planning for the long term. Some of them have exceeded their targets. As the UK example shows, where there are a number of recovery organisations operating in competition with one another, competitive pressures force them to aim at just meeting the targets and no more. In Germany, pressure from the competition authorities has led DSD to abandon its public interest role. In future, it will be competing on equal terms with rival organisations [see Chapter 6]. This development may spread to other Member States, and it suggests that in some countries recycling rates may well fall to the minimum set by the law. Some Member States set national targets which are higher than the minimum targets prescribed by the Directive. There is no reason why the national targets should be reduced under Scenario B, so in these cases we have based our calculations on the recycling rates which we estimate would result from meeting the national rather than the EU minima. Most national targets are sector- or material-specific, however, and as far as we can see the only Member States where existing requirements would result in an overall minimum recycling rate of more than 55% are Germany and the Netherlands. In the case of Germany, we applied the material-specific German recycling obligations for sales packaging and assumed for the sake of simplicity that the same rates were achieved for non-household packaging. For the Netherlands, we assumed that the 2005 recycling targets in Packaging Covenant III will be achieved in 2008. Both scenarios For both scenarios, we have assumed that • Greece, Ireland and Portugal met their derogated recycling targets in 2006, and that by 2008 they

have achieved 40% of the difference between their 2006 and 2011 targets (i.e. a recycling rate of 37%);

• each Member State’s 2008 energy recovery rate is identical to that achieved in 2001.

14 We have confined our calculations to EU-12, because 2008 is an intermediate year for the three derogated EU-15 member states, and they have no national targets for that year.

26

Table 13: PROJECTED RECYCLING RATES UNDER THE DIRECTIVE (tonnes) 1997 2001 2008 2008 EU-15 Actual Actual Scenario A Scenario B Total packaging 52,699,765 56,231,442 58,199,542 58,199,542 Recovered 28,284,315 54% 34,580,323 61% 39,116,363 67% 37,358,521 64% Recycled 25,008,298 47% 30,680,605 55% 35,080,155 60% 33,322,313 57% Energy recovered 3,276,017 6% 3,899,718 7% 4,036,208 7% 4,036,208 7% Disposal 24,366,166 46% 21,651,119 39% 19,083,179 33% 20,841,022 36%

Tonnages recycled (1997=100) 123 140 133 Tonnages disposed of (1997=100) 89 78 86

Thus the effect of Austria, Belgium and Germany lowering their recycling rates 15 would very largely have cancelled out the increasing levels of recycling in the other Member States. 2.4.3 The no-Directive scenarios Table 14 suggests what might have happened in the absence of a Directive: • For EU-7/15, those Member States where we do not believe that the Directive has had a

significant effect, we used the same tonnages as in Table 16 above. • For EU-8/15, those Member States where we consider that the Directive has had a significant

effect, our first assumption was that the average annual increase in the tonnage recycled between 1997 and 2001 would be continued through to 2008. This worked for Ireland, Italy, Spain and the UK, where the results were significantly lower than in Scenario B above.

• For Denmark, Greece, Luxembourg and Portugal, however, the result of applying this calculation

was higher than in Scenario B. We have therefore assumed that in the absence of a Directive, these countries might have caught up with the targets the Directive would have set them:

Table 14: PROJECTED RECYCLING RATES WITHOUT A DIRECTIVE

(tonnes) 1997 2001 2008 2008 EU-15 Scenario 2 Scenario 2 Scenario 2a Scenario 2B Total packaging 52,699,765 55,928,042 58,199,542 58,199,542 Recovered 27,773,778 53% 31,976,989 57% 35,838,954 62% 34,100,368 59% Recycled 24,471,787 46% 27,880,257 50% 31,802,746 55% 30,064,159 52% Energy recovered 3,303,291 6% 4,096,732 7% 4,036,208 7% 4,036,208 7% Disposal 24,918,178 47% 23,951,053 43% 22,360,588 38% 24,099,175 41%

Tonnages recycled (1997=100) 114 130 123 Tonnages disposed of (1997=100) 96 90 97

We considered the following possible post-2001 developments: • We assume that without pressure from Brussels, Denmark’s can ban would not have been repealed

in 2002. By developing our projections from the actual tonnages 1997-2001, we have reflected this no-change scenario in Table 14. Arguably the tonnages in Table 13 should also be adjusted, but the market share of non-refillables has only risen from 3% to 4% following abolition of the can ban, and this is not significant on the European scale.

• Trade and industry mounted legal challenges to the German mandatory deposit system under

German law in parallel with the EU infringement proceedings, so it is possible that the German situation would have been unchanged from the current position. On the other hand, without the

15 And also very marginally Denmark, Luxembourg and the Netherlands.

27

encouragement provided by the EU proceedings, German opponents of mandatory deposits might have conceded defeat in January 2003, when the Federal Constitutional Court rejected the claim that mandatory deposits were unconstitutional. In that event, more orderly deposit arrangements might have been in place by now. However, as we do not know what the situation will be in Germany in 2008 even with the Directive, we have not factored this issue into our projections.

• If the Canary Islands can ban had not been blocked by the Commission, it could well have been

followed by a can ban (and maybe a ban on half-litre PET) on the Greek islands. However, as we understand that recycling activities focus on urban areas on the mainland, we doubt that this would have had a significant effect on Greek recycling rates.

• Sweden – maybe restrictions on heavy metals would have gone further than the current EU

requirements. • If, as assumed in Scenario 2, the UK would have relied on a voluntary agreement until 2000/2001

and had then introduced legislation in force from 2002, we would guess that the targets in these regulations would have been lower than those in the Directive.

2.4.4 Projected impact of the Directive 1997-2008 Table 15 compares the recovery, recycling and disposal rates achieved or likely to be achieved under the Directive with those we would have expected in the absence of a Directive. On our calculations, the tonnages recycled in EU-15 will continue to be about 10% higher than they would have been in the absence of a Directive. If measures are taken to promote competition in household packaging waste management sector and these drive down recycling rates to the minimum required by law, this would have minimal effect on the difference between the Directive and no-Directive scenarios. By 2001, the Directive resulted in a reduction of 10% in the tonnage of used packaging for final disposal. By 2008, even if the energy recovery rate remains constant, we would expect the Directive to have resulted in landfilling and incineration without energy recovery being 14%-15% lower than it would have been in the absence of a Directive:

Table 15: IMPACT OF THE DIRECTIVE AGAINST NO-DIRECTIVE SCENARIO 2 EU-15 1997 1998 1999 2000 2001 2008 2008 Scenario A Scenario B Total packaging 100% 100% 100% 100% 101% 100% 100% Recovered 102% 103% 105% 107% 108% 108% 108% Recycled 102% 103% 106% 109% 110% 109% 109% Energy recovered 99% 98% 98% 97% 95% 100% 100% Disposal 98% 97% 95% 91% 90% 87% 88%

In terms of absolute tonnages, the Directive appears to be responsible for the increased recycling of 2.8 million tonnes in 2001, and we expect this to grow to 3.25 million tonnes by 2008. In per capita terms, this represents an additional 7.4 kg per person in 2001, rising to 8.6 kg per person in 2008:

Table 16: IMPACT OF THE DIRECTIVE ON RECYCLING TONNAGES AND RATES

EU-15 1997 2001 2008 2008 Scenario A Scenario B With Directive 25,008,298 47% 30,680,605 55% 35,080,155 60% 33,322,313 55%Without Directive 24,471,787 46% 27,880,257 50% 31,802,746 57% 30,064,159 52%

Impact of the Directive +536,511 +2,800,348 +3,277,409 +3,258,154

28 The disposal savings are of similar orders of magnitude:

Table 17: IMPACT OF THE DIRECTIVE ON DISPOSAL TONNAGES AND RATES

EU-15 1997 2001 2008 2008 Scenario A Scenario B With Directive 24,366,166 46% 21,651,119 39% 19,083,179 33% 20,841,022 36%Without Directive 24,918,178 47% 23,951,053 43% 22,360,588 38% 24,099,175 41%

Impact of the Directive -552,012 -2,299,934 -3,277,409 -3,258,153

We do not have sufficient data from the ten new Member States to be able to replicate the foregoing analysis for EU-25. To indicate general orders of magnitude, we have taken the recycling rates the new Member States have reported for 2002, and have calculated the increase in recycling needed on the basis of a straight-line projection to the 55% minimum rate by the deadlines laid down.16 On a weighted average according to population, this shows that between 2002 and 2008, the new Member States must increase their combined recycling rate from 23% to 40%.

Table 18: IMPACT OF THE DIRECTIVE ON FUTURE RECYCLING RATES IN THE TEN NEW MEMBER STATES

Population Recycling rate Millions % of EU-NEW

6 Years as % of total lead-time 2001 2008

Cyprus 0.75 1% 60% 7% 36% Czech Rep. 10.3 14% 60% 31% 45% Estonia 1.5 2% 60% 25% 43% Hungary 10.1 13% 60% 34% 47% Lithuania 3.7 5% 60% 15% 39% Latvia 2.5 3% 46% 31% 42% Malta 0.4 1% 55% 2% 31% Poland 38.7 51% 50% 19% 37% Slovenia 2 3% 60% 30% 45% Slovakia 5.4 7% 60% 21% 41% ALL 75.4 100% 23% 40%

Figure 4 shows how this relates to the rate of progress expected in the existing Member States:

Figure 4: Recycling rates 1997-2008 in EU-25

0%

10%

20%

30%

40%

50%

60%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Recycling % EU-12 Recycling % EU-3Recycling % EU-NEW

16 Directive 2005/20/EC of the European Parliament and of the Council of 9 March 2005 amending Directive 94/62/EC on packaging and packaging waste, sets 31 December 2012 as the deadline for meeting the second-stage targets in Cyprus, the Czech Republic, Estonia, Hungary, Lithuania, Slovakia and Slovenia. 31 December 2013 is the deadline for Malta, 31 December 2014 for Poland and 31 December 2015 for Latvia.

29 2.5 NATIONAL MEASURES TO ENCOURAGE REUSE SYSTEMS 2.5.1 The policy options We were asked to consider a scenario with “any national measures adopted to encourage reuse systems on the basis of Article 5 of the Directive,” and in Scenario 4 we assume that all Member States took action to promote the use of refillable beverage containers. Policy options already in place when the Directive was adopted were • Statutory beverage container targets for refilling or recycling (Austria and Sweden):

Austria had a combined reuse/recycling target. In Sweden, there is a 90% reuse/recycling target for PET beverage containers. Sweden also has separate recycling targets for aluminium and PET beverage containers which are higher than the recycling targets for metal and plastics packaging for other products.

• A tax on non-refillable beverage containers (Belgium and Finland):

The Belgian law exempted non-refillables achieving the recycling targets laid down. These rose year by year from 1996 to 2000, when they were 80% for glass and metals and 70% for plastics and beverage cartons. Although these targets were somewhat higher than the general targets for packaging, the beverage container eco-taxes were never imposed, as it was decided that beverage suppliers would be deemed to have met this obligation if they were members of the FOST Plus multi-material recovery organisation and the overall FOST Plus recycling rates were above the general targets. In Finland, the tax applies to both refillables and non-refillables, but there is a 75% reduction for deposit-bearing refillables provided the stipulated return rates are met.17

• A ban on beverage cans and a requirement that any non-refillable bottles should be subject to a

deposit-and-return system equivalent in its effects to the dominant refillable bottle system (Denmark):

Given the market strength of the established companies using refillable bottles, non-refillables did not gain a foothold in the market until the can ban was replaced by a deposit-and-return system in 2002. Even now, the market share of non-refillables is only 4% – but as explained in section 5.3, the tax system has served to dissuade the purchase of non-refillables.

• Mandatory deposits on non-refillables (Finland and Sweden):

These systems were introduced when non-refillables first came onto the market, and operate alongside traditional refillable bottle systems.

• Market share quotas designed to protect refillables (Germany and Portugal), or a “conditional

standstill” on refill, i.e. with exemptions where non-refillables could be shown to be environmentally equal (Netherlands):

These arrangements are discussed in detail in Chapter 4.

The Luxembourg authorities were intending at one time to conclude a voluntary agreement on reuse with the beverage sector, but this was never proceeded with.

17 95% within four years of the system being established.

30 Protection of refillable beverage containers was not a public policy objective in France, Greece, Ireland, Italy, Spain or the UK. If Member States had been required to introduce specific measures to support refill – which was never a real possibility in the climate of 1994 – they would undoubtedly have chosen an option that allowed fillers to opt for increased recycling as an alternative , i.e. either • a combined reuse/recycling target, or • a tax on non-refillable beverage containers with an exemption for members of an approved

recovery organisation or for materials which achieved a specified recycling rate 2.5.2 Impact on reuse We believe that it is unlikely that any requirements pursuant to Article 5 would have resulted in an increase in beverage containers reuse. Even the refill quotas imposed in Germany and Portugal have failed to arrest the decline in the demand for refillable beverage containers: Figure 5: Germany – market share of refillable beverage containers (litres sold)

0102030405060708090

100

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

All beverages (except milk) Mineral water Beer Carbonated soft drinks

Source: BMU (Federal Environment Ministry)

Imposition of refill quotas

Figure 6: Portugal – market share of refillable beverage containers (by number of containers sold)

0

10

20

30

40

50

60

70

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Carbonated soft drinks Mineral water

Source: QUERCUS (Associação Nacional de Conservação da Natureza)

Imposition of refill quotas

31 The Portuguese NGO Quercus18 has argued that failure to maintain the Portuguese reuse rates is due to lack of enforcement. It adds that when this law appeared, the Secretary of State for the Environment promised companies subsidies to help them adapt. A one-year transition period was allowed, but by the time this had passed, no more than three or four companies had made the necessary changes, and those that had, received no help from the government. “In the meantime, a company began to work and received the proper licenses although it had no returnable packaging.” Further time has passed and, says Quercus, the only investment being made is to promote Verdoreca, a subsidiary set up by the Green Dot system SPV to collect used packaging from cafes, hotels and restaurants for recycling. Meanwhile the dual stocking requirement of the Portuguese law is so loosely worded that it can easily be circumvented by the retail trade. Retailers only have to sell one brand in one size of refillable bottle. The producers agree with the NGOs that the Portuguese requirements are not being effectively enforced, but this was certainly not the case in Germany, where the sanction was the automatic imposition of mandatory deposits, a requirement that the beverage industries have always been very keen to avoid. Similarly, the introduction of deposits on non-refillable beverage containers in Sweden has not led to a shift towards reuse:

Figure 7: Sweden – market share of refillable beverage containers (in %)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

soft drinks/water beer/soft drinks/water beer

Introduction of a deposit on cans Introduction of a

deposit on one way PET Introduction of

refillable PET

2.5.3 Impact on recycling and disposal As explained in section 2.5.1, we believe that if France, Greece, Ireland, Italy, Spain or the UK had had to promote beverage containers reuse in line with Article 5 of the Directive, they would have chosen policy options which allowed recycling as an alternative. The result would have been that driven by the beverage sector, recycling rates in those countries would have been accelerated in the early years of implementation of the Directive, but this effect

18 Associação Nacional de Conservação da Natureza.

32 would have lessened year by year as the recycling of non-beverage packaging developed. The extent of this acceleration, and how long-lasting its effects were, would depend on • how high any combined reuse/recycling target was set, or • how high any tax on beverage containers with exemptions for reuse or strong recycling

performance. The Belgian example demonstrates this effect. Following adoption of the eco-tax law in 1993, the recovery organisation FOST Plus was set up in 1994, three years before the Inter-regional Co-operation Agreement transposed the Directive. The beverage sector needed to develop container recycling to justify an exemption from the tax, and beverage producers gave FOST Plus its critical mass long before general recycling targets for packaging came into effect.19

Grafting beverage containers legislation onto a mature recycling system for all packaging has the opposite effect, however. This is discussed in section 4.7.5.

19 By early 1995, FOST Plus already had 420 members.

33

2.6 PACKAGING PREVENTION AND SUBSTITUTION At any given recycling rate, the amount of packaging recovered or disposed of will depend on the amount of packaging placed on the market. Packaging reduction programmes have been in place in most companies for many years, for economic rather than environmental reasons, but for ten years or more companies have also been factoring environmental concerns (and marketing issues relating to the environment). In many Member States, catalogues have been published since the early 1990s showing specific examples of year-on-year improvements. Under the Essential Requirements in the Directive, packaging weight and volume is to be minimised to the amount necessary for functional purposes. Legislation implementing the Essential Requirements came into force in France in October 1998 and in the UK at the beginning of 1999. The other EU-15 Member States have transposed the Essential Requirements provisions of the Directive but have not yet set up an enforcement regime, and even in France and the UK it is unlikely that reduction measures specifically attributable to the Directive would have worked through to the market before 2001. 20

The CEN standard on prevention by source reduction (EN 13428:2000) provides companies with a methodology for a systematic evaluation of their packaging reduction opportunities, but this is also unlikely to have worked through to the market before mid-2001 at the earliest. Two small-scale surveys (by Perchards for the UK Government 21 and by FFact for EUROPEN 22) have indicated that companies have usually chosen to implement packaging reduction systems Community-wide rather than adopting special procedures for their sales into France and the UK. Nevertheless, we believe that these benefits of the Directive would not have had a significant effect on the EU market until after our 2001 cut-off date so we have not factored them into our scenarios. Legislation in Belgium and Spain requires companies or product sectors to publish packaging prevention plans. The first Dutch Covenant (but not the current Covenant III) also required plans to be developed. The impact of these plans has been evaluated by Pira International and Ecolas for the parallel study commissioned by DG Environment. The other question is whether the Directive has led to substitution of one packaging material for another. Where recovery organisation licence fees for easily collected and readily recyclable materials such as glass and corrugated board are much lower than the fees charged on lightweight packaging, substitution is likely to occur. However, this effect is likely to be strongest in the countries with the highest recycling targets, which are also the countries that would have adopted legislation even in the absence of a Directive. Therefore, we have not factored into our scenarios any substitution effects resulting from prevention measures. We have however considered in Scenario 3 the implications for the overall market for each material of a hypothetical major intervention in the beverage containers market in Ireland and Portugal.

20 Though PIRA and Ecolas 2004 have identified an interesting correlation between enforcement of the Essential Requirements in France and the UK and a decoupling of GDP from packaging waste generation [report Annex 7]. This decoupling is comparable with that in Belgium and Spain, where the requirement to develop prevention plans appears to have had broadly similar effects, and is greater than for EU-15 as a whole. 21 Perchards: Impacts of the Packaging (Essential Requirements) Regulations – a brief survey, Department of Trade and Industry, October 2003. 22 FFact Management Consultants: Compliance with the Packaging and Packaging Waste Directive’s Essential Requirements for Source Reduction – a survey of best practices of EUROPEN member companies, EUROPEN, December 2003.

34 2.7 ECONOMIC IMPACTS 2.7.1 Introduction To assess the impacts of implementation of the Packaging Directive on the Internal Market, the costs and benefits of implementation must first be assessed from an economic perspective. This section of the report attempts a quantitative assessment as far as this is possible. In subsequent chapters this assessment will be used as the basis for a further analysis focusing on the Internal Market aspects, and in particular of national measures taken independently of the Directive as well as of differences in national measures to implement the Directive. In section 2.3.2 a description was given of the different scenarios and the impact of the Directive in terms of achieving recycling targets and in reduction of disposal. Three scenarios were considered: • Scenario 1 – the situation as reported; • Scenario 2 – pre-existing legislation but no new legislation; • Scenario 3 – pre-existing legislation plus the legislation in those Member States that opted to set

stricter targets than those in the Directive. The outcome of these scenarios will be used to evaluate the economic impact of the Directive. Pira and Ecolas 2005 used the same scenarios in their study on the impact of the Directive. For that reason we use the same methodology and basic data for our assessments in this study. A more detailed description of the methodology and results can be found in Pira and Ecolas 2005. The main aspects of this work are summarised in Annex B. Here only a limited description and presentation of the main findings of that study are given. 2.7.2 Methodology and results The methodology for this assessment is based on the Handbook for (Extended) Impact Assessment in the Commission used to assess the impact of proposed measures. The methodology had to be re-interpreted to be able to use it for an ex post evaluation in this study. The aim was not to make exact calculations of costs, but rather to estimate the magnitude of the costs, and it is in that respect not a fully-fledged cost-benefit analysis. The following terms are used: • Private costs

These are the costs incurred by a particular sector or group (e.g. packaging manufacturers, waste collectors or businesses specialising in waste management) because of the Directive.

• Social costs

These are the costs of the Directive to society as a whole. • Incremental impacts

Only the additional impacts that are directly attributable to the Directive (i.e. the incremental impacts) are considered, as opposed to changes that would have occurred anyway. This is ensured by using the baseline scenario as described in section 2.3.2.

35 To assess the direct costs and benefits of packaging recycling, the following three types of costs need to be distinguished: • The gross costs of packaging recycling (all costs from the moment a packaging becomes waste to

the moment when, after recycling, it becomes a recycled product) ; • The financing need (the gross costs minus the revenue from the sale of secondary raw materials) –

i.e. the funds that need to be injected into the market in order to render recycling economic, in other words, to make recycling happen. This is the relevant cost from the point of view of the recycling chain.

• The net costs for society (the financing need minus the saved disposal costs). Depending on the

material and the circumstances, recycling may be cheaper or more expensive than disposal – this is the relevant cost from the point of view of society.

Table 19 shows the results of calculating the incremental costs of meeting the Directive’s recycling and recovery targets. These results were calculated by extracting the total financing need of Scenario 2 from the financing needs of the reported recycling and recovery rates as achieved by implementing the Directive in Scenario 1. The incremental costs based upon Scenario 3 have not been calculated. Since the recycling and recovery rates under Scenario 3 are even closer to those in Scenario 1, the outcome would be a lower estimate of the incremental costs.

Table 19: TOTAL FINANCING NEED FOR PACKAGING WASTE MANAGEMENT FOR EU-15 23

1997 1998 1999 2000 2001

bn. euros/year 6.0 6.3 6.6 6.7 6.8 Scenario 1 Amounts as reported % of Costs Scenario 1 100% 100% 100% 100% 100%

bn. euros/year 6.0 6.3 6.4 6.5 6.6 Scenario 2 Pre-existing legislation % of Costs Packaging Directive 99% 99% 97% 97% 97%

bn. euros/year 0.050 0.055 0.176 0.185 0.227 Incremental cost : Costs of Packaging Directive – Pre-existing legislation

% of Costs Packaging Directive 0.8% 0.7% 2.7% 2.8% 3.3%

The incremental costs increase from € 50 million in 1997 to € 227 million in 2001. The percentages relate to the costs of implementing the Directive. This shows that the incremental costs of meeting the Directive’s recycling and recovery targets are quite limited. A calculation based upon Scenario 3 would provide an even lower estimate. To calculate the net costs for society, one would need to compare the actual costs of recovery and recycling with the costs in a scenario with no recovery. We concluded that a zero recovery scenario was not very relevant because it is purely theoretical, since a number of Member States were already regulating packaging before the Directive came into effect. In fact the estimates in section 2.3.5 demonstrate that the baseline scenario is quite close to the recovery and recycling rates as achieved by the Directive. Pira and Ecolas 2005 estimated the additional costs of achieving the targets of the Directive compared with a scenario with no recovery at all. These additional costs were calculated as € 0.27 bn in 1997, rising to € 0.61 bn in 2001. However, only the costs indicated in Table 19 above can be attributed to implementation of the Directive. The full calculation of the costs for society as presented by Pira and Ecolas are shown in Annex B.

23 In real prices 1998.

36 2.7.3 Distributional consequences Pira and Ecolas 2005 made an attempt to quantify the costs and benefits for different groups in society. This is relevant because even if the Directive has incurred costs for society as a whole, it may have had positive or negative impacts on different groups in society. Table 20 on the next page summarises the groups considered relevant in this context and offers a qualitative description of the impacts on these groups. Pira and Ecolas 2005 does not quantify these distributional consequences. Such quantification is extremely difficult: • The various compliance systems in the Member States differ considerably in the type of costs

included into their fee structure. Therefore, these costs cannot be compared to provide a quantitative overview for the Community.

• Empirical data exist only for a limited number of Member States to allow costs to be broken down

for these various groups in society. • There is a lack of empirical data on the impact of the shift from public financing to private

financing or the impact of higher packaging prices on consumer purchasing. As the incremental costs of implementing the Directive are estimated to be rather limited, no large changes in consumption patterns are to be expected.

Our study does not attempt to take this analysis further, as we do not believe that such an exercise would provide meaningful results.

37 Table 20: OVERVIEW OF COSTS AND BENEFITS TO PARTICULAR SECTORS

COSTS AND BENEFITS

AM

OU

NT

IN

19

98

(B

N. E

UR

O)

PA

CK

AG

ING

M

AN

UFA

CTU

RER

S (1

)

PA

CK

AG

ING

REC

YC

LIN

G

IND

US

TRY

RA

W M

ATE

RIA

L P

RO

DU

CER

S

CLA

SSIC

AL

WA

STE

TREA

TMEN

T IN

DU

STR

Y

PA

CK

AG

ING

CH

AIN

OR

P

AC

KER

S/FI

LLER

S/

IMP

OR

TER

S (2

)

PR

IVA

TE H

OU

SEH

OLD

S

MU

NIC

IPA

LITI

ES

Financing need for packaging recycling 3.1 Bear cost for x%

Benefit Bear cost for y%

Bear cost for z%

Bear cost for w% (3)

Gross costs of packaging recycling 4.4 Cost (profit excluded)

Cost (profit excluded)

Revenue from the sale of secondary raw materials

- 1.3 Benefit Cost

Total financing need for incineration with energy recovery

0.5 Bear cost for x%

? Bear cost for y%

Bear cost for z%


Total financing need for disposal of remaining packaging waste

2.7 Cost (profit excluded)

Bear cost for y%

Bear cost for z %


Revenue from incineration with energy recovery

0.5 Benefit

Revenue from the sale of the recovered energy

N/A Benefit

Revenue from disposal of remaining packaging waste

2.7

Revenues from sales of virgin materials 1.3 Benefit (plus profit)

Revenues from packaging sales N/A Benefit Revenues from sales of products Benefit

(1) Packaging manufacturers : (in most countries) contribute to the recovery cost by paying a fee or tax for putting a pack on the market

(2) Packaging chain or Packers/fillers/importers (depending on the country) (3) In many countries the municipalities are responsible for the (separate) collection of waste fractions

The one aspect that we have looked into in more depth is the redistribution of costs for collection and waste management from municipal authorities to industry as a result of the introduction of producer responsibility schemes in most of the Member States. National packaging recovery organisations have taken over responsibility for the separate collection of used packaging from households or else provide financial compensation for additional collection activities by the municipalities. These organisations are financed by industry through fees paid to them which are based on the amount of packaging placed on the market. In most Member States, the brandholder has the largest part of the financial burden, but not all Member States allocate responsibility for funding funds in the same way. For that reason, and because of uncertainties in the data, we do not think it is possible to attribute the redistribution of costs to the different type of actors within industry. Even an estimate of the total amount of the costs to industry provides only a fairly rough indication. It is estimated that in the current situation industry bears approximately 65% of the cost for recovery of packaging in the EU. This would mean approximately € 2.8 bn in 2001. These costs would have been borne by the municipalities if, in the absence of the recovery organisations, Member States had

38

had to put in place similar collection systems run by the municipalities. Under normal market conditions, the costs for industry are incorporated in the price of the product, whereas the costs for municipalities would be covered by taxes. Our estimate of the shift of costs is based upon the following assumptions. In principle, the municipalities bear the cost for collection and management of packaging in residual waste from households.24 Recovery organisations do not interfere there. Industry bears the cost for collection and management of packaging waste from sources other than households. The only redistribution of costs is for the separate collection and recovery of packaging waste from households. In the absence of the recovery organisations, this would have been financed by the municipal authorities through taxes or levies. The total costs for recycling are estimated to be € 3.7 bn. It is assumed that the costs of collecting and sorting packaging waste from businesses can be financed by the revenues from the collected material. Therefore, the total costs of recovery are attributable to the costs for collection, sorting and recovery of household waste.25

To estimate industry’s share of the financing of these costs, two calculations were made: • An estimate per Member State of those costs of separate collection and recovery of used

packaging from households borne by the recovery organisation. These vary from 1%-2% in Denmark and the Netherlands to 100% in Germany and Austria. It was estimated that on average, 65% of these costs would be financed by the recovery organisations. Thus the costs range from approximately € 2.4 bn in 1998 to € 2.8 bn in 2001.

• The annual combined expenditure of the recovery organisations, which varies from some € 2.8 bn

in 1998 to € 3.0 bn in 2002. Not all of this expenditure is dedicated to the collection and recovery of household packaging; the administrative tasks of collecting the fees and monitoring the amounts of packaging placed on the market are also included, as are the overhead costs of the recovery organisations themselves. It is estimated that the costs of managing the packaging waste are approximately 90% of the expenditure of the organisations, i.e. from around € 2.5 bn in 1998 to € 2.8 bn in 2001.

These two calculations come quite close. It should however be kept in mind that the expenditure of the recovery organisations does not include obligated companies’ internal administrative costs. These are impossible to quantify, but in many cases will have been quite considerable. The cost to a major multinational of employing one or two extra people per country will not be significant, and a small company with a simple product range may not have incurred much cost; but for a medium-sized company producing goods in a variety of packaging formats or importing them from outside the Community, the burden may have been substantial. This also suggests that the foregoing calculations underestimate the total costs for industry and hence the total costs of implementation of the Directive.

24 We are not aware of any detailed arrangements that might have been negotiated for funding by industry of that proportion of household packaging waste that ends up in the residual municipal waste collection system. 25 In reality, the situation is slightly more complex than this. Small end-users will pay to have their backdoor packaging waste taken away, but larger end-users will usually be able to sell the material, and use the proceeds to defray their household packaging waste management costs.

39

Table 21: PUBLIC/PRIVATE SECTOR SHARES OF COLLECTION AND SORTING COSTS FOR HOUSEHOLD PACKAGING, 2001 Recovery

organisations Municipalities Rationale for rate of municipal financing

Austria 100% 0% ARA covers full cost of collection and sorting of household packaging

Belgium 100% 0% FOST Plus covers full cost of collection and sorting of household packaging

Denmark 2% 98% Municipalities set up the system, no compliance scheme but non-refillable beverage containers supported through the deposit system 26

Finland 7% 93% Municipalities cover collection costs, PYR pays some sorting costs – but only up to a 61% recycling rate. PYR concentrates on non-household packaging 27

France 65% 35% Eco-Emballages only covers additional costs of collection and sorting

Germany 100% 0% DSD covers all costs of collection and sorting Greece 0% 100% HERRCO was not yet operational in 2001

Ireland 25% 75% Repak has focused more on non-household packaging, but is giving increasing support to municipalities

Italy 65% 35% CONAI covers most costs but not all Luxembourg 75% 25% Valorlux only covers additional costs of collection and sorting

Netherlands

1%

99%

SVM-Pact does not contribute significantly to the costs of collection or recycling. EcoVerpakkingen provided some support for recovery of beverage cartons and recently for glass recycling and plastic bottle collection, as well as anti-litter activities

Portugal 65% 35% SPV only covers additional costs of collection and sorting Spain 65% 35% Ecoembes only covers additional costs of collection and sorting Sweden 95% 5% Repa covers almost all costs UK

7%

93%

In principle, producers cover all costs of meeting the targets, but the main focus has been non-household packaging (only 35% of household packaging recycled 2001). PRN revenues provide some support for household packaging waste management

26 We have assumed that beverage containers represent 20% of all packaging, but as the market share of non-refillables is only 4%, this is less than 1% of the total. Since the cost of the deposit system is high, we assume that the producers’ contribution is 2% of the total cost. 27 We have assumed a 5% contribution for non-beverage costs plus a further 2% through the beverage container deposit system.

40

Table 22: USED PACKAGING RECOVERY TONNAGES FUNDED BY PRODUCERS Total tonnage of used packaging recovered Producers’ share of used packaging recovery

1997 1998 1999 2000 2001 1997 1998 1999 2000 2001

Austria 735,000 731,000 766,000 842,500 752,500 735,000 731,000 766,000 842,500 752,500Belgium 765,300 927,770 937,190 950,230 1,076,374 765,300 927,770 937,190 950,230 1,076,374Denmark 758,927 741,755 776,083 776,958 780,070 15,179 14,835 15,522 15,539 15,601Finland 225,300 235,200 265,500 265,800 284,000 15,771 16,464 18,585 18,606 19,880France 5,523,000 5,960,000 6,239,000 6,449,000 6,579,000 3,589,950 3,874,000 4,055,350 4,191,850 4,276,350Germany 9,756,100 10,033,900 10,257,900 10,491,600 10,419,800 9,756,100 10,033,900 10,257,900 10,491,600 10,419,800Greece 263,200 275,300 287,500 301,100 315,300 0 0 0 0 0Ireland 83,532 86,651 97,215 123,953 179,333 20,883 21,663 24,304 30,988 44,833Italy 2,331,100 2,778,940 3,168,640 3,882,500 4,354,800 1,515,215 1,806,311 2,059,616 2,523,625 2,830,620Luxembourg 29,426 32,461 31,338 36,081 44,921 22,070 24,346 23,504 27,061 33,691Netherlands 2,130,000 2,126,000 2,211,000 2,142,000 1,655,000 21,300 21,260 22,110 21,420 16,550Portugal 272,950 357,118 402,644 556,912 628,879 177,418 232,127 261,719 361,993 408,771Spain 2,164,460 2,332,220 2,477,971 2,768,474 2,959,137 1,406,899 1,515,943 1,610,681 1,799,508 1,923,439Sweden 601,100 781,300 709,900 640,900 662,920 571,045 742,235 674,405 608,855 629,774UK 2,654,870 3,168,705 3,649,239 3,870,736 3,888,289 185,841 221,809 255,447 270,952 272,180

EU 15 28,294,265 30,568,320 32,277,120 34,098,744 34,580,323 18,797,969 20,183,663 20,982,331 22,154,727 22,720,364

Producers’ share of total recovery 66.4% 66.0% 65.0% 65.0% 65.7%Total recovery costs (€ million) 3,655 3,850 4,070 4,250

Costs borne by industry (€ million) 2,413 2,053 2,644 2,792

41

Table 23: EXPENSES OF THE RECOVERY ORGANISATIONS € millions 1998 1999 2000 2001 2002 2003 Remarks

Austria 194 195 184 162 156 148 ARA also covers non household packaging ( +/- 40% of total amount managed by ARA)

Belgium 58.2 65.8 73.7 83.7 95.6 99.9 Denmark 0 0 0 0 0 0 No recovery organisation Finland n/a n/a n/a n/a n/a n/a France 118 156 182 283 296 n/a Germany 2063 1989 2018 1879 1874 1697 Greece 0 0 0 0 0 1.7 Ireland 2.3 2.04 6.07 12.5 15.4 15.8 Financing need, not expenditure Italy 200 216.5 227.9 231.1 233.8 n/a Revenues, not expenses Luxembourg 1.23 1.86 2.7 3.14 3.71 4.55

Netherlands 3 3 3 3 3 3 Costs related to packaging waste recovery are negligible

Portugal 6.1 10 n/a n/a n/a n/a Revenues, not expenses Spain 20.3 51.3 91.4 134.9 160.6 /na Sweden 43 44 47 48 51 56

UK 118 53 55 106 175 78 PRN and PERN revenues, not expenses of the

compliance schemes 90% of organisation costs 2,544 2,509 2,602 2,652 2,757

Source: Pira International and Ecolas SVM-Pact (Netherlands data) DEFRA (UK data)

42

2.8 THE IMPACTS OF CROSS-BORDER SHOPPING 2.8.1 Introduction Development of the EU Single Market has facilitated not only business-to-business trade but also personal shopping in neighbouring countries. This occurs when short, low-cost travel is possible between countries with large retail price differentials. In recent years it has become popular for EU citizens to purchase goods in neighbouring countries, either on special shopping trips or in the course of leisure or business trips. Commercial parallel imports have also increased. Cross-border commercial trade and personal shopping has been facilitated by easier border controls and fewer restrictions on personal imports, through increased car ownership and the increased availability of public transport links that are becoming more and more affordable.28 By its nature, it is hard to quantify cross-border shopping, and there is no systematic statistical recording of it. However, a proportion of these purchases are made in specialist border retail outlets and in duty free outlets, such as those on ferries. The option for economic operators and consumers to seek out cheaper products in neighbouring Member States can be seen as a benefit of the Internal Market. This trade results in increased competition and lower consumer prices. However, it also gives rise to increased transport movements and increases the likelihood of tax avoidance and non-compliance with producer responsibility requirements. Regardless of one’s view of cross-border trade, it is certain that this type of informal trade is a fact of life. The expansion of the EU from 15 to 25 countries has given rise to an open market for trade between Member States with very different price and income levels. We therefore expect that cross-border personal shopping and grey imports will continue to grow, which will create new problems for packaging recovery and return systems based on national financing. These systems must accommodate the packaging arising from these imports. Differences in taxation are the most important cause of price differentials between Member States at a similar level of economic development , and for this reason, personal imports of alcoholic drinks and cigarettes are particularly significant. For example, data from the Danish Brewers’ Federation indicates that personal imports of beer from Germany into Denmark are increasing steadily. In 1991, it was estimated that 54 million litres of beer were imported,29 rising to 96 million litres in 1999, and 154 million in 2003. In 2004, private imports of beer into Finland amounted to 53.7 million litres,30 about 10 litres per capita. This represented 13% of domestic sales and was double the volume of 2003 imports. Personal import quotas had been abolished on 1 January 2004. An estimated 90% of the beer was in cans, and about 60% of the private imports were re-imports of Finnish beer, a share which is declining as the packaging and marketing of Estonian beer improves.

28 EU citizens are permitted to import as much as they wish provided it is for personal use. Guidance from UK Customs for example says that more than 3,200 cigarettes, 110 litres of beer or 90 litres of wine is “considered suspicious” (source: The Independent, 9 October 2004). Given that this quantity can be imported on each visit and clearly there is no limit to the number of visits, these quantities are significant. 29 Source: Institut for Grænseregionsforskning. 30 TNS Gallup study commissioned by the Federation of the Finnish Brewing and Soft Drinks Industry.

43 Private imports of other alcoholic beverages are significant too. Private imports of strong spirits tripled in 2004 to 15.9 million litres. Those of long drinks and ciders equalled 19% and 15% respectively of domestic sales. 2.8.2 Impact of taxes and excise duties on retail prices 2.8.2.1 Finland and Estonia Average retail prices of all alcoholic beverages in Finland were more than double those in Estonia in 2003 (and 3 times higher in the case of tobacco products). The difference is largely explained by excise tax levels, which in 2005 are still 4-5 times higher in Finland than in Estonia.

Table 24: RELATIVE PRICE LEVELS IN ESTONIA AND NEIGHBOURING COUNTRIES (2003)

% more (- less) expensive than in Estonia

Overall survey

Food products N.E.C.

Alcoholic beverages

Tobacco

Finland 100% 76% 103% 215% Sweden 95% 74% 71% 226% Norway 165% 58% 181% 495% Latvia -8% -13% 4% -26%

Derived from Eurostat, Statistics in Focus, Eating, drinking, smoking – comparative price levels in EU, EFTA and Candidate Countries for 2003

On 1 March 2004, in an attempt to curb private imports, Finland reduced its excise tax on beer by 32%, on spirits by 44% and on wine by 3%. Despite the tax reduction and Estonia’s decision in July 2004 to restrict the opening hours of alcohol retailers, the Finnish Statistics office estimated in August 2004 that private imports were 2-3 times higher than in 2003. In January 2005 Estonia raised its excise duty on spirits by 5%, excepting wine and fermented beverages. The increase will be repeated in 2006 and 2007. However, this will not narrow the retail price gap between the countries by much. The alignment of excise levels cannot be done abruptly. A sudden increase in Estonia could encourage the black market and smuggling of alcohol from Russia and the Ukraine. A reduction in the excise tax in Finland could encourage an increase in personal imports from Sweden (so needs to take account of Swedish tax levels) and would increase alcohol consumption, which is contrary to health policy.

Table 25: EXAMPLES OF RETAIL PRICES IN FINLAND AND ESTONIA BEER: 0.33 litre, 5% vol. VODKA: 1 litre, 40 % vol. FINLAND FINLAND Before

1 March 2004

After 1 March

2004

ESTONIABefore

1 March 2004

After 1 March

2004

ESTONIA

Excise Tax 0.47 0.32 0.06 20.18 11.30 3.88 Retail & Manufact.

0.40 0.40 0.40 2.00 2.00 2.00

VAT 0.19 0.16 0.07 4.88 2.93 0.94 Retail Price (€) 1.06 0.88 0.53 27.06 16.23 6.83 121% 100% 61% 167% 100% 42%

2.8.2.2 Belgium, France, Luxembourg and the Netherlands Section 5.3.7 describes the impact of the Belgian eco-tax on non-refillable beverage containers, which was already heavy when introduced in 2004 and was increased still further in January 2005. The aim of the tax was to bring about a price difference between refillable and non-refillable containers large enough to have a dissuasive effect comparable to that of deposits, but in practice the fillers and/or

44 retailers have moderated this effect by reallocating or partially absorbing the tax burden so as to reduce the price differential. Cross-border shopping is easy for Belgian consumers, and one unintended consequence of the tax has been a loss of beverage sales in Belgium in favour of personal imports from shops just over the border in France and Luxembourg. The Belgian food industry association FIEB/VIWF commissioned market research company IRB europe to survey Belgian shoppers in six supermarkets just over the border in France, the Netherlands and Luxembourg, to find out the reasons for their going to these stores. As Figure 8 shows, almost all the shoppers sampled cited the purchase of soft drinks and water as one of the main reasons for their visit:

Figure 8: Reasons for cross-border shopping by Belgian consumers

0%20%40%60%80%

100%

Aucha

n Ron

cq (F

)

Aucha

n Lee

rs (F)

Aucha

n Pte

Forêt (F

)

Pall Cen

ter (L

ux)

C 1000

(NL)

Albert Heij

n (NL)

Soft drinks/water Wine Dairy Other food Textiles & shoes

We understand that the Belgian authorities have recognised that the current level of eco-tax is causing problems, and have decided to reduce it to the 2004 rate with effect from 1 July 2005. 2.8.3 Impact of cross-border shopping on deposit systems The number of beverage cans that end up in a deposit system of a different country from that in which they were purchased may be sufficient to affect the return rates achieved. It also distorts funding arrangements. These issues, and the solutions which have been attempted, are discussed in section 4.4. 2.8.4 Impact of cross-border shopping on recovery and recycling 2.8.4.1 Impact on the importing country The waste management costs arising from personal imports occur in the country of destination, but the corresponding taxes or fees are charged in the country of origin. Hence personal imports increase per unit fees or taxes placed on the market in the country of destination and reduce them in the country of origin.

45 For instance, one effect of cross-border shopping to avoid the Belgian eco-tax (see section 2.8.2.2 above) is that the Belgian recovery organisation FOST Plus is getting the used packaging in its bins but is not receiving fees from producers to pay for the management of this material. 2.8.4.2 Impact on the originating country There is also a potential drawback for the originating country. If a significant proportion of the packaged goods recorded as having been placed on the market actually leaves the country through personal export before it arises as waste, the waste management targets set by the Directive might not be achievable, or at least might be very difficult to achieve. This can have a significant impact on particular product sectors even in large countries – the British alcoholic drinks sector asked for the “Calais effect” of personal imports from France to be taken into account in the UK data calculations, and the French authorities make an allowance for packaged products intended for sale to personal shoppers from England 31 – but the effect on small countries is potentially much greater. A significant share of private exports will render the calculation of recycling rates for the purpose of the Packaging Directive more difficult, as the simplifying assumption that the amount of packaging put on the market is equal to the amount of packaging waste generation will no longer be true. For example, Estonia would have to recycle 102% of glass waste generated if it were to calculate its recycling rate on the basis of packaging put on its national market. 32

Table 26: RECYCLING TONNAGES REQUIRED TO MEET ESTONIA’S 2012 TARGETS33

(tonnes) Glass Metal

Domestic Packaging Waste (2001) 34 24 115 9 187

Packaging of Private Exports (2004) 17 000 250

Total Packaging put on market 41 115 9 437

Minimum recycling target 2012 60% 50%

Minimum recycling tonnage if target calculated on the basis of packaging put on market 24 669 4 719

Actual Recycling Rate (domestically collected packaging / total packaging put on market) 102% 51%

To overcome this problem, Estonia will either have to • estimate the amount of packaging exported through personal export and deduct that from the

reported amounts of packaging placed on the market (the British and French approach), or

31 Source : ADEME, La valorisation des emballages en France – Directive 94/62/CE relative aux emballages et aux déchets d’emballages – Base de données. 32 Private exports of metal cans seem to have only a very small impact on the metals recycling rate. 33 For simplicity’s sake, we assumed that all private exports of beer are in 0.33 litre cans with an average weight of 15g and that all other alcoholic beverages are in glass 0.7 litre bottles with a weight of 300g. Based on the estimated exports in 2004 (50 million litres of beer and 40 million litres of other alcoholic beverages), this suggests that personal exports were responsible for 250 tonnes of metal packaging and about 17,000 tonnes of glass packaging. For the packaging waste generation data we use the data submitted by Estonia during the technical consultations on revision of the Directive. 34 Data based on Estonia’s submissions during technical consultations on the revision of the Packaging and Packaging Waste Directive.

46 • base its estimated recycling rates on the amount of packaging waste arising in Estonia rather than

the amount placed on the market (which is the Irish approach to data collection). The latter option, which is the one we believe Estonia is adopting, depends on the availability of reliable data on waste arisings and on the selection of realistic adjustment factors to take account of the presence of moisture and contamination in collected waste. 2.8.5 Cross-border shopping elsewhere in the Community Appendix C identifies other Member States where there is a strong incentive for personal imports of certain products.

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3. MARKET ACCESS ISSUES 3.1 THE ESSENTIAL REQUIREMENTS AND THE CEN

STANDARDS 3.1.1 Background Article 9 of Directive 94/62 says that Member States shall ensure that from January 1998 packaging may be placed on the market only if it complies with all Essential Requirements defined in Annex II of the Directive. Article 18 adds that Member States shall not impede the placing on the market of packaging which complies with the Directive. No conformity assessment procedure has been laid down: in November 1996 the Commission did issue a proposal for a Directive on Marking and Conformity Assessment,35 but this was not proceeded with. The European Parliament’s rejected the marking proposals at First Reading in February 1999, and the Council did no further work on the proposal before that, apparently having no interest in either the marking or the conformity assessment provisions. The Commission formally withdrew the proposal on 1 October 2004. Article 10 of the Directive called upon the Commission to promote the preparation of European standards relating to the Essential Requirements. Use of these standards is voluntary, and companies are free to find alternative ways of satisfying the enforcement authorities that their packaging complies with the Essential Requirements, but adherence to the standards does in principle offer companies a straightforward means of ensuring that their packaging is guaranteed market access throughout the Community. Article 9 of the Directive requires Member States to presume that packaging produced in accordance with the relevant harmonised European standards, the reference numbers of which have been published in the Official Journal of the EU, is in compliance with the Essential Requirements. In March 1996 the Commission issued a Mandate to CEN, the European Committee for Standardization, to draw up a series of standards intended to give presumption of conformity and other supporting standards and reports. Drafting of the principal standards was completed by mid-1998, and they were submitted to the somewhat lengthy consultation process necessary to ensure consensus. The standards were finally adopted in 2000. The principal standards secured very strong support from the national standards bodies, but some national governments, and also DG Environment, were not convinced that they would be a viable enforcement tool. The standards were based on a management systems approach, and do not allow a

35 Proposal for a European Parliament and Council Directive on marking of packaging and on the establishment of a conformity assessment procedure for packaging, COM(96) 191 final (OJ No. C382, 18.12.96).

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pass-fail test to be applied to individual packs.36 In particular, the standards do not provide any objective criteria for measuring packaging prevention or reduction. In consequence, two Member States invoked the “safeguard clause”, and the Commission eventually decided not to publish the references to the full set of standards. 37

The reference to the standard EN 13432:2000 (Packaging recoverable through composting and biodegradation) was published without qualification, and the reference to EN 13428:2000 (Prevention by source reduction) was published with a warning that it did not cover that part of the Essential Requirements which relates to the minimisation of the presence of noxious and other hazardous substances and materials in packaging. The references to standards EN 13429:2000 (Reusable packaging), EN 13430:2000 (Packaging recoverable by material recovery) and EN 13431:2000 (Packaging recoverable in the form of energy recovery) were not published at all. The January 1998 deadline for non-compliant packaging to be excluded from the market was fast approaching when the Commission’s Mandate was accepted, and it is undeniable that the standards were prepared in some haste and were capable of improvement. Remarkably, though, acceptance of the quantitative prevention provisions of EN 13428:2000 meant that the principle of the management systems approach, the source of most of the objections to the standards, was accepted. Thus when in 2001 the Commission issued a mandate to CEN to revise the standards, the basic philosophy underlying these texts was left unchanged. The revised standards were adopted in mid-2004, and the Commission published the full set of references in the Official Journal on 19 February 2005.38

3.1.2 Enforcement of the Essential Requirements All Member States have duly transposed the Essential Requirements into their national legislation, but only three – France, and UK and more recently the Czech Republic – have put an enforcement mechanism in place. Member States are free to decide for themselves how they ensure compliance with the Essential Requirements, but the French and UK authorities have recommended close adherence to the CEN standards and Czech law currently provides for no alternative means of compliance.

36 The standards do contain a few pass/fail criteria. For instance, • packaging fails the reuse standard unless the producer can ensure not only that the packaging is capable of

being reused, but also that a reuse system is available in the markets where the pack is used; • the material recycling standard lays down various procedures which must be followed before the pack can be

assessed as recyclable; • the energy recovery standard defines certain types of packaging as recoverable in the form of energy as these

packs are known to provide calorific gain – other types pass the standard only if calorific gain can be determined by calculation using the methodology laid down in the standard;

• the organic recovery standard lays down criteria for packaging to be regarded as organically recoverable which relate not only to the biodegradability of the materials but also to the absence of negative effects on the biological waste treatment process and on the quality of the resultant compost.

However it is true that the issue that has received most attention, the avoidance of over-packaging, can only be tested by ensuring that the producer has set up and operated a system to ensure that he asks himself all the right questions and that he has documented the answers. 37 Commission Decision 2001/524/EC of 28 June 2001 relating to the publication of references for standards EN13428:2000, EN13429:2000, EN13430:2000, EN13431:2000 and EN13432:2000 in the Official Journal of the European Communities in connection with Directive 94/62/EC on packaging and packaging waste (OJ No. L190, 12.7.2001). 38 Commission communication in the framework of the implementation of the European Parliament and Council Directive 94/62/EC of 20 December 1994 on packaging and packaging waste, OJ No. C44, 19.2.2005.

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The reluctance of the other Member States to comply with this obligation may be attributed to a belief that the Essential Requirements as currently drafted are unenforceable. The Commission’s decision not to publish most of the references in 2000 and a vigorous campaign against the standards by certain NGOs39 will undoubtedly have helped discredit the CEN approach as a viable solution, and no others are on the table. 40 The enforcement authorities can however verify compliance with the Prevention Standard by asking the producer to demonstrate the steps that have been taken to identify the “critical area” that prevents further source reduction.41 If this cannot be done, the packaging fails the standard. So far there have been three successful prosecutions, all in the UK. The first two offenders were prosecuted under both the Trade Descriptions Act and the Essential Requirements Regulations, i.e. the packaging was deceptive as well as excessive, though in the second case the magistrates said they thought the Essential Requirements offence was the more serious.42 In the most recent case, a mail order supplier was prosecuted under the Essential Requirements Regulations for sending out office supplies in excessively large corrugated cases – one of the items filled only 7% of the packaging used, and the others 19% and 29% respectively. At a workshop on enforcement of the Essential Requirements which CEN organised early in 2000, officials were asked how products are selected for testing. The British officials explained that this was done by a mixture of specific complaints received; routine inspections for compliance with this and other legislation; and specific sampling projects based on trade sectors, taking account of which types of pack have the largest impact on waste. The French officials responded similarly – some inspections were part of overall company controls and others are targeted, with special attention to large quantities. So companies are at particular risk if ordinary consumers see what they regard as excessive packaging and feel strongly enough about it to make a complaint. Up to now, however, it has been possible to resolve all the cases that have arisen in France without the need for action in the courts. British and French officials have made it clear that the real aim is not to notch up successful prosecutions but to encourage a change in company culture to bring about packaging minimisation. Prosecutions of particularly flagrant abuses will certainly help improve awareness of the legislation, but the real measure of success is how well companies are respecting the Essential Requirements.

39 CEN At Work: How the requirements of the European Packaging and Packaging Waste Directive (94/62) are bypassed by CEN standards, European Environmental Bureau, September 2000. 40 Packaging minimisation is a part of the Dutch Covenant, but this too contains no pass-fail procedures. In Belgium and Spain, there is a legal requirement to prepare and submit packaging prevention plans, but like the CEN approach, this is a way of getting companies to think systematically about the issue rather than a mechanism to aid enforcement of the Essential Requirements. 41 The source reduction standard requires the producer to examine each of the ten listed performance criteria and identify the “critical area” which governs the achievable limit for source reduction. If no critical area has been identified, there may be scope for further source reduction. If tests show that further source reduction will result in an unacceptable increase in the packaging failure rate, the critical point has already been reached. An “unacceptable” failure rate must be a matter of commercial judgement – it may be different for a high-value packaged product than for a low-value item, and for products where leakage could endanger people or property – and this judgement must be shared between the producer, the customer and possibly the end-user. 42 The first case related to a tin of mushroom powder with a false bottom; the second concerned a butcher who was placing an upturned polystyrene tray inside a slightly larger PS tray and then packaging meat on top. The packs appeared to contain more meat than they did, and the upturned tray was totally unnecessary.

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3.1.3 Possible trade barriers arising from different legal obligations 3.1.3.1 France and the UK In the absence of a harmonised compliance assessment procedure, there is in theory a danger that Member States might take different views on the legal acceptability of a particular pack. It might be allowed on the market in one country, and banned in another. With an enforcement mechanism in place in only three Member States, and with enforcement being carried out with a very light touch, this danger has been much reduced. Even so, France and the UK have allocated legal responsibility for fulfilling the Essential Requirements to different stages of the supply chain. In France, responsibility falls on the packaging supplier and in the UK, on the packer/filler. This has not caused any practical problems for producers, for in reality responsibility has to be shared. The CEN “umbrella standard” (EN 13427:2004) which sets out how the set of packaging standards is to be used, stresses that producers need to co-operate up and down the chain. Component suppliers can provide information on minimisation of heavy metals and dangerous substances and packaging suppliers on the level of recoverability of the functional unit, while prevention by source reduction can only be assessed on the whole packaging system, which will usually be by the packer/filler. Another issue relates to how the enforcement authorities deal with imports. LACORS 43 has offered the following guidance on when packaging falls or does not fall under UK jurisdiction. It concludes (subject to any possible future court ruling to the contrary) that the relevant control regime is determined by the location at which packed or filled packaging is first placed on the market: • Where this is in the UK, this means that the appropriate controls are the Packaging (Essential

Requirements) Regulations 2003. Compliance with these controls also ensures compliance with equivalent legislation in other EEA countries, so free movement across these countries should not be prevented.

• Where packed or filled packaging is imported into the UK from outside the EEA and the UK is the

first point of placing on the market, the position is the same as above. • However, where the imported packed or filled packaging has previously been placed on the

market in another EEA country it would have had to comply with the relevant “Essential Requirements” legislation in that country.

• The point of first placing on the market can be understood as the point where packaging or filling

takes place. LACORS considers that empty packaging imported from another EEA member state for filling and sale in the UK would be controlled by the UK Regulations, as would goods imported for assembly, repackaging or labelling.

These ground-rules, which are based on the Commission’s Guide to the Implementation of Directives based on the New Approach and Global Approach, mean that the UK authorities will take no action against packaged products imported from another Member State, whether or not an enforcement regime exists in that country.

43 The UK Local Authority Coordinators of Regulatory Services.

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3.1.3.2 Czech Republic This was not the case in the Czech Republic until recently. Act No. 477/2001, which transposed the Packaging and Packaging Waste Directive, said that manufacturers and importers may not place packaging or packaged goods on the Czech market unless the packaging conforms with the Essential Requirements. Those placing packaging or packaged goods on the market must prepare a written declaration of compliance for their customers, and this declaration was to be made available to the authorities on request. 44 In practice this was a condition of customs clearance. Before the Czech Republic entered the EU, however, these provisions were amended by Act 94/2004 of 29 January 2004. Customs officers are no longer allowed to block the importation of packaging or packaged goods at the frontier if it does not comply with the Essential Requirements – they must allow it in, and inform the environmental inspection authorities. The new measure extends the obligation to comply with the Essential Requirements to packaging components, and Czech producers have complained that it is no longer clear whether it is the packaging manufacturer or the packer/filler who is legally responsible for compliance. The discussion above on the conflict between the British and French allocation of legal responsibility suggest that this may not create any problems in practice, but much depends on how the Czech enforcement system operates. A second trade barrier remains. Decree No. 115/2002 on Treatment of Packaging prescribes the European (CEN) standards and reports, and in two cases Czech standards, as the only way of fulfilling some of the legal requirements.45 Standards are supposed to be voluntary, but Czech law gives producers, including foreign producers exporting to the Czech Republic, no option of finding another way of fulfilling the requirements. However, on 7 April 2005 the Czech authorities notified a draft Act amending Act No. 477/2001, which will bring the provisions relating to the Essential Requirements into line with the Directive. The proposed amendment says that “if the packaging for a certain product is produced in accordance

44 An example of such a declaration is given in an annex to the Act – this says that the packaging specified has been designed and manufactured in compliance with the effective technical standards, namely the CEN standards EN 13427 – EN 13432. 45 The Decree supports the Packaging Act by prescribing • the method of determining the lowest weight and the lowest volume of packaging materials – ČSN EN 13427

and ČSN EN 13428; • the method of determining the concentration of substances on the List of Classified Dangerous Chemical

Substances – the list is contained in Act No.157/1998 as amended, and the methodology is laid down in ČSN EN 13428;

• the limit of the sum of the quantity of lead, cadmium, mercury and hexavalent chromium in packaging – the

limits are as specified in the EC Packaging and Packaging Waste Directive and in Commission Decisions 1999/177/EC and 2001/171/EC, and the methodology is laid down in the technical report ČSN CR 13695-1;

• the method of determining the recoverability of packaging – ČSN EN 13430 on material recovery, ČSN EN

13431 on energy recovery and ČSN EN 13432 on organic recovery; • the extent and method of marking packaging materials – Czech standards ČSN 77 0052-2 and ČSN 77

0053; • the requisites of the measures facilitating the re-use of packaging and the method of reusable packaging –

ČSN EN 13429.

52 with the harmonised Czech technical standards, the requirements … shall be considered to have been satisfied.” 3.1.3.3 Stakeholder views There are conflicting views among industry as to whether enforcement of the Essential Requirements in only two of the 15 Member States (before May 2004) has put French and UK producers at a competitive disadvantage. Some argue that it has; others say that French and UK producers have had an advantage in that other Member States were not allowed to exclude their products (the only practical significance of this was in the Czech Republic before May 2004). Another view expressed is that enforcement has arguably been an advantage to French and British producers, in that it has encouraged a systematic approach to packaging minimisation which may have helped them identify possible cost savings. EUROPEN notes that Directive 2004/12/EC has revised Article 4 of Directive 94/62/EC, requiring the Commission to “present proposals for measures to strengthen and complement the enforcement of the Essential Requirements”, and calls for a robust, deeper and wider investigation of this question. For instance, • What institution or government agency within each member state is or should be responsible for

enforcement of the Essential Requirements? • How such an institution or agency is or would be funded to carry out the enforcement? • What training has or will be offered to member state officials responsible for this enforcement and

who will conduct the training? • What is the estimated cost for each member state to enforce the Essential Requirements? • What is the estimated benefit that full enforcement of the Essential Requirements legislation

would bring? In parallel, EUROPEN calls upon the Commission to carry out a detailed, large-scale study of industry practices, to determine: • to what extent the Essential Requirements are being respected, • how companies are complying with them, and • if companies are not complying, what is the reason. This research should include canvassing the opinion and suggestions of environmental NGOs which have criticised the Essential Requirements. EEB has also asked for a deeper analysis of the impact of the Essential Requirements and of the resources necessary and those available for their proper enforcement. EEB suggests a proper investigation of the enforceability of the CEN standards in relation to the Internal Market and of the consequences of unenforceability. We strongly support these recommendations.

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3.1.3.4 The future: Implications of publication of the references Publication of the references to the CEN standards may change things. We understand that the French authorities intend to step up enforcement of the Essential Requirements, and it may be that other Member States will put an enforcement regime in place for the first time.46 A wider range of legal requirements may generate new conflicts between different sets of national rules. One answer might be for a Directive to be adopted setting out a Conformity Assessment Procedure. It is generally felt within industry that the procedures set out in the Commission’s now-abandoned proposal for a Directive on Marking and Conformity Assessment were not really appropriate, as they were taken off-the-peg from modules designed for engineering standards, but it would be perfectly possible to draw up something applicable to the packaging standards on the basis of experience with enforcement up to now. On the other hand, when this was discussed at the responsible CEN committee47 on 14 April 2005, a majority of the delegations felt that there was no need for this, since the “umbrella standard”48 sets out clearly where within the packaging supply chain responsibility should lie for each of the compliance assessments that need to be made. We share the view that there is no proven need for a Conformity Assessment Procedure at this stage. No conflicts between national requirements have arisen as yet, and until they do, we cannot know what it is that needs to be harmonised. This may be an issue in the future, but for the sake of harmonisation we share industry’s hopes that national authorities and stakeholder bodies will as far as possible build on what has already been done rather than striking out in any new directions. As the Swedish body Miljöpack has pointed out, different requirements in different countries could place operators in smaller Member States at a competitive disadvantage, since they are often more export-dependent. This, says Miljöpack, underlines the importance of Article 18 of the Directive in ensuring that a pack accepted in one Member State may not be banned in another.49 To be able to rely on Article 18, a company must be able to show that its packaging complies with requirements in the Member State where it is produced. Miljöpack, together with the Swedish national authority, is working on a compliance certification scheme. This model has already been applied successfully in Sweden in relation to food-contact packaging. A certification scheme would only be needed if there were concrete evidence that the enforcement authorities in some Member States were not prepared to accept the level of enforcement in place in others. If such a problem did arise, the idea that exporters could take the initiative and apply for certification from the authorities in their home country is an attractive one, but Commission officials do not believe that it would be effective. Unlike a Commission Decision, it would not have legal validity at EU level, and without this it would pose a legitimacy problem (who has the right to define an assessment procedure?) and would not add value to existing guides such as that published by EUROPEN.

46 Wider enforcement of the Essential Requirements is not a necessary consequence of publication of the references to the standards, but it is a possibility, since some officials have previously said that the EU framework would not be complete until the standards had been endorsed by the Commission through publication of the references. 47 CEN TC261/SC4. 48 EN 13427:2004, Packaging – Requirements for the use of European Standards in the field of packaging and packaging waste. 49 As noted in section 3.1.3.1 above, this principle of mutual recognition is already a part of UK enforcement procedures for the Essential requirements.

54 3.1.4 Impact of the Essential Requirements on producers 3.1.4.1 Existing studies Two studies have been carried out on how companies have been complying with the Essential Requirements. One, 50 commissioned from Perchards by the UK Department of Trade and Industry, examined implementation in the UK by 22 large and medium-sized businesses; the other 51 was commissioned from FFact Management Consultants by EUROPEN, and reviewed implementation across Europe by 17 production units from ten international companies in membership of EUROPEN. Although Perchards and FFact were both involved in the preparation of this report, those two studies were carried out entirely independently of one another. In the FFact survey, 65% of respondents were using the CEN prevention standard or procedures based on it, and 12% were using internal procedures not based on the CEN standard. The Perchards figure was 55%, but in the UK there is also the INCPEN/BRC Responsible Packaging Code,52 and only 27% were using neither the standard nor the Code. This was remarkably close to the 24% non-users identified by FFact, but all but one of the operations which FFact found not to have assessment compliance procedures were based on countries which did not join the EU until May 2004. Further details of the findings of these studies are set out in Annex D. They were both quite small-scale surveys of companies known to be giving serious attention to the Essential Requirements – they did not purport to be an analysis of the impact of the Essential Requirements on the market as a whole. Nevertheless, the studies showed how actions permeate through the supply chain. In the UK, companies must show "due diligence". This means that to demonstrate that they have taken all reasonable steps to comply with the Regulations, companies must have an appropriate system of control, operate the system properly, document it, and identify all reasonable steps and take them. Companies must audit suppliers' quality systems and undertake random testing of packaging materials. The French arrangements are similar. Many retailers and packaged goods companies have written to all their suppliers drawing attention to the Essential Requirements and asking for guarantees that all packaging supplied is in conformity with the national legislation in force. Anybody challenged has to prove that their products are in conformity, and the practice is to delegate as much as possible up the supply chain. That means that a distributor would expect its packaged goods suppliers to have obtained all the necessary information on heavy metals minimisation, recyclability and so on from their packaging suppliers, while the packaged goods suppliers themselves demonstrate that the total packaging system has been minimised. Thus commercial pressures reinforce the legal obligations, and Essential Requirements legislation becomes largely self-policing. It could never be certain whether decisions have been made as a direct result of implementation of the Essential Requirements or whether the same decisions would have been made anyway, but 18 of the 22 respondents to the UK study said that application of the procedures had resulted in changes to their packaging.

50 Perchards: Impacts of the Packaging (Essential Requirements) Regulations – a brief survey, Department of Trade and Industry, October 2003. 51 FFact Management Consultants: Compliance with the Packaging and Packaging Waste Directive’s Essential Requirements for Source Reduction – a survey of best practices of EUROPEN member companies, EUROPEN, December 2003. 52 Responsible Packaging – Code of Practice for optimizing packaging and minimising waste, 2nd edition, INCPEN, March 2003.

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The survey showed that enforcement of the Essential Requirements had encouraged discussions between the enforcement authorities and companies producing or distributing packaged goods. This had been valuable in helping local authorities understand the technical and commercial realities which underlie packaging design, and improving companies’ understanding of how their packaging is perceived by the outside world. 3.1.4.2 Compliance with the Essential Requirements in the context of the Internal Market The FFact study demonstrated that the Essential Requirements are not only having an effect in countries where they are being enforced. Also, Perchards asked respondents whether their method of implementation of the Essential Requirements was specific to the UK or pan-European. Most were operating the same system across Europe, though two distributors and four packer/fillers had systems designed specifically for the UK. Two of the packer/fillers with UK-specific systems were foreign-owned. As both consultancies noted, compliance is not confined to Europe. We have received numerous enquiries from US companies seeking guidance on practical interpretation of the Essential Requirements and the CEN standards, and a considerable number from Asia and the Arab world. Visy, the largest packaging company in Australia, uses the CEN standards “to help guide packaging design towards more environment-friendly and recyclable outcomes.” 53 The CEN standards are becoming de facto world standards. This notwithstanding, it is clear that many European companies, particularly those working at a national level rather than EU-wide, are taking no action to ensure compliance with the Essential Requirements. Two stakeholders commented that industry is not making use of the CEN standards in Germany. PRO Europe and UNESDA/CISDA both stressed the need for clear guidelines at EU level to ensure that there is a harmonised approach to the Essential Requirements in all Member States in order to avoid market distortions and barriers to innovation. The issue of a possible EU-wide guide to implementation of the CEN standards and/or the Essential Requirements has been discussed. We are not convinced that it would be possible to produce an official guide to compliance and enforcement aimed at regulators and industry alike, given the different cultures and structures of legislation and enforcement to be found across the Community, though a detailed handbook has been published by OPTI-PACK,54 a joint project of the Nordic countries – Denmark, Finland, Iceland, Norway and Sweden – which was funded by the Nordic Innovation Centre. On the other hand, we do believe that there is value in providing detailed guidance for companies on how to implement the standards, as advice for companies on how to adapt their management systems is generic rather than country-specific. EUROPEN’s existing guide55 has performed a useful service, and we welcome EUROPEN’s decision to update this guide in 2005 to take account of industry’s practical experience of working with the standards and the issue of the revised CEN standards.

53 The Visy report –National Packaging Covenant, Environment and Community 2003/04. 54 Process-oriented environmental assessment of packaging regarding compliance with the Essential Requirements of EU Directive 94/62/EC, 2005 (downloadable from www.opti-pack.org). 55 The Essential Requirements for packaging in Europe – How to Assess Compliance of Packaging with the EU Packaging and Packaging Waste Directive (94/62/EC) with reference to the CEN standards, revised edition January 2003 downloadable from www.europen.be/whats/whats_publications.html

http://www.opti-pack.org/

http://www.europen.be/whats/whats_publications.html

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3.2 TRADE BARRIERS AND DISTORTIONS OF COMPETITION 3.2.1 The notification procedure Article 16(1) of the Directive says that before adopting measures transposing the Directive, Member States shall notify the Commission of drafts of measures which they intend to adopt within the framework of this Directive, excluding measures of a fiscal nature, but including technical specifications linked to fiscal measures which encourage compliance with such technical specifications. These notifications are then processed according to a procedure first laid down in Directive 83/189/EEC and now governed by Directive 98/34/EC.56 This procedure aims at providing transparency and control by enabling the Commission and the Member States to evaluate the Internal Market implications of national measures while they are still in draft form. There is a mandatory three-month standstill during which time the Member State may not definitively adopt its proposal. If no reaction is forthcoming, the notified draft may be adopted as soon as the three months have expired. If one or more Member States and/or the Commission issue comments on the notified draft, the measure may still be adopted once the three-month standstill is over, but the Member State responsible for the draft must take these comments into account as far as possible when finalising the text. If on the other hand this consultation gives rise to negative comment in the form of a “detailed opinion”, adoption of the regulatory draft is postponed by a further three months, so that the Member State concerned can amend its text to remedy the defects identified. If a Member State which has already notified a draft measure makes substantial changes to it which render the text more strict as regards scope, timetable or content, it must be renotified. The initial standstill period of three months then starts again. 3.2.2 Infringement proceedings Measures can also be challenged after they have come into force. Anyone may lodge a complaint with the Commission against a Member State about any national measure or administrative practice which he/she considers incompatible with Community law. However, it is for the Commission to decide whether or not to take further action on a complaint in the light of the Commission’s own rules and priorities. When the Commission decides to pursue a complaint, it sends a letter of formal notice setting out the Commission’s initial legal assessment of the facts and inviting the Member State to present its response. If the Commission is not satisfied with the response, or if no reply to the letter of formal notice is received, it sends a reasoned opinion expressing the Commission’s view that an infringement exists and asking the Member State to remove it within a stated time limit. If the Commission receives no reply to the reasoned opinion from the Member State, or if the reply is unsatisfactory, the Commission will usually refer the case to the European Court of Justice (though it is not obliged to do so).

56 Directive 98/34/EC of the European Parliament and Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations (OJ No. L204, 21.7.98).

57 Findings by the European Court of Justice do not resolve individual cases, but they oblige the Member States concerned to bring their national measures into line with Community law. These are the formal stages of proceedings, but nothing prevents the Commission from negotiating with the Member State throughout the entire infringement procedure. During the stakeholder consultations on this report, EuPC complained that the procedure is too slow, and that this undermines the credibility of the Internal Market, for which legal certainty is essential. We sympathise, but do not agree. Whilst recognising the need to reach a conclusion as quickly as possible, we believe that it is important not to reduce the time allowed for bilateral negotiations aimed at achieving a satisfactory and workable outcome. A Court ruling should be considered as a solution of last resort if negotiation fails. 3.2.3 Measures subject to infringements and measures amended during the

notification procedure Below is a review of the national measures that are being or have been challenged because they are (or were) deemed to give rise to barriers to trade. The review covers both measures that were/are the subject of infringement proceedings (whether or not the cases were referred to the European Court) and measures that were amended during the notification process because of comments or detailed opinions submitted by the Commission and/or other Member States. The review therefore includes both measures that were amended before they took effect because it was anticipated that they could give rise to barriers to trade and those that were challenged after they had taken effect, once evidence was available of trade barriers. Also included are measures that we believe should be considered further, regardless of whether they have been formally challenged. A detailed overview of these cases and the issues concerned, showing the outcome of proceedings or notification, can be found in Annex E. Marking issues are summarised separately, in Annex F. We have also prepared an analysis of how quickly the issues were resolved (the lead-time between introduction of the measure, the initiation/conclusion of proceedings, and removal of the trade barrier or distortion of competition). The cases can be classified into the following categories – • those where the Directive brought about change in national policy in favour of free movement of

goods, • those where the case was concluded in the Member State’s favour, • those where the Directive failed to bring about change in national policy in favour of free

movement of goods, • those where proceedings still continue. We have also considered • fiscal measures which are prima facie a barrier to trade and/or distortion of competition, but where

the EU has limited power to intervene.

58 In Tables 27-30 we have classified the issues as follows: • In 16 issues (59% of the total), intervention brought about removal of the trade barrier or

distortion of competition.

In 8 of these 16 issues (50% of the issues in this category), the proposed national measure was amended or abandoned before coming into force. By contrast, the Danish can ban was in force for 25 years for soft drinks and 21 years for beer. Malta has been given an adjustment period of 2½ years to replace its beverage container restrictions The remaining issues were resolved after about 2 years.

• In 2 issues (7% of the total), the case was resolved in favour of the Member State concerned. • 5 issues (19% of the total) were fiscal measures, where the EU or EFTA Surveillance Authority

has only very limited power to intervene (i.e. where the technical specification underlying the tax infringes EU rules). These taxes remain in force. The EFTA Surveillance Authority did pursue the Norwegian case for some time, but eventually dropped it. However, there were two cases where intervention achieved some success. Although the Belgian eco-tax came into force, its exemption provisions were amended as these were classified as technical regulations. The one issue where intervention achieved removal of the tax was in the case of the Italian tax on polyethylene.

• 4 issues (a further 15% of the total) are still unresolved.

All of these issues (64 % of the issues in this category) concern beverage containers, either mandatory deposits or restrictions on market access for non-refillables.

These percentages exclude the issue of mandatory requirements on material identification in some of the new Member States. Owing to a lack of clarity in the EU provisions,57 it was not understood that under EU rules material identification is supposed to be optional. Some of the Member States concerned have already corrected their legislation, and it can reasonably confidently be expected that this problem will be resolved before too long. Table 27a: ISSUES WHERE THE DIRECTIVE BROUGHT ABOUT CHANGES IN NATIONAL

POLICY IN FAVOUR OF FREE MOVEMENT OF GOODS Austria Mandatory material identification

marking requirement on plastic packaging since 1992

Amendment notified that will bring marking requirements into line with EU rules.

Belgium

2002/280/B 2002/494/B 2002/495/B 2002/496/B

Requirements relating to eco-taxes for beverage containers

Proposals amended before coming into force in 2004

Czech Republic

N/A Ban on PVC packaging Resolved during accession negotiations – ban repealed

Denmark ECJ ref C-246/99

Ban on cans for carbonated soft drinks (since 1977) and beer (since 1981)

Resolved after 8 years from start of infringement proceedings – ban repealed after ECJ Advocate General’s opinion

Denmark 2002/98/DK Mandatory deposit requirements Amended before implementation – Order revised to address concerns

57 Directive 2004/12/EC amending the Packaging and Packaging Waste Directive, which has to be read in conjunction with Commission Decision 97/129/EC.

59 Table 27b: ISSUES WHERE THE DIRECTIVE BROUGHT ABOUT CHANGES IN NATIONAL

POLICY IN FAVOUR OF FREE MOVEMENT OF GOODS Finland ECJ ref

C-13/04 Return system for beverage containers

Case withdrawn following satisfactory amendment of the Waste Act

Germany ECJ ref C-463/01

Market share quotas for refillable beverage containers

Case resolved after 6 years

Italy Tax on polyethylene Repealed 1997, and replaced by a consortium to promote recycling and recovery

Luxembourg 1995/438/L Proposal for market share quotas and possibly mandatory deposits on non-refillable beverage containers

Proposal withdrawn following Formal Notice

Malta Carbonated soft drinks must be sold in refillable glass bottles or through dispensing systems

Act of Accession allows this to continue only until 2007

Netherlands 2002/228/NL Market share quotas and mandatory deposits for refillable beverage containers if litter reduction targets not met

Alternative arrangements agreed between Dutch Government and industry in summer 2004

Portugal 1996/264/P Market share quotas for refillable beverage containers sold to households, and catering outlets to sell beverages in refillables only

Measure repealed and replaced in 1998

Portugal 1997/3/P Mandatory to mark all reusable packaging and packaging covered by a recovery organisation

Requirements amended 2000

Portugal 1997/777/P Transposition of the Essential Requirements

Proposal amended in response to comments

Slovakia N/A Ban on PVC packaging Resolved during accession negotiations – ban replaced by substitution programme requirement

Spain Ban on sale of beverage cans in catering outlets in the Canary Islands

Resolved after 22 months – ban repealed in 2000 before coming into force

Czech Republic, Slovakia

Informal request from Commission to amend rules

Mandatory to mark: EU’s material identification codes and/or EU’s proposed reusable/recyclable symbols and/or “tidyman logo” on diverse pack types.

Requirements predated membership of the EU. Amendment of legislation to bring it into line with EU rules is underway.

Table 28: ISSUES RESOLVED IN FAVOUR OF THE MEMBER STATE CONCERNED Netherlands Packaging Covenant II – No collection,

recovery and recycling system Case closed July 2003

Netherlands 2001/406/NL Mandatory use of KCA logo on selected products

Requirement still in force

Table 29: ISSUES WHERE THE DIRECTIVE OR OTHER EU LEGISLATION HAS FAILED TO

BRING ABOUT CHANGE IN NATIONAL POLICY IN FAVOUR OF FREE MOVEMENT OF GOODS

Denmark 1999/29/DK Tax on PVC Tax remains in force Denmark 1999/30/DK Taxes on beverage containers and on

sales packaging of specified food and non-food products

Taxes remain in force

Ireland 2001/387/IRL Tax on plastic carrier bags Tax remains in force Malta Eco-tax since September 2004 on

containers for certain beverages Tax remains in force

Norway Taxes on beverage containers with preferential rates for refillables

Taxes remain in force

60 Table 30: ISSUES UNRESOLVED / CASES STILL PROCEEDING Germany ECJ ref C-

309/02 Market share quotas and mandatory deposits for non-refillable beverage containers

The ECJ ruling of 12/04 established some criteria, but it did not answer all of the questions raised by the German court.

Germany 2003/2133/D Mandatory deposit arrangements for non-refillable beverage containers

Case ongoing since Oct 2003

Germany 2004/446/D (superseded 2003/232/D)

Amendment to the Packaging Ordinance to replace refill quotas by mandatory deposits on all “environmentally unsound” non-refillable beverage containers

Case ongoing since original notification in July 2003

Netherlands 2002/163/NL Authorisation requirements for certain non-refillable beverage containers

Case ongoing since November 2003

Latvia, Poland

Informal request from Commission to amend rules

Mandatory to mark: EU’s material identification codes and/or EU’s proposed reusable/recyclable symbols and/or “tidyman logo” on diverse pack types.

Requirements predated membership of the EU, but still in force.

3.2.4 Belgium 3.2.4.1 Eco-tax measures for beverage containers Eco-taxes were imposed in Belgium in 1993 on a range of products, including beverage containers. In the early years there was an exemption from the eco-tax provided that minimum recycling rates were achieved. In practice, this eco-tax was not paid because recycling targets were achieved through FOST Plus, the packaging recovery organisation that handles all types of household packaging waste, including beverage containers. In 2001 Belgium started to amend these eco-taxes, with the aim of bringing about a price difference between reusable and non-reusable containers large enough to “have a dissuasive effect comparable to that of deposits”. In July 2002 Belgium notified a Draft Act amending the eco-taxes. It was proposed that the eco-tax would apply to non-refillable containers unless they met minimum recycled content requirements, but the tax would not apply to refillable containers (provided they met certain conditions). The text contained requirements that both packs subject to the eco-tax and those exempt from the eco-tax (high recycled content or reusable) must be marked. Companies placing drinks containers on the market had to register with the Belgian tax authorities and had to mark their registration number on the containers. The Commission issued a detailed opinion which challenged the requirement to mark the tax registration number on the containers. The Law started its passage through the Belgian Parliament in September 2002. In December 2002 Belgium notified to the Commission three implementing decrees establishing rules related to the eco-taxes: • a draft decree setting minimum recycled content criteria for exemption from the tax. This was

categorised as a fiscal measure and so the standstill period was not extended, even though several Member States submitted comments and detailed opinions and the Commission issued a detailed opinion;

• a draft Decree dealing with marking of packaging exempt from the packaging tax; • a draft Decree on registration and other administrative requirements.

61 These last two were both considered Internal Market measures and the standstill period was extended for them because several Member States submitted comments and detailed opinions, and the Commission also issued detailed opinions. • Decree setting recycled content criteria:

As notified, the Decree would have provided for an exemption from the eco-tax for containers only if they contained not less than 70% recycled material in the case of coloured glass or 50%, in the case of other materials. The Commission challenged the procedures for demonstrating that specific containers met the recycled content threshold. All packs had to be assessed within Belgium, making it harder and more expensive for producers outside Belgium to obtain the necessary exemption certificate necessary to demonstrate to the Belgian authorities that they had met the conditions for exemption from the tax. The Commission also challenged the requirement that producers who place approved containers on the Belgian market must tell the Belgian authorities each how many containers they had bought from approved producers was also harder for producers outside Belgium to meet. The Commission pointed out that, where Member States offer exemptions or reductions from taxes, “this preferential treatment must be extended, without discrimination, to products from other Member States which satisfy the same conditions”. Therefore “Member States cannot make the award of a tax benefit subject to conditions which products originating from other Member States cannot satisfy due to their place of production or the legislation of the state of production.” Nor must the evidence which may be requested by a Member State be more cumbersome for products from another Member State.

• Decree on marking:

The Commission also challenged the proposed requirements to mark containers that were exempt from the eco-tax. It argued that the requirements were liable to be a barrier to trade. The Commission said that it had no information that proved the need to affix a distinctive logo. In the case of containers that were exempt because they were refillable, companies registering with the authorities had to prove that the containers are genuinely reusable before being granted an exemption. The Commission said that the marking was therefore not necessary. Similarly, the Commission argued that, in the case of containers that were exempt because they were above the recycled content thresholds, marking was unnecessary – the simple fact that the container is not subject to or is exempt from the eco-tax already suggests to consumers that the product is deemed to have a positive effect on the environment. The Commission commented that it had received many complaints from economic operators affected by the proposed taxes.

62 • Decree on registration

The Commission repeats the comments it made challenging the requirements in the Draft Act that packaging must be marked with the company’s eco-tax registration number.

The outcome was that the eco-taxes for beverage containers were adopted in December 2003 and took effect on 1 April 2004. However the exemption for recycled content was withdrawn, together with the accompanying marking requirements and other administrative measures. The text now in force retains the possibility of introducing exemptions for non-refillable containers containing more than a specified proportion of recycled material, but says that any such exemptions would have to be approved by the European Commission. In this case, the standstill procedure worked effectively in relation to the measures falling within its scope, i.e. the measures relating to certification procedures and marking, but not the taxes themselves. Thus, the eco-taxes are now in force and are being paid on most non-refillable beverage containers. Fillers pay these plus fees for recycling/recovery to FOST Plus. The question now remains of whether Belgian fillers benefit because the tax is not paid on refillables. This is considered further in section 5.3. 3.2.5 Czech Republic 3.2.5.1 Ban on PVC In 1997 the Czech Republic introduced a ban on the production or importation of packaging made from PVC or goods packed in PVC with effect from 2001 (Waste Act 125/1997). This was amended by Act No. 37/2000, which delayed the ban’s entry into force until 2008. The ban was then repealed in December 2001 by Packaging Act No. 477/2001. Thus, it never actually took effect. When the Czech Republic adopted its PVC ban, it was not yet a member state so did not have to notify draft legislation to the Commission. However, the accession process was well underway and the Waste Act that introduced the ban was adopted to transpose EU waste legislation. We understand that the Czech Republic was encouraged to repeal the ban during the accession negotiations. A ban on PVC would be a barrier to trade in contravention of Directive 94/62, which applies to packaging made of any material. PVC is an interesting example of the interaction between environmental concern and the internal market. PVC (in all its applications, of which packaging is only one) has consistently come under attack from some environmental groups, however the EU has not decided to ban this material. This means that no individual Member State can ban PVC. As far as PVC packaging is concerned, there is no doubt that PVC benefits from the free trade guarantee offered by the Directive because the material identification system (97/129) includes an abbreviation and number for this polymer, and PVC is also referred to in the data tables annexed to Commission Decision 97/138.

63

• Article 5 of the Directive permits Member States to promote reuse systems in conformity with the Treaty. This does not allow them to ban certain types of drinks packaging.

3.2.6 Denmark 3.2.6.1 Ban on beverage cans and other requirements for beverage containers Under Regulations of 1981 refillable bottles of an approved design were mandatory for beer and carbonated soft drinks. In 1984 the rules were amended to the effect that non-refillables – except cans – were permitted up to a maximum of 3,000 hl per producer, in order to test the market. The Commission challenged the requirements as a barrier to trade. Denmark argued that the requirements were justified on the grounds of environmental protection. The case was referred to the European Court of Justice in 1986. In its judgment issued in 1988, the ECJ confirmed that environmental protection could be used to justify measures that limit the application of Article 30 of the Treaty.58 It then considered whether the Danish measures were proportionate, i.e. whether the objectives sought could be attained by measures that were less restrictive of Community trade. The Court accepted the requirement to participate in a deposit system for reuse, because a deposit and return system was an essential element of a system that aims to ensure the reuse of packaging. However, it did not accept the requirement (which had already been repealed) that containers must be approved by the Danish authorities. The authorities could reject containers used by importers. They could thus have to use containers of an approved design, making it difficult to import to the Danish market. The Court also considered that the restriction to 3,000 hl per producer per annum was disproportionate. The requirements were subsequently amended again on several occasions. Thus, domestic production had to be in bottles of an approved design. Imported drinks in non-refillables had to participate in a deposit/return system. In practice, the only deposit system handled refillables but not non-refillables, since domestic drinks had to be in refillables. Denmark banned cans for carbonated soft drinks in 1977, and for beer in 1981. The Commission opened infringement proceedings against the can ban in 1997.59 Following further exchanges of correspondence with Denmark, in November 1998 the Commission sent Denmark a Reasoned Opinion that challenged both the can ban and the other restrictions on drinks containers. The Commission referred the case to the ECJ in July 1999. In its Reasoned Opinion, the Commission argued inter alia that: • the Directive requires Member States to ensure free access to packaging that meets the essential

requirements. Metal drinks cans and non-refillable packaging meet the essential requirements because metal cans can be recovered and recycled.

• Thus, the Directive establishes full harmonisation for Member States’ rules for packaging and

packaging waste. No Member State can ban a particular category of packaging that meets the ERs. The Commission rejects Denmark’s position that the free market guarantee would not take full effect until agreement had been reached on harmonised standards and a procedure for demonstrating compliance with the ERs.

58 Now renumbered as Article 28. 59 Letter of Formal Notice of 30.6.1997.

64

deposit systems for beverage containers, must be established so as to avoid barriers to trade and distortions of competition.

The Advocate-General’s Opinion was published in September 2002. However before the case was concluded, the Danish government which had been newly elected in November 2001 announced that the can ban would be repealed. The Advocate-General’s Opinion supported the Commission’s position that the ban was a barrier to trade. He rejected Denmark’s claim that the Packaging Directive is too imprecise and that Member States are therefore entitled to set their own hierarchies between reusable and single-use packaging. He agreed with the Commission that the Directive establishes full harmonisation of national measures relating to the management of packaging and packaging waste. Denmark must respect not only the Directive’s environmental objective, but also the equally important second objective of removing barriers to trade and avoiding distortion or restriction of competition. The Advocate-General noted that Denmark obviously considers that beverage cans fulfil the Essential Requirements of the Directive, since cans are used on the domestic market for products other than beer and carbonated soft drinks, and because a significant volume of Danish beer is exported in cans. One cannot claim that cans are not a suitable pack for beer, that they do not fulfil all safety and health requirements or that they are not recyclable nor recoverable. He rejected Denmark’s scenario that refillables would be totally replaced by one-way containers. Deposits could be introduced to bring about a high collection rate, and he added that high recycling rates were also achieved in countries where cans are sold without a deposit. The outcome was that the can ban was repealed in January 2002, and new legislation was adopted instead introducing mandatory deposits (see below). Canned beer and carbonated soft drinks finally appeared in retail stores from September 2002. 3.2.6.2 Orders establishing deposit systems In January 2001 Denmark notified a draft Act establishing the operating principles for a deposit/return system. The Act established rules for deposit/return systems, primarily to improve the existing system for refillables, but also in anticipation of handling non-refillable beverage containers. Key economic operators in Denmark had established a new deposit/return system in 2000. The Act was adopted in May 2001. This was followed by a draft Order, notified in February 2002, which established more detailed rules for operating the deposit system. It required that all non-refillable containers of beer and carbonated drinks participate in Dansk Retursystem (DRS), the deposit and return system. The Commission did not raise any objections during the initial three-month notification period (which was extended until August because of detailed opinions received from other Member States). However, in August 2002 the Commission issued comments because of concern expressed by economic operators and because of further information received from the Danish authorities. In its comments, the Commission expressed concern about the registration requirements including the administrative requirements and fees and marking requirements. The Commission indicated that it would monitor the practical operation of the arrangements to ensure that they did not create barriers to trade for imported products.

• The obligations arising from the Directive apply without distinction to beverage containers produced in Denmark or in other Member States. All return systems, such as

65

becunr data to the satisfactory as it could lead to breaches of commercial confidentiality.

l of the can ban.

to an independent firm of auditors, which supplies aggregated data to DRS.

eful insights into concerns in relation to eposit systems. These are discussed further in Chapter 4

Concerns expressed by other stakeholders were that the arrangements favoured local producers ause the requirements to register with the system and pay fees and to mark containers placed an easonable cost and administrative burden on exporters. The requirement to provide market system was un

The draft Order was adjusted in response to the comments and detailed opinions received during thenotification process and comments made during passage through the Danish Parliament, but the new text also took account of the repea The Order was amended to address these concerns as follows: • The requirement to mark containers with a unique code for Denmark remains, but marking

requirements were made more flexible. Containers may be marked either with the standard international bar code plus a special code for Denmark, or fillers can use adhesive labels.

• Beverage sales are not reported directly to Dansk Retursystem but

• Registration fees were capped at DKK 2000 (€ 268) per annum. This change was to address the

concern about the cost of registering each product line, particularly for smaller companies. The amendments made to the Danish system provide some usd .

le

dustry organisations submitted complaints about the taxes, arguing that the beverage container tax is isproportionately high and therefore distortive, and that being based on volume, it does not provide

sales packaging and secondary packaging for a wide nge of specific food and non-food products with effect from January 1999. In April 2001, the

he taxes were notified in 1999 as a fiscal measure. Complaints were submitted to the Commission,

ring

its response, the Commission said that it was inclined to believe that the fact that there is no production of soft PVC in Denmark was not sufficient to establish a breach of Article 90 of the Treaty.

3.2.6.3 Taxes on beverage containers and selected other packaging Denmark has taxed beverage packaging since 1978 in order to “reduce the consumption of disposabcontainers and stimulate recycling”. Indany incentive for reducing packaging weight. It has further been suggested that the beverage container tax constitutes an illegal state aid, in that it does not apply to exports. Moreover, some containers are supplied to shops just over the border where they are bought tax-free by Danish consumers and reimported to Denmark. Denmark also introduced weight-based taxes for raweight-based taxes were adjusted and the tax rate for each material established on the basis of results from an LCA covering relative environmental impact. Twhich argued that the LCA on which the taxes were based used outdated figures and had not been subjected to peer review. Furthermore, the taxes discriminated against certain materials by offediscounts for some recycled materials but not others. Denmark also adopted a tax on certain types of PVC in 1999. This was also notified as a fiscal measure. When Denmark notified the tax to the Commission, it argued that the tax was not a barrierto trade because neither PVC nor the alternatives were produced in Denmark. In

66

ill

to certain roduct groups over other product groups on the basis of objective criteria – such as environmental

taxes such as these are therefore limited.

.2.7 Finland

3.2.

inland already had requirements for beverage containers when it joined the EU. They were not e iners

of b r litre if e containers participate in a deposit system that achieves a return rate of at least 95%. A deposit

he Commission investigated Finnish arrangements for beverage containers in response to complaints

he Commission opened infringement proceedings in 2002, on the ground that “Finland has failed to anspose the requirement of the Packaging and Packaging Waste Directive that return, collection and

f the Directive and that there is no evidence that the Finnish thorities are supervising the operation of the system. Specifically, they are not ensuring “open

it system for refillable containers that operates tionwide is operated by the Finnish Federation of the Brewing and Soft Drinks Industry. Complaints

d and they can also serve certain recoverable packaging for existing members”. However, membership of the federation

sit system for cans, operated by Palpa.

l be distributed

“The issue of whether the measures are justified on the basis on environmental considerations whave to be evaluated in the light of the future Community strategy on PVC.” The Commission also commented that Member States are entitled to give fiscal advantages pconsiderations – and irrespective of the origin of the goods. The powers of the Commission to take action against 3

7.1 Return system for beverage containers

Fam nded when Finland transposed the Directive, and remain in place today. Non-refillable conta

eer and carbonated soft drinks are taxed at € 0.67 per litre. The tax is reduced to € 0.16 pethsystem operates for cans.

Treceived by economic operators. Ttrrecovery systems be open and non-discriminating”. In its letter of formal notice of 30 January 2002,60 the Commission points out that Finland does not appear to have transposed Article 7.1 oauparticipation by all economic operators so as to avoid barriers to trade and distortions of competition”. The Commission also highlighted that the only deposnareceived by the Commission indicated that the board of the federation can make decisions about membership and participation in the system and about participation fees. Further, the operators of this system “can determine what volume and what type of packaging shall be usereis reserved for domestic companies. The Commission letter also said that operators who dominate the Finnish market for beer and other drinks can also influence who can participate in the depo The Commission called on Finland to ensure that Article 7.1 is correctly transposed. This case was referred to the European Court in July 2003, but the Commission withdrew it in November 2004. An amendment to the Finnish Waste Act took effect in September 2004.61 Among its provisions is a section (18g) governing recovery organisations. This says that producers may meet their obligations by joining a producer organisation. Duties within a producer organisation “shal

60 Ref: 1998/4811 (English translation from version in Swedish by Perchards). 61 Law no. 452/2004 amending Law 1072/1993.

67

a part owner, member

contractor on the same conditions as apply to existing producers.

hapter 4

between the producers and other potential operators equitably” and so as to avoid barriers to trade ordistortions of competition. These organisations must admit a new producer asor 3.2.8 Germany This section discusses only the infringement issues that have arisen from German legislation; inC we discuss the market impact of these measures.

in relation to mineral waters

market share quotas for refillable ntainers for any drinks category that

on of all beverages to be in refillables favour local producers,

s are short. The environmental impact of transporting empty ng outweighs any benefits in terms of reduced waste. A

is discriminatory. The Directive requires that a proportion of all packaging, including beverage containers, is recycled or recovered. From the

d

ith Germany, it decided to limit the case to natural mineral waters. This is undoubtedly the sector

in

3.2.8.1 Refill quotas Packaging Ordinance 1992 (as amended 1998 and 2001) sets

everage containers, with mandatory deposits on non-refillable cobdoes not meet the quotas. There have been many complaints about the provision since it was first introduced, which can be summarised as follows: National rules that require a proporti•

distort competition and are a barrier to trade. Refilling makes environmental and economic sense only where transport distancecontainers over long distances for refillipreference for refillables is therefore not justified on environmental grounds.

• Singling out beverage containers for special rules

environmental point of view, it makes no difference whether a can contained a drink or other fooproduct.

The Commission opened infringement proceedings in 1998, but during the course of its discussions wwith the strongest case against refill quotas, since these products must be filled at source to comply with the relevant Directive on quality standards. 62 However, all other beverage sectors covered by the refill quota consider that they also have a strong case.63

In 2001 the Commission referred the case to the ECJ. The Advocate-General issued his Opinion May 2004, and in December 2004 the ECJ issued its ruling. 64

62 Council Directive 80/777/EEC of 15 July 1980 on the approximation of the laws of the Member Statesrelating to the exploitation and marketing of natural mineral waters (Official Journal No. L 229 , 30.8.80)

.

ere should be no major problems for such cases as they serve very specialised markets and it is unlikely that they would be de-listed just to achieve the refillables quota.

Case C-463/01, Commission vs. Federal Republic of Germany.

63 These products can be filled locally, but, stakeholders say, as there is an EU Single Market, why should they have to be? A multinational company might set up a filling plant in Germany, but this will probably not be feasible for a small company. The Commission’s response is that most of the other beverages are indeed filled locally. Marginal cases such as quality beers have been discussed, but the Commission concluded that th

64

68

orted mineral water, because they affect imported products more than domestically produced mineral water.65 Although the requirements for beverage containers in the Packaging Ordinance “apply to all producers and

ng in national territory, they do not affect the marketing of natural mineral waters produced in Germany and that of drinks from other Member States in the same manner”.

ers, and they incur higher costs than domestic producers if they use refillables. “A producer established in another Member State who

ibution of his products to the specific requirements of the German market.”

rotection. It concluded that

- they ensure a high return rate and more precise sorting of non-reusable containers, which

- by encouraging the use of refillables, they promote waste prevention.

How • n measures were disproportionate because they did not allow a sufficient transitional

period to enable producers and distributors to adapt to the requirements of the new system.

ng

It went on to say that even after the announcement, there was much uncertainty as to whether a e

Government would actually decide to publish the results.

The Court found that • the German deposit requirements are a barrier to trade for imp

distributors operati

• Importers use more non-refillables than domestic produc 66

exports to Germany is compelled to adapt the distr

The Court then considered Germany’s argument that the legal requirements were justified on the grounds of environmental p • deposit systems for non-refillables do contribute to environmental protection in that

facilitates recycling, - they help to prevent litter by providing an incentive for consumers to return the empty

containers, and

ever, the Court went on to conclude that

the Germa

“The period of six months …between the announcement that a deposit and return system must beestablished and the entry into force of such a system is not sufficient to enable producers of natural mineral water to adapt their production and their management of non-reusable packagiwaste to the new system…”

•

deposit system would in fact be established because it depended on new market surveys about thmarket share of refillables and also on whether the German

rn

ember States.”

sed for natural mineral water sold in Germany by reign producers, with a use rate of approximately 71% for non-reusable plastic packaging.” Case C- 463/01, §

65 The Court said that “the replacement … of a global packaging collection system with a deposit and retusystem is such as to hinder the placing on the German market of natural mineral water imported from other M 66 “As the Commission has observed, without being contradicted by the German Government, producers of natural mineral water which originates from other Member States use considerably more non-reusable plastic packaging than German producers. According to a study carried out in June 2001 by the Gesellschaft für Verpackungsmarktforschung, in 1999 German producers used approximately 90% reusable, and 10% non-reusable, packaging, while those proportions were reverfo60.

69

sing to repeal the market share quotas and replace them with a mandatory eposit of “environmentally unfavourable” containers (see section 3.2.8.4

Germany is now propod ). To address the ECJ’s

tran The l the

mains in force, but lawyers acting on behalf of mineral water importers argue that the ruling should

earlrequ

separate ECJ case relating to all beverages, not just mineral waters, involves two Austrian m y al berg), hi r

These co position of mandatory deposits on non-refillable containers repr en hey pointed

eir con

he tu

ve from promoting reuse systems, such

However, it did not specifically provide an

2)

ota is not reached?

The ECJ did not reply to this question – see reply to question 4. 3) Do producers and distributors of drinks in non-refillable containers have a right under Article 7

of the Directive to continue to participate in an existing recovery organisation as a way of meeting

The ECJ ruled that producers and distributors do not have a right to continue to participate in a

argument about the transitional period being too short, the proposal has been amended. The sitional period for the deposit provisions has been extended from six months to one year.

re has been some uncertainty as to whether the mandatory deposit applies to mineral waters untirevised version of the Ordinance has been adopted. The German authorities argue that the deposit

resuspend the deposit for mineral waters. The German authorities brought a successful prosecution

y in 2005 against a retailer who was not charging a deposit. Thus, in practice, the current deposit irements will remain in force until the Ordinance has been amended.

3.2.8.2 German beverage provisions – challenge by Austrian importers Aco panies that export drinks to Germany, Radlberger Getränke GmbH & S. Spitz KG. Theh lenged the deposit provisions in the Stuttgart Administrative Court (in Land Baden-Württemc

w ch eferred the case to the ECJ.

mpanies argued that the imes ts a restriction of their exports to Germany that is incompatible with Community law. T

out that they were participating in DSD, which ensures regular collection and recycling of tainers. th

T S ttgart Court had asked four specific questions in relation to specific articles of the Directive.

) Are Member States prohibited by Article 1(2) of the Directi1as the German refill quota linked to deposit systems. The Court interpreted this as: Does Article 1(2) of the Packaging Directive prevent a Member State from promoting systems for the reuse of packaging, such as that prescribed by the German Packaging Ordinance?

The ECJ replied that the Packaging Directive does not prevent the adoption of reuse measures, provided that they are consistent with the Treaty. Nor does the Directive establish a hierarchy between reuse and recovery of packaging waste. answer as to whether the German refill quotas are acceptable.

Are Member States prohibited by Article 18 of the Directive from impeding the placing on the market of drinks in non-refillable containers by removing the possibility of participating in a Dual System if the refill qu

a statutory obligation to charge a deposit on non-refillable drinks containers and accept the return of these containers?

specific packaging recovery organisation. The Court said that Article 7 of the Directives leaves itup to Member States what type of packaging collection system to set up for non-reusable packaging – a deposit system, a global packaging system, or a combination of the two.

70

- The new system must be “equally appropriate for the purpose of attaining the objectives of the

- The changeover to the new system must take place without a break and without jeopardising the ability of the economic operators affected to participate in the new system as soon as it

producers and distributors concerned have access to a packaging waste management system at all times and

charge a deposit on non-refillables that participate in a global packaging recovery system? The Court interprets this question as does “Article 28 preclude

The Court concludes that replacing a global packaging collection system with a deposit system in

r

H w A tion grounds, the Court concludes, as in the mineral waters case, that deposit systems can have environmental benefit. It

e,

.2.8.3 Implementation of mandatory deposits on certain beverage containers

In rtrigJan carbonated soft drinks. Impsysmak o, the Bun a financial clearing house to balance differences in deposits paid out and redeemed among the various

However, the Court went on to say that, if a member state replaced a close-to-home collectionsystem for packaging with a deposit and return system, “such replacement must comply with certain conditions”:

Directive”. If the new system is a deposit and return system for non-reusable packaging, “the member state must ensure that there are a sufficient number of return points so that consumers who have been charged a deposit … can recover the deposit even if they do not go back to the initial place of purchase”. The current requirements governing refund of the deposit seem ambiguous, comments the ruling.

enters into force. Member states are responsible for ensuring that “the

without discrimination.” (48) 4) Under Article 28 of the Treaty, are Member States permitted to establish a refill quota linked to an

exemption from the obligation to

national rules…. under which the proportion of reusable packaging in the sector concerneddetermines whether producers and distributors using non-reusable packaging may fulfil their deposit, return and recovery obligations by participation in a global collection system”.

respect to non-reusable packaging is a barrier to trade for imported drinks.

The Court says that the requirements do not affect domestic producers and importers “in the same manner”. It notes that importers use more non-reusable packaging than German producers and notes the observation made by the Stuttgart court that recourse to reusable packaging incurs highecosts for importers than for domestic producers.

owever, the ruling does not specifically answer whether the German refill quotas are compatibleith Article 28.

s to whether the measures are justified on environmental protec

specifies the same criterion for assessing whether the German requirements are disproportionatnamely whether the transitional period is adequate to allow all producers and distributors to participate in an operational system.

3

ecent years the market share of refillable containers has dipped below the quota levels, which gered the introduction of mandatory deposits on non-refillables (except beverage cartons) in uary 2003 for beer, waters and

lementation of the deposit in Germany has been piecemeal and there is still no national deposit tem operating. This is largely due to legal uncertainty,67 which deterred economic operators from ing the significant investment in the infrastructure needed to operate a deposit system. Alsdeskartellamt (German competition authority) expressed concerns about the operation of

67 Challenges in the ECJ to the refill quotas as they apply to mineral waters, numerous legal challenges in the German courts, and the Federal Government proposal to amend the deposit legislation.

71 retades aged som y the discount chains, to operate return systems only for their own products,

sing unique packaging. The resthere arany retachains. blue rin Thi athe marhard to tead because

October 2003 the Commission opened infringement proceedings relating to the way the deposit

dep e “isl ty trad In O g. However an amendment has been proposed to the revised deposit provisions to remove “island solu

il chains. In addition, a provision in the Ordinance allows individual companies using a unique ign of container to handle only their own containers, known as “island solutions”. This encoure retailers, particularl

u

ult has been that several different deposit systems operate in competition with each other, and e several “island solutions”. This means that consumers cannot get their deposit refunded at il outlet, as “island solutions” restrict take-back to the specific retail chain or group of retail Red Bull has also established an “island solution” for its cans – which are identified with a g pull.

s h s caused significant disruption in the market. For example, cans have largely disappeared off ket. It appears that the trippage rate for refillables has also fallen as consumers, who find it get the 25 eurocent deposit refunded on non-refillables, are buying refillable bottles ins the deposit is lower, but then not returning them.

Insystem currently operates in Germany. The Commission argues that there is no nationwide

osit/return system, as the only systems operating nationwide have a market share of just 12%. Thand solutions” adopted by a number of discount chains also pose a problem for intra-Communie, because they require producers to supply distinctive packaging.

ctober 2004 the Commission decided to refer the case to the ECJ. This case is still pendin

tions” (see section 3.2.8.4 below), and the Commission has put the referral on hold.68 3.2. Theuns end them. For example, the potential yo-yo effect, whereby the deposit imposed on drinks categories that do not meet the refill quotas would be lifte Germany has proposed to repeal the refill quotas and instead impose deposits on all containers of key bev les exclegiThe udies, but this term.

revised proposal was notified to the Commission in November 2004. The new proposal addresses l, retailers

ould no longer be able to refund the deposit only on the containers that they sell. They would have

this proposal. The measure is considered be a barrier to trade that discriminates against imports and is not justified on environmental grounds

8.4 Proposal to delink deposits from refill quotas

German Federal Government acknowledges that the current refill quota and deposit provisions are atisfactory and in July 2003 notified a proposal to am

d if the drinks categories again met the quota, creates legal uncertainty.

erages which are not classified as “environmentally advantageous” (i.e. on all non-refillabept beverage cartons, PE pouches for milk, and aluminium pouches for soft drinks). The draft slation also requires that 80% of all beverages are in “environmentally advantageous” containers. categorisation of containers as “environmentally advantageous” was made following LCA stthe legislative proposal does not define

Athe objections made by the Commission to “island solutions”. Under the new proposawto take back any containers of the same material, including those sold by other retailers. Several Member States issued detailed opinions challengingtobecause it is disproportionate. Others have challenged the proposed distinction between “environmentally advantageous” and other packaging. The meaning of this term is unclear and is

68 In February 2005, the Commission issued comments in Germany’s proposed amendment.

72

came under attack from opposition parties in Germany (among others) ecause it does not contain an “innovation clause”, a provision opening the way for other packs to be

. o

eland imposed an environmental levy of 15 eurocents per unit on plastic carrier bags with effect from nt

for fresh

ing the use of plastic carrier ags. This has been successful in that the number of bags used has decreased by around 90%. Any

on from e Irish authorities to justify a possible exemption for “biodegradable plastic bags which have a more vourable environmental impact than other plastic bags” (the text as notified refers only a possible

ion”). The Commission also reminded eland that monies in the Environmental Fund, depending on how they are used, could be subject to

he objective sought for this tax was litter reduction, which is discussed further in section 8.2

incompatible with the Directive.69 The Commission has issued comments on the proposal but not a detailed opinion, its main concern being the provisions that allowed “island solutions”. The original proposal alsobdesigned as environmentally advantageous in future if they meet environmental criteria. Although there is widespread support for the repeal of the quotas within Germany, the proposal is controversialHowever, since the Bundesrat finally approved the original proposal in October 2004, it is expected tapprove the revised version. 3.2.9 Ireland 3.2.9.1 Tax on plastic carrier bags IrMarch 2002. The justification for the tax was that “plastic bags are a visible and persistent componeof litter pollution…” Reusable bags sold for 70 eurocents or more each and certain bags usedproduce are exempt. The tax is charged by retailers, who must pass it on in full to consumers. The government wanted the tax to change consumer behaviour by reducbrevenue from the tax goes to an Environmental Fund. When the tax was notified, the Commission issued comments that requested further informatithfaexemption for certain bags “by reference to their compositIrthe rules on state aids. The levy took effect in March 2002 with no exemption for biodegradable bags. T .

tax (10% of invoice value) on polyethylene material used to manufacture plastic films for the Italian

ted.

esearch in aly distorted the market in favour of Italian companies. Also, while Italian producers paid the tax on

producers

used PE-based products for recycling and recovery.

3.2.10 Italy 3.2.10.1 Tax on PE Amarket came into effect in 1994. It was intended to fund collection and reprocessing and research intonew end-use markets. Point-of-sale packaging and “farm films” were the categories mainly affec The Commission objected to the tax because taxing imports for the benefit of recycling rItthe raw material, foreign companies paid it on the value of the products made from PE. The tax was abolished in 1997 and was replaced by the establishment of a consortium forand converters of PE products other than packaging. The consortium was to promote take-back of

69 One industry stakeholder, BCME, has pointed out with particular vigour that various Member States (through the

ns laid down in the

ackaging Directive. “There is no room for alien concepts, especially if arbitrary.”

notification procedure) and complainants have rightly argued that Member States are not allowed to introduce suchdistinctions which undermine the backbone of harmonization, namely strict compliance with the definitioP

73

.2.11.1 Proposed rules for beverage containers

be payable if the refillable market share target and recycling targets for on-refillables were achieved. The eco-tax was to be paid by individual companies if they are outside registered recovery organisation. If they were members of such an organisation, responsibility for

rgets would be collective.

nts or detailed opinions on the proposal. The Commission also sued a detailed opinion, arguing that since Luxembourg producers used refillables to a much greater

d by e mechanism introduced by the draft.

ndum, Luxembourg had indicated the recycling ossibilities for the materials reviewed.

ch at

f the place of consumption and the appropriate nature of these circuits with gard to the product concerned, the journey to be made from the place of production, and the

ies should also show at the environmental objective cannot be attained by other methods which do not have detrimental

uxembourg withdrew its bill.

rinks may only be sold in refillable glass bottles or through premix or postmix dispensing systems.

nder the Act of Accession, Malta is permitted to keep these restrictions until 2007, but it is already

at would apply to all beverage containers and to all types of bottle and can.

3.2.11 Luxembourg 3 In 1995 Luxembourg notified a bill to the Commission that required that all parts of the chain take back used beverage containers of the capacity and brands they sell. Producers and distributors mustensure that consumers have the option of buying refillables. There would be a take-back obligation, recycling targets and refillable market share quotas. There would also be an eco-tax on non-refillables, but this would notnafailure to meet the ta Five Member States submitted commeisextent than for imported products (90% and 30% respectively), the costs of coping with the preference given to refillable packaging would fall almost exclusively on foreign suppliers and would seriously hamper the free movement of goods. The Commission also noted that dairy products in Luxembourg had little competition from imports, were marketed in one-way packaging, and were not covereth The Commission further argued that Luxembourg had not sufficiently justified its preference for refilling, particularly since, in the explanatory memorap The Commission said that “it cannot be shown that, as a general rule, refilling presents ecological advantages as compared with recycling. A case-by-case evaluation should in fact be made where eaproduct presents details with particular regard to origin, regulation government mandatory bottlingthe source or at the place of production, the needs of the consumer, the presence of reutilisation circuits in the vicinity oreproximity of recycling or indeed incineration centres. The Luxembourg authorittheffects on the internal market.” L

3.2.12 Malta 3.2.12.1 Preference for refillables Under the Non-alcoholic Beverages (Control of Containers) Regulations, LN 158/98, carbonated soft dThese regulations do not apply to other beverages, and waste arises in Malta from discarded plastic mineral water bottles, beer cans and glass bottles from imported beer and wine. Uworking on replacing them. Under consideration is a mandatory deposits system th

74

uced an eco-tax on plastic, glass and metal containers of key beverages, nd on empty beverage containers of the same materials. The tax took effect on 1 September 2004.

either measure has been notified – the deposit because it is still under discussion and the tax because

e in June 1996, which transposed the main provisions f the Directive. However, it provided for an exemption from some legal obligations for companies

irements, there were no measures to promote use of recycled aterial, and no measures for informing packaging users.

fficient – municipalities had to set up separate collection of at ast glass and paper/board, while producers could make arrangements with municipalities to collect

rgets

m rates permitted by the Directive) could be exceeded through the ovenant. The Commission expresses concern that this arrangement could circumvent the

ng the Directive’s maxima must be subject to prior scrutiny. In the this, the Netherlands are unlikely to fail to meet the Directive’s targets, which suggests that the

ommission’s challenge on the voluntary approach is a technical challenge.

August 2000 the Commission sent the Netherlands a reasoned opinion. This indicated that, th the Dutch authorities, the Commission maintained two of its

bjections:

e so legal underpinning was unnecessary. The Commission argued that this was a key requirement of the Directive and should be transposed even if appropriate systems

Meanwhile, Malta has introda Nit is a fiscal measure. 3.2.13 Netherlands 3.2.13.1 Packaging Covenant II The Netherlands notified a draft packaging decreothat signed up to the second Packaging Covenant. This is the voluntary agreement which a vast majority of Dutch companies joined. In its letter of formal notice of 9 June 1998,70 the Commission identified various problems with the measures notified. For example, the definitions of recycling and recovery did not fully correspond with those in the Waste Framework Directive, there was no reference to harmonised standards to assure conformity with the Essential Requm In relation to the obligation to set up a collection and recovery system for packaging, the Commission argued that the measures taken were insuleother packaging materials separately. The Commission also questioned the “voluntary” nature of the Covenant. The Commission is concerned as to whether the Dutch authorities have sufficient powers to take action should the tanot be met. Do the legal obligations in the Packaging Regulations provide an adequate legal safety net? The Commission also took issue with the indication in the Decree that the statutory recovery and recycling targets (at the maximuCrequirement that targets exceedilight of C Infollowing further correspondence wio • The definition of recycling does not correspond to the one in the Directive (the Dutch definition

does not explicit include organic recycling nor explicitly exclude incineration with energy recovery).

• Insufficient measures for collection and recovery systems. The Dutch argued that such systems

already operated in practic

operated.

70 Case reference 1997/2230.

75

ombining legal obligations with a voluntary agreement.

.2.13.2 Beverage container provisions of Covenant III

s notified a third Packaging Covenant, establishing revised recovery and 2005.

he text also contained some proposed restrictions for beverage containers aimed at protecting

duct

are permitted to use new product/pack combinations to place existing refill systems only subject to certain conditions (they must demonstrate that the new

s that meet the Essential Requirements hould have free market access. It also argued that the provisions are a de facto refill quota which

he Commission also commented on the recovery and recycling targets, which are higher than those must

e these challenges, the Covenant was duly signed. However in November 2003 the ommission opened infringement proceedings, and in January 2005 referred the case to the ECJ.

ents. On

eanwhile for non-refillable PET bottles of up to 0.75 litres, there will be a temporary mandatory lect

If orks well, no mandatory deposit will be imposed on them. This proposal was notified to

e Commission on 30 September 2004. As it was notified as a fiscal measure, there was no standstill

.2.13.3 Penalties for beverage containers linked to litter reduction targets

dthatwould take effect on selected beveoll paper and board), currently a municipal responsibility in

nds. The Commission and some Member States issued detailed opinions during the notification procedure.

the refill quotas that would take effect for glass and plastic (above 0.5

The Commission closed the case on 9 July 2003. The definitions in Covenant III correctly transpose the definitions of recovery and recycling. The Commission has also accepted the Dutch approach ofc 3 In June 2002 the Netherland

cycling targets, and other targets to be met byre Texisting refill systems. The principle was that existing refillable packaging systems for beer, soft drinks and waters should not be replaced by non-refillables. There are no restrictions for product/packcombinations already on the market in December 2002, but there are restrictions on new pack/procombinations. Producers and importersrepack would not increase environmental impact; or not exceed 2% of the total volume of that drink category on the Dutch market). The Commission issued a detailed opinion that challenged the special authorisation requirements for certain drinks packs. The Commission argued that all packstends to discriminate against importers. There are certain criteria for exemption, but these favour producers already established in the market and they also favour traditional glass bottles over new types of packaging. Tin the revised Directive (not adopted at that stage), and reminded the Dutch authorities that theyofficially notify the Commission. DespitC The Dutch authorities have now decided to allow large non-refillable PET bottles onto the market from 2006, albeit with a mandatory deposit system and new producer responsibility requirem28 January 2005, the Government announced that these proposals will be taken forward in a new Packaging Decree, which is to be published shortly. Mrecycling levy of 2 eurocents per bottle. The revenue will be used to set up pilot projects to colused bottles for recycling through a “bring” system (these bottles are often consumed out of doors). the system wthperiod.

3 A raft Decree on the management of packaging, paper and board, notified in April 2002, provided

, if litter was not reduced by two-thirds by the end of 2004, a mandatory deposit and refill quota rage containers. Industry would also have to fund the segregated

ection of packaging (and non-packaging cThe Netherla

The Commission challenged

76

have to be bottled at source. The measures ould thus breach Article 5 of the Directive, Article 28 of the Treaty and the Mineral Waters irective.

he Commission also sought clarification about the provisions on the collection of packaging and non-

ion requirements, on which the authorities ould impose restrictions and conditions. The Commission sought assurances that any restrictions

id not

shed very soon, there will no longer be an automatic imposition of the uota and deposit if the litter reduction target is not met – the Environment Minister can decide

axes

ed through deposit and return systems.

the

nvironmental concerns – to maximise use of refillables in order to minimise beverage container d

November 1996 the EFTA SA sent a Reasoned Opinion arguing that the basic tax was

he Norwegian government subsequently recommended repealing the tax in the 1997 budget, but the arliament rejected the proposal.

he EFTA SA did not pursue the issue, pending clarification of EU policy on priority of reuse over

The discount on the new packaging material tax relating to the return rate remains force. The new tax takes account of the likelihood of the containers to end up in litter. Containers

litre) beverage containers if the litter reduction target were not met. The Commission argued that fillers in other Member States would have to establish refill systems. This would entail additional costs, particularly for importers of mineral waters, which wD Tpackaging paper and board. Producers and importers would have to submit information to the Dutch authorities about how they proposed to meet the collectcimposed would not give rise to barriers to trade and that the requirement to submit information damount to a requirement to obtain prior authorisation to place a product on the market. Such a requirement would be a barrier to trade. The Commission and some Member States also expressed concerns about the proposed deposit requirements and associated requirement to mark packaging. In the decree which will be publiqwhether to impose any or all of the measures. 3.2.14 Norway 3.2.14.1 Packaging t Norway long since taxed non-refillable containers of beer and carbonated soft drinks. Since 1994 there has been a basic tax on non-refillables. An additional tax is also payable, but is discounted depending on the return rate achiev In August 1995 the EFTA Surveillance Authority (EFTA SA) issued a formal challenge to preferential tax treatment for refillables. Norway’s defence was that the tax was motivated by ewaste. That it affected imports more was a consequence, not an aim of the tax. Norway also arguethat repeal of the tax would destroy the Norwegian glass industry and thus make it impossible for Norway to recycle glass, prompting Norway to propose exempting glass from the tax. Indiscriminatory because most domestic production fell outside its scope whereas most imported beverages were subject to the tax. EFTA SA also pointed out that ECJ jurisprudence holds that a differentiated tax system is compatible with EU law if it is based on objective criteria and if the detailed rules avoid any form of discrimination. This defence was inapplicable since the tax exemptedmilk in non-refillables, which were almost exclusively domestically produced. TP Trecycling, and in June 1999 informed Norway that it had decided to drop the case. The taxes remain in force, but in 2000 they were restructured. The basic tax on non-refillables remains but the additional tax was replaced by a packaging material tax, with different rates for different materials. inof squash and juice are exempt in addition to milk because they are usually consumed in the home

77

s,

f tax are also differentiated according to the perceived harmfulness when littered. The rate r glass is the highest because it has a long lifespan as litter and can cause injury. Metals and plastics

ble beverage containers

July s sold to households, and required

atering outlets to sell soft drinks, beer and bottled water in refillables only.

l had catering outlets. Portugal had argued that refill rates

ere already high in these outlets, so the requirements made little difference. However it had not rovided any data on reuse levels for each drink category that would have enabled the Commission to

lity of the proposed measure.

nd replaced it with a new measure, Implementation Decree 29-B/98. This tained the 100% quota for catering outlets as one option, but it offered them the alternative of selling

s

same

osed ter).

g

However, since no go for reusable packaging has been devised, the requirement causes no problems in practice.

t mandatory to mark all packaging participating in a recovery rganisation. Some economic operators challenged this because it created a conflict with requirements

t” rt packaging, but

ansport packaging was not handled by recovery organisations in some other Member States. Hence

since “for nutritional reasons they belong to the daily diet”. Conversely, non-carbonated soft drinkpreviously benefiting from a low rate of environmental tax, now attract the same tax rates as carbonated drinks. The rates ofowere originally both charged at the same rate but metals are now charged at the same rate as glass. Beverage cartons are charged at the lowest rate because they are biodegradable. 3.2.15 Portugal 3.2.15.1 Market share quotas for refilla Decree no. 313/96 for Implementation of the Packaging and Packaging Waste Law, published in1996, set market share quotas for refillable beverage containerc Several Member States challenged these restrictions and the Commission concluded that Portugafailed to justify the 100% refill requirement for wpassess the proportiona Portugal withdrew the text arebeverages in non-refillables provided they either recycle them or take them back. The Green Dot organisation SPV has set up a subsidiary, Verdoreca, to ensure the recovery of beverage containerfrom catering outlets. The text also contains requirements that the market share of refillables sold to households is maintained, and later increased. All retailers selling drinks in non-refillables must also offer theproduct categories in refillables. 3.2.15.2 Marking requirements In the same detailed opinion, the Commission also challenged the draft Decree-Law’s proprequirement that reusable packaging must be marked with a logo (which would be determined laThe Commission referred to Decision 97/129/EC of 28 January 1997 on identification of packaginmaterials, which said that marking and material identification should be voluntary. The requirement to mark reusable packaging was adopted and remains in force. lo The draft Decree-Law also made ioin other Member States where the Green Dot on-pack symbol was used. The Portuguese “Green Dorecovery organisation, Sociedade Ponto Verde (SPV), handled both sales and transpotrthe Portuguese requirement caused problems for products traded in several Member States. This requirement is still in force for sales packaging, but since 2000 marking has been voluntary for secondary and transport packaging.

78

ued that the Decree failed to transpose the requirement that all packaging must eet the Essential Requirements. Portugal argued that the requirements were too costly and

he Essential Requirements and heavy metal limits were eventually transposed by Decree-Law no. 07/98 of December 1998.

an on the manufacture, port and export of PVC and PVC-containing products with effect from January 2008.

the Canary Islands adopted a law banning the use of non-reusable etal packaging of liquids by hotels and restaurants, except where alternative packaging could not be

sed for hygiene and health reasons, and except for products sold in vending machines.

number of industry sectors submitted complaints to the Commission, arguing that the main purpose

en notified prior to doption, without prejudice to whether the measure was compatible with the Directive.

s for ll packaging that meets the Essential Requirements.

3.2.15.3 The Essential Requirements The Commission argmadministratively burdensome for economic operators. The Commission rejected this position – “financial and organisational difficulties cannot justify a Member State adopting a measure which derogates from a Community directive”. T4 3.2.16 Slovakia 3.2.16.1 Ban on PVC Waste Act No. 223/2001, which came into force in July 2001, provided for a bim The Packaging and Packaging Waste Act adopted in August 2002 amended this, requiring manufacturers of packaging or products using PVC to develop a prevention programme containingmeasures leading towards a gradual minimisation and substitution of PVC by other types of plastic or other materials. In our view, the prevention programme has the potential to result in a barrier to trade for PVC. Whether it does or not depends on how it is implemented and enforced in practice. 3.2.17 Spain 3.2.17.1 Ban on beverage cans in the Canary Islands In January 1999 the Parliament ofmu Aof the legislation was to protect local beverage producers from foreign competition. The Commission opened infringement proceedings in July 1999. In its letter of formal notice, the Commission pointed out to the Spanish authorities that the measures should have bea The Commission subsequently challenged the ban because it infringed the free access provisiona The Canary Islands first argued that they were a special case. The Canary Islands Government then announced that implementation of the can ban, which was to come into effect in November 1999, would be delayed to give the authorities time to review the situation, and in October 2000 it was finally repealed.

79

.2.18 Sweden

aluminium beverage cans are exempt from duty if they articipate in a deposit system.

d a proposal to the Commission that would expand the scope of the eposit requirements to all cans and plastic packaging. The proposal also contains new requirements – at all commercial distributors of drinks in the affected containers must participate in a deposit

sit system in dominant market position must ensure that its rules do not iscriminate and that its requirements for participating containers are reasonable.

he standstill period ended on 15 December 2004, and the Swedish proposal is expected to be adopted

everal of the new EU-10 Member States have made it mandatory to use the EU material use of

d by the EU, and ow withdrawn. Annex F

3 3.2.18.1 Competition implications of deposit and return systems Non-refillable PET bottles are permitted in Sweden only if they participate in a deposit and return system that achieves 90% recycling whilep In June 2004 Sweden notifiedthsystem, and that a depod Tsoon. 3.2.19 Marking requirements 3.2.19.1 Commission Decision 97/129/EC and Directive 2004/12/EC Sidentification system set out in Commission Decision 97/129/EC, and some have also mandated the reusable and recyclable logos proposed in COM(96) 191 final, but never adopten contains an overview of the marking requirements.

EC has updated Directive 94/62/EC somewhat ambiguously, which makes the legal osition even less clear. Whereas the original Packaging and Packaging Waste Directive, which

ndicate for purposes of its identification and lassification by the industry concerned the nature of the packaging material(s) used”, the amending

ctive makes em mandatory, but the Commission has now taken the view that national rules which diverge from

Directive 2004/12/ppredated Decision (7/129/EC, said that “packaging shall icDirective says that “packaging shall indicate for the purposes of its identification and classification by the industry concerned the nature of the packaging material(s) used on the basis of Commission Decision 97/129/EC.” There has been some discussion as to whether this means that the voluntary nature of the provisions of Decision 97/129/EC are carried forward by Directive 2004/12/EC or whether the DirethDecision 97/129/EC are not allowed. Further discussion of marking requirements can be found in section 6.5. 3.2.19.2 Marking rules in EU-15 Austria: Ordinance 137/1992 on the marking of plastics packaging has required plastics packaging (with certain exceptions) to be marked or labelled with the full name of the polymer or an abbreviation. This was contrary to Commission Decision 97/129/EC, at least until Directive 2004/12/EC came into force, but a proposed amendment to the Packaging Ordinance notified on 24 November 2004 provides that if packaging is marked, the markings should be in line with Decision 97/129/EC. Thus, the Austrians ensured that whatever was decided at EU level on whether or not the marking system remains voluntary would automatically be transposed into Austrian law.

80

een mandatory since 1994 to mark the “KCA” logo (see ight) on specified items that must not be put in the household waste bin,

ted items clude the packaging of specified chemical products (pesticides, solvents,

on

be

Netherlands: It has brbecause they are collected separately for special disposal. The designainpaints, etc). Imported products must also be marked with the logo, unless they bear a mark designated by the government of another member state relating to the separate collectiof small chemical waste. Although this logo relates to the contents rather than the packaging, it is in effect an instruction toconsumers on how to dispose of packaging waste. Arguably, therefore, it falls within the scope of Directive 94/62. The Dutch requirement that these packs be marked in a specific way could thusseen as a barrier to trade.

81

4. NATIONAL RULES SPECIFIC TO BEVERAGE CONTAINERS 4.1 POLICY OBJECTIVES Many of the cases discussed in section 3.2 relate to beverage containers. Early national packaging policy focused on beverage containers, when traditional refill systems began to be replaced by new

rms of non-refillable packaging that were better suited to new distribution and retailing methods. ll

s ch as Austria 72 and Belgium 73) retained special rules for beverage

ontainers, but others (France 74) did not.

Directive 94/62 clearly applies to all packaging without distinguishing between the product a pack contains nor the material from which it is made. The only reference to beverage containers is to repeal the Directive on containers of liquids for human consumption. Thus, the Directive does not provide any specific justification for any special measures for packaging of specific product categories. On the other hand, Article 5 of the Directive does permit Member States to “encourage” reuse systems for packaging. The market for beverages in refillable containers has been in decline for many years, and Article 5 has been used as a justification for supporting refillables by introducing special measures to limit or reduce the competitiveness of non-refillable beverage containers. More recently, the need to combat littering has been used as a justification for special measures against non-refillable beverage containers, though litter is not specifically mentioned in the Directive. These issues are discussed below.

foHowever, Germany moved away from this narrow emphasis when it adopted recycling targets for apackaging in its pioneering Packaging Ordinance 71 in 1991, while maintaining special rules for beverage containers. When other Member States started to follow Germany by adopting requirementfor all packaging, some (suc

71 Verordnung über die Vermeidung von Verpackungsabfällen (Verpackungsverordnung – VerpackV) vom 12/6/91. 72 Verordnung des Bundesministers für Umwelt, Jugend und Familie über die Festsetzung von Zielen zur Vermeidung und Verwertung von Abfällen von Getränkeverpackungen und sonstigen Verpackungen, BGBl. Nr. 646/1992, subsequently amended by Verordnung des Bundesministers für Umwelt, Jugend und Familie, mit der die Verordnung über die Festsetzung von Zielen zur Vermeidung und Verwertung von Abfällen von Getränkeverpackungen und sonstigen Verpackungen geändert wird, BGBl. Nr. 649/1996 and later by Verordnung des Bundesministers für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft, mit der die Verordnung über die Festsetzung von Zielen zur Vermeidung und Verwertung von Abfällen von Getränkeverpackungen und sonstigen Verpackungen geändert wird, BGBl. Nr. 426/2000. 73 Loi ordinaire du 16 juillet 1993 visant à achever la structure fédérale de l’Etat/ Gewone wet tot vervollediging van de federale staatsstructuur. 74 Décret 92-377 du 1er avril portant application pour les déchets résultant de l’abandon des emballages de la loi N° 75-663 du 15 juillet 1975 modifiée relative a l’élimination des déchets et à la récupération des matériaux (J.O. du 3 avril 1992).

82 4.2

MEASURES

d r

s if the i se sectors falls below 72% 75 and the market share of

76

ector is monitored 1

mandatory deposits if at least 20% of market volume is packed in 78

Official figures show the following evolution of market shares for refillable beverage containers and milk pouches:

MARKET SHARE QUOTAS AND OTHER REFILL PROTECTION

4.2.1 Germany The German Packaging Ordinance of 1991 set ambitious targets for the collection and sorting of usepackaging. For beer, waters, soft drinks, juices and nectars, still wines (except dessert wines), and fodetergents, cleaning agents and emulsion paints not packed in "flexible refill packs" or "cardboard reinforced flexible packaging", a mandatory deposit would be applied if the collection and recycling targets were not met. Even if the Dual System achieved the collection and sorting targets laid down, a mandatory deposit-and-return system would be imposed nationally on packaging for beer, soft drinks and still wine

arket share of refillable conta ners in themrefillable containers in any given sector falls below the 1991 level. Pasteurised milk had its own separate refillables quota of 17%. In addition, mandatory deposits would be imposed in any Land where the market share of refillables fell below the 1991 level – which in some cases was well above 72%. Under the revised Ordinance which came into force in 1998, • the refill quotas apply nationwide rather than being monitored in each Land;77 beverages are now grouped into major sectors (beers, waters etc). Each s•

individually, and sanctions are applicable only to a beverage sector which falls below the 199levels; and

• pasteurised milk is exempt from

refillable bottles or PE pouches.

75 The national market share of refillables at the time the Ordinance was introduced. 76 Verordnung über die Vermeidung und Verwertung von Verpackungsabfällen (VerpackungsverordVerpackV) vom 27/8/98. 77 This change had the effect of re-establishing a Single Market within Germany. The pre-1992penetration of non-refillable beverage containers had been lowest in the south of Germany

nung –

market and highest in the

rmer GDR, where the established distribution system collapsed once the market was opened up to western market share

ved not only to protect Bavarian brewers against foreign ompetition but also to protect them from the larger brewers of Northern Germany.

foproducts. The original provision that the exemption from mandatory deposits may be revoked if the of refillables fell in any given Land therefore serc 78 The revised Ordinance refers to refillables and PE pouches as “environmentally favourable” packaging, but this term is not defined.

83

Ta HARE OF REFILLABLE CONTAINERS IN GERMANY, 1991-2002 ble 31: MARKET S 1991

% 1994

% 1997

% 1998

% 1999

% 2000

% 2001

% 2002

% Mineral waters 91.33 89.53 88.31 87.44 84.94 80.96 74.03 68.33Still soft drinks & juices 34.56 38.76 36.81 35.66 34.84 33.35 33.16 29.46Carbonated soft drinks 73.72 76.66 77.76 77.02 74.81 68.45 60.21 53.97Beer 82.16 81.03 77.88 76.14 74.90 73.07 70.84 67.99Wine 28.63 28.54 28.10 26.20 26.75 25.76 25.41 25.29ALL BEVERAGES (except milk) 71.69 72.87 71.33 70.13 68.68 65.46 61.13 56.24Milk (refillable) 24.17 24.69 17.99 15.20 13.20 11.80 11.50 10.20Milk (pouches) 2.10 2.25 12.22 9.70 8.70 7.10 4.40 3.10ALL MILK 26.27 26.94 30.21 24.90 21.90 18.90 16.00 13.30

Source: BMU (Federal Environment Ministry) In 1997 the market share of beverages sold in refillable containers fell below the 72% quota for tfirst time. According to the revised Ordinance, if the market share was still below 72% 12 monthafter the announcement was made (it was made on 19 November 1998), mandatory deposits wouldimposed six months later on the beverage categories whose market shares were below 1991 levels. The de

he s

be

posit would apply to all non-refillable containers in the beverage sectors affected. These ontainers would have to be returned in-store and could no longer be collected through DSD. In April

e rate had fallen further.

reverse vending achines for the return of used beverage containers would cost between € 1500 and € 2000 million.

circ

y autumn 1999 it was widely accepted that the current arrangements were based on outdated u

situ doption of the Packaging Ordinance in 1991. DSD’s success developing recycling meant that the original waste problem, the rising quantity of beverage

mental burden was only marginal, and the enormous cost of introducing a deposit system would be disproportionate to the environmental benefits. In any case, the 1998 drop of 1.87% below the 72% quota was within statistical margins of error. “Refillables are always privileged, independent of how well they are organised; non-refillables are always discriminated against, no matter how good or bad they are. A packaging policy which is viable for the future must see that the most important indicators of environmental performance are optimised in all refillable and non-refillable systems. This is the decisive potential for the avoidance of environmental impact, not from shifting from non-refillables to refillables,” said the BDI. The Environment Ministry was unwilling to accept this point of view, and in June 2000 it announced

c alternatives, the the next survey

r alternatives and numerous court cases, mandatory deposits were finally

posed from January 2003.

c2000, the results of the 1998 survey were published, and the reus The retailers said that if mandatory deposits had to be introduced, the installation ofmThe retailers and fillers claimed that the only way to make beverage sales profitable under those

umstances would be to delist refillables altogether.

Bass mptions and needed reforming. The BDI, the Association of German Industry, argued that the

ation had completely changed since aincontainer waste, had been solved. The contribution beverage containers were making to Germany’s overall environ

that as German industry had been unwilling to come up with or agree to realistiandatory deposit provided for in the Packaging Ordinance would take effect if m

showed that the 72% refill quota has been missed for a second consecutive year. After many furthediscussions on politicalim Mandatory deposit systems are considered in section 4.3 below. Here we consider market share quotas per se. It is generally accepted that refilling makes better sense when distribution distances are short, so

easures reserving a large share of the market will inevitably restrict competim tion from more distant producers, especially foreign companies. The question is whether the environmental benefits of this measure are large enough to justify the restriction. The German authorities have argued that they are

84

cessary if consumers are to continue to buy local, which is in the interests of the environment. The Ger d are outweighed by the substantial breac nt r s ea nt Th cerned with Internal M is o ak u n ro nis f se judgements: e t a on e th d tak On ich is s he t i m quo osition of mandatory d s p to od a n arirre eir individual policies. Many n y d ir st to respect the quo e actions of others – and, e u i coed se which moved a greater proportion of their production

neman Refill Alliance agrees. Many other commentators believe that the benefits are marginal, an

79h in I ernal Market p inciple which this m sure e ails.

is study is con arket sues, s we m e no j dgeme ts on p portio ality. It or others to make the we se k only o draw ttenti to th issues at nee to be en into account.

e feature of the legislation wh clearly unjust i that t penal y for fa ling to eet the refill tas – the imp eposit – has a plied all pr ucers ctive o the m ket, spective of th compa ies ma have one the utmotas, but th let us not forg t, the p rchasing decis ons of nsumers – have

lin

to them being penalised along with thoto non-refillables.

Infringement proceedings have been underway since 1998 (see section 3.2.8), but during the course of its discussions with Germany, the Commission decided to limit the case to natural mineral waters. This is undoubtedly the sector with the strongest case against refill quotas, since these products mustbe filled at source to comply with the relevant Directive on quality standards. 80 However, all other beverage sectors covered by the refill quota also have a strong case.

On 14 December 2004, the European Court of Justice delivered its judgement in the case brought by the Commission which challenges Germany’s refill quotas in relation to mineral waters. The outcomewas described in detail in section 3.2.8.1, but can be summarised as follows: • the Directive does not establish a hierarchy between the reuse of packaging and the recovery of

mental protection.

nt

packaging waste – i.e. reuse is not automatically superior; and • the German deposit requirements are a barrier to trade for imported mineral water, since they

compel foreign producers to adapt their packaging for the German market; • the German measures were disproportionate because they did not allow a sufficient transitional

period to enable producers and distributors to adapt to the requirements of the new system; but • deposit systems for non-refillables do contribute to environ In a parallel case,81 where a ruling was also given on 14 December 2004, the ECJ said that • the Directive “does not establish a hierarchy between reuse of packaging and the recovery of

packaging waste”. However, the Court went on to conclude that • the Directive does not prevent the adoption of reuse measures, provided that they are consiste

with the Treaty.

79 BCME, for example, has commented that national requirements promoting the use of refillable beverage ontainers mean in practice that the deciding factor behind establishing a factory is the immediate proximity to

nt ational companies are able to set up in Germany in order to supply the market with refillables, d not necessarily be possible for small operators.

cconsumption. In their view this was against the spirit of the Internal Market. BCME accepts EEB’s argumethat major intern

ut says this woulb 80 Council Directive 80/777/EEC of 15 July 1980 on the approximation of the laws of the Member States relating to the exploitation and marketing of natural mineral waters (Official Journal No. L 229 , 30.8.80). 81 Case C-309/02, Radlberger Getränkegesellschaft mbH & Co. and S. Spitz KG vs. Land Baden-Württemberg.

85

ould abandon the market share quotas and replace them with mandatory deposits on all beverage

es

The ECJ did not specifically say whether refill quotas are acceptable. Meanwhile on 4 November 2004 Germany notified a proposed amendment to the Ordinance which wcontainers except refillables and “ecologically favourable” non-refillables. “Ecologically favourable” non-refillable beverage containers are defined as cartons (including gable-tops), polyethylene pouchand foil pouches. 4.2.2 Portugal As noted in section 3.2.15.1 above, Portugal withdrew its original legislation setting market share quotas for refillable beverage containers sold to households, and requiring catering outlets to sell sodrinks, beer and bottle

ft d water in refillables only.

g

he outcome was that the Green Dot organisation SPV set up a separate system, Verdoreca, to collect

is granted provided the utlet either has an ecoponto (“bring” facility) nearby, or is covered by kerbside collection. The outlet

s

hen Implementation Decree 29-B/98 was introduced, the market share quotas for refillables sold to

The replacement measure, Implementation Decree 29-B/98, came into force on 8 January 1998. This retained the 100% quota for hotels and restaurants as one option, but offered the alternative of sellinbeverages in non-refillables provided they either recycle them or take them back (which may be done by means of participation in a recovery organisation). Tbeverage containers from the catering sector. Verdoreca was approved in September 1999 and by theend of 2002, 5190 catering outlets, more than half of the total, had signed up for this system. Verdoreca membership is free of charge to the outlets concerned. A contract omu t undertake to sort all its waste, not just beverage containers, and take it to the ecoponto.

Whouseholds remained unchanged. These were:

Table 32: PORTUGUESE MARKET SHARE QUOTAS FOR REFILLABLES SOLD TO HOUSEHOLDS

1997 1998 1999 and thereafter Soft drinks 15% 20% 30% Beer 70% 75% 80% Packaged waters 5% 8% 10% Table wine (except regional and VQPRD wines) 55% 60% 65%

Al retailers selling these products in non-refillable packaging must also offer the same product categories in refillables.

l

not been enforced. This means that the ctical problems for the Internal Market, but it also

ea

Producers and NGOs both say that these quotas have egislation has not up to now presented any pral

m ns that the share of refillables has been in steady decline (see section 2.5.2).

ording to the PortuAcc guese NGO Quercus, refillables represented 66% of the overall market for carbonated soft drinks in 1992, 36.4% in 1999, when the legislation was adopted, and 30.9% in 2000.

n achieved.

In the case of mineral water, the share of refillables declined from 28.2% in 1996 to 23.3% in 1999 and to 14.9% in 2002. However, the information supplied to us is not sufficient to enable us to determine whether or not the market share quotas for refillables sold to households have bee

86

or

owever, in 2000 the Government replaced these with a single 80% reuse plus recovery target for all everage containers. This change arose from the findings of a study undertaken by GUA83 which had

oned by the Environment Ministry, the national recovery organisation ARA and e beverage industry. The study had been prompted by a switch away from refillables towards one-

UA carried out a cost-benefit analysis comparing one-way and refillable beverage packaging, which

for half-litre refillable glass. There was no ifference between the one-litre refillable polycarbonate milk bottle and the one-litre carton.

at

ll beverage containers placed on the market. The cycling rate for PET in 2003 was 46.8% of the quantity licensed, up from 42% in 2002.

With regard to the commit inistry expressed concern that their mark share had fallen to just 48%:

4.2.3 Austria When Austria first adopted its legislation on packaging in 1992, it established special requirements fbeverage containers. The Objectives Ordinance82 set a series of beverage-specific combined reuse/recycling targets. This meant that operators could choose freely between using refillable containers or non-refillables, provided that they were recycled. Hbbeen jointly commissithway PET in the mineral water sector. Sales had risen by 20%, but the Government was concerned about the environmental implications and suggested this study. Gconcluded that there was a huge benefit in using 1.5 litre PET bottles for mineral water in place of one-litre refillable glass. Replacing 1.5 litre refillable PET for mineral water and soft drinks with 1.5 litre non-refillable PET produced smaller but still clearcut benefits, and there were also marginal benefits in substituting half-litre aluminium or steel cansd However, the legislation was repealed following a legal procedural challenge,84 and in 2000 it was replaced by a voluntary agreement. In the agreement industry undertook to ensure inter alia thdrinks would continue to be available in both refillables and non-refillables while beer would be supplied predominantly in refillables. Signatories also undertook to recycle 50% of non-refillable PET by 2005 (through ARA). According to the report on implementation of the agreement in 2003, published in June 2004, participants in the agreement represent 80% of are

ments on refillables, however, the Environment Met

82 Verordnung des Bundesministers für Umwelt, Jugend und Familie über die Festsetzung von Zielen zur

ermeidung und Verwertung von Abfällen von Getränkeverpackungen und sonstigen VerpV ackungen, BGBl. Nr. der

etzung von Zielen zur Vermeidung und Verwertung von Abfällen von etränkeverpackungen und sonstigen Verpackungen geändert wird, BGBl. Nr. 426/2000.

84 The Federal Constitutional Court upheld a complaint by Vienna’s regional government that the Federal Government was not entitled to relax the product-specific beverage container targets without data to show that these targets had been met in 2000.

646/1992, subsequently amended by Verordnung des Bundesministers für Umwelt, Jugend und Familie, mit die Verordnung über die Festsetzung von Zielen zur Vermeidung und Verwertung von Abfällen von Getränkeverpackungen und sonstigen Verpackungen geändert wird, BGBl. Nr. 649/1996 and later by Verordnung des Bundesministers für Land- und Forstwirtschaft, Umwelt und Wasserwirtschaft, mit der die Verordnung über die FestsG 83 Gesellschaft für Umweltfreundliche Abfall-behandlung, or Company for Environmentally Friendly Waste Treatment.

87

% market share of refillable beverage containers in Austria, 2000-2003 Figure 9:

02000 2003

10

70

2030405060

8090

100

Beer Mineral water Soft drinks Fruit juices

Thus in autumn 2004, that agreement was replaced by a new one, which set out new objectives for the

ive

50% of all PET bottles to be recycled as material each year from 2005 (an extension of the target

end, the agreement sets targets for the tonnage of recycled PET to be used in bottle-to-bottle recycling –

fillers, distributors and importers of waters, beer, soft drinks and juices undertake to continue to supply them in refillables, whilst beer must predominantly be supplied in refillables (as in the earlier agreement).

The agreement also set out detailed implementation methods to ensure that the objectives are achieved. These include: • At least € 75,000 to be spent per year on consumer campaigns to increase awareness about

refillables and their “environmental aspects”. A standard logo for refillables was to be developed.

ng,

Each participating company would sign up individually. Participation is open to fillers, and

period 2005-2007: • 80% of all beverage containers to be either refilled or recycled (this is the same as the legislat

target, now repealed); •

in the earlier agreement); • PET beverage bottles must be produced using 30% recycled material by 2007. To this

500 tonnes in 2005, 2,500 tonnes in 2006 and 6,000 tonnes in 2007; •

• To facilitate price comparisons, the price of drinks was to be indicated per litre or per half litre as

appropriate. • Industry was to increase the attractiveness of refillables to the consumer by increased advertisi

in-store promotion (price promotions, etc.). Refillables were to be used at large events, including refillable glasses. If non-refillables were •

used at such events, convenient bins should be available. •

wholesalers and retailers, importers and other distributors, packaging producers and collection recovery systems for beverage containers.

88 Given the ent, which stablishes a clear preference for refillable containers. On the other hand, the use of a voluntary

erstand nts.

ncern

dual operators from

conclusions of the GUA study, it is hard to justify the conclusion of this agreemeagreement rather than legislation could provide a flexible method of promoting reuse. We undthat Austria was keen to avoid the problems encountered with the German deposit requireme

The agreement contains some objectives and some innovative market-based measures that could not been introduced through legislation. However, stakeholders outside Austria have expressed cothat the agreement could give rise to barriers to trade if domestically produced drinks in refillables are given preference over imported products. And, given the absence of penalties, it remains to be seen whether the agreement will achieve its objectives. Market conditions may deter indivi

making the necessary adjustments to their marketing and pricing policies.

89

4.3 DEPOSIT SYSTEMS FOR BEVERAGE CONTAINERS 4.3.1 Introduction Article 15 of the Directive says that in the absence of economic instruments established at Communitylevel to promote the implementation of the objectives set by this Directive, Member States may adoptnational measures to implement those objectives provided they are in accordance with the principles governing Community environmental policy and with the obligations arising out of the Treaty. The most controversial use of economic instruments in the field of packaging has been the impositionof mandatory deposits on beverage containers. As section 3.2.3 has shown, many of the infringement

roceedings launched so far have related to this issue.

.3.2 Deposit systems for refillable beverage containers Deposit systems for refillable containers continue to operate in many Member States. The use of refillable containers for beverages intended for home consumption has been gradually declining since the advent of non-refillable containers (see section 2.5.2

p 4

). In some national markets, such as France and the UK, refillables have largely disappeared from the market. However, refillables are more common for drinks consumed in cafés, hotels and restaurants. 4.3.2.1 Deposit and refill systems operated voluntarily by industry Traditional refill systems have usually involved a deposit to ensure that containers are returned for refilling.85 The fillers took the initiative voluntarily to charge a deposit to avoid the cost of replacement bottles. The deposit was typically the value of a replacement bottle. Industry continues to operate some deposit systems for refillables on a voluntary basis. We have concluded that systems operated voluntarily are unlikely to give rise to barriers to trade. Either each filler operates his own discrete system, or else there is a pooled system, in which participation is voluntary. Operators usually benefit from logistical efficiency if everyone participates in the pool, but any operator who feels disadvantaged is free to leave it. We received no input from stakeholders to suggest that there are any barriers to trade or competitive distortions from such voluntary deposit arrangements. A voluntary refill system with a pool is unlikely to disadvantage new entrants to the market as they are more likely to choose non-refillables. This is because non-refillables have fewer upfront capital costs than a refill system, are more appropriate for test marketing a new product in selected retail outlets, and therefore represent a lower financial risk for a new market entrant. GRA argues that private businesses voluntarily establish refill systems “for numerous reasons, above all environmental, but also economic”. However, we are not aware of any refill systems for beverage containers that have been established voluntarily by industry in recent times. We see the legislative measures taken by some Member States to protect existing refill systems as evidence that today’s market conditions are not conducive to the establishment of new refill systems. It is true that refill remains strong in the brewing sector, but even here it is in decline.86 85 The British doorstep milk delivery system is a notable exception. In this system, the milk is delivered in refillable bottles to consumers’ homes regularly, usually every day, so a deposit is unnecessary. The empties are collected from the doorstep when the milk is delivered. 86 Does consumer preference for locally brewed beer favours industry’s use of refillables, or does the use of refillables promote the consumption of locally produced beer?

90

ble container became available, some Member States decided to adopt g refill systems. They took the view that non-refillable containers generate

4.3.2.2 Deposit and refill systems supported by legislative measures As new types of non-refillaegislation to protect existinl

more waste than refillables, so these measures were justified on environmental protection grounds. Measures to protect refill systems took a variety of forms, as discussed in section 2.5.1. Most of the measures focused on protecting refill systems rather on regulating deposit arrangements

er se. It was usually assumed that fillers would automatically operate deposits if they were usip ng refillables. Further discussion of the implications for the Internal Market of legislation designed to promote reuse can be found in section 4.2. We have identified only a few examples of national legislation that specifically governs deposits for

fillable beverage containers:

islation.87 We are not

the ECJ.88 In 1988 the Court ruled that a

requirement to participate in a deposit system for reuse was acceptable, because deposits were an ment to use approved epealed before the ruling was

ally required to RS).

c drinks

re Austria – the deposit rate for refillable beverage containers is set by leg•

aware of any problems with this requirement, which serves only to ensure that all operators ofrefill systems use the same deposit rate.

• Denmark – a 1981 requirement said that beer and carbonated soft drinks had to be supplied in

refillable bottles of a design approved by the Danish authorities. The Commission challengedrequirement as a barrier to trade and referred the case to the

essential element of a reuse system. However, it said that the requirecontainers was a barrier to trade (this specific requirement had been rissued). This case is widely cited as confirming that deposit systems are in principle compatiblewith EU rules.

So far as we are aware, Denmark is the only Member State where fillers are legparticipate in the sole deposit/refill system approved by the authorities, Dansk Retursystem (DThe operating rules for DRS, which also handles non-refillable beverage containers, were notifiedto the Commission in 2002. Certain amendments were made in response to comments received, and the rules were approved. The Dansk Retursystem is described in detail below.

4.3.3 Deposit systems for non-refillable beverage containers Deposit systems for non-refillable beverage containers currently operate in four Member States, Denmark, Finland, Germany and Sweden. A similar system also operates in Norway. Norway is not an EU Member State, but it has been included in our assessment because the existence of a deposit system in Norway affects the operation of systems in neighbouring countries and there is significantross-border shopping between Norway and neighbouring countries, particularly for alcoholic

from Sweden. Also, as a signatory to the Treaty on the European Economic Area, Norway must comply with the Directive. In the Netherlands, it has been agreed that large non-refillable PET bottles will be allowed onto the market from 2006 provided they are subject to a deposit system.89

87 Ordinance 440/2001, updating legislation adopted in 1990. 88 Case C-302/86 – discussed further in section 3.2.6.

refillable. 89 PET bottles larger than 50 cl are currently permitted only if

91

ve

Denmark: the sole deposit system, Dansk Retursystem (DRS), was originally established to

her

mark also levies packaging taxes on all beverage containers, at rates that vary depending on the type of drink and type of packaging material.

ks containers are subject to taxes, with a discount if a deposit system operates. The deposit system handles aluminium and steel cans (in practice only aluminium are

• e containers (except beverage cartons) of

the drinks that failed to meet the refill quotas in the Packaging Ordinance, namely beer, waters,

e

tified proposed new deposit provisions to the Commission. A deposit would be imposed on “environmentally unfavourable” beverage containers, essentially most non-refillables

Norway: non-refillable beverage containers are subject to a packaging tax, and a second tax is a deposit system.

The level of the tax discount depends on the return rates achieved each year.

a

osit) irective’s recycling targets are met. The respective general packaging

4.3.3.1 Legislative requirements None of the existing deposit systems for non-refillables came into existence at the voluntary initiatiof fillers and retailers. They were all established in response to national legal requirements specific to beverage containers: •

handle refillable containers. Now, since beverage cans were allowed onto the Danish market in 2002, all containers of beer, carbonated water and carbonated soft drinks must participate, whetrefillable or non-refillable. The non-refillable container types handled are aluminium and steel cans, and plastic and glass bottles. Den

• Finland: non-refillable drin

on the market), but there are no non-refillable PET or glass bottles for beverages in Finland.90

Germany: there is a mandatory deposit on non-refillabl

and carbonated soft drinks. The deposit took effect on 1 January 2003.

Companies selling drinks in a unique design of packaging are not required to take back and refund the deposit on other containers, a provision that has encouraged some operators, particularly discount retail chains, to operate their own discrete deposit arrangement, which have becomknown as “island solutions”.91 Germany has no

(except beverage cartons and certain laminated pouches). The new deposit would apply on containers of all beers, waters, soft drinks and mixed drinks containing less than 15% alcohol or less than 50% wine, but not on juices, drinks at least 50% milk or milk-based products, or beverages for particular nutritional uses. The provisions that have permitted “island solutions” would be revised.

•

levied on all beverage containers, with discounts for containers that are part of

• Sweden: users and importers of non-refillable PET must have a licence, which is granted only if

they participate in a deposit system. Aluminium cans are exempt from duty if they participate indeposit system.92

In all the above countries except Denmark, a separate recovery system operates for other (non-deppackaging to ensure that the D

90 A proposal to reform the tax has recently been notified to the Commissioexpanded to some non-carbonated drinks. It is also proposed to replace th

n. The scope of the tax will be e discount for deposit-bearing

containers with an exemption from the tax in 3 years’ time. This should make it viable to include non-refillable PET in the deposit system.

tas and the deposit on non-refillables in two lings of 14 December 2004. The Commission has argued that “island solutions” are a barrier to trade

ainer.

ackaging has been notified to the ommission.

91 The ECJ challenged the link between failure to meet refill quorubecause their operators insist on a unique design of cont 92 A proposal to extend the deposit requirements to all metal and plastic pC

92

ay and Sweden handle both sales and transport packaging. In

ermany, one large system operates for sales packaging (with increasing competition from smaller recovery organisations in Finland, NorwGsystems), while for transport packaging there are various different recovery systems that operate in competition with each other. These packaging recovery systems are discussed in Chapter 6. The deposit systems in Finland (Palpa), Norway (Resirk) and Sweden (Returpack) started to operate at

set to replace traditional refill countries were established The situation sale

iggered by a provision in the 1991 Packaging Ordinance designed to maintain the market share of i

the legislation at a high ratLeg

eposit systems. The deposit is € 0.15 on glass bottles of water, milk and soft drinks (irrespective of e

is 0.15.

4.3.3.2 Table 33

the same time or soon after non-refillable beverage containers first came on the market and lookedsystems. The recovery systems that handle other packaging in these later.

in Germany is very different. A recovery organisation started to handle all categories of s packaging ten years before the deposit took effect. Imposition of the deposit in 2003 was

trref llables at 1991 levels. To encourage consumers to continue to buy refillables, the deposit is set in

e – € 0.25 for containers up to 1.5 litres and € 0.50 for larger sizes. islation does not control deposits on refillables, where the beverage industry operates its own

dsiz ). The deposit on glass beer bottles is € 0.08 and on glass wine bottles € 0.05. The deposit on PET

93

Description of the systems

provides an overview of the requirements of deposit systems in the Nordic countries, and in many (although German requiremGer ents and arrangements are subject to change).

TheSweden. Those in Finland, Norwayseveral ydeposit ssomthe Commission that woularrangem stem were written into a legislative Order (notified to the

ommission), and it has been granted a licence by the Danish government to operate as a monopoly

Arrange

per deposit u

o d posit systems below, we set out the current situation in Germany, together with

re are many similarities in the way that deposit systems work in Denmark, Finland, Norway and and Sweden have been operating with only minor adjustments for

ears, and the operating method of the new Danish system is similar. There is a single national ystem for non-refillables in each country,94 although in Norway and Sweden there are also

e very small, specialist systems (Sweden has recently notified proposed revised requirements to d inter alia facilitate the establishment of new systems). The operating

ents for the Danish sy 95

Cfor six years. The Danish system is the only one that handles both refillables and non-refillables.

ments in Germany however are very different, and are not finalised. The development of ating arrangements has been hindered by uncertainty about the legality of theo

req irements, and by competition concerns (which hampered the establishment of a clearing house to co-ordinate the different deposit systems).

ur review of the eInsome possible scenarios once the amended legislation has taken effect. The current arrangements now seem likely to remain in operation until the end of the transitional period after the new requirements have been adopted – June 2006 at the earliest.

93 Revised deposit rates provided by GRA. 94 The systems for PET and for cans in Sweden are separate legal entities, but they operate as a single system

llection etc of packaging for beer and certain ft drinks (Deposits and Fees Order) [Bekendtgørelse om pant og indsamling mv. af emballager til øl og visse

for both pack types. 95 Statutory Order No. 713 of 24 August 2002 on deposits and cosolæskedrikke].

93

Table SIT S U F V E NTA 33a: DEPO YSTEM REQ IREMENTS OR NON-REFILLABLE BE ERAG CO INERS, 2004

Country/

Syste e m namPack type Admin fee Unit fee Pack tax/

Unit De posit Marking Comments

/ t øre / €cent øre / €cent DKK €cenAlu 0.33l 13 13.4 1.80 10 1.34 1.00 Alu 0.50l 13 15.9 2.13 16 2.14 1.00 Steel 0.3 13 3l 22.0 2.95 10 1.34 1.00 Steel 0.5 13 l 24.3 3.26 16 2.14 1.00 Plastic 0. 13 33l 28.0 3.75 10 1.34 1.00 Plastic 0. 20 50 l 30.4 4.07 16 2.14 1.50 Plastic 1. 40 5 l 51.1 6.85 48 6.43 3.00 Plastic 2. 40 00 l 57.1 7.65 64 8.58 3.00 Glass 0.3 13 3 l 37.7 5.05 10 1.34 1.00 Glass 0.5 40 l 47.9 6.42 10 1.34 3.00 Plus unitall types(suppliedretailer)

-

fee for /sizes to

7.99

1.07

-

-

-

DenmReturs

ark/ yste

All types/s

28epte

Snsi

Load d froeu

r batft

S alr

Danskm

izes

DKK (€ 26No fenew regisyear.

,000 ) per year. payable if no acks red in any

urcharge for on-standard zes

go & special bar code – hesive labels can be purchasem DRS @ 4.5 øre (0.6 rocent) each.

Mandatory focarbonated wcarbonated soame system efillables.

eer, ers and drinks. so handles

Alu: 0.25 l 0.33 l 0.50 l

0(nsi

T -rc ec atd dd m

.5 eurocent surcharge for on-standard zes)

€ 0.16 (reduced rate)

€ 0.15 ax on all nonontainers of barbonated wrinks, with reeposit syste

efillable er, ers and soft uction if in a

Steel: 0.33l/ 0.50 l

00 og fe

0 per tered

3

AshBaFinAd N c

r h

€ 7,6joinin€ 55regis

ne-off e. Plus bar code .

eurocent € 0.16 (reduced rate)

€ 0.15

mount of the deposit on can oulder. rcode must be unique to land. hesive labels not permitted. o steel cans

egistered witurrently system.

PET - - € 0.67 (full rate)

-

Finland/Pal

Glass -

N blg a

pa

- € 0.67 (full rate)

-

o non-refillalass on the m

e PET or rket.

94

Table 33b: DEPOSIT SYSTEM REQUIREMENTS FOR NON-REFILLABLE BEVERAGE CONTAINERS, 2004

Country/ System name

Pack type Admin fee Unit fee Pack tax/ Unit

Deposit Marking Comments

Germany/ P-Pfand (now works with Vfw)

mainly ed

rket.

€ 1,000 one-off fee per bar code

s coated taile

- - P-Pfand logo mandatory

(adhesive labels possible for small operators)

Any, but disappearfrom the ma

sPET as canhave largely

Logistic st negoti by each re r

Germany/ Westpfand

4.5 20 ctly p

r, buting to

r

-

: 25 c

l: 50 c Westpfand logo mandatory.

Mandatory for all non-ref containers of beer, all waters and carbonated soft drinks, but not beverage

Currently onlycans, but expects to handle PET in future.

< 5 l: c > 5 l: (currenby fille

aid

switch etailer funded)

≤ 1.5l > 1.5

cartons. P-Pfand and Vfw accept each other’s containers. Others operate separately.

Germany/ Discount chain island solutions

In ly - ≤ : 25 c > 1.5 l: 50 c

Unique design of bottle required. Accept only their own containers.

Mainly private label PET.

- dividualnegotiated

1.5l

øre / €cent

asic plus Material Tax øre / €cent

NOK/€cent

B

Alu cans 6 1.00 12 17 2.02

B-89 M-30

B-10.M-3.6

Steel 32 3.81 B-89 M-30

B-10.6 M-3.6

1.00 12

PET < 0.5 l .64 B-10.6

12 39 4 B-89 M-52 M-6.2

1.00

PET 0.5-1 l 26 3.09 -6.2

50 30 B-89 B-10.6 M-52 M

2.

Norway/Resirk

1 l

K

bar code registered.

9 3.45 -10.6 -6.2

50 30

ial bar code arge

bar code used)

bottles and sleeved bottles.

Basic tax paid only on non-

s in 2004,

ly ks.

PET >

Joining fee of NO30,000 (€ 3,570) plus NOK 5,000 (€ 595) per

2 B–89 BM-52 M

2.

Mandatory use of Resirk logo. Usually spec(4 øre (0.48 eurocent) surchif standardFor PET: surcharge for coloured

refillable containers. Rate of material tax determined by return rate achieved each year. (93% discount for can80% for PET). Taxes and associated deposit requirements appto all ready-to-drink drin

95

Table 33c: DEPOSIT SYSTEM REQUIREMENTS FOR NON-REFILLABLE BEVERAGE CONTAINERS, 2004

Country/ System name

Pack type Admin fee Unit fee Pack tax/ Unit

Deposit Marking Comments

Sweden/ Returpack

Alu cans No joining fee and free registration of bar codes.

5öre €c id only by

importers, passed to Returpack.

50öre/5.5€c (paid by converters or importers)

y, f

Requirements apply to all ready drinks in alu cans.

0.0 3. /0.38pa Use of barcode mandator

Returpack logo and amount odeposit.

Scope may be extended tosteel cans.

PET ≤ 1 l 27öre/2.94€c opaid by filler r

SEK 1.00/

importer) 15öre/1.64€c extra for coloured PET

11 €cent

Sweden/ No joining fee and free registration of

codes. er or

15öre/1.64€c xtra for oloured PET

SEK 10,000 (€ 1,090) annual

ence fee to authorities.

Use of barcode mandatory, Returpack logo and amount of ready drinks in PET bottles.

d to tles.

Returpack PET PET > 1 l bar 77öre/8.39€(paid by fillimporter)

c

ec

lic SEK 2.00/ 2 € cent 2

deposit.

Requirements apply to all

Scope may be extendeall plastic beverage bot

96 There are currently two systems which are open to all participants and pack types, “P-System” and “Westpfand”: • P-Syst ted by Lekk baccoland, a wholesaler which distributes to convenience

stores (including kiosks, petrol stations, etc) throughout Germany. Vfw, a waste company and recove rator whic d its own deposit system using return coupons, has now jo s with P-S d acts as service provider within the system.

• Westpfand is connected to Interseroh, a waste management and recovery system operator which

runs the logistics and ensures the recycling of the empty containers. The two systems have reached a clearing arrangement so that consumers purchasing containers which are part of either m can in prin get their deposit refunded in outlets participating in P-System or Westpfand.96 Man gh y a nvenience shops as well as bakeries, supermarkets, petrol stations, chemists and som ains now pate in one r of these return systems. GRA reports that more than 25,000 shops, 80 fillers and 300 products of major brands have joined P-System, including 750 motorway service stations. Convenience stores remain the main focus of the system, but the purchasing group Spar now participates and so do some department stores. Although there are a large num of res p cipating in P-System and Westpfand, they have a relatively small of the drinks market. The take-back sy s are open to all distributors, irrespective of whether they sell national or im te d iety of ks in deposit-bearing non- lables b retail ou throughout Germany, and consumers can get their deposit refunded in any of the participating outlets. ”Isla o perate alongsid n systems. These are primarily operated by discount store chains. Operators of “island soluti nd the deposit only on the containers sold by the chain – in practice usuall tle of a unique design. Although there are relatively few of these stores, they e a lar are for he drinks categories subject to the mandatory deposit. We can only speculate wh d s and how many deposit systems, will be in oper o e e new d s e ems likely that several different systems will operate in com ition, as thority, the Bundeskartellamt, has made clear that it will not permit a si Under the amended Ordinance, all re outlets that supply drinks in non-refillables in a given material will be required to refund the deposit on any empty container of that material. Thus, operators of island solutions will be required to refund the deposit of non-refillable PET bottles sold by others. This l r ire participate earing arrangement. We expect that the existing open sy ill continue to operate. DSD has also indicated its intention of establishing a return system for deposit containers. The retail chains that currently operate island solutions may participate in these or in new, yet to be established, open systems. Alternatively, they use their newfound experience in handling returned containers and continue to operate their own em ules. Some of the mainstream supermarket chains have delisted non-refillables, but we would expect that they will begin to sell them again. Like the discount chains, they would have a choice of participating in one of isting open deposit systems, or in new ones, or they could establish their own system.

em

ry s

is op

ystemined

era

ope force

erlan

h oryste

d-To

iginally operatem, an

syste

nd co partici

cip

or

le

othey hie ch

ber

porrefil

nd s

hav

ation

wil

may syst

wa

sto

d pr

arti

oducts, an are availa

ste a le

mvar in

importers also participate. As a result, drintlets

lutions

y age

” o

PET bot market sh

e on

so

the opes” refu

me of t

aepo thng

t typsite Ge

le sy

e of erule ta

rman cstem.97

pokeo

sit effmpet

ystems, ct. It seition au

nc thpet

tail

in a cl

stems w

equ them to

s under the new r

the ex

96 It is not clear ho this arrangem erates in practice, however. 97 The competition implications of deposit systems are discussed further in section 4.6.2

w far ent op

.

97

ived (on containers sold) and refunded (on containers returned) by each store chain.

4.3. Aut

, a dont y hand,

nty has discouraged retailers and deposit systems from investing in RVMs,

two

tu ned containers not counted by the retailers, and then sort and

stem’s five depots for . As in

deposit containers of the same material can also be placed in the

A robust clearing arrangement would need to be established to handle imbalances between the number of deposits rece

3.3 Return arrangements and logistics

omatic versus manual handling at the store In all the Nordic systems, the majority of large supermarkets have reverse vending machines (RVMs)n consumers can return empty containers and get their deposit refunded on any deposit-bearing

ainer at any supermarket or similar retail outlet. The smaller stores handle containers bceither using hand scanners or by visually checking the deposit logo marked on the container. The RVMs count the containers and crush them before they are transported for recycling.

Germany, legal uncertaiInso manual handling in-store remains common. Many of the retail outlets participating in the P-System are of a type where manual handling would be expected – either because the outlets are small and/or because the quantity of containers handled is relatively small. We believe that the Danish and all German systems will have to invest in RVMs in future. RVMs identify deposit-bearing containers (in the Nordic systems by reading the barcode but possibly by scanning a security logo in Germany), and then crush the containers. This reduces the economic and environmental cost of transport and reduces potential fraud (containers retain the value of the deposit until the barcode/logo has been made illegible by crushing).

ubsequent handling S In Norway and Sweden, the containers are backloaded (i.e. transported on delivery trucks) from the retailer back to the filler, whilst in Finland they are picked up by a waste collector and taken to regional depots for counting and baling before being sent for recycling. In Denmark, all containers are currently transported from the supermarkets uncrushed to DRS’s depots, where they are counted. However in future, RVMs in the large supermarkets will count andcrush the containers before they are transported to the DRS depot.

Sweden, fillers used to count any re rInbale all containers. Returpack has now established its own depot to undertake these tasks. The containers are still backloaded to the filler, from where Returpack’s contractors collect the containers in boxes or plastic sacks.

the German P-System, the containers are backloaded to one of the syIncounting. This is undertaken by the system’s two affiliated service providers, Vfw and RhenusDenmark, they are transported uncrushed, but cans and PET can be mixed in the same sack. Westpfand uses the contractors affiliated to Interseroh to transport empty containers uncrushed to one its ten depots for counting. Each sack should contain only one type of container (cans separate from

ET etc). Westpfand says that non-Psack, but the retailer will of course not receive any money back. For retailers with limited space to store the containers, containers are backloaded to the wholesaler, and transported on from there by Interseroh’s contractors.

98

consumers import deposit-bearing containers from a neighbouring country and then return them in eir home country, the containers are accepted by the Nordic systems but no deposit is refunded. The

um cans, but in future will also accept tinplate cans. RS says that it accepts German cans (many of which are steel), and uses the revenue from

d their handling.

ic .

Figure 10: Direction of beverage container flows

ees paid by fillers

Joining fee arrangements are as follows: • The deposit systems in Finland and Norway each charge a flat rate one-off joining fee paid by

fillers and drinks importers, regardless of the quantity placed on the market.

4.3.3.4 Deposit-bearing non-refillable containers in cross-border trade IfthSwedish system currently accepts only aluminiDunredeemed deposits (on exported containers) to fun The direction of flows of cross-border purchases and thus of deposit containers returned to a foreign system are fairly predictable. They are determined to a significant extent by differences in tax andexcise duties on alcoholic drinks, and by transport distances and available transport links. Thus, the deposit-bearing containers affected are primarily cans of beer. In Denmark, beer and other alcoholdrinks in glass bottles are also affected because glass is part of the same deposit system Tax and excise differences mean that containers flow into Norway particularly from Sweden, and into Sweden particularly from Denmark and Estonia. Containers flow into Finland particularly from Estonia and into Denmark particularly from Germany.

The deposit on Swedish cans is roughly half the Norwegian rate, which makes Swedish drinks seem even cheaper to Norwegian consumers. Resirk ensures that all foreign cans received are recycled. 4.3.3.5 Funding flows F

99

egister one or more new bar code(s) during that year.

re than

money is not passed on to the deposit system, we conclude that the fee is in fact a state levy on the use of PET.

y pack type nd size, and in Denmark an additional logistics fee at a flat rate of 7.99 øre (€ 0.01) per pack. In the

In P-System, handling fees are paid by retailers not by fillers. Due to competition policy concerns, here is no centra (see section 4.7.2.2

• In Denmark, fillers/importers pay the flat rate fee each year only if they r

• In Sweden, fillers do not pay any joining or annual fee to the system. However, fillers using PET

must pay a flat rate fee to the authorities for a licence each year, regardless of the quantity placedon the market. The fee is (SEK 10,000 or € 1,090) per company per annum, which is mowould normally be expected to cover administrative costs. As the

• In Germany, P-Pfand charges fillers and importers a one-off registration fee of EUR 1,000 per

product. So far as we are aware, Westpfand does not charge a joining fee or an annual fee. In Denmark, Finland and Norway, fillers and importers also pay a unit fee, differentiated baGerman Westpfand, fillers and importers pay a fee per unit, which is regardless of pack type and is the same rate for all containers up to 5 litres.98

t l funding mechanism to cover the logistics costs ). Each retailer egotiates indivi , charges in

retailers and their suppliers, and are commercially onfidential.

estpfand still charges unit fees to fillers, but plans to switch to a retailer funding model like P-ystem. Westpfand will however offer unit fees to importers if they want a “one-stop shop” solution.

Sweden, for aluminium cans, importers pay the deposit plus an import surcharge per unit to the griculture Agency99, and this is passed on in full to Returpack. Swedish fillers pay the deposit but ot the fee. This arrangement was originally devised to compensate domestic operators for the cost of eveloping the system (RVM purchase etc). As the system has been fully operational for so long, we onsider that it is now obsolete. Returpack told us that although importers still pay it to the griculture Agency, Returpack then refunds the levy to importers. We understand that this

rrangement will disappear once the proposed amendment to the legislation takes effect (see section

n dually with the affiliated service providers, Vfw or Rhenus. Similarly“island solutions” are negotiated directly between c WS InAndcAa3.2.18.1).

he Norwegian and Swedish systems both charge a surcharge for coloured PET, and the Norwegian ystem also charges extra for sleeved PET. The Danish system applies a surcharge for any containers at cannot be identified by the RVMs.

andling payments made by the systems

he deposit systems in each country pay for the regular cost of collection, sorting and transporting mpty containers from the retailer to the recycler as follows:

companies for transporting the containers and for operating regional depots, where the containers are sorted and baled.

Tsth H Te • Finland: Palpa pays the retailers a handling fee for each can handled. The payment is higher for

crushed cans (i.e. to retailers with automated handling). Palpa pays separately to transport

98 he revised mandatory deposit would apply only to containers up to 3 litres.

ordbruksverket

T

99 J

100

illable containers. DRS told us that all retailers handle refillables. If any were handling only non-refillables, they were probably importing them illegally (i.e.

tailers with automatic handling than to those that handle the containers manually. Retailers pay Resirk

ling fee per container. Retailers with automatic handling receive a higher fee than those that handle containers manually. In the past, the fillers who

g

ompany.

e

sacks for the empty containers free or charge and do not pay for the containers to be collected. y

ing.

means that retailers need to have the financial resources to purchase RVMs initially, unless

ey already have RVMs for refillables and are able to upgrade them to handle non-refillables also.

ake a profit from handling containers.

here, DRS makes “efficiency payments” to stores andling large quantities of containers. The money is used to upgrade RVMs, and DRS also pays a

how many categories it sorts into. here is a maximum level of support for each band, and within that a maximum amount is paid for

pro per unit

• Denmark: DRS makes no payment at all to retailers for handling non-refillable containers. DRS pays handling fees only for ref

without reporting them to DRS or paying the packaging tax). DRS also provides investment support to retailers handing a large number of containers (to contribute to the cost of RVMs, upgrading RVMs etc). These retailers receive a reduced handling fee per unit. DRS pays for transport separately, and contracts for transport were awarded to contractors on the basis of competitive tender.

• Norway: Resirk pays a handling fee to retailers for each container handled. Rather than give

retailers financial assistance with the capital cost of RVMs etc, Resirk pays a higher fee to re

for the boxes or sacks they use to store the empty containers. The fillers whose delivery trucks are used to backload cans do not receive any handling fee.

• Sweden: Returpack pays retailers a hand

backloaded the containers, baled them and forwarded them for recycling, also received a handlinfee, which was higher for the containers counted by fillers than for those counted by retailers. However, fillers no longer count any containers, a task now undertaken directly by Returpack. Returpack now pays fillers only for backloading the containers, at rates negotiated individually with each c

• Germany: Neither P-Pfand nor Westpfand pays any handling fee to retailers. Indeed, it is th

retailers affiliated to P-Pfand who fund the operating costs of the system. The retailers receive

Westpfand charges retailers for abuses, such as mis-sorted sacks (mixed materials, exceptionallhigh levels food residues, etc) or for sacks ordered but not used for deposit containers.

In the Finnish, Norwegian and Swedish systems, the investment costs of installing the necessary infrastructure have been funded by paying retailers a higher fee if they have automatic handl This is an extremely simple way of funding infrastructure, but we have identified some problems withit. First, itthThe small additional fee per container means that it takes a long time before retailers get their costs refunded. Eventually, however, the handling fee will have refunded all investment costs (including interest) and then retailers will start to m The arrangements in Denmark are different. Thcontribution of between 50-80% of the capital cost of RVMs. Stores are divided into five bands according to the number of containers each store receives andTeach element of the return infrastructure – RVMs, sorting, containers, receiving station, installation,

ject management. 100 The stores receiving efficiency payments receive a lower handling fee than the smaller stores that received no upfront payment from DRS.

100 Thus, for example, stores in band one, which receive 350,000-1,500,000 containers per annum and sort into six categories, can receive up to DKK 100,000 (€ 13,400) overall in support. At the other end of the scale,

to 6-10 categories, can receive p to DKK 405,000 (€ 52,270) overall in support.

stores in band 5, which receive over 10 million containers per annum and sort inu

101

thestype y on refi les rath The e retailers have to sort refillables, but not non-refillables. It further argued that paying retailers a

andling fee for non-refillables would unfairly subsidise non-refillables. We find it hard to see how

havfact r nonthan offered than for refillables.

pos heir hansett e thei , the s to stock refillables in preference to non-refillables.

c a 4.3.

ith se

r countries. Adhesive labels are not permitted.

e

f n is amended. Returpack

told us that if other systems were established, it would probably devise a special adhesive label. • Germany: Neither Westpfand nor P-System requires a special bar code, because their special

logos are the key to deposit refund. Once containers reach P-System’s depots, bar codes are read

l

ent at depots) will no doubt be introduced once the

The aim is to improve the efficiency of sorting for refillable containers. Most of the stores that receivee payments (i.e. the larger stores) handle both refillables and non-refillable containers, and all s of containers are handled in the same RVMs. However, handling fees per unit are paid onl

llables, not on non-refillables. Thus, the system appears to encourage retailers to stock refillaber than non-refillables.

Danish Brewers’ Association argued that handling costs for non-refillables are lower becaus

hretailers incur no costs for handing non-refillables – even if they do not have to sort them, retailers

e to devote staff time to bagging up non-refillables, labelling them, and storing them securely. The that the other Nordic systems, with similar retail handling arrangements, all pay a handling fee fo-refillables indicates that retailers do incur costs. If the costs of handling non-refillables are lower those for refillables, then a lower handling rate could be

We argue that handling fees paid to retailers and fillers should reflect typical costs as closely as

sible, and that they should be transparent. The Danish Brewers’ Federation pointed out that tdling fees are based on the costs of the 25% most efficient retailers. We agree with the principle of ing payments at the rate of the most efficient retailers, since this encourages the others to improvr efficiency. However, since retailers incur costs for handling both refillables and non-refillablesDanish policy of not paying stores to handle non-refillables has the effect of encouraging retailer

In Germany, little investment in RVMs has been made yet. However, it is expected that each retail h in will fund its own infrastructure.

3.6 Marking requirements Containers in each of the Nordic deposit systems for non-refillables must in principle be marked wa special bar code, which is read by RVMs to identify deposit-bearing containers accurately. Becau

e bar code is read by machine, its location on the container and the colour used are also important. th • Denmark: Containers must be marked with a special bar code, but fillers or importers can buy

special adhesive labels from Dansk Retursystem for 4.5 øre (0.6 eurocent) each. • Finland: Palpa no longer allocates special bar codes to fillers, but requires that the bar code,

which must be printed directly on the can, is different from that used in othe

• Norway: Fillers not using the special bar code pay a surcharge to Resirk of 4 øre (0.48 eurocent)

per unit, slightly less per unit than the Danish labels. • Sweden: Returpack also requires that the aluminium cans and PET bottles it handles are marked

with a bar code. The Swedish system, unlike the others, does not require the bar code to be uniqufor the Swedish market, but Returpack may make use of a special bar code mandatory in future iother competing systems are established in Sweden after the legislatio

using hand scanners. Containers that the scanners cannot identify are sorted and checked manually. Manual scanning is adequate given that these systems are handling a relatively smalquantity of containers mainly from small outlets. Automated scanning (including RVMs in larger stores and large capacity automated equipm

102

ystems should be marked with the level of the deposit and/or the logo of e deposit system so that consumers and staff in small stores can identify deposit-bearing containers.

d

illers in the Nordic systems must register all their bar codes with the system. In Finland and Norway f the

Ordinance has been revised, and the marking arrangements may change in future. Markings will have to be machine readable, and for clearing purposes will need to make it possible to identifywhich of the various systems each container belongs to.

Containers in all the Nordic sthThis is the case in Sweden, although Returpack says that it does not insist on it. Similarly, both the open German systems, Westpfand and P-System, currently require that all packs are marked with their respective system logo. P-System has developed a security sticker for importeproducts, and it is developing a new security logo for use by all fillers, to be launched during 2005. In the P-System, retailers should refund the deposit even on crushed containers, provided the logo is legible. Ffillers must pay a flat rate registration fee each time they register a new bar code (i.e. regardless onumber of units), but not in Denmark or Sweden. The fee covers the cost of reprogramming all the RVMs. When fillers/importers register a new product in the Nordic systems, they must also submit samples oftheir containers to the deposit system for testing in the RVMs.

103 4.4

owing criteria:

Do deposit systems give rise to increased administrative burdens for operators, particularly for

t are the implications of the marking requirements?

ombinations subject to the deposit requirements?

What is the impact on consumers of deposit systems? • What are the implications for deposit systems of cross-border shopping, which we expect will

continue to increase, particularly for alcoholic drinks? We also consider whether there is any statistical evidence of barriers to trade in the market data for various drinks and pack types in countries with deposit systems, and in those where all containers are handled in a general packaging recovery organisation. In our assessment, we will use these criteria to compare deposit systems against recovery systems handling packaging from all product sectors. This is the most common method of meeting the Directive’s recovery and recycling targets – even in those Member States with mandatory deposit systems. Our assessment considers the implications both for established local operators and for importers and for new market entrants. 4.4.2 Cost of deposit systems for non-refillables Fillers and importers bear costs for participating in a deposit system for non-refillables as joining and administrative fees and fees per unit handled. These are set out in Table 38

ASSESSMENT OF DEPOSIT SYSTEMS FOR NON-REFILLABLES FROM AN INTERNAL MARKET PERSPECTIVE

4.4.1 Criteria From the perspective of the Internal Market, we consider that deposit systems for non-refillables (all

f which are mandated by national legislation) should be assessed against the follo • Do deposit systems give rise to increased costs for operators, particularly the fillers and importers

who pay the fees? How do the costs compare with those in Member States where no deposit system operates?

•

fillers, retailers and importers? How does the administrative burden compare with that in Member States where no deposit system operates?

• Wha • Do distortions of competition arise from deposit systems, such as between the different materials

subject to the deposit, or between different drink/container c

•

above. Fillers and importers also incur costs from preparing data for the deposit systems, and for special marking of packaging. These fees cover the operating costs of the system, as well as the significant initial investment cost of establishing the system and infrastructure. 4.4.2.1 Joining fees and admin fees Denmark originally intended to have similar joining fees and bar code registration fees to those charged by the Finnish and Norwegian systems. However, it simplified and reduced the fees following comments received after the proposed system was notified to the Commission. Joining fees

104

ed, were de

ell sma

ate annual fee in Denmark was capped at DKK 2,000 (€ 268) per year. For this, a

fil

In S fee possible because of a combination of circumstances specific to Sweden

d 101

•

he retailer to the filler is cost-efficient,

esigned to promote refillable containers.

10,000 (€ 1,090) to the authorities for PET. o other material is subject to this levy in Sweden and we can find no justification for it. However we

e consider that the high joining fees in Norway and Finland could be a barrier to new market

he Nordic countries also fill and distribute oft drinks and waters, and pay only one flat rate fee for all these drinks categories, the difference in

stem of updating RVMs with new codes is the same regardless of how many units bearing e code are sold. Nonetheless, the current arrangements disadvantage small producers and importers.

particularly high for importers into Finland. The deposit system handles nly one pack type, aluminium cans, and these have a small market share because packaging taxes iscourage their use.

all the countries except Denmark, companies also have to pay a separate set of admin fees to a

and registration fees charged at a flat rate regardless of the quantity of drinks suppliconsi red to be disproportionately high for new market entrants and importers, who were likely to

ller quantities than established domestic producers. s As a result, the flat rcompany can register as many new bar codes as it needs. If it does not register any new bar codes in any calendar year, it does not pay the fee at all. The single Danish annual fee covers a wider range ofpack types than the other Nordic systems, namely aluminium, steel, plastic and glass, both non-re lable and refillable.

weden, the deposit system itself charges no joining fee or bar code registration fee at all. Thisstructure is, we conclude, onlyan unlikely to be replicated elsewhere. These factors are that:

the Swedish system has already been operating for several years, so the investment cost of infrastructure has already been amortised,

• the backloading arrangement for empty containers from t • the market share of non-refillables, particularly cans for beer,102 is higher than in the neighbouring

countries, so the system benefits from economies of scale. This is largely because Sweden doesnot have taxes d

However, fillers and importers pay an annual levy of SEK Nunderstand that there are plans to repeal it in the near future.

Wentrants. They are also relatively high for small operators. A flat rate fee works out at far more per unit for an operator importing, say, 5,000 containers each year, than for an operator handling 500,000 or even 5 million containers. Given that the brewers in tsfee per unit between domestic producers and importers could be significant. Similarly, the bar code registration fees may penalise importers. We recognise that the cost to the deposit syth The flat rate fee structure isod Inseparate recovery organisation for the transport packaging in which the drinks are transported. In Denmark, the admin fee to the deposit system is the only one that companies pay because there is no recovery organisation for other packaging. 101 The tone of the comments in our interim report suggested that we believe that the Swedish arrangements,

fee, are to be preferred. The Danish Brewers’ Association argues cture “because the costs are paid by non-redeemed deposit (deposits

Our by the

See section 4.4.7

with no joining fee or bar-code registrationhat Sweden does not have the ideal fee strut

paid for by consumers). The ideal fee structure is such that every packaging material pays its own costs.” comment referred only to its economic benefit for fillers and importers, and we agree with the point madeDanish Brewers. 102 for more information on market shares of different container types.

105

6Packaging recovery organisations and the fees they charge are discussed in detail in Chapter . In

the larger Member States, a more ommon arrangement is that one recovery organisation handles consumer packaging, and transport

d

learly cost, particularly for new market entrants and small operators.

y reference to Table 34

Sweden, Norway and Finland, there is only one recovery organisation handling both consumer packaging and commercial/industrial packaging. However, incpackaging is handled either by one or more separate recovery organisations or through different arrangements. Therefore, if deposit systems were established in other Member States, operators coulhave to pay three sets of joining fees and/or administration fees – to a deposit system, to a system handling consumer packaging and to a system handling commercial/industrial packaging. This cincreases the compliance 4.4.2.2 Unit fees B and Annex J, the fees in deposit systems may be compared with the

able 34

equivalent fees in multi-sector recovery organisations.

T overleaf compares the fees per unit in deposit systems with those in recovery organisations

covery organisations are usually charged by weight. We have calculated the recovery organisation

b s

e ees in deposit systems

for common beverage container types. Deposit system fees are usually set per unit, while those in refees based on the weights shown at the top of the table, which we obtained either from the shopping

a ket (Annex K) or from other industry sources

conclude from the table that for both aluminium cans and PET bottles, unit fWare typically higher than equivalent fees paid to recovery organisations. The notable exception is the Swedish deposit system, which charges no fee for aluminium cans, as discussed in section 4.3.3.5.

able 34T does not show the joining and/or annual fees that deposit systems and a few recovery ry

organisations also charge. These add to the price differential between deposit system and recoveorganisations – the deposit systems charge lump sum joining/annual fees while the annual fees whicha few recovery organisations charge tend to be graduated by tonnage or turnover, and are in any case spread over a wider range of pack types. Taxes are also paid on beverage containers in some member states, as discussed in section 5.3. These re separate from collection system charges, but we have indicated in the “comments” colua mn where

taxes are payable as they increase the distribution cost.

106

Table 34: COMPARISON OF CHARGES PER NON-REFILLABLE DRINKS CONTAINER – DEPOSIT SYSTEM VERSUS RECOVERY ORGANISATION COSTS in eurocents (consumer packs only, excluding annual system fees)

33 cl alu can 50 cl alu can 50 cl PET 1.5 l PET Comment:Weight g 14 17 27 47 Austria 0.60 0.73 1.89 3.29 Recovery org. Belgium 0.18

0.22

0.78

1.36

Recovery org plus eco-tax

Czech Republic 0.05 0.06 0.23 0.39 Recovery org. Denmark

2.87 (1.07+1.8) +13c deposit

3.2 (2.13+1.07) + 13c deposit

5.14 (4.07+1.07) + 20c deposit

7.92 (6.85+1.07) + 40c deposit

Deposit system plus ann

ual fee

plus tax Estonia

1.27

1.54

2.34

4.07

Recoveryplus tax

org

Finland

0.50 + 15c deposit

0.50 + 15c deposit

None on market

None on market

Deposiplus joininregistratioplus tax

t system g and n fees,

France 0.13 0.15 0.59 0.95 Recovery org. Germany

Cost negotiated between retailer

and filler + 25 c deposit







Deposit

Greece 0.06 0.06 0.22 0.34 Recovery org. Hungary

0.02

0.02

0.15

0.26

Recoveplus tax

ry org

Ireland (total) 0.09 0.11 0.18 0.32 Recovery org. Italy 0.04 0.04 0.20 0.34 Recovery org. Latvia 0.08

0.09

0.25

0.44

Recovery org plus tax

Lithuania

0.06

0.08

0.06

0.11

Recovery oplus pack ttargets not

rg. ax if met

Luxembourg 0.21 0.25 0.78 1.35 Recovery org. Malta

0.14

0.17

0.67

1.16

Recovery org. Refillables mandatory for carbonated soft drinks. Plus pack tax.

Netherlands

0.30

0.30

1.00

1.00

Recovery org plus registration fee.

Portugal 0.07 0.09 0.32 0.56 Recovery org. Slovakia

0.06

0.07

0.12

0.21

Recovery org plus pack tax

Slovenia 0.08 0.10 0.15 0.25 Recovery org Spain 0.11 0.14 0.52 0.90 Recovery org. Sweden

0 (+ 5.5 c deposit)

0 (+ 5.5 c deposit)

2.94 (+11 c deposit)

8.39 c (+ 22 c deposit)

Deposit plus statutory annual fee for PET and unit fee for imported cans.

UK 0.05 0.06 0.04 0.06 Recovery org plus admin fees

107

4.2.3 Other costs Fin Norway a ed with preparing th rately from data on other packaging. 4 inistrat burden for producers and importers T tion of a depos tem means that producers and im rs have to rep theircontainers separately from other consumer packaging. In German operators have to eporto drinks packaging (potentiall everal differe osit systems), non-drinkc packagi po g o ii ustrial packagin s tha e to p ckag to different types of pack separately and it means that operators m ill in additional sets of socomplicated data forms. As discussed in Chapt

4.

illers and importers also incur costs for marking their containers with a special bar code and logo – or nd Denmark, they may pay a fee instead. There are also some costs associate necessary data on their packaging for the deposit system sepa

.4.3 Adm ive

he opera it sys porte ort on beverage to several y, r

rganisations – y to s nt dep s onsumer ng and the trans rt packaging fallin

t opera ors hav within DSD’s sc

rogramme pape, and commercing da abases

al/ count the nd g. This mean t t

ust f metimes

er 6, the packaging quirements of covery organisations vary significantly between the Member States, which makes data preparation a complex task for acompany whose packaged products are sold in more than one country. Thus, in th countriedeposit s stems fo ers to k nes o f i a l a rdFurthermore, whil pa ry organisations us y weight, the deposit systems ha fees f ea sed ge ontainer. This means that fillers an know the weight of the pack, he numunits used. W re administratively cumberso s that fillers and importers must de infoo bar codes to depo s, which rmation not r ed by packagi coveryorganisations. This is necessary so that RV n identify the containers. Fillers and importers mu submit samp f their packs to the system opera ho tesRVMs can identify them. However, in Denmark, both the Danish gislative order an DRSsay s and importers ust provide information to DRS about container shape and c s. This serv e same purpo ubmitting sa packs for the other systemalthough DRS charges a surcharge for any pack that the RVMs cannot identify. D ssurethey have most container types and sizes registered already and th they rarely need ask tproducer for further details. Furtherm there is often a time delay in deposit systems between fillers and im rs regbar code and being able their products. To allow time f the RVMs to rogrand for the new packs to be tested, operators need to wait for up to four weeks.103 The local, well-established fillers who are familiar with this gement can n bt work arou – theye ify the deposit of the new bar code as part of their planning for product launpack changes. However, these requirements ar rous for small perators making ad hoc f porter trying out some ne ducts in these ets. By com n, opeparticipating in packagin very organisations can provide t levant data af ey havto sell their products, and many packaging recovery organisations offer simplif orting tcompanies.

data re reny s with e

yparately from

r drink tainther packaging oe the fees in the

s con , a req enttself creates onlyckaging recove

uirem eep da those beverminor additiona

are

ta on a taidministrative buually charged b

ge con rs e en.

ve set flat rate for each size o ch commonly u type of bevera cd importers do not need to just t ber of

hat is far mo me, i provi rmation n the sit system is info equir ng re

Ms ca

st also les o tor, w ts that le d ’s rules

that fillerteristic

mharac es th se as s mple s,

RS a d us that he at to

ore, por be r

te istering a to sell or all ep ammed

arran o dou nd it can asily not system ches or

e one o imports, or example an im w pro mark pariso rators

g reco he re ter th e started ied rep o small

1 Most retailers now use arcode reading tec logy in their cash lls, but we assume that these avery regularly to accommo e new products an her changes. Ho ever the Danish Br ers’ Asso points out that it can take a couple of months for a new product to be listed by a retail chain, so it argD four week delay is not sive.

03 b hno ti re updated ciationdat d ot w ewues that

R’s exces

108

he Swedish system is unique in that no special bar code is required. Use of the Returpack logo is commended, but the system does not insist on it. As with the low fees, this simple arrangement is

he Swedish system robably pays out a deposit on some foreign cans, most likely beer cans from Denmark (where alcohol

or Estonian cans through unredeemed deposits on Swedish cans purchased y Norwegians. Moreover, the deposit rate on cans in Sweden is roughly half the rate in the

ut a f

e therefore conclude that marking special barcodes and/or logos is an inherent requirement of

e. nsumers, and small

tailers not using RVMs, can identify deposit-bearing containers.

lass bottles, ous

he marking requirements in deposit systems are more onerous for fillers and importers than the

s nt

4.4.4 Marking requirements With the exception of Returpack in Sweden, all the Nordic deposit systems for non-refillables require that containers are marked with a special bar code and with the logo of the organisation and the amount of the deposit.104

Tredue to circumstances unique to Sweden. By not having a special bar code, tptaxes are lower) and from Estonia (where retail prices are lower). However this is a recent phenomenon since cans only came on the market in Denmark in 2002 (and non-refillable glass is not deposit-bearing in Sweden), and shopping trips to Estonia are a relatively recent phenomenon. On the other hand, private imports of canned beer from Sweden to Norway are also significant because retail prices and alcohol taxes are higher in Norway. Thus, the Swedish system can fund any refunded deposit on Danishbneighbouring systems, so the financial risk to the Swedish system of accepting and paying odeposit on foreign cans is lower. The Swedish system would have to make marking mandatory iother competing systems were established on the Swedish market. It has not yet been decided what the German marking requirements will be once the deposit requirements have been amended. However, there has been discussion on developing a special security logo. If several different systems operate in competition, containers will need to be marked to show which system each participates in for clearing purposes. Wdeposit systems because the deposit is usually refunded by RVMs. All the deposit systems rely on RVMs, except in small retailers, because manual handling is too labour-intensive and expensivMost systems also require other special marking (a logo or similar) so that core The special marking requirements of deposit systems are particularly onerous for cans, which are delivered to the filler already printed. The requirements are less of a problem for PET or gas the filler can use a different label for each country.105 The marking requirements are also onerfor fillers based in countries with a deposit system, since they have to use a different bar code for theirexports. Trequirements in general packaging recovery organisations. Only in a few Member States is it mandatory that packs participating in general packaging recovery organisations be marked with a special logo to indicate participation. And in 17 Member States,106 the same logo, the Green Dot, iused, which avoids the need to use a different logo for each country. Some countries use a differeon-pack logo (such as PYR in Finland), but none has made it mandatory to mark these country-specific logos on packs. (Further comments about the Green Dot appear in section 6.5).

104 GRA suggested that the Norwegian deposit system does not have mandatory marking. We wonder whether they were referring to the refill system. Information from Resirk indicates that marking is mandatory, and that companies not using a special barcode for Norway must pay a surcharge.

hbouring countries.

105 Problems arise for PET or glass when a batch originally intended for one member state is diverted elsewhere, and in the case of parallel imports and other cross-border purchases. 106 And in Norway, and some other neig

109

obliged to amend its marking requirements following omments made during the notification process. DRS now allows companies to use adhesive labels,

he fees charged by Denmark for the labels seem rather high to us. We acknowledge that DRS has

only

the Danish

rs for

rements to mark certain packs

ifferently for each Member State, or even for different systems within a Member State, are certainly a ether the

e

eposit systems usually affect beverages, which under EU rules on food marking 107 must be written most

be

e Food Marking Directive are ken to mean that marking in another language is permitted if there are only minor differences in

in

estrictions on pack design

ard uct

rast,

d design. They may have to pay a surcharge simply because their pack has a non-standard shape, although it is

The Danish deposit system, DRS, was cwhich must be purchased from DRS. In Norway, importers can use their standard bar code but pay a surcharge to Resirk if they do not use a special bar code. Tincurred costs to develop a fraud-proof label, and note that the system has recently redesigned its labels to make them more difficult and expensive to copy. We fully understand that to protect the operator of the deposit system from fraud, any filler or importer using labels should obtain themfrom the system operator. However the cost of each label should be based on the cost of printing and distributing each label plus a consideration for the cost of developing them. We agree with Brewers’ Association, which argued that charging less for labels than their production cost would subsidise the producers and importers who use them. We also find it hard to understand why Resirk in Norway should charge a similar amount to fillethe privilege of not using a special bar code. GRA pointed out that the European Court of Justice has in the past ruled that special markingrequirements are not necessarily a barrier to trade. These rulings do not however mean that all marking requirements are automatically acceptable, because the ECJ accepted the specific markingrequirements that were presented to it to assess. We find that requidhindrance to trade in practice. Whether or not they are considered acceptable depends on whEU authorities conclude that the requirements are proportionate given the environmental objectivsought. Din a language easily understood by local consumers in each Member State. In practice, although Member States require that food and drink packs are in the mother tongue of that country, this does not mean that a packer/filler has to produce separate packs for each country, because each pack canlabelled in several different languages. Multi-lingual food packaging is increasingly common throughout the EU. Interestingly, the Swedish rules that transpose thtaspelling. This could, for example, make it possible to use the same packs for beer, which is spelt öl Swedish and øl in Norwegian and Danish.108

4.4.5 R The handling methods for deposit systems rely on the fact that beverage containers are fairly standin design and weight, and are arguably more standardised than the packaging in any other prodsector. This enables deposit systems to have simple fee structures, with a set fee per unit. By contthe general recovery organisations have fees based on the weight of the pack, so fillers need to know the precise weight of their packs. On the other hand, there may be problems for producers whose packs are not of a standar

107 Directive 2000/13/EC of the European Parliament and of the Council of 20 March 2000 on the approximation of the laws of the Member States relating to the labelling, presentation and advertising of

odstuffs, Official Journal No. L109 , 6.5.2000.

tt samordna återvinnings- ch retursystem för dryckesförpackningar inom EU/EES [Potential benefits for the environment, consumers and

em for beverage containers with the EU/EEA], ommerskollegium, ref 100-419-2003, published 31.10.2003.

fo 108 Source: Potentiella vinster för miljö, konsumenter och den inre marknaden av aothe internal market of a co-ordinated recovery and return systK

110

material.

nder the current German deposit legislation, producers or retailers who sell containers of a unique

rs.

made of a standard material and can be recycled easily together with other packs of the same This would be a barrier to trade if these non-standard containers were imported from a country where they were the standard design. Udesign are entitled to refuse to handle any other containers. As discussed above, this legislative requirement has encouraged some companies to require a unique design of container (usually a distinctively shaped PET bottle), and accept back and refund the deposit only on their own containeThus their suppliers must use a specific design of bottle. The Commission has challenged this provision and Germany has now proposed to repeal it (see sections 3.2.8.3 and 3.2.8.4). The Danish Brewers’ Association and GRA both disagreed with our conclusion that deposit systemhave the potential to stifle innovation in pack design. T

s he Danish Brewers argued that there has been a

reat increase in new packaging designs in Denmark, particularly one-way packaging. It pointed out

t the take-back obligations.

ent their

to

uld hypothetically be technical and practical problems for importers using pack types that VMs were unable to identify.

e products that compete with each other.

rom the discussion above, we conclude that the cost and administrative burden of a deposit system i n established local fillers. The flat rate joining fees and

ar code registration fees obviously work out more per unit for small operators, and the high joining

er States also, there is a marginal additional administrative burden that international operators need to maintain data for deposit-bearing containers separately from

porters

his is a new arrangement, which could give rise to a number of potential consequences in the market.

gthat the Danish deposit system does not restrict the design of packaging in the deposit system, and, more importantly, that retailers cannot restric We are indeed aware that new packs have entered the Danish market, notably cans. Our commrelated to how deposit systems would respond if a new design of pack, which is problematic forcollection method, became popular. DRS is the only deposit system to require fillers and importers provide information about container shapes, to ensure that the RVMs can identify them. What happens if Danish RVMs cannot identify a new pack type? If all RVMs needed to be adjusted to identify these packs, who would bear the cost of this? There coR 4.4.6 Distortions of competition within national markets which arise from

mandatory deposits on non-refillable beverage containers 4.4.6.1 Different economic operators Distortions of competition arise when the compliance costs and/or administrative burden are heavier for some operators, some pack types and/or som Faffects mporters and small operators more thabfees make these markets expensive for new entrants. We find that the requirements for reporting on packaging – by unit rather than by weight – are simpler than those in packaging recovery organisations. If we assume that many operators need to report on beverage containers in other Membinother packaging. However, we find the unique Danish requirement relating to the shape of the containers onerous and can find no justification for it.

In the German P-System, it is the retailers who fund the operating costs, while fillers and imneed only report on products to the system operator. TThe large retailers will be able to negotiate better terms than their smaller competitors, which will accentuate their existing economies of scale. The retailers will also endeavour to reduce their costs in

111

,

use of lastics for beer is limited. The deposit is mandatory for aluminium in all these countries, and for

tudies. These are non-illable containers – glass, cans and PET, but not laminated pouches, or beverage cartons.

s

all the Nordic countries, the domestic fillers use aluminium beverage cans, not steel. We

ns are more common than steel in several Member States, while in thers, such as Germany, they are more often made of steel.

s is e

igh ini of the restrictions

e

ic. There is currently no deposit system in ny

a variety of ways. They will pass on some costs to consumers, and will no doubt try to claw back some costs from their suppliers. 4.4.6.2 Competing pack types The drinks subject to mandatory deposits in the Nordic countries are filled in different materialswhich compete with one another. Does the inclusion of some materials in the deposit but not others distort competition between these materials? Soft drinks and waters can be filled in aluminium or tinplate cans or in glass or plastic; beers can be filled in these same materials, though theptinplate in all except Sweden,109 while only the Danish system covers glass. The German deposit currently covers all non-refillable containers of the drinks categories affected, except for beverage cartons which were specifically excluded. The new deposit will apply only to containers deemed “environmentally unfavourable” on the basis of LCA sref German retailers may also seek to reduce their costs by limiting the number of pack types they handle.They will opt to focus on those that are popular with consumers, but handling costs are also likely to affect retailer preferences. This could mean a return to cans or even a switch to aluminium can(because of their higher scrap value), and to increased availability of non-deposit container types. Inunderstand from all the Nordic deposit systems that there are hardly any steel cans on their nationalmarkets. Aluminium beverage cao It is hard to determine whether the quantity of steel cans registered with the Nordic deposit systemsmall b cause foreign fillers find these national markets too difficult to enter, either because of the

tial cost of participating in the deposit system or, in the case of beer, becausehon alcohol sales. The proposed expansion of the scope of the Swedish system to tinplate suggests that there may be some competitive distortions. The argument for extending the deposit to steel was that because steel

ll outside the scope of the deposit, importers using steel cans could avoid the need to register with fethe deposit system, pay the fees and mark the cans. Of course importers of steel cans would still havto pay a fee to the packaging recovery organisation. Interestingly, the scope is not being extended to glass, so the question arises of whether importers will in future be able to avoid the deposit by using glass. It is open to question whether the absence of steel indicates that foreign suppliers have opted to use aluminium rather than steel for these markets, where the choice is economically feasible for them.110 The unit fees for steel can be expected to be higher than those for aluminium because aluminium has a significantly higher scrap value than steel, and this funds part of the collection cost. The steel industry argues that the Nordic deposit systems put tinplate at a disadvantage, because the

igh participation cost makes use of this material uneconomha Member State where steel cans are more common than aluminium,111 so it is difficult to say with a

109

Steel is more common in Germany, but the chaotic deposit arrangements have resulted in a massive reduction in the use of cans, so Germany cannot be used as a comparison.

For the time being – the scope of the Swedish system is being extended to include steel cans. 110 We received no comment or data from stakeholders on this point. 111

112

ese herent imbalance between the cost of handling these metals in a

eposit system.

r the exclusion of non-refillable glass from the deposit gives this aterial a competitive advantage over the competing materials. In practice, this question can be

ter in beverage cartons ould not be deposit-bearing, and they feared that the plan would be challenged on competition

rs,

ices. However in Norway the deposit applies to all ready-drinks and in Sweden to all ready-drinks

d to avoid consumer confusion. In

ontrast, Norway decided not to extend the deposit to alcopops because the market was too small and

onated mineral water should also be included in the Danish deposit system. owever, the government decided against this: some waters in Denmark are sold in beverage cartons

ut

nks, but not to juices, nor drinks for particular nutritional uses or drinks containing over 50% ilk. However it will apply to alcohol mixes containing less than 15% alcohol or less than 50% wine.

ing canned arbonated soft drinks has to participate in the deposit system and pay taxes at the reduced rate, while

certainty whether this is simply because aluminium happens to be more common than steel in all thcountries, or whether there is an ind It is also open to question whethemconsidered only in Sweden, because non-refillable glass is deposit-bearing in Denmark, while in Norway and Finland the structure of taxes on packaging discourage the use of non-refillable glass.112

In Sweden, the market share of non-refillable glass is very small for both beer and soft drinks.113 The Danish government has recently abandoned its plan to extend the deposit to still waters. The authorities realised that some still water would be deposit-bearing but still wawgrounds. 4.4.6.3 Competing products Imposing a deposit on non-refillable containers of some beverages but not on others could give rise to competitive distortions. The deposit applies only to carbonated drinks in Denmark and Finland, not tostill drinks. Thus in Denmark and Finland carbonated waters are deposit-bearing but not still watewhile carbonated soft drinks are deposit-bearing but not ready-to-drink cordials, squashes or fruit juin the container types specified. In Denmark, the government recently proposed extending the deposit to ready-mixed spirit drinks and“alcopops” to level the playing field with beer-based drinks, ancso they considered it was not worth it. A study commissioned by the Danish Environmental Protection Agency recommended that plastic bottles for non-carbHand there would have been competition problems if the deposit were imposed on waters in bottles bnot in cartons. In Germany, the deposit currently applies to all non-refillable containers (except beverage cartons) of the drinks categories that did not meet the refill quota: beers, waters, and to carbonated soft drinks butnot to still soft drinks. Under the proposed new requirements, the deposit will extend its scope to all soft drim In Denmark, a filler or importer of still drinks does not need to report data or pay any fees for still water (because there is no general recovery organisation), but he does have to pay packaging tax at a higher rate than for carbonated water. Similarly, in Finland a filler or importer supplyca supplier of a non-carbonated soft drink must pay the fee to PYR but pays no packaging tax.

112 Packaging taxes are discussed in section 5.3.

% for soft drinks in 2002. Cans were the ost popular non-refillable pack type for beer. For soft drinks refillables remain popular but for non-refillables

n glass

113 Non-refillable glass represented 1.3% of the market for beer and 11mPET had a larger market share than glass (so deposit-bearing containers have a larger market share thafor both drinks). Source: Swedish Brewers’ Association.

113

inks are insignificant, because the same companies fill and distribute drinks that bear

e deposit and those that do not. However, some fillers are likely to have a higher market share of

f d

he differences between the scope of each of the existing deposit systems indicates that there is no that

. s and new pack types have been developed.

or example, wines and spirits are usually not subject to deposit requirements, but carbonated soft dy made drink containing wine or spirit and a mixer (such as a spritzer

r ready-to-drink gin and tonic) be classified? Is it appropriate that a drink should be deposit-bearing

Water and soft drinks are primarily produced and distributed in the Nordic countries by the brewers, alongside beer. Thus, at first sight, it appears that any competitive distortions arising from differentrules for some drthsome drinks than others, so the different operating conditions will not affect them all equally. Furthermore, the brewers often fill and distribute waters and soft drinks under licence on behalf oforeign brand-holders. Adverse operating conditions may affect the development of these brandedrinks in the respective national market. Tclear-cut division between drinks that are appropriate to handle through deposit systems and those are not. When deposits were first imposed on non-refillables, the targeted drinks were those that had traditionally been sold in refillables. However, the market has developed significantly since thenNew drink Fdrinks are. So how should a reaoif it is in a can or non-refillable PET, but not if it is in non-refillable glass or a carton? 4.4.7 Evidence of barriers to trade arising from mandatory deposits on non-

refillable beverage containers Table 35 shows the breakdown by container type for beer in Denmark, Finland, Germany, Norway and Sweden for 2001. At this time, cans were still banned in Denmark and DRS had not yet started to handle any non-refillable containers. The mandatory deposit on non-refillables for beer in Germany had not then taken effect. The overall market share of refillables in Germany had been gradually declining since 1992 despite the threat that mandatory deposits would be imposed. The market share of non-refillables in Sweden, the only country shown with no specific pro-refill requirements, is 65% (cans plus bottles), by far the highest.

Table 35: MARKET SHARE OF BEER PRODUCTION BY CONTAINER TYPE, 2001% of total Draught Refillable bottles Non-refillable bottles Cans Denmark 11 89 - - Finland 20.9 74 - 6 Germany 19.5 55.5 5.1 19.9

Norway 114 25 42 0.2 34

Sweden 13 23 1 64

Source: Brewers of Europe

114 Data for Norway is for consumption, not production.

114

Table 36: MARKET SHARE OF CARBONATED SOFT DRINKS BY MAIN CONTAINER TYPE, 2001

% of total

Refillable glass

Refillable PET

Non-ref glass

Non-ref PET

Cans Postmix Cartons

Finland 115 88 - - 1.3 11 Germany 116

45 14 6 17 2 16

Norway 117 1 90 not specified not specified

1 5

Sweden 21 33 1 20 11 13

Source: WAFG (Germany), national brewers’ associations (other countries) According to the Danish Brewers’ Association, the market share of non-refillable containers for soft drinks and waters increased from 2% in September 2002 to 4% at the end of 2003. They expect that it

ill increase to 15% by 2008. w Given that the deposit systems are nearly always associated with other measures designed to promote the use of refillables (such as taxes), it is difficult to disentangle the two to establish whether barriers to trade arise from the deposit system requirements or from the other measures. The market shares of

on-refillables are far higher in Sweden than in the other countries shown. However, not onln y is weden the only country that does not have measures to promote refillables, it also has the deposit

eposit systems),

e rticipation in the system, fees charged etc,

but membership of the association was limited to Finnish companies. The Commission withdrew the the W .2.7

Ssystem with the lower participation fees and more relaxed marking requirements than those in neighbouring countries. However, there are two cases where there is evidence that deposit systems have given rise to distortions of competition: • Finland: The Commission opened infringement proceedings against Finland in 1998, and

referred the case to the ECJ in July 2003. The Commission argued that Finland had not established rules governing the operating of recovery organisations (including dand had therefore failed to transpose Article 7.1 of the Directive. The Commission said that it had received complaints about the deposit system for refillables and that for cans. The Board of thBrewers’ Association could make decisions about the pa

proceedings in November 2004 when Finland changed its rules through an amendment toaste Act (see also section 3 )

• Ge In Germ e imposition deposit on selected non-refillables in January 2003

caused significant disruption in the beverages market. This was primarily because no practical arr nts to operate the deposit syst g house was in lace when the d sit took e open to all do now operate (as described above) but they have a small market share. In November 2003 this was estimated at 20%, 118 but it has now fallen to around 10%.119

Some supermarket chains responded to the lack of a deposit system by delisting non-refillables completely.

.

rmany: any th of the

angeme em or clearin p epoffect. Two deposit systems

115 Includes waters. 116 Includes non-carbonates. 117 Includes waters. 118 Source: GVM.

fand combined. 119 Indicated by P-Pfand, referring to P-Pfand and Westp

115

The establishment by the discount chains of “island solutions” relying on a unique design of pack nst

Germany in , it specifically referred to the requirement for a specific design of pack rrier to

re of cans decreased signifi , from in to just 4% in the same period the following 121 According to the

try, co umption of steel for be in the year after the deposit took effect.122 APEAL’s information is that the market has since fallen further, by 95% compared

ere per year, with a market

123

th consequent economic disruptions there. In section 5.3.8

has been referred to above. 120 When the Commission opened infringement proceedings agai October 2003

as a ba

trade.

As a result of the deposit, the market shaSeptember/October 2002

cantly 27%year.

steel indus ns verage cans fell by 80%

with consumpti it took effect. As 11,00 s of steel beverage cans used in Germany before 2003, the loss corresponds to 209,000 tonnes

on before the depos 0 tonne w

value of € 128 million per year. One effect of this was that surplus canned beverages were dumped onto the markets of neighbouring countries, wi we discuss the impacts on Hungary of a huge influx of cans intended for the German market. Data supplied by the German soft drinks, waters and juices association, WAFG,124 provides a picture over a longer period of the disruption to the market for soft drinks and waters in Germany (see Table 37). Non-refillable PET has increased, largely because of “island solutions”, says WAFG. However, cans and 2 litre non-refillable PET bottles have almost disappeared from themarket. Cartons (not deposit-bearing) have increased their market share, while non-refillabglass has decreased. O

le

verall, refillables have declined, particularly glass.

Table 37: BREAKDOWN OF MARKET IN GERMANY FOR NON-ALCOHOLIC DRINKS BY CONTAINER TYPE, 2002-4 (take-home consumption of soft drinks, waters and juices)

% Jan/Jun 02

Jul/Dec 02

Jan/Jun 03

Jul/Dec 03

Jan/Jun 04

Difference: Jan/Jun-03 to Jan/Jun

04 Refill Glass 38.8 35.0 37.5 35.7 32.6 - 11.0 PET 14.3 15.2 20.0 21.4 19.5 - 1.6 Total refill 53.1 50.1 57.5 57.2 51.9 - 7.7

Non-refill Glass 4.2 3.5 3.5 2.8 2.4 - 29.4 PET 23.7 28.6 19.6 22.5 27.4 + 42.6 Carton etc 17.1 15.6 19.2 17.5 18.4 - 2.5 Cans 1.7 1.8 0.2 0.0 0.0 - 88.3% Total non-refill 46.7 49.5 42.5 42.8 48.1 + 15.7

120 Red Bull operates an island solution for cans with special blue ring-pulls, but these have been challenged in the courts as not being sufficiently easy for consumers to distinguish.

1 Source: GfK, taken from Mandatory Deposits for non-refillable beverage containers in Germany: social implications, EUROPEN, April 2004.

’s legal analysis of the proposed revised German Packaging Ordinance, January 2004.

12

Economic, environmental and 122 EUROPEN, ibid. 123 Source: APEAL 124 Wirtschaftsvereinigung Alkoholfreie Getränke.

116 Accmin orters, who use non-refillables. Sales fell by 60% - 80%, depending on the brand. According to CSEM, German bottlers, who use refillables, benefited. 4.4.8 Refill protection and cross-border trade With the exception of Sweden, all the Member States that have mandatory deposits for non-refillables also have requirements in place designed to promote the use of refillables. This makes it hard to disentangle the impact of pro-refill measures from any barriers to trade arising from deposit systems per se. In this part of the report we examine the statistics for beer production and trade in order to ascertain whether and how far refill protection measures (deposits, refill quotas and a can ban) have served as a barrier to trade between Member States. We have identified the “refill-protection states” as • Denmark – can ban to September 2002, mandatory deposits thereafter; • Finland – beverage container tax with rebates for deposit-bearing containers; • Sweden – mandatory deposits on non-refillables; • Germany – market share quota for refillables until end 2002, mandatory deposits thereafter.

ording to CSEM,125 the entry into force of the German deposit also had an impact on French eral water imp

Table 38: MARKET SHARE OF IMPORTED BEER (by volume) % consumption produced locally % consumption imported

COUNTRY 2000 2001 2002 2003 2000 2001 2002 2003Denmark 98.2% 98.1% 97.7% n/a 1.8% 1.9% 2.3% n/a Finland 98.5% 98.3% 97.6% 95.0% 1.5% 1.7% 2.4% 5.0%Sweden 88.1% 88.5% 89.6% n/a 11.9% 11.5% 10.4% n/a Germany 96.9% 96.2% 96.7% 97.1% 3.1% 3.8% 3.3% 2.9%Total refill-protection states 96.6% 96.1% 96.5% n/a 3.4% 3.9% 3.5% n/a Austria 94.9% 94.7% 94.9% 93.9% 5.1% 5.3% 5.1% 6.1%Belgium 92.0% 91.2% 92.5% 89.7% 8.0% 8.8% 7.5% 10.3%France 77.2% 77.5% 76.7% 76.0% 22.8% 22.5% 23.3% 24.0%Greece 95.5% 96.0% 95.7% 95.2% 4.5% 4.0% 4.3% 4.8%Ireland 89.6% 88.9% 87.0% n/a 10.4% 11.1% 13.0% n/a Italy 74.6% 73.6% 72.8% 73.3% 25.4% 26.4% 27.2% 26.7%Luxembourg 57.6% 62.6% 68.3% 63.0% 42.4% 37.4% 31.7% 37.0%Netherlands 92.8% 93.9% 93.7% 91.1% 7.2% 6.1% 6.3% 8.9%Portugal 95.7% 100.0% 98.7% 98.9% 4.3% 0.0% 1.3% 1.1%Spain 88.4% 87.1% 88.3% 89.2% 11.6% 12.9% 11.7% 10.8%United Kingdom 90.5% 91.4% 89.0% 89.4% 9.5% 8.6% 11.0% 10.6%Other Member States 87.7% 87.8% 87.1% n/a 12.3% 12.2% 12.9% n/a Total EU 91.3% 91.1% 90.9% n/a 8.7% 8.9% 9.1% n/a

Source: Brewers of Europe Annual trends are not complete as two of the four refill-protection states have not yet reported on import volumes in 2003. The Danish can ban came to an end on 22 September 2002, but Finland has reported a larger rise in imports between 2002 and 2003. Mandatory deposits were introduced in Germany in January 2003, and that year showed a 23% fall in imports as a percentage of consumption. Table 39 shows that import penetration is 3-4 times higher in Member States with an open market than in the refill-protection states.

125 Chambre Syndicale des Eaux Minérales.

117 Wethat

next considered whether the relatively high beer consumption in the refill-protection states means they have a strong local industry which would always be able to resist competition from imports:

Table 39: COMPARISON OF PER CAPITA BEER CONSUMPTION WITH THE BALANCE OF TRADE

pop ('000) hl per capita consumption hl per capita net exports

COUNTRY 2000 2001 2002 2003 2000 2001 2002 2003Denmark 5 359 0.88 0.91 1.11 0.90 0.51 0.44 0.48 0.66Finland 5 188 0.85 0.86 0.88 0.86 0.04 0.03 0.03 n/a Sweden 8 894 0.57 0.56 0.54 0.47 -0.06 -0.06 -0.05 n/a Germany 82 333 1.24 1.23 1.22 1.17 0.09 0.09 0.09 0.11Total refill-protection states 101 774 1.15 1.14 1.14 1.07 0.10 0.09 0.10 n/a Austria 8 132 1.08 1.06 1.07 1.10 0.00 -0.01 0.00 -0.01Belgium 10 286 0.98 0.97 0.96 0.97 0.45 0.48 0.56 0.56France 59 191 0.36 0.36 0.35 0.36 -0.04 -0.04 -0.04 -0.05Greece 10 591 0.40 0.39 0.40 0.37 0.02 0.03 0.03 0.02Ireland 3 839 1.62 1.52 1.28 2.12 0.55 0.75 0.83 n/a Italy 57 948 0.28 0.29 0.28 0.30 -0.06 -0.07 -0.06 -0.07Luxembourg 441 1.11 1.01 1.00 1.12 -0.12 -0.11 -0.13 -0.24Netherlands 16 039 0.82 0.81 0.80 0.80 0.74 0.77 0.76 0.77Portugal 10 024 0.60 0.58 0.59 0.60 0.04 0.08 0.12 0.13Spain 41 117 0.71 0.76 0.75 0.81 -0.07 -0.08 -0.07 -0.07United Kingdom 58 800 0.97 1.00 1.00 1.04 -0.03 -0.03 -0.04 -0.05Other Member States 276 408 0.63 0.64 0.63 0.66 0.03 0.03 0.04 n/a Total EU 378 182 0.77 0.77 0.77 0.77 0.05 0.05 0.06 n/a Source: Brewers of Europe

st of the refill-protection states have high beer consumption and therefore a strongy be part of the answe

The fact that mo local industry ma r – per capita consumption in the refill-protection states is about 80% higher on average that of the other Memb – b s not see ugh to explain this big difference. Also, Sweden, which as we show in section 4.5

er States ut it doe m to be eno i

state with the least barrier to imports, is a net importer.

s the refill-protection

Table 40 LANC TRAD BEER EU-15 MEMBER STATES, : BA E OF E IN IN RANK CORDING TO PER CAPITA CONSUMPTIOED AC N

COUNTRY per capita con n sumptio

2001 per capita net exports

2001 Ireland 1.5 0.752 Germany 1. 0.09 23 Austria 1.06 -0. 01 Luxembour 1. -0.1g 01 1 United Kingdom 1.00 -0.03 Belgium 0.97 0.48 Denmark 0.91 0.44 Finland 0.86 0.03 Netherlands 0.81 0.77 Spain 0.76 -0.08 Portugal 0.58 0.08 Sweden 0.56 -0.06 Greece 0.39 0.03 France 0.36 -0.04 Italy 0.29 -0.07 Total refill-protection states 1.14 0.09 Total other Member States 0.64 0.03 Total EU 0.77 0.05

Source: Brewers of Europe

118

e

ection 2.8

4.4.9 Impact of cross-border shopping on deposit systems for non-refillablbeverage containers

S discusses the economic impacts of cross-border shopping as they relate to packaging. In

is section we discuss the particular impacts on the operation of deposit systems for non-refillable

l

of cans and some consistently lose a proportion of their cans to neighbouring countries.

exported. Norway, where alcohol taxes and consumer prices are high, 5% of all cans returned to the deposit

provides data to the wedish system on the Swedish containers it has recycled, and these count towards achievement of the

s the Norwegian ontainers separately in the data it submits to the authorities. The Finnish can deposit system Palpa

nium. he high market value of the aluminium scrap minimises the economic impact on the systems that are

net im and. For the systems that are net exporters, such as Returpack in S wedish cans that end up in Norway provide an addit The effect of trade flows could r ic t os m n a ren of circum – differences in d nd pri etw ig n rie d in the ty ect o de s co A fin f in ncial difficu b gh ing y B sold cheap beer in glass bottles. Glass has a much low p ha in arti y the coloured glass comm d for beer. If B ad s m ss, then A could ask B to transport the materials back home for recyc h n B heunred nd as gh er agrecov ganisation, it is unl ha s ss d as o hewould locally) wo ve tr t. An arrangement to manage the situation describ ve te e e e .126 A Sw called Da tu B a se for h e les impor n sign an agrehave the em ected. The retailers ref consumers, using the difference to fund handling costs. The sy ensu pty mark, nd m their deposit refunded. Otherwise the bottles would

it

thbeverage containers. Beer, a popular personal import, is included in existing deposit systems within the EU. Because the trade flows of deposit-bearing beer cans are to a large extent determined by excise duties and retaiprice differences, they are fairly constant. Thus some deposit-bearing systems consistently receive a surplus The number of cans that end up in a deposit system of a different country from where they were purchased may be sufficient to affect the return rates achieved. The return rates in Sweden, Norway and Finland are adjusted each year to take account of the number of containers imported andInsystem Resirk come from abroad. Some 80% of these are Swedish. NorwaySSwedish targets for drinks containers. The Swedish deposit system Returpack showcalso shows its return rate adjusted for imports. In the existing Nordic systems, the cans ending up in foreign deposit systems are nearly all alumiT

porters of foreign cans, primarily Resirk in Norway and Palpa in Finlweden, the unredeemed deposits on the S

ional source of revenue.

be mo e signif ant in o her dep it syste s, give diffe t set stances excise uties a retail ces b een ne hbouri g count s an

pes of container subj to a dep sit. A posit sy tem in untry could d itsel finalties if, say, glass was deposit- earing and if nei bour countr

er scra value t n alum ium, p cularlonly use also h a depo it syste for gla

ling. T e cost of the transport could be fu ded by from t eemed deposits, at least in part. However if B ha led gl s throu a gen al pack ing ery or ikely t t its fee for gla (coste on the sumpti n that t material be collected uld co r such anspor

ed abo opera s betwe n Swed n and D nmarkedish company nsk Re rglas A offers return rvice Danis glass b er bottted by Swedish consumers. Swedish retailers ca ement with Dansk Returglas to

pty bottles coll und onlres that em

y part of the deposit to bottles do stem get returned to Den

a eans that consumers do get at least some of probably end up in the Swedish recycling system, Glasåtervinning. Kommerskollegium commentsthat each retailer decides what proportion of the deposit to refund as a way of managing how many empty bottles they handle. This means that consumers never know what proportion of their deposwill be refunded.

Source: Kommerskollegium report, Potentiella vinster för miljö, konsumenter och den inre marknaden av

att samordna återvinnings- och retursytem för dryckesförpackningar inom EU/EES, of 31.10.2003, ref: 100-419-2003.

126

119

Scandinavian consumers without charging the German deposit. To benefit, Scandinavian consu beverages purchased to their me day. They must also prove their (Scandinavian) identity, in order to establish that the goods are tobeverages – in bulk packs only (export declaration does not contain a statem re n e m o r mbeverage containers to the border sh 7 We find this ent far from ideal be and Deare n is su h o th s ld it the export of s to a nei ng country without cha he os it ou 128 n eup in ish deposit system without any a be id To pr candinavian consumers re ng o er r im 5 d it (although not paid), the German retailer needs to de t rc n t p a the conta defacement is un iv at on rs s s b The Association of Border Shops i I ss m a h r in Schleswig-Holstein – IGG), which represents the m ty er o h o u the situat ecause man p s ha t h i E e n sever made an o its b p a lu y D sit syste al obligation to do so. Thus, Danish consumers would have had to pay

e Danish deposit on purchases made in the German border shops and would then have been able to sh

ported from Germany by Danish onsumers s are

aluminium nd the arrangement helps Denm We conclude that participation by these border shops RS would be the idea ution to this situation. D sal to accept these retailers mean t they do not pay DRS a participation fee and this, to the no-deposit arrangement, en s them to sell drinks nish consumers

Personal export of beer from Germany to Denmark is also extensive, but is managed very differently. German retailers near the border are authorised by the government of Schleswig Holstein to sell drinks to

mers must complete an export declaration confirming their intention of exporting the home countries on the sa

be exported. Having done that, they may purchase 30 cans per pack) – without a deposit being cha

rged. However, the

ment p venti g thes custo ers fr retu ning e pty ops.12

arrangem for a num r of reasons. First, both Germany nmark ow deposit states, so it rprising t at nati nal au oritie shou perm drinkghbouri rging t dep it of e her c ntry. The contai ers th refore end the Dan fee h ving en pa .

event S from turni the c ntain s late to cla the 2 cent eposfaces he ba ode a d/or o her de osit m rk on

iners. Such likely g en th the c taine are u ually old in ulk.

n Schleswig-Holstein ( ntere enge einsch ft der Grenz ändleajori of G man b rder s ops, p ints o t that

ion has arisen b datory de osit sy tems ve no been armon sed at U lev l. Oal occasions IGG ffer for mem ers to articip te vo ntaril in the anish depom, despite having no leg

thredeem the deposit in their home towns. However Dansk Retursystem, with the support of the Daniretail associations, has dismissed the attempts of the German border shops to participate in its system.129 IGG points out that in practice there is no significant environmental or economic disadvantage for ither Germany or Denmark. Many of the beverage containers ime

c end up in the reverse vending machines of Dansk Retursystem. Most of the can, says IGG, so p, a DRS can fund recycling from the value of the aluminium scra

ark meet the Directive’s targets.

in D l solRS’ refu s tha

gether with able to Da

127 The Mi e Environment of Schleswig-Holste rised this practice a e Administrative Court of App verwaltungsgericht) of Schleswig-Holstein ruled that the sale of rages in border shops to Sca stomers was not subject to the ma ry deposit scheme. In cision of 23 June 2003, the co nd that the mandatory deposit requirem aid out in the German ging Ordinance did not apply to les, including exports by consumers, hat the Federal Govern was not entitled to submit cons rt sales to the mandatory deposit sch Thus, the court endor pleadings which argue posing a mandatory deposit on the border shops would violate both German constitutional law and Eu w, in particular Articles 28 and 29 of U Treaty (free movem ds) and Articles. 5 and 7 of t aging and pack ste. This legal situa ill remain unchanged aging Ordinance into force, since the G legislator is not entitled to a rovisions of EC law. 1 Maybe there is a parallel with duty-free air travel between EU Member States, which has now been a ished. 129 “Obviously”, says IGG, “ such denial of access was motivated by an interest to avoid cross-border competition.”

nistry for th in autho fter theals (Ober bevendinavian cu ndato its deurt fou ents l Packa export sa and t mentumer expo

meme. sed the written

d that in laropea the E ent of goo

he Directive 94/62/EC on pack aging wa tion weven after the amended Pack enters ermanlter any p

28 bol

120

ooperate ). Greater co-operation between deposit systems could also be

ossible, as described in 7

even m re cheaply. Another option would be an arrangement similar to Dansk Returglas, which s in Sweden (described above

section 4.5.p .

r deposit arrangements, need to consider the impact of cross-border trade.

ecause of the range of drinks usually included in a deposit system, it is easier to predict which way s

sit

ase”.

ers who regularly buy deposit-bearing ontainers. These consumers effectively provide operating funds to the deposit system – at any given

ed. This

m.

onsumers on the move are more likely to purchase non-refillables than refillables – kiosks and other

The problems set out above indicate that Member States wishing to establish new deposit systems, oto adjust their existingBthe trade flows in a deposit system than in a general packaging recovery organisation. Deposit systemdo have an advantage over general packaging organisations, in that, as in arrangement between Denmark and Sweden for glass, the unredeemed deposits can contribute to the cost of handling packaging waste that ends up in a neighbouring country. 4.4.10 Impact of deposit systems for non-refillable beverage containers on

consumers The ECJ specifically referred to consumers in its ruling of 14 December 2004 on the German depoarrangements.130 The Court set some conditions for a return and deposit system for non-refillable packaging, which included that “the Member State must ensure that there are a sufficient number of return points so that consumers who have been charged a deposit … can recover the deposit even if they do not go back to the initial place of purch This reference by the ECJ to consumers confirms our view that the impact on consumers is relevant to an assessment of deposit systems. Furthermore, cross-border shopping by consumers, an issue closely associated with the Internal Market, may conflict with the smooth operation of a deposit system. Deposit systems have some financial impact on consumctime there will be containers in their homes on which they have paid a deposit. Their trip to the supermarket to return the empties and get their deposit refunded probably coincides with the purchaseof replacement drinks. There will always be circumstances in which consumers are unable to get their deposit refundmay be because they are in transit, or they may be foreign visitors who do not know how the refund arrangements function, or cross-border shoppers who take the containers back home with theEuropean citizens are more mobile than they used to be and are more likely than in the past to consume drinks in the street or on the move, away from their home or in a bar or restaurant. Csmall retail outlets that specialise in supplying consumers on the move (such as in railway and bus stations, on motorways) do not usually sell drinks in refillables. The fact that return rates in deposit systems for non-refillables are typically lower than in refill systems indicates that some consumers cannot always get their deposit refunded (and/or that they do not wish to go to the trouble of returning their empties). The return rate for refillables in Denmark was 102% in 2003,131 compared with 83% for non-refillables. In Finland, 98% of refillable bottles are returned, but only 85% of non-refillables (cans).132, 133

130 Case C-309/02, Radlberger Getränkegesellschaft mbH & Co. and S. Spitz KG vs. Land Baden-Württemberg,

ra 46. 131 Source: Danish Brewers’ Federation – the rate above 100% is explained by cross-border purchases and

urce: Finnish Association for Nature Conservation.

pa

data is corrected for bottles missing from crates. 132 So

121

ems for

ng

.

eintroduce a deposit system in the Member States where eposit systems for refillables have ceased to operate, particularly if those systems disappeared a long

for several years in most of EU-5. The packaging recovery organisations in those countries have made a considerable effort to

ecovery rganisations to be hostile to the idea of such a change, particularly since all countries without

er

t the recycling targets using other

The Nordic deposit systems described above were all introduced at a time when non-refillable containers were coming on the market alongside long-established refill systems. Deposit systrefillables continue to operate in those countries. Thus, when the deposit systems for non-refillables were established, consumers in these countries were already used to paying a deposit and returniempty drinks containers to get the deposit refunded. Furthermore, when the deposit for non-refillablestook effect, there were no systematic collection arrangements in place for other consumer packaging We believe that it would be very difficult to rdtime ago. 134 In most countries, the new deposit system for selected packs would be established alongside existing kerbside and/or bring systems for other packaging. Collection systems handling all packaging have already been in place1inform consumers about the importance of sorting their used packaging for recycling and how they should do this. They would have to run expensive information campaigns to explain why consumers should now start taking certain empty containers back to the store. We would also expect rodeposits met or almost met the Directive’s recycling targets for 2001. 4.4.11 Impact of deposit systems for non-refillable beverage containers on

packaging recovery organisations If a deposit system operates for selected drinks containers, a separate packaging recovery system is still needed to handle the rest of the packaging. The container types used for drinks that deposit systems would typically handle are aluminium and tinplate cans, and PET bottles. Aluminium and tinplate cans are among the easiest and cheapest containers to recycle, and the PET bottle is by far the easiest type of plastic to recycle and the polymfor which recycling facilities are most readily available around Europe.135 If these easy-to-recycle materials are handled through a deposit system, they are excluded from the scope of packaging recovery organisations. This organisation may have to mee

r

og

ral

than 1% of his selling space, or (4) the retailer can demonstrate y

5 Recovery organisations in some Member States, such as Eco-Emballages in France and FOST Plus in aging

ted with other waste and recovered as energy.

133 We argued in the interim report that deposit arrangements could be confusing for consumers, in particulabecause the boundaries were blurred between products and pack types subject to the deposit. We felt that consumers may not always return containers if they are uncertain whether the pack/drink combinations are dep sit-bearing. GRA suggested that we delete this comment because we provided no firm evidence of this confusion. GRA went on to point out that deposits have been operating “for decades and no-one is challenginthem”. Perhaps they were referring to refill deposit systems? Our comments related to deposits for non-refillables, which were established relatively recently and which have been the subject of a number of complaints and challenges. 134 The only jurisdiction which has introduced mandatory deposits into a non-refillables market is Hawaii, andthere the return arrangements have as much as possible in common with conventional “bring” collection systems for recycling. Retailers do not have to take back deposit-bearing containers if (1) there is a certified independently-operated redemption centre within two miles of the store, (2) the retailer is located in a ruarea, (3) the retailer can demonstrate that taking back containers would incur physical hardship, e.g. by jeopardising public safety or taking up morethat taking back containers would incur financial hardship. The Hawaiian mandatory deposits system onlcame into force in January 2005, so it is too early to judge the success of this measure. 13 Belgium, collect only PET and HDPE bottles separately for recycling. Other plastics in household packwaste are collec

122

he impact on the packaging recovery organisation of beverage containers being handled separately

nd on

In Germany the situation is different. The legislation sets high material-specific targets for household packaging waste, and these have not been adjusted since the deposit was imposed on

ers are n to it, the tonnage of glass, plastic and metal reported has decreased and correspondin onnage needed to meet the targets.

f its total income for that year (€ 1,697 million). . In 2004 its revenue from beverage containers increased slightly as some companies

.4.12 Risk of fraud

defrauded by producers or importers who under-report the quantity of ontainers sold – though packaging recovery organisations also suffer from under-reporting by fillers

ular it could

bar ode is required, it could also be because of parallel imports from a non-deposit country. General

It is of course possible that small operators importing a small quantity of products from a neighbouring

will not be possible for the deposit system to establish whether they have been imported

packaging waste of the same material, which may increase the cost of meeting the target for that material. Tdepends on how the targets that it must meet are structured and how high they are: • In Sweden, for example, national legislation sets two targets for aluminium and for plastics – one

for the deposit-bearing beverage containers, and one for the other aluminium and other plastics. The targets for “other” aluminium and plastic apply both to packaging waste in households abusiness sites, and the same recovery organisation handles both streams.

•

selected beverage containers. The only difference for DSD is that since those beverage containo longer reported

gly the t

Of course, there has also been a reduction in the fee income which DSD received to support itsactivities – with a loss of economies of scale, and in particular a loss of the most easily recyclablematerials, DSD has undoubtedly suffered a serious net loss. Its fee income from beverage containers fell by € 308 million in 2003, or 18% o

136

switched to pack types not subject to the deposit, such as beverage cartons. 4

The value of the deposit makes deposit systems susceptible to fraud, more so than general packaging recovery organisations. The higher the deposit, the greater the incentive to fraud. Deposit systems can be cand importers who under-declare the number of units sold, either deliberately or inadvertently. The operator of a deposit system always knows if more containers are being returned with a particbar code than have been reported to it. However, this may not be because of under-reporting – also be because of fraud by one of the methods described below. In Sweden, where no uniquecpackaging recovery organisations cannot identify fraud as easily as deposit systems, but they regularly audit their members to check data returns against sales figures. They also use methods to identify possible under-reporting, such as comparing the packaging consumption of competitor companies inthe same sector. Fillers and importers in recovery organisations may omit to declare a product code entirely. This would be detected in a deposit system because it would mean that the bar code was not registered withthe system.

country omit to register either with the deposit system or the general packaging recovery organisation. sit system will identify the containers as not having been reported, but if the imports are on a The depo

mall scale, itsby private consumers or by small commercial operators.

136 Source: DSD.

123

ansk Retursystem told us that few drinks were imported informally by small operators into Denmark.

tarted to handle non-refillables. Data from the Danish Brewers’ Federation (see section 2.8.1

DSuch operators would, in addition to registering with DRS, have to pay VAT and packaging tax. If they failed to report to DRS, they would probably also fail to pay tax, a more serious offence. As a result, says DRS, most imports are handled through specialist import companies. However, we wonder whether this situation is unique to Denmark, or whether it means that undeclared parallel imports have simply been undetected so far. After all, the Danish system has only recently s )

e find it hard to believe that small operators (e.g. of small retail stores or cafes) or ad hoc small

is e.

these undeclared imports are then sold on to consumers in countries with a deposit system, the onsumers will assume that they have paid the deposit on the containers, even if they have not. The

nother codes, printed on labels, can be

ve label which contains new security markings to

ide

detected. The risk of this type of fraud is another reason why deposit system operators prefer to

y

entify the source.

and

indicates that cross-border imports of beer from Germany into Denmark are significant, and increasing. The data do not indicate what pack types are imported, nor how much of this is from personal shoppers and how much from commercial operators. Wentrepreneurs (who sell informally any items on which they can make a small profit) do not occasionally drive a van to a neighbouring country to buy supplies, if the price of those products significantly lower there. In this situation, these operators would pay VAT in the country of purchasThese small operators are usually not required to register for VAT because their turnover is below the national VAT threshold, they cannot claim back the VAT from the country or purchase, and are unlikely to pay the VAT in the country of import. Ifcdeposit system in this situation ends up with additional containers in its system to recycle.

way that deposit systems can be defrauded is that false bar Astuck on non-deposit containers.137 In this case, the RVM pays out the amount of the deposit for containers on which the deposit has not been paid. DRS, the only system that permits the use of dhesive labels, has recently developed a new adhesia

prevent this occurrence. Deposit systems can also be defrauded in retail stores during handling of the returned containers – the same container can be passed through a scanner several times. In stores with manual handling, the containers retain the value of the deposit until they have been crushed – making it necessary to provgood security for the trucks and depots where the containers are stored. This type of fraud is, we conclude, probably limited to small stores and is probably on a small scale, or it would be quickly

operate with RVMs that crush the containers when they refund the deposit, which makes the bar code illegible. Deliberate fraud represents a greater financial threat to deposit systems than to packaging recovery organisations if the fraud results in the system paying a deposit on a container on which it was never charged. Although deposit systems are more likely than general recovery organisations to identifimbalances between the number of containers reported and returned, they will not always be able to id Both deposit system and recovery organisations can suffer a financial loss from having to handle ensure the recycling of packaging without any fee having been paid.

137 Source: Kommerskollegium report, op cit.

124

food and drink ta

Stat hains having a large

market share. This means that there are fewer operators that the deposit system needs to negotiate

•

ngement of using delivery trucks to transport empty containers back to the fillers in Sweden and Norway from where they are

• these

other EU Member States, there are typically a larger number of supermarket chains and a larger

umber of independent convenience stores, a well-established wholesale trade and many private stores selling alcoholic drinks. The Nordic systems work on the

assu ption that consumers can return their containers and get their deposit refunded at any

aid by each retailer.

Nordic

d perating some time ago, supermarkets and drinks retailers would need to be persuaded to make space

4.5 CONCLUSIONS 4.5.1 Applicability of the Nordic model to other countries The way that the Nordic deposit systems operate is designed around the structure ofre iling in those markets. The structure is similar in all the Nordic countries, but does not exist elsewhere in the EU. The Nordic deposit model therefore may not be appropriate in other Member

es, where drinks distribution is structured differently:

Grocery distribution is highly concentrated, with a few large supermarket c•

with to ensure a good nationwide coverage of RVMs.

The brewers also fill waters and soft drinks, and they sell directly to the retailers – there is no large wholesale trade. Again, this reduces the number of market operators involved in the distribution of deposit-bearing drinks. It also enables the efficient arra

collected by the system operator’s contractors.

Alcoholic drinks (beers, wines and spirits) are sold only in state-owned monopoly stores in countries. This guarantees that containers of all alcoholic beverages participate in the deposit system. (Supermarkets sell low-alcohol and non-alcoholic beverages.)

Innsupermarkets and specialist

msupermarket. The more diffuse retail structure in other markets would make harder to ensure this and would complicate clearing arrangements for imbalances in deposits received and p The deposit systems for non-refillables operate alongside existing systems for refillables in the countries. Thus, the supermarkets already had space assigned and the infrastructure to handle deposit refund, and staff are used to handling empty containers. In countries where refill systems stoppeoavailable138 and would need to install the necessary infrastructure from scratch.139 We conclude that other Member States wishing to set up a deposit system for non-refillables wouldnot necessarily be able to establish a system similar to those in the Nordic countries. The logistics arrangements and funding flows would need to take account of the different distribution structure for drinks in that country.

38 Persuasion1 may not be enough in cramped inner-city sites where additional storage space is simply not

ultural tradition of deposit and refund rrangements. This is not the case in Ireland and it is likely re-establishing deposit and refund arrangements

would involve significant costs. Account would also have to be taken of the impact on existing compliance arrangements.”

available. 139 Although mandatory deposits on beverage containers had been one option listed in the government’s litter action plan [see below], the Environment Minister told Parliament on 29 April 2004 that he would not be pursuing this. “Successful deposit and refund schemes operating internationally are generally located in those countries where there has been no break in the continuity and ca

125

ith Returpack for ET, but these are localised.

er

eration of a single dominant deposit ystem.

recent ve

er of nvironment. The Council pointed out that Dansk Retursytem (DRS) had been granted the sole right

reaucratic and inflexible. They also felt insecure because the system is owned nd run by their competitors (Carlsberg, Bryggerigruppen et al.)

of a clear division between owners of infrastructure and the companies that compete to provide services using that infrastructure,

d

when the companies report sales figures to DRS,

the obligation for small suppliers to hotels, bars and restaurants (HORECA) to use DRS.

4.5.2 Deposit systems for non-refillable beverage containers and competition In all the existing Nordic deposit systems, one monopoly deposit system operates for non-refillable beverage containers per national market. In Sweden some small systems compete wP Drawing an analogy with packaging recovery organisations, it is also common in the smaller Member States, such as the Nordic countries, to have a single recovery organisation handling both consumand transport packaging. The larger countries have tended to encourage the existence of more than one recovery organisation, to ensure some competition. This suggests that for competition policy reasons, the larger countries might also wish to discourage the ops National competition authorities in several Member States, and also DG Competition, have inyears expressed some concern about the competition implications of deposit systems, just as they hafor packaging recovery organisations.140 For example: 4.5.2.1 Denmark

The Danish Competition Council issued a statement on 17 December 2003 141 to the MinistEfor six years to operate the return/deposit system, but this had led to competition problems in the Danish beer and soft drinks market. The Danish Competition Agency had received several complaints from small importers and producers who found the system bua The Competition Council had previously looked into the company and the regulation at the planningstage. The company has now been operating for a couple of years and the Council was evaluating the criticism it had raised previously. The Council pinpointed five reasons why it had to issue a statement: • the lack

• the absence of a common deposit system at EU level, which creates barriers for import of beer an

soft drinks, • too much red tape • Carlsberg collecting empty packaging from restaurants with whom it has no contracts, and •

140 The compatibility of packaging recovery organisations with competition rules is discussed further in section 6.6.

1 Statement made available to us by APEAL. 14

126

il suggested that the Minister of Environment

the sole right expires in the beverage business.

the HORECA sector is organised such

•

The of the

ou

ie o DRS, if it were

da in both countries, which makes it easier for the Minister and the EU to uggest alternatives. One alternative could be a system organised like DRS, but not owned by the

beverage business. The Council is also disappointed by the Minister’s lack of enthusiasm towards a more lenient ruling when it comes to the collection of packaging from the HORECA sector. Finally, the Council expressed hope that the Minister would involve it and the Competition Authority

anz

nt

To solve these problems, the Counc • states as soon as possible that DRS will be put out to public tender when

2008. The tender should ensure that the new owners come from outsideThis would solve the problems arising from the fact that the breweries own DRS;

• works for a common EU deposit system; should ensure that collection of disposable packaging from•

that suppliers can collect packaging only from places where they are already contractors;

should simplify procedures for reporting sales to DRS; and • should allow small suppliers to make their own return and deposit system of packaging from the

HORECA sector.

Minister of Environment replied in a letter of 16 April 2004. He was positive towards several issues raised by the Council, and indicated that he would address the problems raised by thencil by: C

• making the question of ownership to DRS a key element in the planned evaluation of DRS in

2006; • discussing a common EU deposit system with the Commissioner of Environment, but he was

pessimistic due to the problems arising from the deposit-and-return systems in Germany and Sweden;

• planning the future public procurement from DRS in a way that eliminates Carlsberg from

collecting packing made of glass, a solution suggested by the Competition Council; and • easing the administrative burdens for the small suppliers in DRS. However the Minister said that he would not allow operators other than DRS to collect beer and soft drink packaging before 2008. He believed that the success of DRS related to its being a unified deposit-and-return system. The Minister would be positive towards suggestions from DRS to allow mall suppliers to promote beverages in one-way packaging which was not notif d ts

done for a short specified period. The Council is positive overall about the Minister’s suggestions. The Council believes however that the Minister is too pessimistic about the situations in Germany and Sweden – deposit-and-return ystems are on the agens

s

in his deliberations about the future public status of DRS. 4.5.2.2 Germany

The Bundeskartellamt (German competition authority) has repeatedly expressed its formal oppositionto derogations from German competition rules for waste collection systems. For example, FrHeistermann, head of BKA’s department 10 (which supervises competition in the waste manageme

127

uggests that the BKA would not permit a single deposit system.

atus of derogations from German competition legislation in various conomic sectors, including environment and waste management. The BKA makes clear that, in light

petition law.

onkurrensverket, the Swedish competition authority, has published a report 145 that identified some the current deposit system for beverage containers. The report concluded that that the

urrent system restricts competition to some extent and is a barrier to trade, particularly for smaller nd foreign companies. The report said that:

• e largest deposit systems are not subject to sufficient control and regulation;

disincentive to participate in the system, particularly for one-

n.

ocess of amending its legislation, d

sector), said 142 that the BKA would “not permit any new sector-wide take-back systems”.143 This s Further guidance on the Bundeskartellamt’s position is provided by a discussion paper of September 2003,144 which discusses the steof developments so far, it opposes a derogation from competition rules for agreements implementing the national take-back systems for deposit-bearing non-refillable containers. It considers that a derogations would give rise to significant restrictions of competition and increased costs for consumers. It would accept co-operation between stakeholders exclusively relating to clearing andmarking aspects, but argues that agreements leading to uniform take-back and disposal costs would beproblematic under com 4.5.2.3 Sweden Kproblems withca

th • gaps in supervision of the system result in different players being subject to different terms; • current deposit and fee rates are a

way PET; • the requirement to mark containers with a unique bar code is a barrier to trade; • it is difficult for low volume pack types and packaging material to participate in the system at

reasonable cost; and tax evasion distorts competitio•

artly as a result of the conclusions of this report, Sweden is in the prP

an new deposit systems may provide more competition to Returpack in future.

2 ailable by APEAL). Final

a erzu abgegeben kann - keine euen branchenweiten Rücknahmesysteme mehr zulassen und alte, wie die DSD oder die GGA, mit unserem

t abler eise umstrukturieren. Wir haben diese Lehre auch mit aller Entschiedenheit bereits bei der Umsetzung des k

143 Although most of Heistermann’s speech related to DSD, he made clear that his comments applied to other sectors subject to producer responsibility, such as WEEE. 144 Ausnahmebereiche des Kartellrechts – Stand und Perspektiven der 7. GWB-Novelle. Environment and waste

Pant och Retur – Konkurrenseffekter av pant- och retursystem för dryckesförpackningar, Konkurrensverkets 3.

14 Speech given at AGVU conference in Berlin in November 2004 (text made avpar graph: "Unsere Schlussfolgerung ist: Wir werden - soweit man Prognosen hinkar ellrechtlichen Instrumentarium auflösen, wenn sie sich nicht freiwillig in wettbewerbsrechtlich akzeptWEle troG deutlich vollzogen....“

management discussed on pp 5-10 (text made available by APEAL).

514

rapportseries 2003:3, published 8 December 200

128

for non-refillable beverage containers

All As no model for

ow competing deposit systems might operate alongside each other in the same market.

ll the following arrangements look possible, based on current developments:

• but some specialising in specific distribution channels. This could happen in Germany, where the

s, and possibly restructured “island solutions”.

• ystem, with several smaller, specialised systems. This could happen in Sweden. Operators of new systems could include small, regionalised drinks producers.

e ctor. This could happen in Denmark, where HORECA outlets have expressed

concern about current arrangements.

• ate deposit system for each material. This is theoretically possible in Germany, where the new legislation will permit material-specific systems. It might have the effect of increasing

or g

of liers of

cific opolies and it could affect

made for clearing deposit imbalances between retailers who sell

KA

ould the eposit system that received fees to handle those containers pay the competing system that in fact

s aspect is more problematic, particularly because the BKA in Germany has ruled

4.5.3 Potential future impact of competition on deposit systems

the mandatory deposit systems in the Nordic countries currently operate as national monopolies. far as we are aware, so do all such systems elsewhere in the world. 146 There is thus

h A

Several systems, most handling all pack types, all drinks sectors and distribution channels,

existing open systems will probably be joined by new system

One large deposit s

• One or more deposit system serving the retail trade, with separate deposit arrangements for th

HORECA se

A separ

competition between materials, but it is not certain whether it would provide real competition fthe fillers and retailers who pay the fees, and it would most certainly make the task of reportinmore complicated. It would probably mean that these companies paid more in admin fees.

This arrangement could be problematic if it resulted in the system handling a high proportionthat secondary raw material in Germany. There also needs to be competition between suppsecondary raw materials to recyclers. The same is true of deposit systems specialising in spedrinks sectors. Again, the effect would be to create narrower moncompetition between the different sectors.

A key factor to be considered is how to meet the ECJ’s specification that consumers can get their deposit refunded anywhere, not only in stores affiliated to a particular deposit system. If all stores accept all containers, or even if all stores accept certain containers participating in other ystems, arrangements will need to be s

more deposit-bearing containers than they receive back, and vice versa. If all systems within each Member State charge the same deposit levels, as we consider they should, then this is relatively straightforward. However, a clearing system would need to be established to fulfil this role. The Bin Germany has accepted that such an arrangement is necessary, but should be limited to clearing deposit and common marking. It may also make sense for this clearing house to take on the role of passing information from the deposit system operators to the retailers about bar codes, etc. More complicated, however, is the question of how and whether handling costs should be allocated between competing systems. If one deposit system collects and ensures the recycling of containers

articipating in a competing system, it will incur costs for those containers. On what basis shpdhandled them? Thi

146 For example, there are several different systems in the US, but only one in each State that has mandatory deposits.

129

n

s

our analysis above, we have argued that deposit systems are problematic in the internal market on e have compared deposit systems with packaging recovery organisations. Although

y ulti-

sector recovery systems for equivalent pack types. These costs affect importers more than local

ental and economic cost of transporting empty containers back for refilling rules out this option for them.

Furthermore, the flat rate one-off joining fees and flat rate fees for registering new bar codes

is fee structure may be of particular benefit to local fillers because they typically handle a large range of different drinks. Operators also need to pay a separate set of fees

n for the transport packaging of their deposit-bearing containers, and any non-deposit packs they place on the market. Many packaging recovery

• Marking

The requirement to use a unique bar code for each national deposit system and to mark a deposit logo on containers is expensive and burdensome for fillers and importers. It is particularly

a

very organisations use the same logo, the Green Dot, to identify

Fillers must wait for four weeks between registering a new barcode and selling their products,

out any clearing arrangement that would result in uniform fees and disposal costs among competingsystems. As a result, it looks likely that Germany will opt for a different funding model, in which individual retailers bear the operating costs, with each chain negotiating individually with service providers. Isuch an arrangement, operating costs do not pass through the system, so no inter-system clearing is needed for these costs. Retailers will seek to claim back a part of these costs in their price negotiationwith suppliers. In practice, therefore, the costs will be allocated by market forces. 4.5.4 The principal objections to mandatory deposit systems for non-refillable

beverage containers Inseveral levels. WArticle 7 of the Directive does not specify what form such systems should take, we have used recoveryorganisations as the yardstick because they are the most common arrangement for meeting the targets. The main problems we identified can be summarised as follows: • High cost

Deposit systems for non-refillable beverage containers are more expensive for fillers than recoverorganisations. The unit fees are typically higher in deposit systems than the fees charged by m

producers, because a higher proportion of importer’s production is typically in non-refillables. The environm

charged by some deposit systems are disproportionately high for new entrants to the market andfor small operators. Th

to a packaging recovery organisatio

organisations also charge one-off joining fees or an annual admin fee, but these are graduated by tonnage or turnover.

problematic for cans, which are printed by the converter. We have concluded that the need for unique bar code is inherent to deposit systems because of their automated return arrangements – the reasons Sweden has not insisted on such marks relate to conditions unique to Sweden, and these may soon change in any case. We are also concerned about the surcharge paid by fillers to use adhesive labels in Denmark or to use their standard bar code in Norway. In contrast, the majority of packaging recoparticipating packs. Only a few Member States make use of a logo mandatory, and marking is voluntary in all the systems using other logos.

• Administrative burden

which we find particularly burdensome for new market entrants and importers wishing to try out

130

prob

nal fillers very much as they need to prepare accurate data for their packaging for recovery organisations in

aused by the different national reporting requirements for packaging recovery organisations (see Chapter 6

new products. Delays of this length may well be common in the large grocery chains, but ably not in small retailers.

The need to maintain data separately for deposit-bearing drinks containers adds only marginally tothe already complex data requirements for packaging. Deposit systems have simple, fee per unit price structures, which we welcome. However, they probably do not benefit internatio

other countries. We have in any case expressed concern at the complexity c) and have

•

The handling arrangements for returned containers have the potential to restrict packaging design. can

ative pack

The fact that some packaging materials and drinks categories are subject to mandatory deposits,

on

ated water, which is deposit-bearing, and still water, which is not? We feel that in future, the

4.5

s s that give rise

barriers to trade. The ECJ has interpreted this to say that measures may be permitted even if they

es

nal

trade. he question therefore that needs to be considered is whether the barriers to trade to which deposit

w

EU authorities in their consideration of deposit systems.

made some suggestions on how these might be simplified.

Possible restriction on pack design and innovation

All packs must be tested in RVMs to ensure that the latter can identify them before productsbe placed on the market. This could be problematic for operators using unusual or innovdesigns. Mandatory deposits may therefore stifle innovation in pack design.

• Distortions of competition

while other competing packs and drinks are not, could give rise to competitive distortions. Examples are the planned extension of the deposit to tinplate cans in Sweden because exclusigave them a competitive advantage over aluminium, and the decision in Denmark not to expand itsdeposit to still waters for fear of a competitive distortion between still waters in cartons (not deposit bearing) and in glass or plastic. But is there a competitive distortion between carbon

development of new drink products and pack types will make it increasingly difficult to draw the boundaries of deposit systems. .5 Proportionality

Under Article 95 (4) and (5) of the Treaty, Member States may maintain or adopt national measurethat they deem necessary to protect the environment, while Article 28 prohibits measuretogive rise to barriers to trade, on condition a) that the measures are justified by an environmental objective, b) that the environmental benefit needs to be proportionate to the restriction, and c) that the measure must be necessary. To be necessary, the Member State must demonstrate that the objectivcould not be achieved through other less restrictive measures. Above we have identified various barriers to trade and distortions of competition arising from natiodeposit systems. We have concluded that recovery systems handling all packaging, the main alternative method of achieving the objectives of the Directive, give rise to fewer barriers toTsystems can give rise are justified by the environmental benefits. Any conclusion as to whether any specific deposit system is acceptable, falls outside the scope of this study.147 Decisions would be made by the EU authorities, if appropriate. However we set out belosome information and arguments, including material provided by stakeholders, to offer guidance to the

7 This interpretation of the scope of the study is based on guidance from our client, DG Enterprise, and is

arguing that proportionality is the fundamental issue that the study should have considered.

14

supported by a number of stakeholders. However it should be recorded that BCME strongly objects to this limitation,

131

The European Court of Justice considered the Danish deposit arrangements, and ruled 148 that

in

More recently, the European Court of Justice considered the current German requirement in which

spe al waters, which must be bottled at source under EU rules. The ECJ ruled on 4 that the German requirements do give rise to barriers to trade.

system is liable to increase the proportion of empty packaging returned and results in more precise ackaging waste, thus helping to improve its recovery.” 150 However it said that the asures were disproportionate because the six-month transitional period was too short to

of refillables but also on a decision of the German Government to announce rveys.

•

ative to

must be “equally appropriate for the purpose of attaining the objectives of the

ve”. If the new system is a deposit-and-return system for non-reusable packaging, “the er State must ensure that there are a sufficient number of return points so that

Consideration of the acceptability of mandatory deposit systems might take account of the following: •

deposit systems were acceptable. However, this case related only to refill systems, so its conclusions may not necessarily be applied to deposit systems for non-refillables. The Court saw the deposit as “an essential element” of a reuse system. However, the Court also ruled that certaelements of the Danish arrangements – namely a requirement to use containers of a type approved by the Danish authorities – were a barrier to trade.

•

the deposit is linked to non-achievement of a refill quota. It considered this arrangement cifically as it relates to miner

14 December 200Although the requirements for beverage containers in the Packaging Ordinance “apply to all producers and distributors operating in national territory, they do not affect the marketing of natural mineral waters produced in Germany and that of drinks from other Member States in the same manner.” 149

The Court acknowledged that deposit systems have environmental benefits: “a deposit and return

sorting of perman meG

enable producers and distributors to adapt to the requirements of the new system before the deposit system enters into effect. The ECJ argued that the arrangement created uncertainty for the economic operators affected, because the date of entry into force of the deposit depends not only on new market surveys to assess the proportion

e results of those suth

In another case that considered the German deposit requirements,151 the ECJ confirmed in its ruling of 14 December 2004 that a deposit system for non-refillables is an acceptable collection method as specified in Article 7 of the Packaging Directive, and that Member States were free to opt for this method of collection. The Court considered the deposit provisions as an alternan existing packaging recovery system, and established some criteria152 to ensure a smooth transition from one system to the other:

The new system -DirectiMembconsumers who have been charged a deposit … can recover the deposit even if they do not goback to the initial place of purchase.”

Case 303/86.

Case 463/01, para 58.

148 149

0 Case 463/01, para 76.

ase 309/02 – Radlberger & Spitz v. Land Baden-Württemberg. 152

15

151 C

Paras 46, 47 and 48 of the ruling in Case 309/02.

132

ising operators affected to participate in the new system as soon as it

enters into force. Member States are responsible for ensuring that “the producers and

• r

re on-refillables. Nonetheless, certain

aspects of the Danish arrangements provide guidance on what deposit arrangements may be

Somprorec • The British Soft Drinks Association (BSDA) argued that a deposit affects only a small percentage

eas kerbside collection captures a far higher tonnage of waste across ll material categories, including non-packaging materials. BSDA suggests that the level and ease

•

•

unsound to impose a deposit system on non-refillable beverage ontainers if a multi-material recycling system operates that collects and recycles or recovers all

se conclusions are supported by the findings from a study carried out for ce Service (BIOIS) in 2004.154

- The changeover to the new system must take place without a break and without jeopardthe ability of the economic

distributors concerned have access to a packaging waste management system at all times and without discrimination.”

In 2002 Denmark notified the Commission of its proposed regulations setting out detailed rules fohow the deposit system would operate. Following comments received, amendments were made to the measure that satisfied the Commission and the Member States. The Danish arrangements aunique in that the same system handles both refillables and n

acceptable.

e stakeholders have argued that since deposit systems ensure the recycling of only a small portion of all packaging, other arrangements are necessary to meet the Directive’s recovery and ycling targets for other packaging:

of household waste,153 wheraof recycling could be improved through methods that optimise recycling in the community wherethis is possible and cost-effective. It gives the example of a trial being undertaken by a UK supermarket of a fully automated recovery system. The equipment collects and sorts rigid containers (not just of beverages), which it compacts for more efficient transport.

European Plastics Converters (EuPC) pointed out that, even counting milk and wine, deposit-bearing containers represent only about 5% of the beverage containers sold in the EU.

APEAL (the Association of European Producers of Steel for Packaging) argued that it was conomically and environmentallye

cpackaging segments. TheAPEAL by BIO Intelligen

It is clear that deposit systems for non-refillable beverage containers are not necessary to meet the recovery and targets in the Directive. Member States without deposit systems have met the Directive’s 2001 targets, and in some countries were already meeting the material specific targets set

153 The UK soft drinks sector represents only 3% of UK packaging waste by weight.

ed with

he n-refillable beverage containers) – both

• the environmental impacts of the combined system are higher than for a multi-material selective collection

ve

154 The BIOIS study assessed the environmental and cost efficiency of waste collection systems, comparing the efficiency of multi-material selective collection systems with the efficiency of such systems when combindeposit systems for non-refillable beverage containers. It concluded that: • in terms of the collection rate achieved, multi-material selective collection systems are equally efficient as t

combined system (multi-material collection plus deposit system for nousually collect around 70% of the available material;

• there are higher costs for the combined system than for the multi-material selective collection system. Multi-

material collection typically costs between € 320 and € 770 per tonne, and combined systems between € 790 and € 1200 per tonne;

system. For each of the environmental parameters, the environmental impact of the multi-material selecticollection systems was lower than of the combined system.

133 for 2008.155 Figures 11-13 compare the overall 2001 recycling rates for glass, metals and plastics for the deposit states Denmark, Finland and Sweden with those of the five other countries whose recycling

Figure 12: Comparison of 2001 metal recycling rates in Denmark, Finland and Sweden with

rates were we believe unaffected by the Directive: 156

Figure 11: Comparison of 2001 glass recycling rates in Denmark, Finland and Sweden with those in 5 non-deposit states

those in 5 non-deposit states

nted that the collection rate for PET in Germany was 79% before the mandatory

eposit took effect. This compares with a return rate in Sweden of 78% through a deposit system.

n obligation to recycle at least 15% of the etal packaging that was on the market (food cans, industrial drums etc). Mandatory deposits did not come into

es in this comparison, four had Green Dot systems and in e Netherlands the municipalities were responsible for collection.

155 One stakeholder commed 156 In 2001, the Danish can ban was still in force, but Denmark had amforce in Germany until 2003. Of the 5 non-deposit statth

0%10%20%30%40%50%60%70%80%90%

Denmark

Finlan

d

Sweden

Austria

Belgium

France

German

y

Netherl

ands

0%10%20%

Denmark

Finlan

d

Sweden

Austria ium nc

eman

30%40%50%60%70%80%90%

Belg FraGer

y

Netherl

ands

134

We ng andon A further

s for p inst e

partits aa re

ed r 9 % of packaging, namely multi-material

alone, or, even better, of beverage containers between deposit states and Member States relying on packaging recovery systems. Unfortunately, though, we were not able to obtain data which would

risco aging.

Figure 13: Comparison of 2001 plastics recycling rates in Denmark, Finland and Sweden with those in 5 non-deposit states

decided to make a comparison based on overall recycling rates achieved because the Packagi Packaging Waste Directive repealed the Directive on containers of liquids for human sumption,c 157 reflecting that the scope of policy has broadened out to all packaging.

expansion and/or restructuring of EU policy is now under consideration which may result in targetall roducts of specific materials. Thus, specific arrangements just for beverage containers go aga

trend in EU policy in this area. th GRA has challenged our line of argument, saying that the fact that deposit systems handle only a small

of packaging is no reason not to have a deposit system. GRA used a medical analogy to illustrate rgument – if you have a medicine that can cure 10% of the patients, but not the other 90%, is there ason not to use the medicine for the 10%? However, this is not an exact analogy, because a icine does exist for a significant proportion of the othe 0m

selective collection. Several other stakeholders have also challenged the basis of our comparison, arguing that a clearer picture would emerge from a comparison based on recycling rates for household packaging waste

have enabled us to pursue this suggestion. 4.5.6 Mandatory deposits for non-refillables – a possible way forward We have argued above that mandatory deposit systems for non-refillable beverage containers can give

e to barriers to trade and that they have certain disadvantages from the internal market perspective mpared with recovery systems that handle all pack

The two recent ECJ rulings in the cases involving the German deposit requirements (see section 3.2.8)

ve confirmed that deposit system are in principle acceptable, but that they can give rise to barriers tode.

ha ra

t

Council Directive 85/339/EEC of 27 June 1985 on contain157 ers of liquids for human consumption, OJ No.

177, 6.7.85. L

0%

arknla

nd

10%

enm

Fi Sweden

Austria

Belgium

France

many

nds

20%

30%

40%

50%

60%

D Ger

Netherl

a

135

en where no packaging recovery system exists r where both types of system are being established concurrently.

view, a constru blish some criteria for mandatory deposit systems for

on-refillauthorities to assess the acceptability of individual deposit systems in any Member State that opts to perate them. The same ground rules for operating such systems should apply both to existing ystems and any new ones that may be established.

Below we set out some possible criteria and ground rules for deposit systems. These criteria are drawn from elements of the two ECJ rulings on the German deposit, particularly its criteria in case C-309/02 We have also drawn on certain aspects of the Danish requirements, particularly those that were a ended during the notification process, We have also drawn lessons from our own assessment of existing deposit systems. First of all, we suggest that a Member State wishing to impose a mandatory deposit should set out clear and detailed requirements in legislation for the establishment and operation of deposit systems. The proposed legislation should be notified to the Commission as a technical regulation, providing the Comm sion and other Member States with an opportunity to comment on the proposals and identify any problems. The issues that we consider should be covered in the legislation are set out below: • Clear requirements for the operation of the deposit system

This is necessary he system can be judged, to ensure that it is “appropriate for the purpose of attaining the objectives of the Directive.”158 For instance, the

Clear approval requirements and procedures When each system applies for approval, it should indicate for example its ownership structure, methods for achieving the objectives set (collection and recycling/recovery arrangements), proposed fee structure159 and payments to retailers and other service providers. 160

Arrangements for competing deposit systems, where relevant If more than one deposit system operates in competition in the same market, clear operating criteria are needed to ensure fairness between the systems, such as arrangements for clearing deposits and fees with competing systems to ensure that consumers can return any containers at any store. The ECJ specified that there should be a sufficient number of return points so that “consumers who have been charged a deposit … can recover the deposit even if they do not go back to the initial place of purchase.”

In these rulings, the Court argued that barriers to trade could be avoided by a smooth transition from a packaging recovery system to a deposit system. We interpret that to mean that, equally, the establishment of a deposit system should be smooth evo

In our n

ctive way forward is to estable beverage containers. These could be used as a guide for Member States and the EU

aos

. m

is

so that the acceptability of t

legislation should set a return target. •

•

158 ECJ Case C-309/02.

0 EUROPEN has suggested that, if a deposit system is replacing an existing packaging recovery system,

hieved, quantified where possible.

159 The Danish system had to amend its fees following notification. 16

Member States should also submit a detailed analysis showing: • the additional cost to industry, consumers and government above existing costs for packaging collection, • the additional cost or loss of income for existing recovery schemes, and • the additional environmental and social benefit expected to be ac

136 • Realistic

he req

functionin

Clear legal obligations for economic operators These include, for example, fillers and importers of deposit-bearing products, and retailers. Also, Member States are responsible for ensuring that “the producers and distributors concerned have access to a packaging waste management system at all times and without discrimination.” To this end, the role of each different category of economic operators in the deposit system should be clear.

All retailers should be required to accept and refund the deposit on deposit-bearing containers of any pack type and brand. However it may be appropriate to limit the take-back obligation for “small retailers”, which should be defined (turnover threshold, sales area threshold etc). The take-back obligation on small retailers may be limited to containers of the type that they sell.161 We do not think that the obligation should be limited further, so as to permit any retailer of any size selling a unique type of container to refuse other containers. The German provisions along these lines have resulted in market fragmentation, have been challenged by the Commission, and are being repealed.

is

es and products to be subject to the deposit

hat new deposit systems for non-refillables are most likely in Member States es

a significant drop in the return rates for refillables – the

transitional period

T uirements should allow a realistic transitional period to meet the ECJ’s criterion that a g system be in operation when the legal obligations take effect.

•

We take the view that fillers and importers should also be subject to a take-back obligation.162 It usually the fillers who initially charge the deposit and therefore they should have an obligation to refund it. They should have a legal obligation to ensure their participation in the deposit system, even though they may not physically handle returned containers in practice.

• Clear indication of the pack typ

with an assessment of the competition implications for the products and pack types outside the deposit that compete with deposit-bearing products and packs.

• The proposed rates of the deposit for each pack type/size

We have argued twhere refill/deposit systems still operate. We therefore believe that the deposit for non-refillablshould be set at a similar rate as those for the equivalent refillables of similar size.163

Germany set the deposits on non-refillables far higher than those for refillables, in order to encourage consumers to buy refillables instead, but this proved to be counter-productive. Therehave been reports that this has triggered

s, but they

umers and no discrimination for importers ould be better safeguarded if large retailers were required to accept all container types, as in the Nordic

argued that fillers should not have a take-back obligation, but we feel that it would not be in their cial interest to be excluded from the deposit system in this way.

163 The deposit rate for refillables is usually set at roughly the purchase price of the empty container, so the a

f thumb.

161 So if they sell drinks in cans and PET but none in glass, they should not be required to accept glasshould accept cans and PET of all brands and beverage categories. German proposals to amend the deposit requirements restrict the take-back along these lines for retailers of any size. We suggest that the ECJ’s criteria of easy take-back for conswsystems. 162 CSEMommerc

unredeemed deposit on an unreturned container funds the purchase of a replacement container. We find this sensible rule o

137

same for

able

deposit creates an incentive for system operators not to aim for a high return rate.

interest of a deposit system to operate inefficiently to ensure higher revenue from this source. In fficiency.

and

ncentive to operate efficiently, and there should be a penalty for failure (such as loss of operating permit, or higher packaging taxes as in Norway).

generated by factors beyond the control of the eposit system, such as extensive informal exports due to high alcohol taxes in a neighbouring

t local roducers. This could be the case where the return rate for non-refillables (i.e. including some

eposit-refill system (which would mainly benefit local producers).

Rules for marking deposit-bearing containers

Deposit-bearing containers need to be marked differently for each national deposit system because of their automated handling. We suggest the arrangement offered in the Danish system and the

s, whereby fillers and importers are permitted to use an adhesive label, if they ting the special code/logo directly on the container. Each deposit system

ith features designed to prevent fraud. These labels should be supplied to for fillers and importers by the operator of the system at a price

difference in the deposit rate has indeed encouraged consumers who usually buy non-refillables to buy refillables instead, but they have not been returning them. The deposit should be the all deposit systems competing in each national market, to avoid confusing consumers and others who handle containers.

The deposit needs to be high enough to motivate consumers to return containers to ensure a good return rate. However, there are dangers in setting it too high: - the risk of fraud – both the likely incidence of fraud and the financial risk to the system

operator of fraudulent redemption;

- higher cost to consumers while containers are stored at home and when consumers are unto get their deposit refunded (damaged containers, etc);

- high revenues from unredeemed deposits if the return rate is not high. If there are no statutory

return targets, a high

• How unredeemed deposits should be allocated 164

The lower the return rate achieved by a deposit system, the higher the revenue from unredeemed deposits. Therefore, unless the deposit system has to meet a return target, it would be in the

any case, a high deposit rate creates a stronger incentive to ine We would argue that revenue from unredeemed deposits can help to defray the investmentoperating costs of a deposit system. However, some safeguards are needed – deposit systems should have to meet return rates as an i

Allowances may be made if low return rates are dcountry (as in Sweden). Care needs to be taken that the money is not used in a way that could unfairly benefipimports) is lower than for refillables, but the revenue was directed towards reducing fees in the d

The proposed new German system’s combination of a high deposit rate and no performance targets for deposit systems will create a strong disincentive to efficiency. This could be exacerbated if several deposit systems operate in competition, because they could use the unredeemed deposit revenue to reduce their participation fees.

•

German open systemwish, instead of prinshould develop a suitable set of machine-readable labels w

that reflects the cost of designing, printing and distributing them. Charging a premium on them

164 This issue was discussed at the request of Bureau B&G, Netherlands.

138

d small operators, who are more likely than large local producers to ant to use them.

We stem operators seek pproval from the relevant national authorities:

• eposit systems for non-refillables should be separate legal entities from those for refillables

e

hat their interests are taken account of in decisions. Their fees and charges should reflect the actual costs of collecting and handling the different container types.

•

,

s as a useful model for admin fees. There is no joining fee, just a reasonable

y if new bar codes are registered. •

ng costs for that pack may well be higher. However, the higher unit fee should reflect only the additional handling

porters pay a fee, hich is not paid by domestic fillers. The justification given is that domestic fillers bear the

We find this arrangement unjustified because the fillers also receive a handling fee for each

rate the system. All fillers and importers should pay fees at the same rate. Fillers and retailers should then receive a handling fee

• nsure

For example, we question the fact that the Danish deposit system pays no handling fees for non-refillables, whilst all the other Nordic systems make such payments. The means of funding new

re, but then receive unit handling fees at a slightly lower rate than retailers that have not received any funding. However, such

adversely affects importers anw

would also suggest that the following should be considered when deposit sya

D The participants in a deposit system for refillables are usually established local fillers, whilst thosfor non-refillables also include small operators and importers. The decision-making structures of systems for non-refillables should include representatives of importers and small business to ensure t

The system should indicate how it proposes to set the fees paid by fillers and importers Clearly, the fee rates should be reasonable and should not be disproportionate for small producers, and should not discriminate against importers. High, flat-rate joining fees should be avoidedbecause these work out as significantly more expensive per container for small operators and importers than for the large local producers. In our view, the annual fee charged by the Danishdeposit system serveannual fee, paid onl

Unit fees should not discriminate against pack types or products primarily used by importers If only a few packs of a particular type are on the national market, the handli

costs. We find the arrangement for cans in Sweden unacceptable, whereby im165w

costs of operating the system.

container, so it appears that they are being paid twice to ope

separately from the deposit system for the services that they provide. There may not necessarily be a correlation between the number of cans placed on the market by a filler and the number of returned cans handled.

The basis on which fillers and retailers are paid handling fees should be transparent, to ethat domestic operators are not being unfairly subsidised

infrastructure should also be transparent. We welcome the Danish arrangement in which retailers can receive financial support to buy or upgrade infrastructu

arrangements should be kept under review to ensure that the lower handling fee does not disadvantage retailers over the longer term.

165 However, this is soon to be abandoned.

139 •

afeguards may be needed to avoid the situation that has arisen in Denmark where the largest brewer has won a contract from the deposit system to transport empty

ing of empty containers on fillers’ ucks where this is feasible, as this is economically and environmentally efficient.

• Safeguards to ensure that packaging data from fillers and importers is not accessible to other

articipants, because this is sensitive market information

Als titors or other operators that supply ackaging data) should have access only to aggregated data. Commercial confidentiality became

repo

between deposit systems for non-refillable packaging containers

Komope by K Komrefi g Nor pan-Eurmin Sim tion Council has identified the absence of a common deposit system at EU level as a cause of barrier to trade for the import of beer and soft drinks to Denmark. In its stat for a com We ompetition Council that all

U Member States will one day operate deposit systems for drinks containers. Policy-makers in cou se cou years ago ting dep containers together with other

sed packaging for recycling. It would be hard to explain to consumers why plastic drinks bottles from other

metal containers. In c m pro

Other service contracts for transport and handling should be awarded on the basis of competitive tenders Beyond this, additional s

containers from third parties, including from some HORECA sites that it does not supply with drinks. Nonetheless, the rules should not prevent the backloadtr

p

o, board members (some of whom are likely to be compepan issue when the Danish deposit system was notified. To address this problem, data is now

rted to an independent company.

4.5.7 Potential for international co-operation

merskollegium166 in Sweden has published a report 167 discussing the options for closer co-ration between deposit systems in different Member States. We find some of the ideas put forward

ommerskollegium interesting and worth further consideration.

merskollegium looks to the future, toward a harmonised, EU-wide deposit system for non-llable beverage containers. As a first step, they suggest closer co-operation between the existindic systems, but anticipate a time when all EU and EEA Member States participate in a singleopean deposit system for non-refillable beverage containers. The report sees this as a way of imising barriers to trade from deposits, and of solving problems with cross-border purchases.

ilarly, the Danish Competi

ement of December 2003,168 the Council called on the Danish Environment Minister to workmon EU deposit system as one way of resolving the problem.

do not share the expectation of Kommerskollegium or of the Danish CE

ntries such as France and Italy have never shown any inclination to mandate a deposit. In thentries, and in others (such as Ireland Spain and the UK), where refill systems disappeared, it would be difficult to introduce deposits now.169 Consumers have lost the habit of operaosits, and indeed they have now got used to sorting their beverage

ushould now be handled separately from other plastic bottles, and drinks cans separately

ountries where refillables have disappeared, we would also anticipate considerable resistance froducers and retailers to the idea of having to operate a deposit system. The disappearance of Swedish Board of Trade.

Kommerskollegium report, op cit.

166 167 168 Summarised in section 4.6.2.1.

ote to section 4.2.1 169 See the comments of the Irish Environment Minister reported in a footn .

140 refilong ry infrastructure and sometimes lack the store space to do so, and would be nwilling to make the significant up-front capital investment requirement to establish a deposit

retailers and fillers are not supportive.

e problems with cross border shopping and parallel imports. There would still be a problem with compricwithcou

n the other hand, we do see potential benefits in Kommerskollegium’s suggestion of increased co-stems

could also form the basis for international co-operation later – any deposit systems established later cou We •

d pass on the information to the national deposit systems. This should simplify reporting and registering for international fillers, and reduce

•

ce

ach deposit system would continue to operate according to its own rules, and would retain its own

fee data on talth The num be sent to the relevant deposit system, together with the appropriate fees nd

The osits paid out on containers purchased one country and then refunded in another country. Consumers would get their deposit refunded for imp Weat ledep ed the arra tes.

e imagine that initially, co-operation would apply initially only to the containers common to all the existing systems, i.e. cans and non-refillable PET. In due course the system could be expanded to handle all deposit-bearing containers. Further work would be needed to consider the practical details and cost implications of such co-operation before it could be decided whether it is viable. For example, the clearing house may need

llables indicates that fillers and retailers no longer want to handle empty containers. They no er have the necessa

usystem. The problems encountered in the past two years in Germany are a good illustration of how difficult it can be to establish a deposit system if Moreover, we do not think that a single, harmonised EU deposit system would necessarily solve all th

mercial and private parallel imports from non-deposit countries outside the EU, because retail es in many of these countries are lower than in the EU. There would probably also be problems cross-border fraud, again because of the differences in the retail prices in neighbouring third

ntries.

Ooperation between the existing Nordic systems. The arrangements made between the existing sy

ld also participate.

think that the main benefits from closer co-operation could be:

Fillers could register all their deposit-bearing containers with a single organisation, an international clearing house. That clearing house woul

administration costs.

All the systems would be able to recognise each other’s containers. Consumers would therefore be able to get their deposit refunded on containers imported “informally”. Failure to get the deposit refunded has been identified as a problem for deposit systems. Consumers lose confidenin the system, which reduces their motivation to return deposit containers.

Estructures etc. Thus, containers would still need to be marked separately for each system, andhe quantity of containers sold would still need to be prepared individually for each market, ough reported to the international clearing house.

clearing house would pass on the bar code data for all containers to all the systems. Data on theber of containers would

a deposits.

clearing house would also manage imbalances between dep

orted containers at almost the rate they paid, allowing for currency fluctuations.

think that it would probably be simpler if the deposit rates were about the same in all the systems, ast for the existing systems (at current deposit levels, this would involve Sweden increasing its

osit rates, as the others charge more or less the same). However, if other new systems joinngement later, for example from the new Member States, these may have lower deposit ra

W

141

ies in all the ms participate would need to approve the new arrangement. Mo deposit sys The nd pos

rrangements would also have to be made for the clearing house to manage imbalances between fees

com at handles the empty containers incurs costs (handling payments to retailers and other service providers). It may not be appropriate simply to pasbecA f

stablishing and operating the clearing house would involve significant costs. It would be worth oing only if the benefits in terms of simplified reporting and reduced administration costs and

n alter stems such as the one operated in Sweden by

competition clearance in the Member State where it was established. The regulatory authoritcountries whose syste

reover, all the RVMs would need to be re-programmed to recognise the containers of othertems. Norwegian RVMs already recognise Swedish containers, but they do not refund the deposit. reprogramming exercise required for international co-operation would be a far more complex asibly an expensive exercise.

Apaid by fillers in one member state that are then handled and recycled in another. This is more

plicated than imbalances of deposits. The deposit system th

s on the fee charged by the deposit system in the country where the containers were purchased, ause part of the fee is used to cover administration overheads, public information and other costs. ormula would need to be devised for allocating fees in this situation.

Edimproved consumer confidence outweigh these costs. 170

native, less costly arrangement could be return syADansk Returglas. As described in section 4.4.9.2, this company organises the return of Danish glbottles imported by Swedish consumers. The operation is funded by refunding only a proportion of the deposit.

ass

170 EUROPEN opposed the idea of international co-operation between deposit systems on the grounds that it

t such co-operation would be worth pursuing only if the cost savings utweighed the increased cost.

would increased cost. We agree thao

142

5. IMPACTS ON THE INTERNAL MARKET OF DIFFERENT NATIONAL APPROACHES TO IMPLEMENTATION OF THE DIRECTIVE

5.1 LEGAL REQUIREMENTS FOR RECOVERY AND RECYCLING Article 7 of the Directive requires each member state to ensure that systems are set up to provide for the return and reuse of reusable packaging and/or the collection and recovery of packaging waste. Article 7 does not specify what type of systems should be established, nor what form they should take.

owever, itH makes clear that systems should not give rise to barriers to trade and should apply to imported products under non-discriminatory conditions. As discussed in Chapter 6, systems have been established in each Member State to meet this requirement. Most of the systems established are based on the original German idea of producers

aying into a private sectorp fund – referred to throughout this study as a recovery organisation – to The recovery organisation contractors to ensure that

ame in

eco

a stem for non-refillable beverage containers operates

finance the collection and recycling of some or all packaging waste.isburses the money collected from producers to private and public d

packaging waste is collected and recycled. However, although these systems work on the spr ciple, there are major differences between them, either through the decisions made by the

nomic operators concerned or as a result of national legal requirements.

few Member States, a deposit-and-return syInalongside the multi-material system. These arrangements are described in section 4.3.

ee national systems stand apart from the others:

In Denmark, there is a deposit system for refillable and non-refillable beve

Thr

rage containers, but

ated eeting the targets in the Directive is largely

esponsibility in the near future.

the industry

ucer’s behalf. As in most other Member States, companies can is

• otherwise no general recovery system funded by producers. The segregated collection of recyclable packaging (and other items) remains the sole responsibility of local authorities, and producers bear no legal responsibility (except for beverage containers). Denmark places no particular emphasis on recycling household packaging, most household waste being incinerwith energy recovery. Denmark’s effort towards mfocused on transport packaging and special rules for beverage containers. Denmark has recently notified proposed legislation to the Commission that extends the role of local authorities in segregated collection of recyclables, which suggests that there is no intention of introducing producer r

• In the Netherlands, the legislation transposing the Directive does impose producer responsibility

but offers companies the option of complying by signing up to the Packaging Covenant. Almostall companies opt to comply this way. Companies pay to register with SVM-Pact, body that monitors the Covenant, and in principle have paid no other fees. However from 1994 to 1996 and since 2002, packers/fillers pay a fee to an organisation called EcoVerpakkingen which uses the money for various projects related to implementation of the Covenant. For commercial and industrial waste, end-users are responsible for the costs associated with disposal.

• In the UK, companies at each stage of the supply chain share the obligations for recovery and

recycling. The focus is not on disbursing funds to promote the collection of used packaging but on purchasing tradable certificates as evidence that a specific tonnage of packaging has been recovered or recycled on each proddelegate their obligations to a recovery organisation. Thus in the UK, the financing method based not on a fixed contribution to a recovery organisation, but on market prices.

143

e to 90%. Meanwhile beverage container policy was

ment was not formally signed;

o

y Orders oblige the municipalities to set up collection schemes for paper and board and for plastics transport packaging from all types of business. They do not have to collect this material, but they must ensure that it happens. These rules do not affect businesses which already have a waste management contract, provided the local authority is satisfied with the arrangement. Business end-users are responsible for any costs. Municipalities are also required to “assign steel drums from commercial enterprises to recycling.” Steel drums were chosen as the main means of satisfying the Directive’s target for metal. Municipalities must adopt local regulations on the collection of recyclable waste, including packaging waste, from households, with a view to recycling it. In regulations on collection schemes for waste suitable for incineration, the local authorities shall require householders, businesses and institutions to separate waste suitable for incineration. Local councils serving built-up areas with more than 2000 households must set up collection schemes for waste glass packaging. In 1992 the only Danish glassmaker and the Confederation of Danish Industries agreed to organise colour-separated collection of non-refillable glass in addition to the normal municipal collection of glass, with a view to achieving an 80% recycling rate. However this plan was abandoned. It was not cost-effective as too little glass was available through this channel. A study carried out by Carl Bro a/s, Dorthe Nejrup Institute for Product Development and Marianne Wesnæs for the Danish Environment Agency in 2000 concluded that reuse makes sense even if the bottles need to be shipped back to their country of origin. Apart from the special case of the Danish beverage container rules, no fees are payable for other packaging under the Danish system, so home and foreign producers are treated in exactly the same way. Thus, there is no possibility of barriers to trade or distortions of competition from recovery organisation fees.

5.2 IMPACT ON THE SINGLE MARKET OF THE NON-MAINSTREAM LEGAL STRUCTURES

5.2.1 Denmark As early as 1991, 75% of municipal solid waste in Denmark was being incinerated with energy

covery, and later in the decade this rosregoverned by a tax designed to “reduce the consumption of disposable containers and stimulate recycling” 171 and the ban on cans for beer and carbonated soft drinks. The Government wished to maintain this approach. To continue with the development of energy recovery from non-recyclables, the landfilling of combustible waste was banned from January 1997, and implementation of the Directive focused on voluntary agreements on the recovery of paper and board and plastic transport packaging, and on the recycling of metal drums. A voluntary agreement was signed on 16 August 1994. This was based on expanding existing commercial/industrial packaging recycling systems, and there was no take-back element. The agreement was subsequently revised, and the targets are now 80% recycling for paper and board

ansport packaging, and 40% recycling for plastics. The revised agreetrthe updated provisions are contained in an annex prepared by the working group which monitors the agreement. Future reports will include surveys on existing reuse systems for transport packaging (amounts, trips and life span). The next report, which is due at the end of 2004 or early 2005, will alscover wood and metal transport packaging. Statutor

171 To promote refill, the tax was and is charged only on the first trip that a refillable container makes.

144 5.2.2 Netherland In the Netherlands, th ntries. All companies have to pa lders pay also

EcoVerpakkingen in respect of consumer packaging for projects such as a litter prevention exercise.

s

e financing structure is different from that in the neighbouring couy a fee to SVM-PACT for general Covenant costs, while brandho

to Most of the costs for collection and recycling of household packaging are paid for by consumers

rough their local taxes instead of through recovery organisation fees paid by industry. Since thproducers would be expected to incorporate these costs in their sales prices, products put on the market in the Netherlands can in theory be cheaper than products put on the market in neighbouring countries. Since this is the case both for Dutch companies and for foreign companies, it has no impact on the Internal Market. As discussed in Chapter 6, there are many factors that determine retail prices.

ifferent national requirements and systems can be a barriDb

er to trade for multinational companies

ot a

the nt

. So ers than the Covenant

l . How this

moment.

ecause for some countries they have to put another mark on the label and for others not. Dutch producers need to mark with the Green Dot for their exports to neighbouring countries, but this is nproblem because this symbol has no meaning in the Netherlands and can be used without any repercussions. The possibility of introducing a “Green Dot” style system in the Netherlands as an alternative to present system may be discussed in the context of renewal of the Covenant. The present Covenawill expire at the end of 2005, and at that time alternative arrangements will be evaluated againar, the fact that a Green Dot system is seen as more expensive for the producf

arrangements has always led to a new Covenant. Because of the problems of some parts of the recycling industry, and the Government’s wish to increase the level of producer responsibility, the calor a system which offers greater financial support for recycling will be louder this timef

financial support will be organised is not clear at the The Dutch glass industry has experienced serious problems (see section 7.3.6.1). It has to compete with the German glass industry, which can offer better prices for glass bottles because the DSD syst

sidises the collection of used glass.

.3 UK

3.1 The UK system

he UK, companies at each stage of the supply chain share the obligations for recovery and cling. Every company above de minimis thresholds, whether a raw

em sub 5.2 5.2. In t

material producer, converter, ck

•

•

•

recypa er/filler or seller (or a combination of these), bears an obligation for recovering or recycling a specific tonnage of packaging, calculated using a specified formula:

raw material producers are responsible for a 6% share of the overall recovery and recycling obligation,

converters for 9%, • packer/fillers for 37%, and

sellers to the final end-user (whether a private household, a business or the public sector) 48%.

145 Targets have been set as follows:

Table 41: UK TARGETS 2004-2008 2004 2005 2006 2007 2008 Paper & board 65% 66% 68% 69% 70% Glass 49% 55% 61% 66% 71% Aluminium 26% 28% 30.5% 33% 35.5% Steel 52.5% 55% 58% 60% 61.5% Plastics 21.5% 22% 22.5% 23% 23.5% Wood 18% 19% 20% 20.5% 21% O 69% 70% verall recovery 63% 65% 67% Minimum amount of recovery to be achieved through recycling 94% 94% 94% 95% 95%

Thus, by January 2005 a packaged goods producer should have obtained evidence showing that material equivalent to 7.955% of the tonnage of plastics packaging he supplied (i.e. 37% of the 21.5%

covery target for 2004) has been recovered on his behalf, and 7.4777% has been recycled.

ear the ll

obligation.

K.

r obligations to a recovery organisation. UK recovery organisations compliance schemes”) operate by acquiring evidence of recovery on the open market rather than

re In practice most companies fall into several categories. A packaged goods manufacturer will bpacker/filler obligations for the sales packaging of goods packed and supplied to a retailer, but wialso bear the retailer obligations for the transport packaging of those goods. The converter also carries a 37% obligation as the packer/filler of the transport packaging he uses –and a 48% obligation as the supplier of this transport packaging to the end-user. This is defined in the Regulations as an 85% “secondary provider” Importers pick up a legal obligation for any activities that have previously taken place outside the UThus a packer/filler of imported converted packaging takes on the material producer's and converter's obligations as well as his own obligations as a packer/filler and as a supplier if not selling to an obligated retailer. An importer takes on 100% of the obligation for the transport packaging around imported raw materials, converted packaging or packaged goods.172

Companies can delegate thei(“disbursing money to contractors to develop collection and recycling. Evidence must be in the form of Packaging Recovery Notes (PRNs) or Packaging Export Recovery Notes (PERNs). PRNs are purchased from reprocessors accredited by the authorities and PERNs from exporters (waste contractors, waster paper merchants etc),173 the idea being that reprocessors use the income to boost collection and develop capacity.

172 As we argue in section 6.4.8 in relation to Italy, there may be a problem of over-reporting when upstream operators have the task of reporting on packaging because they do not know how much of their production will subsequently be exported by downstream operators.

e a problem particularly in Italy, where packaging producers report to the recovery organisation. It is also true of the UK, though the effect is diluted by the shared obligations. 173 It was though impracticable to accredit overseas reprocessors. An unintended consequence is that since collectors rather than reprocessors get the revenue from PERNs, there is an incentive to export rather than pass

We also argue that there may be competitive distortions when the reporting requirements for imports are different from those for domestically product packaging. We identified this to b

the material on to UK reprocessors to develop capacity in the UK.

146

e Internal Market

ste r

e

5.2.3.2 Practical issues for th PRNs and PERNs are issued only in respect of UK-generated packaging waste. This makes UK waattractive to reprocessors who can sell PRNs and to merchants who export it, so UK waste has a highevalue than waste of equivalent quality from other countries. Thus, foreign waste will find an outlet in

e UK only if there is surplus capacity. As the value of PRNs rises to reflect the pressure on UK threprocessing infrastructure from increased collection, foreign sources of packaging waste could blocked out of the UK market. The Irish Green Dot organisation Repak has complained that this is distorting the market. Its complaints have not been heeded, possibly because PRN and PERN prices have fallen from their 2002 levels and are currently very low for some materials. Figures G-1 to G-6 in Annex G plot the progress

f PRN/PERN prices. o In Ireland, Repak provides financial support to collectors of packaging waste at set rates for each material, if the collectors can prove that the materials have indeed been sent for recycling. The financial support covers the cost of collecting and transporting the material and passing it to a recycler, either within Ireland or abroad. The collectors receiving funding from Repak are responsible for

entifying a suitable recyid cler for the material, and they keep the revenue if the material has a positive

rs m

pt tonnes of OCC (Old Corrugated

n

suggests that the subsidies paid by recovery rganisations in other Member States also distort the market by enabling materials to be sold at a

n would otherwise be possible. As we discuss in Chapter 7

market value. The collectors must keep records of all transactions, because Repak audits the claims for subsidy. According to evidence submitted by Repak to a House of Lords enquiry in summer 2002,174 operatoin the UK were willing to purchase Irish material at “a price which would in the absence of some forof PRN subsidy make the transaction unviable”. In other words, the high price offered by UK operators was viable only if they were (fraudulently) counting Irish waste with their UK waste and issuing PRNs for it. Otherwise, suggested Repak, UK recyclers were not at that time willing to acce

ish material. Repak also estimated that in 2002 at least 20,000IrCardboard ) which became waste in the Republic of Ireland “received subsidy in the form of PRNs ithe UK.”

he largest UK recovery organisation, Valpak, Tolower price tha , the price of secondary raw

arily determined by what recyclers are prepared to pay for it. This is determined by ilability of material and the processor’s demand for it, the cost of processing of the output from the processor’s plant.

ming a subsidy. The Green

y of at

itua Valpak suggests, then recovery organisations in different Member States would have , and the payments they make would have increased steadily over the years,

th he fees paid by brandholders. In fact, the trend has been that once recovery ets, they have gradually reduced their fees while maintaining their

y

e ot tyle recovery organisation, it is usually up to individual collectors to find reprocessors on the open

material is primmarket factors such as ava

e material and the value th The subsidies provided by the Green Dot type of recovery organisation are designed to fill the gap between the value of the material when acquired by a processor (recycler or energy recovery plant) and the cost of collecting, sorting and transporting it to the processor. We accept that processors may

ffer a lower price for material when they know that the collector is claioDot subsidies do distort the market, in particular where there is an imbalance between the quantitm erial collected and the reprocessing capacity available to meet the targets. However, if the

tion was as shad to outbid each other

i a knock-on effect on tworganisations have met their targec cling rates at the same level.r

feel that Valpak has not taken full account of the fact that even in Member States with a Green DW

s

174 House of Lords Select Committee on the European Union: Enquiry into Costs to Industry Associated with Directive 94/62/EC.

147

neighbouring countries). Moreover, only household packaging aste benefits from subsidies in most Member States, particularly in the large countries which have

the most to ery organisation does handle transport packaging, it often does not handle all of it, as the larges make their own independent arrangements with collectors an cha pass corr d board and plastics film cyclers. The continued operation of a free ma ilute istor ffects of these subsid In contrast, are sold with a positive va r all our ateri n those with a positive mar packaging waste from er M er States. This has the potential to force out a w at th ome hich m d value of UK mate ation ecyclin rgets e year by ear as shown in Table

market (including reprocessors in w

nnage. Even in countries where the recovt end-users (the supermarket chains) continue to

d mer nts to their ugate to re rket d s the d ting eies.

PRNs lue fo UK-s ced m als (eveket value), but not for oth embimported material. PRN pricesrial. However, as the UK’s n

re loal r

e mg ta

nt, w ris

inimises the adde y

41,175 PRN prices may increase again. This could be particularly problematic for Ireland, because a ort

he will have to pay the

rench market rate for it. The absence of reprocessing capacity in Ireland means that there is no going

accident of geography. Ireland cannot imply avoid UK reprocessors (which are mainly based in Great Britain) and use reprocessors

velop

e do not believe that Ireland would be facing problems if the UK had opted for the type of funding

ting effects of subsidies paid by individual national recovery ystems (the “Green Dot” model) cancel each other out to some extent, problems emerge in countries here there is a different funding arrangement.

This is the case in the Netherlands, where the principle of each producer internalising the cost of meeting the targets has been undermined by German subsidies on glass. Another is the UK system,

proportion of Irish material has always found a market in the UK. As the cost of direct sea transpfrom Ireland to continental ports is far higher than from Ireland to the UK, most material will continue to be transported for recycling via the UK. This distorting effect is magnified by the fact that Ireland has hardly any reprocessing capacity. Thus, there is no real national market for secondary raw materials. If UK reprocessors cannot acquire all tmaterial they need from UK sources and acquire some from, say France, they Fmarket rate in Ireland. The impact of the UK system on Ireland is the result of anselsewhere to meet its targets for two main reasons. First, the cost of sea transport to Great Britain is significantly lower than to other countries, because of the backloading possibilities. Second, Ireland istoo geographically isolated and the Irish market is too small to make it economically viable to delocal recycling capacity. Warrangement used in most other Member States, one in which the recovery organisation directly contributes to local authorities’ collection cost, and recyclers usually buy material at a market price. 5.2.4 Conclusions We conclude that, whilst any distorsw

where problems arise in respect of material from Ireland. As section 7.3 shows, market distortions occur primarily where there is a shortage of recycling capacity (as in the case of glass). These problems have arisen because a small number of Member States have opted for a different

the r these permits and for secondary raw materials

tes

funding model from that adopted by the majority. If, hypothetically, all Member States adopted K system of tradable permits, perhaps the market foU

in the UK and in other Member States would balance each other. However, no other Member Stahas adopted this approach and, if they did, each would no doubt adapt the model slightly, with

nforeseeable consequences. u 175 The UK targets for 2002 were left unchanged in 2003, as the post-2001 targets to be set by the Directive were not then known. With no expansion of recycling required, the market responded with a collapse of PRN

rices. p

148

sary or desirable for the Directive to specify what type f recovery organisation or funding regime each Member State should establish. However, the

On grounds of subsidiarity, it may not be necesoexistence of specific problems in Member States that have adopted a different approach from the mainstream suggests that there seem to be practical advantages in all Member States adopting a similar approach.

149

es ded that these are “in accordance with the principles governing Community

e

5.3 TAXES ON PACKAGING 5.3.1 Introduction While the Directive does not say anything specific about taxation, it does establish some basic principles for the use of economic instruments by Member States. Article 15 says that Member Statmay adopt measures provienvironmental policy, inter alia, the polluter-pays principle, and the obligations arising out of thTreaty.” Article 15 also indicated that the Council would establish more precise ground-rules. There was some discussion of such a measure, but none has been adopted. Use of taxes by Member States is governed by Article 90 of the Treaty. This says that “no Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products”. Furthermore, Member States cannot impose taxes on the products of other Member States that afford indirect protection to other products”. “

In practice, Member States guard their sovereignty over national taxation policy closely. As the following review of selected national taxes on packaging shows, the Commission’s powers to challenge national taxes are limited unless there is a clear breach of Article 90. The Commission has challenged packaging taxes on very few occasions. 5.3.2 The objectives of packaging taxes A number of Member States have imposed taxes on a range of different types of packaging, as the overview in Table 42 below shows. The stated objective of the taxes varies: to promote reuse, part• icularly focused on beverage containers;

on the assessed or perceived environmental impact of certain pack types or product/pack

sessments usually take a range of factors into port and waste management;

• to discourage the use of certain items, because of their perceived environmental impact; to reflect the environmental impact of the packaging and other taxed items. Such taxes are based•

combinations, such as LCA evidence. These asaccount, including trans

• to create an incentive to recycle the items, such as by offering exemptions or discounted tax rates

if the targets are met; • to use recycled material, by offering differentiated tax rates or discounts if producers can

demonstrate that minimum thresholds for recycled content have been met; or • to raise revenue, either for environmental purposes, or for the national budget. 5.3.3 Review of selected national taxes on packaging Table 42 summarises all the taxes on packaging imposed by the Member States. It is followed by a discussion of selected taxes.

150

Table 42a: OVERVIEW OF TAXES ON PACKAGING CHARGED BY EU-25 MEMBER STATES Country Date in force Scope of tax Current rates charged Objective/conditions Comments

1993, confirmed 2003.

Packaging of solvents, glues, inks for “professional use” (above min. unit volumes)

€ 0.62 per volume unit: - 5 l for solvents - 10 l for glues - 2.5 l for inks, max € 12.39 per container

Exemption for packs in return system: - solvents: deposit only - glues: deposit or return premium & 70% return rate; - inks: deposit or pack credit & 80% return rate.

Tax not for exemmet.

paid, as conditions ption have been

Belgium

1993, Revised requirements since 4/2004.

Non-refillable drinks containers (beers, wines, waters, soft drinks and juices).

€ 9.8537 per hl of beverage. To promote refillables. Exemption for containers with min. recycled content proposed but challenged by EU.

Earlier tax hlinked to achrecycling tar

ad exemptions ievement of gets.

1994, rates increased 1998

Carrier bags with handles > 5l capacity

Paper: DKK 10 (€1.34) / kg Plastic: DKK 22 (€2.95) / kg

To promote reusable bags. Danish auth decrease in taxed bags.

orities report 1/3consumption of

1999, rates & structure revised 2001

Consumer packs of selected products (e.g. toiletries, cleaning products, certain chemicals, certain dairy products, margarine, petfood, certain sauces, still soft drinks and lemonades.)

Per kg: Paper (virgin) Paper (recycled) Textiles EPS/PVC Other plastics (virgin) Other plastics (recycled)Alu Steel Glass/ceramics Wood

DKK 0.95 0.55 0.95

20.35 12.95 7.75

33.30 9.25 1.85 0.55

€ 0.13 0.07 0.13 2.73 1.74 1.04 4.46 1.24 0.25 0.07

Rates set following LCA. Reduced rate for recycled if min. 50% recycled content.

Other rates packaging fogoods and wagent. Revision undconsideratio

apply to r hazardous ith bulking

er n.

1999, rate revised 2001

PVC film approved for food use. For imports, tax applies to empty film and products subject to weight base taxes (above)

DKK 20.35 (€ 2.73) per kg. To discourage use of soft PVC

Tax per unit depending on size (<10 cl - >160cl) Still soft drinks: material-specific by kg

Denmark

1978, Last revised Feb 2004

Beverage containers, with lower rates for those subject to deposit.

Cartons: Other materials: Deposit drinks:

DKK 0.15-2.00 0.25-3.20 0.05-0.64

€cent 2.0-26.8 3.4-42.9 0.7-8.6

Tax on refillables charged on first trip.

151

Table 42b: I A N D E E ATEOVERV EW OF TAXES ON P CKAGI G CHARGE BY U-25 MEMB R ST S Country Date in force Scope of tax Current rates charged O sbjective/condition Comments

Estonia

9

8

0

in er. e to, fla e to

pe e: ce s

P s c s

pe t: ce s

P s

E.0.0.0.0

.5

.0

.7

€c1212126

364

p aco dors sm er

r r c u.

n sal .

March 1 Dec 199 July 200

97

ContaspiritsScopejuicesScope

ers of be

xtended waters & xtended

, wines &

soft drinks, voured milk. all drinks.

Rate Glass/lastic

MetalsOther (Rate Glass/lastic

Metals

r litrramic

artonr uniramic

etc)

E2221 010

K 0 0 0 0

0 0 5

ent .6 .6 .6 .3

.1 .3 .7

Both taxon each Exemptireused, Rates bais to pro

er litre and per unitontainer. n if 60% collected an recovered. ed on “eco-friendlineote reuse and recov

re paid

s”. Aim y.

Tax currentlypackaging reReview now consideration50% of reveEnvironment

main dovery.nder ue goe Fund

iver fo

to

Finland

19 refillab ntarbon so

6 o itr d1 o itr t et.

n osn .

intained mllables. d to exte ks and of conditio

94 Non-and c

le coated

ainers of beer ft drinks.

7 eur6 eur

cent/lcent/l

e, reducee if condi

to ions m

Reductiosystem aachieved

if containers in depd if 95% return rate

it Tax has mashare of refiNow proposeto other drinexemption if

arket

nd taxfer full

ns met.

Hungary

19Ra c . Co n xemp

ck typ d ucts. lso ch o

te gen g batte etc

: P s C osA niuSP w ex

H2311

5.0 35.0

€cent11145

5.2 2.0

14.0

ons: ers us lefor Ök bechievrall rrall ryclingehold

w goes to e budget. higher t85% 15% tax plus Ö-an full tax. ax now under

96, tes innditio

amended 2003

reaseds for e

each yeartion

All paprodTax a“wastyres,

es an

argederatinries,

of all

n other ” items: .

Per kglasticomplumiteel aper/

Glass Other

ites m

ood/t tile

UF 9.0 5.0 3.0 0.0

13.0

.6 .0 .2

4.0

Exempti1) for fill2) 80% targets a45% ove25% ove12% rec8% hous

ing 60% refillabo-Pannon memed: ecovery ecycling each material collection.

s. rs if

Revenue nogeneral StatÖ-P acceptedand granted exemption. P fee less thRevision of tdiscussion.

argets

Ireland

20 c carri gs, exfor ce fresh able b old fo

e arged at point of s

to re goes alent o m

ption decreased

nsion of tax to , fast food ewing gum.

02 PlastiBags Reusmore.

er bartain ags s

cept: foods; r € 0.70 or

15 euroale.

cent p r bag, ch Purpose:Revenueand is sp

duce litter. to Environmentn waste manage

Fund ent.

Bag consumby 90%. Possible exteATM receiptspacks and ch

Per kgGlass ET

Other plaMetalsCompositeaper

Wood Other

:

Pstics

s

P /board

LVL .040 .105 .090 .060 .060 .012 .012 .012

€cent 6

16 13 9 9 2 2 2

00000000

Latvia

Jaune 1996

Ap 00.

ckagi

able dishes bleware taxed at2% of invoice valu

ironm ent, sse of es,

mpact ntally prodg).

of Zalais d targ

60% of tax. n 1996, Amended J

ril 20 and

All pa ng

Dispos and tae

Aim: envas limit ureduce iharmful”packagin

ReductioLatvijasrecycling

ental improvem natural resourc of “environmeucts (including

n of 80% for members Punkts provide

ets met.

uch LZP fees are

152

Table 42c: OVERVIEW OF TAXES ON PACKAGING CHARGED BY EU-25 MEMBER STATES Country Date in force Scope of tax Current rates charged Objective/conditions Comments

Lithuania Per kg:

Plastics Composites

TL 0.05 0.70 0.70

1.80 2.00

€cent 1.4 2.0 2.0 2.6

2.6

51.5 57.2 74.4 2.9 5.7

overy

waste

2002 Primary packaging. Per litre: LGlass Plastics Composites Metals 0.90

Glass 0.09

Metals per/bo

2.60 Pa ard Other

0.10 0.20

Paid only by companies that do not meet the recycling and rectargets. Revenues used formanagement.

Malta

opted ks,

oholic

MTL 0.01 0.00.01

€cent

1

set out Law adSept 2004

Beverage containers made ofplastic, glass or metal

Per unit: Beer, soft drinwaters Other alcbeveragesEmpty containers

5

2.3

1.7 2.3

Further details will bein Regulations.

Pola

2002 ics

u (<300 litres)

ard

Natural materials Composites

PLN 2.51.25 0.75 0.60

0.30 2.70

€c52113.5 6.9

62.4

Paid on the difference between the targets and the rate achieved.

nd

Packaging Per kg: PlastAlTinplate Paper/boGlass 0.15

0 ent 7.8 8.9 7.3 3.9

Slovakia es

€cent 1.5

Fee paid on unrecycled materials (output excluding exports and excluding recycled tonnage from local authority collections)

ees apply to other products uch as ELVs, WEEE,

batteries, etc.

2001 Packaging materials

Per kg: Paper/board

SKK 0.62

Glass Plastics

0.60 5.00

1.4 12.0

CompositSteel Aluminium

7.00 1.20 4.30

16.8 2.9

10.3

Revenue used to develop recycling facilities.

Fs

Sweden 1991 Non-refillable PET beverage containers

Licence to sell/import paid to Agriculture Agency.

Applies only to PET. Repeal expected soon.

SEK 10,000 (€ 1,090) annual fee.

153 5.3.4 Italian tax on poly h In 1994 o tax (1 u ture plastic films for the Italian m as to ro s te material and research into new s. Sem g stic/paper composite films and recycl empt, ging were the categories mainly aff The Comm ion objected to the tax, because • usin r nue to devel ecycling i distorted the market in favour of It companies;

and • fore m aid m cause th ai alue duc e Italian

prod e raw material. The tax 1997 w e Pa nsp . In place of the tax, producers and converters of PE produ con ch ensure that PE fil d an led. This provides a rare example of a successful challenge by the Commission to a national tax on packaging. 5.3. o In 1999 Denmark i osed a tax of DKK 12 (€ 1.61) kg PVC film. The tax applies to appl h ood oducer or retailer, and to film s on s. Its purpose was to encour phase-out of C i r of ative mate ls. e ra f the tax was in a DK .25 (€ 2. Whe e ed the it did trade since neither PVC nor the alternative materials were produced in Denmark. However some industry stakeholders objected, arguing that the measure was a trade barri The i mmente t Mem are enti ive fiscal advantages to certain prod prod roups t mental considerations – and irrespective of the origin oods. nish tax aims to discourage all use of so n rk, regar of its he Co n i clined to believe that the fact ion of soft PVC k is nbeen re le 90 of reaty. of wh e res are justified on the basis en l conside s wil evaluated in the light of future Community strat The EU has still not determined its strategy C, but the Packaging an ackaging Waste Directive guarantees free access to the market for all packaging that meets the Essential Requirements. In principle, soft PVC packaging meets the E l Requirements, but on the other hand, concerns have been raised about the impact of additives used in soft PVC. We suggest that it would now ppropri Commi n to rec whether these taxes are prop he one h e free access guarantee of the Directive, and, on the other hand, of the latest research on soft PVC.

et

0% o funi-fin

so ag

ylene

f invoid the coished ricultu

, Itarket e

aly i.

nd-ued PEected

mp These m

we.

sed a aim warketre ex

ce vllec

and ral f

alue) on tion and finished pilms and

PErepacka

poin

sedcesgint-of-

to manuing of w films,sale pa

facas

placka

iss

he

coers p

s rep

ms w

g t

ignuc

wa

eve

panaid

eale

ere

op r

ore be

hen th

d recyc

n I

ey

ag w

taly

m

ing Dould

alian

ts, whil

would

ies pon th

d in

collecte

nl

i p

y p

recar

a

titic

id o

veip

n

wate

the v

as tra in a

of PE pro

osed in Italysortium whi

ckcts

5 D

ied

71)

n th

Comuct

ft Pthat a b of

egy on PVC.”

ortionate, taking account on t

a

by t

pe

nish tax n PVC

al

no

mp prn f00

ove

peroldTh

a

on rollte o

that

filmage aK 20

er to

e fPVg in 2

ni

av1.

r

ou

nm

tern

tifi

ria

su

cre

st

se

te

d to

a

r k

Da sh g ent mea re, it rgued not con itu barri

er.

to g

Dassiofficient to establish whether there has the m

mgr

Vth

issoups over other

C iereach oviron

on176

Denis no

f Armen

co

ma productticta

d thauct g

dless

the Tration

beron

orig in D

“Thl hav

Stateshe basis of objective criteria – such as environof the gin, and t

enmare issue e to be

tled

The mmiot suether

s in

asu

on

ss

fod,

PV

entia

r the of th

d P

sider be a atean

ssio on

176 I Market er Frits Bolkestein: written reply of 1 ne 2001 to a Pa mentary Question. nternal Commission 1 Ju rlia

154 5.3.6 Taxes on certain carrier bags in Denmark and in Ireland Denmark introduced a tax on disposable carrier bags in January 1994 s currently charged at DKK 10 (€ 1.34) per kg for paper bags and DKK 22 (€ 2.95) per kg for plastic carrier bags. The objective of the tax is to encourage the use of durable cloth shopping he original plan was to tax only plastic shopping bags, but to discrimination it was decided to tax paper bags also. Denmark taxes foodservice disp (cutlery ending cups etc), to encourage use of a durable alternative. The tax is DKK 19.20 (€ 2.55) per kg. In 2002 revenue from these taxes, which is not ring ced for enviro KK 5.6 million (€ 750,400) for paper and DKK 165 millio 2.1 million) for plastics – equivalent to € 0.14 per capita for paper and € 4.12 per capita for plasti Ireland x on single-use plastic carrier b t a rate of € 5 per bags are not taxed. The tax was imposed because “plast ponent of litter pollution…”, according to the Environment M er. This is o s ckaging where the sed for environmental purpo Both Mem eported that their respectiv had the desired effect. The Danish EPA reports that consumption of disposable bags decreased by one-third, while in Ireland, the number of ba a b fr on (€ 1.85 per capita) in 2002 to € 0.7 m 0.1 The operators who prod an i conomic burd e er. Conversely, or ing the desired replacement items (paper bags in Ireland, durable cloth bags in Denmark). In some c s the same operator supplies both types of bags, so ec ay elativ small, but often the winners and losers are different compan re i s hat they ed fewer free c ie ag re plastic rubbish sacks (to replace secondary use of ca r bags. The question that could be addressed in the context of proportionality is whether the economic impact on the operators affected is justified by the environmental benefit achieved. For instance, plastic shop bags in Ireland can be meas d according to their proportion of total packaging waste or of total • When the tax was introduced in 2002, the Irish Environment Minister said that some 1.2 billion

plastic shopping bags were provided free of charge to consumers retail outlets each year, equivalent to 325 bags per person. If we assum hat the weight und 7g,178 then before the introduction of the tax, plastic shopping bags accounted for some tonnes, which represented 4.8% of the total weight of p tics packaging placed on the Irish market in 2001, and 1.2% of the total weight of all packaging.

• Litter composition analysis carried out by Ireland’s official Litter Monitoring Body in 2001 and

2002 found that shopping bags represented 0.75% of total litter in the earlier sample and 1.70% in t ecent survey 179 (based on a count of the number of litter items in each category).

. The tax i

bags. T avoid

osablealso , v

fenn (€ 2cs.

ags aic bags are a visible and persistent cominist

ses.

e taxes have

nmental purposes, was D

0.1

ne o

imposed

revenu

ber States have r

a ta

e is u

per bag in

f few taxe

2002. Pa

on pa

gs h

en i

distrrie

ping litte

he m

s decreased y 90illion (€

%. Income 8

om the plastic bag1 le77

vy fell from € 7.1 milliper capita) in 2003.

uced, importev

d d d stributed tth

heer

tae i

xs a

ed g

itai

emn f

s beop

ar er

moat

sor

t os s

f thup

e eplyase

of

n th

rib

form of reduced turno

thes alandf wi

effo ansold re sto

t mimpact on retailers – Irish retailers gained in tmore

be r

e

ely

b

ies. arror

Ther b l

utbag

s os), but also rep ted oss bask ts used y consumers in lieu

ure

r:

at of a typical bag e t

las

is aro 8400

ore r

177 S ce epartment of the Environm nd Local Government, Annu eports 2002 a 003. 178 S ce: British Plastics Federation (using UK data). 179 S The Litter M itoring Body, Annual Report to the Department of the Environmen d Local Gove for 2000/20 and System Results Report – May 2 , report to the artmen the Envi t and Local Government.

our

our

ourrnm

ronm

: D ent a al R nd 2

ce:enten

on01,

t ant of 003 Dep

155

everage containers in Belgium

he Belgian government then announced that it would revise the tax. The purpose of the new eco-tax eusable and non-reusable containers large enough to

have a dissuasive effect comparable to that of deposits”.

Bel offer an exemption from the revised tax for non-refillable containers that ere produced using more than a specified proportion of recycled material. The Commission

asse had met this condition for exemption. It argued that the onditions for an exemption from a tax or preferential treatment “must be extended, without

ssary.

eting recycled content thresholds. It challenged technical requirements associated with e tax and the exemption.

rvention, the eco-tax took effect in April 2004 on all non-refillable , but in principle no exemptions are allowed. The text still provides

January 2005, the tax rate increased by 47%, to € 14.5037 per hl. This rise was announced as part

ry association FEVIA points out,

5.3.7 Eco-taxes on non-refillable b Belgium first imposed eco-taxes on non-refillable beverage containers back in 1993. However, theywere not paid in practice until April 2004. Under the original legislation,180 the containers were exempt from the tax if recycling targets were met. This condition for exemption was considered to be met because FOST Plus met its recycling targets for all household packaging waste. Twas to bring about a price difference between r“

gium also planned to wchallenged this requirement because producers, including foreign producers, had to get their packs

ssed within Belgium to prove that they 181

cdiscrimination, to products from other Member States which satisfy the same conditions as national products”. The Commission also challenged requirements to mark eco-taxed containers with a tax registration number, because this was unnece Thus, the Commission did not challenge the tax per se, nor the principle of an exemption for containers meth Following the Commission’s inteontainers of the specified drinksc

for the possibility of introducing exemptions for non-refillable containers containing more than a specified proportion of recycled material, but says that any such exemptions would have to be approved by the European Commission. Inof the Federal Budget, and no specific reason was given for such a large increase. Revenue from the tax is not ringfenced for environmental purposes, but is part of the general budget. The increase in revenue is projected at € 130 million, which, the Belgian food indust

more than the annual budget of FOST Plus. is Below we set out the impact of the tax in 2004 and 2005 on retail prices of a 1.5 litre non-refillable container of various types of drink, compared with refillables in Belgium and non-refillables in neighbouring Member States. The tax is paid in addition to the Green Dot fee.182 Figure 13 shows that the tax represents a far higher proportion of the retail sales price in Belgium than in France:

180 Law of 16 July 1993 aimed at completing the Federal State Structure [Loi ordinaire visant à achever la structure fédérale de l’Etat / Gewone wet tot vervollediging van de federale staatsstructuur].

Detailed opinion dated 9 April 2003 in relation to proposal notified as 2002/495/B.

181

182 No recovery organisation fee is paid on refillable household or industrial packaging in Belgium.

156

elgium and Figure 14: Impact of taxes, duties and Green Dot charges on mineral water prices in Beighbouring countries n

Price comparison for 1.5 litre of natural mineral water

0.7

0Luxembourg France Belgium O/W 2004 Belgium O/W 2005 Belgium refillable *

0.1

0.2

0.3

0.4

0.5

0.6

Price start Transport Green Dot Duties Ecotaxes Specific duties VAT

1,5 litres

EAU1,5 litres

Water1,5 litres

Water1,5 litres

Water1,5 litres

Water

Total taxes & Green Dot :71,8 %


Total taxes : 6 %

Total taxes & Green Dot :

Total taxes & Green Dot:

8,2 %6,7 %

€

Figure 14 shows that while taxes, excise duties and the Green Dot fee added 51.9% to the retail price for mineral water after April 2004, this has now risen to 71.8%. This compares with charges of only 6% on refillable bottle prices, to which should be added some cost for return and cleaning.183 This proportion is significantly higher than in Luxembourg and in France, the most accessible markets for many Belgian consumers. As Figure 15 shows, the situation for spring waters (private label) is similar. Taxes and the Green Dot

fee added 127% to the net retail selling price of spring water in 2004, and 180% in 2005, compared with only 6% for refillables. In comparison, taxes and Green Dot fees represented only 12% of the retail selling price in France.

183 Figure 14 does not show the costs associated with the return and cleaning of refillable bottles. Howevercosts of collection, sorting and recycling of non-refillable bottles are covered through the Green Dot f

, the ee.

157 Figure 15: Comparative prices for 1.5 litre spring water (private label)

label

Private Finally, for a 1.5 litre bottle of lemonade (private label), the effect of the eco-tax is as follows: Figure 16: Comparative prices for 1.5 litre soft drink (private label)

Price comparison for 1,5 litre of spring water (private label)

0,4

0,45

0 France Belgium O/W 2004 Belgium O/W 2005 Belgium refillable*

0,05

0,1

0,15

0,2

0,25

0,3

0,35

Prix start Transport Green Dot Duties Ecotaxes Specific duties VAT

1,5 l

Water

Private label

180,1 %

Total taxes & Green Dot :

Total taxes : 6 %


Total taxes & Green Dott 12,3 %

€

1,5 l 1,5 l 1,5 l

Private label

Private Private Water Water Water

label label

Price comparison for 1,5 litre softdrinks (private label)

0.6

0.7

0

0.1

0.2

0.3

France Belgium O/W 2004 Belgium O/W 2005 Belgiume refillable

0.4

0.5

Price start Transport Green Dot Duties Ecotaxes Specific duties VAT

1,5 l Softdrinks

Total taxes & Green Dot :103,8 % Total

taxes : 25,1 %

Total taxes & Green Dot :86,4 %Total

taxes & Green Dot :8,6 %

€

1,5 l Softdrinks

1,5 l Softdrinks

1,5 l Softdrinks

158

3.8% in 2005, compared with just 25.1% for refillables. By comparison, taxes nd the Green Dot fee represents only 8.6% of the retail price of similar non-refillables in France.

Taxes, duties and the Green Dot fee increased from 86.4% of the net retail sales price for non-refillables in 2004 to 10a Table 43 shows the effect of the tax on average retail prices of key producers (including private label) in March 2004, just before the tax took effect, in April immediately after, and in September 2004 to show the longer-term impact. It should be noted that the imposition of the eco-tax in April 2004 was accompanied by a reduction in excise duties and VAT. However, for beer these other taxes remained unchanged. Table 43: BELGIAN BEVERAGES – PRICE EVOLUTION PER PRODUCT AND PACK TYPE SINCE MARCH 2004 Drinks & packaging category 184

Ave. price Mar 2004

(€ per unit)

Ave. price April 2004

(€ per unit)

Price evolution

(€ per unit) Mar - April

Ave. price Sept 2004

(€ per unit)

Price evolution

(€ per unit) Mar - Sept

Price evolution (€ per litre)

March - Sept 185

Carbonated soft drinks: Refillable glass - 1L 0.97 0.86 - 0.11 0.87 - 0.10 - 0.10 per litre One-way PET - 1.5L 1.05 1.06 + 0.01 1.02 - 0.03 - 0.02 per litre Metal can - 33 cl 0.39 0.37 - 0.02 0.38 - 0.01 - 0.03 per litre

Water : Refillable glass - 1L 0.35 0.29 - 0.06 0.27 - 0.08 - 0.08 per litre One-way PET - 1L 0.67 0.65 - 0.02 0.63 - 0.04 - 0.04 per litre Metal can - 33 cl 0.27 0.26 - 0.01 0.26 - 0.01 - 0.03 per litre

Non-carbonated soft drinks: Refillable glass– 1L 1.02 0.91 - 0.11 0.92 - 0.10 - 0.10 per litre Drinks carton – 1 L 0.83 0.83 0.00 0.83 0.00 0.00 per litre One-way PET -1.5 L 1.10 1.18 + 0.08 1.16 + 0.06 + 0.06 per litre Metal can – 33 cl 0.56 0.54 - 0.02 0.53 - 0.03 - 0.09 per litre

Beer : Refillable glass-33 cl 0.73 0.72 - 0.01 0.73 + 0.00 0.00 per litre Metal can - 33 cl 0.43 0.46 + 0.03 0.45 + 0.02 + 0.06 per litre

Source: AC Nielsen on behalf of APEAL Table 43 shows that the immediate effect was, as the government intended, an increase in the price differential between refillables and non-refillables. However, on closer analysis, the table also showa more nuanced trend. While

s the immediate effect was a reduction in the price of refillables in all

ategories, by September average prices had increased again slightly for refillables in all categories xcept water. In contrast, the average retail price for carbonated soft drinks in non-refillable PET had

fallen again slightly by September. Also, the impact on price for cans has been far less than for non-refillable PET. These price trends suggest that eco-taxes may not be the most effective means to achieve the stated objective of the Belgian government. The table shows that different fillers and retailers have responded differently to the tax. Each filler and retailer must decide how much of the tax to absorb and how much to pass on to consumers, and whether to adjust the relative price of refillables and non-refillables. In making these decisions, fillers consider the cost of producing and distributing drinks in different pack types, and retailers consider the handling and distribution costs of each pack type, and they both take a view as to how best to maximise their return. The impact on consumer choice can therefore be moderated through adjustments to the price made by the filler and/or retailer. The tax can

ce

184 Average price for about 4 major brands and private label for each category and pack type. 185 Prices calculated per litre on the basis of real prices.

159 chieve its policy objective only if it is passed on in full in retail prices – otherwise it does not send a a

clear signal to consumers. Table 43 suggests that the eco-tax is not being passed on in full.186

Another factor is the effect on cross-border shopping. There is evidence that the tax has resulted in

rice distortions. One Belgian wholesaler located near the border with France has reported a 20-40% duction in turnover (different for different drink types), compared with sites in other parts of elgium.187

hile the tax applies equally to domestic producers and importers, we would argue that it affects ported products more than locally produced drinks because longer transport distances make it

arder for importers to switch to refillable containers. There is a parallel here with the refill quotas in ermany. Although the quotas and taxes are very different instruments, they both aim to promote the se of refillable beverage containers. The ECJ concluded in December 2004 that the German easures were a barrier to trade. Arguably the Belgian taxes are too.

dustry stakeholders have suggested that if the tax is creating some distortion in cross-border trade nd is a barrier to trade for imported products, the EU authorities should consider whether these are stified, given the environmental objective sought. In assessing this, they say, the Commission would

eed to examine the effectiveness of the tax in achieving a preference for refillables, given that it does ot appear to be passed on fully in consumer prices. The final point to be considered in assessing roportionality of the tax is the fact that the revenue accrues to the Belgian state budget. What is the nvironmental justification for the significant tax increase in January 2005?

he Commission stresses that as EU legislation stands, Member States do not have to justify setting xes at a particular level, and there is no test of proportionality in respect of tax issues (see section

preB WimhGum Inajunnpe Tta4.3.10). We now understand that in view of the problems that have arisen, the Belgian Government has

considered the level of the eco-tax and is proposing to bring it down to the 2004 rate with effect refrom 1 July 2005. 5.3.8 Hungary – “product fee” on packaging 5.3.8.1 The product fee and tax on commercial packaging In 1996 Hungary introduced a state “product fee” on a range of products, including packaging materials.188 The tax was payable by the first distributor, user or importer according to the weight and type of material. Since January 2003, however, the law has applied to “packaging” rather than “packaging materials”. As a result, producers and importers of packaged goods are now affected (in addition to packaging producers). The legislation provides for exemptions from the fee provided certain conditions were met. These conditions have changed over time, as have the tax rates charged:

186 One stakeholder suggested that taxing water had an adverse social impact, but we have disregarded this argument, since consumers can avoid the tax by drinking tap water. 187 Source: PRO Europe.

8 Act LVI of 1995 on Environmental Product Fee, in effect from January 1996. 18

160

Table 44: EVOLUTION OF HUNGARIAN PACKAGING TAX RATES, 1998-2005 1998 1999 2000 2001 2002 2003 2004 2005

HUF per kg Plastics 10 11.5 12.7 13.5 14.2 25.5 29.0 36.0Composites 8 11.7 15.2 16.1 16.9 30.4 35.0 44.0Aluminium 5 5.5 5.6 5.9 6.2 11.1 13.0 16.0Tinplate 4 4.3 4.3 4.6 4.8 8.6 10.0 13.0Paper, wood, textiles 3 4.3 5.6 5.9 6.2 11.1 13.0 16.0Glass 2 2.1 2.1 2.2 2.3 4.1 5.0 7.0Others 5 5.5 5.6 - - - 35.0 44.0

€ cents per kg Plastics 4.0 4.6 5.1 5.4 5.7 10.2 11.6 14.4Composites 4.7 1 6.8 143.2 6. 6.4 12.2 .0 17.6Aluminium 2.0 2.2 2.2 2.4 2.5 5. 4.4 2 6.4Tinplate 1. 41.6 1.7 1.7 1.8 9 3.4 .0 5.2Paper, wood, textil 2.5 5es 1.2 1.7 2.2 2.4 4.4 .2 6.4Glass 0.8 0.8 0.8 0.9 0.9 1.6 2.0 2.8Others 2.0 2.2 2.2 - 14.0 - - 17.6

In addition, a new law189 h took t on 1 January 2005 created new taxes on “com

”, in the categories set out in Table 45 whic effec mercial

packaging :

Table 45: NEW HUNGARIAN IT-BAS CKAGING TAXES UN ED PA HUF € cents Fee per unit

) Refill fee/

unit (UFee per unit

(H) Refill fee/

% per (H % per ) unit (U) Plastic bottle <1.5 litres .25 4.0 0.1 10 0Plastic bottle, 1.5 – 5 lit .45 8.0 0res 20 0 .2 Plastic carrier bag ≥ 3 li 1.2 0 tres 3 0Plastic carrier bag, 3.01 – 20 litres 10 0 4.0 0 Plastic carrier bag ≥ 20 10.0 0 litres 25 0Glass <1 litre 3 .25 1.2 00 .1 Glass >1 litre 10 0.45 4.0 0.2 Beverage carton ≥ 1.5 litres 12 0.20 4.8 0.1 Beverage carton >1.5 litres 25 0.40 10.0 0.2 Other composites ≥ 1.5 litres 15 0.50 6.0 0.2 Other composites >1.5 litres 45 0.80 18.0 0.3 Metal packaging ≥ 1 litre 30 0.25 12.0 0.2 Metal packaging >1 litre 60 0.45 24.0 0.2

For composites which cannot easily be separated by hand, the fee is paid at the rate for the predominant material provided this represents at least 90% of the total weight of the pack; if it is less han 90%, the ratt e for other composites applies.

on ed

are met. Decree 342/2004 sets out conditions for exemption for companies participating in a recovery organisation and, separately, for individual compliers;

The new tax on “commercial packaging” must be paid by the company which places the packaging the market in Hungary, including importers. However, if an exemption from the product fee is grantthrough participation in a packaging recovery organisation, then the fee-payer is liable. The fee is not payable on personal imports by private consumers. The new tax on “commercial packaging” comprises two elements: • a fee per unit (H), which is not paid if collection and recycling targets set out in Decree 324/2004

plus

189 Law CIII/2004, in conjunction with Decree No. 26/2004 and Decree No. 342/2004.

161

002, companies were exempt from the product fee if they met the material-specific use/recycling targets set out in Table 46

• a refill percentage fee (U), linked to achievement of refill quotas as specified for individual beverage categories.

5.3.8.2 Conditions for exemption for individual compliers From 2000-2re . Each company had to apply individually for exemption, so

y they would have to operate their own individual collection scheme and in practice few companies qualified. The targets have now been extended to 2007. If companies fail to meet the targets, thebenefit from a partial exemption from the product fee (calculated according to a formula), but no exemption from the commercial packaging tax.

Table 46: TARGETS RELATED TO INDIVIDUAL COMPLIERS’ EXEMPTION FROM THE HUNGARIAN PRODUCT FEE

2000-02 2003 2004 2005 2006 2007 Overall recycling target - - - 25% 29% 33% Material-specific targets Reuse/recycling Recovery Recovery Recovery Recovery RecoveryGlass, plastics, composites 45% 40% 45% 50% 51% 52% Metals - 45% 50% 50% 51% 52% Steel 50% - - - - - Aluminium 55% - - - - - Paper 55% 45% 50% 50% 51% 52% Wood - 45% 50% 50% 51% 52% Textiles 50% 45% 50% 50% 51% 52% Proportion of plastic shopping bags to be markment

-

-

-

4%

8%

12%

ed with ‘environ-ally friendly’ logo 190

5.3.8.3 Conditions for exemption for companies which are part of a recovery organisation When the conditions for exemption were amended in 2003,191 a distinction was introduced between

panies participating in the recovery the conditions applicable to individual compliers and to comrganisation ÖKO-Pannon. Table 47o shows the targets for ÖKO-Pannon:

Table 47: CONDITIONS FOR EXEMPTION FROM THE PRODUCT FEE

FOR ÖKO-PANNON MEMBERS 2003 2004 2005 2006 2007 Extent of relief from fee 100% 85% 100% 100% 100% Collection from households - 8% 20% - - Overall recovery target 40% 45%- 50% 51% 52% Overall recycling target 25% 25% 25% 29% 33% Material-specific targets Recovery Recovery Recovery Recovery RecoveryGlass 9% 12% 15% 18% 21% Plastics & composites 9% 12% 15% 16% 17% Metals 9% 12% 15% 20% 25% Paper 9% 12% 15% 21% 27% Wood 9% 12% 15% 15% 15% Textiles 9% 12% 15% 21% 27% Proportion of plastic shopping bags to be marked with ‘environ-mentally friendly’ logo 192

-

-

4%

8%

12%

on the Conditions for Product Fee Exemption.

190 To be specified in separate legislation. 191 Decree 53/2003 (IV.11) 192 To be specified in separate legislation.

162

he overall recycling targets relates to packaging within the company’s sphere of activity. Thus the rates a 5.3.8.4 Refill protection measures From 2000 to 2002, beverage containers ass E ere n axe re les seof the ma sh uo Under the current legislation, the compa ha pl rin n th arket i Hungary t ensure that the following proportion of drinks (in litres) is in refillable containers:

Tchieved for packaging materials that the company does not use, will not be counted.

(gl and P T) w ot t d if fillab repre nted 60% producer’s output – in effect a rket are q ta.

ny t t first aces d ks o e m n mus

Table 48: MARKET SHARE QU S F CER 200 0OTA OR PRODU S, 5-2 10 2005 2006 2007 2008 2009 2010 W 0% 20% 25% 30% 35% ine 10% 1B 5% 67% 68% 69% 70% eer 65% 6A & mid-alcoholic product 0% 28% % 3lcoholic 20% 2 31% 33 5% M ater 1% 7% 13% 1ineral w 1% 7% 3% Carbonated soft drinks, 5% 5% 11% 11% 17% 17% non-carbonated soft drink or syrup with preservatives Non-carbonated soft drinks or 0% syrup without preservative

0% 2% 2% 3% 3%

Onward distributors must meet the above refill q plus the following additi tas:

uotas onal quo

Table 49: ADDITIONAL MARK SHARE QU S FOR DISTRIBUTORS ET OTA 2005 2006 2007 2008 2009 2010 Drinking water, carbonated water 10% 10% 16% 16% 22% 22%

The f chieve a r rn rate of at least 60% of the reusable packaging. A fill only non-r lable containers would pay the refill percentage fee (U) x the re unit.

r beer in c , the fee pe would be:

HUF 0.25 x 65 = HUF 16.25 per unit (6.5 eurocents)

du

he juices and nectars.

inimis exemptions apply to small fillers (less than 10,000 units of wine, 75,000 units for beer, ed soft drinks and cordials, 200,000 units of carbonated soft drinks, waters).

iller or distributor must a etu

er or importer who uses efilfill quota for each pack

Example: fo ans r unit

However, a filler who supplies more than 65% of his production in refillables would not pay this fee atall, provided that he also meets the 60% return target. Fillers who supply a proportion of their drinks in refillables, but less than the quotas specified, would benefit from a partial exemption. A filler who used refillable containers for 50% of the beer he supplied in Hungary would pay the refill fee on the difference between the refill quota and his refill market share (65 – 50 = 15%). Thus he would pay:

HUF 0.25 x 15 = HUF 3.75 per unit (1.5 eurocents).

This would be the case only if the filler also met the 60% return target. The rate of exemption is re ced by 5% for every 1% by which the filler fails to meet the 60% return target.

refill quotas do not apply to milk and milk based product, nor toT

e mDnon-carbonat

163

he revised taxes are designed to promote the use of refillable beverage containers. A key motivation r introducing them seems to be as a defence against the sudden increase in imports of beer from

5.3.8.5 The trade conditions that led to the new refill protection measures

TfoGermany following the imposition of deposits there. According to VAB,193 exports of beer from Germany to Hungary increased significantly after the mandatory deposit took effect in Germany in January 2003. As Figure 17 shows, there had been an increase in exports in 2002, but they then surged by 460% in 2003. Data for the first 5 months of 2004, if maintained throughout 2004, would result in a further 63% increase on the 2003 level. Figure 17: Beer exports from Germany to Hungary (in hl), by pack type

00

Year from J

5000100000

000

400000

an2000

Year from Jan2001

Year from Jan2002

Year from Jan2003

t. full yearfrom Jan 2004

150000200250000300000350000

Es

Total Cans Draught Bottles

2 hout 2000-2004. The share

f cans in exports increased from just over 60% in 2002 to 93% in 2003, and to 95% in the first five mon

Source: BCME Most of the growth came from canned beer, with a 763% increase in exports of cans between 200and 2003. Exports in bottles and kegs/tanks both decreased steadily througo

ths of 2004.

T N OF BEER EXPOR OM ANY UN , 200 able 50: EVOLUTIO TS FR GERM TO H GARY 0-04Bottles Cans Kegs s /tank Total

hl % hl % hl % hl % 2 9 157 - 6 - 12 185 - 418 000 076 27 - 2 8 196 -10.5 1 2 001 5 778 -4 10.9 88 .4 -16 24 16 -11.92 7 280 -11.2 2 3 0 002 4 969 + 32.1 9 43 -11.2 41 292 +70.92003 7 695 +5.7 215 +763 8 208 .2 458 .5555 .3 -10 231 +4602004 (Jan-May) 3 933 - 151 - 2 38 - 413 100 0 157 - 2004 (annualised) 9 439 +22.7 362 + 68 5 712 .4 791 .2640 .2 -30 377 +63

S BCME BCME reported that these exceptional increases in exports from Germany were the result of dumping as th No price ata was ided, he extent of the increase in imports is exceptional and does indicate dumping.

Brewers lobbied their government to take action nted beer from Germany – hence the proposed tax increase.

ir beer in refillable containers

ource:

e deposit took effect on beer in non-refillables. d prov but t

BCME also reports that the Association of Hungariano protect them from this flood of discout

We understand that the four Hungarian brewers produced 81% of the

n. 193 Verband deutscher Ausfuhrbrauereie

164

his case provides an example of the impact on cross-border trade of protective measures taken by an a Member State whose local producers were affected by

umping from abroad has responded by taking retaliatory action to protect them.

e only country to suffer from dumping by erman brewers unable to sell canned beer in Germany after the imposition of the deposit. However,

5.3.8 When ee was first introduced, 75% e rev was t paid Cen nviro t Protection Fund to m ment purposes. The rem r was nd admin the cr of r ry or ation Howe the product fee was changed from a charge to a tax, and 60% of the reven The rem inder of the revenues still went to the Fund e managem mp recovery of ommercial and industrial packaging waste.

tate udge

.3.9 Other packaging taxes in the ten new Member States

s the overview of packaging taxes in section 5.3.3

(bottles and kegs) in 2002 and 2003. As the refill rate of each of them is well above the quota, they will not have to pay the tax. Tindividual Member State. In this cased It would be reasonable to assume that Hungary was not thGwe received no evidence from stakeholders indicating such problems in other Member States.

.3 Use of tax revenue

the f of th enue o be into a tral E nmenbe used for packaging waste

pport, including anage ainde to fu

istrative su eation ecove g sani s.

ver in 1998 the status of ue was to be used to balance the nat

astional budgeent co

t. anies for the collection and

a, and was paid out to w

c

ince 2000 all of the revenues go to the State, but the Environment Ministry can apply to the SSb t for funding.

5 A shows, taxes on packaging are imposed by Estonia

These taxes are offering an exemption or a iscounted rate i

he existence of these taxes obliges recovery organisations to set their fees to take account of the taxes

e tax) is lower than the taxes paid by ompanies not participating. Participation in the recovery organisation in effect competes with paying

ith the part-private, part public Recycling Fund. The Fund gets its money from the taxes that mpanies have lained that the way the Fund

allocates its money

(certain beverage containers), Latvia (all packaging), Lithuania (primary packaging), Poland (all packaging) and Slovakia (packaging materials) as well as in Hungary.

all linked to achievement of the targets in some way, byf certain targets are met. d

Trather than of the cost of meeting the targets. Recovery organisation fees in Hungary are set such that the total paid by member companies (fee plus 15% of thcthe taxes. In this situation there is a risk that the fees charged by recovery organisations will not be sufficient to ensure that the targets are met.194 Similarly, in Slovakia, the recovery organisation ENVI-PAK sees itself as operating in competition wco to pay on unrecycled tonnage. ENVI-PAK has comp

is untransparent.

194 Until January 2005, the structure of the Hungarian taxes was such that there was no graduated discount if ÖKO-Pannon failed to meet the targets by only a small margin. Thus, its members could have ended up paying the full tax on top of the fee. This has now been changed, and a formula introduced which allows for graduated payment of the tax in respect of most types of packaging (though not beverage containers or plastic carrier

ags). b

165

lty

rganisations could then determine what is needed to meet the targets and set their fees accordingly.

o some extent this is already the case in Lithuania, where the taxes are paid only by operators that do

owever, we consider that having penalties in the form of taxes may be unfair on the producers who

chieve because they are calculated on the tonnage of packaging officially on the market.

y

ct

g, we identified a number of problems and questions, which

l as with the eco-taxes in Belgium (as evidenced by the recent large rate increase),

Hungary, etc. • axes are ineffective at ac eir stat ental p r exam

lgium, designed to rag onsum y inks able containers, have rage an increase in -b purc The tax on plastic bag and

ded to reduce litter av y a t a the e nly c f t

• m to prot ca uce y

ce against dumping of canned beer from Germany following the imposition of the

as resulted in recovery organisation fees in effect competing with taxes. As a result, the recovery organisations may not be able to

cling systems.

As this is in effect a financial penalty, would it not be better if the legislation simply imposed a penaon recovery organisation(s) or individual operators that did not meet the targets? Recoveryo Tnot meet recycling and recovery targets, and effectively in Poland where the taxes are paid only on the difference between the recycling rate achieved and the target. Hbear the obligations for meeting the targets. Countries such as Estonia, Lithuania and Poland havetaxes linked to achievement of the targets. There is already evidence of significant export by cross-border shoppers attracted by the lower retail prices in these new Member States. If significant quantities of packaging are leaving the country unreported, the recycling targets will be harder toa Moreover, as EuPC pointed out, linking payment of the taxes to meeting recycling target encourages fraudulent reporting of recycling activities to enable producers to demonstrate that they have meet the targets.

We recognise that packaging taxes can play a useful role in encouraging producers to establish recycling systems. However once recovery organisations have been established, the need for taxes is greatly reduced.

The stated objective of the taxes in several Member States was originally to raise revenue for environmental purposes. However, we note that in Hungary for example, the revenue now goes to general State funds and is no longer ring-fenced for environmental purposes. Similarly, in Estonia onlhalf of the revenue goes to the Environmental Fund. There is a danger that, once a Member State creates a tax, it becomes a useful source of state revenue regardless of the future environmental impaof the taxed items.

5.3.10 Conclusions on packaging taxes In the above review of taxes on packagincan be summarised as follows: • The main purpose is in reality to raise government revenue rather than achieve environmental

objectives. In most cases revenue is not earmarked for environmental purposes but goes to generastate revenue –

T hieving th ed environm urpose. Fo ple, the eco-taxes in Be encou e c ers to bu dr in refillencou cross order hases. carrier s in Irel , inten , can h e onl iny imp ct since y repr sent o a. 1% o otal litter.

They usually aquotas, a defen

i ect lo l prod rs. As with the new taxes in Hungar linked to refill

mandatory deposit there. • They undermine rather than aid recycling efforts. The linking of taxes to achievement of the

recycling targets in several of the ten new Member States h

raise the funds they need to establish collection and recy

166

a risk that Member States will see taxes as a way to introduce measures at give rise to barriers to trade or distortions of competition without risk of legal action from the

ome industry stakeholders have therefore suggested that the Commission should re-examine the

CME argues that “Art.15 on economic instruments of the Packaging Directive obliges Member tation of the Directive’s objectives. Art.1 establishes as objectives, on

e one hand, the protection of the environment, and, on the other, prevention of obstacles to trade…. t its

omments received from the Commission services indicate that BCME’s interpretation is incorrect. cts

justify setting taxes at a particular level.

Commission verify its powers under Article 15 of the Directive and Article 90 of e Treaty to intervene in the case of taxes that discriminate de facto between imported and domestic

roducts.

As we noted in the introduction to this section, the Commission has hitherto succeeded in challenging packaging taxes on very few occasions. When it has started infringement proceedings, these have usually focused on technical measures associated with the taxes rather than the taxes per se. We conclude that there is nowthCommission. There is already evidence that taxes are undermining the Internal Market objectives of the Directive. Simpact of the taxes reviewed above to determine whether the measures are indeed justified by the environmental objective claimed, and should reconsider what powers it has to challenge these measures. BStates to pursue the implementhEcotax systems which do not focus on the achievement of this objective, but on the contrary prevenrealization, appear to be directly forbidden by Art.15 of the Directive.” CLinking Articles 1 and 15 of the Directive and interpreting this in a way to say that Article 15 restrithe freedom of Member States compared to Article 90 of the Treaty “misses both the text and the intention of the legislator when the Directive was adopted.” There is no proportionality limit in Article 90, and Member States do not have to It is not the purpose of this study to go further into such legal argumentations, but we would recommend that the thp

167

6. EVALUATION OF PRODUCER RESPONSIBILITY SYSTEMS 6.1 EVALUATION OF THE SYSTEMS IN EU-15

uirements are transposed by the ember State and how they are interpreted, applied and controlled. The Directive provides for a

ay create

f packaging waste. Most were based on the original German fund arrangement whereby

ause of the decisions made by the economic operators concerned or as a result of

Internal Market issues have been one of the key aspects of the Directive from the very beginning, and its effects on the Internal Market largely depend on how its reqMlargely harmonised system regarding market access (via the Essential Requirements) but gives considerable latitude to Member States to develop the waste management policy aspects of the Directive in their own way. Unless there are major differences in the way the national enforcement authorities interpret and enforce the Essential Requirements, the harmonised approach to market access has clear advantages for removing potential and real barriers to trade. On the other hand, freedom to choose between various options regarding the management of packaging waste mnew barriers to trade. Systems have been devised in each member state to fund and organise the collection, sorting and recovery oeconomic operators pay a fee, entitling them to mark the “Green Dot” on their packs. The fee is used to ensure the targets are met, primarily to fund the segregated collection of packaging waste for recycling by private and public collectors. However there are key differences even between these systems, either becnational legal requirements.

168 6.2

OVERY ORGANISATIONS

6.2.1 Producers’ legal obligations

All the Member States have imposed legal obligations on some or all economic operators in the packaging supply chain that require them to ensure that packaging waste is reused, recovered or recycled and that the targets in the Directive are achieved. These operators include producers and distributors of the raw materials used to make packaging; packaging producers (converters) and distributors; producers and distributors or packaged goods; and wholesalers and retailers. For imports of packaging and packaged products into the Member State concerned, the importer bears the equivalent obligation. Table 51

IMPACT OF DIFFERENT LEGAL REQUIREMENTS ON THE ROLE AND OPERATION OF PACKAGING REC

sets out the legal obligations in each Member State. Below is a brief overview which highlights the key differences between national obligations: • The type of operator subject to these legal obligations varies. In some Member States all the

companies in the packaging supply chain bear producer responsibility obligations (such as in Austria, Germany, Ireland, UK) but in others only a specific type of operator, such as the company that put products into packaging (e.g. France in respect to household sales packaging), is obligated.

• The nature of the obligations also varies between Member States. For example operators in

Germany and Austria are required to take back used packaging of the same type, shape and size of that they have supplied and ensure that it is recycled or reused, while in Belgium the obligation on operators is to take back used packaging and meet the recycling and recovery targets.

• Also different is the scope of the obligations. The same obligations apply to all packaging in

most Member States while in others there are different obligations for transport packaging and for household packaging waste respectively. France has one decree for household packaging waste (requiring operators placing packaged goods on the market to contribute to its disposal) and one for packaging waste on commercial/industrial sites (end-users must ensure that the material is passed on for recycling).

• Some Member States exempt small operators from producer responsibility obligations, or

provide for simpler requirements. The respective legislation in Austria and the UK, for example, exempts operators that either supply less than threshold tonnages of packaging or whose turnover was below set turnover thresholds. In Ireland, small operators below turnover and packaging tonnage thresholds are partially exempt. They are exempt from the requirement to take back used packaging or join a recovery organisation, but not from the requirement, applicable to all business end-users, to make available packaging waste on their premises for recycling or recovery. The implications of excluding small operators are discussed further in section 6.2.2.1.

• Some Member States also have special requirements relating to particular types of pack. The

most common packaging category singled out for special requirements is beverage containers, as discussed in Chapter 4. Some Member States also have special requirements or taxes on specific items such as carrier bags and packaging of hazardous contents. These require operators to handle these pack types separately (outside a recovery organisation), and to provide separate packaging data on these items. There may also be economic implications in that compliance costs may be higher in the form of taxes or separate fees. And if measures are intended to deter consumption of certain items (plastic carrier bags, beverage cans), there may be a significant economic impact on the economic operators affected in the form of reduced turnover.

169

n must

sually be approved by the authorities. In some Member States, the legislation sets out detailed rules

ost operators comply by joining a recovery organisation regardless of the structure nd nature of producer responsibility legal obligations. This is particularly so in respect of household

ecause most operators comply through a recovery organisation, particularly for household packaging

In most Member States, producer responsibility legislation for packaging offers producers the optioof meeting obligations by joining a packaging recovery organisation. These organisations ufor how such organisations should operate and organise their activities, but in others, the detailed requirements are part of the approval process. In practice, mapackaging waste. Participation in these systems primarily involves operators providing data on thequantity of packaging they place on the market and paying fees to the recovery organisation to fund the necessary activities to ensure that the targets are met. Bwaste, we consider that in practice operators are affected far more by differences in the requirements of each organisation than by differences in legal obligations. Data reporting requirements are summarised in Annex H. Despite the differences in legal obligations, the same type of operator reports on data ands pays

e fees. In the majority of EU-25, for household packaging waste it is the brandholder that reports on

se

or non-household packaging waste, in some Member States the brandholder also reports on irements

ng quantities of packaging supplied.

Annex H

thpackaging data to the packaging recovery organisation and pays the relevant fee. The brandholder is the packer/filler of branded goods and the supermarket or other retailer is for private label products. For imported products, the brandholder is the importer of the packaged goods. This is often the caeven in those Member States where the legal obligations do not rest solely on the brandholder. Fpackaging to a recovery organisation. But in other Member States there are no reporting requper se because the legal obligation for recovery and recycling rests on end-users. In that case, the end-user must keep records of tonnages collected by a contractor for recycling, a far simpler reporting taskthan tracki As also shows, most of the systems now being developed to implement the Directive in the

mber States have also opted to make the brandholder responsible for reporting both household and non-household packaging. In some Member States, other operators report on packaging. In Ireland and the UK, all stages in the supply chain report for both household and non-household packaging although the fee structure and reporting arrangements vary between these countries. In Italy, it is the converter or packaging importer who reports, and for imported packaged goods, it is the importer that reports. Some recovery organisations have also devised individual reporting arrangements to meet particular circumstances. Thus, in practice, the converters report on certain types of pack, such as service packaging195 filled in retail stores and small HORECA outlets. Our assessment of the impact on different producers of producer responsibility obligations for recovery and recycling therefore mainly focuses on the different requirements for producers in recovery organisations. For transport packaging, where some companies meet their requirements without participating in recovery organisations, we compare the differences between different recovery systems and between recovery systems and individual compliance.

new Me

195 Items such as delicatessen wrappers, produce bags, vending cups and fast food containers.

170

Table 51a: LEGAL OBLIGATIONS FOR MEETING RECOVERY TARGETS FOR PA N M S IN CKAGING WASTE, A D COMPLIANCE REQUIRE ENT

PRACTICE (excludes deposit systems for beverage containers) Household packaging waste Non-household packaging waste All packaging Legal obligations Compliance in practice Legal obligations Compliance in practice Exemptions Comments

Austria All stages (producers & distributors) to take back pack waste and ensure its reuse or recovery.

Brandholder: reports on pack data and pays fees to recovery org. Beverage cartons handled by separate recovery org.

All stages (producers & distributors) to take back pack waste and ensure its reuse or recovery.

d

t

e gets fo s ks hrougn reeme

Brandholder: pack data anfees to recov.org. (Same as for household pack), buothers compete.

For small cos. (turnover and material-specific tonnage thresholds) from take-back requirement. Simplifed reporting for some sectors.

- Sppacvolu

cial tar (met ttary ag

r drinkh nt).

Belgium Packer/filler or importer of packaged goods to take back pack waste and meet targets.

Brandholder: reports on pack data and pays fees to recovery org. Single org. for household pack waste.

Packer/filler or importer of packaged goods to take back pack waste and meet targets.

recoSinpac

FfrSis

m on betse nd indks d by hoso xes ola nks pacq nt to s

ve lan.

Brandholder: reports on pack data and pays fees to

very org. gle org. for industrial k waste.

or small cos (<10 kt/a) rom prevention plan equirement. mplified reporting for

mall cos.

- Dehoupacaut- Alrefil- Repre

arcatihold a definerities. eco-table driuiremention p

ween ustrial

n non-ks. ubmit

Cyprus ?? Brandholder: reports on pack data and pays fees to recovery org. Same org. for all pack waste.

?? Brapac recoSinwa

N n ts still el t.

ndholder: reports on k data and pays fees tovery org.

gle org. for all pack ste.

/A Arradev

gemenopmen

under

Czech Rep. Producer or importer of packaging and packaged goods to ensure take-back and recovery to meet targets.

All stages report on pack data and but only one stage pays fees to recovery org. Same org. for all pack waste.

Producer or importer of packaging and packaged goods to ensure take-back and recovery to meet targets.

All sdat e paySawa

Strr

tages report on pack a and but only one stags fees to recovery org.

me org. for all pack ste.

mall companies (tonnage hreshold) exempt from equirement to pay state egistration fees.

Denmark N/A (only drinks in deposit system)

N/A End-users to ensure collection for recovery/recycling (voluntary agreement)

Encollreco

N es lected sci s for drtai

d-users to ensure ection for very/recycling

one. TaxtypeSpecon

on se. al ruleners.

pack

inks

Estonia All stages (producers & distributors) to take back pack waste and ensure its recovery.

None yet All stages(producers & distributors) to take back pack waste and ensure its recovery.

No St

on drinks contne yet. mall packs exempt from ake-back obligations.

Tax ainers.

171

Table 51b: LEGAL OBLI G A T U ENTS IN GATIONS FOR MEETING RECOVERY TAR ETS FOR P CKAGING WAS E, AND COMPLIANCE REQ IREM PRACTICE ( e cexcludes deposit syst ms for beverage ontainers)

Household packaging waste N paon-household ckaging waste All pac g kagin Legal obligations Compliance in practice Legal obligations Compliance in practice Exemptions Comments

Finland Packers/fillers importers of pgoods to meet for reuse, recoprevention.

anacove

orys

p

erf eeec

s pac erecoSam cwast

F(ton

s and -ble d .

d kaged bligations ry and

Brandholder: reppack data and parecovery org. Same org. for all waste.

ts on fees to

ack

Packers/fillimporters ogoods to mfor reuse, rprevention.

s and packaged t obligations overy and

Brandholder: reportk data and pays fvery org. e org. for all pae.

on es to

k

or small companies urnover < € 841 k) – pay nly small flat rate fee and o data reporting.

Taxerefilla

deposit on nonrinks containers

France Packers/fillers importers to codisposal of wastheir packagin

annte

g.

orts oys fee

o r

Eac tiawith id

For eof pacSimplsmallhous

d tribute to from

Brandholder: reppack data and parecovery org. Two competing organisations.

n s to

End-users tcollection fo

ensure recovery.

h end-user nego contractor indiv

tes ually.

nd-users with <1100 l k waste per week. ified reporting for companies for ehold packaging.

N/A

Germany All stages (prodistributors) topack waste andreuse or recove

du t r

orts oys fee

g

pr) ta

co

Som owith idSom reon yto r evcom tio

None cted drinks . Now handled s

cers & ake back ensure its y.

Brandholder: reppack data and parecovery org. Several competinorganisations.

n s to

All stages (distributorspack waste reuse or re

oducers & o take back nd ensure its very.

e end-users neg contractor indive brandholders

pack data and paecovery orgs. Speting organisa

tiate ually. port fees eral ns.

. Sele containerseparately.

Greece All stages to prrecovery organ

ois

orts oys fee

pack

o ga

Bra s pac ees trecoSam ack wast

None. N/A vide ations

Brandholder: reppack data and parecovery org. Same org. for allwaste.

n s to

All stages trecovery or

provide nisations

ndholder: reportk data and pays fvery org. e org. for all pe.

on o

Hungary Packer/fillers oto ensure takerecovery and r

r -bec

orts oys fee

pack

rs-bg

Bra ts on pac fees trecoSam ack wast

Exemfor soptioto papack

Packaging taxediscounts if rectargets met.

importer ack, ycling.

Brandholder: reppack data and parecovery org. Same org. for allwaste.

n s to

Packer/filleensure takeand recyclin

or importer to ack, recovery .

ndholder: repork data and paysvery org. e org. for all pe.

o ption from take-back

mall companies, and n for small companies ss responsibility to producer.

s, with ycling

Ir gie d

n pacto

andhoee. pack

o tan

o r

All st pack datreco dholdpay Sam ack wast

For s(<€1<25 only

Tax on plastic . eland All stages to reauthorities, takpack waste anrecovery.

ster with back ensure

All stages report odata and pay fee recovery org. Brpay most of the fSame org. for allwaste.

k

lders

All stages tauthorities, waste and eEnd-users tcollection fo

register with ke back pack sure recovery. ensure recovery.

ages report on a and pay fee to very org. Bran

most of the fee.e org. for all pe.

ers

mall companies m turnover p.a. or tonnes supplied p.a.) obligation as end-user.

carrier bags

172

Table 51c: LEGAL S C , I E OBLIGATION FOR MEETING RECOVERY TARGETS FOR PA KAGING WASTE AND COMPL ANCE REQUIR MENTS IN PRAC s r e TICE (exclude deposit systems fo beverag containers)

Household packaging waste Non-household packaging waste All packaging Legal obligations Compliance in practice Legal obligations Compliance in practice Exemptions Comments

Italy All stagdata anenvironmanagfrom thMandatrecover

h s t eefrg.ver

P n p ch ipS l p

/es to submit pack d ensure proper mental ement of waste eir packaging. ory to join y organisation.

Pack producer reports on pack data, pays fee (whicis invoiced on to packers/fillers). Same organisation for all pack waste.

All stagedata andenvironmof waste packaginjoin reco

o submit pack nsure proper ntal management om their Mandatory to y org.

ack producer reports oack data pays fee (whi

s invoiced on to ackers/fillers). ame organisation for alack waste.

N/A N A

Latvia Packers/importerfor manfrom th

o fils gr

p torSw

afillers and s are responsible agement of waste eir packs.

Brandholder: reports on pack data and pays fees trecovery organisation. Same organisation for all pack waste.

Packers/importerfor manafrom thei

lers and are responsible ement of waste packs.

Brandholder: reports onack data and pays feesecovery organisation. ame org. for all pack aste.

N/A T x on packaging.

Lithuania Producto mee

Brpac o recSapac

s ge

p to rS ll p

a g if ar

ers and importers t targets.

andholder: reports on k data and pays fees tovery organisation. me organisation for all k waste.

Producermeet tar

and importers to ts.

Brandholder: reports onack data and pays feesecovery organisation. ame organisation. for aack waste.

N/A Tt

x on sales packagingets not met.

Luxembourg Packers/importergoods t

Brpac o recwhan

fillerss of pmeet

L te w lly.

p or p ld p

ea

30produ

fillers and s of packaged

o meet targets.

andholder: reports on k data and pays fees tovery organisation, ich handles household d similar pack waste.

Packers/importergoods to

and ackaged targets.

arge end-users negotiaith contractor individua

Brandholder: reports onack data and pays fee facks similar to househoacks.

Simplified rsmall comp<6.2 m, <and >300

porting for nies (turnover employees)

ct lines.

Malta “Produpackagi

Arrdevbrapacrec

rs” tog. d

b p r

ax on rs, ith eartic ry

organi

cers” to take back ng.

angements still under elopment. Probably ndholder to report on k data and pay fee to overy organisation.

“Producepackagin

take back Arrangements still under evelopment. Probably randholder to report onack data and pay fee toecovery organisation.

Twp

drinks containexemption if ipating in recovesation.

Netherlands Packers/fillimporters ttake preven Other stagethem.

All Pa s onpaim

fillerss to mentioges t

. P cus opi

able p

fromts fo(tonnempl

Specia or drinks Covena cial ommiteduct

ers and o meet targets, tion measures.s to assist

stages sign Covenant. ckaging producers focu meeting targets; ckers/fillers and porters on prevention.

Packers/importertake prevOther sta

and eet targets, n measures. o assist them.

All stages sign Covenantackaging producers fon meeting targets; ackers/fillers and

mporters on prevention.End-users to make availack waste for recovery.

Exemption requiremencompanies number of

reporting r small age,

oyees) cr

l requirements fcontainers. nt contains spements on litter

ion.

173

Table 51d: ACKAGING WASTE, AND COMPLIANCE REQUIREMENTS IN LEGAL OBLIGATIONS FOR MEETING RECOVERY TARGETS FOR P PRACTIC tems for beverage E (excludes deposit sys containers)

Household packaging waste Non-household packaging waste All packaging Legal obligations Compliance in practice Legal obligations Compliance in practice Exemptions Comments

Poland

ers to sort used packaging, and to meet targets for point-

mpete, and

ports on pack data and

certain. In some - brandholder reports on pack data and

recycling rate achieved.

Packers/fillers to meet targets and report on packaging. Retail

of-sale packs.

Many recovery organisations coarrangements not certain. In some - brandholder repays fees to recovery organisation.

Packers/fillers to meet targets. Retailers to sort used packaging.

Many recovery organisations compete, and arrangements not

pays fees to recovery organisation.

For small retailers (<500 m²) for POS packs.

Taxes on difference between targets and

Portugal /fillers and importers of packaged goods to set up deposit system. Packaging producers to recover pack

aste.

d pays fees to recovery organisation, which handles household and similar pack waste.

fillers and importers of packaged goods to set up deposit system. Large end-users to sort pack waste and ensure

overy.

e r individually.

Brandholder: reports on pack data and pays fee for packs similar to household

ers and other

get collected.

irements for Packers

w

Brandholder: reports on pack data an

Packers/

rec

Large end-users negotiatwith contracto

packs. HORECA outlets to sort drinks containpacks and take to bring sites or

Special requdrinks containers.

Slovakia

e fee ee, andholder reports on

data and pays fees to recovery organisation.

fee ee, andholder reports on

ees to nisation.

0 t

ments.

Requirement to prepare prevention plan.

Pack producers, packers/fillers and importers to pay Stat

Pack producers, packers/fillers and importers to pay State fand Brpack

Pack producers, packers/fillers and importers to pay State

Pack producers, packers/fillers and importers to pay State fand Brpack data and pays frecovery orga

For small companies (<1p.a.), exemption from prevention require

Slovenia All stages to ensure collection for reuse,

Brandholder reports on pack data and pays fees to

rganisation. Same organisation for all pack waste.

l

to sort pack waste to facilitate its recovery.

on pack data and pays fees to

ganisation. Same organisation for all pack waste.

For small packers/ fillers, retailers.

ife packs, point-of-sale packs.

recovery or disposal. recovery o

All stages to ensurecollection for reuse, recovery or disposal. Alstages to accept back usedpack from customers. End-users

Brandholder reports

recovery or For deposit-bearing returnable packs, long-l

174

Table 51e: LEGAL OBLIGATIONS FOR MEETING RECOVERY TARGETS FOR PACKAGING WASTE, AND COMPLIANCE REQUIREMENTS IN PRACTICE (excludes deposit systems for beverage containers)

Household packaging waste Non-household packaging waste All packaging Legal obliga io s t n Compliance in practice Legal obligations Compliance in practice Exemptions Comments

Spain Packers/fillers or selor brandholder to take back packs and ensure its recycling, or to operate deposit system, and to submit pack

l ,

data.

d

ndled separately.

i

for ld

rget.

ers Brandholder: reports on pack data and pays fees to recovery organisation, which handles householand similar pack waste.Glass ha

Commer ial in upack exempt from take back and deposit obligations.

c & d str al Large end-users negotiatewith contractor individually. Brandholder: reports on

pack data and pays fee packs similar to househopacks.

Long-life packs and household packs achieving 60% recycling exempt from take-back obligation.

Obligation to submit prevention plans and chieve pack reduction a

ta

Sweden Packers/fillers, importers and distributors of

aged go

provide data.

Brandholder reports on pack data and pays fees to rec

Packers/fillers, importers and distributors of

aged go rovide

collected packaging, and to provide data.

Brandholder reports on pack data and pays fees to r

Special requirements for beverage containers.

pack ods to provide collection systems, and ensure the recovery of collected packaging, and to

overy organisation, Same organisation for all pack waste, except glass.

pack ods to pcollection systems, and ensure the recovery of

ecovery organisation. Same organisation for all pack waste.

U.K. All stages to register, submit data, meet a share of the targets (calculated using mathematical formula).

org, r with

s and purchase suf nt re

pes.

formula).

pes.

ll companies (turnover < £2 m, or 50 t packaging)

All stages report and pay fees for their share of targets to recovery Or all stages registeauthoritie

ficie cycling certificates for their share of the targets. Several recovery orgs compete, all handling all pack ty

All stages to register, submit data, meet a share of the targets (calculated using mathematical

All stages report and pay fees for their share of targets to recovery org, Or all stages register with authorities and purchase sufficient recycling certificates for their share of the targets. Several recovery orgs compete, all handling all pack ty

For sma

175 6.2.2 Differences in national coverage 6.2.2 for small operators

In principle, e ptions from l l requir ts for small operators s have the effect of placing a greater share of the burden on larger companies. O e t of the recovery o n ions make a icy deci n howriders, which may amount to the same thing. Furthermore, several of the recovery organisations offer smal m ies the option of simplified reporting or o a fee based on t over rather than on packaging us The e co ated the reporting rules are, the gre ed for exemptions for small operators. Importers are ore likely to be small operators, and because they do not manufacture the packaged good emselves, it is harder for them to obtain the data on the weight of their packaging necessary to calculate the fees. In addition to permitting small co anies sim ly to pay tu over-based fee, som ecoveorga tions evis a ra f sim o s, some of which may by oper s of . S e ex • S ra isat r r ees ied to

s l r k duas ra l

• Eco-E llages in France has a piggy-back arrange

h through an additional paym e bee-keepers’ association whe ay the insurance for their hives.

• A sec h as tex s and sh nd

v le • F l o c nies to pa turnove ed on ckaging

t /tur c nies. We w e suc as tho e t a e t offer simplified repo em s. 6.2.2 -ri Fail The e er State to another, hence the num e riders. Poor enforcement can create distortions of competition between competing com hen some operators bear the costs of comply with th gal requir ts, such as by payi v g s and some do not. Companies participating in recovery organisations mes put pressure on the recovery ations to ensure that their competitors also We a r gula e rigorou nforc thorities and that prosec ffenders. There are ver a ressures on c ies to comply – some retailers insist that all suppliers demonstrate participation in a recovery organisation and invitations to tender may include relevant conditions. In the UK for example, the authorities responsible fo forcing the packaging regulations are also resp ble for secuting com ha mmit s us breaches ollution legislation. They

.1 Exemptions

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in some Mn the oth

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isat far it is cost-effective to pursue small free-

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mplic m

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age co This avee.

a rting

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stria offers simplified reporting innd ceramic ti

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tile

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s (per m² of tile).

ws small the larger

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f the enfo

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r eneriopro panies t t co of p

176 have brought a num of succes prosecutions. Although the fines are usually not high, these cases are often well publicised in the business and specialist press. The risk of non-compliance lies in dam to a than in the level of the fines. On the other packaging recovery organisation in Ireland, Repak, has repeatedly argued that inad te fo t by the authorities has resulted in widespread free-riding. The local auth es ig esponsible for enforcement, lacked the necessary financial and staff resources to br pr cutions. The government has now established a new environmental enforcement body whose role includes enforcement of the packaging regulations. In G any, that the level of ance i ig e have received man quir the years from companies seeking our advice on comp hroughout Europe. Ever e wi on has indicated that they were already signe p and that their packs were marked with the Green Dot. Many were how ware o needed to sign up with equivalent recovery organisations in the other Memb s where their packaged products were sold. This suggests that the legal requirements were blici any and/or that these panies had been made aw of their obligations by their German business partners. We u rsta h tati r ny inv goods cont c io ppl s ana aste. In practice this mea at ear c r organisation. The struc o e tent, at least in resp f l m om customers and get it recyc ra c es gets the pack g st en a e supp i ent was common in the past. However, recovery organisations handling industrial/commercial packaging now often char e ndholder, the sa ing arrangement as for consum ackaging. Som ons have resulted in court cases that challenged the obligations. These have som ct of clarif bligations. eferrecourts sought the lega .197 nged the Decr ackaging use it was not notified rench courts referred the case to the ECJ, which ruled that although France was at fault for failure to notify, there were no grounds to overrule the French court (which had ordered the company to comply with the Decr ov d the same rul n and Fre s. Ano se e CJ, ian court,199 co carrier bags do fall within the scope of the Directive. And a case in the UK, High Court, conc g as defined b ions. Given the exem s mpanies, the ruling was significant for the horticulture secto g es would hav e threshold if plant pots

ber

pany’s reputation rather

nd, the rcemeninally r

sful

age

equaoritiing

ermy eny on

com

ndeain ans thture

ect o

agin

ge f

e eetim

ee

ee)

the

ludptr s

wer

com

ha en, orose

anecdotal evidence suggests ies thout excepti

compli

ever unaer State well-pu

s h

d u that

sed in

h.196 Wliance t to DSDthey als

Germ

over

are

ons tier is the in Gepackctica

ch

nd tdite se m i

at some invin that the su

upplier must blegal obligationsercial/industria

s usually not a pe collected, and

o tende responcost, surmany

aging. Tble optio

rges the

in Germaible for mh as by pancourageshe requiren. In pra

cost to t

olving thging the pac

ticipating in acompliance to

ent to take batice, the end-u

lier. Th

e supply of packaged kaging w

recovery a certain exck waste frser sometim

s arrangem

on thf thcomled

wa

to

rceha

th h

ees

nfoes

on H

, pr

r ca

ed ion incee

th

md t to

ous

bra

ent actihe effe confirmehold P

me fund

ying legal olity of the French legal obligationsWaste 198 beca

er p

d to the EC A companto Brussels.

A case r J by the French y challe The F

ide

ref

t p thanp

that

rred to the E

lastic plant potse UK regulationy nurseries and

ackaging.

es apply to foreig

by an Austr

are packaginfor small coarden centr

nch firm

nfirmed threferred to the

y the packag

e been below

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the 50 tonn

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196 A p re a riders in G due to f enforcement by the Germ o 197 E -159/00. 198 D 92-377 1er avril porta pplication pour les déc s résultant ’abandon des emballages de la loi N -663 du uillet 1975 mod e relative a l’éliminatio es déchets la récupération des matériaux. 199 ECJ case C-341/01.

s Dan

CJ c

écret° 75

SD auth

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177 Under-reporting

In ad on to g by anies that do nothing at all to comply, there is also the possibility of parti on-c by under-reporting. Companies may under-declare the quantity of packaging plac n the y omitting some product codes, or by miscalculating the fees. This may som es a deliberate att panies to defraud the recovery organisation, or it may be the resu ge ine errors. As we argue below, data reporting requirements are extremely complicated and s between different national recovery organisations. Companies whose pack du com ions change often find it hard to keep track, and those who import from all over the w d m to determine the weight of the packaging. Prev ng d errors (whether deliberate or inadvertent) is the responsibility of packaging recovery orga enuine errors are as result in over-reporting as in under-reporting, as so companies who estimate their packagi deliberately err on the high side. Some recovery organisations require participating co s to get their data audited (usually as part of the com ’s general financial audit) and some s heir own auditors to check data. These audits may stematically – such as selecting particular sectors each year, or they may focus on c anie are suspected. Whe re io s in com a national market, the recycling targe at s as a pr ng reported to it. Inaccurate repo c n ging ation needs to recycle to meet its ta . D in e targets above 100% for som te tion o porting by companies that do parti te d la o ope of c ng that becomes waste on business sites that sometimes counts as consumer packaging and sometimes as industrial packaging). Info ging re te agin ry organisations is also one source of data used to cr er dat ses quantity of packaging placed on the market. If the data is inaccurate, it may m tal packaging placed on the market. 6.2. fer etw s rious national recovery

anisations These differe • T tions In th e reco s packaging waste from hous tates n operate in competition. In som s ber St rganisation handles both hous ing, so producers report both sales and transport pack is n. In e ger ber States, it is more common for the scope of reco be lim d e aging waste, while transport packaging is hand

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200 T tegories are often referred to as “sales packaging” and “transport packaging” respectively, the term e definition of packaging in the Directive. Below we use the terms “consumer packaging” or “hou d packaging” on the hand and “commercial packaging” or “industrial packaging”, because the distin ns in re ing requirements relate to wh ckaging typically becomes waste rather than what legal categ it falls i

heses used in thseholctioory

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178

ersity between the legal obligations and compliance in practice in each Member State than for household packaging. In Belgium, for example, a single

tact with suitable contractors.

m small businesses, such as cafes and bars, doctors’ practices and small offices. his is because such packaging waste is often collected and handled together with household

sations

ut not large retail stores or factories. The same product/pack ombination may sometimes be sold to a household and sometimes to a business site outside the scope

tr n

In p y

rganisations by paying fees for the packaging they place on the market. To do this, they need to m he

w i

f c a

• The treatment of transport packaging For transport packaging, there is greater div

recovery organisation operates for all “industrial packaging” (defined as transport packaging and some secondary and sales packaging likely to become waste on industrial sites). In Germany a range of different organisations compete with each other, and in France each business end-user negotiates individually with a contractor. Recovery organisations exist in France for specific types of industrial packaging but their role is limited to establishing ground rules (quality specifications, etc) and putting end-users in con • Different dividing line between household and non-household packaging waste Many of the recovery organisations whose scope is limited to household waste also handle some packaging waste froTpackaging. In Germany for example, the 1998 Packaging Ordinance says that recovery organihandling household waste can handle packaging waste from all “private end-users”, a term that includes schools, hospitals and offices, bcof a recovery organisation for household packaging. If there are separate targets for household and for

a sport packaging, the lack of clarity can also affect the apparent recycling rate achieved.

6.2.4 The implications of these differences

ractice, the main responsibility is for operators, usually brandholders, to participate in recoveroco pile and submit data on the weight of packaging that they place on the market, indicating t

e ght (and sometimes the volume) separately for each packaging material. As we discuss below, there are differences in the fee structures and hence in the data requirements oea h recovery organisation. Furthermore, each recovery organisation requires the data to be presented

different format. in

179

r companies, on a not-for-profit basis. .

6.3 THE FEES CHARGED BY NATIONAL RECOVERY ORGANISATIONS

6.3.1 Overview of fees Each packaging recovery organisation sets its own fees at rates sufficient to ensure the collection and recycling or recovery of sufficient packaging to meet national targets, or the targets set for it in national legislation. The majority of packaging recovery organisations were established by the

perators subject to legal obligations and operate as private sectooHowever, some are operated by waste management companies as an add-on to their existing business As the overview of fees charged by packaging recovery organisations in Annex J shows, there is a wide variation in the cost to operators (usually brandholders) of complying with this element of the Directive. Because the fee structures and bases for calculation are so different, the fees for specific pack types are shown in a list of “shopping basket” items in Annex H.

actors affecting the fees charged by packaging recovery organisations include the following: F • Inherent structural and market differences, including demography (population density affects

collection costs, and transport distance between population centres and recycling plants affects transport cost), market conditions (prices charged by waste collectors, regional differences in secondary raw material prices), structure of the packaging market and proportion of imported packaging and packaged goods (which affects the availability of recycling facilities).

• Extent of producer responsibility. In some countries (Austria, Belgium and Germany),

obligated companies have to cover the total cost of collecting and sorting household packaging waste, whereas in other Member States (such as France) they cover only part of the cost.

• The structure and severity of the national targets. Some Member States set targets at the

minimum levels permitted by the Directive. Others such as Austria, Belgium and the Netherlanhave secured approval for targets above the maxima in the Directive. And some Member States have adopted ambitious material-specific targets, separate targets for composites, and separate targets for household packaging waste and for non-household packaging waste. These specific targets reduce industry’s ability to concentrate on the material that is easiest to collect and/or material with the highest market value.

ds

• Quantity of packaging not participating. If national controls on free-riders are not effective, and/or if individual compliance is not enforced, the cost of meeting national targets will fall disproportionately on those companies that do comply correctly. The same is true if national legislation exempts small operators, with high exemption thresholds for turnover, tonnage of

ation in the country of import handling significant quantities of packaging waste for which it has received no fee.

• Scope of recovery organisations. It is usually cheaper to collect and recycle packaging from

business sites than from households, so systems that can choose what proportion of material to collect from households can more easily keep costs down. Some recovery organisations that handle both streams have separate fees for each stream (Czech Republic) or for “small” and “large” packaging (ARA in Austria), or else they charge the same for both (Portugal, Ireland, Sweden).

packaging, etc. Furthermore, extensive cross-border shopping can result in the packaging recovery organis

• Timescale for establishing systems and meeting targets - if the lead-time allowed by legislation

for developing a national system is short (12 months in Austria, 18 months in Germany) there is no time to learn from pilot programmes and plan an orderly expansion of collection and

180

pacity. In comparison, Eco-Emballages in France had ten years in which to meet s first targets.

w

s far as costs for brandholders are concerned, we do not believe that differences in fee rates of

ng

it is

reprocessing cait

• Short lead times are one example of a “pioneer disadvantage”. Lessons were learned from the

experience of the first systems to be established. Legal provisions and arrangements that hadunforeseen consequences were avoided by the systems established later. The result was that the fees in countries where the systems were established first tended to be high initially, but over timethey have gradually decreased. Conversely, the fees in countries established later were loinitially, but they have increased over time as the tonnages handled have increased. Thus, there has been a convergence in fee rates to some extent.

We conclude from this that some differences in fee rates between different systems are inevitable. Fees apply equally to packaging for home-produced goods and for imported goods, so in principle there is no discrimination in respect to packaging placed on the market in a given Member State. The question is – do the differences in rates in the different Member States create trade distortions? If so, are these distortions unacceptable, or are they are an inevitable consequence of a Single Market consisting of a large number of quite diverse economies? Athemselves create any significant distortions between brandholders in different Member States. [This conclusion is based on the information we currently have, and will be reconsidered once the shoppibasket is available.] 201 Even in Member States where fees are high, the fee per pack typically represents a relatively small proportion of the total retail price of the packaged product. We think unlikely that retail prices are typically lower in a country like the Netherlands, where no fees are paid

012 Annex G shows a selection of common grocery items in different types of pack, together with the fees

nisation

es for these specific packs in each Member State.

Consumer packaging – the retail sales pack, which usually becomes waste in the home.

BoS) – the box, tray or similar around a number of sales units. This packaging y be large sites or small, city centre retail stores or

aging has been calculated twice – once at the rate for the consumer packs and once at e rate for commercial/industrial packaging. This is because such packs are sometimes handled by recovery

organisations that handle household packaging waste and similar packaging, and sometimes as commercial/industrial packaging waste.

o each end-user varies.

charged by recovery organisations in each Member State. The data on the packaging weights and volumes was obtained from Packforsk in Sweden. The products/packs shown are the Swedish market leaders in each category. Most of the products are international branded items sold throughout the EU, although others may be

nique to the Swedish market. The table will show what a producer would have to pay in recovery orgaufe The packaging is divided into three categories, as follows:

•

Back-of-store packaging (• usually becomes waste on business sites. These macafes.

• Transport packaging – the pallet, plastic or paper wrapper and any strapping. This packaging usually

becomes waste on large business sites. The table will show the fees per 1000 consumer sales units, including the relevant proportion of the BoS and transport packaging. Thus the fee shown for the transport and BoS packaging has been adjusted up or down asappropriate, sometimes for partial units.

he fee for the BoS packTth

To calculate the fee for the transport packaging, we have assumed that this packaging is always outside the scope of recovery organisations for household packaging waste. Thus the fee is at the rate for industrial packaging in the Member States where such packaging is handled through a recovery organisation. No fee will be indicated for Member States such as France where each end-user negotiates individually with a waste contractor, as the cost t

181

organisation fees are one ctor among many that affect retail prices charged. And, as discussed below, the cost is in practice

to

an local producers, flat rate fees could create a competitive distortion. As the fees overview in Annex J

to a recovery organisations, than in Germany, where fees are high. Recoveryfainternalised according to market forces. There are however two aspects of the fees that could give rise to competitive distortions: • Several recovery organisations charge a one-off joining fee or a flat rate annual fee in addition

the weight-based fees. These are intended to cover the recovery organisation’s administrative costs of accepting new members and managing their participation. Given that importers typically sell smaller quantities of packaged goods th

shows, nearly every recovery organisation turnover or

by tonnage placed on the market, or they are expressed as a percentage of turnover. The only is

the

e quantities handled (economies of scale) and the greater availability of local recycling facilities. The question is whether the difference is exaggerated to the disadvantage of imported products.

s it is usually brandholders which pay the fees to recovery organisations, particularly in respect of

developed the concept of DSD, the negotiators decided that the brandholder on the clear understanding that the cost would be passed on to customers,

nd ultimately to the consumer. Brandholders would pass on the cost either overtly, in invoices, or internalised in product prices.202 Brandholders were selected as the most appropriate stage in the packaging chain to pay the fees initially because, since they specify the packaging, they are the operators best placed to influence the design of packaging, the material used, etc. The fee paid to the recycling organisation would, it was argued, encourage brandholders to minimise their packaging. Moreover, brandholders are in any case responsible for labelling packaging, and they know which packs will be exported to which national market. This arrangement was adopted by recovery organisations in the vast majority of the other Member States. Different arrangements apply in: • Italy, where the converter pays the fee. However, the same idea applies in that converters invoice

the cost on to their packer/filler customers. • The UK, where operators vehemently opposed the principle that one stage in the supply chain

should alone pay fees. There was little confidence that packers/fillers, or any other stage of the

that charges a joining or annual fee has graduated the fees. Either they are banded by

system that charges a flat rate fee is EKO-KOM in the Czech Republic. However, as this fee less than €100 (currently the equivalent of €86.80), we do not believe that it represents a significant financial burden.

• Secondly, decisions on fee rates may favour the types of product and packaging produced in

home market, to the disadvantage of producers importing into that market. For example, in some Member States most drinks cans are made of aluminium but in others they are tinplate, reflecting the most commonly available metal on the local market. The fee may be lower for the more common metal in a given Member State. A lower fee may be justified because of the larg

6.3.2 Impact on different players 6.3.2.1. Fees Aconsumer packaging, it would be easy to assume that they bear most of the cost of compliance. When German industryhould initially pay the fee,s

a

202 In Spain it is a statutory requirement that recovery fees are shown on invoices.

182

ate about which ges of the supply

chain share it. As a result, all stages of the chain pay a proportion of the fees, with different the supply chain.

g producers have made their States

g waste

• r

iler. er in

203

• erator

pays the fees initially and whether he has passed them on to his customer, the cost will be ice

m, a tiations on product price. Brandholders may be able to

recoup some of the fee in the price they pay for packaging. The extent to which any operator is

• t

d operators may wish to keep to a threshold price (99 eurocent, €9.99, etc). The cost

of the recycling fee may therefore be added to other similar products whose price is less sensitive,

chain, would be able to pass on the cost to their customers. After prolonged deboperators should bear responsibility, a compromise was reached whereby all sta

percentages for each stage in • Ireland originally envisaged following the UK arrangement, and also opted for shared producer

responsibility. However, in practice most of the fees are paid by brandholders, with other stages of the supply chain contributing a small amount.

On closer analysis, we conclude that even in systems where the brandholder pays the fees, the cost of meeting the targets is in reality spread between different operators: • Producers of packaging raw materials and of packaging also contribute to meeting the

recycling targets. The fees paid by brandholders to recovery organisations primarily fund the segregated collection and sorting of packaging waste, although the money is also used for other purposes, such as R&D. The raw material producers and packagincontribution by investing in new reprocessing capacities where necessary. In some Member they have given a guarantee to the recovery organisation to take back and recycle packaginthat has been collected and sorted.

The term “brandholder” can apply to different operators. Most commonly it is the produceof the packaged goods, but it can also be the retailer (in the case of private label products), or the importer of packaged goods. The importer may be a specialist importer, a wholesaler, or a retaIn the case of industrial packaging, the importer may also be a packaged goods producrelation to the packaging of imported raw materials and empty packaging.

Market forces allocate the costs between different operators. Packaging recovery fees are costs like any other, such as for labour, energy and raw materials. Regardless of which op

internalised and distributed between the operator and his suppliers and/or customers during prnegotiations for the packaging and packaged products. The operator that ends up with all or most of the cost will be the weaker party in each negotiation. Thus, the producer of a “must have” brand may be able to pass the full cost on to a small chain of convenience stores, but a small specialist food producer may find that his proposed price rise is not accepted by a large supermarket chain. Even when the packaging fee has been passed on as a separate invoice iteretailer may claw some of it back in nego

are able to do this depends on the relative market strength of the supplier and customer in each case.

Market forces allocate costs between different products. The fee for a given pack may noalways be added to the price of the corresponding product. Some products are extremely pricesensitive, an

or to an unrelated product. The fee for a pack of milk may result in an increased retail price for,say, yogurt or for another product entirely.

UK recovery organisation Valpak argued that it may not always be clear who is the brandholder of sport and commercial packaging. The concept of “brandholder” is not a part of the UK arrangem

203 tran ents, and we are not aware of any confusion in the countries where “brandholders” are responsible for reporting.

183 The operators affects, together with our general understanding of market forces. It is impossible to provide

ard evidence because information about price negotiations is obviously commercially sensitive.

6.3. Bel the ost pliance costs made by companies, so they

y makes the system fairer. We believe ost of

despread.

on their premises do so, but in

mrecocollection directly.

en be p Prices for removing recyclable material vary

conclusions above are based on general discussions with recovery organisations and the economic

hHowever, one informed observer in France did comment to us “les coûts – ça balade”! 204

2.2 Administrative costs

ow we consider the administrative burden of preparing packaging data, as the basis for calculatingfees. We conclude that the administrative burden, in staff time for example, is significant. These s may not always be included in the assessment of comc

may not always be passed up and down the supply chain like recovery organisation fees. If recovery organisation fees are in practice allocated between operators during price negotiations and if the administrative cost of preparing the necessary packaging data is significant, are the shared responsibility arrangements in the UK and Ireland really worth it?

he idea in these Member States is that shared responsibilitTthat, even in a shared system, the operator with the weakest market position will in reality bear mthe costs. In the UK, producers of packaging raw materials bear only 6% of the responsibility and packaging producers 9% (compared with 37% for packer/fillers and 48% for companies selling to the final end-user). However, in practice many raw material producers and packaging producers probably report on packaging that they supply to UK customers but which is subsequently exported. There have been discussions about passing data up and down the supply chain to avoid this. But this raises issues of commercial confidentiality and of itself adds to administration costs, and we do not believe that the practice is wi We conclude that any advantages of shared responsibility in terms of fairness are far outweighed by the higher administration costs arising from the fact that a larger number of operators have to prepare data. 6.3.2.3 Costs and benefits for end-users In some Member States, business end-users arrange directly for the packaging waste

cling. In countries such as France, they have a legal obligation toto be collected for recyso e other Member States, brandholders and their customers can choose whether to participate in a

very organisation in respect of transport packaging or whether the end-user will organise

Large end-users may in some circumstances not pay to have packaging waste collected, and may ev

aid by waste collectors for their material. significantly depending on the quantity and quality of material collected, whether it is baled, etc. Market prices for secondary raw material prices fluctuate – when they are high, the value of the material is higher than the cost of removing it and collectors pay end-users for the material. Information supplied by Interseroh indicates the maximum and minimum costs across all sectors in 2003 in Germany:

420 Roughly translated as “costs wander!”

184

Table 52: INTERSEROH’S MAXIMUM AND MINIMUM WASTE MANAGEMENT COSTS FOR TRANSPORT PACKAGING, 2003 Best • large quantity of good quality material (eg End-users would be paid:case OCC or clean, sorted, homogeneous PE film),

• baled, • no container supplied by contractor.

• € 0–20/t for board, • € 50-100/t for PE film

Worst case

• minimum quantity of material, i.e. 1.1 m³ container (material at sites with less waste is considered sales packaging),

• mixed grades • unbaled, • container rented from contractor

End-users would pay: • €150-200/t for board • €350-400/t for PE film

Inte te coll • fees to a recovery organisation for transport packaging. The

recovery organisation uses some of the money to provide incentive payments to end-users to sort e

•

payment for some types of material subject to certain conditions.

o comply individually or to participate in a recovery organisation. Companies buy “Packaging Recovery Notes” (PRNs) from reprocessors to

that they have met their share of the targets, or else recovery organisations purchase PRNs on behalf of their members. End-users with large quantities of packaging waste and/or

r Ns

they have acquired to the scheme and the relevant tonnage is deducted from their obligations. .

ney is

end-users represent a distortion of competition in vour of private label goods? Or are these payments just a “fact of life”? Payments to large end-

rseroh is a German waste company that inter alia markets recyclable material collected by wasectors. Interseroh stressed that there were significant regional variations in the figures above.

In Belgium, brandholders pay

their packaging waste and make it available for recycling. The payments, made through the wastcollectors, relate to the quantity of packaging made available. They provide an incentive to end-users to sort their packaging waste and they contribute to the costs of collection.

In Austria, brandholders pay a fee in respect of transport packaging. The money is used to operate a network of drop-off centres where end-users can take their material free of charge. Thecost of transporting the material to the drop-off point is borne by the end-users but they receive

• In the UK, companies can opt whether t

demonstrate

waste collectors can negotiate with reprocessors to purchase PRNs when they deliver material forecycling. Obligated companies who are members of recovery organisations then send the PR

End-users may be able to get their PRNs at a good price because they are also supplying materialIndeed, in such situations, it is hard to separate the price paid for the material from the price paid for the PRN (PRNs are issued for a certain number of tonnes).

If a large end-user (say a supermarket chain) is receiving money for its packaging waste, the mooffset against the fees paid by that supermarket to a recovery organisation. Supermarkets usually have far larger quantities of packaging waste on their premises than branded goods producers. Do the payments they receive asfausers are not a new phenomenon, and they are unrelated to producer responsibility legislation.

185 6.4

.4

othey

ete iscussed above), and by fee

mpanying reporting yclers,

dpro Werequthei

ey ging database for each country because of the significant

eaccomcom ents nd

smaFor anypro Som This solulargneecou s arra

art , and some permit only foreign producers registered within another EU Member State to

In p riskreposep

ur experience in preparing this report provides a good example of the complexity of what should be a straightforward exercise. We had intended to calculate the fees for our shopping basket ourselves, using the data obtained from Packforsk. After all, we are familiar with recovery organisation fee structures and reporting requirements, and we have on file all the documentation provided by each recovery organisation about how to calculate the fees. We have undertaken a similar exercise in the past, albeit for a smaller number of items. However we realised that in order to calculate the fees, we

for

THE IMPACTS ON PRODUCERS OF INCONSISTENT DATA REPORTING REQUIREMENTS

.1 Data reporting 6 Pr ducers, usually brandholders, must report to recovery organisations on the quantity of packaging

place on the market. This is the basis for paying recycling fees. The reporting requirements are rmined by the context in which the organisation operates (as dd

structure.

ach recovery organisation has undertaken the process of setting fees and the accoErequirements individually, in negotiation with producers, waste management contractors and recan the authorities in the respective Member State. As a result, the requirements as to how each

ducer must present data on packaging vary considerably.

have identified significant problems arising for operators from these different national rules and irements on data reporting. We spoke informally to some major international brandholders about

r experience of reporting on packaging to the different recovery organisations. One told us that simply maintained a different packath

differences in national rules. Another reported that it does have a single packaging database for all markets, but that the task of manipulating the data to generate information in the format required by

h country was difficult and complicated. Because the rules vary so much in each country, the pany has a dedicated staff member per country responsible for preparing packaging data. The pany had concluded that it was necessary to have a staff member familiar with local requirem

who speaks the local language. a If large international companies are finding the task of preparing packaging data so challenging, then

ller companies with fewer specialist staff and fewer IT resources must be facing real difficulties. example, the requirements must be daunting for a medium-sized company, too big to benefit from legal exemptions for small companies or simplified reporting, and which imports a significant portion of its production from other Member States.

e recovery organisations permit exporters to report data and pay fees on behalf of importers. tion makes sense where for example a large international producer of branded goods sells to a e number of small operators (such as specialist retailers) in each Member State. The exporter ds to supply a list of all its retail customers within the respective Member State, and in some ntries each retailer must confirm the arrangement. Some recovery organisations do not permit thingement for legal reasons, because only companies registered within the Member State may icipatep

participate.

rinciple, we welcome all initiatives designed to simplify reporting procedures. There is however a that special reporting arrangements for specific types of pack or sub-material types may make data rting more complex. If they mean that the pack or material types affected have to be counted

arately, these apparent simplifications can in fact give rise to unintentional barriers to trade. O

would have to read through all the documentation for each Member State to determine whether,example, each element of the pack (label, closure) should be included in the total weight of the pack, calculated separately, or ignored. Should reusable packaging be included or not? Are the ice lolly

186

on

e think that the way reporting requirements have developed is understandable, because each ished at a different time and under different conditions. As PRO

. Although

eir requirements as far as

stick and the drinking straw on the fruit drink carton considered packaging or not? The time needed to do the job accurately was simply going to be disproportionate, given the other tasks needed for the project. We therefore decided to enlist the help of PRO Europe in asking each recovery organisatito calculate the fees for us. Wrecovery organisation was establEurope has pointed out, some of the reporting differences arise from different national legislation, and are therefore beyond the control of the recovery organisations. We conclude that there is now a need for greater harmonisation in the way each Member State requires producers and recovery organisations on its territory to present data on packagingall the Member States must submit their data to the Commission in the same format, each requires data from producers and recovery organisations to be presented in a different way. Also, given that recovery systems are governed by Article 7 of the Directive, there is a need for the recovery organisations in each Member State to work together to harmonise thpossible. Annex H provides an overview of the different reporting requirements, including those for packaging taxes. The key areas of difference which give rise to different reporting requirements for the producers affected are discussed below. .4.2 Definition of 6

packaging

ission has been working with the Member States to clarify the definition of some items. The mending Directive 2004/12/EC contains some new criteria that will reduce the number of borderline

ber States but not in others. Directive 2004/12/EC mples of borderline items, indicating which are packaging

ll do not cover all doubtful items, so companies then have to contact each national

covery organisation in turn to find out which items should be reported. This is a time-consuming and expensive process. Otherwise, the operator can guess what to include, in which case he risks either over-reporting and thus paying too much in fees, or under-reporting, with a risk of having to pay back-fees with interest, or even prosecution.

Article 3 of the Directive contains a harmonised definition of packaging, so in theory all Member States should apply the definition uniformly. However this is far from being the case, and the Commaitems that are considered packaging in some Mem

rovides a limited number of illustrative exapand which are not. However, a number of items still fall within the definition of packaging in some Member States but not in others. This situation is inappropriate – the Directive contains a harmonised definition of packaging that should mean the same in all Member States. From the environmental perspective, these minor differences in interpretation are insignificant – if one Member State includes items such as matchboxes, labels, or plant pots as packaging while others exclude them, the environmental impact is negligible. However, from the Internal Market point ofview, these differences complicate the process of data reporting for companies whose products aretraded in more than one Member State. 205

In some Member States either the authorities or the recovery organisations have prepared lists of borderline items, indicating which are packaging and which are not. Such lists are not available in a

ember States andMre

205 PRO Europe identified different national legislative rules on packaging of medical equipment as a problematic sector.

187

eform of EU recycling policy is currently under discussion, with one idea being a possible switch from recycling to material-based targets. 206 If the problem of definitions an at c harmonising the definition of packagin Discussions on reform a s m c ew recycling/reco targets efo a taken. We therefore take the view t the definition o . In any case, even if spe ic were no longer set at EU level, we believe

at it is highly likely that some Member States will maintain their national targets for packaging.

ded. Thisomincrdiff

long-term In thou organisation and/or

e b s EU. Thesectasseregulang 6.4

And randholders can easily add both categories of packaging of each material together for data reporting

in the countries where there is no distinction between them. The real problem for brandholders is the lack of clarity between what is considered consumer packaging and what is considered commercial/industrial packaging. The distinction varies between each Member State, and sometimes within the same recovery organisation. This makes it difficult for producers to know what packaging should be reported to a particular recovery organisation. Packs

R targets for specific products such as packaging, WEEE and batteries,

the decision were taken to switch to material-based targets, perhaps d borderline items would simply disappear? In th

g really necessary? ase, is further work on

re till at an early stage, and it is far fro might take, nor how long it will be bat further clarification of

ertain what form nvery re ny such decision is

h f packaging is necessary

cif targets for packaging wastethAfter all, when the EU abandoned specific provisions for beverage containers in favour of rules for allpackaging, some Member States nonetheless opted to maintain special rules for this type of pack. The ideal solution would be to resolve these differences, as the Commission had originally inten

s would involve further negotiations between the Commission and Member States. Given that in e Member States it is the recovery organisations that interpret the definition of packaging, eased co-operation between recovery organisations could also contribute to resolving some erences in interpretation.

We recognise that achieving a fully harmonised interpretation of the definition of packaging is a

goal. Full harmonisation is probably unattainable.

he meantime, we believe that clearer information about borderline items in each Member State ld be more readily available to brandholders. We suggest that each recoverys

national authority should publish lists of borderline items on their website. We think that this is the t way to make it easier for companies to determine the status of items they use throughout the

information should be available in the section of the website available to the public, not the ion reserved for members. Otherwise, new market entrants will be unable to make proper ssments of the compliance cost for different types of pack. The information should be updated larly as decisions are taken on specific items, and the information should be in both the local uage and in an internationally accessible language, presumably English.

.3 Differences in the scope of the recovery organisations

As explained above, some recovery organisations handle only consumer packaging, others handle only commercial/industrial packaging and a further group handles both. In most cases brandholders can deal with the differences in the scope of recovery organisations by keeping data for consumer packaging and for industrial packaging in different databases. Some recovery organisations handling all packaging require that data is provided separately for each category anyway, because they charge different fees for consumer and for industrial packaging. b

206 We discuss this in Chapter 8.

188

ur

ypical for some food products and foodservice disposables, (and so considered household packaging waste) or

gated se of wine. Packaging of products intended for commercial or specialist use may become

estimate of what packaging to report to

es

o

hese include large packs that are more likely to become waste on

arcations for sales packaging which is

all

in

that can fall into either category are referred to below as “consumer/commercial” packaging. In oshopping basket, such packs are mainly in the “Back of Store” category. “Consumer/commercial” packaging is twhich may be supplied to small cafes or snack barsto large hotels or restaurants (where they are considered commercial packaging). The distinction is not clear even for products specially intended either for consumer use or for specialist business or medical use. Consumer packaging often becomes waste on business premises (sandwich wrappers in large offices), and conversely consumers may take home transport packaging, such as the corrubox for a cawaste on premises such as small offices or doctors’ practices, where they are handled together with household packaging waste. In Germany even hospitals are considered “private end users” and packaging supplied to them should be reported together with household packaging. The result is that brandholders simply have to make their best a recovery organisation. However, some recovery organisations have developed additional reporting requirements to address these demarcation problems: • ARA in Austria simply divides packs of certain materials by size, with a lower fee for the larger

packs assumed to become waste on business sites. For board packaging, the reporting categoriare divided into “sales packaging” and “transport packaging”. For plastics and steel, ARA has twcategories of pack, “large” and “small”, determined by area, volume or weight of the pack. For the other materials, both categories are reported together.

• DSD in Germany has all kinds of special fees for “consumer/commercial” packs, each of which

must be reported on separately. Tthe commercial sites within DSD’s scope than in households, and packs in particular sectors.

DSD also has a system whereby a set proportion of packaging in certain sectors is assumed to be within DSD’s scope. Different percentages apply to different sectors.

• In Belgium, the authorities have devised simple dem

considered either “household” packaging (handled by FOST Plus) or “industrial” packaging (handled by Val-I-Pac). For example, the packaging of all televisions and video recorders is deemed to be household packaging although many are supplied to offices, and the packaging ofcomputers is considered “industrial”, although home ownership of computers is now very significant. From the data reporting point of view, these demarcations are a simple solution. In the examples cited above, the TVs supplied to offices and the computers supplied to homes will cancel each other out to some extent. However, they are not necessarily made by the same companies.

• In Sweden, REPA has just devised differentiated fee rates within certain material categories,

which are designed to reflect the different handling costs. These came into effect in April 2005. For corrugated board, different fee rates apply for different product sectors. For example, the fee for the fruit and vegetable sector (where most board becomes waste on commercial sites) is lower than that for the domestic appliance sector (where a higher proportion of board becomes wastethe home). For metals, there are two fee rates, depending on the diameter of the container.

These distinctions can affect compliance costs because the fees for household packaging are higher than those for industrial/commercial packaging. We feel that there is potential for simplification of the reporting of packaging that may or may not fall within the scope of various recovery organisations.

189

.

stems where the scope of the recovery organisation is learly defined and limited to household and similar packaging waste.

D

fferent

ery organisation handling packaging waste from households and certain commercial outlets would make an estimate of what proportion of the bottles typically becomes waste on sites

Similarly, each recovery organisation would estimate what proportion of the corrugated board ng

lds and small commercial sites.

A recovery organisation that handles packaging waste only from households and small % or even 0% for the pallets, film and strapping.

f-tc).

EPA in Sweden for corrugated board appears to have been devised long the above lines. REPA has devised fees that reflect the proportion of corrugated that typically

ill fall into only one of REPA’s categories and we

agine that Swedish retailers have their product databases arranged by sector and so will be able to

f

olders about how to simplify reporting requirements.

ly a partial definition of composites: “packaging made of different materials, and which cannot be separated by hand, none exceeding a given percentage by weight, which shall be established in accordance with [the Article 21 procedure]. Potential

One possibility would be to adopt the method used by ARA in Austria, with simple demarcations by pack size. These demarcations are straightforward and easy for brandholders to distinguish betweenThey make sense in this system where ARA handles both sales and transport packaging. However, wefear that they would not be appropriate for syc We have thought of another possible method. This is an adapted version of the method used by DSin Germany to offer product sector-specific discounts for packaging that becomes waste on commercial sites within DSD’s scope: • Each recovery organisation would make estimates for each product sector of the average

proportion of consumer packaging, Back of Store packaging and transport packaging that typicallybecomes waste in the home and on business sites respectively. These proportions would obviously vary between the Member States as the scope of the recovery organisations are dias are retailing structures and shopping habits.

• A recov

within its scope, say 60%. •

boxes become waste on sites within its scope, say 10 –15% for a recovery organisation handlipackaging waste in househo

•

commercial outlets could put say 1-2 Thus, wine producers and importers would declare all their sales packaging (glass bottles), Back-oStore packaging (corrugated boxes) and, if relevant, transport packaging (pallets, plastic film, e The brandholder would then report all the relevant packaging and would simply adjust the tonnages bythe relevant percentages. Thus, the tonnage of glass would be reduced by 40%, and the tonnage of corrugated board by 80%-85%. The new fee structure devised by Raends up as waste on commercial premises rather than in the home on a sector-by-sector basis. Wewelcome this arrangement – most producers wimadapt easily to the new fees. These are just ideas for how to simplify reporting difficulties arising from the differences in scope orecovery organisations. Our intention is that they should form the basis of a discussion between thedifferent recovery organisations and brandh

6.4.4 Composites Commission Decision 97/138/EC gave Member States a choice between submitting “data on composites …. according to the predominant material by total weight or separately specified.” Commission Decision 97/138/EC contains on

exemptions for some materials may be established by the same procedure.”

190

ntary basis. The revision does not amend the definition f composites in the 1997 Decision.

Since then, no percentage has been specified, nor have any exemptions been established. However, the revised Commission Decision on database harmonisation (2005/270/EC, says that Member States should report composites under the predominant material by weight, although separate data on composites may be provided on a voluo

191

a of a fully harmonised definition of composites eans th o t ab e.

The Mem

bsence er Stat

mTable 53

at there is a wide variation in h w composi es are defined and counted in e ch These are listed in :

Tabl O S C – R Ae 53a: BEVERAGE CART NS AND OTHER COMPO ITE PA KAGING LEGAL REQUI EMENTS ND RECOVERY ORGANISATION RULES

Country Beverage containers Ot sither compo es Definition Legal

requirements Recovery organisation

requirements Legal

req ts uiremenRecovery organisation

requirements

Composite if main material represents less than x %

of total pack weight

Defined by:

Austr BCs syste

aing Ap em

l s

%

%

ia 20% recycling target

handled by separate m, Öko-Box.

10% nrecyclhas sefor co

tional target.

arate targposites.

RA ts

Speciacompo

fee rate for ites in ARA.

Board – 80Alu – 80% Steel – 80%Plastic – 95

ARA

Belgi SpecPlus.

com frcri

ov%

ie

e

redst

Ste ie

um No ial fee rate in FOST No Many some packs)recovenon-recatego

mposites (and ono-material all into “other, able” or “other, overable” es.

“Other, recBoard – 85Alu - < 50µ Steel – heav< 50µ Plastics – pr “Other, non-Glass – if prAlu – heavie

el – heav

erable”:

st but <50%,

dominant

ecoverable”: ominant but <50%, >50µ st but <50%, >50µ

FOST Plus

Cyprus m eRequire ents still und r development. Czech R Sam

all coa etsfi

osi

oor salanspo

ep. Same requirements for all composites.

e requirements for mposites.

No sepbut decomp

rate targnition of tes.

, Eko-Krates fand tr

m has separate fee es composites rt composites.

70% Law

Denmar N/A i onofts l or te

Ta eunl m

k Packaging taxes – special rate for BCs

Packagpacks producrules f

ng taxes certain . Specia composi

s

N/A x paid oness main

ach constituent material, aterial >90%.

Law

Estonia Still der d N/Subject to beverage container tax.

under development. N/A Still un evelopment. A

Finland PYR BCs.

ounteminan

N/A has special rate for N/A N/A (cpredo

d with t material).

N/A N/A

France N/A ounteminan

N/A N/A N/A (cpredo

d with t material).

N/A N/A

192

Tab : RA O C T K – E E Ole 53b BEVE GE CART NS AND OTHER OMPOSI E PAC AGING LEGAL R QUIREM NTS AND REC VERY ORGAN ISATION RULES

Country Beverage containers Othe sr compo ites Definition Legal


requirements Legal

requirements Recov saery organi tion

r ts equiremen

Co mmposite if main aterial r nepresents less tha x %


Defined by:

Germ recypositkagin

currentlyfrom madeposits.

D f

cle sg.

ha s r c

. tic

9 5

any 60%compac

cling for e sales g. BCs excluded nd

SD has special fee rateor BCs

60% recycompositpackagin

ing for ales

DSD “othe

s special rateomposites”.

for 95%Plas

s - 50%.

5% Law

0% - DSD

Gree N/A HERrate

c untedh

Nce RCO has special fee for BCs.

N/A Otheras “ot

omposites coer materials”.

N/A /A

Hun Special rpack tax f

Öko-rate

ins rc es

a ecial or sites.

Lgary ate of or BCs

Pannon has special for BCs.

Pack tax lpecific taomposit

ked to get for .

Öko-Prate f

nnon has sp other compo

90% aw

Irela N/A Reparate

al te tes fco

er/ %

Rnd k has special fee for “paper/plastic”

N/A Speci“alu/sother

fee rate for el”. Other rambinations.

or PapNo

plastic or alu/steel.specified.

epak

Italy N/A N/A com l)

N N/A N/A (predo

unted with inant materia

N/A /A

Latv Same requiremall compo

Samall c

tet m

as tutoringos s at osi

Lia ents for sites

e requirements for omposites

Special raax for co

of pack posites.

LZP hrecyclcompseparcomp

separate sta target for

ites. LZP hae fee rate fortes.

y 95% aw

Lithu Same requiremall compo

Samall c

ra k t m

ar rt

s sep rate mposi

Lania ents for sites

e requirements for omposites

Separate ax for co

and separecovery/arget.

te of pacposites, te ecycling

ZT hafor co

arate fee tes.

70% aw

Luxe N/A Valor e rate

osites “othe er nod – 8l – 90– 50%

Valormbourg lux has separate fefor BCs

No Compnon-

fall into recoverable” category

r .

“OthBoarSteeAlu

n-recoverable”: 5% % , > 50µ

lux

Malt t der de nt. a Requiremen s still un velopmeNeth Target in

III to recof BCs. be collectseparately forecycling.

Compred

count N/A erlands Covenant over 10 kt BCs must ed

r

panies include with ominant material

N/A N/A ( ed with predominant material)

N/A

193

Table 53c: BEVERAGE CARTONS AND OTHER COMPOSITE PACKAGING – LEGAL REQUIREMENTS AND RECOVERY ORGANISATION RULES

Country Beverage containers Other composites Definition Legal


requirements Legal


requirements

Composite if main material represents less than x %


Defined by:

Norway 60% recycling target for BCs in voluntary agreement

Materialretur has separate fee rate for BCs

N/A Packs counted with either main or minor material.

N/A N/A

Poland Same rules for all composites

Various different organisations. RekoPol has separate fee rate for BCs

Separate recycling target for composites

Various different organisations. RekoPol has separate fee rate for other composites.

?? ?

Portugal N/A Same rules for all composites.

N/A Counted with predominant material unless each material of equal weight.

N/A N/A

Slovakia Packaging tax has special rate for board-based composites, focussed on BCs

Envi-Pak has special fee for board-based composites.

N/A Envi-Pak has separate fee rate for composites.

70% Law

Slovenia N/A Slopak has special fee rate for paper/plastic, paper/ plastic/alu

N/A Slopak has special fee rate for “other composites”

Not defined, so all laminated packs. Slopak

Spain Same rules for all composites

Ecoembes has special fee rate for BCs

15% recycling target for all composites.

N/A (counted with predominant material).

N/A N/A

Sweden N/A N/A N/A N/A (counted with predominant material)

N/A N/A

UK N/A N/A N/A N/A (counted with predominant material)

N/A N/A

194 In some Member States, composites are not counted separately but laminated packs are simply counted with the predominant material by weight. In others, there are special requirements just for beverage cartons, and in others special rules for beverage cartons and/or other composites. A ountries follow e definition to the extent that they th omposites are packs made of m than one material that cannot be separated easily by hand, where the predominant terial represents more than a specified percentage of the total weight.207 wever, the threshold percentage varies fro ne c to another, which means that a pack that is defined as a composite in some countries can be counted with the predominant material in others. Some Me r States have established s r ta for beve cartons, some have a target f evera ca a differe arg o h sites, wh hers have a target for all c A a nu er of n i eparate or beverage cartons and/or other com ites. th d i charged the fee for c osit nd which ar n a s fro e s m to another. In some c overy organisation is bound by the percentage established for composites in national legislation, and in he recovery organisation establishes the percentage. These differences c pro ompanies tha organisations. In order t blis given lamin should nt a site or n com y the h constitu al so tha e ca e the proportio th It difficult fo rs and fo mal ers of p ged d ab het ck should d as mp t. It is a rob ati r larg rna ies using m t typ f pa aintain a c al pa gi inated packs count as co sites in some Member States but not in others. It is only a minor extra cost to keep data on composites defined in a particular way and merge it with another category in m composites can be counte minant material, but it is m mo ifficult verlapping definitions. The existence of a special category for composites also affects the cost of compliance – where a recovery organisation has a separate fee for composites, this is usually higher than ere the c r w he predominant materi 08

These national requirements are likely to remain, even thoug uture data com sites will be r t get with the predominant m al. W t e ery changes to the definitions of compos in ber States a ec ganisations first established them. These threshold percentages no doubt reflected the proportion of contaminants that local recyclers indicated th h uld coG e s of recycling processes and facilities in recent years, we find it hard to believe that recyclers and material preparation plants cannot n ma with a higher proportio inor m We therefore conclude that t hre for composites s T l nario would be that all Member States delete their composites category and their beverage carton category ecov anisations would then repo ll com

ll core

or bomposites.

lso,

ompases, the rec

ot, a

ackalso pentr

uch

omposites is counted to

eported

e notend/or r

iven th

hould be reviewed.

he idea

th EU say at cma

Ho

rage ile ot

fees f

m on

m o

mbege

mbpos

es a

pann of goolemcka

re d

o th

hatov

tec

n o

sce

ountry

ns a

pack The

epaet f

gaaghe

ate r ot

isatuseai

rger

on to m

et co

s h date

s jm

avetri

ustpo

e sermal v

rto nd

ag

nt t

veer w

inree c

g shou

reoln

cod pted

ryceit

ornth t

e m

ne which packs are rie yste

others t

au

dsta

est

se

tol w

manyo esta knoweight.lish we inte

blems for ch whether a weight of eacis particularly her a given pational compan

t mateenr i

be any

mpo

ust report packaging data to recoveryd pack

t materimportecatego

diffe

cout hr s

a coes o

s a con caller positeck th

mpoculatroduc or noat m

neee to

s toc fong database. Lam

riseren

arkto d

ets whereeal with o

d with the predo

wh

po

ce M

gethe

ion to

been v

ith t

her

few

al.2

h in fateri

on

ites s

e C

theery

hn

f m

om

re or

ica

miss

hav em

at t

ow hahe mate

ey co

ndlerial t

pe with at that time.

terialsholds

l prog

at

res

erials.

. R ery org rt a posites categories

2 , s ma f more than o material that can be ea para (e.g. ttle ) are not co 208 The fee for board-based composites is usually higher than the fee for board, while the fee for plastic-based composites is sometimes the same as for plastic mono-materials.

07 Thusmposites.

pack de o ne sily se ted a bo and cap

195 according to their predominant material. After all, Member States are not required to submit data to the Commission separately for composites. Another possi u ber States to retain their separate rules for composites, and the Commission a M b tates te the harm is on of th finition his would improve the current situation e all c posite packs w d l within same c gory in all Member States. A starting point for discussion on the appropriate threshold percentage would be to take account of be ilable collection and recycling techniques within the EU. We have identified a number of problems with this option. We think that negotiations would probably be protracted and meanwhile the current unsatisfactory situation would remain in force. Even once a harm se d percentage has been a d, operators will still have pro s in determining whe sp ks e composites or no 6.4. iff t rial ca g ies The different reporting requirements for composites outlined above are just one example of the many variations in the material categories of each recovery organisation. The rent tegories

bilnd

ity woem be

ld be for Memer Sus

comom

ple onoul

ati fal

e de the

. Tateca

st ava

resific p

eren

onither

5 D

diffe

d thec

holac

greet.

blem ar

ate m te or

reporting ca are set out in Annex H, includin 33

g ose for r ry tions, and s tho d with deposit sys

th ecove organisashow se associate tems (Table in section 4.3.3) a th p g taxes

(Table 42nd wi ackagin

in section 5.3.3), where A qu lo ll t ferent r t r why anies find data repo s hallenging, and why one of the companies that we asked told us that they ve a different packaging database for each country. The rting reflect the tructure of t overy ion. We realise that special fees h or sub-typ terial to reflect differ ce costs. For example, PET is sometim ther plastics and corrugated board separately from other boar cause thes pes ar h et r c However, a balance needs to be drawn. There is little point in companies pay less for specific pack types in a single national market gni increases their ministra e costs i aring the necessary The way th e elements o r ted and reported as th or lid label, also s, each a e cou epara while ers th ole pack is re er 6.4. a ing Ano teg f ing to diverse reporting requir ts is reusable psom ber S s n ed data returns and a fee pa when thfirst on the m , be lu ata bu fee pai Som fil e containers may be intended to be used only in one a there are many types of reusable packaging, primarily transport packaging (pallets, crates, roll cages, drums, trays, etc) that are used througho U. From the reporting point of view, it makes sense for recovery organisation fees to be charged on reusable packaging when it makes its first trip. This is the best option because brandholders can then report on refillables and non-refillables together.

rele

equir

vant.

emenick rting

repo

d, be

varpor

6

thee Mpla

e re

ok o c

at a he dif s and categories makes clea comp ha

reave

qui be

es r

rementsen set feported separatelye sub-ty

fee ses of ma from oeaper to

he rec

led.

organisatent complian

e c g ecy

ingtiv

e cap in oth

if th

f a p elem

is si

ack aent h

ficantly

e couns to b

ad

, suchtely,

n prep

and e wh

data.

differsome eth

nt system.

at In tog

us

y. ted

Re

r caemced

nted s

ble

y otate

packag

packaging givs these packs arket. In oth

or rise t be ithey m

emen

returns

ackaging. In e packs are d.

muers

cludust

in inc

id t noded in d

labl national m rket. However,

ut the E

196 However, this transport packaging may not necessarily become waste in the Member State where they are first placed on the market. From the perspective of funding recycling, it would be preferable for a fee to be paid on these items at the point where they become waste. But this does not fit well with reporting and funding structures focused on packaging when it is first placed on the market. Any funding short s w ld be most sign ant all Member States that are net importers. We received several comments from stakeholders on reporting and fee arrangements for reusable pack g, p larly in relation to reusable transport packaging: • E C po t that the different fee and reportin equirements could result in no fee being

paid in the case of, say, a pallet first placed on the m ket in the Netherlands (where end-users pay the fee) and discarded as waste in the UK (where c anies placing products on the market pay t ee

• O he o d, Valpak argued in favour of a fee being paid on reusable packaging when first

p ed o market, irrespective of whether it was sales or transport packaging. CIAA argued that paying the fee on the first trip shoul pply onl ho h kaging – and that there was no need to disturb existing arrangements for commercial/industrial packaging.209

EuPC has highlighted the problems that arise from diff s in pay ments for reusable indu l pac g s easy n e arrangeme recycling should be the same all M r s, b t s how e ould be paid on reusable pack g We a e s m app is funded b in the Member State where the pack becomes wa e arra e States such as France, Netherlands and Denmark. However, as fees are levied on packaging when it is first placed on the market in the majority of Me States, care would be needed in establishing other rules for specific types of pack, ould give rise to widespread free-riding. We would suggest that the m ppropriate way to define reusable transport packaging is that set out in th N stan d reus The nd requires t p g pliers confirm that the pack is su le for reuse that sta heir intention to reuse the pack in either an open or closed loop tem. mpanies could rep rt on such packaging as a separate category, together with data on other packaging placed on the market. Conversely, r ang w ld n o be revised to require end-users to report on their reusable trans ing 6.4. nt fo A further difficulty identified by the interna oke to was that each recovery organisation r e a to ubmitted in format. This means that companies cannot devise a single data program t ackag ta for all Member States. The data has t esen eac eco ion.

fall ou ific in sm

agin

uP

he f

n tlac

stria in agin

gre

e CEitab sys

7

o b

articu

inted

ther n the

ou

han

g rar

omp

y to

).

d a use old pac

erence

the r

ngem

ment arrangeor fung fe

end- Mem

kaem

it i

ginbe

. It i State

ore

to cout wha

ropriate tste. This

clude tis less c

hat recyis alrea

hat thlear i

clingdy th

nts fcycli

y thent in

ndinges sh

user ber

.

that

mber

ost ae.210 users

otherwise the arrangement w

dar on and

state t

ard tha ackagin sup

Co

eportiport p

re

o

ements waste.

rmats

ng arrackag

data

ou eed t

Di

e pr

ffe

tional companies we sp a different

o generate pvery organis

equir

ted

d datmanipuladifferentl

be stion y for

ing da h r at

209 H ev much reusab ales packaging becomes w e in home. Such packaging nearly always bear ep , to en that it is return to th lling pla It is f w discards the pack if it no longe ets q ificati . Such cka does no ually cross bo rs, although there is some cross-border trade (e.g. beer and mineral water between Germany, Poland and Czech Republic). 210 EN 13429:2004, Packaging – Reuse.

ows a dr me

er, notosit

le s

ons

astnt. t us

the thesure

speced pa

e figing

iller hordeuality

197

des for ent

e one used y another organisation.

Brandholders could use the same product codes for every organisation, which would simplify data

onised product codes would help to ensure the comparability of statistical data between Member States.

m

e conclude that there is potential distortion where the reporting arrangements are different for goods

orting, and domestic packers/fillers do not report to the recovery organisation in respect of the goods they produce

packaging and pay fees.

, r corrugated board, and rolls of

paper, but the packer/filler reports for fibre drums and board boxes.

be

the arrangement may lead to over-reporting and double counting, and therefore payment of two sets of fees.

g consortium, have complained to the Commission about this arrangement. Through their trade

producers in other Member States do not have to pay into a consortium.

In addition to presenting the packaging data differently, each recovery organisation also uses codifferent pack types and product categories. We looked at the product nomenclatures for four differrecovery organisations. Each was different, although one looked like an edited version of thb We recommend that all recovery organisations use the same nomenclatures for packaging and products. For the products, we recommend that the EU’s Combined Customs Nomenclature is used. We see several advantages to all national recovery organisations using these codes: •

reporting. Exporters are probably already familiar with the CCN codes for their products. • Use of harm

• Using the EU’s own system would avoid one recovery organisation gaining any advantage by

having its system adopted by the others. However, we note that Dutch companies already use the CCN codes. This demonstrates that these codes are suitable for this purpose.

6.4.8 The party responsible for reporting data We have already discussed the administrative implications of different reporting requirements. Frothe Internal Market point of view, it is certainly much neater that the same category of operator (i.e.brandholders) have the task of reporting on packaging in all Member States. But do different arrangements, when other stages of the supply chain undertake this task, give rise to competitive distortions? Wproduced on the home market from those for imported goods. • In Italy, packaging producers or distributors are responsible for rep

using locally purchased packaging. • In the UK and Ireland, all stages in the supply chain report on • In Sweden, reporting requirements are divided between packaging producers and packers/fillers

depending on the pack type. Thus, packaging producers report fo

We have identified the following problems with this arrangement: • Packaging producers and distributors do not always know which products their customer plans to

export, and so may report on some packaging that is subsequently exported. Packaging maycounted in the country where it is filled and again in the country where the packaged goods are consumed. Thus,

The Italian producers of polyethylene, who have a statutory obligation to pay into a recyclin

association, Unionplast, they argue that the arrangement creates a distortion of competition because

198

g have a lower proportion of the obligations than packers/fillers and retailers. In Ireland, there could be significant distortions for packaging

cause

In countries where brandholders have the task of reporting, imported products are also reported differently when retailers import some filled products. However, when reporting is undertaken at

the distortion is magnified because arrangements for imported products and local production vary at two stages.

ackaging data, for example when an EU operator imports packaged goods from manufacturers in

ard reporting arrangements do not make sense in certain on behalf of importers, and packaging producers

ns and interpretation, such as lassification of different materials, particularly composites, and the definition of packaging. These,

oreover, these differences reduce the financial incentive to minimise packaging. The fees paid to

bly diluted.

e therefore suggest that reporting requirements should be simplified and approximated. It should se a single packaging database to generate the necessary data for

The problem may be less significant in the UK in terms of tonnage, because producers of packaging raw materials and of packagin

reported by a packaging importer (little packaging is produced in Ireland) and sold to a packer/filler that exports nearly all its production (there are many such companies producing for the export market). On the other hand, packaging importers pay only a small proportion of the fees, and packers/fillers who export most of their production often do not bear obligations beexports are excluded from the 25 tonne per year de minimis threshold.

• The requirements for imported filled packaging are different from those for domestically produced filled packaging. The distortion is further magnified in Italy, where CONAI offers importers the option of paying on the value of the products rather than by weight.

the packaging production/distribution stage,

There will of course always be situations where the importer will need to prepare the necessary pthird countries. This is not to say that exceptions to the standircumstances, for instance exporters reporting c

reporting for service packaging. These are examples of ways to minimise administration costs for special situations that do not give rise to distortions of competition between imported and domesticallyproduced packaging and packaged goods. 6.4.9 Conclusions – recovery organisation reporting requirements In this section we have outlined major differences in definitiocwe conclude, make the task of preparing packaging data for each Member State unduly complex, and involves brandholders in unnecessary and expensive administration. Mrecovery organisations should encourage brandholders to reduce their packaging. But if they are having to calculate the fee separately for each national system, rather than for the EU as a whole, this incentive is considera 211

Wbe possible for each brandholder to ull Member States. To this end: a

• The interpretation of the definition of packaging should be further harmonised. This is

primarily the responsibility of the Member States, and we hope that work will continue within the Article 21 Committee to reduce differences. However, some demarcations have been decided bythe national packaging recovery organisations. We hope that they will also work together to harmonise the interpretations within their control. In the meantime, information about borderline items should be more easily accessible to stakeholders in each Member State.

211 FOST Plus points out that the Green Dot is a financing instrument for the collection, recycling and recovery of packaging. Prevention may be a positive side-effect, but it is not the objective.

199

ery

to the Commission. The threshold percentage for minor materials in composites could be harmonised, but we feel that this

The number of reporting categories for material sub-types should be minimised, and the way

• d on the

market. However, the fee on reusable transport packaging should be paid at the point where it

ucts.

ging nts

nvert it easily to the data they need for recovery organisations.

e

panies to better manage their packaging use, such as by estimating the cost of switching to a new pack design. If the data requirements were streamlined,

larger number of companies. We suggest that the recovery organisations work together on this, in co-operation with large

companies and importers to ensure that decisions are helpful. forum for this work, but the recovery organisations not

Packaging reported by upstream players may result in over-reporting. The difference in how imported packaging and packaged goods and those produced on the home market are reported, are greater than when brandholders undertake this task. The fees paid to recovery organisations create

e

• Requirements for “consumer/commercial” packaging should be clarified. Simplified reporting methodologies should be developed to help brandholders determine what proportion of their packaging should be reported together with household packaging waste, and what proportion isindustrial packaging outside the scope of the recovery organisation. We suggest that the recovorganisations work together to ensure that the methodologies chosen are compatible.

• The rules for composites should be more closely harmonised. Ideally, these packs should be

counted with the predominant material, as required for reporting

arrangement would still cause problems for operators who report to recovery organisations, andexperience so far suggests that the Member States are unlikely to reach agreement on a single threshold percentage.

•that different elements of a pack are reported should be harmonised. Some of the benefit of having a lower fee for certain sub-categories is lost through increased administration costs.

Reusable sales packaging should be reported, and a fee paid, when it is first place

becomes waste. • The formats for presenting data should be harmonised, including nomenclatures for pack types

and prod

We should like to see a situation in which brandholders can generate more easily all the packadata they need, for all Member States, in the appropriate format. To achieve this, the requiremeneed to be harmonised. For example, the number of different material categories needs to be reduced, so that brandholders can use a single packaging database for all countries. Companies should be able to take the data many already have in systems such as SAP and co

A number of specialist IT companies in Europe and in third countries have devised proprietary software systems to help companies compile the necessary data. These systems certainly provida solution, but they are beyond the budget of many companies. Some have other sophisticated features and they can also help com

perhaps lower specification versions of existing software packages could do the job at a price which would be affordable for a 212

international brandholders, small PRO Europe would seem to be the idealusing the Green Dot should also participate, together with appropriate representatives from Denmark and the Netherlands.

♦ The brandholder is the most appropriate operator to undertake the task of data reporting.

the strongest financial incentive to minimise packaging if brandholders initially pay them, becausthey are the economic operators who are most likely to decide which packs to use.

ations could negotiate group terms of use by these members of

immed-down versions of these software packages. 212 Perhaps the national recovery organissl

200 6.5 THE IMPACTS ON PRODUCERS OF INCONSISTENT MARKING

RULES .5.1 Recovery organisati6 on marking requirements

hen similar

e ow

, m

pub re n system is vailable”. In its explanatory memorandum to the proposal,215 the Commission commented that it was

re the packaging is actually sold”.

s ark or the Netherlands (except for deposit-bearing beverage containers) where the

entify participating packs, but its use is

The k is ce ber States by a separate legal entity organisation,

Ont.

ey

resp

e majority of national recovery on many consumer packs

roughout Europe (and in third countries, where the same packs are used throughout the world), and

A f e Com

When, DSD was established in Germany, it decided that all participating packaging should bear an on-

pack logo, the Green Dot. This logo would be a signal to consumers that the pack was participating in the system, and would aid monitoring, to prevent free-riding. Wrecovery organisations were established in neighbouring Member States, they decided to use

th same symbol rather than have a different on-pack logo in each country. The Green Dot logo has been adopted by recovery organisations as an on-pack logo in 20 Member States, and it has also n

been adopted by several packaging recovery organisations in third countries – Bulgaria, NorwayRo ania and Turkey. 213

The Directive said that new marks would be developed later to “facilitate collection, reuse and recovery”. The plan was that use of any other similar marks would be banned. The Commission duly

lished a proposal for a Directive on marking.214 This proposed new marks to indicate that a pack cyclable or reusable, but did not provide for any marks to indicate that “a returis

a“impossible to ensure that a system is available in places whe In practice, the Green Dot serves this purpose. The Green Dot is not a recycling logo – marking it on a pack means that the pack participates in a recovery organisation. The Commission’s proposal has never been adopted, and was formally withdrawn on 1 October 2004. In some Member States, the recovery organisations use no on-pack logo (Italy, UK) and no logo i

sed in Denmurecovery arrangements are organised differently.

PYR in Finland has adopted its own on-pack logo to idvoluntary.

Green Dot logo is a registered trademark, ultimately owned by DSD. The use of the trademarnsed to recovery organisations in the other Memli

PR Europe. Because the Green Dot is a trademark, the contract concluded between each national recovery organisation and participating operators is in effect a trademark licensing agreemeOp rators that mark the logo on their packs without permission (i.e. without reporting on them and pa ing the relevant fee) are infringing the trademark, in addition to any breach of producer

onsibility requirements that they may also be committing. From the Internal Market perspective, the use of the same logo by thorganisation is clearly helpful. The Green Dot is now widely markedthis widely recognised by many consumers.

ew problems have emerged with licensing of the Green Dot in relation to competition policy. Thmission has investigated the licensing contracts between Green Dot recovery organisations and

213 214 esta18.1 215 Draft proposal dated 29 January 1996.

Source: PRO Europe.

Proposal for a European Parliament and Council Directive on marking of packaging and on the blishment of a conformity assessment procedure for packaging, COM(96) 191 final (OJ No. C382,

.96). 2

201 ind iscussed in s

ividual economic operators and has established criteria for what is acceptable. These are dection 6.6.1.

wever, we have identified a few problems with the Green Dot logo as currently in use.

.2 Difficulties arising from mandatory marking of the Green Dot

Ho 6.5 In m st Member States, brandholders can choose whether to mark the logo on their packs, but in some

legi And g packs are marked.

Masyspacano nd is therefore handled by a packaging

covery organisation in one Member State, may fall outside the scope of the packaging recovery

hat DSD offers a waiver from the marking requirement to operators who find that ome of their packs must participate in DSD in Germany but not in recovery organisations in other

dvised to print the Green Dot on price labels, rather than irectly on the pack. This may work well for larger companies with the appropriate coding equipment, ut is unlikely to solve the problem when the products are sold through small retailers. Operators can

e recycling.

roblems

organisation

ble

ssively disappear. However, we think that it is highly unlikely at companies would stop marking the logo, given that it has become so ubiquitous on so many

on many packs likely to be consumed away from home.

for pac a resho

omarking is mandatory. France, Spain, and Portugal have a statutory requirement in their packaging

slation that all primary packaging participating in a packaging recovery organisation is marked.216

some recovery organisations, such as DSD, insist that all participatin

ndatory marking causes problems in cross-border trade because of all the differences in national tems and reporting requirements identified above. For example, an item that is considered kaging in one Member State may fall outside the scope of producer responsibility requirements in ther. Also, a pack that is considered household packaging a

reorganisation elsewhere. We understand tscountries. Operators must specifically apply to DSD for the waiver. This is administratively burdensome, but obviously resolves the problem there. In the countries where marking is a statutory requirement, operators have to find ways to comply. We understand that companies are sometimes adbalso use adhesive labels to mark the logo, but this is expensive and the labels may imped PRO Europe argued that mandatory marking “does not create any significant problems”. If pdid arise, “it has always been possible to find a solution in the interest of all involved parties”. This response rather confirms our view that mandatory marking requirements are cumbersome in that they require licensees to negotiate a special arrangement with the recovery Given that marking the Green Dot is voluntary in the majority of systems, we cannot find any justification for marking to be mandatory in other Member States. If voluntary marking is acceptain some Member States, why not in all? PRO Europe argued that if marking were not mandatory in some Member States, it could progrethpacks. We think that most companies would wish to continue to use it because it has become so well known to consumers. An analogy can be drawn with the “Tidyman” symbol, use of which is voluntary,217 but which is marked The arguments for mandatory marking are that the logo is used to increase consumer awareness, and

monitoring free riders. The objective of increasing awareness can be achieved if the majority of ks are marked, and we agree that it is helpful. Perhaps the solution would for the contract betweencovery organisation and participating companies included a provision to the effect that packs uld be marked except where this was problematic for reasons of space, international trade, etc.

216 EuPC considered that requirements for the privately owned Green Dot fell outside the scope of the Directive. However it is relevant in that it is the legislation in some Member States that makes it mandatory to mark packaging with a recovery organisation logo. 217 Although currently still mandatory in Slovakia and with a meaning unrelated to litter prevention.

202

stillThe lf not are

theivary e recosort lor-mad ction arrangements in the respective Member States. We do not consider

at such markings give rise to any barrier to trade, provided their use is voluntary.

We tes whe en

ational systems. We note that none of the systems that has started to use the Green Dot recently has Dot

o m

ol Green Dot would also be in line with the EU rules on material identification. m

6.5 In f ion use d withresp re no recovery organisation. Thus, packs marked with the Green Dot, a trademark, are sold in these markets without any trademark licensing agreement. PRO170 e trad s this, PROno rroy PROtradecolice argues PRO nd probably high costs to their members. It is more effective to stablish special offices in these markets than to work with consultants and lawyers, it says.220

As for monitoring free-riders, the logo can be useful only to a certain extent.218 The monitoring teams need to check whether all the marked packs are indeed registered with the recovery organisation. enforcement authorities can also undertake the same check on any packs on the supermarket shemarked with the Green Dot. If these packs are not participating in the recovery organisation, how they meeting their producer responsibility obligations?

Nor can it be argued that the Green Dot must be marked as a guide to consumers about how to sort

r used packaging. Such guidance has to be provided in other ways, because sorting requirements significantly between Member States, and indeed between different municipalities. Somvery organisations (Portugal, Sweden) have developed additional material-specific logos as a ing guide for consumers. Marking the logos is voluntary in both countries. These logos are taie for the specific colle

th

therefore argue that marking the Green Dot on packs should be voluntary in all the Member Stare a recovery organisation uses it. This would avoid problems arising from differences betwe

nmade its use mandatory. If marking were voluntary, operators would continue to mark the Green

n ost packs, but not on problematic packs.

untary marking of the VCo mission Decision 97/129/EEC says that use of the numbers and abbreviations is voluntary.

.3 Difficulties arising for countries with no Green Dot recovery organisation

ive Member States – Denmark, Finland, Italy, Netherlands and the UK – no recovery organisats the Green Dot. However, many internationally traded products sold in those markets are marke the logo. The same situation arises in many third countries where there are no producer onsibility obligations for packaging and therefo

Europe has registered its ownership of the trademark with the appropriate trademark office in countries throughout the world.219 However, PRO Europe would eventually lose the right to themark if it is used in a given country without permission of the trademark owner. To addres Europe has developed a licence agreement covering use of the logo on packs in countries where

ecovery organisation uses the Green Dot. Companies can use the logo without paying any alties.

Europe has made special arrangements in the UK and North America to license use of the emark. It says that these agreements are necessary because of the “great importance of these nomic regions”. Many products marked with the Green Dot are distributed in these regions by nsees of PRO Europe members. Losing the right to the trademark in these countries would,

Europe, cause many problems ae

DSD reports that there are still free-riders in Germany.

Source: PRO Europe.

218 219

We had argued that it was unacceptable that economic operators have to pay to protect another company’s trademark simply because their packaging happens to use that trademark perfectly properly in certain EU

sees it.

220

Member States. However, we accept PRO Europe’s point that protecting the trademark does benefit licenby preventing third parties from seeking royalties for

203

ana

ubsidiary of the largest recovery er year, which covers the operator

k The sm

at

ls become a public logo. The situation is slightly different from that of the

tecting its trademark in

is is is because the arrangement would be to the

enefit

at

al sed

n handles only consumer packaging.

ach organisation has its own logo. This is the case in

We are not aware of any problems arising from different marking rules for transport packaging. its own logo, it is possible that an internationally traded pack may be marked

i om different countries. We imagine that staff that sort used packaging will

Comp ies whose products are marked in the UK and the NAFTA countries pay a flat rate annual tradem rk fee. In the UK, companies register with the Green Dot Licensing Co, a sorganisation, Valpak. In 2001, the fee was a flat rate £ 150 (€ 219) pfor all the packs sold on the UK market. The annual fee has gradually increased since then and in 2004 it was £175 (€ 256). We argued that this fee was disproportionately high for small companies.

pointed out that it was mainly large international companies who used multi-national packs.aller companies are less likely to export. In that case, perhaps it would be possible to exempt

small companies. Similar difficulties arose with use of the Mobius Loop recycling logo several years ago. This was alsoregistered as a company’s trademark. That situation has now been resolved. It could be argued ththe Green Dot should a o

Valpa

Mobius Loop because the Green Dot is not simply a recycling logo but indicates a contractual arrangement between private sector recovery organisations and a company subject to producer responsibility obligations. Certainly, if the Green Dot had not already been adopted by several recovery organisations by the time the Commission started to consider EU-wide marking requirements, a standardised EU logo would have been preferable. However, the Green Dot is now widely used and only one Member State (Finland) has chosen to adopt a different logo. We therefore consider that, on balance, the Green Dot should continue to be licensed as at present. However, we urge PRO Europe to identify a better arrangement for proMember States and third countries where there is no recovery organisation. Perhaps each economic operator that already has a licensing agreement with any packaging recovery organisation could simply conclude a worldwide licence directly with PRO Europe. Ideally, we would argue that thshould be free of charge to individual operators. Thb of PRO Europe in terms of trademark protection. 6.5.4 Recovery organisation requirements for industrial packaging No Member State makes it mandatory to use an on-pack logo to identify packs that participate in a recovery organisation for industrial packaging. Portugal did have a requirement that all packaging thparticipates in a recovery organisation must be marked with the logo of that organisation. The Portuguese recovery organisation, SPV, uses the Green Dot and handles both consumer and industripackaging, so industrial packaging would have to be marked. However this would have cauproblems in other Member States where the recovery organisatioPortugal repealed the requirement in respect of industrial packaging although it remains in force for consumer packs. Some recovery organisations handling transport packaging do have a logo that can be marked on participating packs. Unlike the Green Dot, eGermany for example, where recovery organisations for industrial packaging compete with each other and some do license use of an on-pack logo.

Because each system has th more than one logo frw

simply ignore any logos that they do not recognise.

204

s Table 54

6.5.5 Other marking requirements A shows, several of the new Member States have adopted the marks proposed by the

t mandatory use these codes and marks, and each has slightly different rules. This is out of line with ommission Decision 97/129/EC on material identification, which makes use of the material codes

o

Commission to indicate that packaging is recyclable or reusable. Indeed, they have made itoCvoluntary. Making it mandatory to use logos for recyclable and reusable packaging is alsnacceptable as they have never been adopted at EU level. u

Table 54: INFRINGEMENTS & CHALLENGES TO NATIONAL LEGISLATION ON MARKING IN RELATION TO DIRECTIVE 94/62 AND COMMISSION DECISION 97/129

Overview of problem Interpretation Outcome Several countries (see below) have made it

Some countries (see below) have also

Directive 2004/12

However, the Commission has

being considered further.

All national mandatory to use the EU material identification system in Commission Decision 97/129/EC. Decision says that use of the numbers/letters is voluntary. Each country has interpreted the system slightly differently.

confirms that packs should be marked in accordance with Decision 97/129 (i.e. voluntary).

requirements remain in force.

mandated use of the recycling/reuse logos proposed in COM(96)191 final. Measure was never adopted, so the logos do not form part of the harmonised marking regime.

since indicated that legality of mandatory material identification is

Country Ref no. Details of legislation/ Nature of problem

Legal challenge Outcome

Austria Ordinance 137/92 requires plastic packaging to be marked to show the full name of the polymer or an abbreviation.

1994 – notified.

Requirement still in force, but a proposed amendment to the Packaging Ordinance will bring it into line with EU rules.

Czech Rep. Mandatory to mark abbreviation and/or number on consumer packaging components of plastic, metal and composites

Requirement still in force.

Latvia Mandatory use of EU identification codes on Requirement still all materials since 1/2004, except for specified categories.

in force.

Netherlands 2001/406/NL Mandatory use of KCA logo on selected products. Germany and Italy argued that this was a barrier to trade because the logo is only intended for the Dutch market. The Netherlands argued that the measure was necessary for the protection of the environment ( that is, to mark products that are part of the separate collection scheme for hazardous waste from households) and

Notification in 09/01 relates to extension of scope of mandatory use of KCA logo. Comments from I; Detailed opinion from D.

Use of KCA logo has been mandatory since 1994.

introduced the logo after the extended standstill period expired. Standstill

extended. Poland Mandatory use of proposed EU

reusable/recyclable symbols on packaging meeting criteria in Packaging Act, and mandatory use of EU identification codes on

sales packaging until 31.4.04.

Requirement still partially in force (?)

alu and plastic Slovakia Mandatory use of EU material codes and

mandatory use of tidy man logo (to indicate correct disposal method) from 1.1.2004, except for small p

Requirement still in force.

acks and ancillaries.

205

des may be reconsidered by the ommission. We recommend that their use remains voluntary, given the problems experienced so far

they

Marking the Green Dot on packaging should be voluntary in all Member States, to avoid

Use of the EU material codes and any other recycling logos should also remain voluntary. We

made mandatory.

We consider that these requirements are a barrier to trade. Packs have to be specially marked for those national markets. Because the rules are slightly different in each country, it is impossible to use the same packs everywhere. We understand that the voluntary use of the EU material coCwith differences in interpretation of the EU marks by the Member States that have made their use mandatory. If they were made mandatory, it would be necessary to draw up detailed rules at EU level for how are to be used, to ensure uniform application. Even then, we fear that individual Member States may interpret the rules slightly differently to suit the local situation, such as collection arrangements. 6.5.6 Conclusions – marking requirements We suggest the following approach would minimise barriers to trade arising from different national marking requirements: •

problems from different national requirements and interpretations. Its use is voluntary in most Member States, and we see no reason why it should be mandatory.

•

fear that differences in national interpretations could give rise to barriers to trade if their use were

206

t in favour of a single scheme is that it can co-ordinate the activities of the various

o s

, or a

aly is unique in that it is the only Member State where membership of the recovery organisation y handled

ial packaging

into their national arrangements, mainly by allowing several schemes to operate in

recovery organisations started to compete with DSD 221

6.6 RECOVERY ORGANISATIONS AND COMPETITION POLICY 6.6.1 Competition between recovery organisations As each EU Member State has established a system to help industry meet producer responsibility obligations for packaging, the authorities and the private sector have weighed up the relative merits ofhaving a single national organisation or several smaller systems operating in competition with each other. The main argumenoperators and steer the national recycling effort. Most Member States have opted for a single scheme for this reason. However, such an arrangement does give rise to concerns about potential restrictions of competition. Without competition, it is argued, there is little incentive for recovery organisations tkeep their fees low, or to operate efficiently. Operators subject to producer responsibility obligationshould have a choice of compliance options. This may be a choice between competing systemschoice between participating in a recovery organisation and individual compliance. As a result of these concerns, the larger countries (such as France, Germany and Spain) have tended to limit the scope of the recovery scheme to packaging waste from households and from small business end-users. In these countries, packaging waste from large commercial and industrial sites is either handled by recovery organisations operating in competition with each other, through a free market for recovery services, or a combination of these two approaches. Smaller Member States have fewer fears about the existence of a single recovery system, for practical reasons and because fewer obligated companies and less material are involved. Thus a single organisation operates in countries such as Finland (except for beverage containers, which are handledseparately), and in Ireland. In Austria, a single scheme, ARA, has always handled domestic and commercial/industrial packaging, but competes with other recovery organisations for industrial packaging. ItCONAI is mandatory, and all stages of the supply chain must participate. CONAI originallonly household packaging waste but has now expanded to cover commercial and industrwaste also. CONAI is named in the legislation, so operators have no choice of compliance option. In the UK and Poland, competition concerns ruled out the creation of a “national champion”, and a far higher number of organisations operate in competition with each other in these Member States than elsewhere. The first countries to introduce producer responsibility requirements saw packaging recovery as a natural monopoly, at least in respect of household packaging waste. Some have since tried to inject some competitioncompetition. This has not always been successful, sometimes because the legal framework was not amended appropriately and the operating conditions for newly established competitors were not thesame as for the original recovery organisation. One example of this is in Germany, where new but did not apply for full approval as dual systems. As a result, only DSD had a “all area coverage”obligation. Under German rules the new competitors officially offered pooled individual compliance and so did not have to collect packaging waste throughout the territory. Moreover, some of these competitors have contractual links with DSD to take material collected through DSD and to ensure

Flächendeckung – Dual systems must obtain approval separately in each Land, granted only if they cover the

hole area of the respective Land. Under Article 6(3) of the 1998 German Packaging Ordinance, operators are om the take-back obligation in respect of sales packaging only if they participate in a Dual System.

221

wexempt fr

207

ith DSD, these competitors have information about the rms on which DSD gets its material recycled, and may in effect be competing with DSD for access

on the

authorities

dentical fees to their members and pay cal authorities and recyclers identical sums for their services. When it reviewed the French

ar

“The French authorities argue t ales downs ompauthoritie o move tow ht r rdownstream and hence , th diffscales upstream would o est French authorities thus claim that the existence of different sca armful to a system’s economic and ti ity. They argue that the existence r activities thus leads to uniform price scales, although this does not rule out th of differences regarding, for example up provthe possibility of outbid nt se ovative solutions when approvals a

The Commission decided not ngem certain undertakings given by the largest recovery organisation, Eco-Emballages, including: • Mem ship c s would not re participate in respect of all products m

he Gr n Dot. The ce atrespect of only some pac

• Members would be able to terminate their contracts each year without paying com • Municipalities would similarly be able to able to terminate their contract with Eco at

ying • mbal ges will gra an other approved

organisation. Th o c er “recovery organisations. The ioacceptable under EU compet • In April 2001, the Comm ree respect of DSD

in Germany.223 This cas te in respect of some of their packs and used o liance arrangements referred to above. DSD required operators arke e Green Dot placed on the market in Germany, even if it was not participating in DSD. mission found against

and D D now cha s marked with the Green Dot ththrough other complianc

that it gets recycled. Through their contracts wteto these recyclers. This is an unacceptable arrangement, but we understand that DSD may abandguarantor contracts as part of its corporate restructuring (see below). In France, on the other hand, the authorities took the view that nobody’s interests would be served bycompetition between the recovery organisations handling household packaging waste. The therefore require that Eco-Emballages and Adelphe charge ilo

rangements, the Commission summarised the French position as follows:222

hat different price sc tream would pr t local s t ards the highest prices, and this mig

higher consumer prices. Conversely prompt producers to deal with bodies

esult in higher pe existence of

ffering the lowles would be hon and durabil

ing the same

ices erent prices. The

financial balance, proper implementa of two or more approved bodies perfo m

e possibilityided to local authorities or rvices or inn

ent, in light of

, the quality of service and back-ding as bodies propose more efficie

re being negotiated.”

to raise any objections to this arra

ber ontract quire members to arked with t ee y could participate in respect of only

ks of a given material. rtain types of m erial or in

pensation.

-Emballages any time without pa compensation.

Eco-E la nt a sub-licence for the Green Dot to y recovery

e Commissi n has also considered aspects of the operations and decisions give helpful guidance as to wition rules:

ission published a Decision about Ge was brought by companies which opne of the pooled individual compto pay a fee for all the packaging m

ontracts of othhat the Commiss

Green Dot” n considers

n Dot licensing ind out of DSD

d with th The Com

DSD, S rges no fees for those packe arrangements.

at comply

hed in OJ No. C227 of 9.8.2000. 222 Case 34.950; Notice publis

223 Case COMP D3/34493. Decision published in OJ No. L166 of 21.6.2001.

208

d that none of its contracts breach EU competition rules – the clauses in Eco-Emballages’ contracts to which the Commission had objected had already been amended.

d to

(originally up to 15 years), which granted the exclusive right to collect waste in a specific municipal area. As a result, DSD reduced the term of the contracts so they expired in 2003. Since

r.

ture”. It referred to the arrangement whereby waste collectors were required

to pass materials on free of charge to "guarantors" appointed by DSD, and were not permitted to

ut

The Commission only granted an exemption from competition rules for contracts between ARO and ARGEV (the material organisations that handle paper and the lightweight fraction in the ARA system) and collection/sorting contractors. The Commission agreed that these exclusive contracts, granted to one collection company per region and material group for a minimum period of 3 years, were justified to recover the investment for infrastructure development. ARGEV and ARO undertook to award new contracts through competitive tendering within 5 years. As with DSD, the Commission made its approval conditional on ARGEV allowing access by ARA’s competitors to the disposal infrastructure, such as “sharing containers and other arrangements for the collection and sorting of household packaging waste.”

The position of the Commission and of national competition authorities was originally pragmatic – they accepted that collective packaging recovery organisations are in a unique position in relation to competition. There is a balance that needs to be drawn. Recovery organisations are not conventional businesses – almost all of them are private sector companies established on a not-for-profit basis, and they are subject to robust government control. Their board members usually include representatives of key stakeholders, often including the companies that fund them. No two recovery organisations are structured in quite the same way, although many were inspired by the original German model. Some are loosely structured, with a series of material organisations (MOs) representing each packaging material. The MOs ensure the recycling of their own material, and in some countries the collection also. Each MO negotiates with the recovery organisation as to the funding it requires to ensure that its material meets the target. In Sweden, the central organisation REPA acts as a service provider to the MOs, collecting monies from brandholders and passing it on, and providing some other services on behalf of all MOs. REPA handles common tasks, such as data

• In June 2001, the Commission “defined the principles of competition”224 for collection systems handling packaging waste when it approved the contracts concluded by Eco-Emballages. The Commission confirme

Through this decision, the Commission accepted the existence of one large recovery system in each member state, provided that certain conditions are met, such as that competitor schemes are alloweoperate. • In September 2001, the Commission further defined conditions for collective packaging recovery

organisations in a decision relating to DSD’s contracts with waste management service providers. The Commission challenged DSD’s long-term contracts with waste management companies

then, DSD has put its service agreements out to tende

The Commission insisted that DSD’s competitors should have “free and unimpeded access to thecollection infrastruc

find markets for the materials. This practice, known as "zero interface",225 had already beenabandoned by DSD following negotiations with the Commission. DSD retained its guarantors bthere was no obligation to use them.

• In October 2003, the Commission approved the contracts concluded by ARA in Austria with its

members (who pay Green Dot fees only for packs handled through ARA), and those with waste collectors.

224 Press release IP/01/850 of 15.6.2001. 225 Schnittstelle nul.

209

-

similar lines, but the central

ngement with MOs does not operate in some Member States, for example in Ireland where

eet f behalf of their customers. The organisations would negotiate a price for this with the

t

of recovery organisations have cross-border

27

gathering, public information, etc. This decentralised structure works well with Sweden’s materialpecific recycling targets. s

ecovery organisations in some other Member States operate along R

organisation has a greater role in negotiating collection contracts for all materials. Where the recycling targets are not material-specific, it will have to decide what tonnage of each material should be collected so that the overall targets are met as cost-effectively as possible.

he arraTlittle packaging is produced, so there are too few producers and recyclers of packaging to form MOs. In Ireland, the central organisation negotiates with waste collectors who then arrange for the material to be exported for recycling. In Germany, DSD does not work with MOs to handle the recycling of material but with a series of “guarantors”, several for each material. Some of these are like MOs, but most are waste management companies. 6.6.2 Improving competition within recovery organisations The Commission’s recent decisions in respect of DSD and ARA demonstrate that it no longer considers the original pragmatic approach to be appropriate. As indicated in these decisions, the approach being promoted is one of shared use of the dominant recovery organisation’s collection infrastructure by competitors. Recovery organisations do not directly own infrastructure – what is referred to here are the contractual arrangements made between the recovery organisation and local authorities and/or private companies to collect used packaging. Competitors would have access to the tonnages of packaging waste collected that they need to m

e targets othdominant player. The idea is that obligated companies have a choice of compliance options withouthe need to operate parallel collection rounds, thus avoiding householders having to choose between different recycling bins.

G Competition is currently discussing competition in the waste management sector with national Dcompetition authorities. It is developing a discussion document that will aim to ensure a similar approach. In principle, it is the responsibility of the competition authority in each Member State to ensure that recovery organisations operating in the national territory comply with EU competition

les.226 The Commission intervenes only if the activities rueffects or if a single organisation operates in four or more Member States. Thus it will remain the responsibility of each national competition authority to decide whether to permit existing arrangements to continue. The continued existence of a single dominant recovery organisation is most likely in the smaller Member States, where the tonnage of material and thus the waste services market is smaller. The competition authority in one Member State, Germany, is currently imposing this shared use approach rigorously. DSD had previously challenged the shared use approach advocated by the Commission and national competition authorities. It argued that these competitors, who were not approved as dual systems, did not have an obligation to provide all areas coverage, which allowed them to operate more cheaply. However, a couple of Länder have recently approved dual systems.2

226 Article 81of the Treaty – rules applying to undertakings. 227 Interseroh in Hamburg, Landbell in Hessen, Hamburg, Saarland and Bavaria. Länder where Landbell is approved represent 25% of the population.

210

l challenges against competitor rganisations.

A sim ublic awar per year to deter So farecov In fa re. It has c ted on be rom the prod imum of 25% of the shares are now held by ompanies in the packaging chain, and US finance house Kohlberg Kravis Roberts (KKR) acquired

is not certain how the Commission's new guidelines would apply in the case of Italy. Italy is the

CO is nam ated participation, which suggests that it will

main the sole compliance option.

riginally, CONAI handled mainly household packaging waste, but it now also handles m

The dominant recovery organisation, DSD, must now negotiate with these competitor dual systems. DSD retains its approval in these Länder, so in theory both organisations have an obligation to operatean all-areas collection service throughout each Land. However the Federal Cartel Office and the Länder have agreed a shared use approach. DSD has dropped its legao DSD now shares the collection costs with Interseroh and Landbell. DSD awards collection contracts through competitive tendering. Waste contractors must notify DSD of the tonnages of packaging waste now being delivered to the other dual systems, and these tonnages are deducted from thepayments made by DSD to the waste contractors.

ilar arrangement operates for the payments that dual systems are required to contribute to peness – a set amount per capita population in each area. The dual systems meet twice mine the proportion each pays, based on the tonnages of packaging licensed.

r as we are aware, no competition authority in any other Member State where a dominant ery organisation operates has so far insisted on similar changes.

ct the Federal Cartel Office has also insisted on a radical change to DSD’s corporate structuhallenged the arrangement under which packaging recovery organisations are not only operahalf of packaged goods producers, but are also owned by them with representatives f

ucers on the recovery organisation’s board. A maxcthe other 75% of capital towards the end of 2004. Itonly Member State where all obligated companies must participate in a single packaging consortium,

NAI. Within the CONAI system, there is a single sub-consortium for each material. CONAIed in the amendment to the legislation that mand

228re Oco mercial/industrial packaging waste. EuPC reported to us (see section 6.4.8) that its Italian

ber, Unionplast, had complained to the Cmem ommission about the arrangement in respect to plastic lms. EuPC told us that DG Competition said that EU competition rules do not apply to these

iv lders have complained to the Commission, we suggest that the Commission should

te

ficonsortia because they are not "undertakings".

en that stakehoGexamine the practical implications of the arrangements in Italy more closely. It would be unfortunaif a legal loophole made it possible for the Italian arrangements, which are unique in EU-25, to giverise to competitive distortions.

ssed in Parliament, and we nderstand that a switch to voluntary membership remains under discussion.

. 228 A proposal to repeal the compulsory membership provision has been discuu

211

6.6.

here has been a gradual shift in policy since the early days of “Green Dot”-style systems, when the

ch now being taken by Commission and national competition authorities accepts the ontinued operation of a dominant recovery organisation in each Member State, but imposes certain

•

s in for

Contracts between recovery organisations and service providers must be awarded on the basis of

•

• organisations and their members must be on a “no service,

no fee” basis. In other words, no fee should be payable in respect of packs that are not handled by

Where municipalities or private collectors can benefit from a take-back guarantee through the

Thewas ens Theorig ompetitors are

ders from other Member States to ffer their services across borders.

nted.

6.6.3 Conclusions – competition

3.1 Sales packaging

Tneed to meet recycling targets took priority over competition policy. The approacconditions on them. These conditions can be summarised as follows:

Contracts between recovery organisations and participating companies and between service providers (public and private waste collectors etc) must not tie the members and contractorprolonged periods.

•competitive tendering.

Dominant recovery organisations handling packaging waste from households must permit competitors shared use of the collection infrastructure.

Contracts between Green Dot recovery

the recovery organisation (because they fall outside its scope, or because they are handled by a competing organisation).

•recovery organisation, they must have a choice as to whether they take advantage of this or find amarket for the material themselves.

se principles seem sensible to us. The Commission acknowledges that for household packaging te, it makes sense to have a dominant recovery organisation, but it has then identified ways toure that such organisations operate in compliance with the EU’s competition rules.

re are parallels here with the privatisation of public utilities. The monopoly supplier, often inally state-owned but then privatised, continues to operate the basic infrastructure but c

permitted shared use of this infrastructure. The new arrangements result in cheaper compliance for obligated companies. However, recovery organisations operating in competition may not be willing to publish their charges, so the system willbe less transparent. Companies will also have to devote time to establishing whether competitors are offering a better deal than the dominant organisation. The new arrangements should also make it easier for service provio Up to now, Germany is the only Member State where the shared use approach has been implemeThus, Germany is again the pioneer, as it was with the original Green Dot concept. It is too soon to assess the impact in Germany and it remains to be seen how the problems that will inevitably emerge will be resolved. Also, the corporate restructuring of DSD, which is also unique, complicates the picture somewhat.

212

al packaging waste, competition between different recovery organisations nd with individual compliance seems to be functioning more successfully.

handle both consumer packaging and transport packaging should be permitted to participate in respect of consumer

compete with recovery organisations, but there is no real competition if individual compliers fail to meet their recycling targets. The option of individual compliance must

l packaging, but it must represent real competition to recovery organisations.

Where several competing recovery organisations operate within a Member State, there should be ould be transparent and

6.6.3.2 Commercial & industrial packaging waste For commercial & industria We would make the following suggestions: • Companies participating in brandholder-funded recovery organisations that

packaging, but to make alternative arrangements, (individual compliance or another recovery organisation) for transport packaging, if they so wish. 229

• Individual compliance can

be robust, with appropriate reporting requirements and rigorous enforcement. Otherwise, it canrepresent an opportunity to do nothing. Individual compliance can make sense for commercial & industria

•

common ground rules for them all to ensure fair competition. The rules shclearly set out, either in national legislation or in government guidance.230

229 UK stakeholders challenged this point. The point relates to brandholder funded “Green Dot” type sysnot to the UK scenario. UK arrangements are unique, and do not distinguish between consumer packaging transport packaging. Although obligated companies in the UK cannot opt to handle consumer packaging through one compliance scheme and transport packaging through another, or through individual compliance,

tems, and

we accept that companies in the UK do have ample choice of compliance options. 230 We did not intend to suggest that operating rules should be established at EU level, and we agree with PRO

te. Europe that harmonised European rules would be inappropria

213

7. IMPACT OF NATIONAL RECYCLING SYSTEMS ON THE WASTE MANAGEMENT AND RECYCLING SECTORS

7.1 INTRODUCTION

targets for packaging waste in 1991. A ombination of high targets and a short timetable for meeting them had resulted in surplus tonnages of

material was raw

d material. These developments

hus, national recycling legislation for packaging waste triggered not only an increase in the tonnages

as where the new funding was concentrated.

easures other

it

the targets, the Directive set not only minimum covery and recycling targets, but also maximum rates.

ling and recovery” must notify the Commission of their intention to set igh targets. The Commission, having consulted the other Member States, can confirm the high rgets provided that they

• avoid distortions of the internal market, • do not hinder compliance by other Member States with the Directive, and • do not constitute an arbitrary means of discrimination or a disguised restriction on trade between

Member States.

One of the aims of the Directive was to ensure that packaging waste recycling activities undertaken at national level did not disrupt waste and recycling across the Community. Problems had emerged after Germany set recyclingcmaterial being exported to neighbouring countries for recycling. Although secondary raw materials from packaging waste are commonly traded internationally, the market was unable to cope with the very significant increases in the tonnages exported from Germany. Also, the German subsidised through new funding structures. These cheap exports disrupted international secondarymaterials markets, and hindered recycling activities in the importing countries because the recyclers could now acquire German material more cheaply than locally collecteare described in more detail below. Other Member States responded by setting their own recycling targets, to ensure that collection systems within their own countries survived the influx of imports. This resulted in yet more packaging waste seeking limited recycling capacity. Fees paid by producers in these Member States generated new sources of funding for these activities. Tof packaging waste recycled, but also radical changes in international trade flows of the recyclable materials and in the funding arrangements for packaging waste. These activities are no longer solely market-driven, but are now in part managed from the centre. This change has particularly affected household packaging waste – the political focus was on the separate collection and recycling of household packaging waste, and this w As the preamble to the Directive explains, it is important to respect the general principle that mtaken in one Member State to protect the environment should not adversely affect the ability of Member States to achieve the objectives of the Directive. To prevent exported surpluses of collectedpackaging waste from undermining collection systems in other Member States and thus makingmore difficult for the importing country to meetre Member States are permitted to set targets above these maximum levels, but only if they meet conditions set out in Article 6.6 of the Directive.231 Member States “which provide to this effect appropriate capacities for recychta

231 Article 6.10 of amending Directive 2004/12/EC.

214

ity obligations took effect, the collection of packaging waste from ouseholds was on an ad hoc basis and was limited to certain materials, particularly glass in “bring”

raise money for charitable urposes.

arkets for these materials were mited, if they existed at all.

Oncsys eparately from other waste, sorted and made available for recycling. They

ere collected either by municipalities directly, or by private waste contractors.

Rec the money from brandholders’ fees to pay these public and private waste ollectors. Some recovery organisations were required by legislation to pay the full cost of collection,

befo l costs resulting from the source-egregated collection of packaging.

Recsortradi ndi, particularly for municipalities which had hitherto themselves

etermined how collection should be undertaken and how it should be funded. The new arrangements e

requ

s ments were negotiated between recovery organisations,

velop

r with other developments that we describe ere insufficient and so quantities of material had to be

ed

een reluctant to collect materials for recycling as that prices for secondary raw material are subject to significant fluctuations. When market prices

t to cover costs, or the municipalities might even have to pay a cycler to take the material. Public bodies are often reluctant to engage in activities involving

low, the recovery organisation would pay the difference by offering the uaranteed minimum price. Thus, the establishment of recovery organisations affected the price at hich recyclable materials were acquired by recyclers. The need to meet targets sometimes resulted

in materials being exported to other Member States or to third countries with a “dowry” attached, that would make that material more attractive to recyclers than locally sourced material.

7.1.1 Household packaging waste Before producer responsibilhcontainers and some cans. These were the materials whose value was higher than the cost of collecting them. Sale of the materials was sometimes used as a way top Paper/board and plastics had rarely been separately collected from households before, because the value of the material was insufficient to cover the cost of collection. Mli

e recovery organisations were established, packaging materials from households were tematically collected s

w

overy organisations usedcwhile others paid only the additional cost – the municipalities bore the basic cost of collection as

re, while the recovery organisation funded the additionas

overy organisations had to enter into negotiations with municipalities, private waste collectors and ers to agree the terms on which they would provide the necessary services. This represented a cal change of modus opera

drepresented significant new business opportunities for private waste contractors, but at the same tim

ired significant new investment in infrastructure.

everal Member States, framework agreeInmunicipality representatives and recyclers governing the terms and conditions for funding various services. Thus, an activity, waste collection, that had hitherto been managed separately in each area became subject to national operating rules. Recovery organisations also had to work with waste contractors and recyclers to identify and derecycling facilities for the materials collected. In some Member States, the deadline for meeting the first targets set by legislation was short. This, togetheelow, meant that existing recycling capacities wb

exported for recycling. In other Member States, legislators gave producers more time, which allowa more carefully planned expansion of collection and recycling. One of the reasons why municipalities had previously bwwere high, revenue from the sale of materials would fund the collection and transport, but at other times, revenue might be insufficienresignificant financial risk to taxpayers, and they may be legally prevented from doing so. In some Member States, such as France, one of the roles of the recovery organisations was to provide a safety net, by guaranteeing municipalities a minimum price for the material. When secondary material prices weregw

215

hese subsidies were not universal, however. Some Member States, such as Belgium, insisted that

al authorities articularly those with a track record of source-segregated collection) opted to continue to find

mat is no dem for the

7.1 The Tra s.

ackaging waste on business sites usually has a higher value than that in households because it arises

recycos

The new obligations now required a larger tonnage of material to be collected than before, and that material continued to be collected even when the value of the material was insufficient to fund its collection. Small companies which had not previously made their packaging waste available for recycling, now had to do so. In some Member States, the new legal obligations altered the way that collection and recycling was funded. Previously, there had been a free market between end-users and waste collectors. They would negotiate terms which took account of the cost of collection and transport and the value of the material. This arrangement remained in place in some Member States (such as France), but in others, end-users started to charge their suppliers for the cost of waste collection and/or brandholders paid fees to a recovery organisation, as they did for consumer packaging. As in the case of household packaging waste, these funds were sometimes used to support the price of materials, to ensure they would be recycled. And where the timescale for achieving the targets was short, these materials would sometimes be exported, or exported in larger quantities than before, thus forcing locally-collected materials out of the market. The new legal obligations and new funding patterns inevitably resulted in some unintended developments and distortions. In section 7.2

Trecovery organisations pass material to recyclers on the basis of competitive tenders. Even in the Member States where the recovery organisation offered a guarantee, some loc(precyclers themselves.232 Another barrier to increasing recycling to meet the targets was the lack of outlets for the recycled

erial. There is no point in collecting material and investing in new recycling facilities if there and for the output. The recovery organisations therefore funded research to identify new uses recyclate.

.2 Transport packaging waste

impact of producer responsibility obligations was not only felt in the household packaging sector.nsport packaging has long been collected for recycling, particularly from large end-user

Pin larger quantities, and is usually cleaner and more homogeneous. However, until the introduction of

cling targets, material was collected only when the value of the material was sufficient to fund the t of collection and transport.

we set out the impact on the international market for secondary raw materials of the German Packaging Ordinance, which was a key factor in the establishment of the Packaging and Packaging Waste Directive.

232 In future we expect greater competition at the interface between collectors and recyclers, as discussed in

ction 6.6se .

216 7.2 EA

The c

e Directive was adopted, it had become clear that d already had the effect of creating a series of managed markets

ominated by particular companies or groups of companies.233

as in the public interest – rge companies have the financial resources to invest in high environmental standards and have

tractors

it

sal ly. In

of the two were rather different.

re

he mills up to €20 er tonne to take it off their hands, and balanced their books by raising their prices – they now charged

t the mills would have to pay, not be paid,

r their raw material. To prevent loss of control, the paper industry formed GesPaRec to collect raw

ces ing only one grade of paper (Kaufhaus), GesPaRec had much lower

RLY IMPACT OF THE GERMAN PACKAGING ORDINANCE

reation of managed markets 7.2.1 By 1994, before the Packaging and Packaging Wastthe German Packaging Ordinance had It could be argued that fostering concentration in the waste disposal sector wlareputations to protect. On the other hand concentration had also given the waste disposal conthe upper hand in their negotiations with DSD, which had minimised pressure to keep the Dual System's operating costs down. At that time, the waste disposal sector's involvement with Dual System policymaking was growing –had a shareholding in the DSD and in DKR, the organisation guaranteeing plastics recycling. 7.2.2 Paper and board German papermakers were also unhappy at the way that the company formed by the waste dispoindustry and the waste paper merchants, Interseroh, 234 now controlled their raw material suppGermany, unlike some other European countries such as the UK, there was very little integration of paper mill and waste paper merchant and the interests Before the Packaging Ordinance reversed the balance of power, big paper manufacturers were buying from small waste collectors; now Interseroh had entered the market and had become a dominant supplier. In Germany, waste paper collectors had made their money by charging retailers for a disposal service which undercut the cost of landfilling waste paper. 235 This enabled them to supplythe mills free of charge. Now the waste had to be collected and may not be landfilled. Much mowas available, more than the mills needed. This meant that the collectors now paid tpcommercial and industrial end-users some €90 per tonne to take the waste paper away. With so much material being collected, Interseroh had to build up export markets.236 German papermakers were concerned that Interseroh could maximise its profitability by expanding exports beyond what was needed to get rid of their surpluses, to the extent that within the German markethere was a shortage of the right grades for the mills. Thenfomaterial for them and compete with Interseroh on price. GesPaRec was not interested in the soiled and contaminated paper in the DSD system: its only concern was the higher-value transport packaging material. By concentrating on the big commercial sour(supermarkets) and collect

33 ard and Bevington: Packaging waste m2 Perch anagement – Learning from the German experience,

4 Interseroh was founded by the waste disposal companies to operate a recovery service for transport

com by weight of paper and board. It also acts as a broker for secondary raw materials, ndling markets on behalf of private waste contractors affiliated to it.

5 At that time landfill costs ranged between DM 100 (€ 50) and DM 300 (€ 150) per tonne.

arket rose from 21% in 1989 to 34% in 1991.

Perchards, June 1994. 23

packaging and to give the DSD a take-back and recycling guarantee in respect of all packaging materials prising at least 50%

fi 23

236 Germany’s share of the Community waste paper m

217

rofit while just undercutting Interseroh – charging €80 er tonne instead of €90. If GesPaRec's costs were €30 per tonne, it could deliver to the mills at the

rns of

te paper prices had fallen and German mills had been able to reduce the price of recycled aper. Both waste paper and recycled paper are internationally traded commodities, so the prices of

romoted the use of recycled paper rather than virgin pulp as a raw aterial and so created new outlets for the collected waste paper once the necessary production

as

the any had to take into account the additional transport costs

volved.

osts r

the UK paper recycling industry to main competitive, waste paper prices needed to fall much further. However, as disposal to landfill

s e

competitiveness to be restored.

out

.

for he

ny's

m

t

collection and sorting costs, and could make a pplowest possible price. Whatever the German paper industry's worries, they paled into insignificance beside the conceGermany's competitors. Since the German waste paper market had had its supply side subsidised, German waspboth had fallen across Europe. In principle, this should have pmcapacity had been put in place. In practice, it was not quite that simple. Since Interseroh wexporting these surpluses outside Europe, other European buyers were not getting a cost advantage from the large surpluses generated in Germany. With collection subsidised, and cheap transport available backloaded onto ships delivering Far Eastern consumer goods to Europe, German waste management companies could find profitable outlets for their high-quality surpluses, leaving for European mills the waste containing most contaminants, where the usable material was a relatively low proportion of the total tonnage acquired. Also,prices available to mills outside Germin Thus while UK and other non-German papermakers may have benefited from lower raw material cto the extent that they were prepared to sacrifice the security of supply from their local waste papecollection infrastructure, their cost savings were not sufficient to make them fully competitive with German mills. Waste paper and packaging paper prices had fallen in the UK in response to pressure from the Continent, but British papermakers were saying that forrewas less costly than recycling, there was no incentive to collect additional quantities in the UK. Somehow, the paper and board industry argued, a way had to be found to increase collection chargeby € 45 to € 60 per tonne above the levels then prevailing so that waste paper could be made availablto UK mills at a price which enabled British There had been initiatives all over the European Community to increase the amount of waste paper collected in each national market. The availability of cheap imported waste paper reduced the incentive to collect waste paper in the importing country. Waste paper merchants had been going of business, to the detriment of existing collection infrastructure. The effect of ambitious German recovery targets, therefore, had not been so much an increase in actual recovery rates but a transport-intensive displacement of local waste by imported German waste There had not been much change in the pattern of exports of finished paper and board packaging – its low bulk density made long-distance transportation uneconomic – but the competitive disadvantage of industry outside Germany in waste paper and recycled paper markets could have had consequencesthe future location of production. And with Germany installing new recycling capacity to balance tincreased supply while paper recyclers in other countries struggled to balance the books, Germacompetitive advantage would grow. The German Environment Ministry argued that waste paper was a traditional secondary raw material and must be allowed to be traded freely, but it conceded a promise that the DSD would refrain froany further exports of secondary raw materials to other Member States except where it already had a contractual obligation to do so. Perchard and Bevington 1994 commented that this concession mighnot be particularly significant, since the undertaking to refrain from exporting applied only to DSD, which was responsible for the recovery of sales packaging. There was no mention of Interseroh or the

218

ther organisations handling transport packaging, which was a far more valuable secondary raw

he German Packaging Ordinance also gave rise to waste plastics surpluses, some of which had been

ported waste was available from Germany.

he German standards accreditation body TÜV had licensed plants outside Germany to reprocess the German recycling guarantors. Dutch sources

laimed that all the plastics packaging being recycled in the Netherlands came from Germany and that

r governments, the German Government agreed to refrain from eliveries of waste plastics to recyclers in EU Member States after January 1994 except where specific

nd et.

4.

.2.5 Response by Germany’s neighbours

anuary onsibility for the recovery of

ckaging waste from households, either by operating a deposit-and-return system, joining an dustry-run but government-approved recovery organisation, or setting up its own recovery scheme,

which also had to have official approval. The role of the French recovery organisation for household packaging waste, Eco-Emballages, was to give financial support to the municipalities to help them develop systems for segregated collection and sorting of packaging waste. Operational responsibility remained with the municipalities; brandholders

omaterial. 7.2.3 Plastics Tdumped (in the economic sense) on third world markets; some had been landfilled. The Europeansecondary raw material market had been swamped – plastics recycling was in its infancy everywhere in Europe, and it was difficult to make an economic case for collecting used plastics packaging locally if subsidised im TGerman waste plastics packaging on behalf ofclocally-generated waste was having to be landfilled. In the UK, the increasing availability of negatively priced German material during 1993 forced a halving of the price paid to collectionschemes to £25 (€ 37) per tonne. At these prices collection was not an attractive proposition, and it would only be through a political commitment to keep such schemes going that they could survive. Faced with complaints from othedexemptions had been granted; but the German plastics guarantor organisation, DKR, said in March 1994 that there had been a large number of exemptions, and it hoped that the quantity sent to otherMember States in 1993 237 could be maintained in 1994 "so that recyclers dependent on German material can stay in business." 7.2.4 Glass The same story applied to a lesser extent to the glass industry. Interseroh had taken responsibility for selling surplus collected glass to neighbouring countries, and there had been complaints from Italy aelsewhere that locally-collected material was no longer finding a mark In 1990, France was a net importer of 25,000 tonnes of waste glass. In 1992, net imports rose to 83,000 tonnes and the glass industry announced a 30% cut in cullet prices from the beginning of 199 7 The undercutting of collection systems in countries neighbouring Germany was one of the main reasons for the rapid development of producer responsibility ideas in these countries. From J1993, France required238 all producers and importers to take resppain

237 About 20,000 tonnes. 238 Décret 92-377 du 1er avril portant application pour les déchets résultant de l’abandon des emballages de la

x. loi N° 75-663 du 15 juillet 1975 modifiée relative a l’élimination des déchets et à la récupération des matériau

219

mp system based n disposal to one based on recovery. This was very different from Germany, where industry was

costs.

The level of subsidy was different r each material. Municipalities were offered a choice between making use of the take-back

decree to cover commercial and industrial packaging waste. olders of such waste must recover it in approved installations, hand it over under contract to the

er waste hich cannot be valorised using the same channel or channels.

rnt from and developed the pioneering German model, proved to be ost of the Green Dot systems across Europe evolved (though no two

and i orters were responsible only for financing the additional costs of moving from aoexpected to take on all packaging waste management To get funding from Eco-Emballages, municipalities had to submit recovery plans material by material. Eco-Emballages would provide a subsidy per tonne of sorted material delivered for recycling and complying with minimum quality specifications.239

foguarantee given to Eco-Emballages by each of the materials networks; 240 or selling the sorted products under terms at least as favourable, to parties meeting approval criteria specified by Eco-Emballages. In 1994 France adopted a second 241

Hoperator of an approved installation or hand it over under contract to an intermediary offering a transport or brokerage service for waste. Holders of such waste must keep it separate from othw The French approach, which lea

e basic template from which mthare identical, and Austria and Belgium, in placing total responsibility on industry for the management of packaging waste, relied more on the original German take-back concept). Once there was a system in place to subsidise the collection of packaging waste for recycling, the

isruptions of the recycling market which had caused such a furore came to an end and a new dequilibrium was established. Initially, this was attributable to spontaneous actions within the countriesaffected by the German packaging waste surpluses, but the Directive also helped to restore order by establishing common ground-rules.

That was in addition to payment for the material from the glass and metals reprocessors. Paper and plastics

relative à élimination des déchets et à la récupération des matériaux et relatif, notamment, aux déchets d’emballage dont

239

were taken back free of charge, provided they met specifications. 240 As in Germany, the material sectors guaranteed to take back all sorted material which conformed to minimum technical specifications. 241 Décret 94-609 du 13 juillet 1994 portant application de la loi N° 75-633 du 15 juillet 1975l’les détenteurs ne sont pas les ménages.

220 7.3 DEVELOPMENTS SINCE THE DIRECTIVE WAS ADOPTED 7.3.1 Overview The establishment of national recycling targets for packaging waste, has indeed led to a significant increase in the tonnage of packaging materials collected and recycled. As Table 16 in section 2.4.2 shows, the tonnage of packaging waste recycled in EU-15 increased from 25 million tonnes in 1997 to 30.7 million tonnes in 2001, while the total tonnage of packaging placed on the market increased from52.7 million tonnes to 56.2 milli

on tonnes over the same period.

ive gets,

me ile

the price they pay for collection (Austria). This suggests that subsidies are paid only on

it

gets:

d a report by the Federal Environment Ministry to demonstrate

The disruptions in the recycling markets within the EU have certainly diminished since the Directwas adopted. All Member States have now established their own recycling requirements and tarand new recycling capacities have been developed. Most Member States have established recoverysystems, which have provided a source of funding to balance the subsidies on foreign material. Nevertheless, we do not believe that the free market for secondary raw materials has been replaced by competing subsidies from different national recovery organisations. This is because the recovery organisations mainly handle packaging waste from households, and some municipalities and many business end-users still pass material on for recycling independently of recovery organisations. Sorecovery organisations pass material to recyclers on the basis of competitive tenders (Belgium), whothers simply offer a minimum price (such as France and Spain) while the value of materials is reflected insurpluses of material which cannot easily find a recycling outlet. In addition, a proportion of material continues to be exported to third countries for recycling. The revised Directive acknowledges that some material will be recycled in third countries. In Article 6.2 says that packaging waste exported outside the Community can count towards the targets “if there is sound evidence that the recovery and/or recycling took place under conditions that are broadly equivalent to those prescribed by the Community legislation on the matter.” In practice, however, Member States acknowledge that it is extremely difficult to monitor recycling in third countries to establish compliance with this condition.242

7.3.2 Targets exceeding the Directive’s maxima Since the Directive was adopted, three Member States – Austria, Netherlands and Belgium (twice) – have sought the approval of the Commission and other Member States for targets higher than the maxima set by the Directive. In all four instances cases, the Commission approved the higher tar • Austria:

The Commission confirmed the Austrian targets in December 1998.243 In 1994 Austria notified measures to bring its 1992 packaging legislation into line with the Directive. Austria indicated that it was already meeting the Directive’s targets and expected to do so in future, particularly for paper and glass. Austria providethat adequate reprocessing capacities were available.

242 Discussion at the Article 21 Committee, 2 February 2005. 243 Commission Decision 1999/42/EC, published in OJ No. L14, 19.1.1999.

221

ents. ember State considered that the Austrian measures would give rise to Internal Market

distortions, but several questioned the assessment procedure. They pointed to the difficulty of assessing capacities which exist on the open international market, and argued that it was not

resee when measures would result in the targets being exceeded. There was a consensus that the effect of measures should be keep under constant review. Member States

at the Member State must be self-sufficient, as they should have recourse to capacities in other Member States and in third

Co-operation Agreement, which set recycling and recovery targets and the rules for how they

As in the case of Austria, no Member State objected to the Belgian targets, but they did comment on the procedure, and on the difficulty of assessing capacities and of anticipating problems. The

mittee concluded that it was therefore necessary to constantly monitor the

Netherlands

on the second Packaging Covenant, through which most Dutch companies complied with the Directive, and which set material-specific recycling targets higher than those in the Directive.

a recycling rate of 51%, and that recycling

e

The Commission then consulted the Member States, seven of which submitted written commNo M

always easy to fo

which feared the measures would prejudice their ability to meet the targets should play a primary role in the monitoring procedure. In its assessment, the Commission argued that the requirement that appropriate recycling and recovery capacities should be available does not mean th

countries. The Commission concluded that the measures met all the criteria set by Article 6.6.

• Belgium

The Commission confirmed the Belgian targets in September 1999.244 Belgium had notified its

should be achieved. The Agreement set overall targets of 45% recycling and 70% recovery in1998, and 50% recycling and 80% recovery in 1999. In its submission, Belgium said that it had reviewed the available recycling capacity for each material. It argued that it was already achieving a recycling rate of 55% for glass, and that it produced only about 3% of the total packaging waste in the EU.

Article 21 Comsituation. The Commission concluded that the measures met the criteria set by Article 6.6.

•

The Commission confirmed the Dutch measures in November 1999. 245 The assessment focused

The Netherlands argued that it was already achieving capacities were sufficient. The Netherlands highlighted the difficulty of monitoring what proportion of Dutch packaging waste was recycled abroad because the material was subject to frecirculation. No Member State raised objections, and the Commission concluded that the measures met all the criteria set by Article 6.6.

4 Commission Decision 1999/652/EC, published in OJ No. L 257, 2.10.1999. 24

245 Commission Decision 1999/823/EC, published in OJ No. L 321, 12.12.1999.

222

for the period after 1999, and these were confirmed by the Commission in January 2003. In this instance one Member State, France, did

ated to

• Belgium

Belgium again notified its intention to set higher targets 246

raise objections about the impact of these targets on its recycling sector. The objections relglass, and this case is discussed in further detail in section 7.3.3.4 together with other glassissues.

7.3.3 Current market issues – paper & board

-related

he national recycling targets for paper & board packaging are mainly being met by recycling

er sed –

Tcorrugated transport packaging. In many Member States this is not handled through a recovery organisation, but through direct negotiations between end-users, waste collectors such as waste papmerchants, and recyclers. The tonnage of paper & board packaging recycled has certainly increafrom 13.9 million tonnes in 1997 to 15.9 million tonnes in 2001, which represented an increase in the recycling rate for this material from 59% to 67%. There has always been a well-established international market for this category of waste paper. As Figure 18 shows,247 market trends for OCC (old corrugated cardboard) in France, Germany and theUK follow the same pattern even though prices in each market are different. The German Packaging Ordinance disrupted the market temporarily – prices collapsed in both France

and Germany to zero in id-1993, and fell to a lesser extent in the UK. However prices surged again in mid-1995. Legal

hat o other

ated Cardboard in France, Germany and the UK, 1991-2004 (in £)

mobligations in France for board industrial packaging took effect at this time, which would suggest tmore material was being collected for recycling. The price increase must therefore be related tmarket factors.

Figure 18: Prices for Old Corrug

European OCC Prices

-20

0

20

40

60

80

100

120

140

160

180

Jan-91

Jul-91Jan-92

Jul-92Jan-93

Jul-93Jan-94

Jul-94Jan-95

Jul-95Jan-96

Jul-96Jan-97

Jul-97Jan-98

Jul-98Jan-99

Jul-99Jan-00

Jul-00Jan-01

Jul-01Jan-02

Jul-02Jan-03

Jul-03Jan-04

£ pe

r ton

ne

FRENCH BRITISH GERMAN

246 Commission Decision 2003/82/EC, published in OJ No. L 31, 6.2.2003.

may 247 Source: British paper industry. Note that all prices are all in GBP, so the German and French pricesbe affected by exchange rate fluctuations.

223

t b

dermined by subsidised exports from elsewhere. The solution was the same as Europe – to set up their own recovery systems to organise the funding of

ve.

This will

cle. Used steel cans need to

.3.5 Current market issues – plastics

German Packaging Ordinance was d cycling techniques and investment

ics fractions that are the easiest to recycle – primarily PE films used as nd HDPE.

ic recycling is relatively new and less commercially driven than recycling was for other at re has been no real market for secondary plastics. However there are now signs that an

nte Asi EuPsomincrease in exthe figures are very approximate because of the absence of good data.

After the Directive was adopted, there were reports of some material being exported to the formerovie loc countries in Central and Eastern Europe. Again there were complaints that local collection S

activities were being unt had been in Western i

selective collection, on the basis of rules established by the Packaging and Packaging Waste Directi At the moment there is strong demand for OCC from Asia, and particularly from China. Net exports of recovered paper from Europe are increasing: 3.3 million tonnes in 2003,248 compared with 2.8 million tonnes in 2002. This trend is expected to continue. 4 million tonnes of additional production

pacity for recycled containerboard is expected to come on stream in China in 2004-6.caincrease demand for recycled fibre as raw material for the plant. 7.3.4 Current market issues – metals We received no comments from stakeholders indicating any problems relating to recycling markets for metals, and we are not aware of any current trade imbalances relating to either aluminium or steel. We believe that there are several reasons for this: • metal packaging represents only a small proportion of total packaging, so tonnages are relatively

small;

aluminium and tinplate cans are among the easiest pack types to recy•be detinned, but then they can be recycled along with other ferrous scrap. The high value of aluminium scrap 249 ensures the economic viability of recycling for this material;

• packaging represents a very small proportion of the total production output of these metals, and

there is sufficient recycling capacity. 7 The recycling of plastics packaging was in its infancy when the dopte . Since then much work has been undertaken to develop rea

has been made around Europe in new recycling capacity. Thus, the development of recycling capacities for plastics has been driven by recycling targets to a significant extent.

he focus has been on the plastTtransport packaging, and plastic bottles which are usually made of PET a Because plast

erials, themi rnational market is emerging. As in the case of paper, demand for recyclable plastics in south-east

a, particularly China, has been growing.

R (the Association of European Plastics Recyclers) estimates that around 30% of used PET and e 50% of all PE waste in Europe is being shipped to China for recycling. EuPR ascribes the

ports to the increase in prices for managing this waste in Europe, although it stresses that

n tonnes.

ne.

248 EU-15 exported 12.9 million tonnes but imported 9.5 millio 249 Typically, used aluminium beverage cans trade at around € 1,000 per ton

224 In Gon (disc y for ava 3 alm per tonn DSD has worked with the plastics sector to develop recycling capacities within Germany and had madcurr s. In a co rease in shipments of plastics to Asia in future, and redundant capacity in Germany. Thi trally

nded system for competition policy reasons.

7.3 In trecydem 7.3.6.1 Glass recycling in general Beiair, llet is usu to neighbouring countries, the knock-on effects of such movements can spread much wider.

pact of high Belgian targets on glass recycling in France

ob cling capacity were highlighted in 2001 when Belgium notified to the Comdid targ

ermany, some developments after the mandatory beverage container deposit was imposed in 2003 inter alia) non-refillable PET bottles have also resulted in increased exports to Asia. Some ount retail chains developed their own deposit arrangements, focusing on PET.250 Responsibilitgetting the material recycled switched from DSD to these retailers, who sought the cheapest ilable option. EuPR estimates that the quantity of PET shipped to China for recycling during 200ost doubled to between 80,000 and 100,000 tonnes. Asian recyclers were offering up to € 260e, a price far higher than German recyclers were offering.

e sure that these are fully utilised. However, the German system for packaging recycling is ently undergoing a restructuring to allow more competition between several recycling systemmpetitive market these systems will seek the cheapest options. This could result in an inc

s trend could be even more marked if other Member States also move away from a cenfu

.6 Current market issues – glass

he glass sector, we have identified two ongoing trade imbalance issues, one relating to glass cling in general and the other to a specific imbalance between the supply of green cullet and the and for green glass.251

ng a heavy and bulky material, glass does not lend itself to long-distance transportation by road or but it is sometimes shipped long distances by sea or inland waterway. Although surplus cually exported

Im

r lems with glass recyPmission proposed higher targets in a revised Co-operation Agreement. The original Agreement

not set targets beyond 1999 (although these were extended to 2000 at 1999 levels). The new ets that Belgium proposed were as follows:

Table 55: BELGIAN TARGETS FOR 2001-2003 Year Overall recycling Overall recovery Recycling of each material 2001 60% 80% 20% 2002 65% 85% 25% 2003 70% 90% 30%

Bel

el ntainer glass252 and had limited recycling capacity, so any increase in lass recycling would use capacities outside Belgium.

gium would need to achieve a high recycling rate for glass to meet these targets. However gium no longer produced coB

g

250 See section 3.2.8.3. 251 We understand that PRO Europe has now commissioned Ernst & Young to study the future of glass

pected in the future, with a iew to establishing how best to achieve the 60% recycling target for glass by 2008. 2 The only producer, Verlipack, had a capacity of 160,000 tonnes per year until its closure in 1999.

recycling in Europe. The study will assess the current situation and developments exv 25

225

ed that the Directive imposed no requirement to use only domestic capacity. There ould be no distortion of the Internal Market because of the limited size of the Belgian market, the

gradhouwas France objected to the proposed higher targets because any increase in glass recycling could only be

one by exporting for reprocessing abroad. The French Government said that 40%-45% of Belgian ullet was exported to France for recycling. Germany was also exporting glass to France and the

ase in recycling targets would cause a hortage of capacity in the French glass recycling sector and distortions of the Internal Market. Spain

glass.

response to these objections, the Belgian authorities reported to the Commission that the total

ng countries. These costs were taken into account when

Finall

Belgium arguw

ual increase in the targets and because Belgian industry was already meeting the targets (73% of sehold packaging waste and 77.9% of industrial packaging waste in 1999). Its glass recycling rate 75.5% in 1999 and increased to 86.6% in 2000 and 87.5% in 2001.

dcNetherlands. France was concerned that the proposed incresand Italy also expressed doubts as to whether Belgium had appropriate recycling capacities for The French Government argued that the subsidies paid for collection and sorting in Belgium were much higher than in France, so even with the additional transport cost, glass from Belgium could be made available to French recyclers much more cheaply than glass originating in France. Intonnage of glass collected for recycling in 2001 was 278,600 tonnes (FOST Plus plus other collections). France was indeed the largest importer in 2001 (40-45%), followed by the Netherlands (slightly less than 30%), and Belgium and Germany (10% each). However, in 2002, less than 15% of Belgian cullet would be exported to France, while 55% would be recycled in the Netherlands. 6% would be recycled within Belgium and 20% in Germany. Belgium also denied that the fees paid to FOST Plus permitted Belgium to offer a better deal to recyclers. On the contrary, FOST Plus was obliged to make available material to recyclers on the asis of competitive tenders, unlike neighbourib

Green Dot fees are set.

y, Belgium argued that it generated only 3% of the total packaging waste in Europe, too little to have a real impact on the Internal Market.

Table 56: BELGIAN GLASS RECYCLING, 1997-2001 253

1997 1998 1999 2000 2001

Glass collected in Belgium 217 221 250 266 281

Glass imported into Belgium 102 110 149 168 273

Glass exported from Belgium 213 290 338 389 573

Glass theoretically recycled in Belgium 106 41 61 45 -19

Table 57: BELGIAN TRADE BALANCE FOR CULLET, 1995-2002 254

1995 1996 1997 1998 1999 2000 2001 2002

Germany 15 4 -9 -67 -78 -92 -65 -54

France 22 19 33 88 139 129 151 36

Italy 0 1 1 1 2 15 49 67

Netherlands 127 86 67 118 115 138 135 179

Sweden 0 0 0 0 -21 -10 -9 -17

UK -1 -1 6 -2 -6 15 13 36

Other countries 19 46 13 42 38 26 26 -3

Total 182 155 111 180 189 221 300 244

253 Source: Institut des Comptes Nationaux.

ieur Belgique. 254 Source: Statistiques du commerce exter

226

rgest Belgian glass recycler had closed because of international competition. However, Belgium did

to technical and market limitations nd cannot be overcome by additional financing, it should be assumed that appropriate capacities are vailable, independently of whether this is inside or outside the concerned Member State”. The

case for the proposed Belgian measure. Although ere were some signs of saturation in the glass market, the Commission argued that additional

he Commission acknowledged that distortions of the Internal Market could occur if “high recycling g through e.g. licence fees”, resulting in lower

rices for secondary materials. This could have an effect on a neighbouring country where recycling

wer xpensive than the subsidised imported materials. If recycling capacities are limited, it ould be difficult for countries with low targets to find a market for their own collected material.

Imp s

he Dutch glass industry complained to the Dutch Economics Ministry in 2000 about imports of r

eccy The Dutch glass industry also feared that Dutch fillers ould opt to buy their bottles more cheaply from German glassmakers.

is was not a major problem – the reason the Dutch d

Belgium commented that Verlipack, the largest glass recycler, had closed because of European competition. In Belgium, glass was collected colour-sorted, so Belgian cullet was an attractive material for foreign recyclers. The quantity of glass collected for recycling was unlikely to increase. The Commission confirmed the Belgian measures in January 2003.255 It acknowledged that the lahave sufficient recycling capacities for metals, plastics, paper and board on its territory. Because there is no obligation to recycle within a country, “the measure needs to be seen in the context of an overall assessment of the European and/or global market for recycled material. Therefore, unless there is a general market saturation which is dueaaCommission concluded that this seemed to be the thmaterial would be able to find appropriate capacities. Trates are accompanied by a high degree of financinptargets and thus financing were lower. It could mean that domestically collected secondary materials

e more ec

act of the German producer responsibility system on glass recycling in the Netherland

256TGe man glass collected by DSD. It argued that the price of German cullet was not based on market m hanisms – DSD subsidised the price of cullet, and German material was more attractive to Dutch

clers than material collected locally. 257rew

owever the Dutch Economics Ministry said that thHglass recycling rate was "only" 66% (321,000 tonnes) in 2000 was that only half of the glass collectein the Netherlands was colour-separated, and non-segregated glass did not meet the requirements of the market.258

o redress the balance, Dutch recyclers now also receive some funding from EcoVerpakkingen, which Tis financed by Dutch producers and importers,. This suggests that the problem is still ongoing but that Dutch industry has found a way to resolve the issue.

255

tonne in the Netherlands compared to € 45.80 in Germany. The Dutch glass industry imported 65,000 tonnes of cullet from Germany, 101,000 tonnes from Belgium and bought 330,000 tonnes on the domestic market.

8 While there is undoubtedly some truth in the Ministry’s response, it did not entirely address the complaint

Commission Decision 2003/82/EC, published in OJ No. L 31, 6.2.2003. 256 Through Stichting Kringloop Glas. 257 A study by Berenschot in 1999 estimated the recycling cost as € 48.50 per

25

made by the industry.

227 .3.6.2 Green glass

es.

ling ge of

7 Some Member States import significant quantities of green glass but produce very little themselvThese are mainly Member States that produce little wine, in other words the northern Member States, such as Ireland, the UK and Sweden. This is a problem because green glass cannot be recycled together with clear glass because it gives the glass a greenish hue. The UK The UK’s Waste Resources and Action Programme (WRAP) estimates that to meet the 60% recyctarget for glass in 2008,259 the UK will have to recycle 1.44 million tonnes. It estimates the tonnaglass that will need to be recycled to meet the 60% target and the quantities of glass that will be used in container production as follows:

Table 58: FORECAST UK GLASS TONNAGES, 2008 Colour Target recycling

tonnage (60%) Container sector capacity Container sector use Surplus

Clear 504,000 719,000 504,000 - Green 720,000 295,800 295,800 424,200 Amber 216,000 189,100 189,100 26,900

• For clear glass, the UK supply of recyclate is expected to be in balance with the demand for

glass containers, and there is more than enough manufacturing capacity available. For amber glass, pro uct

new

d ion of new containers absorbs the UK’s entire manufacturing capacity, and there is forecast to be a small surplus of recyclate.

g capacity is also in line with market demand, but a large surplus

ately 10% per year. Most of the glass contained lcoholic drinks an

As a result, SGÅ has a sur at it cannot ra loss.

ommerskollegium has suggested solving the problem by means of a weight-clearing arrangement to es and

•

For green glass, UK manufacturin•

of recyclate is forecast. WRAP is endeavouring to address the problem by developing new, high-value outlets for the glass, such as for water filtration. Sweden The Swedish glass recovery organisation, Svensk Glasåtervinning (SGÅ), has complained to theSwedish authorities260 about the significant quantities of glass being imported to Sweden each year asa result of cross-border shopping. SGÅ estimates that the tonnage imported and undeclared was 38,000 tonnes in 2002 (compared with a tonnage of 170,000 reported to SGÅ261). SGÅ estimates that

e undeclared tonnage is increasing by approximtha d, according to SGÅ, much of it is coloured.

plus of glass th ecycle. This has to be exported for recycling, at

Ksmooth out the costs of recycling. Each Member State would analyse how much glass it produchow much material it handles and then would then calculate an average quantity. Costs could then be 259 Source: Recycled Glass Market Study & Standards Review – 2004 Update, by Enviros for WRAP.

inster för miljö, konsumenter och den inre marknaden av att samordna återvinnings- etursystem för dryckesförpackningar inom EU/EES [Potential benefits for the environment, consumers and

],

SGÅ annual report 2002.

260 Source: Potentiella voch rthe internal market of a co-ordinated recovery and return system for beverage containers with the EU/EEAKommerskollegium, ref 100-419-2003, published 31 October 2003.

126

228 divided between Member States. Sweden would benefit from such an arrangement because of the undeclared imports from cross-border shopping. The Kommerskollegium report suggests that these smoothing payments should be made by each Member State, but it does not suggest any mechanism for this. In our view, such an arrangement would be administratively cumbersome and of dubious cost-effectiveness. The glass industry could not manage the system, since cross-border exports are usually outside its control. A mechanism operated by brandholders would be cumbersome and would only solve the problems to a limited extent. A special arrangement could be made for sales in retail outlets near national borders that specialise in selling to consumers of the neighbouring countries. These operate in several border areas between Member States where there are wide differences in retail prices and/or different rates of tax and excise duties on alcoholic drinks (for instance Denmark/Germany, and France/UK). Either brandholders selling to such outlets could declare the packaging to a recovery organisation in the importing country, or they could declare it separately on their data form and the recovery organisations in each country could come to an arrangement. However, this would only solve the problem of purchases made in border shops. It would not cover consumers who make their cross-border purchases at a normal supermarket. As Kommerskollegium points out, much of the glass privately imported to Sweden is associated with alcoholic drinks. The main driver for cross-border trade in alcoholic drinks is the differences in national taxation of alcohol, which has a significant effect on retail prices in the different Member States. The source of the imbalance in this case is the alcohol policy of the Swedish government. 7.3.7 Conclusions 7.3.7.1 Trade imbalances within the Community Since the Directive was implemented by the Member States, the trade imbalances in secondary raw materials markets that it intended to address have been reduced. However, it is impossible to conclude from this that the Directive has “cured” the problems. One reason for the improvement is that nearly all Member States have established similar funding mechanisms, providing them with subsidies of their own to counter the effects of subsidised foreign material. It is significant that the Netherlands, one of the few Member States which has tried to implement the Directive without a special funding regime, has been forced to provide some funding to counter German subsidies on glass. Another factor is that recycling legislation affects the markets for some secondary raw materials, at least in the short term, by increasing the supply of recyclable materials and sometimes by subsidising the price at which recyclers acquire them. But over the longer term, these markets are driven by broader economic factors – the international supply of and demand for recyclable materials, and the international demand for the output of recycling plants. For example, international demand for some recyclable materials, particularly for plastics and paper in China, has increased significantly since the Directive was implemented. On the other hand, there do seem to be ongoing problems in relation to glass. Article 6(6) of Directive 94/62/EC created a mechanism to prevent trade distortions that has been put into practice on four occasions. The process has yielded the following lessons: • The Commission has confirmed that Member States wishing to exceed the targets do not have to

have sufficient domestic recycling capacity – recycling markets are international. • The Commission and the Member States have agreed that it is hard to anticipate the future impact

of measures.

229

(6) procedure. However, the irective’s targets have now been revised upwards for all Member States, and it seems unlikely that

vent

ime will tell whether this will create real problems in practice, but should there be a need for

A periodic review procedure for decisions to permit higher targets. We agree that it is hard to s to

gher

erial.

ture of the recycling targets that EU-12 will have to meet by 2008 will

facilitate an assessment for each material. Our analysis above shows that even if there are no trade

• It would also be helpful for assessments to consider the impact on the most likely importer of recyclable be considered as a single secondary raw material market. Although a o s ar rials are truly inter actions have sufficient value for l e economic ways the case. T igh t of po an t in most cases materials will be sent to the closest suitable recycling plant. the re have some difficulty st elgi dpackaging waste represented only a small proportion of the total. That would be a valid argument only if recycling capacities throughout the EU were equally available for the surp aterial. In fact, as th ring Member States w e used. The o plication of the d im um se u Belgium and the Nethe that only the smaller Me er S ca pra exc the mum targets.

• We believe that it is impo that essm s of uests to set higher targets by a Member State

should co ot only the current recycling level in that Memb ate b also forecast future need for recycling capacity eighbouring ember States. When Austria, Netherlands and Belg set h tar , th ll ar y w alre exceeding the target rate. That level of recycl ay pr te given existing recycling capacities within the Member State and in neighbouring Member States. However, it may be unsustainable in future. The assumption ignores the possibility that neighbouring Member States may not yet have

ditional capacity in future. For example, Belgium had already achieved a high recycling rate for glass, but France had not then met its recycling target

s increasing. We note that Spain and Italy also

• The Member States have expressed a wish to keep under review the outcome of decisions made to permit higher targets.

In addition to the above conclusions, based on our own analysis of the process, we believe that other things being equal, there would have been a need to fine-tune the Article 6Dany Member State will wish to exceed the maximum 80% overall recycling target. Also, there is no upper limit to the material-specific recycling targets. Therefore, although the procedure still remainsin the amended Directive – it is now in Article 6(10), there are no longer any effective curbs to preany Member States from setting over-ambitious national targets which cause problems for its neighbours. Tstrengthened procedures, we suggest that the following considerations, based in particular on the second request by Belgium and the objections raised by France, might be taken into account: •

anticipate the future impact of higher targets and we note the suggestion of the Member Statekeep them under review. At the moment, once the Commission has granted approved hitargets, there is no formal mechanism for calling that decision into question if unforeseen problems should emerge. We suggest that Member States should have the opportunity to raise objections after the Decision has been made – either when problems emerge, or perhaps at predetermined intervals (e.g. annually).

• It would be better if assessments of requests to set higher targets were made material by mat

In decisions made up to now, there has been some limited consideration of each material, but detailed evaluation was not really possible when Member States did not have material-specifictargets. The revised struc

imbalances overall, there may be problems with certain materials, particularly glass.

materials. We do not believe that the EU should automatically the m rkets f r some econd y mate

national and certain fr ong-distance transport to bally viable, this is not al he h cos trans rt me s tha

We refowith the argument put forward by Au ria, B um and the Netherlan s that their

lus me discussion about Belgian glass demonstrates, only capacities in neighbou

er ther im e min is arg ent u d by A stria, rlands is mb tates n in ctice eed maxi

rtant ass ent reqnsider n er St ut the

in n Mium applied to hig gets ey a gued that the ere ady

ing m be ap opria

achieved the targets and may need ad

and the tonnage of glass being collected there wa

230

The potential impact of high recycling rates in some Member States on competing recovery es are

mber States. At this stage it is hard to forecast the impact of differentiated targets on these new arrangements,

rts to third countries of certain types of cyclable material will increase in future, particularly to Asia. This is for purely economic reasons –

g

cycling, has ended up in landfills there. Now, some European recyclers report that they are short of

nd plastic packaging waste, even including the cost of transport.

rgued that these exports are st another manifestation of the globalisation of production. If our clothes and computers are being

t the moment the Directive says that recycling in third countries can count towards meeting the

he factors to be considered are as follows: • Environmental:

There must be a guarantee that the packaging waste is genuinely recycled. The fact that Asian monstrates that these materials

still a risk that some other material types could of recycling activities in third countries is still necessary.

challenged the Belgian application, no doubt because they expected that they would need to increase their recycling rates in future years.

•

organisations may need to be considered in future. The Commission and some Member Statnow considering moving from centrally managed recovery systems to a more market-based approach, with several systems operating in competition with each other in some Me

but we suggest that this is kept under review. 7.3.7.2 Exports to third countries The impact of exports of recyclable materials on third countries is beyond the scope of this report. However, given that such exports affect recycling markets within Europe, we feel that it is appropriate to comment on them briefly. It seems likely that exporeAsian demand for the material is growing, and if there is a switch away from centrally managed systems to more market-based mechanisms, competing systems will seek out the cheapest recyclinoption. European policymakers may therefore need to review the legal framework for such exports infuture. In the past there have been reports that packaging waste exported to third countries, ostensibly forrefeedstock for their plants because Asian recyclers are offering a higher price for some types of board

262a European plastics recyclers have complained263 about the export of plastic packaging waste, which clearly threatens European recycling. They argue that low Asian wages, operating conditions and environmental standards enable Asian recyclers to undercut European processors. These arguments are similar to those made by other European manufacturers. It could be ajumade in the Far East, it may make sense for the packaging in which these goods are transported to be produced there also. On the other hand, activities to recycle packaging waste in Europe are not purely commercial, but are driven by legislative targets. Atargets provided it is undertaken under equivalent conditions. In future European policy-makers may feel it appropriate to consider to what extent recycling should be treated as an economic activity like any other. T

recyclers are offering higher prices than European reprocessors dewill definitely be recycled. However, there is a end up in landfill, so monitoring

262 Freight charges for sea shipments from Europe to Asia are usually low. As Europe is a net importer of

oods from Asia, the ships travel full from Asia but return with spare capacity.

e: Das Ende des Kunststoffrecyclings in Europa? (The end of plastics recycling in urope?)

g 263 EuPR press releasE

231

impact of transport is often cited as a reason to avoid exporting for recycling. However, if the material is recycled in Europe, the chances are that a proportion of the output will

Economic:

If Asian recyclers are offering a higher price for recyclable materials, then European producers

hey currently receive some subsidy from recovery organisations, but this may decrease or cease completely in a more market-based scenario in future.

• Long

If Asian countries adopt their own recycling legislation in future, there is a risk that they will no longe t so m opean packaging w recycling. This ely while the Asian econom fast, but exports fro line and may be cut off

Most of these issues are related to Regulation 259/93/EC on the supervision and control of

pects mentioned above are already under scrutiny, including the possibility of taking the quality of recovery into consideration. However, there are also Internal

ry ulation of goods. Imposing European environmental standards on

recycling processes in Asia and refusing trade if these are not met, may raise concerns related to TO agreements. Any such measures should take due regard of these aspects.

use lve or at least minimise this

roblem? The possible options include:

ntifying and developing new recycling techniques for the material. For green glass, much effort has been dedicated to this. Glass cullet is already being used in construction and road-

higher value application and may provide a useful outlet for some tonnages, but it is unlikely to absorb all the surplus.

The environmental

be exported to Asia to package goods intended for export to Europe or elsewhere in the world. Because we import more than we export, European producers would not be able to use all the output from the recycling plants.

•

can meet their recycling targets at lower cost. This will contribute to their competitiveness. On the other hand, large-scale exports of recyclable materials will threaten the future of European recycling plants, particularly for paper and plastics. This suggests that these recycling activities will need subsidies to survive. T

er-term perspective:

r wan uch Eur aste for is unlikies are growing so m Europe would dec

altogether once there is a surplus of material available. There is a risk that Europe will have lost some of its recycling capacity by this time, in which case it could become difficult to meet the EUtargets.

• Broader EU policy on waste shipments:

shipments of waste. This Regulation is currently under review in the European Parliament and the Council. Some of the as

Market and trade concerns about such an approach, as it could be misused to protect local industand hamper the free circ

the W 7.3.7.3 Some options for glass The green glass issue demonstrates the problems that arise when large quantities of certain packaging materials are imported into a Member State for which there are limited recycling facilities and end-markets locally. What action can be taken in a Member State to sop • Ide

building, but it competes with other materials which are often available much more cheaply. Other uses are being identified, such as a medium for water filtration (replacing sand).264 This is a

• Exporting the material for reprocessing. This is often associated with high transport costs.

Foreign reprocessors may already have contracts with their local recovery organisations and may not have sufficient spare capacity. Offering the material at a lower price or higher premium can bedistortive (see sections 5.2 and 7.2).

6.2264 As mentioned in section 7.3. , work on this has been undertaken by WRAP in the UK.

232

ing a tax on the material. This is possible under EU rules, and some Member States have taxed packaging because of its perceived environmental impact. However, there are problems

• Banning the material. This is not an option if the material meets the Essential Requirements.

This is certainly the case with green glass, which is technically as easy to recycle as clear glass. • Impos

with taxes on packaging, which are discussed in section 5.3. • Charging a higher recovery organisation fee for green glass than for clear glass. Such

differentiated fees could give rise to competitive distortions benefiting local producers – the material subject to the higher fee will often be a material not commonly used by local producerAnd charging a higher fee deters local producers from using the material, which would furtherreduce local demand for the recycled material. Also, as we have discussed in Cha

s.

pter 6,

o

rs lear glass sprayed green, and

would put it all together in the green bottle bank. Perhaps it is time to revisit this, to see whether another technical solution can be identified?

differentiated fee rates make data reporting more complicated for brandholders whose goods aretraded internationally. Establishing separate fees for certain sub-types of material is one of the reasons why the current requirements are so complex.

• A technical innovation could be identified at the production stage to make the material easier t

recycle. In the case of green glass, we remember hearing some years ago about a plan to spray clear bottles green. The green colour would simply burn away in the glass furnace. We are not aware of whether this particular innovation has been put into practice. This is perhaps because it would only help the problem if all green glass were produced this way. Otherwise, consumewould not be able to distinguish between traditional green glass and c

233

.4 IMPACT ON ENERGY RECOVERY FACILITIES

The or recycling and higher targets for recovery. Member States must ensure

all ging was collected for recycling. Now, only the plastic fractions for which recycling

hannels are readily available (PET and HDPE bottles) are collected, while other plastics (the flexible

ome gions (such as Vienna), the treatment method is energy recovery. For ARA, this provides a

Wh o bee hortage of m som .

cineration plans are usually large facilities, and they require a significant amount of investment to

EU nced eith s wasgro

e suggested in our interim report that the establishment of recycling targets for packaging that and

env e Dir

7

Directive sets targets fthat both the overall recycling target and the recycling target for each material are met. Beyond that, they can choose what proportion of the recovery targets are met through recycling and what proportion through incineration with energy recovery. Some Member States, such as Germany, have chosen to give priority to recycling. Others have targeted the materials that are easiest to recycle and have recovered the rest. ARA in Austria has recently adjusted its collection arrangements in some regions. Previously, plastic packacfractions) are collected together with other waste for energy recovery. This change in practice has been made possible by the implementation of the Landfill Directive.265 Austria's Landfill Ordinance requires that, from January 2004, non-recyclable waste must be treated before landfilling. In sreguarantee that all material not recycled will be recovered as energy.

en the Directive was transposed by the Member States, some packaging waste that had hithertn recovered as energy, was now recycled. As a result, some incineration plants reported a saterial. As incineration is a continuous process, plants need a guaranteed supply of material. Ine cases, we understand that plants were forced to import material in order to keep operating

Inconstruct. Some of the older plants required an injection of new investment for upgrading to meet new

standards (most recently the Waste Incineration Directive).266 Some of these plants were finaer from public funds or through private-public partnerships. The purpose in building these plant to divert waste from landfill, in order both to reflect the EU's waste hierarchy and to address an wing shortage of landfill capacities

Wresulted in energy recovery plants facing a shortage is counter-productive, both from the economic

ironmental perspectives, but received no comments at all from stakeholders on the impact of thective on energy recovery facilities.

Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste, OJ No. L182 , 16.7..1999.

Directive 2000/76/EC of the European Parliament and of the Council of 4 December 2000 on the eration of waste, OJ No. L332 , 28.12.2000.

265 266 incin

234

8. COSTS AND BENEFITS OF FURTHER HARMONISATION OF IMPLEMENTATION OF THE DIRECTIVE

OVERVIEW

.1 Where the Directive might do more to increase harmonisation

analysis confirms that the Directive has gener

8.1 8.1

ur ally worked well from the Internal Market point of iew. In Chapters 3-7

Ov we have identified some possibilities for fine-tuning implementation of the

irective. D Article 5 is the provision that has given rise to the most stakeholder dissatisfaction, and we discuss it further in section 8.2. In section 3.1 we have considered the implications of the patchy enforcement of the Essential Requirements up to the present time. Publication of the references to the revised CEN standards on 19February 2005 may change the situation. The calls for replacement of the current Essential Requirements by more restrictive measures have been made on environmental grounds, and are outside the scope of this study. Alternative approaches to packaging prevention were considered in Pira and

Ecolas 2005.

producers arising from different data reporting 4

In its response to the stakeholder consultation, EUROPEN commented that with the exception of threeproblem areas, the Directive has had a positive impact on the functioning of the Internal Market and has stimulated the recovery and recycling of used packaging to high levels across all Member States. In EUROPEN’s view, the three areas of the Directive requiring attention are as follows: • Article 5, which provides for encouragement of packaging reuse systems by member states, has

caused financial losses and numerous difficulties for some industry and trade sectors; • Articles 9 & 11 and Annex II, dealing with packaging Essential Requirements, are not being

enforced by the majority of member states which has led to ill-founded calls from some regulators for additional restrictions on packaging;

• Article 12 and Annex III on harmonisation of data reporting by member states and Commission

Decision 97/138/EC have failed to deliver sufficiently robust data on which to base optimal policydecisions at all levels of government. The resultant differing data reporting requirements between Member States have caused high costs for industry.

EUROPEN has drawn attention to the costs for requirements. This is discussed in section 6. , where we concluded that further harmonisation is first

d lity of the national recovery organisations.

heis a •

an foremost the responsibi T ability of Decision 97/138/EC to deliver sufficiently robust data on which to base policy decisions

separate question, and this falls into two parts:

Undeniably there are some problems with the data, as we mentioned in section 2.3.1 – there are some peaks and troughs in some of the national data reported to Brussels for 1997-2002 which are difficult to explain other than as statistical quirks. However as experience grows, the quality of the data is improving.

235 • ember States use different methodologies to calculate packaging placed on the market, and these

ta a

logy, so information on the impacts of the Directive on recovery and recycling in 1997 and maybe also 1998 might never have become available.

he Technical Adaptation Committee on Directive 94/62 (the “Article 21 Committee”) has addressed the Env 200 g requ As t

portant thing is to be able to identify trends within a given Member State, as this information can of the methodological differences, the data are not a reliable indicator

f the relative per capita consumption of packaging across the Member States, and should not be used as s 8.1 We have identified only one possible omission from the Directive. When mandatory deposits were

rst introduced in the 1970s, the motivation was litter abatement. In Europe, litter slipped down the attention was focused on recycling. In the last

w years, however, litter has come to the fore again, and has been cited by legislators as justification for to the litte At p , but mar nts of litteadd

e suggested that there might be a need to establish some harmonised ground-rules for the extent to to justify national measures focusing on packaging items.

owever, there was a strong reaction from stakeholders in favour of addressing the litter question in

Although certain types of packaging are commonly found in litter, there is also a great deal of non-

e

Mmethodologies do not always yield comparable results. This is not an easy problem to solve. Member States have long had their own systems for collecting data, and if Decision 97/138/EC had imposed strict uniformity, it would have been impossible to compare post-1997 data with dafrom previous years. Also, it would have taken much longer for the Member States to agree onuniform Community-wide methodo

T

issue of data comparability, and the conclusions of this work were drawn together in a DG ironment working paper of 31 October 2003.267 Commission Decision 2005/270/EC of 22 March5268 establishing the formats relating to the Directive’s database system has revised the reportinirements for the Member States in order to simplify them and improve comparability.

the working paper recognises, however, the real issue is how the data are used. The mosimguide national policy. Becauseo

uch.

.2 Possible omissions from the Directive

fienvironmental agenda in the late 1980s and 1990s as fe

a number of legislative measures aimed at specific packaging items considered to contributer problem.

resent, the Directive cites “providing a high level of environmental protection” as part of its aimslitter is nowhere mentioned. In our interim report we opened up a discussion on whether the ket distortions that result from singling out certain types of packaging or other key componer are justified by the results, or whether litter should be regarded as a behavioural problem best ressed by measures aimed at reducing the incidence of all litter.

Wwhich litter abatement can be usedHways other than through the Packaging and Packaging Waste Directive. The reasons for this were as follows: •

packaging litter. American litter studies 269 carried out before and after the introduction of mandatory deposits in certain US states, and studies comparing the prevalence of littering in adjacent deposit and non-deposit states, show that deposit legislation only has an impact on thtargeted beverage containers and that its effect on other litter is negligible. Thus littering is not a

7 Reproduced as Annex 20 to Pira and Ecolas 2005.

268 269 For instance, Syrek: What we now know about controlling litter – Findings pertinent to Michigan derived

26

OJ No. L86, 5.4.2005.

from thirty years of litter research, The Institute For Applied Research, 2003.

236

concerned can be involved. packaging-specific issue. Stakeholders therefore say that this issue should be addressed in a broader framework where all parties 270

• We concluded in Chapter 4 of the report that while mandatory deposit systems for non-refillable

beverage containers can give rise to barriers to trade and that they have certain disadvantages for

the Internal Market, the question is one of proportionality which must be assessed case by case.

ial case.

rs of

8.1

The trategy on Waste Prevention and

ecycling, raises two interesting issues which suggest that the Packaging and Packaging Waste

The marman

Therefore, whilst we believe that the effectiveness or otherwise of mandatory deposits as an anti-litter measure should be included in any assessment of proportionality when litter abatement is cited as one of the justifications, litter does not present a spec

• The Irish tax on plastic carrier bags does distort competition against producers and supplie

these bags, but the Commission has only limited powers to challenge fiscal measures.

.3 Ensuring that the Directive remains compatible with other policy developments

Commission’s Communication, Towards a Thematic SRDirective might in future be subsumed within a broader waste management policy.

first is that recycling targets could be established at Community rather than national level, lettingket forces determine which recycling facilities can achieve the objective in a most cost-effective ner. The implications of this for packaging are discussed in section 8.3.

second possibility is a switch from product-based targets to material-based targets. The munication floats the idea of setting collectio

TheCom n targets for packaging and recycling targets for glass, metals, plastics and paper & board, whether obtained from packaging or not. We consider the implications of this for packaging in section 8.4. We received very little comment from stakeholders on either of these issues. 8.1.4 The limits of harmonisation – does “one size fit all”? There appears to be a consensus among policymakers that the Member States that have taken a lead on packaging waste management policy, have reached the highest recycling rates that can practically be reached, from both an environmental and an economic point of view. Directive 2004/12/EC, which set new recovery and recycling targets for the years after 2001, aimed at bringing about a greater coherence of the Internal Market through a further increase in recycling in those countries who had not achieved high recycling rates so far. Repak, the Irish recovery organisation, has questioned whether the new targets are optimal for all Member States, or whether the geographical situation of some Member States means that they are at a permanent disadvantage which a delayed deadline for meeting the targets can never solve. Thus, has harmonisation already gone too far? We consider this question in section 8.5.

270 Indeed, UNESDA/CISDA is one of many stakeholders taking the view that litter is not an environmental problem, but rather a social problem that can result in environmental degradation.

237 8.2 MEASURES TO ENCOURAGE REUSE Article 5 of the Directive allows Member States to encourage reuse systems of packaging, which can be reused in an environmentally sound manner, in conformity with the Treaty. As section 3.2 of report shows, this rather imprecise provision has proved rather difficult to interpret. We thereforeconsider ways in which its clarity might be improved b

this

y making it more specific.

consumer packaging where no 271

there is no real possibility of scaling up from a survey to 273

8.2.1 Quantifying packaging reuse The first point to note is that much more packaging is reused than is generally realised:

• in the business-to-business sector, there are pallets, roll-cages, metal, plastic and fibreboard drums,

crates, and trays for bread etc;

• in the HORECA sector, there are beer kegs; there is the British doorstep delivery system for milk – refillable • deposit is charged; and

• there are refillable glass and PET beverage containers, which have been the focus of a great deal

of political activity. However, the extent of reuse is difficult to quantify, in the household packaging sector which is relatively well documented 272 and even more so in the business-to-business sector. There are enormous difficulties in measuring return rates, and without a clear picture of the amount of reusable packaging placed on the market for the first time, the rate of rotation and the amount of equivalent non-reusable packaging employed, it is impossible to establish the market share of reusable packagingin any given sector. This is particularly difficult since rotation rates may vary greatly from one

roduct, system or country to another, sopquantify the market as a whole. It is optional for Member States to report reuse in the context of Directive 94/62, 274 and only Denmark and Germany have chosen to do so. Finland has also compiled data for national purposes:

271 This system is also in decline, however, as a result of social changes which mean that in many households there is nobody at home during the day. Rather than leave the milk outside to spoil, people are increasingly preferring to buy it in non-refillable containers from the supermarket – where it is also cheaper. “Once the dominant form of milk packaging, currently 20% of milk sold in the UK is packaged in this way and the amount is declining by a tenth every year,” says Pira and Ecolas 2005. 272 For example, in a Project Summary published on its website in April 2004, the Danish EPA reports that a survey on the consumption of packaging in Denmark in 2001 found that ‘the stock of reusable packaging is estimated to be 606 million units, which in total have circulated 2.7 billion times in 2001. Of this, bottles for beer and soft drinks account for the majority. A significant element of uncertainty is associated with the figures because of lack of information on the trippage rate (number of roundtrips for a single unit of reusable packaging) for the individual types of reusable packaging. The trippage rate is the central indicator.’ This is a particularly interesting statement as many commentators were confidently attributing a 99% return rate to the Danish refillable bottle system before the can ban was lifted in 2002. 273 Best industry estimates are that about 50% of the production of new pallets in the UK is for reusable

base ncil Directive 94/62/EC on packaging and packaging waste.

systems. However, this tells us nothing about the rotation rate. 274 Commission Decision 97/138/EC of 3 February 1997 establishing the formats relating to the datasystem pursuant to European Parliament and Cou

238

Table 59: REUSE OF PACKAGING IN FINLAND 1997 1998 1999 2000 2001 2002 Glass 87% 84% 83% 81% 81% 80%Metal 86% 90% 90% 89% 88% 91%Plastics 69% 70% 69% 67% 69% 71%Board 5% 4% 4% 3% 3% 3%

In their discussion of the prevention plans submitted to Belgium’s Interregional PackaginCommission, Pira and Ecolas 2005 reports that companies submitting prevention plans (le

g ss than 20%

of the total) reported packaging reuse in 2001 as follows:

Table 60: USE OF REUSABLE PACKAGING IN BELGIUM

Sector % companies with reusable packaging

Average % reusable packaging

Food industry (without drinks, 63 companies)

Food industry (only drinks, 7 companies)

Textile sector (textiles, clothing, shoes)

Plastics industry

Paints/Varnishes/Printing inks

Fuels and lubricants

Pharmaceutical

65%

86%

41%

75%

67%

33%

37%

91%

59%

52%

26%

9%

industry 100% 29%

Cosmetics/ wash and cleaning products

Building industry

Metal industry

Wood industry (including furniture)

60%

52%

51%

33%

50%

64%

53%

21%

Table 61: TYPES OF REUSABLE PACKAGING USED IN BELGIUM

Sector Pallets Crates Containers Barrels Bottles

Food industry

Textile sector (textiles, clothing, shoes)

Plastics industry

50%

36%

28%

5%

3%

12%

0%

0%

9%

0%

Paints/Varnishes/Printing inks

Metal industry

74%

62%

51%

0%

0%

0%

6%

7%

14%

4%

9%

4%

29%

0%

3%

0%

0%

0%

0%

Fuels and lubricants

Pharmaceutical industry

Cosmetics/ wash & cleaning products

Building industry

20%

100%

60%

52%

0%

0%

0%

20%

0%

0%

0%

0%

0%

0%

0%

20%

Wood industry (including furniture) 22% 0% 0% 0% 0%

ccording to VAL-I-PAC, the organisation responsible for collecting dA ata on non-household

sub

packaging and packaging waste in Belgium, reusable packaging accounted for 75% of the trips made by commercial and industrial packaging in that country in 2004. Industry sources are agreed that overall, the share of reusable business-to-business packaging is increasing,275 but we have been unable to obtain data to quantify this and it is not borne out by the data

mitted to DG Environment by Denmark and Germany.

The amount of corrugate27

in 5 d board placed on the UK market has remained static, despite growth in GDP and the demand for products. This is partly attributable to lightweighting, but stakeholders believe that it is

mainly the result of substitution by reusable transport packaging systems.

239

use It isand is to con tions nd restrictions of competition.

DA)

s are not

A large percentage of the total weight of soft drinks packaging is reusable – around 32% the case of 500 ml PET, 33% for 330 ml cans and 44% for 2 litre PET.

ing, taken as a whole, may have a lower is is balanced out by the high reuse rate

Reusable business-to-business packaging systems do not need legislative support because they are d where they make economic sense, and we see no need for any EU rules on the subject.

clear that the use of refillable beverage containers is in decline. This is discussed in detail in Pira Ecolas 2005, which also considers the environmental implications of this trend. Our purpose here consider whether EU rules should define in more detail what measures to promote beverage

tainer reuse are or are not acceptable, in the interests of avoiding barriers to trade and distora One point made in different ways by two stakeholders – the British Soft Drinks Association (BSand the European Plastics Convertors (EuPC) – is that household packaging and the transport packaging which supports it are part of the same packaging system, and should not be considered in isolation. The British Soft Drinks Association comments that while refillable primary packaging systempopular within the UK for a number of social and economic reasons, reusable secondary packaging systems are increasingly common. UK soft drinks manufacturers have introduced reusable trays for 1.5 and 2 litre soft drinks, and the BSDA believes that any attempts to promote reuse should focus on this aspect.in EuPC suggests that while lightweight plastics sales packag

cycling rate than other materials used for sales packaging, threof plastic crates. Combined targets for reuse and recycling (as discussed in section 2.5.1) would present a fairer picture. 8.2.2 Amending Article 5 of the Directive 8.2.2.1 Proportionality

ke ave

n

Court [in its rulings of 14 December 2004 relating to Germany]276 is at Community level on reuse and other fiscal measures designed

the dist Con

EUROPEN comments that there is now ample evidence that Article 5 has been the most problematic section of the Directive for all stakeholders. As the Directive does not establish a hierarchy between the reuse and recovery of packaging waste (confirmed by ECJ case C-463/01), EUROPEN would lito see a revision of Article 5 which would prohibit any type of reuse encouragement methods that h

d to or would lead to Internal Market disruptions. In EUROPEN’s view, the revised provisioleshould require Member States to apply the proportionality principle to any proposed refill encouragement measures and to report the findings of such a test to the Commission and all other stakeholders before their implementation.

he Paper Packaging Co-ordination Group (PPCG) takes the same view. “What the European Tof Justice appears to be clearly saying

at there should be specific guidancethto promote packaging recovery. From a PPCG perspective, this guidance should address the issue of

environmental benefit of the measure, whether or not it is proportional and whether or not it orts competition or interferes with Internal Market rules.”

siderations of proportionality might take account of the following factors, among others:

g, summarised in section 4.2.1276 CasesC-463/01, Commission vs. Federal Republic of Germany and C-309/02, Radlberger Getränkegesellschaft mbH & Co. and S. Spitz KG vs. Land Baden-Württember .

240 Table 62: PROTECTION OF REFILLABLE CONTAINERS –

SOME PROPORTIONALITY ISSUES Re ll advocates’ fiarguments

Economic considerations Environmental considerations

How significant is the difference between the consumer and the payer of local taxes? This depends on the overall cost to be allocated and on the extent to which patterns of consumption vary between different households.

Reusall cocostexte

cycling costs to

more fairly – not just packaging.277

e systems internalise llection and reuse

s; recycling systems rnalise collection and

Are the environmental impacts more or less equal or equivalent, or are they weighted significantly in one direction or the other?

retaxpayers and local authorities (GRA). Variable charging for household waste

management can allocate the costs of managing all discarded household products

If Denmark did not have a deposit s stem then the

ities would have an

Refill protection arrangements based on mandatory deposits on non-refillables have the effecfrom

In Case C-463/01, the Court said tencouraging producers and distribuy

municipal handle

t of diverting beverage containers away multi-material selective collection systems

hat by tors to use

refillable containers, the German rules “contribute towards reducing the amount of

stitutes one l

eturn

toadditional 290.000 tonnes of packaging waste – 20% of total household waste (Danish Brewers’ Association).

and into a parallel collection system. This duplication of effort adds substantially to the overall cost of collecting all packaging.278

waste to be disposed of, which conof the general objectives of environmentaprotection policy.” This is true if the rrate for reuse exceeds the return rate for recycling. However, other environmental parameters (energy, water and raw materials consumption, transport pollution etc) should also be taken into account.

This is true if there is an existing infrastructure for them to join – but non-refillable systems do not need a pre-established infrastructure.

Refill protection limits long-distance trade. The market data reported in section 4.5.1 suggests that refill protection measures have in practice inhibited the circulation of beverages throughout the Internal Market.

Reuse pool systems

stems (GRA).

Pool systems involve a degree of co-operation between competitors. In a climate in which

The Internal Market notwithstanding, should e guarantee free market

structures and make it possible (especially for small producers) to enter new markets by using xchangeable packaging

long-distance land transportation bdiscouraged?

esy

waste collection systems are increasingly under scrutiny from the competition authorities, is this co-operation sufficient to cause concern? 279

Sections 2.5.2 and 4.2 indicate that for a variety of social and economic reasons, consumer preference has moved away from refillable containers.

e “bring” systems than kerbside collections, as there is a

temptation for householders to dispose of their general waste free of charge in the recycling bag or bin rather than pay to have it taken away. 278 If there were no deposit system, Denmark would probably have had to have introduced producer

nsibility systems for all packaging waste, thus relieving the municipalities of some of the economic burden.

ation were restricted to eposit clearing, and each organisation funds its own logistics costs.

277 But variable charging works better alongsid

respo 279 Our interpretation is that competition policy concerns would not arise if co-operd

241

to make it easier r refillables to be used for beverages without giving rise to barriers to trade. Fillers from any

dised refillable bottles in any country without having nsported back for refilling. This arrangement would

ty containers

companies operating these systems, reuse is considered as a strong economic asset. The existing use standardised bottles and crates. This allows

erent producers and an easy stocking of the different crates for the retailers and the wholesalers. In the German refillable system for beer, the standardised

Eur kaging system. Every brewery willing to use this bottle has the right to in the pool system, which is open across the borders and allows today for an exchange of bottles

Slov ottle pool system for mineral water of the German Genossenschaft Deutscher runnen (mineral water producers) works in much the same way.” 280

h are

nity-s

ld be willing to permit the standard bottles used in another ember State to be adopted as the “euro-bottle”, as that would give the fillers in that Member State a

, e

bottles would be set out i a CEN standard.

8.2.2.2 Promoting trans-national reuse systems Reusable transport packaging systems – pallets and crates – are designed for international trade, but refillable beverage containers have traditionally been intended for use within a single country. The idea of adopting a standardised “euro-bottle” for use by beverage refill systems throughout Europe has been proposed by various different observers over the years. The idea isfocountry could, it is argued, sell drinks in standarto organise for their own empty bottles to be traavoid the high economic and environmental cost of imports in refillables where the emphave to be transported over long distances for refilling. GRA says that there are several examples of trans-national reuse systems in Europe. “For the

refillable bottle systems in the EU characteristicallya permanent exchange of bottles between the diff

bottle that is mainly used by the breweries is the 0.5 litre ‘NRW’ bottle. This bottle is used all over ope and is a very cheap pac

jobetween breweries in Germany, Czech Republic, Denmark, Austria, Poland, the Netherlands and

akia. The refillable bB There are also a number of proprietary refillable mineral water, soft drink and beer bottles whicusually sold nationally, but which are shipped across borders to a limited extent. We do not know how large is the market share of these transnational pool systems,281 but such systems can only develop organically – they cannot be imposed. The first hurdle in promoting a Commuwide refillable bottle would be to reach agreement on a bottle standard design in different sizes. It iunlikely that any Member State wouMcompetitive advantage. Therefore, a new family of bottle designs would have to be developedcovering all the bottle sizes commonly in use – 25 cl, 33 cl, 50 cl, 1 litre, etc. The dimensions of thes

n

Once agreement had been reached on a standard euro-bottle design, all fillers wanting to use refillables would have to purchase the new bottles and discard their old ones. They would also have to adjust their filling lines to take the new bottles. Replacing an entire bottle population would involve an enormous upfront capital cost for each filler. It is very doubtful that fillers would be prepared to make

280 It should be noted that the German pool system for mineral water bottles was originally restricted to members of the GDB trade association, and was only opened up to foreign producers as a result of an ECJ ruling in 1991. 281 GRA says that more than 1000 small breweries participate in the beer bottle pool system. We receiveinformation on the number of participants in the mineral water pm

d no ool (which also includes soft drinks made with

ineral water), but 30% of the turnover of the German fillers came from exports, and a “significant proportion” of this was in standard refillable bottles.

242 this investment, given th bles, which in most cases represents a cheaper and mo ible alternative. The high cost of adopting uro- m me at ul do only in Member States with legislation in place inc s ne ro th of lables. Given the high

the e ttle, ou pe lers esis co t, and/or to issue legal

ortionate measure, and whether the ember States would agree to it. Those Member States where use of refillables is voluntary are

nlikely to support it, and even some of those with reuse policies might object, given the high cost. If it is assumed that fillers with a large export trade opt to switch voluntarily to the euro-bottle, what would hap he existing pool system in the cou p re might in practice have to adopt the euro-bottle, even those whose products are not exported. The latter, some of which w ould also be likely to challenge xpensive change, from whic erms of easier exports. The alternative would be to have two refill s ting in parallel – one using the old n al bottles for domestic c nd one using the euro-bottle for international trade. This would involve fillers with two separate filling lines and having two separate bottle population ther defeat the object of the exercise. We conclu e reached on standard specifications, the commercial take-up of a vol ttle would not be good. If its adoption were mandator ould reduce the competitiveness of refillable beverage containers and hasten their decline.

.2.2.3 Amending Article 5

GRA rema stems. As there are many o vailable, one must know which Depending on the current share of refillables in a market, legal requirements might make more sense than econo ts or vice versa. Sometimes protection measures are needed, other times promotion . Othe s s a co tion em ore appropriate antly, as stated by Andreas Golding in Reuse of Prim 283 ‘The success or is often determ no detail of the regulati xing of a punishment o ise el in arison to the benefit which can be real ing the law.’”

at they also have the option of switching to non-refilla282re flex

the e bottle ight an th it wo d be a ptedor with entive desig d to p mote e use refil

cost of switching to c

uro-bo we w ld ex ct fil to r t the ncephallenges to the refill requirements. Major brands with their own proprietary bottles would be

particularly hostile to changing to a standard bottle. Another option would be for the EU to make it mandatory that all refill systems use only the CEN-approved bottles. It is questionable whether the EU authorities would consider this an appropriate and propMu

pen to t ntries where they o erate? All fillers the

ould probably be small companies, w this eh they would derive no benefit in tystems in the member state opera ationonsumption, a an export trade operatings, which would ra

de that even if agreement could buntary euro-bo y, it w

8

rks that “many factors influence the success of policies promoting reuse syptions a one(s) is (are) the best for a given market.

mic instrumenmeasures are more recommended r time till, mbina of th is m. Most import ary Packaging,failure of the instruments ined t by the instrument itself but by the ons, the correct fi r exc lev compised when not follow

282 We discu e stakeholder who has rece epl refill soft dr ottles with non-refillables in ines for the tai were ars o d ne replacing,

ut sales of refillables were in long-term decline and did not justify a major investment. These lines were placed by a smaller number of filling lines for glass non-refillables which were able to supply a wider range of

efillable

pact and therefore involved fewer ehicle movements.

es on a national and regional level), all based on consumer demands. Hence, the refillable bottles and their pools have been tailored accordingly.”

ssed this with on ntly r aced able ink b the HORECA trade. Its filling l se con ners 35 ye ld an eded

breproducts. The move was welcomed by the HORECA trade, which no longer had to sort this suppliers’ rbottles from the non-refillable beer bottles also stocked. Also, with no need for the returnable plastic crates associated with refillables, the new non-refillable packs were more comv The Brewers of Europe sent us a submission strongly agreeing that euro-bottles would not be a viable proposition. “The beer market has a great variety of beer types, presented in different volumes according to each market’s demands (for instance there are significant differenc

283 Andreas Golding, Reuse of primary packaging, 1999, study downloadable from www.europa.eu.int/comm/environment/waste/studies/packaging/reuse.htm.

243

hy with e view that these issues can only be evaluated on a case-by-case basis. The problem with this,

ct refillables which is mild enough to avoid market distortions is nlikely to achieve its intended goals in the face of powerful market forces such as consumer choice.

d, was not sufficient for the refill quotas to be maintained;

– ,

ust be said that GRA disputes this.

efillable and other “environmentally disadvantageous” containers. A istinction between “environmentally advantageous” and “environmentally disadvantageous” was ade on the basis of LCA findings.286

he danger here is that unilateral national decisions designed to encourage “environmentally or discourage “environmentally disadvantageous” packaging may produce

onflicting results, since differences between pack types can be marginal and depend on the specific t

Though we would not necessarily agree with the assumption that some reuse systems must be protected and that the only questions are “which?” and “how?”, we have great deal of sympatthhowever, is that it takes us no further forward than we are today – with every legislative initiative on refill protection creating prolonged legal uncertainty until the Commission and the other Member States are satisfied with the provisions proposed or else the ECJ has delivered a judgement. Any form of intervention to proteuTo take two examples from Germany, • the threat of mandatory deposits, which fillers and the retail trade have always vehemently

oppose • faced with a choice between a deposit of 25 or 50 eurocents (depending on size) on non-refillables

or 8 or 15 eurocents on refillables – a measure designed to encourage the purchase of refillables consumers have chosen to buy refillables, whose shelf price is less expensive than non-refillablesbut then not return them.. The return rate for refillable 0.33 litre Coca-Cola bottles fell from 95% in 2002 to 70% by late 2003. According to AGVU (Arbeitsgemeinschaft Verpackung+Umwelt e.V.), return rates for some categories have fallen below 50% 284 – though it m

285

The refill protection measures proposed by Germany in its third revision of the Packaging Ordinance, notified on 4 November 2004, imposes a mandatory deposit on containers for a wide variety of beverages but exempts rdm Tadvantageous” packaging cmeasurements made. The pattern of trade may differ from one Member State to another, and differenassumptions may be made about system boundaries, transport distances and so on. Each national LCA

284 Source: Mandatory deposits on non-refillable beverage containers in Germany: the economic, environmental and social effects, EUROPEN 2004. 85 Contrary to the opinion of other stakeholde2 rs, says GRA, the return rate of refillables after the introduction

to are not usually available to consumers and

oncern a negligible market share for Coca-Cola. In addition, the situation came back to normal, once Coca-

oreover, says GRA, the introduction of the deposit on one-ways has stopped the decrease of the market share of refillables, which has now stabilised, as shown by the figures (by beverage segments) from the GfK (Gesellschaft für Konsummarktforschung). 286 EUROPEN comments that the German government’s interpretation of the findings of this LCA study were the subject of strong disagreement from various stakeholders, and from the consultants which the Governmemnt

of the deposit on one-ways has not fallen. The experience of all members of the German Refill Alliance and alsoof the Genossenschaft Deutscher Brunnen (German mineral waters producers) show that the return rates are not decreasing since the deposit took effect in 2003 and have been constant at a rate of 95 to 100%. It is mentioned that the return rate for refillable 0.33 litre Coca-Cola bottles fell from 95% in 2002 to 70% by late 2003. Yet, in Germany, bottles of Coca-Cola are usually sold in 0.5 litre PET bottles. The study seemsrefer to 0.33 litre glass bottles sold in the HORECA sector, but thesecCola got prepared and started to use crates. M

engaged to carry out the study.

244

ay be defensible in its own terms, but if this practice were to spread it could only lead to 287

Maybe the refill protection question should be looked at from the viewpoint of the product rather than n 1989, when di refillable bottl

ood Containers Ordinance which was later superseded by the Packaging l E qu o

n br

le packa and concentration; to y, there rmany which produce beer cans. There are, brewe blic, which would mean a considerable

investment of capital to ns in order to service large markets from one location, whereas the reusable product system, using bottles which can be refilled, actually has a

n nge b

t of the bottl a

as, the ability of s e of competition, pressures which the opening up of the Internal Market can only have

intensified. Specialist Belgian beers have survived, albeit under brand; is this an option for local German beers?

cial qu qurade te n pro gislati r packaging which

nd on the Internal Market as guaranteed e Dire

mfragmentation of the Single Market.

its packaging. IGerman Plastic Liquid F

scussing the equivalent e market share quota in the

Ordinance, the Federaprotect small Germa "With disposabput it another wain all, some 1700

nvironment Minister of the time was ewers:

ging, there is always a tendency towards centralisation

ite open that this rule was designed t

are only twelve breweries in Geries in the German Federal Repuallow for disposable packaging in ca

decentralising effect, aBavarian breweries' mreplacemenwall…" 288

This suggests that the real issue is, or at least wthe pressures

d helps the smaller breweries keep goidal in recognition of my intervention one by the disposable metal can will send

. Last November I was awarded the ehalf of the reusable bottle, since

lot of the smaller breweries to the

mall independent brewers to surviv

the ownership of an international

This is a commerInternal Market. Tof preserving certairespects free choice aby Article 18 of th

estion, but there is also a public policy marks and regional designations are products within the framework of a le

estion – protection within the cted, so is the answer to find a wayve regime fo

producers’ freedom to place packagingctive?

87 In any case, EUROPEN poin2 ts out, such definitions are contrary to the Directive as they introduce

Transcript from "Hallo, Ü-Wagen" ("Hallo, this is the outside broadcast"), Westdeutsche

additional terms to describe packaging which are not harmonized throughout the Community.

88 2

Rundfunk 2, 10 August 1989.

245

PRODUCER RESPONSIBILITY

regarded as the most cost-effective cts

MODEL A: adapting the existing arrangements by establishing EU/EEA targets directly binding

MODEL B: allowing companies to acquire tradable permits to comply with EU/EEA targets;

ges to the text of the Packaging and Packaging Waste

present these are confined to Finland, Ireland and the UK). Multinational companies would undoubtedly welcome the chance to collect only one set of data and submit one set of forms on packaging placed on the market, but this would only be possible if all the differences between national legal requirements were ironed out. For instance:

ets

some Member States have separate targets for beverage containers or composites – again, these

8.3 IMPLICATIONS OF A UNIFIEDREGIME

.3.1 The Commission’s ideas 8

The Commission’s Communication, Towards a Thematic Strategy on Waste Prevention and Recycling, comments that the priority is to optimise collection and recycling in the Community as a whole rather than worrying about which member state it takes place in. There could even be an overall recycling target at Community level, letting market forces determine which recycling facilitiescan achieve the objective in a most cost-effective manner.

he Communication adds that tradable certificates are generallyTway to implement environmental objectives. They also give a long-term price signal which direinvestment in new technologies. Thus, tradable certificates could be a way to implement recyclingtargets at EU level. They would allow companies to fulfil their obligations by buying certificates both nationally and in other countries, either freely on the market or from recycling organisations. However, this approach would be feasible only if there were greater harmonisation of the environmental standards for recycling facilities across the Community, and practical aspects such as the scope of the scheme and the means of allocating recycling obligations, and effective monitoring and enforcement mechanisms, would have to be resolved. So far we have identified three possible models: •

on economic operators; • • MODEL C: allowing Member States to trade EU/EEA targets so as to establish national targets 8.3.2 Model A: adapting the existing arrangements to EU/EEA targets directly

binding on economic operators Model A would involve relatively minor chanDirective, though Article 6.1 would have to be amended to put the legal obligation to meet the targets onto economic operators rather than Member States. That would presumably mean recasting the Directive as a Regulation. The individual compliance option would remain, but there would be no de minimis exemptions (at

• in some Member States, the targets apply to all packaging, whereas others have separate targfor household packaging – the EU/EEA rules would have to opt for one or the other;

•

would have to fall in with common EU/EEA rules. It would still be possible to link national return/recycling rates to exemption or rebates from a national packaging tax (e.g. Finland, Norway) and it could still be possible to require mandatory deposits at national level, but this

246

ge r adoption of that system EEA-wide;

ve agree to a long and difficult set of negotiations on the common EU rules.

ther

shed, the system would be very ifficult to change. If it were designed around pure principles of economic efficiency, there would be

re.

he national competition authorities would probably welcome a diminution in the power of the ere, at both national and European level, there might be considerable

oncern about the market muscle of an EU recovery organisation and of a small number of waste

A

ouse gas emission allowance trading within the Community is one obvious source of ideas on how such a system might work. An “allowance” means

for e

persons in the Community, and with persons in third countries which recognise

llowances to cover its emissions during the preceding year shall be held liable for the payment of an , and € 100 thereafter).

would be somewhat distortive. The Nordic countries would doubtless press for separate beveracontainer targets at EEA level, and the deposit states fo

• the Commission (or the ECJ) would need to decide what was or was not packaging in every case –

a set of guidelines establishing general principles would not be enough; • recovery organisations would need to operate according to common rules. The rules would

inevitably be based on the European mainstream approach and the UK would have to give up its PRN system, and Denmark and the Netherlands their fee-free arrangements based on local authority collections.

The Member States would need to be prepared to cede further sovereignty in this area, and would hato British, Danish and Dutch industry would also have to abandon well-established systems designed around local preferences, and even in some Green Dot countries there would be big changes. For instance, in Sweden the material companies are in control, and the Green Dot organisation REPA is a subsidiary which organises funding. If there was an EU recovery organisation, the material companieswould no longer be in control – they would merely compete for the business with reprocessors in ocountries. Industry would also need to recognise that once the rules were establidno economic distortions or barriers to trade; but if political requirements resulted in the continuation of special national provisions such as packaging taxes or deposits or even the adoption of such provisions EEA-wide, industry might feel considerably worse off than befo Tmaterial companies, but elsewhcmanagement cartels operating on a European scale. 8.3.3 Model B: companies to acquire tradable permits to comply with EU/EE

targets 8.3.3.1 The Greenhouse Gas Allowance Trading Directive The Directive establishing a scheme for greenh

an allowance to emit one tonne of CO2 equivalent during a specified period while carrying out specified industrial activities. For each period (the three years from 2005 and every five years thereafter), each Member States shall develop a national plan stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them to operators of particular installations. 95% of the allowances2005-7 shall be issued free of charge, and 90% of the allowances for 2008-11. Allowances can btransferred betweensuch allowances. Every year, each operator must surrender a number of allowances equal to the total emissions from that installation during the preceding calendar year. Any operator unable to surrender sufficient aexcess emissions penalty (€ 40 euros per tonne of CO2 equivalent before 2008

247

ke up

EFRA has devised a Landfill Allowance Trading Scheme, under which allowances will be allocated

years (bank), or use some of their future allowances in dvance (borrow). There will be restrictions on both banking and borrowing in order to ensure that the

rading will not be compulsory, and WDAs may choose to only landfill as much of their

wishowinterequ The for England and Wales will run an electronic register which will display

formation about the number of allowances that have been allocated to each WDA; trades; prices of

WDA

y divert from landfill to the EA on a quarterly basis. andfill site operators will also be required to keep records about the amount of waste they accept

8.3.3.3 An EU/EEA system of packaging allowances?

principle directly opposite to that of the Packaging d Packaging Waste Directive. The Greenhouse Gas Allowance Trading Directive and the Landfill

Payment of an excess emissions penalty does not release the operator from the obligation to mathe shortfall when surrendering allowances the following year. 8.3.3.2 The UK system for tradable landfill permits Dto all waste disposal authorities (WDAs) in England. Each WDA is to be assigned a decreasing amount of allowances each year between 2005 and 2020. WDAs can choose to trade their allowances with other WDAs, save them for futureacountry as a whole does not fail to meet its overall targets.

Tbiodegradable municipal waste each year as their original allocation of allowances permits. WDAs

hing to trade may use brokers to act on their behalf. Brokers will not be able to hold allowances, ever. All trades must be registered with the Environment Agency, which will also provide an rnet bulletin board service for WDAs to advertise any allowances they wish to sell and post ests for any they wish to buy.

Environment Agencyintrades; banked and borrowed allowances; and any penalties that have been incurred. The EA will also monitor the amount of biodegradable municipal waste sent to landfill by eacheach year via a mass balance system. WDAs will have to submit information about the amount of waste they send to landfill and the amount that theLfrom WDAs and make this available to the EA on an annual basis. WDAs will automatically receive a significant financial penalty if they landfill more biodegradable municipal waste in a particular year than they are permitted to by the allowances they hold for that year.

The two systems described above are based on aanAllowance Trading Scheme are based on the acquisition of permits to release emissions, whereas the Packaging and Packaging Waste Directive is based on demonstrating that a certain level of waste generation has been avoided (through recovery or recycling). It would be possible for packaging waste management rules to be based on disposal limits rather thanrecycling targets, but it would not be feasible to identify the companies which originally produced orfilled the packaging disposed of – the obligations would have to continue to be based on packaging placed on the market. Thus the Greenhouse Gas Allowance and the Landfill Allowance have to be turned on their heads. Something like the PRN system may not necessarily result. One idea which has already been put forward in Germany is to have a national tradeable certificate based on collection rather than eprocessing.289 r

Would the authorities accept this? The current targets are for recycling, not collection. 289

248

aging pped around Europe earning Packaging Collection (or

ecycling) Notes as it goes. The markets for secondary raw materials are international, and the open

on,

aintain different legal requirements for sales packaging and for ansport packaging. Trading certificates for household packaging waste would be worth significantly

y) to

e

rs imported from neighbouring countries. This could be problematic if the alue attaching to sales packaging through a certificate system makes it more financially attractive to

g mpanies’ behalf, and that several different systems

ould operate in competition. These systems would also compete against compliance by individual

ty of systems has resulted in short-term thinking – systems have for e most part been unwilling to make long-term investments in infrastructure because they can never

e sure how many members they will have in future years. Also, competition between systems means far less transparent than in Continental recovery organisations.290 Most

systems will readily reveal their administration charges, but the main cost, of PRN purchase, is considered commercially confidential and rarely made public.291

The whole point of a competitive trading system is to allow operators to seek the cheapest available collection facilities, and/or the recyclers willing to pay the most for materials. Foreign facilities will be used if they are cheaper than those at home, despite higher transport costs. The financial incentives inherent in a competitive system can give rise to double counting and fraud, and as the Commission’s Communication points out, there is clearly a need for effective monitoring and enforcement. Whether this can be done by co-operation between national authorities or whether a pan-European body such as the European Environment Agency needs to take charge, is open to question. Certificate trading is a financial activity which needs market management, and the enforcement team needs to include experienced financial auditors. The mechanism for buying and selling certificates is similar to that for shares, and the checks and balances imposed on stock market trading would also be necessary for certificate trading. The market regulator also needs to be able to publish data on progress towards achieving targets and the availability of certificates quickly, regularly, and to a set timetable.

The system would have to be designed so as to avoid creating a financial incentive for packcollected in one member state to be shiRborders within the EU make it hard to control shipments of material. The same packaging is increasingly used in different countries and cross-border shopping has become increasingly commso it is difficult to determine the source of packaging waste once collected and baled. It would not be practicable to mtrmore than those for transport packaging, because it is more expensive to collect from households than from businesses. Thus there would be an economic incentive to claim some transport packaging as sales packaging. However, one would expect some Member States (notably Belgium and Germanbe opposed to any dilution of their present focus on household packaging waste. It would be possible for certain beverage containers to be subject to deposits and thus collected for recycling separately from other sales packaging. However, some beverage containers are likely to bhandled through the system for sales packaging, for instance deposit-bearing containers not returnedby consumers, and containevhandle them through that system. We would expect that there would be an option of pooled compliance, with organisations purchasinPackaging Collection (or Recycling) Notes on cowcompanies. The existence of several systems is essential for competition in the demand for certificates, but systems cannot afford to charge obligated companies far more than their competitors. In the UK, competition between a multiplicithbthat their fee structures are

290 Except in Poland, where the Green Dot system RekoPol faces competition from some 40 rival recovery

In any case, fees are based on PRN prices, which fluctuate.

organisations .

129

249

nothe ember States to trade targets between themselves. The data in the targets 292 can be used for the purposes of illustrating how ts were higher, and the deadline earlier, than those finally

8.3.4 Model C: EU/EEA targets traded between Member States

r option is for MACommission’s original proposal for revisedhis might work (though the proposed target

agreed in Directive 2004/12/EC):

Table 63: Ktonnes ADDITIONAL PACKAGING TO BE RECYCLED UNDER THE PROPOSED MATERIAL-SPECIFIC TARGETS (2006 COMPARED TO 1998)

Paper & board Metals Glass Plastics Total Austria - 10 - - 10 Belgium - - - - - Denmark - 6 - 22 28 Finland - 11 - 9 20 France - 34 527 195 756 Germany - - - - - Italy 724 220 506 162 1612 Luxembourg 2 2 - 1 5 Netherlands - - - 30 30 Spain 78 101 350 128 657 Sweden - 14 - - 14 UK 320 228 814 204 1566 EU-12 1124 626 2197 751 4698

he UK could approach Germany and other over-T

reachievers and offer to trade a proportion of the glass

y

igh to one or more of Austria, Belgium, Denmark, Finland or Sweden. o

othing to stop people exporting packaging waste for reprocessing now, so the targets really relate to e amount collected in each member state.

There is t in such trading – according to a September 2003 raft rep xpected to account for between 45% and 73% of

set otherwise do, and make a positive decision to make up the shortfall

rough trading. On the other hand, it could assume that the UK’s market-based system will deliver, a

on-achievement.

vernments than odels A and B, since it would allow the current diversities of approach (beverage container rules,

Den ould raise o new competition policy issues.

c cling obligation. Germany was already recycling 87% of its glass in 2001, so this would cost the Germans nothing, and the income could be used to reduce DSD’s costs. If the Germans asked for too

a price, the UK could gohGe graphical proximity is not an issue under a trading scheme, so Cyprus and Malta might choose to buy all or nearly all of their recycling from Finland and Sweden. This trading system would have to be based on collection rather than reprocessing. After all, there is nth

a precedent for governmental involvemenort from Natsource LLC, governments were ed

all greenhouse gas emissions trading in 2010. Government purchasing may be pre-planned or as-needed. That is to say, the UK could choose tolower targets than it would thand only trade with other Member States if it does not. In that case, there would be no need to buildsafety margin into the UK targets to protect the UK against n There might be some government sensitivity about being seen to be “buying freedom to pollute” (which may be perceived much less favourably than companies exporting waste for reprocessing abroad), but in general this option seems likely to be much more attractive to goMdifferent definitions, different legal treatment of transport packaging) to continue. It would allow

mark, the Netherlands and the UK to continue with their very different systems, and wn

292 Proposal for a European Parliament and Council Directive amending Directive 94/62/EC on Packaging and Packaging waste (OJ No. C103, 30.4.2002).

250 Theinve

.

h

ment ing right – if it paid more to other Member States for relief from the

target than UK operators were prepared to pay, it would end up holding worthless certificates.

.3.5 Bilateral trading between national recovery organisations

e

of glass packaging produced in a member state should be compared with the quantity of lass packaging becoming waste and managed by that country. Where there is an imbalance, the

ntity untries in Northern

urope have a surplus of green glass arising from wine imports, including the UK and Ireland. 294 or

weden has a particular problem with glass because of its tough policy on alcohol, with high taxes and strictions on who can sell alcoholic drinks. If significant quantities of coloured glass are being

GlasÅte

recycling of this material over which it as no control, and on which no recycling fee is being paid. However, since it is Swedish taxation

ude

posal alcohol, in part because of the problem of cross-border purchases.

his would clearly reduce the problem, but it unlikely to solve it.

main question is how the governments buying relief from the targets would recoup their stment:

• One way might be through a packaging tax, but this could be quite an unwieldy instrument for the

purpose (as well as being thoroughly unwelcome to economic operators) • A better way might be through a second-level trading mechanism, in which – to take a Britis

example – compliance schemes Biffpack, Valpak, Wastepack and the rest, and individual compliers, could bid for target relief certificates issued by the Government. But the Governwould need to get its pric

8 Kommerskollegium, the Swedish competition authority, has considered 293 ways of dealing with thsituation where some countries (such as Sweden) end up with more glass than they produce because ofprivate imports, particularly of alcoholic drinks. Kommerskollegium has suggested that there should be some clearing arrangement for countries that handle more packaging material than they produce. The weightgcountries that are net exporters should contribute to the waste management costs of the net importing countries. These imbalances between the quantity of packaging material produced in a country and the quabecoming waste there are common throughout the Community. Most of the coEIreland produces hardly any packaging itself and so has to export nearly all its packaging waste fexport. If economic operators import those materials into a country, then they should be responsible for ensuring its recycling. Sreimported by private individuals, then no fee for it is being paid to the glass recycling organisation,

rvinning. We are sympathetic that Swedish industry is having to fund the hpolicy on alcohol that is providing a strong incentive for these cross-border purchases, we conclthat it would not be appropriate that producers in the exporting countries should contribute to the cost of recycling in Sweden. We understand that the Swedish government is now considering a proto significantly reduce taxes onT

293 Kommerskollegium, op. cit . 294 The problem of green glass is discussed further in section 7.3.6.2.

251

GETS

ic Strategy on Waste Prevention and ion targets for packaging and recycling targets

t

d the bottles

ents. They would m

deposit systems for beverage containers (which involve significant infrastructure investment) rgets to ensure that the system remained

metal.

ed through bottle banks and the rest with flat glass from the construction and

8.4 IMPLICATIONS OF A SWITCH FROM PRODUCT-BASED TARGETS TO MATERIAL-BASED TAR

The Commission’s Communication, Towards a Themat

ecycling, also floats the idea of possibly setting collectRfor glass, metals, plastics and paper & board, whether obtained from packaging or not. Unless the packaging collection targets were carefully structured to avoid this, the result could well be abandonment of collection of some packaging waste fractions from homes. If national governments set recycling targets for individual materials, industry would try to meet them as cost-effectively as possible by collecting the most valuable grades of material and from the most easily available sources.

many cases, this would not be packaging waste from households. In For paper and board, for example, collection would probably focus on corrugated board from commercial and industrial sources, plus newsprint and graphic paper from both commercial and domestic sources. Newsprint and graphic paper could be collected from households using existing “bring” or kerbside collection arrangements, but it would probably no longer be necessary to collecboard packaging from households because of insufficient quantity or quality. Implementation of the Landfill Directive makes it more likely that some packaging waste fractions will no longer be collected from households. This is already happening in some regions of Austria. To meet new Austrian landfill requirements, local authorities now have to send organic residual wasteo energy recovery. In the past, all plastic packaging was collected from households ant

and containers subsequently sorted and sent for recycling, while the flexible packaging was incinerated with energy recovery. Now, householders segregate at source only the plastic bottles and containers that can easily be recycled. Flexible plastics can be put with residual waste, which is now all incinerated with energy recovery.

ome Member States would no doubt legislate to retain existing collection arrangemSwant to protect the infrastructure investment already made, and there would no doubt be pressure froproducers, waste handlers and recyclers to do so. National governments would also want to avoid giving the impression to voters that they were downgrading environmental activities. Thus, •

would probably remain in place, possibly with return tacost-effective;

• some Member States would retain their existing targets for packaging waste, just as they retained

their beverage container targets when Directive 85/339/EEC on containers of liquids for human consumption was superseded;

some Member States might legislate to protect existing “bring” arrangements for glass and •

Such protection could be the form of a legal obligation to maintain and service a minimum container density (e.g. 1 container per xxx citizens).

The extent to which this would occur would naturally depend on the structure and severity of the newtargets. It may be more cost-effective for example to meet a target for glass with a proportion of ontainer glass collectc

demolition sector. A small proportion of a recycling target for metals could be met from food and beverage cans and other metal packaging. But the rest of the target could be met from recycling

252 ELVs, WEEE (because collecting and recycling systems would also already operate to meet the Directives for these waste streams 295) and other industrial sources of scrap metal.

295 Directive 2000/53/EC of the European Parliament and Council of 18 September 2000 on end-of-life vehicles

J No. L269 of 21.10.2000) and Directive 2002/96/EC of the European Parliament and Council of 27 January of 13.2.2003).

(O2003 on waste electrical and electronic equipment (OJ No. L37

253

THE SAME

-funded recovery organisations have been extraordinarily successful meeting the targets laid down by Directive 94/62/

most (th tage targets cycling rates being achieved by the “f Mem es wer h a ctic d that the task to bring the other M mber States up the same level. The Explanatory Memorandum attached to the Commission’s proposal for revision of Directive 94/62/E nted that “given the current situation of packagishould M et through rther i ase in ing in those co did not achieve h recycling ra so far. Tho countrie ith alrea high recycling rates will not have to increase their current recycling rates.” Repak, the Irish Green Dot organisation, has questioned whether the new targets are optim or all Membe . Directive 94/62 ve Greece, earecovery and recycling targets which EU-12 had to achieve by 30 June 2001, and Directive

8.5 SHOULD ALL MEMBER STATES BE AIMING FOR RECOVERY AND RECYCLING RATES?

8.5.1 Targets and derogations

here is no doubt that the industryTin EC, targets which at the time were regarded by

ough certainly not by the NGOs) as highly ambitious. The discussions on the second-swhich resulted in Directive 2004/12/EC demonstrated that the majority felt that the re

ableront-run ing” n ber at St e as hig s was ra p , an now was e to

C comme a greater coherence of the Internal

ng recycling, the revision proposal lead to ark a fu ncre recycluntries who hig tes se s w dy

al fr States /EC ga Ireland and Portugal a further 4½ y rs to meet the

2004/12/EC allows them an extra 3 years to meet the second-stage targets. It has now been agreed 296 to grant the ten new Member States an additional 4-7 years to meet these targets.

Table 64: DEADLINES TO MEET THE RECOVERY AND RECYCLING TARGETS Directive

94/62/EC Directive

2004/12/EC Directive

2005/…/EC EU-12 end June 2001 end December 2008 Greece, Ireland, Portugal end December 2005 end December 2011 Estonia 1 May 2004 end December 2012 Cyprus, Czech Republic, Hungary end December 2005 end December 2012 Lithuania end December 2006 end December 2012 Slovakia, Slovenia end December 2007 end December 2012 Malta end December 2009 end December 2013 Poland end December 2007 end December 2014 Latvia end December 2007 end December 2015

The rationale for the derogations in Directive 94/62/EC was “the large number of small islands, the

ical

atever

ates

eed their production capacity.

presence of rural and mountain areas and the current low level of packaging consumption”. This suggests that the legislators believed when the Directive was adopted in 1994 that this geographdisadvantage presented problems of adjustment, which could be solved by allowing longer to meet thetargets. 8.5.2 Repak’s position However, Repak says that Ireland is at a permanent geographical and structural disadvantage whthe timescale, and that the same is true of the other island nation-states in membership of the EU (Cyprus and Malta) and possibly the Baltic states Estonia, Latvia and Lithuania. These Member Stare geographically isolated and heavily dependent on imported packaged goods; as a result, their packaging waste arisings vastly exc

296 Directive 2005/…/EC of the European Parliament and Council of …. amending Directive 94/62/EC on packaging and packaging waste, OJ No. ……

254

d orthern Ireland, which is part of the UK) is no more than 5.4 million. This is too small a

arket to sustain a manufacturing infrastructure for a full range of consumer goods. Ireland is

plac

The Republic of Ireland has a population of only 3.7 million, and the total population of Irelan(including Nmtherefore a major net importer of packaged products.297 This in turn means that most of the packaging

ed on the Irish market has been produced elsewhere:

Table 65: ORIGIN OF PACKAGING PLACED ON THE IRISH MARKET 1999 data (‘000 tonnes) 298

Packaging placed on the Irish market (1)

Packaging produced in Ireland (2)

Paper 297 80

Glass 111 54

Plastics 171 33

Steel 39 0

Aluminium 11 0

Wood etc 74 12

Total 704 179

With little home demand for empty packaging, Ireland has very little commercial need for facilities toreprocess used packaging into new packaging. When work on revision of the Directive began, there was only one paper recycler, one glass recycler, no metal recyclers and very little plastics recycling. Since then, the glass recycler has closed, and the management of the paper recycling has announced its intention of ceasing operations during 2005.

e), but these are almost invariably low-value applications and in any case cannot

d

and. Waste can be compacted, so r Ireland it is more space-efficient – and therefore more resource-efficient – to export packaging aste rather than empty packaging.

Repak has estimated that the recycling tonnages required to meet the targets in Directive 2004/12/EC will be more than double the amount of packaging manufactured in Ireland. To meet these targets, Ireland has two choices: • export packaging waste to the UK or elsewhere, despite the high transport cost and possible

environmental costs involved;299 or • build more reprocessing facilities, and export the empty packaging from these facilities as there

would be insufficient demand from the home market. Non-packaging outlets for reprocessed waste are being pursued (crushed glass as a construction

aterial, for instancmmake up the tonnage shortfall. Repak and the Irish Government have been examining the potential for increasing recycling in Irelanto produce materials for the Irish market, but the prospects of achieving this are not encouraging. Packaging manufacture is a volume-driven business, and facilities close to major customers have a competitive advantage. These plants tend to attract investment and outdated small plants eventually close. The greater efficiency of large production units in Great Britain and elsewhere more than

akes up for the extra transport costs involved in exporting to Irelmfow

297 Irish total trade amounts to nearly 200% of GNP (ESRI medium term review 1999-2005). 298 Sources: (1) Environmental Protection Agency submission, pursuant to Commission Decision 97/138/EC

and industry estimates.

r than those to the Continent.

(2) Repak membership statistics 299 Charges for shipping fright to Great Britain are significantly lowe

255

utwards, e

sport

ging waste

sh packaging waste will not find

,

lence between the Member States in terms of the economic and

n

equ he n on the Thematic Strategy suggests that the Commission may be questioning this o.

Pol

ther than national level; 300

ry e it

relatively easy to meet high environmental standards in other areas. Thus Repak regards it as

It is true that if packaged goods can be shipped into Ireland, packaging waste can be shipped osays R pak. However, there are two differences: • packaged goods have a much higher economic value, and so are more able to bear the tran

costs involved; packaged goods have a guaranteed market in Ireland, whereas outlets for Irish packa•

depend entirely on policies made in other countries. For instance, the UK’s packaging recovery activities are funded through the sale of Packaging Recovery Notes (PRNs) by reprocessors to companies with reprocessing obligations. PRNs can only be issued in respect of waste generated in the UK, so Irish waste is less valuable to recyclers than UK

aste. This means that if the supply of recyclate exceeds demand, Iriwan outlet in the UK. Another example – Belgium and Germany export waste glass for recycling in France and the Netherlands. Their transport costs are much lower than those from Ireland, so if the British, French and Dutch glass manufacturers have enough material from their own and these other sources of wastereland’s waste glass will have to go further afield. I

Repak comments that studies have tended to rely on European averages or data most readily available(i.e. from countries most often studied, such as Germany or the UK), and there has been no detailed examination of those at the margin. It has therefore proposed that the Commission carry out one or more studies on “non-mainstream” countries in order to • inform the debate on whether the same targets should be applied to all Member States, develop criteria to measure equiva•

environmental costs and benefits of recycling targets, and • establish what degree of flexibility is needed to assure equivalence.

epak stresses that it is not looking for special treatment for Ireland. Every country has its owRadvantages and disadvantages arising from its geography, geology, history and climate, but it questions whether the way that EU packaging waste targets are structured provides genuine

ivalence between the Member States in terms of economic and environmental costs and benefits. CommunicatioT

to

icy options whose practicality Repak wishes to see explored include • permanently lower packaging recovery targets rather than time-limited derogations for certain

Member States, or

establishment of packaging recovery targets at EU ra • a trade-off between packaging waste targets and other areas of environmental protection [i.e.

equality of effort rather than equality of outcome]. Historically, Ireland has had little heavy industry, and the country therefore has better air and water quality and much less of a land decontamination problem than the industrial heartlands of Europe. Thus if geography and histomake it relatively difficult for Ireland to meet high packaging recovery targets, they also mak

300 A possibility mentioned in the Communication, Towards a Thematic Strategy on Waste Prevention and Recycling, and discussed in section 8.4 above.

256

se of

It has been argued that • whether recycling is environmentally beneficial depends mainly on the energy locked up in the

material. Transport is far less important from the resource point of view, and in any case, recycling markets are international;

• in the Member States with a low population density, most of the population lives in and around

cities, and in particular close to seaports; • other EU-15 Member States have overcome specific problems. Finland and Sweden have been

able to meet their targets despite geographical isolation, a sparse population and long transport distances, while countries like France, Italy and Spain have overcome traditional weaknesses in waste management culture.

However, Ireland is the only country in EU-15 to suffer from both weaknesses, geographical isolation and lack of a strong waste management culture, and unlike the others it does not have an indigenous packaging industry. And it shares these problems with at least two and maybe five much less prosperous members of EU-25. We therefore support the call for a special study on optimal recycling targets for small and geographically isolated Member States. 8.5.3 The response of other stakeholders Three stakeholders responded on this issue. • PRO Europe sees no need for complete exemptions for any given “non-mainstream” Member

State, but believes that there should be more flexibility in applying European legislation to the Member States, for instance regarding the deadlines for meeting the targets, and on deciding whether a particular recycling or recovery process is counted as recycling for the purposes of meeting the targets.

We are not convinced that this would help. Repak argues that the question is not one of a delay in reaching the targets, but whether the targets themselves are appropriate for Member States with particular geographical and structural difficulties. We would not support any suggestion that processes which are not considered to be recycling in one Member State should be accepted as recycling in another, as this would be a clear distortion of competition.

• The EEB has suggested exploring the situation of small Member States, such as Denmark. The

argument that refilling is inappropriate for imports because of long transport distances may not hold true, especially for small countries, they say.

Again, we are not sure that we share this stakeholder’s view. EEB appears to be looking at cross-border trade in refillables from the importers’ point of view, not the exporters’. Certainly a small country is able to import packaged goods without them having to travel very far, but the point of the Internal Market is to allow producers a fair chance to export throughout the Community. As far as British or Spanish exporters are concerned, the size of Denmark is irrelevant to their ability to export there – what counts are the rules which influence their ability to place products on the Danish market in a cost-effective manner.

• EuPC members feel that unequal enforcement is a major problem. Why should we be worrying

reasonable for Ireland to be required to aim higher in other areas if it is to aim lower in the capackaging waste management.

about whether the plastics recycling target is 20%, 22.5% or 25% when some Member States may not be doing very much at all, they ask.

257

9. STAKEHOLDERS’ VIEWS AND ARGUMENTS

ember States to implement

lder meeting was held on 7

this chapter, we • list the attendees at the 7 December stakeholder meeting in s

9.1 INTRODUCTION DG Enterprise commissioned Perchards, FFact Management Consultants and SAGIS Ltd to: • evaluate the impact of the Packaging and Packaging Waste Directive on the Internal Market from

an economic and social perspective; • evaluate the effects on the Internal Market of the decision of some M

the Directive through different producer responsibility schemes; and • summarise stakeholders’ views and argument on these issues. For the purposes of this latter task, our interim report was published on the DG Enterprise website with an invitation for submission of comments and reactions. A stakehoDecember 2004. During that meeting the interim report was presented and discussed, several “hot-spots” for which additional information was necessary were identified and the stakeholders were invited to submit views and information before the end of December 2004. These responses were considered by the consultants, and the text of the final report has been modified to take account of them. In

ection 9.2; • lis y the stakeh e o t in section 9.3t the material provided b olders in respons to the interim rep r ; • su s e s missions in sectmmarise the arguments and view xpressed in those ub ion 9.4; • list the material provided by the stakeh e o the draft final r 5olders in respons t eport in section 9. ;

an summarise the arguments and views expressed in those submissions in section 9.6

d

• .

258 9.2 ATTENDEES AT THE STAKEHOLDER MEETING Table 66: ATTENDEES AT THE STAKEHOLDER MEETING, 7 DECEMBER 2004 Organisation Name APEAL Mr Re(Association of European Producers of Steel for Packaging)

naud Batier EU Public Affairs Manager

Association of Europe l Manager

Small and Independent Breweries in Mr Roland Demleitner Genera

BCME (Beverage Can urope)

b Schmitz Makers E

Mr Bo

Bureau B&G Mr Robbert van Duin CIAA (Confederation o & drink industries of the EU)

Mr Franco Grilli Director, Corporate Environ l Affairs Ferrero Company

f the food menta

CITPA (International Conf f Paper and Paper board Converters)

Mr Kevin Bradley Director General ACE (Alliance for Beverage s and the Environment)

ederation o Carton

Deutsche Umwelthilfe e.V. Mr Jürgen Resch EEB (European Environmental Bureau)

Ms Melissa Shinn EU Policy Unit - Waste, Product and Natural Resources Policy

EU.select GmbH Mr Ulrich Leberle EuPC (European Plastics Convertors)

Mr Joachim Eckstein Vice-President

EuroCommerce Ms Beat Späth EUROPEN Mr Klaus Dräger (European Organization for Packaging and the Environment)

External Relations Procter & Gamble Service GmbH

GRA (German Refill Alliance)

Ms Charline Nicolas

EU Policy Adviser to the GRA ADS Insight SPRL

INCPEN (Industry Council for Packaging and the Environment) 2EG

Mrs Jane Bickerstaffe Director

PRO Mr Joachim Quoden Secretary General

Europe s.p.r.l. UN SDA (Union of European Non-Alcoholic Beverages Associations)

Ms Daniela Kolb

E

P(con

ercsultants for the study)

d Perchard Ms Gill Bevington

hards Mr Davi

FFact Management Consultants (consultants for the study)

Mr Kees Wielenga

European Commission, DG ENTR

Mr Michel Catinat

Ms Camilla Wilander Ms Fulvia Raffaelli

European Commission, DG ENV Mr Otto Linher European Commission, DG MARKT

Ms Katleen Hendrix Mr Tilman Lüder

259

ee ber 2004, a number of organisations submitted comments and provided additional ct

, nd cember 2004 and search their files for

9.3 MATERIAL SUBMITTED BY STAKEHOLDERS ON THE INTERIM REPORT

Following publication of the interim report on the DG Enterprise and the stakeholder consultation

ting on 7 Decemmfa ual information. In addition, the project leader was invited to attend discussions on the interim report at meetings of CIAA and EuPC, held on 16 December 2004 and 14 January 2005 respectively

BCME kindly allowed us to visit their office on 20 Dearelevant information. An overview of the material received appears in Table 67. This does not include the many follow-up exchanges by e-mail, the results of which are referenced in the text.

Table 67a: RESPONSES RECEIVED DURING THE CONSULTATION PROCESS

Stakeholder Type of organisation Geographical scope

Material submitted Date

Association of European Producers of Steel for

Industry association – Packaging material manufacturers

EU - Comments on the interim report - Steel recycling in Japan - Letter Danish Competition

19 Jan 05

Packaging Authority Speech Bundeskartellamt at

(APEAL) -

AGVU conference - Information on Belgian Ecotax - Legal analysis amendment

German packaging Ordinance

10 Jan 05 26 Jan 05

Association for Industry association – EU the

Recovery of

Companies interested in - Comments on the interim report 8 Dec 04

Sustainable Use and

resource management policy

Resources in Europe (ASSURE) Beverage Can Industry association – EU - Comments on the interim report 5 Jan 05 Makers Europe (BCME)

Packaging manufacturers

British Soft Drinks Association (BSDA)

Industry association – Packer/fillers

UK - Comments on the interim report 7 Jan 05

Confederation of the food and drink inthe E


EU - Comments on the interim report 21 Jan 05

dustries of U (CIAA)

Chambre Syndicale des


France - Comments on th

Eaux

e interim report 7 Dec 04

Minérales Françaises (CSEMF) Danish Industry association – Denmark - Comments on the interim report 11 Jan 05 Brewers’ Association

Packer/fillers (appended to UNESDA/CISDA comments)

European Environmental Bureau (EEB)

Environmental NGO EU - Comments on the interim report - Resubmission of comments on

PIRA/Ecolas Study - Comments by ANEC on CEN

standards - Data Finnish refillables

25 Jan 05

European Plastics

Industry association – Packaging material

EU - Comments on the interim report 31 Dec 04

Convertors manufacturers & (EuPC) packaging

manufacturers

260

Table 67b: RESPONSES RECEIVED DURING THE CONSULTATION PROCESS Stakeholder Type of organisation Geographical

scope Material submitted Date

European Organisation

IndusComp

for Packaging and the Environment (EUROPEN)

packaging & environment policy

try association – anies interested in

EU - Comments on the interim report 3 Jan 05

FOST Plus Packaging waste compliance organisation

Belgium - Impact ecotax on prices of soft drinks and mineral water

13 Jan 05

German Refill Alliance (GRA)

Industry association – Packer/fillers, distributors and NGO

Germany - Comments on the interim report - Evolution of refillable packaging

17 Jan 05 19 Jan 05

members in Portugal

Industry Council for packaging and the Environment

Industry association – Companies interested in packaging & environment policy

UK - Comments on the interim report 23 Dec 04

(INCPEN) Miljöpack Industry association –

Companies involved in packaging and environment policy and research

Sweden - Comments on the draft report 22 Feb 05

Paper Packaging

Industry association – Packaging material

EU - Comments on the interim report 22 Dec 04

Co-ordination Group (PPCG)

manufacturers & packaging converters

PRO Europe Association of packaging waste

EU

compliance

- Comments on the interim report 31 Dec 04

organisations Union of Industry association – EU European non-alcoholic beverage associations (UNESDA/ CISDA)

Packer/fillers - Data on consumption in Germany - Information on the Danish

deposit system - Hungarian product fees - Belgian ecotax

- Comments on the interim report 11 Jan 05

Valpak Packaging waste compliance organisation

UK - Comments on the interim report 23 Dec 04

261

The onsultants. The factual material was integrated as appropriate into the main report and the annexes to support the analysis in the report or to highlight specific issues. The comments were assessed, and where appropriate the text of the report was amended. Footnotes in this section explain where stakeholder comments have not been taken into account, and the reasons for this. The following section summarises the views of the stakeholders as expressed in the contributions received. This is mainly an analysis of the content of the submissions called “comments on the interim report” because the other contributions mostly contain factual information which does not need repetition in this chapter. This summary is arranged according to the type of organisation that submitted the comments. 9.4.1 Environmental NGOs EEB Given the timeframe, the length of the interim report and the fact that the summary did not really summarise the data in answer to the original questions, the EEB declined to provide a full critique of the study. “The full interim study document is a fascinating collection of data and information, and personal opinions, but, firstly this data and information collected is largely not focused on the actual questions of the study 301 and secondly, it would require proper peer scrutiny to separate the 'personal opinions' from the more factual data (which is a huge operation given the size).” The EEB did however comment that • The enforcement activities regarding the Essential Requirements are limited, not only due to lack

of surveillance capacity but also to the nature of the CEN standards (environmental management standards rather than standards indicating verifiable and measurable criteria) and the choice of self-verification by industry.

• The CEN standards are of a nature that does not provide a potential to change from “business as

usual” to packaging and packaging waste prevention. • When assessing the impact of packaging taxation, the benefits of these systems should be

highlighted. • Where data or time is lacking to evaluate the benefits and the impacts on functioning of the

Internal Market, this should be stated in the report. • The recommendations should be dropped unless they are there to provide existing information on

the usefulness/impact of such options. • The study should not draw upon the findings of the Pira/Ecolas study unless these have been

substantially verified.

9.4 SUMMARY OF VIEWS EXPRESSED BY STAKEHOLDERS

material submitted was analysed by the c

301 This was based on a misunderstanding. As was explained at the stakeholder consultation meeting, the terms of reference for the study had been inadvertently omitted from the interim report.

262 9.4.2 Gene

our organisations, representing a wide variety of industrial sectors, submitted comments.

.4.2.1 ASSURRE

It would be useful to include a summary of the damage done (jobs lost, profits lost, market share

be strengthened.

The point that taxes may be applied in one Member State but the environmental impact and the

in the summary.

eement with the overall opinion expressed in the report that with the exception of three problem areas, the Directive has had a positive impact on the functioning of the Internal Market

ed the recovery and recycling of used packaging to high levels across all Member States.

The three areas requiring attention are as follows:

- Encouragement of packaging reuse systems by Member States has caused financial losses and

/138/EC have

government. The resultant differing data reporting requirements between member states have caused high costs for industry.

• Article 5 should be revised to prohibit the reuse encouragement methods and similar measures that

have led to Internal Market disruptions. Member States should be required to apply the proportionality principle and to report the findings of such a test to the Commission and all other stakeholders before their implementation.

• Development of a trans-national deposit refund system is not supported because it is believed that

the potential benefits would not be justified by the costs of establishing and maintaining such systems. Also, the suggestion for the introduction of rules for the marking of deposit-bearing containers is not supported.

• A number of outstanding questions regarding the implementation and enforcement of the Essential

Requirements should be answered before the Commission presents any proposals to Council and Parliament.

• The report should address taxes on packaging in more depth.

ral industry associations F 9 •

lost, consumer choice restricted) in Germany. Notification by Member States ahead of intended changes in legislation or policy must

• The summary needs to be clearer on cross-border shopping.

•recovery could be in other Member States, should be included

• Incorrect mandatory marking requirements in some Member States should be highlighted in the

summary, together with a recommendation for Commission intervention. 9.4.2.2 EUROPEN • Agr

and has stimulat

•

numerous difficulties for some industry and trade sectors.

- The Essential Requirements are not being enforced by the majority of member states which has led to ill-founded calls from some regulators for additional restrictions on packaging.

- Harmonisation of data reporting by member states and Commission Decision 97

failed to deliver sufficient robust data on which to base optimal policy decisions at all levels of

263

is supported. The

onmental

allo ember States’ targets in the

rogations for non-mainstream countries are no gations for the means by very target may be achieved are.

ngs sh

issue of cross-border shopping may not be l member states.

liance

ith the general tone of thd deposits. Their views included the oints:

asks with the Pira/Ecolas s be observed.

er by the European Court of Justice as legal measures. The conditions under which t al Market perspective hould be addressed in the study.

se of overall recycling rates as a yardstick f deposit systems is not

ing requirements are not a barrier to trade. Some deposit systems do not require marking.

marks on confusion of consumers should

the German Packaging Ordinance should be taken into account.302

Several examples of trans-national reuse system

of reuse systems fo

Deposit is an efficient measure to protect and promote refillable bottles, whilst at the same time being legal from an internal market perspective.

he return rate of refillables has not fallen since the introduction of the deposit on one-way ackaging but remains constant at a rate of 95 to 100%. The data suggesting the contrary in the

are an exception. The decrease of the market share of refillables has stopped. • The decrease of the share of refillables in Portugal is the result of a laissez-faire approach from the

authorities. • For beverage packaging reuse and deposit on one-way packaging has demonstrated to be an

effective method of reducing the littering of those items.

• The recommendation that further research is needed on anti-littering measuressuggestions for a reference to litter in the Directive and involvement of recovery organisations in anti-litter measures are not supported. Littering is a social problem and not an envirproblem.

• Acknowledgement of the industry resources cated to ensure that M

Directive are met. • De t favoured, but dero

which the overall reco • The use of the Green Dot and other marki ould be voluntary.

• The imited to the new 9.4.2.3 German Refill Al The GRA was dissatisfied w e report and the assumptions made with regards to refillables an following main p • A stricter division of t tudy should • Deposit systems on refillable beverage contain s are recognised

hey are legal from an Interns

• The u to assess the impact o

valid. • Mark • The re be deleted. • ments to The recent amend • s exist. • There are economic benefits r small companies. •

• T

pstudy

302 Our interim report predated adoption of these amendments by the German Federal Cabinet.

264

A s fine how governments may promote re-usable packaging and

the ful.

9.4. AP d in contribution issthe a sys multimaterial selecticol at l d at lower environmenta where b verage con bination with s r pack ging. Since there are constraints regarding the Internal Market, deposit not pass the test under Article 28 or the Treaty. • r po nality should lta s is

mm • tems also pose competition concerns. Examples are the questions raised by the Danish

Authority regarding the Dansk Retursystem and the concerns of the Bundeskartellamt derogations from German competition in the field of waste collection.

• m has clear effects on the prices of drinks in one-way containers as

thos Lu bourg. • easures for beverage packaging only address a minor part of the littering problem.

studies are available. The Packaging Directive should not contain a reference to littering, n oader frame

9.4 BC usions resulting from the ECJ judgments in the German refill cases as it provides confirmation that Member States’ freedom to encourage reuse should be controlled bet • not pe to recovery or recycling. • a of r l quota and m lla

ers constitutes a trade barrier. • The ECJ does not fully address the proportionality pri merits of the equally

ons of reuse, recycling and recovery have no naity of ac ts of the Packaging and Packaging Waste Directive via household

yste en taken into account.

9.4.2.4 Incpen

tronger recommendation to de•what measures they should not use should be included.

• Litter should not be included in any future packaging Directive because it is a social issue. An

explanatory statement in a recital explaining this would be useful. • A section in the summary of the findings regarding the seven areas requested to be covered by

study would be help 9.4.3 Packaging material manufacturers and packaging converters

3.1 APEAL

EAL developem in 2004,lection rates, tainers are collected via deposit in com

one main argument its . According to a study comm ioned by tem based upon aower costs an

ve collection system can reach equivalent l impacts than a system eeparate collection for othe

systems should a

In the study foup to the Co

Deposit sysCompetitionregarding

DG Enterprise, pro rtio not be assessed by the consu nts. Thiission.

The Belgian ecopposed

otax systee sold in Fran to

Anti-litter mFurther

ce or xem

as this problem

.3.2 BCME

needs to be solved i a br work.

ME mainly concentrates on the concl

ter:

Reuse is r se superior

The German ccontain

se of combination efil a findatory deposit on non-re ble

n e respective ciple. Thvalid optipossibilcollection s

t been assessed, and the alter tive hieving the targems have not be

265 Two requirements for deposit systems for one way packaging are specified:

- e d i roduce oncerned be

afforded a transitional period sufficient to enable them to adapt to the requirements of the :

ile it ma onomic operators concerned to organise the setting-up of the

requirements (i.e. clearing system for deposit amounts, refunding of deposit amounts umers, e duty of

time menr lly ate in a

• um crite of deposit systems sh cluded in Article 7 of the

g and re e, including • e to be strengthened from the Internal Market perspective by

onis ctions to competition) as a first step. These

- any bans or f packaging complying with the Essential Requirements;

- market quo

y d to penalise non-reusable packaging, as opposed to pursuing r objectives;

- ecotaxes w te between packaging materials or systems;

datory s product size

9.4 • ommen prove enforce en

Requirements i

Concerns are expressed about the length of time taken to conclude infringement procedures. • The Directive provides for the possibility of taking local circumstances into account. This can

lead to distortions of the market. • Ground-rules for recovery organisations should not necessarily be the same for organisations in

different Member States. Voluntary national collection organisations are supported. • EuPC does not believe that fee payment for reusable packaging when it is first placed on the

market is valid for all Member States. • The conclusion that marking with the Green Dot should be voluntary in all Member Stats is not

supported. However, other markings should be voluntary. • The recommendation on “problematic materials” such as green glass is not supported. • EuPC says that a recommendation on quotas that are distorting trade is missing from the interim

report.

•

Before th eposit system enters nto force, all p rs and distributors c must

system

- Whpracticalto cons

y be left to the ec

take-back of packaging), it is thwhen the packaging w

the national authorities to t system changes, every producer or

ensure that at the aste managedistributo concerned can actua particip n operation system.

Minim ria for introduction ould be inPackagin

Article 5 of thnegative harminclude:

Packaging Waste Di ctiv a proportionality test.

Directive needs ation (outlawing hardcore restri

market delistings o

tas;

- mandatorlegitimate

deposits intendeecovery/recycling

hich discrimina

- man refill obligations for ome s or distribution channels.

.3.3 EuPC

The rec dation for the ims supported.

ment of ment mechanisms for the Ess tial

•

266

ey

m approach of the CEN standard on prevention by source reduction has been accepted. Its usefulness in reducing potential barriers to placing packaging on the market

evention is not being fully exploited yet.

e effect of differences in Member States’ recycling targets in creating barriers to trade could be dressed via one or two case studies such as the Belgian glass recycling targets.

dence of market n.304

•

This guidance should address the environmental benefit of the

mission new packaging data reporting format which is intended to simplify reporting by the

Member States.

an aspect of the Packaging Directive. If it is to be discussed in relation to deposits, then it should be discussed in that section of the report.

9.4.3.4 PPCG • PPCG would like to see the structure of the final report to correspond more closely with the k

questions posed by the Commission in the terms of reference.303 • The Directive has been successful in promoting the removal of technical barriers to trade apart

from a number of cases related to beverage containers. • Further analysis of the notification process would be useful, in particular in relation to fiscal

measures. • What was the market impact of the Danish can ban and the German refill quota? The management syste•

and of approaches to packaging pr • Th

ad • PPCG disagrees with the conclusion that differences in recovery organisation fees did not result in

distorting effects. It has affected the competitive positions of heavier materials such as paper and board packaging.

• It would be useful to have a listing of all Member States imposing deposits, ecotaxes, product

taxes and packaging taxes, with a short analysis on whether or not there is eviimpact or distortion of competitio

• The key elements of the ruling of the European Court of Justice on the two German cases should

be included.305

There is a need for guidance at Community level on reuse and fiscal measures designed to promote packaging recovery. measure, its proportionality and the distortion of competition or interference with Internal Market rules.

• The issue of administrative burden on the packaging chain as result of different packaging

recovery schemes should be addressed by the packaging recovery organisations. The Comis finalising a

The section on litter should be deleted. Litter is not•

303 As noted above, this was based on a misunderstanding. It was explained at the stakeholder consultation meeting that the terms of reference for the study had been inadvertently omitted from the interim report. 304 This was in one of the Annexes in Volume II of the interim report. 305 The interim report predated these rulings.

267

A comparison of the effects of the Packaging and Packaging Waste Directive with situations ould have been useful.306

e

t-benefit analysis for enforcing them.

t necessary to meet recovery and recycling targets. If introduced, these systems should meet requirements such as those specified

Measures for harmonisation of data reporting are supported. A fee for reusable packaging when it

Marking systems must be voluntary.

tion to limit the use of problematic materials should be reworded because it is in contradiction with the Essential Requirements.

• l

tions. Collaboration with the authorities and more research is needed.

4.

The trrench m to brand. The implementation f t d

wate s i

d o • A n

to t

9.4.

•

unfavourable” beverage containers only, as this discriminates against

9.4.4 Packer/fillers 9.4.4.1 CIAA •

outside the EU w • The need for enforcement of the Essential Requirements is supported. The reasons why only thre

Member States have been enforcing them up to now should be investigated, and the Commission should develop guidance on their application and a cos

• Deposit systems for non-refillable beverage containers are no

by the ECJ in rulings C-309/02 and C-463/01.

•is first placed on the market is not supported.

• • The recommenda

Anti-litter measures should be promoted, but this is a social problem rather than an environmentaproblem. A reference in the Directive is not supported, nor is the idea of involving recovery organiza

. 4.2 CSEMF 9

in oduction of the German deposit system in January 2003 had led to the reduction of sales of

ineral water in non-refillable bottles of 60%-80%, according Fo he eposit in the absence of a national system has penalised French waters and favoured German

r n refillable bottles. A ep sit system should fulfill two conditions:

ational organisation should be set up to manage the returns, without any obligation of the filler ake back the packaging.

• The deposit should not exceed the value of the packaging.

4.3 UNESDA /CISDA • All Member States should enforce the Essential Requirements. There is a need for guidelines on

how these can be applied and how they should be interpreted.

UNESDA/CISDA is opposed to the replacement in Germany of the refill quota by a deposit system on “environmentally a particular industry sector.

306 In our view, this is outside the scope of the study. .

268 The German deposit scheme is unsatisfactory. The Nordic system was successful due to specific

• t

is no reason to dismantle existing systems.

o only. The system does not stifle

innovation. There has been an increase of new packaging designs in Denmark, in particular in

be able to on

channels.

ion of mechanisms to support mandatory reusable

More study is needed on anti-littering measures. This is a social/behavioral problem and should

a deposit schemes towards promotion of national kerbside

e provided material as a reaction on e aterial regarding the ecotax system in

m

The evolution of plastics recycling should be included in the summary.

•local conditions.

The report is contradictory when it states that no new deposit systems should be established buthat there 307

• The information and conclusions regarding the handling payments of the Danish return system are

partially incorrect. • The time needed to re-programme Reverse Vending Machines in Denmark is in practice not to

long. The charge for the labels represents the cost price

one-way packaging. • More analysis is needed on packaging taxes. Taxes are too blunt an instrument to

reflect the highly variable levels of environmental impact for different product and distributi

UNESDA/CISDA opposes any introduct•

systems for beverage containers and the concept of standard euro bottles. •

not be covered by the Directive. A number of the comments of BSDA were supported and included in the contribution of UNESDA. In ddition, BSDA also provided the following comment:

The focus should be moved away from•collection schemes, which covers all packaging and not only beverage packaging.

9.4.5 Packaging waste compliance organisations Three organisations involved in management of packaging wast

interim report. One of them (FOST Plus) provided factual mthBelgium, which was used in the report and will not be reproduced in this appendix. The other two

rganisations provided comments which are summarised in this section. o 9.4.5.1 PRO Europe PRO Europe considered the interim report to be very valuable. It made the following specific co ments: • The assumption that for a number of countries the Packaging and Packaging Waste Directive did

not have any influence, may not be totally true. Some countries anticipated adoption of the Directive. Its effect was therefore larger than indicated in the report, and thus the incremental costs of its implementation may have been underestimated.

• The impact of the Directive on household packaging should be measured separately.

•

307 This comment is based on a misunderstanding. We did not say that no new deposit systems should be introduced, we said that deposit systems were unlikely to be successful in Member States where the infrastructure for container return had disappeared.

269

• ssential Requirements. Implementation should be harmonised in the Member States to avoid market distortions and barriers to innovation.

• Deposit systems do not guarantee better results in terms of recycling rates, and they create trade barriers and distortions of competition.

• Mandatory deposits on non-refillable beverage containers are not an adequate solution. Packaging

waste as a whole should be tackled in a coherent and efficient manner. • The interim report contains pays little attention to packaging taxes. In many cases, the eco-tax is

not used for measures supporting the environment but goes into the general national budget. • The idea of simplifying data reporting and making those systems more comparable is supported in

principle. However, different national implementation and interpretations should also be addressed in that context.

• The marking requirements of the Green Dot do not create significant problems in relation to

national requirements. Its use as a logo for proof of producer responsibility is widely recognised and is very important for PRO Europe. The remarks on the application of the Green Dot in the NAFTA area are not relevant for the EU Internal Market and should be deleted.

• The recommendations for European requirements for recovery schemes do not take into account

the specific circumstances of the Member States. The details of the arrangements are best established nationally, and European regulation is not necessary.

• Every producer should be free to decide on the use of any type of packaging in line with European

law, and the suggestions about clear glass for wine should be revised in that light. • Anti-litter measures should include awareness and education programmes rather than legislative

measures. An approach aimed at quantifying the litter problem via scientific research is supported.

• There is no need for complete exemptions for non-mainstream Member States, but more flexibility

in applying European legislation would be useful. 9.4.5.2 Valpak • The Essential Requirements provisions should be properly enforced before any more complex or

onerous measures are considered. • Deposit systems on certain types of packaging or goods inherently distort competition, but may be

justified for other reasons in specific circumstances. • Member States wishing to set up deposit systems should normally be opposed, unless a clear set of

requirements and justification is provided for approval by the Commission. The proposal should include an assessment of the impact on the environment and the Internal Market.

• The UK PRN system may distort trade, but the distortions cause by the alternatives could be much

greater. • The UK licence fee for the use of the Green Dot is not disproportionately high for small

companies, because these are the least likely to wish to use the Green Dot.

PRO Europe advocates a cautious approach towards the E

270

very organization per Member State is not the best solution. However, there is reduced benefit from having too many small operators.

• embers to participate for consumer packaging only.

• s unfeasible.

g of these data.

It is unlikely that the litter problem will be influenced by the packaging measures discussed, but

ide system for producer responsibility is unworkable as national situations and o widely.

• A single reco

Recovery organisations should not be allowed to permit m

The recommendation for limiting the use of problematic materials i

• There is much more packaging being reused than generally is realised, which may justify further

harmonisation of reportin •

more research information is required. • A single EU-w

markets vary s

271

THE DRAFT

DG Entonsulta ecember and those that had submitted comments on the interim report. A number of rg s

An over

9.5 MATERIAL SUBMITTED BY STAKEHOLDERS ONFINAL REPORT

erprise distributed the draft final report to the organisations that were present during the tion in Dc

o ani ations submitted comments and provided additional factual information.

view of the material received appears in Table 68. This does not include the many follow-up es by e-mail, the results of which are referenced in the text.

exchang

Table 68: RESPONSES RECEIVED ON THE DRAFT FINAL REPORT Stakeholder Type of organisation Geographical

scope Material submitted Date

Alliance for Industry association – EU - Comments on the second dBeverage Packaging

raft 29 Mar 05

Cartons and the Environment (ACE)

manufacturers

Association of European Producers of

Packaging material manufacturers

- Data on refill share in Sweden - Final Report BIO study

Steel for

E

Industry association – EU - Comments on the second draft

- Reasoned opinion infringement 2003/2133

5 Apr 05

Packaging (AP AL) Beverage Can Makers Europe

E)

Industry association – Packaging manufacturers

EU - Comments on the second draft - Comments re-use submitted for

31 Mar 05 30 Mar 05

(BCM the PIRA / ECOLAS study Brewers of Industry association – EU - Comments on the second draft 12 Apr 05 Europe Packer/fillers European Industry association – EU - Comments on the secondOrganisation

Environment (EUROPEN)

Companies interested in draft

- Position paper on reuse quota 7 Apr 05

for Packaging and the

packaging & environment policy

and product specific targets for packaging

German RefillAlliance

Industry association – Packer/fillers,

Germany - Comments on the second draft

24 Mar 05

(GRA) distributors and NGO members

Association of Bordershops in

Industry associaRetailers

Schleswig Holstein (IGG)

tion - Germany - Comments on the second draft 5 Apr 05

PRO Europe Association of EU - Comments on the second draft 1 Apr 05 packaging waste compliance organisations

- FIEB data on cross border shopping in Belgium

Union of

associations

Industry association – EU - Comments on the second draft 1 Apr 05 European non-alcoholic beverage

Packer/fillers

(UNESDA/ CISDA)

272

ARY OF STAKEHOLDER VIEWS ON THE DRAFT FINAL

s ctual material was integrated f en

ke

ce is mainly an analysis of the content of the submissions called “comments on the draft does not need tion that

bm

.6

hr presenting a wide variety of industrial sectors, submitted comments.

9.6.

UROPEN was in general satisfied with the study and the way their comments and information was

and structured according to the four questions the study aimed to address. It should also more clearly resent the conclusions, highlighting amongst others the achievements of the Directive and industry’s

On would however like to see clear recommendations on the need for a review of the implementation of

rticle 5 by the Member States and for clearer guidance on its implementation. It suggested including

On introduce deposits on non-refillable beverage containers to underpin such proposals by a detailed nalysis.308

On d e a more detailed analysis of the resources needed for proper enforcement. It was of the opinion that e development of an EU-wide guide for showing compliance with the CEN standards is feasible.

The conclusion that increased enforcement of the Essential Requirements should build on what was already being done by Member States was supported. On packaging taxes, EUROPEN was of the opinion that the threat of taxes should be given more prominence and that a more detailed evaluation of their effects should be undertaken.

9.6 SUMMREPORT

before, the material submitted was analysed by the consultants. FaA

into the main report and the annexes, the comments were assessed, and where appropriate the text othe report was amended. Footnotes in this section explain where stakeholder comments have not be

n into account, and the reasons for this. ta The following section summarises the views of the stakeholders as expressed in the contributions

ived. This refinal report” because the other contributions mostly contain factual information whichrepetition in this chapter. This summary is arranged according to the type of organisasu itted the comments.

.1 Environmental NGOs 9 No comments were received from environmental NGOs in response to the draft final report. 9.6.2 General industry associations

ee organisations, reT

2.1 EUROPEN

Eincorporated into the draft final report. It suggested that the Executive Summary should be shortened

pcontribution to this.

reuse, EUROPEN was pleased with the recognition of most of their suggestions in the report. It

Aa list of actions aimed at reuse encouragement which should be prohibited.

deposit systems, EUROPEN suggested including an obligation for Member States proposing to

a

the Essential Requirements EUROPEN wanted a conclusion added to the effect that there shoulbth

830 Since the European Court of Justice has confirmed that mandatory deposit systems are not per se

e any prior authorisation procedures dditional to those required for the introduction of other measures related to the management of packaging and

unacceptable, we take the view that it would be inappropriate to requirapackaging waste.

273

iance

efill Alliance was dissatisfied with the general tone of the report as well as the and the opinions it is based on.

T esti ing to the ECJ. Only their proportionality had

m

hen

e

he marking requirements were a barrier to trade

atr and that the deposit simply put one-way and

he GRA disagreed with the report’s presentation of deposits b

cie

9.6.

iljöpack stressed the need for a consistent application of Article 18 of the Directive in relation to the ments. In Sweden, industry and the national authority are cooperating in the certificate for companies to show that they comply with the Essential Requirements.

rial manufacturers and packaging converters

packaging converters

CE broadly welcomed the findings of the draft final report. Nevertheless, it was concerned about a rage containers in the context of composite packaging.

co

equ ry organization fees for composites. E ise

Dec

9.6.2.2 German Refill All The German Rrgumentationa

h y stressed that deposit systems on non-refillable beverage containers were recognised as legal and

fied for environmental protection purposes accordjuto be demonstrated. They would like the study to mention criteria that make a deposit system legal fro an Internal Market perspective.

study should be limited to Internal Market issues. Environmental impact should not be addressed. TIt was questioned whether the impact of deposit systems on packaging recovery organisations and oth incidence of fraud were Internal Market issues.

GRA contested the conclusion that deposit systemTand a cause of potential confusion for consumers. It stated that these systems were a key and efficient me sure to protect refillables. It was indicated that the return rate of refillables had not fallen after the

oduction of the deposit on one-way packaging,inreusable packaging on an equal footing. Ts urdensome and chaotic. a

It also stated that the distinction in Germany of ecologically favourable packaging was based on

ntific data and was not as such rigid. s

2.3 Miljöpack MEssential Require

evelopment of a dSuch a “packaging passport”, with guarantees / certificates for packages that have been assessed and approved in accordance with the demands of a Member State, might be of more general interest.

.6.3 Packaging mate9

hree organisations representing packaging material manufacturers and Tsubmitted comments. 9.6.3.1 ACE Anumber of the references to beve It mmented that differences in the treatment of beverage cartons depended on local conditions and sorting requirements and not on legal definitions. It also mentioned that differences in recycling

irements determined the costs of compliance and hence recoverAC opposed the suggestion of maintaining a separate category for beverage cartons as a compromwhile attributing other composites to the predominant material, referring to the recent Commission

ision on simplifying the database formats.

274

PEAL stressed that measures invoked under Article 5 are inefficient in protecting reuse and that the

man was incomplete. The report should also igh es. A table

Ger o

A Eproreus

o

not on

.6.

ing fillable bottles. It argued that the report draws few, if any,

avo e backbone of armonisation. The validity of the use of LCAs to justify trade barriers was questioned.

following views.

Amending Article 5 and introducing an approach to outlaw hardcore restrictions to competition (negative harmonization). In a second step one might carefully examine which positive, if any

nt measures are possibly fitted.

the sion has not fully used its powers in this area. A way forward is suggested to use the

Article 15 of the Packaging Directive to prohibit ecotax systems which do not focus on the

e tax

Common ground-rules concerning set up and functioning of compulsory deposit systems merit

9.6.3.2 APEAL

Areport should assess this issue better. It also indicated that the assessment of the impact linked to

datory deposit systems on one-way beverage containers light the huge cost of such deposits compared to that of Green Dot collection schemh

showing these differences should be included in the report.309 It should also be stressed that in many domestic production is mainly in refillable packaging whereas imported products are mainly ne-way packaging. in

P AL also indicated the need under Article 28 EC to test any measure if it was justified,

portionate and necessary in order to be acceptable, and to point out that the ECJ did not refer to e protection as such in its ruling in Case C-309/02.

Finally, APEAL said that it supported most of the conditions for deposit systems suggested in therep rt, but were of the opinion that the primary conclusion is that deposits for one-way packaging is

the way forward. The report should include additional considerations and conditions in this text. c

3.3 BCME 9 The BCME submission focused on policy evaluation concerning measures discriminating between

le-use beverage containers and resfundamental conclusions from the ECJ judgment of 14 December 2004 in the German refill quota/deposit cases and hardly made any innovative recommendations. The picture on some of the ey issues in the German case was incomplete. k

BCME also disagreed with the report’s conclusion that discrimination between environmentally

urable and unfavourable packaging was outside its scope, since this undermined thfh It suggested strengthening the report by incorporating some of the • On proportionality it should be noted that the Directive does not establish a hierarchy between

reuse and recovery. Reuse is therefore not per se superior to recovery. Measures to promote reuse cannot be implemented without a firm burden of proof on Member States.

•

reuse encourageme • The report draws no apparent conclusions concerning packaging tax discriminations. Also

Commis

achievement of the objectives of the Directive. Also more emphasis should be put on measures that have been adjusted so that the bulk of the domestic production comes within a favourablcategory whereas almost all imported products come within a more heavily taxed category.

•careful attention and specific discussions in the report.

309 That was always the intention – see Table 34.

275

he Brewers of Europe highlighted their opinion that they do not support the conclusion that euro-

le b tt

ar ool systems have been tailored accordingly.

.6.

• ly.

RO Europe

PRO The statement regarding the approach of the Commission and some national competition

n most countries the collection infrastructure is in the hands of the local authorities.

se systems, but also Green Dot schemes are an instrument to internalise costs.

The information on FOST Plus about the exemptions for small operators should be modified.

• osts of collection, recycling and recovery and are not intended to encourage prevention. This may, however, be a positive “side-effect” of the

• plans which

represent less than 20% of the packaging in Belgium.

9.6.4 Packer/fillers 9.6.4.1 The Brewers of Europe

Tbottles could be a realistic alternative for the current packaging mix for beer. More and more refillabo les are either brewery or brand related, and packaging has become a competitive element between

ket operators. The refillable bottles and pm

4.2 UNESDA CISDA 9 UNESDA/CISDA submitted the following remarks: • The handling fees paid to Danish retailers are a compensation for the additional work involved in

sorting bottles. The conclusion in the report that it works as an economic instrument to promote the use of refillables was too strong and should be rewritten.

• UNESDA/CISDA suggested identifying possible settings for harmonisation of packaging taxes,

since this is a problematic issue which the Commission has difficulty handling.

The conclusion that litter should not be included in the Directive should be stressed more strong • A revision of Article 5 of the Directive to prohibit any type of reuse encouragement methods that

have led to or would lead to Internal Market disruptions is supported. The legal argumentation onthe topic provided by BCME should be included in the report.

9.6.5 Packaging waste compliance organisations P

Europe submitted the following views.

•authorities regarding the shared use of the dominant recovery organisation’s collection infrastructure by competitors ignores the fact that i

• Not only reu • The impacts of the ecotax in Belgium on cross-border shipping are significant.

•

The fees of the Green Dot are intended to cover the c

fees.

The reuse figures quoted for Belgium are obtained from the individual prevention

276 .6.6 Retailers

Ass

Den e deposit schemes. Beverage containers sold to Scandinavian customers ncluding private persons) benefit from an exemption from the deposit fee, because German law and

as to be filled es not contain a statement preventing the customers from returning empty beverage containers to the

he y in the Dansk Retursystem but were not allowed to

H with

9

ociation of Border Shops in Schleswig-Holstein The Association provided additional information about the arrangements between Germany and

mark regarding th(iEuropean law prohibit application of the fee to exports. The export declaration that h

odborder shops.

border shops offered to participate voluntarilTdo so. Danish customers that return their German containers in Denmark do not get a refund.

o ever, this practice does not result in a significant environmental or economic disadvantage for er country. e

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