Changes to WEEE regulations could save businesses £50m

Dr Kirstie McIntyre
Head of Environmental Compliance at Hewlett Packard EMEA
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Post date: Thursday, 16th February 2012

The revised Waste Electrical and Electronic Equipment (WEEE) Directive will see the introduction of new ambitious collection targets. Current estimates indicate that double the amount of WEEE currently reported as collected will be needed to meet these new targets.

However, research suggests that much of this additional WEEE is already being collected, but because the UK system only measures the WEEE collected by producer schemes, it is just not being reported.

This is typified by IT and telecoms equipment. In 2010, the UK reported that a total of 206,000 tonnes of this category was placed onto the market, but only 35,000 tonnes was reported as collected.

This is because the value of WEEE means that a large percentage of WEEE is collected and recycled by commercial collectors. Studies in the UK, the Netherlands, Germany and Poland have confirmed that 80% of WEEE is already collected and recycled, but on average only 30% is given to producer schemes, because instead it is diverted by commercial collectors to be recycled for profit. Therefore in order to meet the new Directive’s targets, policy makers must ensure that all of these ‘WEEE flows’ are measured.

Changes to the UK WEEE Regulations could also save business money. A recent report has indicated that there is the potential to save UK businesses around £50m if the UK WEEE regulations were improved to ensure the actual costs of recycling were charged to producers. Producers are paying over £50m more to meet the UK WEEE Regulations than the actual costs of recycling this material. Recent increases in commodity prices have sent the value of WEEE soaring to the extent that overall, there is now a net value in WEEE, even taking collection costs into consideration. And yet in 2010, it is estimated that producers were charged up to £50m for the evidence needed to demonstrate compliance, an annual figure that appears to have changed little since the WEEE Regulations began in 2007.

Under the current UK regulations producers are not charged the actual costs of recycling. Instead prices are agreed between producer’s compliance schemes and waste management companies acting on behalf of municipalities. This hidden and complex price setting means that whilst the actual costs of recycling have fallen, the costs charged to producers have remained the same. Changes to the UK regulations could save businesses £50m.

In 2007 this complex system led to a near meltdown. The over-collection by some compliance schemes and under-collection by others led to WEEE recycling costs increasing by 54%.

The report reveals that although the crisis passed, excessive profits continue to be charged for WEEE evidence. A survey of producers indicated that there has been little change in evidence prices they pay since the Regulations began (see Figure 1). The main reason for this is that the market has settled into a convenient operating position at the expense of producers and consumers. The report analysed the value of WEEE to the recyclers and reuse sectors and concluded that there should actually have been a net value for household WEEE in 2010. With evidence charges to producers at an estimated £40-50m in 2010, the report concludes that there is an underlying level of complacency and lack of transparency in the market that is allowing producers to be exploited.

Fig.1 – Value extracted by WEEE management chain in relation to estimated costs

So what is the solution? In Germany producers have seen their WEEE costs fall to zero under their ‘allocation’ system. The allocation system fairly allocates WEEE collected to producers’ compliance schemes, in contrast to the UK where compliance schemes have to bid for contracts from local authorities and top up their obligations by paying for evidence. The UK WEEE Regulations will be reviewed next year, following changes to the European WEEE Directive, and so this provides a great opportunity to save UK businesses £50m.

The report also identified that lack of transparency is one of the main problems in the UK. There are no market indicators to show actual costs of collection treatment and recycling; there is no information published showing the obligations of the schemes or the amount of WEEE they are collecting; there is no reporting required on the amount of revenue raised for WEEE evidence and how it is used.

And for the future? The current recast discussions indicate that the UK could need to demonstrate collection levels double what is currently reported. If the system allows producers to be charged for evidence of what is largely already happening, then industry could be footing an annual bill in excess of £100m for something that is actually generating revenue.

The WEEE Directive was created as part of the concept of producer responsibility. However producer responsibility was based on waste being a cost. In this new era when waste has a value, policy should instead focus on ensuring all waste is properly treated and reported, that producers pay for waste where there is a cost, and that effective measures are put in place to prevent waste from escaping to illegal export.

Energy and Environment