1.7 C Vanderstricht, a practitioner's view

Global Forum on Environment: Promoting Sustainable Materials Management through Extended Producer Responsibility (EPR)

Tokyo, 17 – 19 June 2014

Christoph Vanderstricht

Global EPR leader

Partner EY

Presentation title

Key learnings of 20 years experience advising public and private sector in the design, implementation and optimisation of EPR regulations and models across the world.

Presentation title

Agenda

1. Introduction

2. Misconceptions

3. Differences

4. Similarities

5. Conclusions

1. Introduction: Our EPR experience

Since 1994, the current EY team has been involved in more than 40 countries in the design, development, implementation and optimisation of EPR and other solid waste management regulations and operational solutions for the public as private sector in a vast waiver of product categories: household and industrial packaging; batteries; electronic waste; tyres; non-woven cotton; solar panels, lamps, etc.

(See countries in yellow for geographical experience)

1. Introduction: The future of resource management

There is wide recognition that, at a global level, current waste growth and resource management practices are unsustainable. Key to develop a circular economy rather than a linear economy which involves simply digging materials out of the ground produce products, and send the waste to landfills.

Demographic growth

Consumption patterns

Urbanisation

Economic growth

Low waste management infrastructure

Public health

Energy demand

Public financing

Central government

Producers

Waste managementtechnologies

Product innovation

► Government must create the economic and legislative conditions for change

► Integrated waste management strategy and system design to reinforce the waste hierarchy

► Implementation of capacity building at municipal/city authority level

► EPR principles to place the cost burden on the producers and drive market development. Creating circular economies

► Increasing use of outsourcing, performance based contracting and PPP/BOT commercial structures to manage the municipal financial burden, drive change and manage technology risks

► Increasing use of multi-stream collection systems to manage public health risks and provide material to the treatment system

► Investment in engineered landfills, waste to energy/gasification and anaerobic digestion as well as intangible factors such as education and awareness

► Economies of scale, increasing capital intensity, technology focus drive joint ventures and M&A activity in the supply chain

How to react to the pressures of change

Municipal authorities

1. Introduction: Drivers for a government to implement EPR regulations

Extended Producer

Responsibility

Presentation title

2. Misconceptions about EPR

► EPR is an instrument to better organise waste management operations and induce product stewardship: collection points; transportation models and the use of valorisation technologies

► EPR only concerns the Ministry of Environment

► EPR laws can be easily copied from one country to the other

► Small and medium enterprises should not be bothered by EPR

► The phantom of the monopoly

► Inefficiencies and fraud with collective schemes show that the model is not working.

The most important component of the cost is the cost of collection of the waste, followed by the cost of recycling (depending on the product). In makets with high bying power the prices for are 3 times lower than in markets with low buying power (ie where more collective schemes are “competing”)

2. The phantom of the monopoly in a reversed marketBuyer Market versus Seller Market

High supplier power

High buyer power

The cooperation between the private and public sector is key to design and implement a sustainable EPR regulation.

There are different partnership models for public-private cooperation:

Experience shows that in most case close cooperation between government and

private sector is necessary to realise the objectives and avoid dramatic risks in the

market.

Industry-government

co-regulation (of industry self regulation

combination and government regulation, with government

having the authority to enforce)

8

Voluntary agreements

established by industry

Voluntary agreements as a

partnership between industry and government (participation of individual

firms not obligatory)

Regulation established and

enforced by government

Voluntary Mandatory

3. Differences: Governance models for EPR development

Presentation title

3. Differences for EPR: Why countries are different

Prioritised

Product

Strength of

government

(enforcement)

Regulatory and

constitutional

context

Culture

Available collectio

n and transport

ation Infrastru

cture

10

Central collection site

Low-density collection

points

High-density collection points (close-to-home

drop-off)

Street-sideContainers

Kerbside or Door-to-Door Collection

BRING SYSTEMS

DOOR-TO-DOOR

Transport by residents / corporations

Collection System Transport

Durable goods Fast moving consumer goods

3. Differences for EPR: Products are different

Collection models depend on the product, the economic activity and the demographic specifications.

Presentation title

4. Similarities for EPR: Why “countries” do have similarities

Improper EPR and solid waste management are a threat to public health and the environment

Effective EPR models create value and opportunities for social inclusion, jobs and better environment

Human action & Change of behaviour

Expectations of the key stakeholders

Strong enforcement and control from government is key

Seller markets lead to higher prices and buyer markets to lower prices

EPR is increasingly becoming the Wild West creating risks for countries and “producers”

The devil is in the detail

“Wrong” or “sub-optimal” EPR models lead to higher costs for society, governments and has strong negative impacts in terms of level playing field in the product markets.

Presentation title

5. Conclusions

► EPR is an economic instrument impacting the whole market: the product market as well as the waste market

► EPR is not only about the environment and therefore requires attention from different ministries (Finance / Trade / Customs / Economy)

► EPR risks should not be underestimated► EPR requires proper consideration and careful implementation by

governments and private sector► EPR requires strong government enforcement and control ► EPR can contribute considerably in the development of an inclusive and

greener sustainable market in big number of countries► EPR should be implemented as part of an integrated strategic approach

by governments, taking into account other challenges (eg energy

needs / resource management)

More information

Christoph Vanderstricht,

[email protected]: +56985508312 (Chile)

Tel: +32477619252 (Belgium)

mailto:[email protected]

Thank you

Presentation title

Additional slides (use during the workshops?)

Sustainable resource management

► Sustainable resource management is a strategic challenge today and tomorrow for all countries across the world.

► It is a key theme for industries and the public sector alike.

► There are several key economic (regulatory) instruments which are broadly used/in development in OECD (also in increasing number of non-OECD countries):► ADF (advance disposal fees)► Landfill/recovery/incineration — taxes tipping fees► Tradeable (landfill) permits► Recycling credits or rebates► Virgin material and ecotaxes ► Extended producer responsibility (EPR)

Sustainable resource management

► EPR is the instrument which comes closest to implementing the whole life cycle approach

► EPR helps in:► Reducing by the amount resources required► Diminishing the associated environmental impacts ► Improving resource scarcity and competiveness► Driving the cost down

Producers

Distributors

Waste collectors and transporters

EPR scheme

End-users

Waste recyclers

Government (central and local)

No costNo hassle

Price Communication Easy collectionNo cost for disposal

Compliance (no fines / penalties)Control / Sustainable solutionCost efficiency

Municipal collection points

Commercial collection points

Professional collection points

Increase profitCompetitive marketSolid growth of the marketLong term contracts

ComplianceNo additional costAdditional financing

- Minimize or externalise internal cost- Employment - Revenue

Introduction to the world of EPR- stakeholders -

Informal collection

EPR

Other Environmental

regulations

Commercial codes

Competition laws

Accounting rules

Administrative law

Contact law

Company law

Tax law

EPR regulation is not "stand-alone"

Introduction to the world of EPR- legal & regulatory -

Producers

Distributors


Financing scheme

End-users

Waste recyclers

Government

Participation agreement



Professional collection points Public markets

Service level agreementJoint awareness campaign

Joint Awareness campaign

Accreditation Service level agreement

Cooperation agreementService level agreementJoint awareness campaign

Introduction to the world of EPR- legal & regulatory -

Introduction to the world of EPR- finance & control -

► Depending on the legal, political, social, economic, demographic and geographic situation in a country, several models are conceivable to fulfil the financial side of the EPR obligations in that country.

► Three generic models can be considered: ► Public financing instruments (tax or similar contribution)► Market driven instruments :

► Deposit - refund schemes► Individual and/or collective financing schemes► Certificate exchange schemes

► Combination of public financing instruments and market tools

Introduction to the world of EPR- scenarios -

Legal and regulatory scenarios

Finance and control scenarios

Information flow and reporting scenarios

Operations and infrastructure

scenarios

Stakeholder commitment scenarios

Governance scenarios

The optimal scenario for a country


► Depending on the legal, political, social, economic, demographic and geographic situation in a country, several models are conceivable to fulfil the financial side of the EPR obligations in that country.

► Three generic models can be considered: ► Public financing instruments (tax or similar contribution)► Market driven instruments :

► Deposit - refund schemes► Individual and/or collective financing schemes► Certificate exchange schemes

► Combination of public financing instruments and market tools


Producers

Distributors


Financing scheme

End-users

Waste recyclers

Government

Price +contribution

Price +contribution

Contribution




Servicefees

Introduction to the world of EPR- operations & infrastructure -

Producers

Distributors


Financing scheme

End-users

Waste recyclers

Government




•Business plan •Geograhical coverage •Technology deployed•Containers

•Quality standards •EH&S standards •BAT •Target setting

•Transportation models•Quality standards •EH&S standards •BAT •Target setting •Compliance with regulations

•Containers•Quality standards •EH&S standards •Target setting •Compliance with regulations •Training and communication

Practical information FAQ

Disposal (sorting at the source)

Introduction to the world of EPR- information flows -

Producers

Distributors


Financing scheme

End-users

Waste recyclers

Government

Public awarenessPractical guidance on disposal of the wasteFAQ

Put on the market (PoM) data




SLA reporting Collection "certificates" (weight / units)

SLA reporting Recycling "certificates" (weight / units)

Product labelling / markingProduct information on safeDisposal manuals

Financial auditorverification report on PoM

Financial auditor

Audit report on collection and recycling

Periodic reporting Position papers

1.7 C Vanderstricht, a practitioner's view

Environment

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