Extended Producer Responsibility an effective and efficient policy instrument in emerging countries? ISWA Conference Antwerp, 7-9 September 2015 Pieterjan Eeman Manager EY Cleantech and Sustainability The better the question. The better the answer. The better the world works.
Agenda 1. Our experience 2. Challenges in emerging economies and steps to take 3. How can EPR as policy instrument help? Drivers to implement EPR regulations Governance models Stakeholders How countries are different 4. Case studies Brazil, South Africa and United Arab Emirates 5. Conclusions Page 2
1. Our experience (See countries in yellow for geographical experience) Since 1994, EY has been involved in more than 40 countries in the design, development, implementation and optimisation of Extended Producer Responsibility (EPR) and other solid waste management regulations and operational solutions. This both for public and private sector and in different product categories: lighting products, electronic waste; batteries; household and industrial packaging; tires; solar panels; non-woven cotton; etc. Page 3
2. Challenges in emerging economies and steps to take Lack of awareness, ownership, responsibility: dumping by lack of formal control Central government risks to human health: legacy waste of unknown composition deposited in poorly controlled landfills Demographic and economic growth + consumption patterns: more waste generated Insufficient and inadequate waste management infrastructure Municipal authorities Producers Inadequate waste segregation: higher cost of treatment and disposal, greater damage to the environment, and loss of recycling opportunities Dissociated development projects without adequate master-planning Inefficiencies in legal and regulatory framework, overlapping responsibilities and lacking enforcement Ineffective financing strategy: direct and indirect government subsidies or levying taxes. Waste management technologies Product innovation Natural resources Extraction Manufacturing Recycling Remanufacturing Refurbishment Resale Reuse Repair Page 4
3. How can EPR as policy instrument help? Drivers to implement EPR regulations Several key economic (regulatory) instruments used in OECD and also non-oecd countries: Disposal Fees Landfill/recovery/incineration taxes Tradeable (landfill) permits Recycling credits or rebates Virgin material and ecotaxes Extended Producer Responsibility EPR puts responsibility with producer who puts the product on the market + aims to integrate environmental costs associated with goods throughout life cycle into the market price. Extended Producer Responsibility EPR is instrument which comes closest to implementing whole life cycle approach: Reducing resource scarcity Diminishing associated environmental impact and promoting product innovation Control by market and authorities Driving the cost down Effective EPR models create value and opportunities for social inclusion and jobs. Page 5
3. How can EPR as policy instrument help? Governance models The cooperation between the private and public sector is key to implement an effective and sustainable EPR model. There are different partnership models for public-private cooperation: Voluntary agreements established by industry Voluntary agreements as a partnership between industry and government (participation of individual firms not obligatory) Industry-government co-regulation (combination of industry self regulation and government regulation, with government having the authority to enforce) Regulation established and enforced by government Voluntary Mandatory Best guarantee to ensure enforcement and a level playing field in the market. Page 6
3. How can EPR as policy instrument help? Expectations of involved stakeholders Municipal collection points - Minimize or externalise costs - Employment - Revenue End-users Price Communication Easy collection No cost for disposal Professional collection points Commercial collection points Waste collectors and transporters Waste recyclers Distributors No cost No hassle Producers Informal collection Outsourced responsibility with aim: Compliance (no fines / penalties) Control / Sustainable solution Cost efficiency Access to raw materials Producer Responsibility Organisation Increase profit Competitive market Solid growth of the market Long term contracts Government (central and local) Compliance No additional cost Additional financing Page 7
3. How can EPR as policy instrument help? How countries are different Strength of government (enforcement) Prioritised Products Culture Regulatory and constitutional context Financing capability Social economic environment Available collection and transportation Infrastructure The product market Page 8
4. Case studies Brazil, South Africa and UAE Activities: Challenges: E-Waste and lighting products: lack of collection, responsibility, infrastructure, proper legal and regulatory framework, etc. Triggers: Different initiatives on federal, regional and municipality level not integrated. Tier-1 electronics producers preferred to engage in governmentindustry co-regulation to ensure enforcement and central set-up of a cost-efficient Producer Responsibility Organisation (PRO). EY engaged by tier-1 electronics producers to support in approaching authorities to ensure government-industry co-regulation, policy assessment, risk analysis, drafting business plan, implementation project management, etc. Key issues confronted with: Ambitious high level goal setting without taking into account all implementation constraints and sufficient control and enforcement. Import control system to be developed with authorities to ensure level playing field. Page 9
4. Case studies Brazil, South Africa and UAE Activities: Page 10 EY was engaged by Lighting Industry to develop Industry Waste Management Plan and assist in set-up and implementation of PRO. Key issues confronted with: Challenges: Increase the diversion of waste away from landfill towards reuse, recycling and recovery. Support growth (regional) secondary resources economy from waste. Triggers: Waste Act introduced the principle of EPR in South Africa for the waste management of certain waste types. Consumer Protection Act introduced obligatory take-back mechanism for end-of-life products Department of Environmental Affairs invited different industries each to develop an Industry Waste Management Plan. Responsibilities within Ministry shifted several times postponing publication of the regulatory back-up and approval of IWMP. Industry prefers principle of EPR fee paid to PRO by producers while authorities through National Pricing Strategy push for EPR tax: easier to control, but uncertainty on allocation of tax.
4. Case studies Brazil, South Africa and UAE Activities: Page 11 Challenges: 10,69 mio tonnes of waste/ year. Since inception UAE, solid waste management system and infrastructure have grown opportunistically in response to demand rather than in a systematic and integrated manner. Waste management system effective at collecting waste via single bins and transferring it to disposal sites, but significant gaps in processes and governance of most waste streams. EY was engaged in 2015 by the Emirate of Abu Dhabi to develop Waste Management Master Plan for the Emirate. Key issues confronted with: Integrated Strategy will require regulatory change to ensure private, public sector and citizens act appropriately. No financial incentive present to discourage waste generation as municipal waste collection and disposal is for free. Major public information and communication campaigns required to influence behaviour with new waste system with multiple bins (pre-sorting, proper bin disposal, etc.) and transfer stations to treatment and disposal locations. Little infrastructure developed in the city or country to deal with waste recycling and recovery materials due to single bin and landfilling.
5. Conclusions Several initiatives involving EPR and emerging countries, e.g. OECD,UNEP. EPR is promoted as policy instrument for several reasons: Economic instrument impacting the product market as well as the waste market; Responsibility with whom puts product on market + familiar instrument to multinationals; If well organized and enforced, proper control can be exercised by both market and authorities, financing structure is clear and externalised (avoiding subsidies, taxes, etc.); EPR can contribute considerably to a more resource efficient market and create opportunities for social inclusion, economic growth and jobs in emerging economies. However, EPR risks should not be underestimated: EPR requires proper consideration, careful implementation by governments and private sector and strong government enforcement and control. EPR is not only about the environment and therefore requires attention from different ministries (Finance / Trade / Customs / Economy) EPR should be implemented as part of an integrated strategic approach by governments. Page 12
More information on www.ey.com/be/wastemanagement Page 13 Christoph Vanderstricht Partner EY Belgium Cleantech and Sustainability Christoph.vanderstricht@be.ey.com Tel: +56985508312 (Chile) Tel: +32477619252 (Belgium) Pieterjan Eeman Manager EY Belgium Cleantech and Sustainability Pieterjan.eeman@be.ey.com Tel: +32477244812 Kurt Wellens Director EY Belgium Cleantech and Sustainability Kurt.wellens@be.ey.com Tel: +32473919398 Maarten Dubois Senior Manager EY Belgium Cleantech and Sustainability Maarten.dubois@be.ey.com Tel: +32475840098
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