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1.7 C Vanderstricht, a practitioner's view

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1.7 C Vanderstricht, a practitioner's view

  1. 1. 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.
  2. 2. Page 2 Agenda 1. Introduction 2. Misconceptions 3. Differences 4. Similarities 5. Conclusions Presentation title
  3. 3. Page 3 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)
  4. 4. Page 4 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 management technologies 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
  5. 5. Page 5 1. Introduction: Drivers for a government to implement EPR regulations Extended Producer Responsibility
  6. 6. Page 6 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. Presentation title
  7. 7. Page 7 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 market Buyer Market versus Seller Market High supplier power High buyer power
  8. 8. Page 8 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
  9. 9. Page 9 3. Differences for EPR: Why countries are different Presentation title Prioritised Product Strength of government (enforcement) Regulatory and constitutional context Financing capability Culture Social economic environment Available collection and transportation Infrastructure the “product” market
  10. 10. Page 10 10 Central collection site Low-density collection points High-density collection points (close-to-home drop-off) Street-side Containers 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.
  11. 11. Page 11 4. Similarities for EPR: Why “countries” do have similarities Presentation title 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.
  12. 12. Page 12 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) Presentation title
  13. 13. Page 13 More information Christoph Vanderstricht, Christoph.vanderstricht@be.ey.com Tel: +56985508312 (Chile) Tel: +32477619252 (Belgium)
  14. 14. Thank you
  15. 15. Page 15 Additional slides (use during the workshops?) Presentation title
  16. 16. Page 16 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)
  17. 17. Page 17 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
  18. 18. Page 18 Producers Distributors Waste collectors and transporters EPR scheme End-users Waste recyclers Government (central and local) No cost No hassle Price Communication Easy collection No cost for disposal Compliance (no fines / penalties) Control / Sustainable solution Cost efficiency Municipal collection points Commercial collection points Professional collection points Increase profit Competitive market Solid growth of the market Long term contracts Compliance No additional cost Additional financing - Minimize or externalise internal cost - Employment - Revenue Introduction to the world of EPR - stakeholders - Informal collection
  19. 19. Page 19 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 -
  20. 20. Page 20 Producers Distributors Waste collectors and transporters Financing scheme End-users Waste recyclers Government Participation agreement Municipal collection points Commercial collection points Professional collection points Public markets Service level agreement Joint awareness campaign Joint Awareness campaign Accreditation Service level agreement Cooperation agreement Service level agreement Joint awareness campaign Introduction to the world of EPR - legal & regulatory -
  21. 21. Page 21 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
  22. 22. Page 22 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
  23. 23. Page 23 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
  24. 24. Page 24 Introduction to the world of EPR - finance & control - Producers Distributors Waste collectors and transporters Financing scheme End-users Waste recyclers Government Price + contribution Price + contribution Contribution Municipal collection points Commercial collection points Professional collection points Service fees
  25. 25. Page 25 Introduction to the world of EPR - operations & infrastructure - Producers Distributors Waste collectors and transporters Financing scheme End-users Waste recyclers Government Municipal collection points Commercial collection points Professional collection points •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)
  26. 26. Page 26 Introduction to the world of EPR - information flows - Producers Distributors Waste collectors and transporters Financing scheme End-users Waste recyclers Government Public awareness Practical guidance on disposal of the waste FAQ Put on the market (PoM) data Municipal collection points Commercial collection points Professional collection points SLA reporting Collection "certificates" (weight / units) SLA reporting Recycling "certificates" (weight / units) Product labelling / marking Product information on safe Disposal manuals Financial auditor verification report on PoM Financial auditor Audit report on collection and recycling Periodic reporting Position papers

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