Examination of Witnesses (Questions 320-339)
Dr Kirstie McIntyre, Mr Andrew Clack, Professor Ab
Stevels and Mr Peter Evans
29 JANUARY 2008
Q320 Lord Bhattacharyya: But you
could. You mentioned earlier on the reason why it is expensive,
because of tooling, but you could use soft tools. If you say it
is low volumes you could use soft tools.
Mr Evans: Sorry, no, we are talking about high
volumes.
Q321 Lord Bhattacharyya: No, no.
You said that the reason why we cannot use recycling in this country
is because we do not have enough volume.
Mr Evans: Yes.
Q322 Lord Bhattacharyya: And that
is because you wanted tooling that you cannot amortise. In very
low volumes you can have soft tools.
Mr Evans: But we are not talking about low volumes;
we are talking about high volumes. The number of TV sets we produce
in our plants is well over a million a year, of which probably
there are about 10 variations, so we are talking about, at a minimum,
toolings that need to last for something in the region of half
a million presses.
Q323 Lord Bhattacharyya: You do not
understand what I am trying to say. What I am saying is that if
you have low volumes of plastic to be recycled then you could
have other techniques of using those low volumes for manufacture.
Mr Evans: Not to give us the surface finish
that the customer requires to be able to accept the product. We
have tried and failed.
Q324 Lord Bhattacharyya: We do it
in cars, we do it in aerospace.
Mr Evans: The only way we could have done it,
and we did try it, was to paint everything with a significant
amount of paint, whereas we are now using self-finishing.
Q325 Lord Bhattacharyya: In-mould
painting is very common but what I am trying to say is that there
are technologies available for that to happen.
Professor Stevels: Maybe I could say a little
bit about performance and best practice among the different Member
States. In this United Nations University report on the WEEE directive
I have already mentioned that there are a lot of data for each
individual Member State in a lot of categories, whether it is
collection, recycle rates, the capabilities and capacities of
the recycling industry, reuse of materials, everything. It is
a 350-page document with an annex of another 350 pages, and for
each item you can find in that report exactly where the UK is
positioned. As far as collection is concerned, there is also one
important point and that is the role of consumers. On Saturday
morning I am in a volunteer group cleaning up the park in the
town—I live nearby. It is incredible what you find there,
and aluminium cans form a major part of that. That is, as I say,
one of the issues. Consumers like the environment but they go
for convenience. Also, a lot of the smaller electronic items are
simply thrown into household waste and that is not the idea of
WEEE but it is the reality of life.
Q326 Lord Howie of Troon: We have
mentioned WEEE quite often this morning and it is clearly very
important to your companies. We are told that the transposition
of the directive into British law is incomplete, and I think that
is true of several other countries. We are also told that it is
virtually impossible to implement individual producer responsibility
even though it has sometimes been in statutes. Can you tell me
something about these problems?
Dr McIntyre: It is true. BERR is absolutely
right. We have had an incomplete transposition for the UK and
it is true for other countries as well. It is also right that
there have been no practical implementations of individual producer
responsibility across Europe, but we have seen them in other countries.
We have been talking about Japan. There they have implemented
individual producer responsibility and that is where each manufacturer,
rather than recycling this mixed bag of electronic products, only
recycles its own brand of products, and there you get the pull
through. We were talking before about why are we not getting enough
materials. There are plenty of materials being collected by local
authorities but they are mixed and the economics of unmixing them
renders them economically impossible to do anything with later
on. We certainly believe at Hewlett Packard that individual producer
responsibility is one of the answers to unmixing this bag of mixed
materials that we get and enabling us to create closed loop solutions
which feed the materials that we use originally in our products
into making new products at end of life. I referred to the research
that we will send to you in March. This group is looking at those
best practices from across the world and trying to generate a
European practical implementation, but I have to admit we are
not there yet and I do not have the answer. I cannot even begin
to lay out what it would look like. It is complicated and it requires
a lot of elements to be put into place. We certainly believe,
and other manufacturers and the NGOs, such as Greenpeace and those
sorts of people agree with us, that this is the way forward, but
it may not, as my colleagues have said, cover the complete range
of electronics. We may have to be selective about which particular
product types we are looking at to implement these systems. They
do not fit for everything. Also, we are not saying that these
things have to be mandatory for every manufacturer. They do not
necessarily fit every manufacturer, but for those manufacturers
who do want to implement these systems we believe that the law
should allow us to jump in there and get on and develop our systems,
which currently UK law does not enable us to do.
Q327 Lord Bhattacharyya: You are
always going to the law. As the Chairman said, you should as a
producer give incentives to the customer in the end to allow that,
and unless you do that you will never get it. You will always
resort to the law.
Dr McIntyre: We did that with cartridges and
I am afraid the Chairman did not like the example I gave of cartridges.
Cartridges is an entirely voluntary programme that we did.
Q328 Lord Bhattacharyya: No, there
was no financial incentive. The incentive was there to put it
in a box; that was it. You should give them financial incentives.
It is done in other areas. In aerospace, in defence and many other
areas there are incentives for that to happen. The fact is you
want to have your cake and eat it as well.
Dr McIntyre: If you think about a deposit system,
like you used to be able to do with lemonade bottles, where you
went back and you got your 10p back on your lemonade bottle, we
are not able to do that with cartridges in Europe because it is
considered that you are forcing the customer to buy your cartridges
back again and so what you are doing is creating a bundling effect
which then becomes anti-competitive, and so we step into other
laws, which is the difficulty in that situation, but I agree with
you: there are ways that we could make it easier but we then step
into other problems around that.
Q329 Lord Lewis of Newnham: In your
paper you refer to the fact that there are four Member States—Austria,
Germany, Hungary and Poland, which have partially transposed this
requirement. What have they done?
Dr McIntyre: They have put it in law but there
is no practical solution to it. It is by law possible to do it
but we cannot practically do it because the system is not set
up. It is a bit early to be looking at WEEE and saying where are
the eco-design principles from WEEE because of this individual
producer responsibility? In the UK we did not implement until
July last year and it is a little bit early to be trying to draw
conclusions, but what we would like and a lot of manufacturers
would like is for the door to be open and for us to generate that
practical solution that we can implement on a countrywide and
regional basis.
Mr Clack: I just want to make a comment about
Japan. Japan is clearly a very different market in terms of electronic
take-back from Europe. It is one homogeneous market for a start,
and clearly Europe is not; there are 27 different interpretations
of the WEEE directive in Europe. Also, as we discussed earlier,
there are only four product categories covered by take back arrangements
in Japan. That makes it far simpler, and equally a lot of the
material in Japan comes back through the retail network and manufacturers
have a much stronger tie to the retailers in Japan than they do
in Europe. I think I am right in saying that something like 80
per cent of the material that comes back at end of life comes
back through retailers in Japan and maybe 20 per cent through
municipalities. I think it is totally the reverse in Europe.
Q330 Lord Howie of Troon: Would you
like to see IPR implemented in this country? Would that be a good
thing?
Mr Clack: I think ultimately producers would
like to be responsible for their own waste and not for somebody
else's. I am more than happy for Panasonic to look after its own.
Clearly there are issues over orphan waste which has no real ownership,
but it does need to be, as Kirstie alluded to, by sector or product
grouping rather than universal. Panasonic certainly has some IPR
arrangements for computers in the UK anyway, so for some products
it works but for others we cannot see a practical way of making
it work.
Q331 Lord Howie of Troon: If it were
implemented in this country would it have any impact on your global
activities which are quite substantial?
Dr McIntyre: Yes, because Europe is such an
important market for us and the UK is one of the biggest markets
we have in Europe. If we had IPR in the UK we would then be looking
to push it into other European countries. That would then create
a whole market for us and it would drive the rest of our global
operations.
Q332 Lord Howie of Troon: Then why
is the Government so slow?
Dr McIntyre: It went into the "too difficult"
box, I think, and I think that is true not just of the UK but
also of many other national governments. WEEE is a complicated
law. There are many different stakeholders in WEEE and the IPR
was the straw that broke the camel's back in a lot of cases and
they put it to one side, but what we are asking for is that it
comes back onto the table and gives manufacturers the option of
going down that route should they choose to.
Lord Howie of Troon: You would like to see the
smack of firm government, as we used to call it.
Q333 Chairman: In the United States,
where your headquarters are based, you have varying rules and
regulations and legislation in different states.
Dr McIntyre: Yes.
Q334 Chairman: If California were
to do this—or does it do it, because it has an awful lot
of recycling and other regulations?—it would not be dissimilar
to the impact of the United Kingdom doing it.
Dr McIntyre: It would, yes, because, of course,
California is one of the bigger markets in the US. In fact, there
are two states I currently know of which have implemented an IPR-style
system with their WEEE-type legislation coming along, and those
are Maine and Washington, but they are very small states. They
are the progressive New England states. California does have an
electronics recycling law but they have looked at it very much
from a collective responsibility perspective rather than individual
perspective and they have gone for very specific product types.
They have followed a Japanese style and looked at PCs and televisions
and a couple of other things which I cannot remember off the top
of my head.
Q335 Lord Lewis of Newnham: Surely
your point is essentially the point that Lord Crickhowell was
making, and I think also Mr Clack. At the moment we have local
authorities, each of them being virtually individual, each of
them having their own particular prejudice as to how they are
going to collect, whereas in Japan, from what you are saying,
it is done in a totally different way with a more centralised
approach. 80 per cent, I think you said, was done on a centralised
basis and only 20 per cent on a local basis. I think our real
problem is in the way we are collecting our waste, and as far
as plastic is concerned it is just impossible when you have mixed
it all together with the eight or nine different varieties of
plastic which makes it virtually impossible to do a simple recycling
without doing a separation, and that is horrendously expensive,
I think was the point Mr Evans was making.
Professor Stevels: I disagree that Japan is
a good example of successful IPR. One of the reasons is that it
is costing the consumer there, for instance, 3,000 yen for a TV
to be recycled, which is more than twice as much as it is here
in Europe, so even if you score a better environmental gain in
that country the environmental gain over cost ratio in Japan is
disappointingly low. Secondly, and this is for you, Lord Bhattacharyya,
the difference between the car and aeroplane industries and the
electronics industry is that cars and aeroplanes have a net material
value at the end of their life. For electronics products, including
the logistic and treatment costs, 90 per cent have a so-called
structural cost deficit which you cannot remediate by good eco-design.
For computers you are close to zero. For TVs and audio equipment
you are far away. This is one of the reasons why you are hearing
from HP a different story than from the Philips of this world,
because Philips is in that respect in one cost corner and HP is
in another. The cost deficit is huge and comparable to the margins
which you have on this product. For all the parties in the chain
the big problem is who is going to pay for that deficit, and that
is, frankly, to a large extent, preventing the smooth functioning
of these systems. Everybody agrees on the goal: maximum environmental
gain at the lowest cost, but there the agreement stops because
the next question is who is footing the bill, because the structural
deficit is there for 90 per cent of the products whether you like
it or not and whether you love the environment, yes or no.
Q336 Lord Bhattacharyya: And therefore
you will never do any recycling at all because that is a huge
deficit for you?
Professor Stevels: Talking about voluntary recycling,
yes.
Q337 Lord Bhattacharyya: BERR is
trying to review IPR with the EU Commission this year. You have
spoken a lot about IPR. What would you like the Government to
do and what input are you going to give to the Government while
they are doing this? Since you say the United Kingdom is the most
important aspect of the EU, if we can come up with proper IPR
then the others will follow.
Professor Stevels: What I would like to do for
any government is that you create laws allowing systems to be
set up which have maximum environmental gain at minimum cost.
That is for me the guiding principle.
Q338 Lord Bhattacharyya: It is a
sort of menopause of legislative injunction.
Professor Stevels: There are also tangible measures
to be taken. These are in the recommendation report which the
European Commission is currently studying. The next step is, do
you personally believe that IPR will help to realise this goal?
My answer is for 90 per cent of the products no, and particularly
for those products which are glass dominated and plastic dominated,
which are generally speaking consumer electronics for telecom
and IT equipment, this is a different story.
Q339 Lord Bhattacharyya: So therefore
you think that they will come up with all voluntary ideas and
you people will use your corporate social responsibility in delivering
that? What is the penalty?
Professor Stevels: It is clearly seen by companies
like Philips, like Sony, like Panasonic, that there is a broad
societal agreement that products should be taken back and recycled,
so there is no discussion about that. There is one important problem
and that is that on a company basis you are talking about £100
million per year for Philips alone. On a European basis you are
talking about £2 billion as a financial problem. This has
to be solved in, let me say, in a balanced way. Saying, as was
the old idea in 1995, "Oh, just do a little bit of eco-design
and then everything will be okay", is simply out of reality.
We have to get rid of that idea and be more creative about how
we can solve this problem in a balanced way.
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