Examination of Witnesses (Questions 720-738)
Mr Steve Franklin, Mr Jerry Hardcastle and Mr Peter
Stokes
1 APRIL 2008
Q720 Baroness Platt of Writtle: How
could the Government and industry work together to support research
into novel processes which increase the value of shredder residue
and to establish markets for the residues which you have mentioned
which are currently sent to landfill?
Mr Stokes: That is an interesting question.
We have done the work with the VW-Sicon process and that is one
of a number of processes, some thermal, which are in operation
today. One of your colleagues mentioned that it is not actually
us that does the recycling, it is the recycling industry that
does that and in its early years CARE formed the kind of environment
that allowed co-operation between all of those parties when we
really did not know anything about going beyond extracting metals
and how to do that. We did a lot of work—we were involved
with the PRoVE project, we had a number of research projects that
we paid for that enhanced the knowledge that was available. Now
we have moved into a more commercial phase the recyclers are,
if you like, doing their own thing now, doing their own research,
because they see a commercial advantage in being able to extract
more material from a vehicle hulk. Whilst it sounds like a bit
of a cop-out so there is less for us to do, the industry does
not actually want us to become too involved in it now because
it is their job, it is their business, and it is where they will
get commercial advantage over their own competitors.
Q721 Lord Haskel: I wonder if we
could get on to the technology for a moment; could you tell us
where vehicle manufacturers go for advice on novel materials or
waste reduction initiatives and good practice generally?
Mr Hardcastle: One of our first points of call
is sitting next to me, we would turn to the SMMT; we can get good
advice from Steve and his colleagues. We would also approach bodies
like the British Plastics Federation who have their own interest;
clearly, materials suppliers or the recycling companies like Luxus
Plastic or Linpac for aluminium, Corus for steel, we would take
advice from all of those. We also talk to universities in the
UK—for example, Warwick University has a bi-annual conference
that we attend and Oxford Brookes had an initiative called Drivenet
which was looking at energy efficient material usage, so we use
that kind of information. Then for more novel materials like carbon
fibre or something like that we are turning towards the aerospace
industries and asking them. They have been using these materials
for longer than us so we are turning to them and asking if we
were to use these materials what do we do? For example, Renault,
our partners, have some conversation ongoing with the likes of
Airbus, for example, that kind of information exchange is very
useful for us.
Q722 Lord Howie of Troon: There are
a number of legislative burdens, as I suppose we might call them,
on vehicles including things like crash protection, material recovery,
carbon dioxide targets or weight reduction. As you said earlier
on, sometimes these conflict with each other. Could you give us
some examples where these conflicting priorities might have caused
difficulties in design?
Mr Hardcastle: You mentioned crash protection,
and that is one of them. The reason is that crash protection requires
additional strength which not always but invariably increases
the material usage and then the weight of the vehicle, so (1)
we have used more material so there is more to dispose of, (2)
the heavier the vehicle the greater the conflict with the CO2
emissions. Also with crash protection we have now introduced lots
of airbags and the more airbags we bring in then the more explosive
devices there are; they need to be managed correctly before the
car goes into the shredder so they need to be deployed to remove
that hazard. We want to improve the CO2 reduction which means
we should drive down the weight of the vehicles, and one of the
ways to do that would be to use some engineering plastics like
nylons or carbon fibre materials, but actually those two materials
are much more difficult to recycle at the moment than steel or
polypropylene so we get some conflict there. Steve mentioned REACH
but that could cause us a problem in the future in that when we
are taking these recycled materials, by the nature of the recycling
process we are not 100 per cent guaranteed what is in those materials,
and when they are made from older materials—PVCs or older
plastics—and get into the recycling chain they could actually
bring lead into the recycled plastic. Clearly we cannot use it
then and in order to screen that out it would be very difficult
and require spectrometer analysis of every batch of material,
so it is starting to potentially conflict. The last example I
have got is the elimination of fluorocarbons or CFCs and HFCs;
we are now going for a CO2-based air conditioning system which
on the whole is good but the CO2 system is less efficient so our
air conditioning equipment potentially is bigger and heavier and,
again, that is against the idea to try and reduce the weight of
the vehicle. They are all engineering challenges that people like
myself like, they are the sorts of things that we enjoy from a
day-to-day point of view, so I do not want to say one or the other
is better but they are some examples of the challenges that we
face.
Q723 Lord Howie of Troon: I must
say that as a civil engineer I would like easy problems rather
than difficult problems. I described the legislation as burdensome,
fairly or unfairly, do you think that the existing legislation
could be improved to deal with these conflicts and make life easier
for you?
Mr Franklin: When some legislation comes out
you always think was that thought about in connection with this
other piece of legislation, and you very often come to the conclusion
that it probably was not. If you spoke to most people in the motor
industry now and asked them what is the main driver, it would
be CO2, there is nothing else, that has got to be it. If you then
introduce some safety requirement or some other requirement then
you have to balance that against this compulsion to meet very
demanding CO2 requirements.
Mr Stokes: We had one of our internal SMMT presentations
with a very nice chart which showed a steady progression in the
reduction of CO2 and then it showed the impact of different pieces
of legislation in actually degrading the improvement in CO2 that
had been made.
Q724 Lord Howie of Troon: Apart from
legislation in this area can you tell me if there are any incentives
which might lead to innovation and so on?
Mr Franklin: There are not so much incentives
but there are Government-funded schemes. The SMMT manages the
Foresight Vehicle Programme which has something like 100 or so
programmes running and looking at innovative thinking—it
is a combination of industry and academia—and there is Government-funding
for that programme, so it is a sort of incentive but I am not
sure if that is what you had in mind.
Mr Hardcastle: From the innovation point of
view there are a number of incentives now where we can join together
with universities and government bodies to tackle the CO2 problem,
and if there were grants or other kinds of incentives for universities
and manufacturers to work at a very early stage of waste reduction
then with innovative materials I am sure—
Q725 Lord Howie of Troon: When you
say Government grants, do you give grants to people?
Mr Hardcastle: Yes, usually when we take a Government
grant we are obliged to give some of our money at the same time.
To be honest, the money in itself is interesting but usually the
process of trying to get the money brings the right people together
and it is a good way of bringing the universities and the manufacturers
and the government bodies into one room to actually talk about
the problem, to start tackling the problem. The grant itself will
not be enough for Nissan to do the job for everyone but by that
innovative process we will be looking for the commercial benefit
and once the commercial benefit is identified we are off and running,
but it is that incentive to get the right bodies into the right
room to start talking about the problem that is important.
Q726 Lord Haskel: The SMMT has said
that the proposed new Waste Framework Directive would change the
definition of recycling which "could affect the viability"
of some technologies to meet recovery targets. How would you like
the definition of recycling to change? In your evidence you also
said that the "SMMT consider that the reclassification of
waste as a secondary raw material once it reaches a standardised
specification is correct."
Mr Franklin: Thanks for that question, I am
glad you have brought it up, because it has been debated and the
second reading is in the EP this week. There are something like
200 different amendments, but this one is pretty critical for
us. The Waste Framework Directive sits on top of the ELV Directive,
the WEEE Directive, the Packaging Framework Directive et cetera,
under which there are various definitions of recycling. The definition
that we like is the Commission's proposal, which is recycling
means the recovery of wastes into products or substances, whether
for the original or other purpose, it does not include energy
recovery. That definition allows things like the VW Sicon process
to function; the tighter and much narrower definition does not.
Sorry, what was the second part?
Q727 Lord Haskel: You did say that
the "reclassification of waste as a secondary raw material
once it reaches a standardised specification is correct."
Would you say that is a way of dealing with this?
Mr Franklin: It is all about the end of waste.
When you have done something to a product and you have a bag of
something, you say this is a product, but no one wants to buy
it. You have transformed it into a product and that is the end
of waste as far as you are concerned, even though there is not
a market, that is the unfortunate thing. We would say this is
a product, we can use it, so it is really about the definition
of the end of waste.
Q728 Lord Haskel: It does again come
down to some sort of commercial investment.
Mr Franklin: To stimulate the market.
Q729 Lord Haskel: Yes.
Mr Hardcastle: As Peter pointed out you have
got to consider this car in the Shetlands; what are we going to
do with a car in the Shetlands, because if we have to transport
it to the mainland or all the way to London to deal with the final
recovery of materials or the recycling of the materials I am sure
we will have used a lot more energy in doing that so we think
it is important to tackle recovery in whatever form we can, in
both a commercial form and an energy balance form.
Q730 Lord Haskel: You would like
to see energy included in the calculation.
Mr Hardcastle: There needs to be an option in
certain situations where it is just not feasible to bring the
vehicle to the facilities that are required to do these special
processes.
Q731 Lord Methuen: We have talked
to some extent about the End-of-Life Vehicle Directive and I am
not sure how much more you can add to that, but how does enforcement
of this directive in the UK compare with that in other EU countries?
You have already said that a lot of the ELV vehicles go east to
Turkey or even further east; is there anything more you would
like to add about ELV and its relationship with the industry?
Mr Franklin: One of the interesting things about
the ELV legislation in Europe is that the piece of statutory legislation
it was brought in on was the environmental one which means that
Member States can actually alter the legislation slightly, so
you do get different systems in different countries, which is
a major disadvantage for motor manufacturers because they have
to do different things. By and large I would say that the UK is
probably one of the more successful implementations of the ELV
legislation, it has been well administered with just one hiccough,
and that is the DVLA CoD administration. If we could kill that
one off it would be very good.
Q732 Lord Methuen: Are companies
encouraged to exceed their ELV targets and are they punished if
the targets are not met?
Mr Franklin: We did not want to put ourselves
at risk by finding out if we would be punished but clearly the
enforcement programme was quite harsh and we have only just submitted
and had our evidence approved for 2006 where we did meet the target,
but BERR were very methodical and demanded to see the evidence
of actually meeting that target.
Q733 Lord Methuen: What are the punishments
if you do not?
Mr Franklin: There is a range of fines and what
is not clear and probably would not be until you got to court
is whether the fine—let us say it is a £5,000 fine—is
that for every occurrence or what; you are not quite sure until
you actually get to court. Nobody wanted to be in that situation,
certainly not vehicle manufacturers, and we have met our targets.
Q734 Baroness Platt of Writtle: We
have heard that the Japanese government worked closely with industry
to develop their equivalent of the ELV Directive, the Automobile
Recycling Law. How did Nissan and other companies work with the
Japanese government in this process and how useful was it for
industry to be included in such an exercise?
Mr Hardcastle: I am possibly the best qualified
here. The specialists from each car manufacturer, the so-called
JAMA (Japan Automobile Manufacturers Association) joined together
with Japan Automobile Importers Association—which would
have included our Volkswagen friends—and they were invited
to work with the government and it was called the Automobile Recycling
Law, as you said. The Ministry of Economy, Trade and Industry
is responsible for enforcing the law and two key organisations
were established to manage it, one was the Japan Automobile Recycling
Centre, and that basically deals with information exchange and
fund management, and then the part that Nissan and the other manufacturers
joined in was the Japan Automobile Recycling Partnership. This
was a window organisation for all of the manufacturers, basically
to collect and recycle airbags, fluorocarbons and then the automotive
shredded residue that we were discussing earlier. What the legislation
entails is that the customer pays a fee when he or she buys the
car which is a payment towards the recycling of the vehicle; typically
it is about £50 to £90 for a medium-sized cars. That
money is then distributed to these organisations that I have described
to facilitate the removal of CFCs and airbags and also facilitate
the disposal of the shredded residue. The key thing is that the
shredded residue became the responsibility of the manufacturer—this
is particularly in Japan—and as there is not much landfill
available in Japan it became the responsibility of Nissan, Volkswagen,
Toyota, Honda et cetera to dispose of this residue or recover
it. In order to promote some kind of competition they established
two teams, one team which Nissan was in and actually Volkswagen
as an importer were in our team and Mitsubishi, and then another
team that Toyota and Honda were in. Those two teams are competing
with each other on how to tackle the shredded residue, and if
they can reduce the cost of the shredded residue or improve the
profit or the recycling, then they can reduce the sticker price
on the car, so they can say that this car is only £50 because
it is a better design for recycling, or this car is £90 because
it is not so good. Through that competition therefore the manufacturer
is required to do the recycling. There is one key point that does
not exist here though, and that is that Nissan and all of the
manufacturers are allowed to put this shredded residue into the
furnaces as a fuel, and that is counted as recovery, so we can
claim a recovery rate of 95 per cent but it is not necessarily
recycled. If we are talking about Nissan cars in Japan there is
almost no demand for recycled plastic, there is almost no recycled
plastic used on the cars manufactured and assembled in Japan,
so although there is a good system and we have taken part in it,
we have to be very careful that the overwhelming environment that
created it is somewhat different to the environment that we are
talking about now in the EU or the UK.
Baroness Platt of Writtle: Perhaps you might
like to write that down because it would be useful to us to know
the difference between the ELV Directive and what is happening
in Japan because obviously it has very interesting results as
far as we are concerned.
Q735 Earl of Selborne: The key to
that is to hear that the Japanese are allowed to take energy from
the waste. You say that one of the clubs is getting 95 per cent;
would the other group be getting 95 per cent as well if you measure
energy from waste?
Mr Hardcastle: Basically a 95 per cent recovery
rate is the target for everybody to achieve. Everybody is achieving
very similar levels but the competition is in the cost of dealing
with the shredded residue. For example, the total vehicle recovery
rate is 95 per cent and of the shredded residue about 63 to 75
per cent can be recovered. There are an awful lot of statistics
here so I think the best thing, as already suggested, is that
when we submit the description of how the system is working we
declare some figures for you. For example, we know that 3.5 million
vehicles went through the system in fiscal year 2006 and we collected
and destroyed 250,000 kilograms of CFCs and 520,000 kilograms
of HFCs. I have access to a lot of information, therefore, which
would be useful for you, and it would be even more useful if I
write it down.
Q736 Chairman: That would be very
helpful, Mr Hardcastle. We are not asking you to give total recall
this morning but it would be useful to have that. We are seeing
some people from Toyota and will be talking to them along similar
lines, but they are obviously the other team and it would be helpful
to get your reflections on it and what the figures tend to mean.
Mr Hardcastle: Just to be sure, on the front
end of the processes we are all the same, it is just at the point
after the vehicle is shredded, that is where we start to compete,
and we are all in the Japan Automobile Recycling Partnership so
we are in the same team and then competing.
Q737 Chairman: Just as a final point
this morning, one of the things that has become clear is that
there are 27 nations in the EU which by and large follow one set
of rules but there are a number of international players in a
sense so that outside of Europe you have Japan, you have Korea,
you have North America and we also heard about India and Brazil.
In some of these countries the same cars by and large are being
produced but in other countries they are not; how do you as car
manufacturers and the Society view the differing legislative pushes
and to what extent does the home country still have the last word.
At VW you cannot go anywhere without tripping over a Passat—in
Beijing, for example. How do you view that as manufacturers and
to whom are you answerable: the home company and the home country,
or to what extent do you have to meet the requirements of the
countries into which you are selling?
Mr Stokes: Basically there are three levels
to that. Obviously, to be able to sell into those markets you
have to comply with the regulations of that market or you are
just not able to compete in that space. For me there are another
two levels which are the production side requirements which dictate
how you build the vehicle and the sort of ethos that goes into
things at that stage, so are you allowed to include lead or not,
are you allowed to leave cadmium or not. In those sorts of areas
we would probably agree that if that is the standard across the
biggest number of countries possible, that is a good thing. As
Steve mentioned—and perhaps Jerry will enlarge on that—the
End-of-Life Vehicle Directive itself was introduced under an act
which allowed the Member State to shape the regulation to fit
its particular demographic and its particular country. My personal
view is that it was not necessarily easier for us to do that but
taking a pragmatic view of it, it probably was a useful thing
to do because the recycling infrastructure that we have got in
the UK, for example, is different to that of the Czech Republic
or Poland or other areas in Europe, so the regulations needed
to be tailored to work in a way which was right for those individual
markets but it did make things more complicated for us.
Mr Hardcastle: Basically we look at all of the
legislation, as I am sure Volkswagen do as well, and we try to
create a global framework by ourselves, so we try and harmonise
as much as possible because otherwise we just confuse all of our
engineers, manufacturing plants and everything, so we try and
create a global framework, but clearly that does not exist and
it does cause us problems. As Peter mentioned, the deletion of
lead, EU and Korea have different levels, different timeframes,
and it causes us some confusion as to what should we do, where
should we do it first. Also, within the EU, the introduction and
timing of the policy legislation can be different from the application
of it—paint emissions legislation for factories, for example.
We have a plant in Sunderland and a plant in Barcelona and although
the legislation is primarily the same, the application is somewhat
different so we adapt to that situation. We also find conflicts
between some legislation. For example, if we are disposing of
a car radio the way the car audio system is disposed of in the
shredder takes into account some legislation. We could remove
the audio system and dispose of it by the waste electronics method
and the treatment would be slightly different, so we have to take
into account all of that, but our request really is if we could
have international harmonisation, it just makes our job so much
easier.
Q738 Chairman: I am not going to
comment. Would you like to add anything, Mr Franklin, or not?
Mr Franklin: There are global technical regulations
and through the UN we meet to discuss in great detail items that
they are proposing on, say, brake legislation, steering legislation.
That exists, and then you suddenly get something coming in from
the EU which does not always help that situation, so harmonisation
has got to be the watchword.
Chairman: On that Utopian note we will finish for
the morning. Thank you very much for your advice and information;
we will be getting back to you because there are a number of points
you raise that are really very interesting and we would like some
help and assistance on them. If you feel on reflection that there
is anything you wished you had said then, please, do not hesitate
to get in touch. Thank you very much.
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