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The Danish Voluntary Agreement on WEEE
February 2015
DIFFERENTIATED PAYMENT
NIRAS A/S
Sortemosevej 19
3450 Allerød
CVR-nr. 37295728
Affiliated to the Danish Associ-
ation of Consulting Engineers
www.niras.dk
T: +45 4810 4200
F: +45 4810 4300
E: niras@niras.dk
D: 40600496
M: 40600496
E: mask@niras.dk
PROJECT Differentiated payment
The Danish Voluntary Agreement on WEEE
Project no. 219042
Version 3
Document no.
1219382958382958
Version 2
The Danish Voluntary Agreement on WEEE is an agreement entered into in
2013 between the Minister for Environment, representatives from producers
and distributors of electronic and electrical equipment (DI, FEHA and BFE)
and three compliance schemes (Elretur, ERP and LWF). The agreement has
run from 2014-2016.
The agreement has been financed in 2014 and 2015 by the three compli-
ance schemes, Elretur, ERP and LWF. In 2016 the agreement was financed
by Elretur and LWF, as ERP decided not to contribute the last year.
Disclaimer
The Danish Voluntary Agreement on WEEE has initiated studies conducted by
external consultants financed by the Danish Voluntary Agreement on WEEE.
It should be noted that such publications do not necessarily reflect the position or
opinion of the Danish Voluntary Agreement on WEEE.
Contact
Chairman of the Danish Voluntary Agreement: Director, Environmental Policy
Karin Klitgaard from DI, kakl@di.dk
Preparation of this report
This report is prepared by: Camilla K. Damgaard (project manager), Maria
Skotte, Jesper Andersen Drescher and Karl Gustav Mattias Holten.
The preparation of the report has been followed by representatives from the
steering committee of the Danish Voluntary Agreement on WEEE.
CONTENTS
The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
1 Background ................................................................................................ 1
1.1 Review of present extent of differentiated payment ................................... 1
2 Price sensitivity analysis .......................................................................... 3
2.1 Price elasticity for different products ........................................................... 3
2.2 Case: Light bulbs ........................................................................................ 4
2.2.1 Assumptions ............................................................................... 5
2.2.2 Results ........................................................................................ 6
2.2.3 Conclusion .................................................................................. 7
3 Willingness-to-pay for eco-friendly design ............................................. 8
4 Foreign experience with differentiated payment .................................... 9
4.1 France ........................................................................................................ 9
4.1.1 General structure of scheme ...................................................... 9
4.1.2 Comparison with Danish system .............................................. 12
4.1.3 Practical experience ................................................................. 12
4.1.4 Future ........................................................................................ 13
4.2 Sweden ..................................................................................................... 13
4.2.1 General structure of scheme .................................................... 13
4.2.2 Comparison with Danish system .............................................. 14
4.2.3 Practical experience ................................................................. 15
5 Administrative complications associated with more
differentiation of environmental fee ................................................................. 15
5.1 Identification of differentiation criteria ....................................................... 16
5.2 Increased administrative burdens ............................................................. 16
6 Conclusion ............................................................................................... 17
7 References................................................................................................ 19
1 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
1 BACKGROUND
This report has been prepared as part of the area for effort of “Differentiated
payment” - an element of The Danish Voluntary Agreement on WEEE.
The purposes of this report are the following:
Clarification of the extent to which differentiated payment models can
drive the market for eco-design in a positive direction and give sufficient
incentives to promote the willingness to invest.
Assessment of administrative costs associated with a differentiated
payment system.
To meet the defined purposes this report describes two activities answering the
questions behind the above purposes:
A price sensitivity and willingness-to-pay analysis assessing what it
takes to shift consumers from different types of EEE products and how
much each consumer is willing to pay for eco-designed EEE products
that are more readily recyclable when it comes to the different resources
contained in the products.
A screening and summary of experience from abroad with differentiated
models: France and Sweden, respectively.
1.1 Review of present extent of differentiated payment
In WEEE terminology, the concept of “differentiated payment” refers to the use of
dissimilar environmental fees for different products covered by the WEEE Di-
rective. In general, two different types of differentiation exist, the first of which is
true-cost differentiation. Such true-cost differentiation means that the environ-
mental fee corresponds exactly to actual reprocessing and treatment costs. The
other type of differentiation is more arbitrary and takes offset in political consid-
erations. This type of differentiation is not based on actual reprocessing costs; it
is rather based on the desire to reward or punish certain products.
In Denmark as well as in other EU Member States differentiation is used to a
certain degree in relation to WEEE treatment. The degree and type of differenti-
ated payment for WEEE, however, is not similar in the different Member States,
as it will be seen in section 4 of this report.
The degree of differentiation has a potentially major effect on product design
(Kiørboe, et al., 2014). From a purely economic perspective a true-cost differen-
tiated payment scheme in which the environmental fee for a product placed on
the market corresponds exactly to the costs associated with the treatment of the
product at the end of its useful life (end-of-life - EOL) would be efficient; this is
due to the fact that such differentiation would mean that each company would
2 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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develop a product design minimising the overall sum of product costs and costs
for reprocessing.
In practice, however, such differentiation is hardly feasible since a calculation of
the environmental fee for each single product on the market would entail exces-
sive costs of administration. This is the case since the relatively broad categories
of the WEEE Directive (2012/19/EU) cover an endless number of products. A
more detailed assessment of these costs of administration along with other po-
tential barriers to a more true-cost environmental fee is given in section 5.
The evident difficulties in having a true-cost differentiated environmental fee
have lead to the fact that all the countries screened, including Denmark, to a
varying degree have limited the number of fractions under WEEE to a significant-
ly lower number facilitating the administrative task. Furthermore, the French
system has chosen to introduce an additional differentiation reflecting a number
of more or less political criteria. For instance, this has lead to a doubling of the
environmental fee for a mobile phone, if the design is not adapted to a universal
charger (IPR WG, 2012). The French system is discussed in more detail in sec-
tion 4.
In Denmark, WEEE has been categorised in six fractions since 1 September
2014:
Fraction 1: Large household appliances
Fraction 2: Refrigeration equipment
Fraction 3: Small household appliances
Fraction 4: Screens and monitors
Fraction 5: Light sources
Fraction 6: Photovoltaic panels
This division was introduced with the WEEE Order (Statutory Order no. 130,
2014). However, interviews with representatives of different collective schemes
indicated that the degree of differentiation of the environmental fee is in reality
larger within each single fraction. It appears, among others, from the website of
Lyskildebranchens WEEE-forening (LWF – Danish Producer Responsibility or-
ganisation specialised in lamps) that a differentiation of light sources is made in
two categories:
CFL-i and LED retrofit
all other light sources
3 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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While the first group is subject to an environmental fee of DKK 0.85 per light
source, the environmental fee for the latter group amounts to DKK 1.44 (LWF,
2014).
Enhanced differentiation in addition to the six fractions also seems to be used in
elretur, as certain fractions are subdivided into up to three sub-groups (Als &
Lund-Thomsen, 2014).
2 PRICE SENSITIVITY ANALYSIS
To clarify the effect of more differentiation of the environmental fees a price sen-
sitivity analysis is carried out. This analysis will indicate the theoretic impact on
the demand for certain types of EEE further to more differentiation of the envi-
ronmental fees, thereby implicitly also promoting a higher focus on eco-design
among the producers.
The price sensitivity analysis is only carried out for one selected product. As
mentioned above, the WEEE Directive covers a very large number of different
products, so it is not feasible to carry out a price sensitivity study of all WEEE
fractions. In addition, the results are expected to be very similar across the dif-
ferent categories, so one example is found to be sufficient for illustrating the
general potential for the promotion of eco-design through more differentiation.
The selected example takes offset in light bulbs, focusing of the bulb types of
LED and CFL-i from fraction 5 ”Light sources”.
2.1 Price elasticity for different products
Price elasticity is used in economic theory to describe changes in supply and
demand as a result of changes in the price of a product. In this section the start-
ing point is the consumer’s point of view, and therefore the specific focus is on
the price elasticity of the demand for different products.
The price elasticity of a specific product depends on a large number of factors
relating to the nature of the product, but also on external factors such as the
income level of the consumer and the duration of the change in price. Below,
some of the most significant factors associated with the price elasticity of a prod-
uct are described:
Nature of product: The most important factor in the determination of the
price elasticity of a product is evidently the product itself. In general, a
distinction can be made between two types of product: Basic goods that
are an essential part of daily life and non-basic goods that may be con-
venient, but are not necessary in daily life to the same extent. Due to the
fact that basic goods are essential the price elasticity of such goods is
generally lower than that of non-basic goods. A large proportion of the
products of the ten EEE categories under the WEEE Directive
(2012/19/EU) are basically considered to fall under the category of non-
4 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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basic goods with the exception, however, of certain products such as
light bulbs and refrigeration equipment.
Range of substitutes: The price elasticity of a product is very much af-
fected by the number of possible substitutes. For instance, the price
elasticity of a TV set with a LED screen is high, since this product can
easily be replaced by a TV set with a plasma screen and a TV set with
the more recent OLED screen. By contrast, the number of substitutes for
freezers is limited to methods such as salting and pickling, so the price
elasticity of this product will be lower. The range of substitutes is also af-
fected by the impact of brands within the product group. For instance, a
light bulb is a relatively generic product, and different brands of light
bulbs are seen as close substitutes. By contrast, brands play an im-
portant role for smartphones, and other brands are not to the same ex-
tent seen as substitutes, e.g., for Apple’s iPhone.
Product’s general price level: A percentage change in price leads to a
large actual price increase for more expensive products than for cheaper
products. Therefore, the price elasticity of more expensive products is
generally larger than that of cheaper products. For instance, a five per-
cent price increase of a refrigerator at the price of DKK 5,000 (DKK 250)
will lead to a larger decrease in volumes sold than a five percent price
increase of a CFL-i bulb at the price of DKK 60 (DKK 3).
Duration of change in price: Furthermore, the duration of the change
in price has an impact on the price elasticity. In the short term, the price
elasticity of most products is relatively modest, since consumers gener-
ally take quite some time to shift their purchasing patterns and identify
substitutes. In the following examples, a durable change in price will be
used and this will have a major impact on the price elasticity.
Possibility of postponing purchase: If it is possible to postpone the
purchase of a product, this will have a major impact on the price elastici-
ty. This may affect, among others, the sale of flat-screen TV sets; the
purchase is often motivated by the desire to replace a functional product
with a more recent model. By contrast, the purchase of new light bulbs is
often driven by defect bulbs in the home, so the price elasticity of this
type of product will be low.
2.2 Case: Light bulbs
This example is based on a possible differentiation of the environmental fee for
CFL-i and LED, respectively; two different types of light source that are today
subject to the same environmental fee in Lyskildebranchens WEEE-Forening
(LWF).
5 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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This example has been chosen since fraction 5 - Light sources - is a relatively
homogeneous fraction with a relatively small number of product types compared,
for instance, to fraction 3, and since the degree of differentiation between the
products of the different producers is relatively limited. It is therefore assessed
that a higher degree of differentiation will be easier to implement in this fraction
than what is seen for other fractions of WEEE.
Fraction 5, Light sources, is also different from the other categories because they
have the highest environmental fee in relation to the sales price of the product
(Bielefeldt, 2014). Therefore, a true-cost differentiation of the environmental fee
may potentially lead to a large shift in the consumers’ purchasing behaviour. On
the other hand, light sources are relatively cheap products compared with other
types of EEE; together with other factors this leads to a relatively low price elas-
ticity. In general, it is assessed that the chosen example is representative for
WEEE.
The example is based on available information from the LWF website and on
interviews with the CEO of LWF, Mr Jan Bielefeldt.
2.2.1 Assumptions
The results of the example depend very much on the price chosen for the light
sources, since the total price is naturally important in relation to the magnitude of
the environmental fee. This example is based on price information from Coop
Denmark’s website: the average price of a LED bulb with socket is DKK 100.-
while the price of a CFL-i bulb with socket is DKK 60.-. All light bulbs used in the
calculation of the average price are from the producer Philips. It should be men-
tioned that in general there are large deviations in prices among the different
producers and that the price of Philips products is in the more expensive range.
The price elasticities used are based on an article by Galarraga et al. (2011),
calculating own-price elasticity1 and cross-price elasticity
2 for low-energy
whitegoods and traditional whitegoods, respectively. It has not been possible to
find articles on price elasticity specifically for light bulbs, but the close relation to
the subject of the above article makes it reasonable to assume that the price
elasticities found can be used in this example.
The price elasticities used appear from Error! Reference source not found..
1 change in demand for a product further to a change in the product’s own price
2 change in demand for a product further to a change in the price of a substitute product
6 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
Table 1: Summary of price elasticities
Own-price elasticity:
CFL-i bulbs
Cross-price elasticity: CFL-i/LED
Own-price elasticity: LED bulbs
Cross-price elasticity: LED/CFL-i
-0.50 0.10 -0.55 0.15
The interpretation of these price elasticities is as follows: a price increase for
CFL-i bulbs of 1 % will lead to a decrease in the sale of these light bulbs of 0.5
%, while the sale of LED bulbs will increase by 0.15 %. By contrast, a price in-
crease for LED bulbs of 1 % will lead to a decrease in the sale of LED bulbs of
0.55 % and an increase in the sale of CFL-i bulbs of 0.10 %.
The assumption of a low price elasticity for light bulbs seems reasonable. This
product is relatively cheap and it is also an integral necessity of modern life. In
addition, the number of substitutes for light bulbs is limited.
2.2.2 Results
The interview with Mr Bielefeldt indicates that the reprocessing costs for CFL-i
bulbs and the more recent LED bulbs, respectively, will be potentially very differ-
ent, if the two products were collected separately.
The large difference in theoretical reprocessing costs is due to the content of
mercury in the classic CFL-i bulbs. The present commingled collection of the two
products, however, leads to a cross-contamination of the LED bulbs and for that
reason these LED bulbs will have to be treated in the same manner as the mer-
cury-bearing CFL-i bulbs. Potentially, separate collection is assessed to halve
the environmental fee for LED bulbs from the present DKK 0.85 per light source
to DKK 0.425 per light source (Bielefeldt, 2014). This would lead to a price re-
duction from DKK 100 to DKK 99.575, corresponding to a percentage reduction
of 0.425 %.
With the above price elasticities this would lead to an increase in the sale of LED
bulbs of 0.23 %3, while the sale of traditional CFL-i bulbs would decrease by 0.04
%4.
As mentioned, however, the price of LED bulbs varies much: in IKEA they can be
purchased for as low a price as DKK 22. If this is assumed to be the prevailing
market price of LED bulbs the reduction of the environmental fee may lead to a
price decrease of 1.93 %. With the assumed price elasticities this would lead to
3 -0.425 * -0.55
4 -0.425 * 0.10
7 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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an increase in the sale of LED bulbs of 1.07 %5, while the sale of traditional CFL-
i bulbs would decrease by 0.19 %6.
However, both of the above examples are based exclusively on the purchase
price of a light bulb without including further costs associated with its use. If this
additional cost is taken into consideration overall costs would increase, which
would mean that the effect of a halving of the environmental fee would decrease
even more. The potential effects are summarised in the below table.
Table 2: Potential effect of more differentiation of environmental fee for light bulbs
CFL-i LED
Change in demand
further to a halving of
the environmental fee
for LED bulbs
-0.04% - -0.19% 0.23 % - 1.07 %
2.2.3 Conclusion
It is seen from the above price sensitivity analysis of light bulbs that a true-cost
change in the environmental fee may presumably have a very limited effect on
the purchasing patterns of consumers and thereby also on the producers’ incen-
tives for designing more recyclable products. Naturally, the above issues are
only based on the light bulb example, but will probably apply to a certain extent
to other WEEE fractions.
The limited effect of the example seems especially to derive from the low repro-
cessing costs for WEEE, which only make up a very small proportion of the total
sales price of a product. Since the implementation of the WEEE Directive the
reprocessing costs have shown a decreasing trend, and today reprocessors
even pay for receiving certain WEEE categories (Hoelgaard & Therkelsen,
2014).
The interviews conducted with the Danish collective schemes indicate that the
low costs borne by producers for complying with the WEEE Directive require-
ments mean that the producers only see these requirements as an extra tax and
not as an incentive for increasing the use of eco-design. Certain producers have
even expressed a desire to pay a fixed annual sum for the management instead
of a variable payment dependent on the quantities of EEE placed on the market
(Hoelgaard & Therkelsen, 2014).
However, the above example is based on the use of a true-cost differentiation
and it may be argued whether more political differentiation may potentially have
5 -1.932 * -0.55
6 -1.932 * 0.10
8 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
a larger effect. The competition prevailing between the Danish collective
schemes and the homogeneous nature of the services provided suggest, how-
ever, that the environmental fees will show a trend towards the marginal repro-
cessing costs. Furthermore, the low environmental fees mean that any politically
adopted multiplication factors must be of a relatively high magnitude to have an
effect. An example of this latter problem in relation to the reprocessing of mobile
phones is given in section 4.1.
In addition to these economic results that speak for a very limited effect on con-
sumption patterns from more differentiation, there are a number of administrative
issues that may hamper further differentiation. These issues are discussed in
detail in section 5.
3 WILLINGNESS-TO-PAY FOR ECO-FRIENDLY DESIGN
As it appears from section 2, an increased differentiation of the environmental
fees for WEEE will presumably have a limited effect on the purchasing patterns
of consumers. As also described in section 2 it is therefore questionable whether
a higher degree of differentiation will push producers of EEE to using eco-design
to a higher extent.
This section discusses the use of ecolabels and the potential given by such la-
bels to affect consumer behaviour as an alternative to the further use of differen-
tiation. It has not been possible to find studies on willingness-to-pay directly in
relation to eco-designed products; therefore, this section takes offset in analyses
valuing the willingness-to-pay of consumers as well as their consumption pat-
terns in connection with other types of ecolabels (Sammer & Wüstenhagen,
2006; Mills & Schleich, 2010).
Ecolabelling is an easy and clear way for consumers to distinguish between the
environmental burdens of different products, and thereby ecolabelling may push
producers to developing more eco-friendly products. An ecolabel indicates that a
product is among the most eco-friendly in its product group. For instance, a
product carrying the EU Flower or the Swan of the Nordic Council of Ministers
complies with a number of requirements based on an assessment of the life-
cycle of the product. The environmental impacts of a product are assessed from
raw material extraction to production and use and until it is discarded as waste.
On this basis, a number of criteria are set up and they have to be complied with
before the product can use the ecolabel. These criteria are enhanced every three
to five years. The producer pays a fee for the right to use the ecolabel, and the
control is carried out by a public authority or an independent organisation.
A Swiss study (Sammer & Wüstenhagen, 2006) has looked into the effect of the
EU energy labelling on the purchase of washing machines. The study shows that
consumers are willing to pay up to 30 % more for washing machines with energy
label A compared with washing machines with energy label C. This excess price
even surpasses the energy savings to be expected from the purchase of an en-
9 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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ergy label A washing machine. Another study has shown that consumers have
an additional willingness-to-pay for Swan labelled detergents and toilet paper
and are even willing to pay an excess price of 10-17% (Bjørner, et al., 2002).
The so-called visible fees, as they are known in France, are of particular rele-
vance to the subject of this report: they are an example of a labelling scheme
under which it is possible for consumers to see the actual costs of environmental
fee for the product in question (see section 4.1). Whether or not the labelling
actually affects the purchasing patterns of the consumers is, however, uncertain.
In Denmark, the number of ecolabelled and certified products has been on a
steep increase, and producers use them as a strong communication and profiling
tool. It also seems that the labelling schemes have gained a foothold among
consumers and are used in purchasing decisions. Furthermore, many companies
are facing sustainability requirements on behalf of the purchasers of their prod-
ucts, and here a certification under a labelling scheme may be a tool for meeting
these requirements (Andersen, 2010). It should be noted, however, that the
familiarity among consumers is limited to a few labels. A study conducted by the
Danish Competition and Consumer Authority in 2013 revealed that 11 of a total
of 40 ”green” labels had a degree of familiarity over 50% (KFST, 2013). There-
fore, one should be careful to introduce too many labelling schemes, since this
will entail a risk of decreasing effects, both because consumers will lose track
and because they will lose confidence in the quality of the labelling schemes.
Nonetheless, the above results show that ecolabelling has the potential to affect
the purchasing patterns of consumers to a larger extent than true-cost differen-
tiation.
4 FOREIGN EXPERIENCE WITH DIFFERENTIATED PAYMENT
To illustrate practical experience with more differentiated payment systems a
screening of the French and the Swedish systems, respectively, has been car-
ried out. It is a common feature of these systems that the payment structure is
based on a substantially higher degree of differentiation than what is the case for
the Danish collective schemes.
The screenings consist of a general description of the payment system and the
degree of differentiation in the country in question, a review of practical experi-
ence with more differentiation, and an assessment of the development of the
system in the past and in the future.
4.1 France
4.1.1 General structure of scheme
France has implemented the WEEE Directive by Decree no. 2005-829. This
decree covers all ten product categories of the WEEE Directive. In 2010, the
decree was updated and the requirement for differentiated payment was intro-
duced for six WEEE fractions (WEEE Forum, 2012).
10 The Danish Voluntary Agreement on WEEE:
Differentiated payment
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In pursuance of the decree producers of EEE must inform annually of the quanti-
ty of products placed on the market, the quantity of collected WEEE, and the
quantity of resources recovered in the reprocessing of collected WEEE. Produc-
ers may choose to comply with these requirements individually or they may sign
up for a collective scheme, and the major part of French producers have chosen
to do so.
There are four collective schemes for WEEE in France:
Éco-systèmes
ERP France
Ecologic
Récylum
The collective schemes are private non-profit organisations established and run
by the producers (ADEME, 2014). The different schemes must be approved by
the French authorities every six years (Ministry of Ecology, Sustainable
Development and Energy, 2012). This is typically done by involving all stake-
holders (including civil society) in negotiations that result in the terms of refer-
ence of the collective schemes, setting up the general objectives of the scheme
for the coming period (with regard to collection requirements, recycling require-
ments etc.) (ADEME, 2014).
Further to the requirement for differentiated payment the French WEEE schemes
are established on a so-called bonus-malus system, i.e. it rewards producers
who are innovative in respect of eco-design and it punishes producers who do
not work to make their products eco-friendly (IPR WG, 2012). In practice, this
system works in the way that producers of EEE pay an environmental fee to their
collective scheme based on the specifications of the product and on the number
of units of this product that is placed on the market.
In order to avoid that the costs associated with the differentiated environmental
fee is passed on to the consumer the producers of EEE in France are subject to
a requirement for a so-called visible fee: the environmental fee for each product
must be visible to the consumer and distinguishable from the price of the product
(French Republic, 2005). In theory, each collective scheme can fix its own envi-
ronmental fee for the different EEE products. In practice, however, the prices are
very similar from one scheme to another (ERP France, 2015; Ecologic, 2015),
which is believed to be caused, among others, by the visible fees system.
Three factors play a role in the determination of whether to increase or decrease
the environmental fee for a product (IPR WG, 2012):
Product’s life-cycle and durability
11 The Danish Voluntary Agreement on WEEE:
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Product’s contents of hazardous materials
Product’s contents of recyclable materials.
The specific requirements for the different fractions appear from the below table.
Table 3: Differentiation criteria in French bonus-malus system
Equipment Criterion for increase/decrease Differentiation
Category 1 Refrigeration equipment
Use of refrigerants with >15 GWP +20%
Category 2 Vacuum cleaners
Containing plastic components with more than 25g of brominated flame retardants
+20%
Category 3 Mobile phones
Cannot be connected to a universal charger (according to international standards, i.e. mini USB)
+100%
Category 4 Computers and laptops
Containing more than 25g of mercury and plastic com-ponents with more than 25g of brominated flame re-tardants
+20%
Category 5 Screens and TV sets
Containing more than 25g of mercury and plastic com-ponents with more than 25g of brominated flame re-tardants
+20%
Category 6 Lamps
Only with use of LED light -20%
The above table is understood in the way that ”+” releases a punishment if the
product exceeds the stipulated limit values and specifications. This means, for
instance, that a mobile phone that cannot be connected to a universal charger
according to international standards will get a 100 % increase of its environmen-
tal fee when the product is placed on the market.
Despite the fact that an increase in the environmental fee of 100 % of certain
types of mobile phones may seem very high, it is not expected to have a major
effect in practice. For example, iPhones would be covered by this system since
they cannot be connected to standard mini USB chargers, but use Apple’s own
chargers. Therefore, Apple will be punished by a 100 % increase in the environ-
mental fee when placing iPhones on the market. With the technical specifications
and weight of an iPhone 6 (129 g) (Apple Inc., 2015), this means in practice an
increase in the environmental fee from €0.02 to €0.04 (ERP France, 2015), i.e.
an increase in the price of an iPhone 6 of €0.02 or 0.003 %7. In practice, this
increase in the environmental fee will hardly result in shifting consumers from
iPhone to other smartphone brands, so the incentive for investing in eco-design
is non-existent.
7 €0.02/€709 = 0.000028
12 The Danish Voluntary Agreement on WEEE:
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4.1.2 Comparison with Danish system
WEEE is treated in six fractions in both Denmark and France. The French sys-
tem was expanded with a seventh fraction (photovoltaic panels) in 2014; howev-
er, this fraction does not yet appear on the price list of the French collective
schemes (pvcycle, 2014; ERP France, 2015; Ecologic, 2015). The French sys-
tem is expanded again up to twelve fractions from 1 July 2015.
The Danish and French fractions are not similar. In Denmark, the sixth fraction is
photovoltaic panels while the sixth fraction in France is a division of comput-
ers/laptops and screens/TV sets, respectively.
In Denmark, WEEE must be divided into the six fractions at the municipal collec-
tion points (Order no. 130, 2014). This division means that the environmental
fees with the collective schemes are also differentiated across these fractions,
while the extent of a further differentiation of the environmental fees within each
single fraction is limited and takes place to a varying extent in the different collec-
tive schemes. The more limited differentiation in Denmark is motivated by the
additional administrative costs that are associated with such a scheme8. The
interviews conducted with the Danish collective schemes also indicated a certain
degree of differentiation in the environmental fees that each producer pays for
the management of WEEE. This is in contrast to the French system in which the
environmental fee consists of a fixed visible fee and in which any given company
can only achieve a reduction of the environmental fee if its products comply with
certain fixed eco-design standards. Similarly, French producers placing products
under a certain technical standard on the market are punished through a prede-
termined increase of the environmental fee. Such a politically decided differentia-
tion does not exist in Denmark at the moment.
4.1.3 Practical experience
Practical experience with differentiated payment schemes for WEEE in France is
ambiguous.
On the one hand, the producers in France are satisfied with the bonus-malus
system; they point out that this system promotes a dialogue between producers
and reprocessors of EEE (ADEME, 2014).
On the other hand, it is difficult to establish the precise value of eco-design
measures (or the lack of such measures). This means that the differentiated
payment does not necessarily reflect actual costs of reprocessing of a product,
but it is rather a politically negotiated price sending a price signal to the consum-
er through statutory visible fees (ADEME, 2014).
8 There are examples of differentiation within the fractions in Denmark. This is the case,
for instance, for light sources where CFL and LED bulbs are subject to a lower envi-ronmental fee than fluorescent lamps (LWF).
13 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
The bonus-malus system in combination with visible fees is therefore rather a
kind of labelling scheme for the consumers than a direct financial incentive for
increased investment in eco-design. Furthermore, it does not seem that the pre-
sent environmental fees and any supplements under the bonus-malus system
are sufficient for shifting the consumers away from these products.
It has not been possible to find more concrete results concerning the effect of the
French system, since collection of WEEE is a relatively new phenomenon in
France. The collection was introduced in 2006 and the bonus-malus system was
implemented in 2010 (Danish Environmental Protection Agency, 2012; WEEE
Forum, 2012).
4.1.4 Future
As from 1 July 2015 new rules entered into force in the French bonus-malus
system, which was expanded to twelve fractions. On this occasion the following
product categories were added to the existing fractions as stand-alone groups:
washing machines, dish washers, coffee machines and electric kettles, tablets,
printers, drilling and screwing devices, and game consoles (Ecologic, 2015). This
expansion took place under a politically planned extension of the system in 2012
(Danish Environmental Protection Agency, 2012).
The system continues to enforce either 20% increases or decreases of the envi-
ronmental fees of the different fractions. Exemptions are mobile phones and
tablets that each are subject to a 100% increase if they do not comply with the
criteria for eco-design (Ecologic, 2015).
4.2 Sweden
4.2.1 General structure of scheme
Sweden is among the leading nations in the European Union when it comes to
collection and reprocessing of waste electronics. The EU WEEE Directive was
implemented in Swedish legislation in 2005, but already back in 2001 the first
Swedish producer responsibility legislation was adopted (Watkins, et al., 2012).
This was the outcome of a legislative process that started in the early 1990s. In
this process the producers were involved closely in the statutory work, and this is
mentioned as one of the main reasons for the success of the Swedish system
(Swedish Environmental Protection Agency, 2009).
In Sweden, the Swedish Environmental Protection Agency is in charge of super-
vision and control of compliance with the producer responsibility system. All pro-
ducers must register with the Environmental Protection Agency, and up to 2009
all producers also had to report quantities placed on the market directly to the
Agency. Since then, however, it has become possible to report through the col-
lective schemes (Swedish Environmental Protection Agency, 2009).
14 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
Just as in Denmark the local authorities are in charge of collection of WEEE,
which is delivered to one of around 650 public recycling centres. Subsequent
treatment of collected WEEE is managed and financed by producers, either
through collective schemes or as individual compliers (IPR WG, 2012). In addi-
tion to municipal collection, WEEE is also collected in a few shops around Swe-
den. The success of the Swedish system, however, is attributed primarily to the
collection at the public recycling centres (Watkins, et al., 2012).
Since the beginning of the producer responsibility system the market for WEEE
management has been dominated by one company: El-Kretsen. Today, two
collective schemes exist on the Swedish market:
1. El-Kretsen
El-Kretsen was founded in 2001 and was the only collective scheme on the
Swedish market up to 2007. El-Kretsen is a limited company owned by 21 busi-
ness associations. It has around 1,500 affiliated companies. Just as for elretur
and ERP, payments to El-Kretsen consist of a fixed annual membership fee and
a variable price depending on the quantities of EEE placed on the market within
the different categories.
2. Elektronikåtervinning i Sverige Ekonomisk Förening (EÅF)
EÅA (WEEE Recycling in Sweden) is a non-profit organisation established in
2007. EÅF is substantially smaller than El-Kretsen and has today around 70
affiliated producers. Just as for El-Kretsen members pay a fixed annual fee and a
variable product fee (EÅF, 2014).
El-Kretsen accounts for the treatment of around 75% of total quantities of WEEE
collected in Sweden while EÅF accounts for the treatment of the remaining quar-
ter (EÅF, 2014).
4.2.2 Comparison with Danish system
It is not an obligation for the Swedish collective schemes to differentiate pay-
ments in addition to the ten product categories stipulated in the WEEE Directive
(Förordning om producentansvar för elutrustning, 2014). However, an interview
with El-Kretsen reveals that there is a relatively high degree of differentiation in
addition to the ten product categories. Thus, the degree of differentiation seems
larger with El-Kretsen than what is the case in the Danish collective schemes.
El-Kretsen operates with a total of 38 subcategories under the ten product cate-
gories. Before 2009, however, the number of subcategories in the El-Kretsen
payment model was 65, but since then the number has been reduced to present-
ly 38. This reduction is based on what El-Kretsen refers to as a balance between
”a fair differentiated payment for its members that is also efficient in terms of
costs and administration”. The largest differentiation in El-Kretsen is seen in
category 3, IT and telecommunications equipment, having as much as ten sub-
15 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
categories. The different subcategories are seen in the below figure; it has not,
however, been possible to collect information on actual environmental fees for
the different subcategories.
Figure 1: Outline of subcategories in product category 3
Category 6, Lighting equipment, is subdivided into six subcategories. In addition,
payments are differentiated according to any contents of mercury in the light
source, since mercury-bearing light sources are significantly more expensive to
manage and process than non-mercury bearing light sources. The latter differen-
tiation in relation to mercury contents was adopted in El-Kretsen in consultation
with the industrial organisation of the light source producers. The difference
makes up SEK 0.20 per unit for an ordinary bulb.
4.2.3 Practical experience
In order to secure the best possible knowledge of actual reprocessing costs
these costs are calculated, analysed and documented by El-Kretsen itself at its
own reprocessing facilities. Every product is controlled, weighed and document-
ed along with the product composition of the different collection fractions. A total
of 1.1 % of collected WEEE is reprocessed at El-Kretsen’s own facilities and
data from this random sampling are used as a representative basis when repro-
cessing contracts are negotiated and producer fees are calculated.
5 ADMINISTRATIVE COMPLICATIONS ASSOCIATED WITH MORE
DIFFERENTIATION OF ENVIRONMENTAL FEE
In section 2 a survey was made into the ways in which a true-cost differentiation
of environmental fees will potentially affect the incentives of producers to have a
higher focus on eco-design and higher recyclability of WEEE. The results of sec-
tion 2 indicate that the potential for more eco-design through further differentia-
tion is limited.
In addition to limited economic potentials, higher differentiation is also associated
with a number of administrative problems. In this section, the problems revealed
16 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
in the interviews as well as in screenings of the systems in France and Sweden
are discussed.
5.1 Identification of differentiation criteria
The first administrative barrier associated with true-cost differentiation is related
to the identification of actual reprocessing costs for each product type within the
different fractions.
As it appears from the example of light bulbs it would be relatively simple for
fraction 5 to differentiate the environmental fee for different product types, while
for several other fractions it would be much more difficult to set up differentiation
criteria (IPR WG, 2012). It was seen from the interview with elretur, among oth-
ers, that fraction 2, Refrigeration equipment, is suitable for further differentiation,
since the reprocessing of refrigeration equipment containing CFC gases is sub-
stantially more expensive than other product types. By contrast, it will be much
more extensive to identify differentiation criteria for fraction 3, Small household
appliances, since to a wide extent this is a catch-all fraction including all those
different types of EEE that are not covered by other fractions.
This barrier is further hampered by the fact that producers will probably not dis-
close design and constituents for intellectual property reasons (Als & Lund-
Thomsen, 2014), just as the use of OEM components means that the constitu-
ents of different sub-components are not always known.
5.2 Increased administrative burdens
The screening of the system in Sweden shows that the number of subcategories
in the El-Kretsen system has decreased from 65 to 38. An interview with El-
Kretsen staff members revealed that the background of this decision was a
trade-off between a true-cost system and more administrative burdens. The
same considerations were seen from the interview with elretur: more administra-
tive burdens associated with the calculation of actual reprocessing costs for a
higher number of fractions were emphasized as an argument against higher
differentiation (Als & Lund-Thomsen, 2014).
The French bonus-malus system offers an alternative basis for differentiation
since it is not a precondition that calculations of actual reprocessing costs are
made. As it is described in section 4.1, this system is based on politically negoti-
ated prices. This, however, leads to the fact that the environmental fees are pre-
sumably not on a true-cost basis, which may cause unintended side effects from
the system.
However, not only the collective schemes can expect higher administrative costs
from more differentiation. The interview with Mr Bielefeldt also indicated that
there is a physical barrier in relation to a more differentiated payment system.
The present collection of WEEE at the municipal collection points takes place in
six fractions, so many different products are mixed before ownership is trans-
17 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
ferred to the collective schemes. For certain fractions, such as light sources, this
causes a cross-contamination and thereby a need for all product types in the
fraction to be subjected to the same treatment form; for other fractions this ”only”
means that a costly post-separation is necessary. Thereby, more separation
would be needed already at the public collection points, in order to secure a true-
cost differentiated payment system.
6 CONCLUSION
The purpose of this report is to investigate the options for more differentiation of
the environmental fees paid to the collective schemes.
Based on a case of light sources, notably CFL-i bulbs and LED bulbs, it was
studied whether more true-cost environmental fees will theoretically give produc-
ers higher incentives to produce eco-designed products. The results of this case,
however, revealed a limited potential, which is particularly due to the very low
environmental fees compared with the sales price of the products. Furthermore,
the costs related to reuse and recycling have decreased since the implementa-
tion of the WEEE Directive, so today there are no expectations of higher envi-
ronmental fees in the future.
The report also describes experience from France and Sweden, respectively;
both countries have a higher degree of differentiation than what we have in
Denmark. However, in none of the two countries is was possible to find a direct
correlation between a more differentiated system and more use of eco-design;
furthermore, a review of data from Eurostat shows that among these three coun-
tries Denmark has the highest share of collected WEEE that is either reused or
recycled. The specific figures appear from the below table.
Table 4: Share of collected WEEE reused or recycled
2012 Denmark Sweden France
Reuse and
recycling of
WEEE (% of
collected
quantity)
88.6% 84.3% 77.7%
Source: Eurostat (http://ec.europa.eu/eurostat/web/waste/key-waste-streams/weee)
The report also discusses other problems related to higher differentiation, includ-
ing the problem of identification of differentiation criteria as well as more adminis-
trative burdens associated with the calculation of true-cost environmental fees for
a large number of fractions and the physical collection of this higher number of
fractions.
Finally, it is worthwhile mentioning a conclusion from the report ”20 years of EPR
in France: achievements, lessons learned and challenges ahead” published by
Adème - the French Environment and Energy Management Agency. In this re-
18 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
port, special emphasis is given to a pan-European system, since higher invest-
ments in eco-design are not profitable, if a company can only benefit from it on
the French market (ADEME, 2014). This conclusion is even more relevant in a
Danish context.
19 The Danish Voluntary Agreement on WEEE:
Differentiated payment
www.niras.dk
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Recommended