ANALYSIS - Car makers face scrap costs under EU waste law
BRUSSELS - European Union carmakers must pay for recycling of scrap vehicles as from this week, having lost a lobbying battle against a radical new EU law on waste, but they still hope to limit their costs.
The \"end of life vehicles\" directive, which took effect last weekend, requires car makers to cover the cost of tough new rules on stripping toxic parts from old vehicles and recycling most of the waste.
The law, agreed in 2000, set a new trend in EU product and waste regulation. Previously manufacturers were liable if what they sold was defective or unsafe while being used, but they had no responsibility for the way the products were scrapped.
Now motorists must be able to send old cars, free of charge, to a licensed recycler who has to respect strict environmental standards. The manufacturer has to pay most of any costs.
These costs are likely to rise as the new law forces scrapyards to remove batteries, tyres and hazardous chemicals before shredding the cars and ensure that 80 percent of the waste is recycled.
By 2015, 85 percent must be recycled with another 10 percent at least being burned for energy recovery.
The EU dumps some nine million tonnes of cars each year.
CAR SECTOR FIRST
Electrical equipment makers may face similar rules, now being debated at EU level, which aim to make manufacturers \"eco-design\" products to make them easier to recycle. EU diplomats are considering similar changes to packaging rules.
The car sector, despite its intense lobbying against the new directive, has become the first to get the EU\'s \"producer responsibility\" treatment.
As of this week, all 15 EU governments should have their own scrap car regulations in place to enforce the European rules.
According to the European Commission and industry sources most member states have missed the deadline, but all countries are in the process of changing their laws and systems.
Car makers, who failed to halt the EU law, are now trying to limit the additional costs.
\"The most difficult question is the cost we have to pay. How should the system be set up. Nobody knows what are the costs - whether there are costs or if there are revenues from recycling that can cover it,\" an official at the European Automobile Manufacturers Association (ACEA) said.
The Bureau of International Recycling (BIR) says the average cost of scrapping a car under the new system could be between 50 and 100 euros.
Earlier this year, a report by Schroder Salomon Smith Barney suggested the EU\'s leading maker Volkswagen could face a charge of 1.3 billion euros, a figure the company has declined to comment on.
The choice of system in each country, as well as calculating the real net cost of recycling and the amount car makers might have to hand over to recyclers, will be a tricky issue.
Some countries are planning to copy a long-standing Dutch system where the extra costs of environmentally-friendly car scrapping is funded by a 45 euro ($40) fee paid by motorists applying to register a car.
ACEA says the risk of such a system is that it sets a fixed fee for recycling, which can often be cost-free, or profitable, depending on the age of the car and the value of its parts.
\"Manufacturers are going into details to be able to argue with recyclers (over the real cost),\" the ACEA official said.
Germany is set to finalise its scrap car legislation by June. To soften the blow to car makers, the government is offering 250 million euros a year in tax breaks for 2002-2007.
According to government calculations, the law should lead to a price increase of approximately 0.5 percent for each new car.
Spain has allocated 263 million euros to cover the costs of setting up a nationwide network of scrap yards.
Although the EU rules have not yet been put into Spanish law, recycling firms said at least 10 percent of the country\'s 3,000 scrap yards are already treating cars to EU criteria.
Britain, which is struggling to implement another EU directive on removing ozone-depleting chemicals in refrigerators, is a long way from applying the car rules.
The British Metals Recycling Association said its members wanted clear information from the government about how the British system will work before they invest in new equipment necessary to bring their facilities up to the new standard.
The directive may yet be challenged in some countries as car makers call foul over the fact that, after 2007, it will make them pay for recycling of older cars that were sold before the law came into force.
German car manufacturers and suppliers association VDA has suggested this could be a breach of the country\'s constitution.
\"No one was aware that they would have to leave aside money to be able to recycle. We produced cars in the 1980s and 1990s without knowing we would be responsible for recycling,\" the ACEA official said.
The European Commission could also launch legal proceedings against member states if they do not hurry up and implement the law they all signed up to two years ago.
\"We have not received a single complete set of implementation letters,\" a Commission official said. The notification should have been in Brussels on April 21.
He said the EU executive would not chase up member states immediately, but was likely to start doing so within the next \"one to three months\".
Story by Robin Pomeroy
REUTERS NEWS SERVICE
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