Important notice: This document has been prepared for use within the Commission. It does not necessarily represent the Commission s official position.

Transcription

1 Important notice: In order to prevent misunderstandings, it seems important to underline that the figures on costs per tonne of waste sorted or unit of energy saved cannot be used directly to qualify a system as cost-efficient or not. Careful reading, including of the preface, the footnotes and assumptions, is necessary to fully understand the context of the numbers and conclusions. This document has been prepared for use within the Commission. It does not necessarily represent the Commission s official position.

2 COST-EFFICIENCY OF PACKAGING RECOVERY SYSTEMS- THE CASE OF FRANCE, GERMANY, THE NETHERLANDS AND THE UNITED KINGDOM Final Report Contract n ETD/98/ FEBRUARY 2000 COMMISSION OF THE EUROPEAN COMMUNITIES DG ENTERPRISE Contact TAYLOR NELSON SOFRES Consulting Jean-François CAGNOT Véronique MONIER Anaïs LE DORÉ SBE /

3 WE WOULD LIKE TO THANK OUR CONTACTS IN FRANCE, GERMANY, THE NETHERLANDS AND THE UNITED KINGDOM FOR THE INFORMATION THEY PROVIDED US AND FOR THEIR USEFUL INPUTS ALL ALONG THE PROGRESS OF THE STUDY. TAYLOR NELSON SOFRES- Consulting

4 Preface Packaging waste management is a controversial issue. Many discussions have taken place and not always on the basis of good analysis. Information might be available (however, usually dispersed among many actors and frequently confidential), but there is a lack of putting this information together in a way that allows to draw conclusions. Doing so is a risky exercise because one is bound sometimes to be imprecise, to work with assumptions and, last but not least, not to please everyone. Nevertheless, we felt that we should take this risk in order to move away from pre-conceived opinions to discussion on hard facts in so far as they are relevant for the main considerations. Without repeating the explanations contained in the report, it seems important to underline the context of the present study. The purpose of the study is to analyse the financing of packaging recovery systems in the wider sense (i.e. the way how existing levels of packaging waste recycling and recovery are financed in the four countries considered). This should help to better understand the differences between national systems and to draw conclusions how existing systems could be developed in a cost-efficient way. Some of the conclusions can also feed into the revision of the targets of the Packaging and Packaging waste directive, although the study cannot give an answer to which levels of targets are appropriate. The study was also intended to help in developing more harmonized financing systems on a European level on the basis of the lessons to be drawn from the national experiences. This latter goal, however, is a long-term strategic objective rather than a concrete plan. Information on packaging recovery systems is extremely complex and data are not readily available. It would, of course, have been possible to launch a very big and expensive study to verify all details of packaging management. However, this was not the idea for the present study. Using the limited financial resources, the study should make best value for money, i.e. to get a good understanding of the way the systems run and how they can be compared. Rather than spending too much time on refining the last details of the figures, the consultant was told to focus on a reasonably exact picture on the core subject of the study, i.e. the financing of household packaging waste recycling. For this subject, the data contained are certainly among the most robust available. On the other issues considered, in particular the non-household packaging section, only rough estimates were made since much more would not have been feasible without substantial research. We feel, however, that the picture would have been incomplete had we entirely left aside non-household packaging. A similar approach has been taken as regards the environmental evaluation. This study is not a new life cycle analysis for packaging. It was based on existing information which may or may not be correct in its details. For the purpose of this study, the analysis of environmental benefits was used as a sort of currency to compare the systems since we felt that it is incorrect to TAYLOR NELSON SOFRES- Consulting

5 compare the costs of systems without looking at what they achieve. Therefore, the data should taken with certain care and, eventually, be refined in future to be representative for all situations. As regards the conclusions, we do not think that the cost differences encountered can be used as simple means to say what is a good or a bad system. However, we think that the study made a number of choices transparent that lead to more or less costefficiency. Properly discussed in their context, they may give an indication in which a cost-efficient development of the systems should go. However, this is a discussion which needs to take place on a national level. This said, we hope that the main purpose of the study was achieved, namely to remove some of the big unknowns or rather nonunderstoods - as regards packaging waste management and to create a better knowledge and understanding of the ways the various systems work and how they can be compared. TAYLOR NELSON SOFRES- Consulting

6 C ONTENT 1. Executive Summary Context and Objective of the Study Methodology and Limits of the Study Cost Analysis Conclusions Likely Developments which may Change the Position of the Various Countries in the Near Future Introduction Objective and Scope of the Study Methodological Issues Current Situation of the 4 Countries compared with the Packaging Recycling and Recovery Directive Targets Current Situation for Total Packaging Current Situation per Type of Packaging: Household / Non Household Current Situation per Packaging Material Cost and Cost-Efficiency of Household Packaging Waste Recycling Presentation of the Analysis Method Scope of the Analysis Definitions used Objectives of the Analysis Method Sources of Data General Philosophy of the Household Packaging Waste Management Systems Structure of the Expenses for GLASS 51 TAYLOR NELSON SOFRES- Consulting 5

7 4.3.1 Total Expenses Market Revenues Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Structure of the Expenses for PLASTICS Total Expenses Market Revenues Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Structure of the Expenses for PAPER/BOARD Total Expenses Market Revenues Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Structure of the Expenses for TINPLATE Total Expenses Market Revenues Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Structure of the Expenses for ALUMINIUM Total Expenses Market Revenues Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Total Financing Need to Recycle Household Packaging Waste Actors Responsible for Covering the Financing Need Comparison of the Financing Need to Alternative Waste Treatment Costs Cost-Efficiency Ratios for Household Packaging Waste Four Cost-Efficiency Indicators 82 TAYLOR NELSON SOFRES- Consulting 6

8 Efficiency of the Systems Recycling Rates and Financing Need per Tonne of Packaging put on the Market Recycling Rates and Financing Need per Capita Evolution of Household Packaging Recycling Costs Cost and Cost-Efficiency of Non Household Packaging Waste Recycling (Order of Magnitude) Presentation of the Analysis Method Scope of the Analysis Objective of the Analysis Method Sources of Information and Hypotheses Order of Magnitude for the Cost of Non Household Packaging Waste Recycling Cost-Efficiency of Non Household Packaging Recycling Cost of Total Packaging Waste Management Presentation of the Analysis Method Objective of the Analysis Method Sources of Information and Hypotheses Comparison of the Unit Costs of Recycling and of Alternative Waste Treatments Environmental Impacts and Benefits of Packaging Waste Management In the 4 Countries Presentation of the Analysis Method Scope of the Analysis Method Methodology for Recycling Methodology for Incineration and Landfilling Main Results Comparison between Treatment Routes per Material Comparison between Alternative Treatment Routes of Currently Recycled Packaging Waste Costs-Benefits Indicators for Household Packaging Recycling 129 TAYLOR NELSON SOFRES- Consulting 7

9 8. Appendix 1: Recycling Quantities and Rates in the 4 Countries Detailed Figures Appendix 2: PRN Price Variations Appendix 3: Indicators of the Cost-Efficiency of the Recycling Systems for Household Packaging Waste Appendix 4: Hypotheses for the Cost of Packaging Waste Management Appendix 5: Hypotheses of Sorting Refuse Rates Appendix 6: Bibliography 143 TAYLOR NELSON SOFRES- Consulting 8

10 LIST OF TABLES Table 1: Current situation Total packaging waste recycling and recovery 34 Table 2: Current situation: Split of the total packaging recycling rate between household and non household packaging 36 Table 3: Current situation and national targets Packaging waste recycling and recovery per type of waste(household, non household) 38 Table 4: Financing need of household packaging waste recycling in Table 5: Financing need breakdown by financer 78 Table 6: Household packaging consumption in 1998 for materials which are recycled 87 Table 7: Cost-efficiency of non household packaging recycling per material 98 Table 8: Net cost of packaging waste management in Table 9: Hypotheses regarding environmental benefits of packaging recycling per material 113 Table 10: Assessment of environmental benefits of packaging recycling per country 115 Table 11: Hypotheses regarding environmental impacts and benefits of packaging incineration and landfilling 117 Table 12: Comparison of the environmental impacts and benefits (energy) of alternative treatment routes per material 120 Table 13: Assessment of the environmental impacts and benefits of packaging if they were incinerated instead of being recycled 122 Table 14: Comparison of the environmental impacts and benefits of treatment routes 124 Table 15: Costs-benefits indicator (energy) for household packaging waste 126 Table 16: Costs-benefits indicator (solid waste) for household packaging waste 128 TAYLOR NELSON SOFRES- Consulting 9

11 LIST OF GRAPHS Financing sources for recycling of household packaging 14 Financing need for recycling (household/non-household packaging waste 15 Cost per GJ of energy saved by household packaging recycling 18 Cost benefit ratio of household packaging waste recycling 19 Cost of recycling: glass, plastics 20 Cost of recycling: paper/board, tinplate, aluminium 23 Description of the methodology followed in the study 28 France: financing of glass household packaging recycling : who paid for what in 1998? 50 Germany: financing of sales household packaging recycling: who paid for what in 1998? 50 Netherlands: financing of glass household packaging recycling : who paid for what in 1998? 52 United Kingdom: financing of glass household packaging recycling : who paid for what in 1998? 52 France: financing of plastic household packaging recycling : who paid for what in 1998? 54 Germany: financing of plastic household packaging recycling : who paid for what in 1998? 56 France: financing of paper/board household packaging recycling : who paid for what in 1998? 60 Germany: financing of paper/board household sales recycling : who paid for what in 1998? 60 Netherlands: financing of paper/board household packaging recycling : who paid for what in 1998? 62 France: financing of tinplate household packaging recycling : who paid for what in 1998? 64 Germany: financing of tinplate sales packaging recycling : who paid for what in 1998? 66 Netherlands: financing of tinplate household packaging recycling : who paid for what in 1998? 68 France: financing of aluminium household packaging recycling : who paid for what in 1998? 70 Germany: financing of aluminium sales packaging recycling : who paid for what in 1998? 72 United Kingdom: financing of aluminium cans packaging recycling : who paid for what in 1998? 74 TAYLOR NELSON SOFRES- Consulting 10

12 Four cost efficiency indicators 80 Cost-efficiency analysis for household packaging: recycling rate versus financing need per tonne sorted 82 Cost-efficiency analysis for household packaging: recycling rate versus financing need per tonne put on the market 84 Cost-efficiency analysis for household packaging: recycling rate versus financing need per capita per year 86 France: cost of commercial and industrial packaging recycling in Germany: cost of non sales packaging recycling in Netherlands: cost of commercial and industrial packaging recycling in United Kingdom: cost of commercial and industrial packaging recycling in TAYLOR NELSON SOFRES- Consulting 11

13 1. EXECUTIVE SUMMARY TAYLOR NELSON SOFRES- Consulting 12

14 1.1 Context and Objective of the Study In the last years, the European Community has launched a number of initiatives aimed at increasing recycling and recovery of certain waste streams. Among these, the Packaging and Packaging Waste Directive (94/62/EC) had to be implemented into national law by 30 June In spite of delays in several countries, legislation is now in place in all Member States except Greece. The objective of this study is to carry out a cost-efficiency analysis of recycling in four countries, including the comparison with alternative treatment routes (incineration with energy recovery, disposal). The study aims at making transparent the underlying political choices, the resulting cost structures and the relative benefits achieved by recycling. The countries chosen were France, Germany, the Netherlands and the United Kingdom. Due to the differences in costs and benefits, the analysis distinguishes between the various materials (glass, plastics, paper and board, tinplate, aluminium) and sources (household and non-household packaging). It focuses on household packaging but also gives an order of magnitude of costs and cost-efficiency of the various treatment routes for non-household packaging. The study aims at assessing the situation of packaging recycling in a country at a point in time (1997 for recycling rates 1, 1998 for costs) without separating the effect of the implementation of the Directive on recycling. Therefore it also includes recycling which was carried out before the Directive was implemented. The term packaging recovery systems has been interpreted in a wider sense (i.e. not focusing only on particular compliance schemes such as DSD, Eco-Emballages, SVM-Pact, Valpak, Biffpack and the PRN system) but on the way both recycling and recovery are organised and financed in the four countries. 1.2 Methodology and Limits of the Study It was initially agreed that the methodology would rely on data available in the literature. However, after considerable secondary research we had to come to the conclusion that expert enquiries at national and European level would be necessary, due to the unavailability of the data and their lack of consistency and reliability when available. A large number of interviews were necessary to build and cross-check the data. Assumptions and sources of information are systematically indicated in the individual chapters. 1 official data transmitted by the countries to the European Commission ; for the U.K., 1998 data have been considered TAYLOR NELSON SOFRES- Consulting 13

15 As a consequence of these difficulties, and in line with the terms of references of the study, we focused more on the household source for cost and energy savings assessments. Accordingly, the data on household waste can be considered as robust (although within the limits indicated in the study), whereas the figures on non-household packaging waste are estimates which may not necessarily reflect the wide range of concrete situations occurring for this type of waste. 1.3 Cost Analysis The cost analysis performed is close to the methodology of value-chain analysis: the various financial flows (costs and revenues) have been shown for each single step from collection to recycling. Three types of costs were considered: The total cost: all costs from collection until the gate of a factory producing a final product. The financing need : total costs minus revenues from the sale of sorted materials. This is the amount of financial injections necessary to render recycling profitable from a recycler s point of view. Since the financing need essentially corresponds to the amount covered by packaging recovery systems (in the wider sense, i.e. including contributions from tax payers), this study mainly focuses on this type of costs and the way it is shared between the various actors. In Germany, fillers and importers pay the entire financing need for the collection and recycling of household packaging waste. In France, it is split between fillers/importers and tax payers. In the Netherlands, the financing need is almost entirely covered by the tax payer. In the UK, there is a split between tax payers and the packaging chain (which contributes via the PRN system). Financing sources for recycling of household packaging /t sorted France Germany NL UK Tax payers/ charities Fillers/ importers Packaging chain TAYLOR NELSON SOFRES- Consulting 14

16 Caveat: Whichever actor pays to finance the scheme in the first place, costs are to a large extent likely to be transferred to the consumer/tax payer via product prices, charges and/or taxes. In the case of industrial and commercial packaging waste, holders of the waste pay the entire net expenses. In the United Kingdom, the revenues from the PRN system may in future also contribute to these expenses. Financing need for recycling (household/non-household) /t sorted 2 France Germany NL UK Household Non household Household Non household Household Non household Household Non household Glass Plastics n.a n.a. 57 Paper/board n.a. 36 Tinplate n.a. 24 Aluminium -50 n.a. 790 n.a. n.a. n.a n.a. The net costs comparing the financing need with alternative waste management options. Obviously, waste that is not recycled must be treated in alternative waste management options. Therefore, from the point of view of the waste holder as well as consumer/tax payer, spending funds for recycling is cheaper if the avoided waste treatment costs are higher than the financing need for recycling. Within the framework of this study, no such net costs were calculated due to difficulties to distinguish between fixed and variable costs for alternative waste treatment methods. Fixed costs occur independently from waste quantities. For example, local authorities cannot always optimise the organisation of residual waste collection (adjustment of containers, of the collection circuit, of manpower) in parallel with the development of separate collection due to management constraints (characteristics of existing equipment ). In the case of incineration, the decrease in the total amount of waste incinerated can push up unit costs as a consequence of an under-utilisation of the incinerator if the recycled waste is not replaced by other sources. Additionally, it is difficult to allocate waste treatment costs per material due to different specific weights and other characteristics. 2 or collected when waste are not sorted TAYLOR NELSON SOFRES- Consulting 15

17 1.4 Conclusions Given the lack of reliable data, cost assessments rely on several hypotheses. As a consequence, the accuracy of the cost values can be considered to be within a range of 10% to 15% for household packaging. For non-household packaging, the accuracy may be much lower. In the estimation of the environmental impacts and benefits of recycling compared to the other treatment routes, the packaging mix currently recycled is taken as basis for the calculations. Energy savings and waste avoidance are used as indicators. The following factors seem to influence the cost-efficiency of packaging recycling. The possibility to choose between industrial and commercial sources and household sources reduces the costs per tonne of waste recycled and per unit of energy saved substantially (focus on the cheapest source for each material). The density of population is an important factor. Obligations to cover small and remote municipalities increase costs considerably. Environmental benefits, however, are reduced by higher transport distances only to a relatively smaller extent. As regards the influence of increasing quantities of collected and recycled packaging materials on the costs per tonne, there is no clear trend recognisable. This may be the result of two opposite trends: on the one hand, economies of scale with higher recycling levels may reduce unit costs; on the other hand, higher recycling levels may result in the need to address sources more and more difficult to recycle (e.g. for plastics and aluminium in Germany). The relatively low costs in the Netherlands may be partly a result of relatively high recycling levels without, however, addressing relatively expensive sources. The recycling costs need to be compared to the costs of alternative waste treatment. Although the study cannot give concrete net costs and has to rely on several hypotheses, as explained in the corresponding chapters, it is clear that in many cases recycling is the cheapest waste management option. This is confirmed by recycling activities that existed before any legislative measures were enacted. The direct comparison between France and Germany on the one hand and the Netherlands and the United Kingdom on the other hand is difficult because the materials recycled do not always come from the same source. In the Netherlands and the United Kingdom, industrial and commercial sources prevail (although there are also highly effective systems for glass and paper/board collection from households in the Netherlands), whereas in France and Germany, there is a focus of recycling efforts on household sources (although there is also significant collection from industrial and commercial sources). TAYLOR NELSON SOFRES- Consulting 16

18 The French and German systems are based on an administrative approach, i.e. the setting of a relatively detailed legal framework differentiating between household/sales and non-household/non-sales packaging. Further details are fixed by the approval conditions for the recycling/recovery systems for household/sales packaging. Consequently, these systems do not necessarily focus on the sources that are most cost-efficient to recycle. Although more costly per unit of environmental benefit, the highest recycling levels and environmental benefits in absolute terms are attained by Germany. The French situation is usually somewhere between the Dutch and German systems as regards costs per unit of environmental benefit (except for paper, where costs are highest for France). Recycled quantities are comparatively low (except glass). The Dutch system is to a large extent based on agreements with industry and public authorities and does not differentiate between industrial and household packaging waste. As a consequence, there is a focus on the most cost-efficient sources for the respective packaging materials and it has the lowest costs per unit of environmental benefit. It fails, however, to achieve as high recycling rates as the German system. The United Kingdom system relies on the provision of evidence of recycling and recovery by obligated companies, this evidence being tradable ( packaging recovery notes ). This system also leaves the choice between industrial and household sources open. So far, the system has, however, not yet substantially increased pre-existing recycling levels and therefore it is too early to evaluate the effects of the PRN system. The current recycling activities in the United Kingdom are not necessarily linked to the PRN system and are mostly limited to cases where it is financially cheaper than alternative waste management options. As regards household packaging, the only existing recycling schemes are for glass (medium to high costs, depending on whether a PRN price is included) and aluminium cans (financially profitable). TAYLOR NELSON SOFRES- Consulting 17

19 Cost per GJ of Energy saved by Household Packaging Recycling in comparison to Production from Virgin Material Euros / GJ of primary energy saved Glass Plastics Paper board Tinplate Alu The United Kingdom The Netherlands Germany France TAYLOR NELSON SOFRES- Consulting 18

20 Cost-Benefit Ratio of Household Packaging Waste Recycling Glass Recycling rate % 3 /GJ primary 4 /GJ marginal 5 (incin.) France 48 6 n.a Germany n.a Netherlands 84 2 n.a UK n.a Plastics Recycling rate % /GJ primary /GJ marginal (incin.) France Germany Netherlands 0 n.a. n.a UK 0 n.a n.a Paper/board Recycling rate % /GJ primary /GJ marginal (incin.) France Germany Netherlands UK 0 n.a n.a Tinplate Recycling rate % /GJ primary /GJ marginal (incin.) France n.a Germany n.a Netherlands 70 4 n.a UK 0 n.a n.a Aluminium Recycling rate % /GJ primary /GJ marginal (incin.) France Germany Netherlands 0 n.a n.a UK figures 4 cost per GJ energy saved compared to the production of primary material 5 additional cost per additional GJ energy saved compared to incineration with energy recovery TAYLOR NELSON SOFRES- Consulting 19

21 Cost of recycling Glass Household Glass 48% E/t sorted kt % kt % 341 kt France Germany Netherlands United Kingdom % 480 kt Recycling rate Recycled quantity 12 Total expenses Market revenues Total financing need Non Household Glass 10 10% 29% 7% 76 kt 57 kt 6 kt 25 kt E/t sorted F. G. NL. UK. Rate Quantity Net expenses Cost of recycling Plastics Household Plastic 5% 44 kt E/t sorted France 69% 609 kt Germany Recycling rate Recycled quantity 12 Total expenses Market revenues Total financing need Non Household Plastics E/t sorted % 14% 23% 21% 71 kt 96 kt 71 kt 125 kt F. G. NL. UK. Rate Quantity Net expenses TAYLOR NELSON SOFRES- Consulting 20

22 Costs of Alternative Waste Treatments Household and Non Household, Multimaterial F. G. NL. UK. Incineration with energy recovery Disposal TAYLOR NELSON SOFRES- Consulting 21

23 Specific patterns per material Glass recycling generally results in low to medium costs per energy saved, due to the variation of recycling costs between countries. Both Germany and the Netherlands achieve very high recycling rates for household packaging (83 and 84% respectively). In Germany the costs per ton are relatively high which can partly be explained by old contracts. Additionally, the cleaning costs of the areas around the collection points are paid by DSD. In the Netherlands, the costs are low, in part because of the high population density. France has a lower recycling rate (48%) and intermediate costs. A cost-containing factor is that glass colours are not collected separately. The United Kingdom has a low recycling rate (26%) and relatively high costs, if the value of PRN is included in the calculation. A particular problem for the UK, but also true to some extent for Germany and the Netherlands, is the fact that collected glass has a high share of green glass for which there is only limited use for domestic beverages. The high costs may also reflect the need to build up additional infrastructure. In the case of glass, non-household packaging plays a minor role. Plastics recycling results in relatively high costs per unit of energy saved. There is, however, a strong variability depending on the composition of the material and the outlet chosen. Energy savings are highest for mechanical recycling of clean, source separated plastics fractions which substitute virgin plastic resins in the same proportion. Mechanical recycling of plastics fractions which substitute less virgin plastic resins or other materials (wood, concrete) as well as feedstock recycling (in the case the blast furnace process) result in lower energy savings. If compared to incineration with energy recovery, the energy balances of both material and feedstock recycling depend on the energy use efficiency of the alternative incineration process. In the case of highly efficient use of electricity and heat, the balances are still favourable to material recycling of PE, but not significant for other resins (PET, PVC) and may be unfavourable to feedstock recycling of mixed plastics. In the case of low efficiency of incineration, the balances are favourable to both material and feedstock recycling. Plastics recycling from household sources seems to be relatively expensive per energy saved although still in the same rough dimension as other materials. This refers, however, to energy saving compared to virgin materials production. If the energy saving compared to alternative treatment methods such as incineration with energy recovery is considered, the relative costs will be to a certain extent higher. Plastics from household sources are collected mainly in France and Germany. The recycling rate is 69% for Germany and only 5% for France. In spite of different products (in France mainly plastics bottles, in Germany a wide range of products) and treatment methods (in Germany feedstock recycling for mixed plastics additionally to mechanical recycling for separated plastics), the costs per tonne are on the average comparable (15% lower in France). Non-household plastics packaging waste arisings usually are slightly lower than from households. The exception is the United Kingdom where non-household sources dominate. Recycling of non-household plastics packaging waste seems to be substantially cheaper, in particular in the case of clean sources and high volumes. In many cases, it is profitable. The Netherlands and the UK recycle almost only plastics from non-household sources and reach around 20% for these sources. France and Germany have lower rates for these sources of around 10-15%. TAYLOR NELSON SOFRES- Consulting 22

24 Cost of Recycling Paper Board Household Paper board 400 E/t sorted % 91% 46% 114 kt kt 234 kt France Germany Netherlands Recycling rate Recycled quantity 12 Total expenses Market revenues Total financing need Non Household Paper Board % 44% 75% 54% F. G. NL. UK Rate kt kt 730 kt kt Quantity E/t sorted 100 Net expenses Cost of Recycling Tinplate Household Tinplate E/t sorted % 77% 70% 258 kt 484 kt 80 kt France Germany Netherlands Recycling rate Recycled quantity 12 Total expenses Market revenues Total financing need Non Household Tinplate % 98% 73% 99% 156 kt 376 kt 78 kt 182 kt E/t sorted 50 F. G. NL. UK Rate Quantity Net expenses TAYLOR NELSON SOFRES- Consulting 23

25 Cost of Recycling Aluminium Costs of Alternative Waste Treatments Household Aluminium E/t sorted % 6 kt % 60 kt % 25 kt France Germany United Kingdom Recycling rate Recycled quantity 12 Total expenses Market revenues Total financing need Household and Non Household, Multimaterial F. G. NL. UK. Incineration with energy recovery Disposal 80 TAYLOR NELSON SOFRES- Consulting 24

26 Paper and board recycling is in the lower to medium range of costs per unit of energy saved in relation to virgin materials production. Again, the figures might be to a certain extent higher if compared to incineration with energy recovery. Recycling is, however, in the large majority of cases favourable in terms of energy savings. For household sources, Germany reaches a recycling rate of 91%, the Netherlands of 46% and France of 11%. In the United Kingdom, very low quantities are collected from household sources. The costs per tonne are highest in France. This is to a large extent due to a high share of kerbside systems (with collection mixed with other materials, inducing sorting). Germany has intermediate costs. A cost advantage may be the mixed collection with newspapers, a drawback is the existence of old overpriced contracts. The Netherlands has the lowest costs per tonne, partly due to a strong involvement of charities. Paper and board packaging waste arisings from non-household sources usually are somewhat more than double of household paper packaging, with the exception of the United Kingdom (sevenfold). Recycling rates are 78% for France, 75% for the Netherlands, 54% for the UK and 44% for Germany. Costs are substantially lower for non-household sources, except for the Netherlands where they are comparable. Recycling of tinplate is in the lower to medium range in terms of costs per energy saved. The respective recycling rates for household sources are 77% for Germany, 70% for the Netherlands and 45% for France. The costs are clearly highest in Germany where tinplate is part of the separate collection at source. Additionally, old contracts may play a cost-increasing role. In France, tinplate is mostly extracted after incineration, in the Netherlands before or after incineration of mixed municipal waste. The distribution of tinplate between household and non-household sources varies between the countries with the extreme cases of the UK (household is triple of non-household packaging) and the NL (non-household exceeds household packaging). Nonhousehold tinplate is recycled to a high degree and cheaper than recycling of household sources. In many cases it is profitable. Aluminium packaging recycling is in the low range in terms of costs per energy saved or even profitable financially. The recycling rates for household sources are 63% for Germany, 28% for the United Kingdom and 7% for France. Germany has net costs, partly due to the wide range of collected aluminium packaging waste 6 and as a consequence of old overpriced contracts for separate collection. France has small profits from aluminium mostly collected after incineration of mixed municipal waste. The United Kingdom bring back for a fee scheme of source-separated cans (high quality aluminium) makes the highest profits. 6 This mix contains almost no cans which are usually made of tinplate in Germany TAYLOR NELSON SOFRES- Consulting 25

27 1.5 Likely Developments which may Change the Position of the Various Countries in the Near Future In Germany, there are old contracts concluded at a time when DSD had a very weak negotiating position. They were to a certain degree overpriced and entail higher costs than the likely underlying real costs of companies charged with the collection/sorting/recycling of the material. The re-negotiation of these contracts and the development of automatic sorting could permit to lower costs in the future. In France, the extension of the separate collection to the whole national territory in the near future (in 1997, 1/3 of the population was involved in separate collection) and the works undertaken to optimise collection and sorting systems will probably increase the recycling rates significantly. This may also bring down unit costs, especially for paper/board. In the United Kingdom, the injection of funds through the PRN system should permit to extend recycling beyond purely market driven levels. Only then, it will be possible to evaluate the cost-efficiency of this system. TAYLOR NELSON SOFRES- Consulting 26

28 2. INTRODUCTION TAYLOR NELSON SOFRES- Consulting 27

29 waste management tax fees minim um guaran teed take back price tonne triée (1) (9) ( soutie départ n à la ) -bottle bank purchase and emptying -containers purchase and kerbside collection subsid y partici pation to transp ort 1 overhead (8) (4) transport of collected glass to processors Glass household packaging sorted in 1998 (4) kt (7) financial flows crushing into cullet transport of cullet to glass companies waste ownership 26 kg/capita/yr 48 % glass flows (1) 90% of glass collected through a bring back system=250 F/t; 10% of glass through a kerbside system=600 F/t (source for cost data: TN SOFRES Consulting) Intermediary calculations Description of the Methodology Followed in the Study Assessment of the performances of the systems COST ENVIRONMENTAL BENEFITS COST of HOUSEHOLD packaging per material France Financing of GLASS household packaging recycling Who paid for what in 1998? Tax payers total (household) Local authorities Fillers & importers waste RECYCLING COST of NON HOUSEHOLD packaging waste RECYCLING per material total COST of TOTAL packaging 105 F/t (2) 285F/t 30F/t (6) 9F/t per tonne sorted (5) Collectors / sorters waste RECYCLING COST of TOTAL MANAGEMENT (household and non household ) recycling incineration with energy recovery disposal ENVIRONMENTAL BENEFITS energy / solid waste per material / household-non household / total recycling / incineration / landfill 150F/t (10) (4) (10) 65F/t 64F/t (3) 25F/t (4) 100F/t (4) FF/t Euros/t sorted Expenses sorted Collection Transport 1 Processing, transport Overhead Eco-Emballages 9 1 Total expenses Market revenues Glass companies Total financing need Eco-Emballages Glass companies (4) 20F/t Transporters 1 Processors Transporters EFFICIENCY of the packaging waste management system in each country Total Household Non household Recovery rate Recycling rate COST-EFFICIENCY of HOUSEHOLD packaging RECYCLING Glass per material UK total 60 G waste COST-EFFICIENCY of NON HOUSEHOLD packaging RECYCLING COST-EFFICIENCY of TOTAL packaging France The Netherlands Recycling rate (%) Germany The United Kingdom COST-EFFICIENCY of TOTAL MANAGEMENT (household and non household ) waste waste RECYCLING 11 COSTS-BENEFITS relation of the systems implemented in the countries for the RECYCLING of HOUSEHOLD packaging waste energy / solid waste per material household / total recycling F NL Total France UK F The Netherlands Recycling rate (%) NL Germany G The United Kingdom EFFICIENCY COST - EFFICIENCY COSTS-BENEFITS RELATION February, 2000 TAYLOR NELSON SOFRES- Consulting

30 2.1 Objective and Scope of the Study Directive 94/62/EC on packaging and packaging waste has been implemented in national law for every Member State except Greece. These implementations have led to different types of national packaging waste recycling organisations (recycling targets, collection systems, financing rules ). The objective of this study is to carry out a cost-efficiency analysis of recycling in four countries, including the comparison with alternative treatment routes (incineration with energy recovery, disposal). Packaging waste from both household and nonhousehold sources is covered. The analysis is carried out on a per material basis (glass, plastics, paper-board, tinplate, aluminium). The study aims at assessing the situation of packaging recycling in a country at a point in time without separating the effect of the implementation of the Directive on recycling. Therefore, it also includes recycling which was carried out before the Directive was implemented. The term packaging recovery systems has been interpreted in a wider sense (i.e. not focusing only on particular compliance schemes such as DSD, Eco-Emballages, SVM-Pact, Valpak or Biffpack and the PRN system) but on the way both recycling and recovery are organised and financed in the four countries. The national schemes chosen in collaboration with the European Commission are those of France, Germany, the Netherlands and the UK. These four national schemes are very different for the following reasons: the contrasted waste management contexts before the implementation of the directive and country specificities: density of population, importance of reuse, recycling habits, proportion of population already involved in separate collection programs, importance of incineration, landfill limitations the different philosophies of implementation: an approach based on agreements with industry and municipalities focussing on low-cost sources of packaging materials in the Netherlands, an administrative approach in France and Germany based on setting a relatively detailed legal framework differentiating between household/sales and non-household/non-sales packaging, an approach aimed at creating additional markets via a tradable permit scheme in the UK, TAYLOR NELSON SOFRES- Consulting 29

31 the different forms of financial organisation, in particular for household packaging waste: green dot systems in Germany and France, PRN system in the UK, financing via municipalities and industry in the Netherlands. Each national scheme has been analysed according to three criteria: performance, costs and benefits. Performances of the systems (chapter 3): recycling and recovery rates split between household and non household packaging waste and per material. Costs: cost of household packaging waste recycling per material (chapter 4), cost of non household packaging waste recycling per material (chapter 5), cost of packaging waste management as a whole, including all types of packaging and all types of treatment routes such as recycling, incineration with energy recovery, incineration without energy recovery, landfill (chapter 6). Benefits: energy consumption and solid waste arising (chapter 7). Scope of the study: Total packaging waste: household and non household. Total current recycling in the country, whether it has been developed after the Directive or was pre-existing. Benefits: environmental benefits are assessed in terms of energy consumption. Costs: the system studied stops at the gate of the companies 7 which use the sorted or processed materials to make a final product. The cost analysis performed is close to the methodology of value-chain analysis: the various financial flows (costs and revenues) have been shown for each single step from collection to recycling. 7 the gate fees are positive when these companies buy the material and negative when they receive money for taking the material TAYLOR NELSON SOFRES- Consulting 30

32 Three types of costs were considered: The total cost: all costs from collection until the gate of a factory producing a final product. The financing need : total costs minus revenues from the sale of sorted materials. This is the amount of financial injections necessary to render recycling profitable from a recycler s point of view. Since the financing need essentially corresponds to the amount covered by packaging recovery systems (in the wider sense, i.e. including contributions by the tax payer), this study mainly focuses on this type of costs and the way it is shared between the various actors. The net costs comparing the financing need with alternative waste management options. Obviously, waste that is not recycled must be treated in alternative waste management options (incineration with energy recovery or disposal 8 ). Therefore, from the point of view of the waste holder as well as consumer/tax payer, spending funds for recycling is cheaper if the avoided waste treatment costs are higher than the financing need for recycling. Within the framework of this study, no such net costs were calculated due to difficulties to distinguish between fixed and variable costs for alternative waste treatment methods. Fixed costs occur independently from waste quantities. For example, local authorities cannot always optimise the organisation of residual waste collection (adjustment of containers, of the collection circuit, of manpower) in parallel with the development of separate collection due to management constraints (characteristics of existing equipment ). In the case of incineration, the decrease in the total amount of waste incinerated can push up unit costs as a consequence of an under-utilisation of the incinerator if the recycled waste is not replaced by other sources. Additionally, it is difficult to allocate waste treatment costs per material due to different specific weights and other characteristics. 8 disposal regroups incineration without energy recovery and landfill (see detailed calculation in appendix 4) TAYLOR NELSON SOFRES- Consulting 31

33 2.2 Methodological Issues The study initially focused on checking available literature but it soon turned out that additional enquiries at both national and European levels were necessary to complete and cross check data. The purpose of the cost analysis is to show the various financial flows in a transparent way. By analysing the costs and revenues of each single step from collection to recycling and recovery, it becomes possible to define particular services (e.g. recycling of 1 kg of glass including collection, transport, grinding, minus revenue from sales to glass plant). The costs of these services can then be compared between the various countries independently from the different financing structures. This type of analysis is very close to the methodology of value-chain analysis. It has, however, not always been possible to identify the real cost of the services. For Germany, we have taken into account the prices paid by DSD without assessing the real costs of operations. In the case of the UK, we only considered the absolute PRN amount irrespective of the real cost of the operations they are supposed to cover. In France, the costs are not real prices paid to the operators, but calculated costs with a theoretical approach (based on studies with local authorities). The same methodology also was applied to non-household packaging waste recycling. However, the degree of uncertainty of available data is far higher than for household packaging. Therefore, the presented figures need to be seen as giving an order of magnitude rather than concrete numbers. The costs quoted include the margin of operators. The evaluation of the situation in the UK is difficult given: the newness of the system: the packaging waste scheme has been running fully for the first year in 1998, the originality of the system, with a decentralised approach and the use of PRNs (Packaging Recovery Note) to inject extra financing in the system. As a consequence, the situation in the UK varied a lot over the year 1998 (PRN prices, sorted materials prices, organisation of collection ) and it is difficult to give a representative picture of the system. In addition, the system still needs to be fine tuned and it is hard to judge the effectiveness of the economic tools put in place (PRNs) towards an increase of recycling. In particular, the way PRN financing is used by reprocessors remains uncertain and there is no evidence today that recycling capacity increased in the UK in Given the lack of reliable data, cost assessments rely on several hypotheses. As a consequence, the accuracy of the cost values can be considered to be within a range of 10% to 15% for household packaging. For non-household packaging, the accuracy may be much lower. TAYLOR NELSON SOFRES- Consulting 32

34 3. CURRENT SITUATION OF THE 4 COUNTRIES COMPARED WITH THE PACKAGING RECYCLING AND RECOVERY DIRECTIVE TARGETS TAYLOR NELSON SOFRES- Consulting 33

35 Table 1: Current situation - Total packaging waste recycling and recovery Directive 2001 targets France Germany The Netherlands The United Kingdom Total recovery 50 to 65% 50% 75% minimum 71% 34% Total recycling (with wood) Total recycling (excl. Wood) 25 to 45% 40% n.a. n.a. n.a. 44% 64% 55% 31% Glass 15% minimum 42% 75% 75% 23% Plastics 15% minimum 7% 45% 12% 7% Paper/board 15% minimum 59% 59% 65% 47% Tinplate 15% minimum 82% 72% 25% 53% Aluminium 15% minimum 72% 15% 27% Composites 15% minimum (1) (1) (1) (1) Wood 15% minimum 18% n.a. n.a. n.a. (1) Included in paper/board and metals n.a. non available Source of data: official data transmitted to the European Commission for France, Germany and the Netherlands; several sources for the United Kingdom (see tables A1, A2, A3 and A4 in appendix 1) TAYLOR NELSON SOFRES- Consulting 34

36 3.1 Current Situation for Total Packaging (table 1) 2001 directive targets for recycling: Total packaging (25 to 45%): reached by all 4 countries, Per material (15% minimum): main problem for plastics (except Germany) directive targets for recovery (50 to 65%): Reached by the 3 countries where waste incineration is well developed, Problems for the UK where there are very few incineration plants. Remarks concerning the reliability of the figures: Different sources of information: Official national data transmitted to the European Commission for 1997 (for total household and non household packaging), Several national reports regarding the split between household and non household packaging waste (see tables 2 and 3in the next pages), Annual reports, Hypotheses regarding non sales packaging recycling rates for Germany (e.g. non sales packaging consumption are calculated by difference between total and sales packaging consumption coming from different information sources), Monitoring systems not yet fully operational in the countries: New system in the Netherlands since 1998, Data coming from all the packaging chain in the UK, which multiply the difficulties to assess exports which have not to be taken into account, Difficulties to split collected papers between packaging and non packaging, particularly in the Netherlands, Difficulties to assess the quantities of household packaging put on the market and the quantities collected outside of the compliance schemes in France and Germany. Different calculation rate (out of packaging consumption, out of packaging waste). Lack of reliability for both packaging quantities put on the market and recycled. TAYLOR NELSON SOFRES- Consulting 35