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WEEE DIRECTIVE ANALYSIS

Analysis of Explanatory Memorandum
 of Third Draft Directive on Waste from
Electrical and Electronic Equipment

Rod Hunter
Marta López-Torres
Anne Hautamäki
Hunton & Williams
Brussels

In July 1999, DG XI issued a third draft for a Proposal for a Directive on Waste from Electrical and Electronic Equipment, together with a 54 page Explanatory Memorandum meant to justify and explain the proposed legislation.  The Explanatory Memorandum surveys environmental problems thought to be caused by electronics.  In addition, the Explanatory Memorandum comments on impacts of the proposal on employment, small- and medium-sized enterprises (SMEs), the internal market and international trade.  The last section of the Explanatory Memorandum comments on the draft proposal’s provisions.  

Despite its length, a close review of the Explanatory Memorandum reveals that DG XI has failed to justify its draft proposal.  DG XI has conducted no risk assessments of substances it seeks to ban, nor has DG XI considered the availability, viability and risks of alternatives.  European pilot projects do not support DG XI’s arguments for the proposed take-back scheme.  The cost/benefit analysis is based on doubtful and unexplained assumptions.  Although DG XI’s intentions are beyond reproach, a close review of its justifications for the draft WEEE Directive highlight the weakness of analysis behind the proposal, and the need for dispassionate and detached analytical work before proceeding with such ambitious regulation. 

This report reviews and comments on the draft WEEE Directive’s Explanatory Memorandum. Part I summarizes our observations on the approach and substance of the Explanatory Memorandum.  Part II examines the assertions concerning environmental problems posed by WEEE.  Part III looks at the assessment of risks posed by the banned substances.  Part IV reviews the cost/benefit analysis.[1] 

I.            Summary of Observations 

A.            General Comments 

Lack of Scientific and Technical Precision:  The Explanatory Memorandum is characterized by vagueness and lack of scientific and technical precision. When DG XI cites pilot projects and scientific studies, references are ambiguous at best, as the footnotes are devoid of page citations.  Furthermore, the Explanatory Memorandum often refers to calculations, scientific data and findings without providing any indication of source.

Studies referenced by DG XI often do not support DG XI’s arguments:  Documentary evidence cited by DG XI is rarely devoted specifically to WEEE, and those that are devoted to WEEE do not, on close review, necessarily support DG XI’s case.  Take for instance the Nordic Council Report on “Environmental Consequences of Incineration and Landfilling of Waste from Electr(on)ic Equipment,” one of the two WEEE-specific studies.[2]  The Nordic Council report avoids drawing conclusions as “calculations and assessments in this report are based on limited exact knowledge and information from only a few sources.”[3]  The Nordic Council report suggests that the issues should thus be further investigated, and that it should be possible to develop informative data on waste for incineration and landfill of electronics. DG XI, however, is attempting to set policy without doing the empirical research or analysis necessary to ascertain the environmental problems and the most prudent and efficient policy solutions. 

            B.            Environmental Problems from WEEE 

The Explanatory Memorandum’s review of environmental problems arising from WEEE is partial and misleading.  

• Two of DG XI’s main arguments for WEEE legislation are (1) WEEE poses risks when incinerated or landfilled, and (2) the environmental risks arising from WEEE are not addressed by current waste management practices.
  
•   The Explanatory Memorandum, while providing a percentage of WEEE that is incinerated or landfilled, fails to note that according to a study commissioned by the Commission, WEEE represents less than 1% of the total EC solid waste stream or about 4% of EC municipal solid waste.
  
• The Explanatory Memorandum, while providing general information on
  waste incineration, does not provide any data on contribution of WEEE to incineration emissions.
  
• The Explanatory Memorandum asserts the WEEE proposal is necessary because some incinerators do not operate at strict enough emission levels and landfills in some EC countries (particularly less prosperous ones) are uncontrolled, but neglects to take into account the impact of its proposed incineration directive and the recently adopted Landfills Directive.  It also fails to consider whether meeting the WEEE Directive requirements might indeed be more difficult for countries not blessed with infrastructure than applying incineration and landfill legislation.
  
• The Explanatory Memorandum asserts as a justification for the WEEE proposal that Central European candidate countries cannot be expected to comply with EC emission (or other) requirements.  However, as candidate countries are not EC member states, their situation is of no relevance.  In any event, this argument runs opposite to DG XI’s intent, for it would seem likely that candidate countries would find it difficult to implement such a complex scheme as envisaged by the WEEE proposal.
  
• DG XI cites material recycling as a main legislative objective, but does not attempt to demonstrate how and why WEEE recycling, an industrial process like any other with potential environmental harms, will necessarily result in a net environmental benefit.
  

            C.            Substance Restrictions 

The Explanatory Memorandum contains no risk assessments to justify the banning of substances. 

• The ban justifications are a mere review of inherent hazards of the suspect substances, devoid of analysis of human and environmental exposure.
• There is no examination of the availability and viability of substitutes, nor of their potential health and environmental risks. 
•   In short, the Explanatory Memorandum provides no grounds for confidence that the proposal will not result in greater risk by forcing the use of materials with less desirable performance and health characteristics. 

Example of lead.  The Explanatory Memorandum finds support in just one study, the OECD Risk Reduction Monograph on Lead.  This document neither constitutes a risk assessment of lead in electronics nor even provides support for banning lead in electronics. 

• The main concern with lead in the waste stream is the potential for drinking water contamination and thus human ingestion.  However, according to the OECD study, “since elemental lead and lead compounds are stable, health concerns are minimal for a properly managed landfill with runoff and leachate controls.”  As for incineration, the OECD study opines that “lead emissions from combustible and non-combustible components of municipal solid waste can be controlled with 99 per cent or greater efficiency.”
  
• The OECD report makes clear that no OECD country has banned the use of lead in electronics as a means to counter-act a “potential” risk from the disposal of electronic goods. 
  
• In all European countries reviewed by the OECD report, the average concentration of lead and lead discharges to air, water and soil has decreased in recent years.  
  

D.            Cost/Benefit Analysis 

Take-Back Costs.  The DG XI cost-estimates of its proposed EC-wide take-back scheme are exclusively (and selectively) based on pilot projects carried out in a handful of member states. 

• How representative these projects are is questionable.  No Southern countries are represented in the pilot projects, even though it seems plausible that take-back schemes would be more costly in Mediterranean and other less economically developed countries where infrastructure is lacking.  Also, DG XI has made no use of cost data from those countries where take-back laws are already in place — e.g., the Netherlands and Switzerland. 
  
• DG XI’s use of the pilot project data is suspect.  Only four studies out of eleven surveyed had results generally supporting DG XI’s costs conclusions.  DG XI’s reading seems to constitute a partial interpretation of data in favor of the lowest cost estimates. 
  
• DG XI’s manner of drawing conclusions from these data is cavalier.  DG XI concludes that the total costs of collection and recycling of WEEE for all member states together will be around 500–900 million euro/year, and notes that this could lead to a price increase of between 1–3% for electronic goods.  DG XI then dismisses, without justification, the relevance of this figure, as “it is likely that these calculated costs are substantially overstated.”

Substance Restrictions Costs. 

·                   The Explanatory Memorandum’s cost analysis for the substance bans is peculiar.  The Explanatory Memorandum assumes that the highest costs will arise from substituting lead in solder. It then boldly concludes that if such costs were found to be “bearable,” there is no need to analyze further the costs of substituting other substances. 

·                   This approach makes a farce of the Commission’s obligation to undertake cost/benefit analyses on legislative proposals.  Since the purpose of the assessment is to allow the legislature to form an educated opinion on the prudence of the proposal and its elements, such assessments must examine the costs and benefits of the ban on each and every substance.  Even if the costs of banning one substance are in absolute terms less than banning another, that information alone is of little use to the legislature.  After all, the purpose is to determine the relation of costs to benefits. 

·                   As for the cost assessment of substituting lead in solder, the Explanatory Memorandum is grossly incomplete. 

·                    It states, without providing its sources, that “the total price increase would remain very small for most products” and that the additional operational costs may be estimated to about 150 million euro/yr. However, industry and other sources estimate the costs to be much higher. 

·                    Also, as the Explanatory Memorandum recognizes, “this amount does not include R&D costs as well as additional investments needed,” which would be, of course, important factors influencing the ultimate substitution costs. 

Collection and Recycling Benefits.   

·       The Explanatory Memorandum provides an impressionistic discussion of environmental benefits (such as “possible use of resources”), enumeration of electronic products’ components (that could be “at least partly introduced into the economic cycle”) and unsubstantiated data and figures.  The discussion leaps, with the analytical rigor of a Rorschach inkblot exercise, from energy savings to negative effects of mining.

·       The Explanatory Memorandum argues that the main financial benefits to be reaped from the draft directive will stem from reduction of landfill and incinerator demand.  If these are indeed the main financial benefits, one might wonder if the legislation is worth the candle.  After all, WEEE constitutes only about 1% of the EC waste stream.

Improved Design and Substance Restrictions Benefits. 

·       According to the Explanatory Memorandum, the WEEE proposal will result in improved design, which will lead to reduced costs for reuse and recycling of waste equipment, lower disposal costs and less environmental pollution.  No analysis is attempted for potential costs incurred by society by restricting or diverting product innovation via government regulation. 

·       As for benefits of bans, DG XI sees this as a case of application of the “precautionary principle,” not requiring further elaboration. This is hardly the sort of analysis that would be contemplated by the draftsmen of the EC Treaty when imposing the cost/benefit analysis requirement. 

Employment Benefits.  The assessment of employment effects is myopic.  The Explanatory Memorandum projects job creation in recycling, but ignores the broader employment effects of the draft directive in the electronics and retail sectors.  By increasing regulatory barriers and burdens to marketing products and services, European regulation increases costs and decreases choice for consumers of those products and services, and hence in turn decreases demand.  That there ultimately is downward pressure on employment in production, distribution and retail should be no surprise. Any respectable analysis of employment effects of legislation would consider such broader implications. 

II.            Environmental Problems Posed by WEEE 

A.            Electrical and Electronic Equipment (EEE) 

The Explanatory Memorandum divides EEE into three groups:  (1) large equipment primarily or exclusively used by consumers; (2) small equipment primarily or exclusively used by consumers; and (3) equipment for professional use.  The Explanatory Memorandum discusses the presence of “problematic” substances in these product groups.  According to the Explanatory Memorandum, one of the main problems with large household equipment is condensators, “more than 10% of which are PCB suspect.”[4] A main problem with small appliances is that they contain high levels of copper. This selective enumeration material content of some electronic products fails to prove the need for legislation.  That is, the Explanatory Memorandum lacks a systematic analysis of the content of the electronics, hazards of suspect substances, risks of exposure to humans and the environment of the suspect substances, and levels of exposure and effects. 

The decision to draft legislation covering all electronic products, as opposed to taking a sectoral approach, is based, according to the Explanatory Memorandum, on national experience.  Apparently, “first experiences with the implementation of national legislation in the Netherlands have shown that consumers tend to be confused by a limitation of take back legislation to selected WEEE groups only.”  The only evidence to support this claim is a vague reference to warnings from “experts from the Dutch government.”[5] 

As regards equipment for professional use, the proposal covers only small- or medium-sized WEEE.  The inclusion of business equipment is justified, according to the Explanatory Memorandum, because it is often found in the municipal waste stream. According to DG XI, this has been “confirmed by pilot projects on the collection of WEEE and by information provided by a number of European recyclers.”[6]  However, the Explanatory Memorandum refers to only one pilot project, that concerning the Lothian region of Scotland.[7]  Moreover, the Explanatory Memorandum does not further explain what was “the information provided by a number of European recyclers,” nor who precisely they were. 

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