69255 THE WORLD BANK GROUP Turkey: Balancing Development, Sector Competitiveness, and Challenges of Complying with the EU Environmental Aquis Analysis of Household Appliances Sector and Implementation of Waste Electrical and Electronic Equipment Directive (2002/96/EC) Sector Note Sustainable Development Department Turkey Country Management Unit Europe and Central Asia Region 1 Contents Abbreviation list............................................................................................................................................ 5 Acknowledgements ....................................................................................................................................... 8 Executive Summary ...................................................................................................................................... 9 1. Introduction ......................................................................................................................................... 17 Background ............................................................................................................................................. 17 Objectives and Audience ........................................................................................................................ 19 Methodology ....................................................................................................................................... 20 Limitations .......................................................................................................................................... 21 2. Waste Electrical and Electronic Equipment Directive ........................................................................ 23 Background and Objective of the Directive ............................................................................................ 23 Experience with Implementing WEEE Directives, Lessons Learned from EU and Other Countries .... 25 Experiences from the EU Member States ........................................................................................... 25 Collective versus Competitive Systems .............................................................................................. 27 Collection and Logistics...................................................................................................................... 27 Fee Structures...................................................................................................................................... 28 Financial Guarantees and Freeriding ............................................................................................... 29 Individual Producer Responsibility (IPR) and Ecodesign .................................................................. 29 Product Scope and Producers .............................................................................................................. 29 An Overview of Actual Performance in EU-27 Member States ......................................................... 31 Directive Improvements ...................................................................................................................... 35 Factors Impacting the Operation of Compliance Schemes ................................................................. 36 The Recast Directive and Other Ongoing Developments ................................................................... 36 Examples of International Experience ................................................................................................ 38 3. Overview of the Sector, Future Projections and Key Issues ................................................................... 41 Generic .................................................................................................................................................... 41 Economic Outlook .............................................................................................................................. 42 Key Issues for the Sector .................................................................................................................... 45 Environmental Profile of the Sector.................................................................................................... 45 4: WEEE in Turkey ..................................................................................................................................... 48 Turkey‘s Context for Implementation of WEEE .................................................................................... 48 Transposition of WEEE Directive in Turkey .......................................................................................... 49 2 Implementation Challenges .................................................................................................................... 50 Estimation of WEEE Quantities in Turkey ............................................................................................. 51 Total Costs of Compliance .................................................................................................................. 57 Total Costs of Compliance with Collection Targets ........................................................................... 58 Implications on competitiveness ......................................................................................................... 65 Spatial Distribution of WEEE and Collection Alternatives ................................................................ 66 WEEE and the Industry .......................................................................................................................... 69 5. Managing the Next steps ......................................................................................................................... 71 References ................................................................................................................................................... 77 Annexes ...................................................................................................................................................... 79 Table 1: Amount of WEEE Collected and Treated in EU27 in 2005 as a Percentage of WEEE Arising .. 31 Table 2. Overall Economic Impact across EU-27 Member States Assuming Full Implementation ........... 33 Table 3. Differentiated Targets for Collection, Recycling and Treatment.................................................. 35 Table 4: Main Companies of the White Goods Sector ............................................................................... 41 Table 5: Economic Value of International Trade in the White Goods Industry (US$ thousands) .............. 43 Table 6: Breakdown of Exports in White Goods Sector ............................................................................. 44 Table 7: Energy Consumption of Different White Goods Produced by BSH Group ................................. 46 Table 8: Estimated Waste Quantities for Large Household Appliances for 2007 ..................................... 52 Table 9: Estimated Waste Quantities for Different EEE Categories for 2007 ............................................ 52 Table 10: Growth and Population Assumptions 2007-2016 ....................................................................... 54 Table 11: Projection of Waste Quantities to 2018 ...................................................................................... 56 Table 12: Component Costs of Recycling WEEE in Turkey by Product Category in 2012 (‗000 €) ......... 60 Table 13: Total Cost of Compliance with Collection Targets (million €, unless otherwise specified) ...... 64 Table 14. Production and Product-weight Information from One Major Company ................................... 65 Figure 1: Breakdown of WEEE Arising in the EU in 2008 ........................................................................ 23 Figure 2: Amount of WEEE Collected in Member States (2008) .............................................................. 32 Figure 3: Breakdown of Technical Costs for the Five Main Product Categories (derived from long running systems in 2005) ............................................................................................................................ 34 Figure 4: Total Production by the White Goods Industry (number of units) .............................................. 43 Figure 5: Production and Exports of White Goods Industry....................................................................... 43 Figure 6: Exports and Imports of the Turkish White Goods Industry ........................................................ 44 Figure 7: Technical and Additional Component Costs by Major Product Category (€/ton) ...................... 57 Figure 8: Total Cost of Recycling WEEE in Turkey by Product Category in 2012 (million €) ................. 61 Figure 9: Cost of Recycling by Product Category in 2012 (€/kg) .............................................................. 62 Figure 10: Composition of Total Cost by Product Category 2007-2018 (percent) ..................................... 63 Figure 11: Draft Map of Geographic Distribution of WEEE in Turkey ..................................................... 67 Figure 12: Actions Steps to Prepare for WEEE compliance....................................................................... 71 3 Box 1: Producers Obligations in EU Member States .................................................................................. 30 Box 2: The Swedish WEEE System, El-Kretsen ........................................................................................ 38 Box 3: WEEE Management System in Japan ............................................................................................. 39 Box 4: WEEE Management System in the US .......................................................................................... 40 Box 5: Collection of WEEE ........................................................................................................................ 68 Annex 1: WEE Directive ............................................................................................................................ 79 Annex 2: ROHS Directive .......................................................................................................................... 95 Annex 3: Draft WEEE Regulation, Key points ........................................................................................ 101 4 Abbreviation list AEGP-ECID Association of Electronic Good Products BERR United Kingdom Department for Business Enterprise and Regulatory Reform (disbanded as of June 2009 with creation of UK Department for Business, Innovation and Skills) B2B Business to business B2C Business to consumer BEYSAD Association of Turkish White Goods Producers C&F Cooling and freezing equipment CFCs Chlorofluorocarbons CRT/LCD Cathode ray tube (Electronic display equipment) Cr-Cd Chrome – Cadmium alloys GNP Gross net product EEE Electrical and electronic equipment ESES DPL Environmental Sustainability and Energy Sector Development Policy Loan EU European Union EPR Extended producers responsibility Euro/€ Monetary unit/currency of the European Union FPD Flat panel display IPPC Integrated pollution prevention and control IPR Individual producer responsibility Kg Kilogram LCD Liquid crystal display (Electronic display equipment) LHHA Large household appliances MOD Ministry of Development 5 MOEF Ministry of Environment and Forestry MOEU Ministry of Environment and Urbanization MOIT Ministry of Industry and Trade MOSIT Ministry of Science, Industry and Technology Ni Nickel NVMP Netherlands Foundation for the Disposal of Metal and Electrotechnical Products PbO Lead oxide PCS Producer Compliance Scheme PP Polluter pays REC Regional Environmental Center R&D Research and development RoHS EU Directive on Restriction of Hazardous Substances SHHA Small household appliances SME Small and medium enterprises SPO State Planning Organization TIS Turkish Institute of Standards TOBB The Union of Chambers and Commodity Exchanges of Turkey TÜBİTAK- Scientific and Technological Research Center for Turkey, Marmara Research MRC Center TURKBESD Association of Turkish White Goods Producers UNEP/MAP United Nations Environmental Program/ Mediterranean Action Plan UNU United Nations University US EPA United States Environmental Protection Agency VOC Volatile organic compounds WEEE Waste from electrical and electronic equipment YTL New Turkish Lira 6 This Sector Note communicates the results of the World Bank‘s analytical work and has undergone the review accorded to the World Bank Technical Papers. The findings, interpretations, and conclusions expressed in this technical Sector Note are those of the author(s), and do not necessarily reflect the views of the International Bank for Reconstruction and Development / The World Bank and its affiliated organizations, or those of the Executive Directors of The World Bank or the governments they represent. Some sources cited in the paper may be informal documents that are not readily available. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 7 Acknowledgements This Sector Note was prepared by a team of World Bank staff and consultants working on environmental management and institutional issues within the Europe and Central Asia (ECA) region under the leadership of John Kellenberg, Sector Manager, and Ulrich Zachau, Country Director for Turkey. This analytical work is a result of collaboration with the Government of Turkey, namely, the Ministry of Environment and Forestry1 (MoEF), State Planning Organization2 (SPO), Ministry of Industry and Trade3 (MoIT) and Undersecretariat of Treasury, and it was carried out in close collaboration with the Association of Turkish White Goods Producers (ATWGP, TURKBESD) and the White Goods and Parts Suppliers Association of Turkey, BEYSAD. The analysis is a synthesis of the inputs and advice of a wide range of interested parties. The team would like to acknowledge the many contributors and individuals that supported the preparation of this report. The team, comprising Adriana Damianova, Lead Environmental Specialist and Task Team Leader; Ruxandra Floroiu, Senior Environmental Engineer; Craig Meisner, Environmental Economist; Dr. Murat Mirata, Environmental Management and Policy Specialist; Esra Arikan, Environmental Specialist; and Ulker Karamullahoglu, Program Assistant, would particularly like to thank Prof. Cumali Kinaci, Director General Environment of the MoEF; Mr. Niyazi İlter, Deputy Undersecretary of the MoIT; Mr. Zühtü Bakir, Deputy Director General, MoIT; Mr. Abdüllatif Tuna, Director General for Economic Sector and Coordination, the State Planning Organization; Mr. Özgür Pehlivan, Deputy Director General of Foreign Economic Relations, Undersecretariat of Treasury; Ms. Elvan Ongun, Department Head Director, Undersecretariat of Treasury; Arzu Önsal, Environment Planning Expert and Ms. Sema Bayazid, Department Head in the State Planning Organization; Ms. Sukran Arkan, Environmental Engineer, Mr. Mahir Erdem and Kemal Kurusakiz, from the Waste Management Department of Ministry of Environment and Urbanization, and Mr. Cengyz Baykara and Ms. Evren Sapmaz from the International Relations Department of MoEU who supported and facilitated the preparation of this work at the level of the Government of the Republic of Turkey. Ms. Ozlem Durmuz, Hubert Humphrey Fellow, facilitated the collection of data from private sources and contributed to this study. Many of the important details in the analysis were obtained through discussions and interviews in Turkey with representatives of the public sector and industry. Therefore, we extend special thanks to Mr. Umut Gur and Mr. Ibrahim Demir, from SPO, Mr. Rifat Coşkun, Ms. Aynur Acar, Environmental Director of the Union of the Municipalities of the Marmara Region; Mr. Fatih Özkadı (Arçelik), Ms. Şebnem Akbaş (Arçelik), Mr. Dilek Temel (TOBB), Mr. Talat Yüksel (MSG) and Ms. İlknur Baylakoglu (TUBITAK). We thank our editor Ms. Barbara Catherwood who edited the sector note under tight schedule. Many other specialists in the public and private sectors also provided valuable inputs. Other contributors include Florian Fichtl and Mara Warwick based in the Ankara Country Office and Ina- Marlene Ruthenberg from the Country Management Unit. We thank them all. 1 Reorganized to Ministry of Environment and Urbanization and Ministry of Water Resources and Forestry in August 2011 2 Reorganized to Ministry of Development in August 2011 3 Reorganized to Ministry of Science, Industry and Technology in August 2011 8 Executive Summary Turkey‘s macroeconomic policies and strategies consider industrial growth as a major source of economic growth. However, industries, such as energy, iron and steel, cement, chemicals and construction, are energy intensive and contribute to air, water and soil pollution. Similarly, key sectors, such as automobile, electronics and household appliances, generate waste streams that could cause irreversible and hazardous effects on human health and environment if not managed properly. The experience of EU Member States shows that sector issues associated with harmonization of national environmental regulations with the EU Environmental Acquis are often complex, challenging and costly4, and causing implementation barriers to industrial competitiveness. The new regulatory requirements in line with EU Environmental Acquis will further affect producers and importers in sectors where significant environmental impacts appear during product use or at the end of product life As part of the effort to harmonize its legislation with the EU Environmental Acquis, Turkey is intensively engaged in strengthening environmental management policies. Key steps toward such improvements include the integration of environmental management systems in national economic development. Consequently, the private sector is under increasing pressure from regulators and international trading partners to strengthen compliance with environmental regulations. Recently, the private sector is stepping up its interest in win-win opportunities like water conservation and energy efficiency for enhanced environmental performance. The public sector role in putting policy incentives into place geared toward innovation, technology improvements and cost effective investments is key. Hence the need for decision makers to assess all ensuing issues. This sector note reviews policy and compliance issues in the electrical household appliances sector concerning implementation of the 2002/96/EC Directive on Waste from Electrical and Electronic Equipment (WEEE Directive). It aims to contribute to the knowledge and capacity of public and private sector stakeholders to formulate WEEE implementation targets in line with sector development goals and with environmental policies concerning WEEE and to assist the Government of Turkey in promoting environmental sustainability in a manner aligned with EU Environmental Acquis. The methodology used for the analysis draws on the Bank‘s experience in analyzing the linkages among industrial growth and environmental compliance and public policies promoting smart industrial growth. It reviews relevant international experiences in order to identify key factors affecting the implementation of the WEEE Directive and extract those that are relevant to Turkey. Waste Electrical and Electronic Equipment Directive (2002/96/EC) The WEEE Directive5 sets collection, recycling and recovery targets for electrical goods and is part of the EU legislative initiative to solve the problem of huge amounts of toxic e-waste. The 4 Turkey will incur substantial costs in implementing actions under the EU Environmental Acquis estimated in the range of €28– 59 billion4 over the 17 year period of implementation. 5 Founded upon the extended producer‘s responsibility principle, this directive makes producers and importers of electrical and electronic responsible for the waste generated by the products they introduce into markets. The directive provides guidance on the recycling targets, which is currently being revised 9 legislation also aims to conserve landfill and to support sustainable development by encouraging recycling practices and minimize the opportunities for illegal WEEE export. The need for such a directive in view of environmental policy priorities include public health protection, energy efficiency, effective toxicity control and air emissions reduction relevant to ozone depletion and global warming. Energy savings from recycling metals and plastics in WEEE is significant. For instance, using recycled copper could result in 85 percent energy savings per unit of production and for plastics more than 80 percent. Harmonization with the provisions of the WEEE Directive will affect several sectors, including household appliances, electronic and battery-operated equipment, and electrical machinery. Based upon the extended producer‘s responsibility (EPR) and polluter pays (PP) principles, the Directive is one of the key policy tools aiming to reduce the environmental impacts of WEEE by making the producers responsible for the management of their products at the end-of-life stage.6 Under the WEEE Directive, the EU requires manufacturers and/or distributors of electronic and electrical equipment to manage and pay for the collection and further handling of WEEE products, as well as provide WEEE-related information to their customers. Producers must register and mark products and components in individual countries that fall under the WEEE Directive and periodically report to government agencies on collection, disassembly and proper disposal of equipment at its end of life. Implementation experience from EU and other Countries There are significant differences in the organization, effectiveness and efficiency of the WEEE practices adopted by different countries. Data available indicates that factors such as availability of collection points, geographical location, culture, waste collection organization and financial mechanisms influence treatment performance. The EU member states experience related to implementation of WEEE directive at national level varies concerning issues such as producer responsibility, harmonization (e.g., registration process, reporting procedures); standardization (e.g., labeling, standard definition for weight, standards for effective recycling); and monitoring of collection, treatment and recovery (e.g., specified amounts to be collected, enforcement of legislation on waste shipments). In Sweden, Denmark, Belgium and the Netherlands, national regulations and organized management schemes for WEEE were already established in the form of single collective compliance schemes used nationally prior to the adoption of WEEE Directive. Transposition, therefore, has been relatively straightforward and achieved through changes on issues such as individual producer responsibilities, product labeling, financial guarantees needed to market a product, and collection and recycling targets. Other countries without any previous WEEE management systems or culture, developing the necessary new legal and operational infrastructure to comply with the directive posed a larger challenge due to different approaches employed, such as giving more weight to using market-based approaches and having multiple providers of takeback systems. 6 The other policy tool that is supporting the same environmental objective is the complementary Directive 2002/95/EC on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS). 10 In EU member states setting up implementation targets was not always straightforward. Weight- based collection targets of 4 kg per inhabitant were easily met by EU member states with waste collection and recycling schemes in operation for a longer period.7 For some Central and Eastern member states, however, setting a target was more challenging. Countries that are front runners, like Sweden, collect as much as 17 kg/person and have recycling rates of 80 to 90 percent, including energy recovery; while others have very low levels, such as Poland with 1.0 kg/person; Romania 1.5.kg/person (2010); and Italy 2.6 kg/person. Introducing a uniform collection target for all product categories could lead to low collection of certain products. To mitigate this concern EU is developing create standards for the treatment of different WEEE categories.8 In EU WEEE collection is largely organized through a national singular collective system and/or competitive clearinghouse system. It is believed that each system has its own merits thus there is no clear winner between these systems. EU member countries use different options for the fee structure that are usually based on the (i) actual costs of recycling; (ii) projected costs of recycling per product category, and (iii) cross subsidization between product groups to support recycling in another. The collection and administrative burden is proportional to the increased complexity of the fee structure. Fees are usually allocated based on current market share either in the form of fees on products sold or allocation of actual costs to products placed on the market. Sorting by brands is seen as highly complex and costly and is not exercised. Most producers consider a mandatory visible9 fee option as an important buffer against potential negative impacts. In EU development of appropriate infrastructure for treatment of WEEE in accordance with the requirements of the WEEE Directive was gradual and was associated with significant investment cost. By mid-2007, sufficient infrastructure capacity was developed in most EU-15 member states. At the same time member states from Central and Eastern Europe were lagging behind which implied that a regional approach could be considered to address infrastructure imbalance. The economic burden associated with Directive‘s technical cost for takeback and treatment of WEEE arisings in 2005, is estimated, excluding start-up costs, from €0.76 billion and is projected to grow to €3.0 billion in 2020. These etsimates are based on the maximum possible collection percentages of 75 percent for large and 60 percent for smaller appliances. The total costs include mainly guarantees, provisions and, to a lesser extent, overhead and administrative burden are provided in Table 2. Collection and treatment of WEEE is regulated in other parts of the world, most notably in Japan and in some states of the US, China and Korea. Other countries like Thailand are in the process of adopting WEEE legislation. Japan represents an important case reviewed in this report and is considered as the front runner in use of the EPR that gave impetus to product design changes. Despite the fact that the Japan legislation does not set any collection targets, in 2007 the system that deals with large household appliances recycled around 3.7 kg/capita of WEEE. 7 Solving the E-Waste Problem Initiative White Paper (March 2010) 8 J.O. Eriksson (2011) Personal communication with Managing Director of El-Kretsen. 9 In visible fee option, the producers are allowed to communicate the amount charged for WEEE compliance separately. 11 Turkey’s Electrical Household Appliances Sector and WEEE Implementation Challenges Turkey‘s electrical household appliances industry is a significant contributor to the national economy with a business volume of $10 billion and a significant market share both domestically and internationally. Sixty-five percent of its production is exported with 80 percent of all exports going to the European markets. The sector employs directly and indirectly about 2.5–3 million people. On average, the value added in the white goods sector is in the range of 55 to 60 percent, and the sector contributes around $1 billion in indirect taxes. In 2008, revenues in the sector amounted to $8 billion, and exports reached $3.4 billion.10 In 2009, the Turkish electronics sector grew substantially, reaching a production volume of about $9.5 billion and registering export revenues of $4.9 billion and imports of $12.2 billion. In 2008, the global sales of white goods trade reached $61.6 billion. Globally, following China, Germany and Italy, Turkey steadily occupies the fourth place with a global market share of 4.3 percent. Sector exports have grown significantly over the years, and according to the latest figures exports of white goods reached around $2.23 billion in 2010 – which is lower than in 2008, but this was due to softer demand as a consequence of the economic crisis.11 In 2009, the exports of the sector accounted for 5 percent of Turkey‘s export volume.12 The sector aims to reach an export volume close to $10 billion by 2023.13 There are a number of conditions specific to Turkey that pose considerable implementation challenges and therefore need to be highlighted. In Turkey, WEEE penetration, despite growing trends, still remains comparatively lower than the EU average. This is linked to country's relatively low income levels and living standards. In addition, the service life of electrical and electronic products, similar to other durables, is much longer than in the EU countries. Notwithstanding the considerable waste management improvements and significant investments, in recent years, recycling and recovery systems are in their infancy to effectively meet the requirements of EU waste directives. Waste is usually collected with no or insufficient source separation, proper handling of collected waste is weak. According to the Turkish Statistical Institute out of 3,225 municipalities, in 2008 only 37 had a sanitary landfill in place. While 24.36 million tons14 of municipal solid waste was collected in 2008 (corresponding to a per-capita waste production of 1.15 kg/day), only around 2.1 million tons15 were recovered and recycled in 2007. Infrastructure for handling WEEE is even less developed. Out of the estimated WEEE arising of around 368,00016 tons, only 5,00017 tons were handled by licensed firms in 2010 Scrap sector plays an important role in the effective collection of various waste streams, including WEEE, and the extensive revalorization of useful material streams. It is estimated that the scrap sector collects and treats 99 percent of the WEEE generated in Turkey. The sector includes collectors and processors which are significant employers, particularly in the Ankara 10 Ibid. 11 General Secretariat of Istanbul Mineral and Metals Exporters Association–IMMIB (2001). 12 Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry 13 Ministry of Industry and Trade (2011) General Assessment of Turkish Industry Sectors 2010. 14 Turkish Statistics Institute (2010) Municipal Waste Statistics, 2008. Newsletter No:50, dated 25.3.2010. 15 MoEF (2010) Packaging and packaging waste statistics (2007). Packaging newsletter, No: 4, dated 26.2.2010. 16 While this value reflects our estimates, the REC study estimates the WEEE arising between 350,000 to 550,000 17 The REC study states this number is 10,000 tons 12 region where more than 10,000 people are directly engaged with collection and treatment of different waste streams. It is estimated that the livelihoods of 1.5 to 2 million18 people are based on the scrap sector. Nevertheless, the majority of scrap processors is known to operate in a way that harms both the environment and workers‘ health and is believed to lack funds for environmental and safety improvements. A great deal of their operations is believed to be outside the formal system, with limited accounting. The white goods sector has realized significant improvements in its economic and environmental performance. Resource requirements and emissions associated with both production processes and product use have been reduced significantly in the last two decades. Although the sector also fulfills the requirements of Directive 2002/96/EC in the European markets, it has made little progress regarding the management of its products at the end of their service life in the domestic market. As it is commonly encountered with the introduction of a new policy, the implementation of the WEEE Directive in Turkey is likely to face a number of challenges. A six year transition period established in the draft WEEE regulation can be used to fill in the information gaps and make necessary adjustments before the directive reaches its full effect. Major implementation challenges which Turkey is likely to experience are similar to those of the new EU member states. These include the following:  Impact on firms’ relative profitability and sales, and hence on their competitiveness could be significant in domestic market. The study measures the impact of compliance with WEEE Directive by assessing the price elasticity of demand, measured by the relative demand response to a price change of the product. Depending on the product value, the impact on sales value could vary. For instance if the cost of the white good ranges from €500–2000/unit, the above results would imply an impact range of €15–62 million for a price elasticity of 0.10 and €56–224 million for a price elasticity of 0.36. The above implications on firm competitiveness may be severe—especially for small or medium firms that operate on thin profit margins.  Large demographic and economic differences could lead to significant lack of uniformity in applying the WEEE Directive. Heterogeneity across Turkey could lead to insufficient WEEE arisings in the eastern and southeastern parts of the country, where population is sparse and income levels are lower, and thus to make collection cost- ineffective.  Developing realistic collection targets could be challenging and will require time. Without a comprehensive inventory of WEEE, based on specific geographic characteristic and collection costs and benefits, adopting a uniform national target may result in emphasis placed only on those regions with high WEEE concentration— typically the Marmara region and around larger and more prosperous cities like Ankara, Izmir, Adana, Antalya, Gaziantep, and Kayseri—while leaving environmentally unwanted practices intact in other parts of the country. 18 Cinkaya, İ. Chairman of Turkish Scrap Merchants Association. Personal communication. 14 June 2011. 13 The way forward Currently, Turkey has an extensive system that handles electronic and electrical equipment at the end of service. However, as the system is predominantly informal, information regarding qualitative and quantitative aspects of WEEE generation, collection, treatment, recycling, recovery and disposal is scarce. In the absence of reliable information, it is not possible to assess the extent of adverse environmental impacts or the social and economic implications of the existing situation. It is known, however, that in line with global trends WEEE quantities would be increasing. Certain WEEE categories—at the minimum fridges and other cooling equipment, CRTs, and lighting equipment—are handled in ways that damage the environment and pose a risk for human health. Besides environmental concerns, the economic and social potential of WEEE management is far too significant to be left in informal hands. Consequently developing and implementing WEEE policy in line with 2002/96/EC that aims to assure safe and accountable management of WEEE and intends to stimulate innovation would be highly positive. At the same time, ensuring environmental protection without compromising the competitive position of sectors that are important for the development of the country poses a challenge. Consumer awareness is key for managing WEEE in a safe and responsible manner and for changing consumer‘s behavior and prevent inappropriate dumping or transfer of WEEE. As the body responsible for the transposition of the WEEE Directive the MoEU has shown remarkable leadership in creating a process that is inclusive, analytical, and facilitates dialogue and consensus building. Although the path followed by the MoEU had some adverse effect of slowing down progress, the emerging output -- the draft Regulation from May 2011, evolves in a promising direction where a variety of tools -- regulatory, market based, or information based, would be in use. More specifically, diverse set of actors will be required to meet certain regulatory requirements to enter the WEEE playing field, but once on the field, they will be subject to market forces giving them incentives to innovate and offer better or lower cost alternatives. The regulation would also facilitate the flow of information among key parties, such as obliging producers to share information about their products with recycling companies or obliging producers, municipalities and distributers to inform the general public. In parallel, it is promising that additional fiscal information is available to the actors in the WEEE field from organizations like TUBITAK, Ministry of Science, Industry and Technology, and KOSGEB. In addition prior to the introduction of the legislation, the dynamics allocating physical and financial reponsibilities have to be thought through properly. The interaction of the WEEE legislation with other regulations, such as those related to hazardous substances, transboundary movement of waste or health and safety markings may need to be clarified. It is noteworthy that the draft regulation leaves it to the market to decide tariffs that will govern transactions among key parties. However, given that there is little information on the cost of treating WEEE in an environmentally responsible manner, it might be sensible if the government takes the lead in setting initial tariff levels based on investigation of the cost of appropriate handling of WEEE. The details of the directive need to be clearly communicated by the legislation, leaving as little grey area as possible for interpretation. The experiences with the implementation of packaging regulations serve as a good example of implementation problems and possible failures. 14 The draft regulation rightly sets gradually increasing targets. Although the analysis does not aim to judge whether the targets19 are realistic or sufficiently demanding, it supports the approach taken by the Government. Furthermore, EU experience shows that there is a need for a proper preparation stage, which includes identifying the waste arising, collection potentials and necessary treatment standards for product groups. In particular, pilot studies for collection could play an important role. The six year transition period in the draft regulation could be used to fill in the information gaps and make necessary adjustments before the legilsation reaches its full effect. Turkey could benefit from a registration system of WEEE which properly determines the details of registration plans. The MoEU can best serve this function or it can delegate it to a different body, reporting directly to the Ministry. The registration costs in Turkey are estimated to be in the range of €3–5 million per annum20 which could financially sustain a registration system. Cost of compliance of the sector with WEEE Directive would depend on a number of factors, including product category, collection efficiency and treatment complexity, economic value of recyclable materials and extent of administrative costs. As incomes rise in urban and rural areas, the demand for new products is also expected to rise. The Sector Note estimates that total WEEE arisings would reach nearly 583,000 tons by 2018, a number that closely reflects estimates from other studies. If per capita WEEE reaches 7.3 kg/person by 2018 and, and if the current draft legislation of 4 kg/person were effective, this would imply a collection rate of approximately 55 percent. This amount is twice as high as the collection rates commonly achieved in most European countries. Total costs of recycling all WEEE for 2012 is estimated to be approximately €194 million with the highest costs in the product areas of cooling and freezing, large household appliances and those concerning CRTs. This implies that the total cost of compliance with the 0.2 kg/capita target (2012) is about €6.7 million, and approximately reaching €137–139 million to comply with the 4 kg/capita target by 2018 (Table 13). Compliance costs are expected to initially rise over time, as consumers generate greater WEEE quantities and collection rates begin to rise. Stimulating recovery and introducing recycling technologies would be a priority area for policy consideration. Setting up a national WEEE recycling R&D facility or a "center of excellence" as in Japan and the UK, will encourage innovative R&D and technology transfer. Policies that encourage companies to "brand" recycling technologies to reduce energy consumption and secure a long-term supply based on recovered materials would help companies to mitigate the cost imposed by WEEE regulation. Education is a key area both to enlighten the younger generation about fundamental recycling and to instruct the older generation on the use of recovered materials as sustainable products. International experience suggests that countries that get the collection and recycling system up and running before committing themselves to performance and targets face less implementation hurdles. Legislators in EU member states have spent considerable time studying the legal and 19 The draft regulation foresees gradual implementation to start with 0.2 kg/capita in 2012 and reaching to a final target of 4 kg/capita in 2018. 20 D. Temel (2009) WEEE Directive and Turkey. Problems Facing the Implementation of 2002/96/EC on WEEE in Turkey. 15 operational approach in those countries with established WEEE schemes, only to prove that it is of key importance to build systems that meet local specifics of culture, geography and industry, and that take into account existing practices of waste collection. 16 1. Introduction Background 1. The World Bank is supporting the Government of Turkey in implementing its sustainable development agenda under the Environmental Sustainability and Energy Sector Development Policy Loan (ESES DPL) series. Specifically, the ESES DPL series supports actions that are among the most critical for Turkey‘s transposition21 of its environmental legislation with the EU Environmental Acquis, such as the government‘s adoption of an EU Integrated Environmental Approximation Strategy (2007–2023). The World Bank is providing further support to the Government for harmonization of the environmental legislation with EU Acquis via nonlending technical assistance, focusing on environmental sustainability. The programmatic approach is used to provide flexibility in delivering sound policy advice tailored to the Government of Turkey‘s needs. 2. This sector analysis reviews the challenges of balancing development, industrial sector competitiveness, and implementation requirements of EU Environmental legislation while sustaining economic growth. The outputs of this assistance aim to (a) engage environmental regulators and the private sector in discussing specific challenges on the road to full compliance with the EU Environmental Acquis and (b) examine sector issues and, where feasible, compliance costs for selected manufacturing sectors. The analysis includes a review of the policy foundations for steady compliance while sustaining industrial competitiveness and business decisions that contribute to meeting the national development goals. It aims to provide public and private sector stakeholders with a set of policy options and incentives that will stimulate industrial compliance. 3. Turkey‘s macroeconomic policies and strategies consider industrial growth as a major source of economic growth. However, industries, such as energy, iron and steel, cement, chemicals and construction, are energy intensive and contribute to air, water and soil pollution. Similarly, other key sectors, such as automobile, electronics and household appliances, generate waste streams that could cause irreversible and hazardous effects on human health and environment if not managed properly. The experience of EU member states shows that sector issues associated with harmonization of national environmental regulations with the EU Environmental Acquis are often complex and challenging. These include implementation schedules, implementation barriers and industrial competitiveness. Decision makers need to assess all of these issues to put policy incentives into place geared toward innovation, technology improvements and cost effective investments. 4. As part of the effort to harmonize its legislation with the EU Environmental Acquis, Turkey is intensively engaged in strengthening environmental management policies. The private sector is under increasing pressure from regulators and international trading partners to strengthen compliance with environmental regulations. Enterprises from the cement, chemical and automobile industries are already engaged in cleaner production initiatives coordinated by business associations. The private sector is stepping up its interest in win-win opportunities like 21 Transposition is the aligning of country legislation with the EU Directive. 17 water conservation and energy efficiency for enhanced environmental performance. For instance, chemical firms are implementing the Responsible Care Program and the Turkish Institute of Standards (TIS) requirements to address waste generation and air and water pollution and to improve overall environmental performance. Additionally new regulatory requirements in line with EU Environmental Acquis will further affect producers and importers in sectors where significant environmental impacts appear during product use or at the end of product life. 5. Turkey will incur substantial costs in implementing actions under the EU Environmental Acquis estimated in the range of €28–59 billion22 over the 17 year period of implementation. This in itself presents a sizable challenge for the manufacturing sector with approximately 280,000 enterprises accounting for 21 percent of GNP and representing 94 percent of Turkey‘s exports (TURKSTAT, 2005). It is expected that about €13 billion will be required by private sector over this period23 to comply with the implementation requirements of the Integrated Pollution Prevention and Control (IPPC)24 Directive, the Volatile Organic Compounds (VOC) Directive, and the Seveso Directive. The cost of implementing all EU Directives related to chemical management will be in the same order of magnitude and will affect small and medium manufacturing enterprises. 6. Harmonization with the provisions of the waste electrical and electronic equipment (WEEE) Directive (2002/96/EC)25 will affect several sectors, including household appliances, electronic and battery-operated equipment, and electrical machinery. The extended producer‘s responsibility (EPR) principle, which is at the center of the WEEE Directive, implies companies to introduce design changes to improve product recoverability, reusability and recyclability while offering environmental benefits. The WEEE Directive also requires better integration and coordination with up- and down-stream actors involved in the lifecycle of manufactured goods. A large part of implementation costs for the WEEE Directive will be borne by private producers. Therefore, a thorough review of the baseline conditions and potential impacts of accelerated compliance pressure could help public and private sectors make more balanced decisions. 7. The electrical household appliances industry is a significant contributor to the national economy with a business volume of $10 billion and a significant market share both domestically and internationally. Sixty-five percent of its production is exported with 80 percent of all exports going to European markets. The sector employs directly and indirectly about 2.5–3 million people. 8. The cost of compliance with WEEE depends on a number of factors, including the product category, collection efficiency, treatment complexity, economic value of recyclable 22 Turkey, Economic Reforms and Accession to European Union, Bernard M. Hoekman and Subidey Togan, World Bank (2005) 23 Estimated cost is based on the EU Technical Assistance Project for Environmental Heavy-Cost Investment Planning Project 24 EU Directive 2008/1/EC concerning Integrated Pollution Prevention and Control. This is the codified version of the original Directive (―the IPPC Directive‖), which replaces Directive 96/61/EC and requires industrial and agricultural activities with a high pollution potential to have a permit. This permit can only be issued if certain environmental conditions are met, so that the companies themselves bear responsibility for preventing and reducing any pollution they may cause. Integrated pollution prevention and control concerns new or existing industrial and agricultural activities with a high pollution potential, as defined in Annex I to the directive (energy industries, production and processing of metals, mineral industry, chemical industry, waste management, livestock farming, etc.). 25 Founded upon the extended producer‘s responsibility principle, this directive makes producers and importers of electrical and electronic responsible for the waste generated by the products they introduce into markets. The directive provides guidance on the recycling targets, which is currently being revised. 18 materials and extent of administrative costs. There is limited number of studies on the cost of WEEE compliance, and many of them are relatively outdated. One 2003 study reports collection and treatment costs ranging from €0.35/kg to €0.64/kg based on a limited number or systems that were operational.26 A more recent study conducted by the United Nations University reports technical costs of compliance in EU for large household appliances, which cover parts of white goods like washing machines, dish washers and ovens, as €0.24/kg or €12.76/unit. The same study reports the costs for refrigerators as €0.56/kg or €21.46/unit.27 At the moment, the Regional Environment Centre (REC) Turkey is performing a comprehensive study to assess compliance costs likely to arise in Turkey under different implementation scenarios. So far, the team has not gained access to the REC study findings. The MoEU under a UNEP/MAP project performed the only other study that puts forward compliance cost estimates. According to this study, the average cost of WEEE collection and handling was estimated to be €0.28/kg.28 Objectives and Audience 9. This analysis reviews a set of policy and compliance issues in the electric household appliances (referred to as ―white goods‖) sector with the 2002/96/EC Directive (WEEE Directive). It aims to contribute to the knowledge and capacity of public and private sector stakeholders to formulate WEEE implementation targets in line with sector development goals and with environmental policies concerning WEEE. The note also aims to assist the Government of Turkey in promoting environmental sustainability in a manner aligned with EU Environmental Acquis requirements as follows:  Advance the understanding of environmental, social and economic costs and benefits associated with the implementation of specific environmental legislation;  Enhance knowledge on international ―best practice‖ that the private sector can use in balancing sector growth and environmental management objectives driven by EU compliance;  Provide guidance on optional policy approaches tailored to Turkey‘s context that the private sector can use in evaluating its compliance and competitiveness position; and  Expand the discussion on key issues by engaging public and private sector throughout the preparation process. 10. The audience of the sector note is the Government of Turkey, specifically the Ministry of Development (MoD), Ministry of Environment and Urbanization (MoEU), Ministry of Science, Industry and Technology (MoSIT) and Treasury who are the key public sector entities that formulate and implement government policies for sustainable economic growth. Private organizations representing the sector are business associations like the Association of Turkish White Goods Producers (ATWGP–TURKBESD), Association of Electronic Goods Producers (AEGP–ECID), Union of Chambers of Commerce and Commodity Exchanges of Turkey, and different chambers of industry and commerce, particularly in the Marmara and Aegean regions where the main white goods producers are located. All are important counterparts and direct beneficiaries of the sector analysis. 26 Future Energy Solutions (2003) Study into European WEEE Schemes. 27 United Nations University (2008) 2008 Review of Directive 2002/96 on Waste Electrical and Electronic Equipment (WEEE). 28 MoEF (2009) Final Report of UNEP/Mediterranean Action Plan. 19 Methodology 11. The methodology draws on the Bank‘s experience in analyzing the linkages among industrial growth, environmental compliance and public policies that promote smart industrial growth. The approach taken in the analysis covers the following main areas: 12. First, the note reviews relevant international experiences in order to identify key factors affecting the implementation of the WEEE Directive and extract those that could be of relevance to Turkey. It then highlights country specific characteristics that are relevant to implementation and identifies key challenges paying particular attention to  Collection targets;  Specific requirements regarding collection and handling/treatment of electronic and electrical equipment waste;  Allocation of responsibilities for collection, treatment and cost-sharing;  Organization of waste collection systems, specifically the extent of collaboration within the sector, as well as public-private partnerships in infrastructure;  Degree of recovery, reuse and recycling; and  Ecodesign innovations. 13. Second, the analysis is based on quantitative compliance cost approximations with known error margins. Certain inputs were used from projects led by the Ministry of Environment and Forestry and other sources (e.g., Matra Final Report 2009, UNEP/MAP, United Nations University, WEEE Forum), which were readily available and contained relevant information. Interviews with representatives from the association of white goods suppliers, companies licensed for WEEE collection, municipalities and other organizations involved in the collection of WEEE provided useful inputs. In addition, interviews were performed with international private and public sector representatives, as well as academicians, regarding implementation experiences in different parts of the world. The authors factored into the analysis both the opinions and comments of representatives of the public and private sectors familiar with international implementation experiences and country-specific aspects of WEEE implementation and industrial compliance during interviews, as well reviews of international experience from available sources. 14. The Sector Note reviews the potential impacts of the following alternative policy options: regulations, institutions and access to information. It also includes a review of the experience of other EU member countries. 15. The note is organized as follows: section 2 reviews the background and requirements of the WEEE Directive and EU experience in implementing the directive; section 3 describes the sector context in the Turkish economy; section 4 presents WEEE in the context of Turkey and provides an overview of anticipated challenges; it also performs a quantification of WEEE generated and estimates the total cost of compliance and its potential impact on competitiveness; and section 5 provides an overview of policy instruments and identifies the main policy recommendations specific to the sector. 20 Limitations 16. Due to the relatively tight timeframe for preparation and inaccessible data, there are certain limitations both to the scope and to the depth of the quantitative analysis. While electronic products, and in particular those that are part of information and communication technologies, are an important component of WEEE, both in terms of quantities and in terms of environmental impact potential, these products and their respective producers are not analyzed in detail here – although useful outputs such as costs of collection and treatment for these fractions are generated. Similarly, lighting equipment and producers are outside the scope of the study. Although the analysis focused primarily on white goods29 and their producers, some of its findings and recommendations are valid and useful for other sectors generating WEEE. 17. While a considerable amount of quantitative and qualitative data was compiled for the preparation of this study, enabling a better understanding of the development and business dynamics of the white goods sector, some data required for the assessment of WEEE compliance costs were limited. For example, it is known that many large producers have certified environmental management systems, and they comply with the applicable environmental regulations. In addition, many companies made significant environmental improvements in the production and use phases of white goods. For example, since 1990s water and energy inputs to the manufacture of white goods have fallen dramatically and the products themselves have become more energy and water efficient. Newer products also contain less hazardous substances. This information is important to understand, but is inadequate for the purposes of quantifying the costs of compliance with WEEE Directive, which primarily focuses on the end-of-life stage of white goods. 18. Readily available information is scarce regarding WEEE quantities and geographic distribution and the nature and size of the required infrastructure, including the technical and administrative infrastructure that needs to be in place. Lack of such information is an important limitation for making an accurate assessment of compliance costs. The cost estimates in the note were derived from available information using unit and cost data from other studies, such as the UNU 2008, UNEP-MAP 2009 and WEEE Forum 2008, and calibrated using the Turkish statistical data. This approached helped to estimate the projected WEEE quantities, as well as unit costs of compliance by WEEE product category adopted from long-running recycling systems in the EU. To this extent the costs derived in this note should be considered conservative since long-running systems may have captured the economies of scale or other learning-curve aspects to system operation and maintenance. Other assumptions were made for demand growth of white goods and electronics based on reasonably reliable sources like the Economist Intelligence Unit (EIU), whose projections went until 2015 instead of the relevant implementation year of 2018. In this instance, GDP growth was used as a proxy for income growth and demand for WEEE products. 29 Among others, the fact that HHA sector has been highly supportive in data provision has been a key factor motivating this scope. 21 19. Similar information gaps existed with respect to sector earnings and investment rates, limiting the sector competitiveness analysis. Ultimately, the analysis used available information from business associations and a major white goods firm willing to share key pieces of information. Impact estimates on sales volumes should be considered a first attempt to quantify such a number, serving as a starting point where the dialogue can continue. The methods adopted in this study can be easily updated once the relevant information becomes available. 22 2. Waste Electrical and Electronic Equipment Directive Background and Objective of the Directive 20. The Directive 2002/96/EC on Waste Electrical and Electronic Equipment (WEEE) is a key element of the EU‘s environmental policy for waste management. WEEE is the fastest growing waste stream in the EU, producing up to 9.1 million tons in 2005 and growing to an estimated 12.3 million tons by 2020.30 A big share of the waste stream (up to 90 percent) is disposed in landfills, incinerated or recovered without any or without proper pretreatment. The average breakdown of WEEE arising in the EU in 2008 is given in Figure 1. Figure 1: Breakdown of WEEE Arising in the EU in 200831 1.0% 0.2% 0.1% 0.2% Large Household Appliances 0.2% 0.9% 0.6% 0.5% Cooling and Freezing 12.4% Small Household appliances IT&T equipment 5.0% 39.4% Monitors 5.5% Consumer equipment 7.9% all TVs 6.1% Luminairs 20.0% Lamps Electrical and Electronic Tools Source: WEEFORUM(2010) 21. The directive addresses a complex waste flow in terms of product variety,32 association of different materials and components, hazardous materials content and growth patterns. It also 30 Proposal for a Directive of the EU Parliament and of the Council on Waste Electrical and Electronic Equipment (WEEE), Impact Assessment, 2008, Commission Staff Working Paper. 31 WEEFORUM (2010). 2008 Key Figures. 23 intends to trigger design modifications that make electrical and electronic equipment (EEE) easier to dismantle, recycle and recover. Finally, the directive plays an important role in prevention and dispersion of hazardous waste in the environment, as well as in the recycling and reuse of such waste to reduce its disposal. 22. Based upon the extended producer‘s responsibility (EPR) and polluter pays (PP) principles, the Directive 2002/96/EC on WEEE is one of the key policy tools aiming to reduce the environmental impacts of WEEE by making the producers responsible for the management of their products at the end-of-life stage.33 Under the WEEE Directive, the EU requires manufacturers and/or distributors of electronic and electrical equipment to manage and pay for the collection and further handling of WEEE products, as well as provide WEEE-related information to their customers. The WEEE Directive sets collection, recycling and recovery targets for electrical goods and is part of a legislative initiative to solve the problem of huge amounts of toxic e-waste. The legislation also aims to conserve landfill and to support more sustainable development by encouraging recycling practices. 23. A key element of the WEEE Directive is the ―producer responsibility,‖ which makes producers34 (e.g., manufacturers, sellers and distributors) responsible for the "end-of-life" collection and recycling of electrical and electronic equipment products. The thrust of the EU Directive requirements through the process of legal harmonization is translated into the national implementing legislation. Producers must register and mark products and components in individual countries that fall under the WEEE Directive with the crossed-out trash bin symbol, a mark that indicates that these products cannot be discarded randomly for pickup but rather must be turned in for environmentally sound treatment and disposal. Furthermore, periodic reports must be submitted to government agencies on the arrangements put in place for the collection, disassembly and proper disposal of equipment at its end of life. Thus, the directive also aims to maximize the separate, efficient collection and treatment of WEEE and to minimize the opportunities for illegal WEEE export or the need to engage in evidence trading. 24. The need for such a directive in view of environmental policy priorities include public health protection, energy efficiency, effective toxicity control and air emissions reduction relevant to ozone depletion and global warming. Energy savings from recycling metals and plastics in WEEE is significant compared to waste landfilling. For instance, using recycled copper could result in 85 percent energy savings per unit of production and for plastics more than 80 percent. The directive‘s thrust is to deliver positive results in conjunction with another interrelated Directive on Restriction of Certain Hazardous Substances in the Electrical and Electronic Equipment (EU 2002/95/EC Directive/RoHS Directive) adopted in February 2003 and effective since July 1, 2006. The RoHS Directive restricts the use of six35 hazardous substances in the manufacture of various types of electronic and electrical equipment sold in EU countries. 32 The directive covers products in ten different categories, including large and small household appliances, lighting equipment (lamps), IT and telecommunication equipment, consumer equipment, electrical and electronic tools, toys, entertainment and sports equipment, monitoring and control instruments, and automatic dispensers. 33 The other policy tool that is supporting the same environmental objective is the complementary Directive 2002/95/EC on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS). 34 Producer is defined as an EU-based manufacturer who supply products in an EU state; an organization that supply products made by another manufacturer under their own brand; a distance seller in one Member State who supply equipment to users in another Member State. 35 Lead, mercury, cadmium, hexavalent chromium, polybrominated biphenils, polybrominated diphenyl ether. 24 It aims to reduce environmental impacts of waste and improve recyclability while reducing hazardous substances, which would decrease the exposure risk to the recycling staff. 25. Separate collection is set as a precondition by the WEEE Directive for treatment and recycling of WEEE. According to the directive, all type of WEEE, including those from private households and others, should be separately collected with their disposal as unsorted municipal waste minimized and convenient facilities set up to include public collection points. The directive‘s target is set for separate collection from households of at least 4 kg/per inhabitant per year. On the other hand, the recast of the directive will establish a new mandatory target by 2016 and might propose a target that takes into consideration the percentage of the quantities of EEE sold to private households. Experience with Implementing WEEE Directives, Lessons Learned from EU and Other Countries 26. The WEEE Directive defines only the general requirements to comply with mandatory collection and recycling objectives while the modalities of the logistics and the organization of the takeback schemes are left to the Member States. Consequently, there were significant differences noted in the organization, effectiveness and efficiency of the practices adopted by different countries. 27. The EU Member States experience related to WEEE directive implementation at the national level includes, for example, issues related to producer responsibility, harmonization (e.g., registration process, reporting procedures); standardization (e.g., labeling, standard definition for weight, standards for effective recycling); and monitoring of collection, treatment and recovery (e.g., specified amounts to be collected, enforcement of legislation on waste shipments). Data available indicated that factors such as availability of collection points, geographical location, culture, waste collection organization and financial mechanisms influence treatment performance. 28. The WEEE-related directives have also been implemented in other parts of the world, most notably in Japan and in some states of the US, China and Korea. Other countries like Thailand are in the process of adopting WEEE legislation. The following section aims to highlight important characteristics of various forms of WEEE directive application and the experiences they provide. Experiences from the EU Member States36 29. In Sweden, Denmark, Belgium and the Netherlands, national regulations and organized management schemes for WEEE were already established in the form of single collective compliance schemes used nationally prior to the EU Directive. Their transposition has been relatively straightforward and achieved through changes on issues, including individual producer 36 Information in this section is primarily based on a review conducted by the European Commission on the Implementation of the Waste Electrical and Electronic Equipment Directive in the EU (by EC Directorate General on Joint Research Centre (2006), Seville) and supplemented by personal interviews conducted by the authors. 25 responsibilities, product labeling, financial guarantees needed to market a product, and collection and recycling targets. 30. In the case of other countries without any previous WEEE management systems or culture, developing the necessary new legal and operational infrastructure to comply with the directive posed a larger challenge due to different approaches employed, such as giving more weight to market-based approaches and having multiple providers of takeback systems. While several countries have been late with the transposition of the directive, all EU Member States had implemented national WEEE legislation by January 1, 2008. Many who have assured timely transposition, however, paid little attention to the practical application details of the directive and had to introduce further secondary regulations and clarifications. Highlights of the lessons learnt during the first years of WEEE implementation in the EU are summarized in the following paragraphs. 31. Setting up implementation of targets was not always straightforward. Weight-based collection targets of 4 kg per inhabitant were easily met by Western EU member states with schemes in operation for a longer period; thus this has not provided an incentive for improving their current system.37 For some Central and Eastern Member States, however, the target was more challenging. There is little research available on the reasons why certain national schemes are more efficient than others with regard to overall costs, recycling percentage and collection amounts achieved. Moreover, due to variations in standards and definitions of recycling and treatment performance, comparisons among countries are difficult. Some countries that are front runners, like Sweden, collect as much as 17 kg/person and have recycling rates of 80 to 90 percent, including energy recovery; while others have very low levels, such as Poland with 1.0 kg/person; Romania 1.5.kg/person (2010); and Italy 2.6 kg/person. As one overall collection target for all product categories could lead to low collection of certain products, there are arguments for developing more specific collection targets per product category. There is ongoing work to create standards for WEEE treatment.38 32. Consumers‘ responsibilities could be perceived as barriers to increased collection rates, although producers have the capacity to effect changes at the source and to reduce environmental impacts of their products. Low collection rates registered in some EU member states are due to low level of consumer awareness of e-waste, compounded by illegal and unauthorized handling of WEEE. Thus, increasing consumer awareness is crucial for implementing WEEE efficiently and maximizing environmental results—collecting more, increasing cost efficiency and treating better. Effective education campaigns could raise consumer awareness of WEEE and why it needs to be treated separately from regular municipal waste. It is important that all stakeholders, especially industries, make a concerted effort to raise public awareness, ensuring that households understand the nature of WEEE and change behavior. 33. Registration and reporting requirements of the directive created a serious administrative burden for producers. Some Member States experienced failures to report, leading to environmental damage and illegal exports, thus pointing at weaknesses in monitoring and enforcement mechanisms. One prerequisite for effective implementation of the directive is the 37 Solving the E-Waste Problem Initiative White Paper (March 2010) 38 J.O. Eriksson (2011) Personal communication with Managing Director of El-Kretsen. 26 establishment of common and consistent reporting framework with harmonized definitions and publically accessible. Collective versus Competitive Systems 34. The WEEE collection can be organized through a national singular collective system and/or competitive clearinghouse system. It is believed that each system has its own merits thus there is no clear winner between these systems. 35. The collective system39 consists of a dominant national organization, nongovernmental not-for-profit companies set up and owned by one or more trade associations, with physical responsibilities for collection and recycling and financial responsibilities for all WEEE within national boundaries. These associations are organized into product categories to focus on achieving maximum efficiency in their recycling operations and to identify markets for recycled material and product reuse. This system is proven successful because it (i) is free of additional costs incurred by managing a national clearing house, separate collection containers and extra logistics; (ii) provides the simplest and most effective route to collecting and recycling WEEE if managed properly, (iii) offers economies of scale attractive particularly for small countries where volumes cannot create a viable market for multiple systems, and (iv) typically exceeds the collection and recycling targets set. Member States, such as Sweden, Netherlands, and Belgium, and other European countries, such as Norway and Switzerland, operate collective systems that were in place prior to the WEEE Directive. 36. The clearinghouse system40 involves multiple partners: producers, recyclers and waste organizations. The government ensures that there is a register of producers, defines the allocation mechanisms, as well as the reporting and monitoring requirements. A central national coordination body is responsible for determining the collection obligation of each producer via the national register, assigning this obligation to the compliance scheme on behalf of the producer and establishing an allocation mechanism that enables compliance systems to collect WEEE in an equitable manner from various collection points. The system is designed to meet the minimum levels of collection and recycling in the most cost-efficient manner without any pressure to exceed them or to provide an incentive for additional environmental or behavioral improvements beyond that stipulated in legislation. Collection and Logistics 37. There are three main collection approaches used for WEEE, including (i) collection and intermediate storage in municipal sites, (ii) in-store retailer takeback, and (iii) producer takeback. The majority of schemes are organized primarily around the collection sites operated by municipalities, for example, the Swedish system. The municipal sites are usually free for households to use to an unlimited extent. Retailer participation is encouraged in some countries, but the quantities collected through this route remain below 30 percent. While the retailer takeback is also free, it may be limited to the purchase of a new product—the so-called trade in 39 This is generally present in countries with previous experience with WEEE. 40 This is particularly preferred by the bigger Member States due to its potential to fuel competition and drive the costs down. 27 systems. Producer takeback is often used for the ―business to business‖ settings and includes the collection of larger commercial equipment in a ―new-for-old‖ basis. 38. The use of multiple recyclers and logistics firms is usually preferred for the transfer and treatment of the collected WEEE. As these firms go through a competitive tendering process, this approach helps to reduce costs substantially. In countries like Sweden, there are examples of municipally owned and operated recycling centers losing market due to their inability to reduce costs.41 The clarity in communicating the system's work dynamics to the consumer and the simplicity of their engagement also plays a key role in collection effectiveness. With higher complexity, such as having multiple systems for different products, the effect on collection rates is negative. Fee Structures 38. Different options are used for the fee structure. The fees are usually based on the (i) actual costs of recycling; (ii) projected costs of recycling per product category, and (iii) cross subsidization, namely the fees on some product groups to support recycling in another. The collection and administrative burden is proportional to the increased complexity of the fee structure. Fees are usually allocated based on current market share either in the form of fees on products sold or allocation of actual costs to products placed on the market. Sorting by brands is seen as highly complex and costly and is not exercised. 39. Most producers consider a mandatory visible42 fee option as an important buffer against potential negative impacts. In the absence of a mandatory visible fee, the costs tend to be absorbed into the product price and disappear. This is particularly worrisome for those producers who are active in highly price sensitive and competitive low margin markets, such as consumer electronics, who may have to bear the short-term costs. 40. With respect to the financial model, there is a split view between the brown43 and white goods (i.e., household electrical equipment) sectors and the ICT sector, reflecting the different preferences for dealing with historic WEEE and orphan products. The brown and white goods sectors have significant amounts of historical waste and, in particular, the white goods sector, supports visible fee schemes used, for example, in Recupel of Belgium and NVMP of the Netherlands. They are less supportive of ex post-based market share schemes, such as ICT Mileu of the Netherlands. The ICT firms, on the other hand, have fewer historic liabilities and therefore prefer the opposite. Schemes such as El-Kretsen of Sweden and El Retur of Norway accommodate both financing systems within a single organization. 41. An approach that combines different product groups into one group or sets a fee based on the retail price is inevitable beyond a certain point to improve recovery and administration. More complex financing approaches that better reflect actual recycling costs are used in the Nordic countries, but they come at the expense of companies who complain about the detail level and 41 J. Christiansen (2011) Personal communication. Technical Advisor for WEEE and Hazardous Waste. Avfall Sverige (Swedish Waste Management Association) 42 In visible fee option, the producers are allowed to communicate the amount charged for WEEE compliance separately. 43 Brown goods refer to those household appliances that are portable or semi-portable and are often used on tabletop, countertops or other platforms. 28 excessive workload. In cases where fee-based systems are used, the paperwork and monitoring requirements often increase significantly both for producers and the scheme based on the numbers of product classifications and fee bands. The alternative of having a simpler system with fewer groups or categories including a wider product range, on the other hand, inevitably leads to greater cross-subsidizing and weakens the relationship between actual recycling costs and fees. Financial Guarantees and Freeriding 42. The WEEE Directive requires each producer to provide a financial guarantee when placing a product in the market to cover the recycling costs when the product is discarded. This is an important provision aimed at safeguarding the producers against bearing the costs of freeriders and orphan products. In cases where the legislation promotes joint compliance schemes rather than individual ones, the guarantee may take into account inflation in collection and treatment costs, thereby making it prohibitively expensive to undertake an individual route. 43. In 2006, the freeriders were stated to represent 10 to 20 percent of products placed on the market, highlighting the importance of enforcement. Enforcement is seen as the key issue to assure cost effectiveness and equity of the schemes. To overcome the problem of freeriders, producers have suggested that only those products with a proof of registration should be allowed in the markets. National collective schemes are generally regarded as effective for ensuring good market coverage and reducing the problems of freeriders and orphan products provided that full enforcement by competent authorities is guaranteed. Individual Producer Responsibility (IPR) and Ecodesign 44. It is argued that assigning financial responsibility for collection and recycling of end-of- life products encourages producers to avoid financial burdens by taking ecodesign measures to minimize waste and assist recyclability. This principle is an integral part of WEEE Directive, 2002/96/EC. Firms are expected to invest in ecodesign if they can recover the benefits of their investments through lower product recycling costs. Although IPR and associated ecodesign improvements are still possible on theory, during transposition compliance criteria are usually set in a way that encourages participation in a collective scheme to ensure equity and to reduce the burden of monitoring and control. Promotion of collective systems and other compliance criteria, such as product weight being the dominant criteria determining charges, discarding other product attributes in the same category, significantly dilutes incentives for ecodesign changes, Although some producers voice their disappointment with the existing application, there is also consensus that ecodesign issues are already being tackled outside of the scope of this directive. Product Scope and Producers 45. Many EU Member States are currently examining possible ―grey area‖ products and developing guidelines to assist companies in deciding whether their products are covered by the WEEE Directive or not. There is an industry concern related to some Member States choice to adopt the widest scope possible and not limit themselves to those products that are part of the categories listed in Annex 1A of the directive. For example, some states, such as the UK, include only products that are clearly within Annex IA of the directive while other states exclude large 29 machine tools and some types of ―fixed installations‖ from the regulatory scope. There are states, such as Finland, that endeavor to include as many types of electrical equipment as possible.44 Furthermore in the EU, issues exist concerning the definition of ―producer‖ and responsibilities assigned to producers. These are mostly related to the free circulation of products among EU Member States once placed on the European market and, therefore, are less relevant for the case of Turkey. Box 1: Producers Obligations in EU Member States45 Most producers comply with WEEE by joining a Producer Compliance Scheme (PCS); in many states this is sufficient as the PCS registers their members on their behalf. However, producers must register themselves in eleven EU States including Austria, Germany, Ireland, Portugal and Sweden. The main requirements for equipment manufacturers who are also producers in four of the EU States are summarized below: France: The seven existing compliance schemes register their members on their behalf without a registration fee. Manufacturers are required to print the crossed WEEE bin symbol and producer's name on the products. France is one of the few countries that have a mandatory requirement to show ―visible fees‖ at the point of sale of new products. The visible fee informs the customer of the actual cost of collection, recycling and end-of-life disposal, and it is part of the product's price. According to French law, distributors who import equipment should apply labels with their name on each individual piece of equipment. In practice this is not done as it requires repackaging, and it has been claimed that this requirement could be illegal as it restricts the free movement of goods within the EU. Producers have to report on weight and number of sales annually. Germany: There are many compliance schemes, but producers must also register with the authorities for which there is a complex fee structure. Unlike in other states, it is also necessary to pay a financial guarantee for back-to-consumers (B2C) using the national guarantee scheme. Financial guarantees are required to ensure that the financial cost of disposal of WEEE at end of life can be met if the original seller has ceased trading. Manufacturers should print the crossed WEEE bin symbol and producer's name on products. German producers are required to report on weight and number of sales monthly for B2C and annually for back to business (B2B). The German authorities use a long list of product types to decide if equipment is B2C or B2B although B2B producers must also prove that equipment will not become municipal waste. This is important as there are separate fees and reporting requirements for B2C and B2B. Netherlands: Most producers both Dutch and from outside the Netherlands join one of the three Dutch PCSs, which is accepted as registration. It is possible to comply without joining a PCS, but very few producers have adopted this approach. There is no registration fee in the Netherlands. The product types accepted by each PCS are limited, and so in reality there is usually a choice of only one scheme. Despite this, the Netherlands has one of the lowest costs for WEEE compliance in the EU. Dutch PCS require quarterly reporting, but producers that comply individually report annually. In the Netherlands, deciding whether a product is B2C or B2B is not what it may appear at first sight. IT and telecom products weighing over 35 kg are classified as B2B whereas lighter equipment is B2C, irrespective of the customer. Deciding whether other types are B2C or B2B is decided by a lengthy list from the NVMP scheme. UK: All producers must join one of the 40 UK-approved PCSs. The PCS registers producers on their behalf and pays the registration fees. Manufacturers should print the crossed wheelie bin symbol and producer's name on all products. Quarterly reporting of sales in terms of weight and number is required. Showing the visible fee is optional in the UK, but it is not used, mainly as it is strongly disliked by retailers. Over 3,200 producers have joined a UK PCS, over 6,000 organizations have registered in Germany and over 3,700 in France, which has a smaller electronics industry than the UK. The shortfall in the UK is probably because some manufacturers have assumed their products are not within scope, but others may be unaware that they should have joined a scheme. Source: ERA Technology (2009) 44 ERA Technology (2009). The WEEE Directive and its Implementation in the EU (available at www.era.co.uk/rfa). 45 Extracted from ERA Technology (2009) The WEEE Directive and its Implementation in the EU (available at www.era.co.uk/rfa) 30 An Overview of Actual Performance in EU-2746 Member States 46. The 2008 review47 of the WEEE Directive carried out by the United Nations University found that the collection targets in the EU-1548 Member States could be easily met in 2005, although the average collection performance in the EU-15 has been roughly half of leading countries like Norway and Switzerland. The collection target has, however, remained a key challenge for new Member States. 47. The estimated amount of WEEE currently collected and treated as a percentage of the amounts of WEEE arising for the EU-27 Member States in 2005 are provided in Table 1. Per capita collection rates in individual Member States in 2008 is given in Figure 2. These figures point to large differences in collection performance by different Member States per subcategory, indicating room for improvement. Factors such as availability of collection points, geographical location, culture, waste collection schemes, as well as the present financing mechanisms are believed to have an influence on the collection treatment performance. The previously mentioned review of the United Nations University also found that various influencing factors are probably all relevant to a certain level, including the active role of different stakeholders involved like public authorities and EU Member States. Table 1: Amount of WEEE Collected and Treated in EU27 in 2005 as a Percentage of WEEE Arising Treatment Category % Collected of WEEE Arising Large household appliances 16.3 Cooling and freezing 27.3 Large household appliances (smaller items) 40.0 Small household appliances, lighting equipment, luminaires 26.6 and domestic medical devices IT and telecom, excluding CRT‘s 27.8 CRT monitors 35.3 LCD monitors 40.5 Consumer electronics, excluding CRT‘s 40.1 CRT TV‘s 29.9 Flat panel TV‘s 40.5 Lighting equipment – lamps 27.9 Electrical and electronic tools 20.8 Toys, leisure and sports equipment 24.3 Medical devices 49.7 Monitoring and control instruments 65.2 Automatic dispensers 59.4 Source: Adapted from UNU (2008) 46 The EU-27 comprises Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. 47 United Nations University (2008) 2008 Review of Directive 2002/96 on Waste Electrical and Electronic Equipment (WEEE). 48 The EU-15 comprises Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. 31 Figure 2: Amount of WEEE Collected in Member States (2008) Source: Eurostat 48. Development of the appropriate infrastructure to enable treatment of WEEE in accordance with the requirements listed in Annex II of the directive has been gradual and was associated with significant investments. By mid-2007, sufficient capacity to treat WEEE arising was installed in EU-15 Member States. The situation in Central and Eastern Europe is believed to be different and may imply that a regional approach by groups of Member States could be adopted. 32 Compliance Costs 49. The economic burden associated with the technical requirements for takeback and treatment of WEEE arising was estimated, excluding start-up costs, from €0.76 billion in 2005 for the current amount collected to €3.0 billion in 2020 as shown in Table 3. The latter is based on the maximum possible collection percentages, which are estimated at 75 percent for large and 60 percent for smaller appliances. The technical costs for collection and recycling, including revenues for secondary materials—in particular for metals, glass and plastics—are provided in Table 2. The total costs include mainly guarantees, provisions and, to a lesser extent, overhead and administrative burden. Table 2. Overall Economic Impact across EU-27 Member States Assuming Full Implementation Technical costs Total costs (million €) (million €) Current Maximum Current Maximum Year collection % collection % collection % collection % 2005 764 1,692 935 2,045 2006 783 1,735 959 2,097 2011 889 1,970 1,089 2,381 2020 1,125 2,492 1,377 3,012 Source: Adapted from UNU (2008) 50. The values listed above are considered to be influenced by the following: F  Additional costs on total compliance costs that represent a considerable percentage across different categories;  Long running optimization of systems (e.g., for the long running systems across the EU, the gap between minimum and maximum cost levels is much lower);  Percentage of WEEE collected and treated versus potential WEEE arising in EU-27; and  Category compositions and recycling technologies used, which are further influenced by future developments of new technologies. 51. Based on the systems running for a longer time, the technical costs for five main product categories in 2005 are presented in Figure 3. 33 Figure 3: Breakdown of Technical Costs for the Five Main Product Categories (derived from long running systems in 2005) 1000 Cost (€/ton) 800 187 600 136 259 400 129 572 95 Transport & collection (incl. access to 8 WEEE) 200 409 145 249 240 Shredding, sorting, dismantling, 59 pretreatment 0 9 12 24 8 -51 -98 -93 Incineration and landfill -284 -200 Recycling + recovery processes * -400 LHHA C&F SHA (small CRT & FDP Lamps (large (cooling and household (CRTs and household freezing) appliances) flat-panel appliances) displays) [1A, 10] [1B] [1C, 2, 3A, [3B, 4B (3C, [5B] 4A, 5A, 6, 7, 4C)] 8, 9] Source: Adapted from UNU (2007). 52. As shown in Figure 3, the technical cost breakdown is largely different for various product categories; for example, transport costs are significant for large household appliances. Revenues are almost equal to the further processing costs after the transport steps. The treatment costs for chlorofluorocarbon (CFC) removal are a major portion of the total costs in the case of cooling and freezing and the CRT-containing appliances. Lamps have relatively high costs given the hazardous nature of possible mercury content thus the need for transport to special landfills. Also, there is little revenue left for small appliances after transport and pretreatment. 53. The noted economic impacts of WEEE takeback and treatment are influenced by the following:  Prices for secondary materials. The sensitivity analysis showed that current 2007 market prices increased the revenues of the above categories by €50–100/ton compared to 2005. This generated a net revenue after collection and transport for some categories;  Developments and availability of markets for downstream fractions and high-level reapplication/valorization of secondary raw materials; 34  Future developments of treatment technologies, as well as different treatment/dismantling requirements for particular product streams, mean that costs for CFC-containing appliances are likely to decrease, and flat panels are expected to cause a significant increase in total costs due to costly mercury removal steps. 54. A review of economic impacts of the WEEE Directive linked to the administrative burden across EU-27 Member States made the following conclusions:  Costs related to registering and reporting ranged from €36.7 million to €42.8 million based on eight hours needed per report;  The average number of reporting activities are about 72 reports delivered every year per producer; and  There is a potential threat of competition distortion due to deliberately misreporting of ―business to consumer ―(B2C) as ―Business to business‖ (B2B), as well as empty reporting without further action, or simply omitting reporting. This could have adverse impact on those companies investing in realization of full and EU-wide legal compliance. 55. In addition, differences in national legislative requirements and the time required to meet specific details of implementation are considered key factors influencing cost structures and contributing to high costs. Directive Improvements 56. UNU study suggests various improvements for the WEEE directive using the implementation experience in EU. These include changing the scope of the directive by removing the appliances covered as real B2B; adjusting collection targets, as the targets for LHHA can be removed as these products are already recycled extensively due to their intrinsic value and setting stricter collection targets for cooling and freezing equipment that have potentially high environmental impact; modifying recycling targets like setting a gradually decreasing target for CRTs, as these products are gradually disappearing; and changing the standards for treatment. Table 3 is a summary of the proposed modifications regarding collection and recycling targets and treatment requirements. Table 3. Differentiated Targets for Collection, Recycling and Treatment Specific treatment Collection target Recycling target requirement Large household (1A, 10) No No No Cooling and freezing (1B) Yes Maybe Yes for CFCs Small household (2A, 3A, 4A, 6, 7) Yes for plastic Yes Yes for NiCd from Cat. 6 (plastic dominated part) recycling Small household (1C, 3A) No No No (metal dominated part) CRT containing (3B, 4B) Yes Yes for CRT glass Yes for control over PbO Flat display panels (3C, 4C) Yes Maybe Yes for LCD Hg removal Gas discharge lamps Yes Maybe for HQ glass Yes for Hg removal Source: Adapted from UNU (2007). 35 57. Another major suggestion concerns higher collection amounts and improved quality of treatment. To improve the collection and treatment results, the review puts forward two suggestions:  Either producers should remain primarily financially responsible and be given the necessary means, including better access to WEEE, combined with a more dynamic and higher collection target based on past market quantities; or  Another stakeholder can be made primarily responsible—the Member States themselves or compliance schemes as a more independent and separate entity with producers as part of the board together with other stakeholders. This option maintains incentives for collecting more, treating better together and sustaining competition among schemes to improve cost efficiency. 58. Some of these suggestions direct the recasting effort of the WEEE Directive for which the following paragraphs provide further information. Factors Impacting the Operation of Compliance Schemes 59. Experience from EU countries shows that the following factors may have an impact on the operation of compliance schemes:  Distance and geography. Smaller distances reduce costs for transport and logistics;  Population size and density. Areas with higher population enable economic efficiencies and economies of scale;  Cost of labor. Collection, sorting and treatment are highly labor intensive;  Length of time in operation. There are greater opportunities for experienced operators to fine tune the system, negotiate better contracts with suppliers, rationalize overheads and invest in capacity;  Established consumer behavior. European compliance schemes owe their success to prevailing consumer recycling behavior. The level of WEEE recycling awareness in relation to specific product groups is also a key driver of success. 60. Other conditions for better results are identified as follows: (i) support better enforcement of the key provisions at the EU and Member State level on all organizational and operational parts of the recycling chain, especially to reduce illegal waste shipments, (ii) enable more simplification and harmonization throughout the EU-27 as current differences in interpretation within and among Member States and even regions delay implementation and subsequently cause considerable environmental drawbacks, and (iii) increase consumer awareness to stimulate more collection. The Recast Directive and Other Ongoing Developments 61. The European Commission has carried out a comprehensive set of reviews of the WEEE Directive and its implementation in EU Member States, resulting in three main publications by Ökopol, the United Nations University and Ecolas. Also, various research papers and detailed 36 analyses were carried out on the current WEEE management practices in various countries and regions around the globe.49 62. According to these analyses, the pace of initiating and enacting WEEE specific legislation is very slow across the globe. Handling of WEEE in developing countries was found to be influenced by high rate of repair and reuse within a large informal recycling sector. This informal recycling has the potential of making a valuable contribution, if their operations can be regulated in accordance with strict safety standards. 63. In 2008, only one-third of the annual WEEE arising was collected, treated and reported, according to the WEEE legislation, while illegal trade in WEEE to third countries was common despite rules on waste shipment50 and illegal dumping. Enforcement of the directive's provisions was rather difficult for customs: watching the WEEE export flow and detecting illegal exports without having clear information and documentation on all used EEE packaging was a challenge. 64. Following a consideration of the findings of these reviews, the European Commission submitted proposals to amend this directive in December 2009. This review considered aspects such as illegal shipment of WEEE outside EU, improper treatment of WEEE within and outside EU and lack of enforcement. The WEEE review is expected to result in an amendment to the WEEE Directive as soon as the end of 2011. Aspects that might change include the following:  Scope: Aim to clarify the grey areas and confirm the status of fixed installations probably through inclusion in scope.  Harmonization of requirements: Current diversity of national legislation inhibits the free movement of goods within the EU and changes are needed to correct the situation. A variety of options are being considered, such as streamlining registration and data requirements for uniformity in all EU States. Single registration in the EU instead of all states where sales are made is another option being considered. Definitions should also be clarified for uniformity in all EU States, such as the difference between B2C and B2B.  Promotion of individual producer responsibility: WEEE is no more than a tax without incentives to design equipment for easier recycling. Another study that looked into the implementation of the Producer Responsibility Principle of the WEEE Directive51 considers a number of financial models some of which are intended to encourage better design for the environment. The study highlights that manufacturers should be able to achieve cost savings by making products that have less environmental impact and are simpler to recycle.  Mechanisms that account for the global market nature of electrical equipment need to be implemented: Equipment made in one EU State is often sold in many others and can reach end-of-life in a different state from where it was originally sold.  Collection and recycling targets: These may be revised but the way equipment is collected could also be changed to increase recovery rates. There are proposals, currently 49 F. O. Ongondo, I.D. Williams, T. J. Cherrett (2011) ―How are WEEE Doing? A Global Review of the Management of Electrical and Electronic Wastes,‖ Waste Management 31, 714-730. 50 Convention on the Control and of Transboundary Movements of Hazardous Wastes. 51 Ököpol (2007). The Producer Responsibility of the WEEE Directive. 37 under discussion in EU member states, to set the mandatory collection target based on a percentage of the average weight of the electrical and electronic equipment placed on the market over the two previous years. 65 percent is the currently discussed figure. 65. Ongoing efforts in the EU regarding improvements of WEEE Directive included developing standards for collection, treatment, recovery and recycling of WEEE. The WEEE- Forum, an association formed by 38 WEEE management schemes from Member States, pioneered the most interesting work regarding introducing a label, called WEELABEX. Examples of International Experience 66. An overview of generic experiences from other countries that have a longer history with the implementation of is provided below: Box 2: The Swedish WEEE System, El-Kretsen The regulation on WEEE was introduced in Sweden on July 1, 2001. Since then, Swedish citizens have collected close to 1 million tons of WEEE. With a collection rate of 16 kg/capita-year, Sweden has one of the highest collection rates. WEEE is managed under a single nation-wide system called Elretur in Sweden. El-Kretsen is an organization established by the producers and manages a nationwide collection and recycling system for WEEE. The system initiated in July 2001 between producers and local authorities is called Elretur and is managed in collaboration with the Swedish local authorities as follows: (i) the local authorities manage and fund collection and storage points where the households may leave the WEEE without charge, (ii) El-Kretsen manages and funds transports of the WEEE to pretreatment and recycling in accordance with the prevailing laws. The system is convenient for the households who can leave the WEEE at the same collection points as other waste, as well as for producers who are members of El-Kretsen since they get access to a nationwide and well-established system. Elretur is the only nationwide collection system in Sweden. In the initial years of the WEEE implementation, treatment was the higher component of the cost, and during this time municipalities were responsible for covering the costs of collection and storing waste. With the improvements in collected waste management supported by increasing prices for the recovered material streams, the balance has shifted over the years to the collection component. Consequently upon a request from municipalities, a new agreement was reached in January 2011 between El-Kretsen and the municipalities whereby the system will compensate the municipalities for part of their cost by around €4.2 million every year. The funds that the municipality receives are calculated by a formula that takes the population, WEEE quantity and number of collection sites into consideration. El-Kretsen organizes the transport of WEEE collected by municipalities and businesses through the use of licensed contractors. The amounts of collected waste are continuously reported to El-Kretsen‘s web-based information system, which allows the carriers to plan and transport the waste effectively. The logistics system is based on the best possible use of large vehicles, quick loading and unloading with specialized loading carriers. El-Kretsen‘s loading carriers are marked with bar codes; the transporter reads the codes and keeps statistics of the collected waste quantities from each collection point. The WEEE is transported from the collection points to the so-called pretreatment facilities. Transportation of hazardous waste, which is the category that most types of WEEE fall under, is strictly regulated in Sweden. Specialized pretreatment and recycling facilities with which El-Kretsen has a contract are regulated by the Swedish legislation, by agreements between El-Kretsen and the recycling companies, by certain developed standards, and by the code of conduct appended to all pretreatment agreements with El-Kretsen. Controls and follow ups at the facilities are made through audits, as well as through reports to El-Kretsen and to supervisory authorities. The control includes treatment at the facility and downstream treatment. The reports to El-Kretsen should account for how the WEEE was treated, where the fractioned material, such as metals, plastics and hazardous waste, was sent and how the material was treated at the receiving facility. The producers have to register their products through an on-line system operated and monitored by the Swedish EPA. El-Kretsen keeps track of the logistics and treatment costs in different product categories and allocates them to the producers according to their market share. The municipalities are responsible to inform the households why WEEE must be separated, how to separate it and where it can be collected. The nationwide collection system comprises approximately 1,000 collection points around the country. They should also give information about the collection and recycling results from the producers. The municipalities fund information dissemination and the major part of collection, and the producers fund transport, treatment and recycling. The cooperation between local authorities and producers is considered as a key success factor. The producers are required to consult the local authorities before introducing a new collection system or upon demand of a local authority. The purpose of the consultation is to make the producers‘ collection system coordinate with the municipal waste management. 38 Avfall Sverige – Swedish Waste Management and El-Kretsen continuously work on improving WEEE management system and run parallel projects to develop new collection systems suited for specific conditions in different parts of the country in cooperation with several local authorities. These organizations also facilitate the diffusion of successful improvements across the country. A recent example of such efforts is the introduction of a special device called ―The Collector,‖ which aims to increase the relatively low collection rates for fractions such light bulbs, smaller batteries and smaller WEEE. The device resembles a vending machine and is placed in stores, making it convenient for the public to return such WEEE. Source: Authors based on material from Swedish Waste Management Association (http://www.avfallsverige.se/fileadmin/uploads/elretur_eng.pdf) and interviews with personnel from Swedish Waste Management Association and El-Kretsen 67. With regards to the management of WEEE, Japan represents an important case and is considered as the front runner in use of the EPR dimension and in resulting design changes. Two different systems operate in Japan. One focuses specifically on computers, and the other covers other electronic equipment like TVs and household appliances. Box 3: WEEE Management System in Japan In Japan, the regulations to make producers responsible for collecting and managing the waste from electronics and household appliances came into force in 2001. Japanese municipalities were aware of the complexity associated with the WEEE and, therefore, did not want to be involved. Today there are two separate systems in Japan: (i) an arrangement dealing exclusively with computers, and (ii) a system that deals with WEEE associated with four product categories, including TVs, refrigerators and freezers, washing machines and air conditioners. The system that deals with computers is relatively straightforward. The consumers are required to send in the computers they no longer want by post to the producers. Computers that are sold after October 2003 benefit from a postage fee paid by the producers, whereas for products purchased earlier, the consumers bear the cost. For the rest of the WEEE, the retailers are the main actors with physical collection responsibility. The retailers may charge the consumers when they bring in their WEEE. The costs that consumers should pay to return their products are clearly marked with a sticker placed on the product. The costs of transporting and treating WEEE after being collected by retailers are borne by the producers. In Japan, besides operating a recycling plant by themselves, every main EEE producer works very closely with other recycling plants. This is considered as one of the key issues underlying Japan‘s success for stimulating ecodesign changes through the use of the EPR regulations. Despite the fact that the legislation does not set any collection targets, in 2007 the system that deals with large household appliances recycled around 3.7 kg/capita of WEEE. While the collection costs for the WEEE are reported to range between €1–40 per unit of appliance, the recycling costs for different product groups are reported to be as follows:  Refrigerators and freezers: €44–53/unit;  Washing machines: €24–32/unit,  TV sets: €17–27/unit  Air conditioners: €24–33/unit Sources: Author‘s interviews with Dr. Naoko Tojo and Mr. Panate Manomaivibool who are experts in the field of environmental product policy and work as researchers at the International Institute for Industrial Environmental Economics at Lund University, Sweden. 68. The US has recently introduced a new bill for e-waste legislation at the national level, the Responsible Electronics Recycling Act of 2010, geared toward stopping companies from exporting electronic waste to developing countries, an action that creates dangerous and toxic places, causes severe environmental damage and harms human health. In the US, which has not ratified the Basel Convention, it is estimated that 50-80 percent of the e-waste collected for recycling is being exported and ends up at unsafe overseas recycling facilities. The legislation has received support from companies like Apple, Samsung and Dell who have published this 39 initiative on their website. Currently there are 25 states in the US that have passed legislation mandating statewide e-waste recycling. All laws except California's use the producer responsibility approach, where the manufacturers must pay for recycling. This means that 65 percent of the US population is now covered by a state e-waste recycling law. Box 4 provides some detailed information on the US WEEE management system and its achievements in several states. Box 4: WEEE Management System in the US According to the Consumer Electronics Association (CEA), Americans own approximately 24 electronic products per household today.52 The US Environmental Protection Agency (EPA) estimates that Americans throw out 400 million units of high-tech trash annually and that they will dump another 50 billion over the next decade. In 2008, Vermont solid waste districts collected more than 1.6 million pounds of e-waste. According to a report from the policy center Demos, constant upgrades caused by improving technology and plunging prices create millions of pounds of e-waste. The products are often potentially toxic, containing lead, mercury, chromium, zinc and other hazardous materials. Of the throwaways, most are sent to dumps and incinerators. Less than 15 percent are recycled—usually through voluntary takeback programs or processed in developing countries using unsafe methods, according to the Demos study. Beginning in January 1, 2005, an Electronic Waste Recycling Fee was assessed for sales in California on certain electronic devices covered by law, such as video display products like computer monitors and televisions. The fee for California consumers ranges from $8–25 depending on screen size and is collected at the time of retail sale, including Internet and catalog sales. Collected fees are deposited in an Electronic Waste Recovery and Recycling Account managed by the State of California and are used to pay authorized collectors and recyclers, fostering the development of recycling opportunities and offsetting the cost of properly managing these types of products at their end of life.53 Examples of innovations include (i) Electronics Recyclers International in Fresno, California has a 900-horsepower tech-trash shredding system that can gobble up 20,000 pounds an hour, and the company‘s founder also launched 1800-recycling.com, which directs customers to local recycling centers; (ii) California has more than a dozen eco-ATMs, automated self-serve machines that can identify and buy back used electronics directly from consumers; (iii) Dell said it diverted more than 150 million pounds of electronics from landfills in fiscal year 2011, nearly two-thirds from the Americas, in a program that invites consumers to drop off old computers, monitors, printers, scanners and more at Goodwill donation sites; (iv) Best Buy said that its in-store recycling kiosks gathered nearly 7 million pounds of e-waste in California—about 52,000 pounds per store. In the US nationwide, the Consumer Electronics Association said it hoped to recycle a billion pounds of e-waste a year by 2016—about three times more than the 2010 amount and enough to fill a 71,000-seat stadium. The EPA is working to educate consumers and others on why it is important to reuse and recycle electronics and what options are available for safe reuse and recycling of these products. Increasingly state and local governments, manufacturers and retailers are providing more opportunities to recycle and reuse this equipment. Starting January 1, 2011, in Vermont, a new electronic waste law bans the disposal of electronic waste and provides convenient free collection of certain electronic waste for consumers, charities, school districts and small businesses. 54 Currently Vermont solid waste districts subsidize the cost of e-waste collections to prevent disposal and provide for better waste management of the waste. The Procedure for the Environmentally Sound Management of Electronic Waste for Collectors, Transporters and Recycling Facilities, effective July 1, 2011, establishes guidelines for the proper environmental management of electronic devices collected, transported and recycled in the State of Vermont. It also provides guidance on how to register as a collector, transporter or recycler under Vermont's electronic waste management law. Manufacturers will pay for the e-waste collection and recycling program starting July 1, 2011. E-devices, such as computers and monitors, printers, TVs, VCRs, stereo equipment and wireless phones, will be banned from landfills. Other state initiatives include Maryland's county-by-county collection system established in 2006 with the manufacturer responsible for either funding the program or creating their own plans. This law was updated in 2007 with a new measure that expands the product scope to include TVs and other display devices. Virginia signed a bill on March 11, 2008 that underlines the producer responsibility and requires manufacturers to set up a collection system for consumers to return computer equipment for recycling and reuse free of charge. Source: Authors 52 Consumer Electronics Association, Market Research Report, Trends in CE Use, Recycle and Removal, April 2011 53 The TRI Products Inc. website, a California State Approved Electronic Waste Recycling Center. 54 Vermont E-Waste recycling program website, http://www.anr.state.vt.us/dec/e-waste/. 40 3. Overview of the Sector, Future Projections and Key Issues Generic 69. Electrical household appliances sector comprises a large number of diverse product groups. These product groups include large household appliances known as ―white goods," such as fridges, deep freezers, washing machines, dishwashers, dryers, ovens, cookers,55 and smaller household appliances, such as blenders, mixers, toasters, and fruit presses, as well as others, such as air conditioning equipment, water heaters and water treatment units. 70. The Turkish household appliances sector started production in the 1950s as an assembly industry. Manufacturing of the first products started in 1955, and the first Turkish–made refrigerator, named Arçelik, was on the market in 1960. Since then, and except during crisis periods, sector production has increased continuously. Six main producers represent about 90–95 percent of the domestic market with around 50 medium-size manufacturing plants and around 500 firms supplying parts and components. There are also some 12,000 distributors and 1,500 authorized service stations.56 About 200 of the suppliers are organized under the White Goods and Parts Suppliers Association of Turkey (BEYSAD). Six major producers are members of the Association of Turkish White Goods Producers (TURKBESD). Manufacturers of the smaller white goods products are organized in the Small Domestic Appliances Industrialists (KESID).57 71. The manufacturing plants in the white goods sector has a production capacity of more than 25 million units per annum, representing the second largest capacity in Europe after Italy.58 While up to 20,000 people are employed in manufacturing of household appliances, this figure reaches 120,000 when the sector suppliers are included. Out of this, 15,000 people are white– collar workers, and remainder hold blue–collar jobs.59 Including distributors and service station, the household appliances sector provides jobs for 2.0 million people. Firms in the sector represent both domestic and foreign capital investment. The six main producers are members of TURKBESD. Table 4 lists these producers and their brands. Table 4: Main Companies of the White Goods Sector Company name Brands Source of Capital Arçelik Arçelik, Beko, Altus Domestic Vestel Vestel, Regal Domestic BSH Bosch, Siemens, Profilo German Indesit Hotpoint, Ariston, Indesit Italian Demirdöküm Demirdöküm Domestic Süsler-Candy Hooever, Süsler Italian and domestic 55 For this study, the main focus is on the products included in the large household appliances category. 56 Ministry of Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry. 57 Export Promotion Centre of Turkey (2010) Household Appliances. 58 Republic of Turkey Prime Ministry Investment Support and Promotion Agency of Turkey, July 2011, Turkish Home Appliances & Electronics Industry Report. 59 Ministry of Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry. 41 72. According to a recent study,60 the largest domestic market shares belong to the following producers: Arçelik 57 percent, Bosch 25 percent, and Vestel 18 percent. Sector manufacturing plants are concentrated in the Marmara, Aegean and Central Anatolia regions with main production facilities in Istanbul, Manisa, Eskisehir, Bolu, Bursa, Izmir, Ankara, Kocaeli, Yavlova, Kayseri, Konya and Bilecik.61 73. Turkey‘s membership in the European Customs Union stimulated foreign direct investments in the sector. Main European brands like Bosch-Siemens and Merloni invested in Turkey, fueling domestic competition and stimulating research and development (R&D) in domestic firms and compliance with EU‘s quality standards. While the ratio of R&D spending to sales in three of the largest exporting companies were 0.70, 0.12 and 0.11 percent in 1994, these ratios rose to 1.63, 0.81 and 0.36 percent in 1998. 74. Similar to other sectors in Turkey, the majority of R&D activities in the white goods sector was geared toward quality and design improvements and product adaptation. In recent years, however, product development efforts have increased. As the sector pioneer, Arçelik has 10 percent of all product patents issued in Turkey.62 Considering that the total number of patents issued in Turkey remains significantly below developed countries, this white goods company share is a telling indicator of achievement in this sector. Economic Outlook 75. On average, the value added in the white goods sector is in the range of 55 to 60 percent, and the sector contributes around $1 billion in indirect taxes. In 2008, revenues in the sector amounted to $8 billion, and exports reached $3.4 billion.63 In 2009, the Turkish electronics sector grew substantially, reaching a production volume of about $9.5 billion and registering export revenues of $4.9 billion and imports of $12.2 billion. 76. In 2008, the global sales of white goods trade reached $61.6 billion. In the same year, the largest trade volumes registered were China with 25.9 percent, Germany with 11.7 percent and Italy with 11.6 percent of the global trade. Turkey followed in fourth place globally with a share of 4.3 percent. Sector exports have grown significantly over the years, and according to the latest figures exports of white goods reached around $2.23 billion in 2010.64 In 2009, the exports of the sector accounted for 5 percent of Turkey‘s export volume.65 The sector aims to reach an export volume close to $10 billion by 2023.66 77. In 2009, the sales of white goods dropped by 4 percent in Western Europe and 25 percent in Eastern Europe. In Turkey, white goods production, shown in Figure 4, contracted by 4 percent, but exports increased by 4.5 percent. To overcome stagnation in the sector, from March to June 2009 the Government of Turkey reduced the private consumption tax applicable to white 60 N. Alptekin (2010) Estimating Market Share Of White Goods Sector in Turkey with Analytic Network Process. 61 Ministry of Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry. 62 Enterprise Europe, (2009) White Goods Sector Report 63 Ibid. 64 General Secretariat of Istanbul Mineral and Metals Exporters Association–IMMIB (2001). 65 Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry 66 Ministry of Industry and Trade (2011) General Assessment of Turkish Industry Sectors 2010. 42 goods from 6.7 percent to zero percent. Between June and September 2009, the tax reduction was adjusted to two percent. Furthermore, special provisions were made for value added tax applied to some equipment used by the sector. These tax adjustments significantly increased sales volumes for white goods. Figure 4: Total Production by the White Goods Industry (number of units)67 20,000,000 15,000,000 10,000,000 5,000,000 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: TURKBESD 78. Turkish white goods exports increased considerably within the last decade. The share of exports and domestic sales for the sector is given in Figure 5. The economic value of the sector's international trade between 2004 and 2008 is provided in Table 5. Table 5: Economic Value of International Trade in the White Goods Industry (US$ thousands) 2004 2005 2006 2007 2008 Exports 1,429,542 1,698,861 2,154,707 2,725 238 2,964,047 Imports 251,207 299,667 391,282 439,769 548,531 Source: Undersecretariat of Foreign Trade Figure 5: Production and Exports of White Goods Industry 20 Millions 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total Production Exports Domestic Sales Source: TURKBESD 67 Based on data provided by TURKBESD. 43 79. Whereas the EU market is the main destination and accounts for 66 percent of Turkey‘s exports, the sector also has a global reach thanks to production plants in Russia and China.68 In the early years after Turkey became a part of the EU customs union, the demand for imported brands increased. Demand has shifted back to domestic producers who have improved their product quality. The fact that Turkish producers can meet the EU quality standards at a lower cost is an important competitive advantage. However, the price discrepancies for domestic and export markets maintained by public enterprises have an adverse impact on the price competitiveness of Turkish producers in domestic and foreign markets.69 Imports in the sector remain considerably small (see Figure 6). The breakdown of export volumes per product category and main export destinations is given in Table 6. Table 6: Breakdown of Exports in White Goods Sector70 Years Destination (with percentage 2004 2005 2006 2007 2008 shares) Refrigerators 591,478 737,653 936,188 1,148,690 1,106,660 England (16), France (12), and deep Germany (9), Italy (7), Iraq (6) freezers Washing 390,551 475,864 579,908 645,360 667,138 France (11), Germany (10), Italy machines (10), England (9), Spain (8) Dishwashers 51,099 67,192 109,275 209,793 264,208 France (16), Spain (15), England (12), Italy (8), Germany (7) Ovens- 141,359 139,617 156,597 199,733 251,898 England (15), Romania (10), cookers France (9), Russia (6), Ukraine (5) Others 255,055 278,535 372,738 521,662 674,143 England (16), Germany (12), Russia (7), France (7), Italy (4) Source: Undersecretariat of Foreign Trade Figure 6: Exports and Imports of the Turkish White Goods Industry 16 Millions 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Exports Imports 68 Ministry of Industry and Trade (2011) White Goods Sector Report. General Directorate of Industry 69 Enterprise Europe, (2009) White Goods Sector Report. 70 Undersecretariat of Foreign Trade. 44 Source: TURKBESD 79. In Turkey the upward trend of production and export figures of white goods sector continued in January 2011.71 According to TURKBESD, production and export volumes in January 2011 has increased by 11.3 and 8.26 percent, respectively, as compared to the same period of 2010. Key Issues for the Sector 81. Turkish white goods brands are less known in foreign markets. Market saturation in the EU, high transportation costs and difficulties faced in customs create challenges to export. In addition, imported goods that are not in compliance with Turkish standards constitute a major problem for Turkish producers. 82. In the domestic market, inadequate market control and sales without invoicing forms remain a problem. These sales often take place in spot markets that offer prices lower than retailers, giving rise to unfair competition. Such sales also represent a loss of tax income for the state and fuel an informal economy. In addition, the white goods sector depends heavily on Cr- Ni steel, which is imported. Environmental Profile of the Sector 83. Environmental impacts of white goods can arise during production, while in use or at the end of their service life. In the production stage, the main concerns are significant water and energy consumption and effluent discharge, containing toxic and hazardous chemicals like solvents, heavy metals, acids, detergents and even cyanide used for surface treatment and coating, as well as the generation of hazardous solid and liquid waste. The use phase is considered to have the lion‘s share with more than 90 percent of total environmental impact72 primarily with energy consumption and associated emissions. For example, according to information from Arçelik,73 the use phase accounts for 92 percent of total life-cycle emissions of CO2 with the production/assembly stage at 7 percent and logistics at 1 per cent. Water consumption, detergent use and subsequent effluent generation are also among important environmental impacts in the use phase. The main environmental impact of the end-of-life stage is the release of toxic and hazardous substances and greenhouse gases, which can result in severe land and water contamination or contribute to global warming. 84. In general the Turkish white goods sector can be characterized as having a good environmental performance profile, touching upon all key life cycle stages. Production facilities of main producers have environmental management systems (EMS) that comply with the requirements of the ISO 14001 standards. Necessary effluent and emission control systems are also in place, and facilities are in full compliance with applicable environmental regulations with discharge and emission permits. Some companies even attain compliant status prior to the 71 Turkey Consumer Products: White Goods Production, Exports Up in January, Economist Intelligence Unit, February 2011. 72 R. Otto, A. Ruminy, and H. Mrotzek, (2006) Assessment of the Environmental Impact of Household Appliances. Appliance Magazine. April 2006. 73 Arçelik Sustainability Report 2008-2009. 45 implementation of certain regulations, such as one that packages waste.74 Going beyond compliance, sector companies have good track records for adoption of cleaner production approaches that reduce resource consumption and improve environmental performance. For example, Arçelik, one of the sector's main players, has reduced water consumption per unit production for different product groups between 5–57 percent from 2008 to 2009. In the same period, overall heat and electrical energy consumption were also reduced by 10 percent,75 and the eight production facilities of the company were recently given a high energy efficiency rating by an independent German energy auditor.76 Another large player, BSH, reported around a 50 per cent reduction in water used per unit of production as a result of a resource productivity effort. They also lowered energy consumption by 36 percent and CO2 emissions 82 percent by switching to natural gas in one facility.77 In addition, sector companies have voluntarily assisted the MoEF work that aims to develop a waste inventory of industrial operations in the country and works with various universities and research centers to this end. 85. Introducing design changes to reduce the environmental impacts arising during the use phase is an area where the Turkish companies have been particularly progressive and successful. Since the 1990s, Turkish companies have concentrated their R&D efforts to resource efficiency and developed products that save significant energy and water during use. For example, washing machines and dishwashers produced by BSH use 67 and 57 percent less water today, respectively, as compared to 1990. Table 7 summarizes the energy efficiency improvements realized with BSH products. Other producers, like Vestel, also have products that reduce water consumption during use. Table 7: Energy Consumption of Different White Goods Produced by BSH Group78 Product Group 1990 2007 Saving Refrigerator 0.53 kWh 0.11 kWh 79% Freezer 0.53 kWh 0.19 kWh 75% Freezer Refrigerator 0.57 kWh 0.22 kWh 61% Cooker 1.10 kWh 0.76 kWh 31% Dishwasher 1.74 kWh 1.05 kWh 40% Washing Machine 0.27 kWh 0.17 kWh 37% 86. The majority of sector products have energy efficiency ratings that meet, and in certain cases surpass, the requirements set by ―class A‖ of EU‘s energy labeling scheme,79 which sets moving targets. In Arçelik's case, 100 percent of washing machines and dishwashers, 79 percent of refrigerators and 40 percent of ovens produced in 2009 allow energy savings required by class A or more.80 Companies also support programs that aim to raise public awareness about 74 Ibid. 75 Ibid. 76 F. Özkadı, Energy and Environment Manager at Arçelik. Personal communication (1.6.2011) 77 BSH Group, Environmentally Friendly Initiatives. http://www.bsh-group.com.tr/page.aspx?id=142. 78 Adapted from BSH Group, Environmental Sustainability, Energy Efficiency. Available at http://sustainability.bsh.com.tr/page.aspx?id=93 79 The scheme places products in one of the seven categories marked by letters from A to G, where A represents the products with highest energy efficiency. 80 Arçelik Sustainability Report 2008-2009. 46 environmental impacts of white goods. Arçelik, for example, has developed campaigns concentrating on energy efficiency in collaboration with UNDP-Turkey and on water use with the TEMA foundation, a local environmental NGO. 87. For the end-of-life phase of product management, the main producers report high recyclability rates for their products. Arçelik, for example, states that white goods they produce have recyclability rates between 84 and 98 percent, depending on the type of product. BSH states that 80 percent of the materials used in large household appliances can be recycled.81 However, these companies do not practice taking back their products and recycling appropriate components. With regards to refrigerant gases used in refrigerators and freezers, the companies have moved progressively from those with high ozone depletion and greenhouse potential, such as CFCs, to more environmentally friendly alternatives, such as R134a and R600 (isobutene). In accordance with the requirements of the RoHS Directive for the end-of-life stage to which Turkish producers comply, products contain limited amounts of hazardous substances. 88. In addition to environmental regulations in Turkish national legislation, the companies also meet the requirements of EU environmental regulations that are not yet implemented in Turkey, such as registration, evaluation, authorization and restriction of chemical substances (REACH) and WEEE. The fact that sector companies received several environmental awards from reputable national and international organizations, support the sector's argument that they maintain high environmental performance profile. 81 BSH Group Environmental Sustainability. http://sustainability.bsh.com.tr/page.aspx?id=105 47 4: WEEE in Turkey Turkey’s Context for Implementation of WEEE 89. Before defining the implementation challenges linked to the transposition of EU Directive on WEEE, it would be useful to highlight certain country dynamics that are relevant to this analysis. The following characteristics and dynamics are of particular importance. 90. WEEE penetration, despite growing trends, still remains comparatively lower than the EU average. This is linked to Turkey's relatively low income levels and living standards. In addition, the service life of electrical and electronic products, similar to other durables, is much longer than in the EU countries. Tight family and social links mean products no longer wanted by one party are passed to another who continues to derive value from it. This cascading effect can involve several users. Even when products are no longer used for their original purpose, owners can revalorize their utility, for example, washing machines turned into flower pots is not an uncommon sight in Turkey. 91. When used white goods are no longer wanted by their users, they are usually sold to scrap collectors, merchants or service stations—items like washing machines can have an end- of-life price of YTL 20–50 per item. Products discarded by their users are quickly spotted, collected by scrap merchants and either refurbished for further use or processed for recovery of valuable fractions. Consequently, both the amount of WEEE that arises from households and the amount sent to landfills or discarded in an uncontrolled manner into the environment are believed to be low. 92. In Turkey, scrap dealing is widespread. It plays an important role in the effective collection of various waste streams, including WEEE, and the extensive revalorization of useful material streams. The sector includes collectors and processors and is a significant employer, particularly in the Ankara region where more than 10,000 people are directly engaged with collection, pre-treatment and recovery of different waste streams.. In the entire country, 1.5 to 2 million82 people are believed to have their livelihoods linked to the scrap dealing sector, including WEEE. Currently scrap collectors collect, and at times purchase, a great majority of the WEEE from consumers, service stations or from waste sites. Collectors bring the materials to scrap processors who buy the scrap based on a price decided by the market value of the useful fractions they can extract. Scrap processors are regarded to have significant knowledge and skills regarding dismantling and recovery. They perform highly useful and valuable pretreatment by dismantling collected products and sorting and preparing valuable fractions for recovery. Most of these fractions are then sold to appropriate domestic and overseas parties that can perform the actual recovery. Consequently the scrap dealing sector is of key importance to the low-cost and highly effective collection and pretreatment of WEEE and to the recovery and recycling of useful materials. In fact, it is believed that this sector collects and pre-processes 99 percent of the WEEE generated in Turkey. Prelicensed companies are reported to rely heavily on scrap dealers for collection, pretreatment and even treatment of WEEE and to form partnerships with them to take part in WEEE tenders opened by large companies. 82 Cinkaya, İ. Chairman of Turkish Scrap Merchants Association. Personal communication. 14 June 2011. 48 93. Nevertheless, the majority of scrap processors are known to operate in a way that harms both the environment and workers' health. A big portion of the processors are small players that operate at facilities with limited space and inadequate infrastructure. They usually follow the shortest route to recovery of valuable fractions that often results in the release of harmful fractions in the environment. . They are believed to lack both the awareness and the funds for necessary environmental and safety improvements. They have limited record keeping and reporting capabilities and a great deal of their operations is believed to be outside the formal system. 94. Also in Turkey, white goods manufacturers have used ―trade-in‖ offers successfully for many years, and these have intensified in the last decade. This has two major implications. The first, based on the observations during the latest trade-in campaign, is that only a small fraction of white goods older than 15 years are still in use. Given that no CFCs were used by the Turkish manufacturers since 1995, this may mean that the number of CFC-containing cooling equipment is relatively low.83 The second implication is that the campaigns provide a special channel that can be highly effective in collecting end-of-life white goods.84 Transposition of WEEE Directive in Turkey 95. Transposition preparations for the WEEE Directive started in 2004. The MoEF conducted several studies to support the analytic basis for WEEE implementation plan, which included the Matra Project cooperation supported by the Government of the Netherlands and the UK Department for Business Enterprise and Regulatory Reform (BERR), the responsible party for the transposition and implementation of the RoHS and WEEE Directives in Turkey. MoEF completed another study in cooperation with the Slovak Environmental Agency under the UNEP/MAP. In the mean time, the preparations concerning the RoHS regulations were completed, and the regulation came into force on May 30, 2008, after publication in the official gazette number 26891. 96. The WEEE draft regulation was published on MoEF‘s website in October 2010, requesting feedback by the relevant parties and the private sector. In fall of 2010, a ―regulatory impact study‖ funded by the EU and conducted by Regional Environmental Center (REC) of Turkey was initiated. This study aims to analyze the directive's economic, environmental and social impacts under different implementation scenarios which would provide the best balance of economic, environmental and social performance. As part of this study, a minimum of four workshops were organized in different regions of the country in which issues pertaining to directive implementation were discussed with multiple stakeholders, including municipalities and private companies. It is believed that this study has produced a number of useful insights and these are taken into consideration while creating updated drafts of the regulation. Although the same study is also stated to have produced preliminary information that would be highly useful for our study, such as WEEE quantities or compliance costs under different scenarios, our team was unable to gain access to these findings. 83 D. Temel (2009) WEEE Directive and Turkey. Problems Facing the Implementation of 2002/96/EC on WEEE in Turkey. 84 The industry states that trade-in campaigns are traditionally used as a marketing tool and have not been utilized for physically taking back old products. 49 97. MoEF has communicated different drafts of the directive with different stakeholders and requested their feedback. It has also organized consultation meetings where relevant stakeholder groups were invited. Based on the contents of the last two drafts85 of the regulation, several interviews confirm that industry feedback was taken into consideration and changes were made accordingly. However, it also indicates that representation of relevant stakeholders could be increased. Some important changes reflected in the May draft of the 2011 legislation include new collection, recovery and recycling targets for Turkey until 2016, as well as revised producers‘ responsibilities, such as providing training, achieving the collection targets and having control of the process they will finance without being responsible to provide containers for municipalities. A specific comparison of the three current drafts available in the public domain is provided in Annex 1. Implementation Challenges 98. There are a number of conditions specific to Turkey that pose considerable implementation challenges and therefore need to be highlighted. Some of these challenges are similar to those experienced in some EU Member States, in particular for newer members. 99. As no official WEEE management is in place, accurate information regarding quantities, characteristics and geographic distribution of WEEE in the country does not exist. There are various attempts to make educated assumptions regarding WEEE generation, including this study, but these have error margins that can be significant. 100. Consumer awareness and behavior is a key determinant in WEEE application. Although there are several on-going efforts to raise public awareness, the current level stays significantly low. There are also large demographic and economic differences across the country, creating significant heterogeneity among geographic regions. Two of the major and somehow interconnected implications of such heterogeneity are (i) the difficulty to access sufficient quantities of WEEE in the eastern and southeastern parts of the country where population is sparse and income levels are lower and (ii) the work toward a uniform national target may result in emphasis placed only on those regions with high WEEE concentration—typically the Marmara region and around larger and more prosperous cities like Ankara, Izmir, Adana, Antalya, Gaziantep, and Kayseri—leaving environmentally unwanted practices intact in the rest of the country. 101. In EU experience, countries that have inadequately developed waste management capabilities find it particularly difficult to meet WEEE directive requirements. Although considerable improvements have been made to this end in recent years thanks to significant investments, waste management and recycling and recovery systems are highly inadequate and in their infancy. While waste is usually collected with no or insufficient source separation, proper handling of collected waste is weak. Out of 3,215 municipalities, only 13 have a sanitary landfill in place. Of the 18–20 million tons of solid waste collected only about 2.5 million tons are recovered and recycled. The infrastructure for handling WEEE is even less developed. None of the recycling facilities that will require large investments are in place. Out of the estimated 85 There are three drafts available: October 1–17, 2010; December 2–18, 2010 and May 4, 2011 50 WEEE arising of around 368,00086 tons, only 5,00087 tons were handled by licensed firms in 2010. 102. In Turkey municipalities are responsible for proper management of municipal solid waste. As the majority of the municipalities lack the resources to meet this responsibility by themselves, they increasingly engage subcontractors for the work. Despite having a thorough procedure for such arrangements in place,88 there are concerns regarding the current practice. More specifically, political interests may sometimes influence the selection of subcontractors, and these sub-contractors may perform suboptimal waste management to maximize profit. As previously stated, source separation is highly underdeveloped and not always encouraged by waste operators. The consequence is inadequate technical infrastructure and lack of consumer readiness for proper end-of-life WEEE management, making implementation particularly challenging. 103. According to the latest draft of the Turkish WEEE Directive (dated 4.5.2011), the responsibility to collect WEEE from consumers is given to the municipalities. This will require municipalities to develop the necessary infrastructure and engage the necessary personnel. However, the majority of the Turkish municipalities already experience resource shortages and can barely fulfill more fundamental obligations, including water distribution, sewage treatment, and road maintenance. Consequently the municipalities are likely to experience difficulties in accessing required resources and making necessary investments. This can hinder or delay crucial collection efforts. 104. The draft directive includes provisions concerning reuse of WEEE. There are, however, numerous concerns regarding reuse. Turkey lacks legal provisions governing product reuse, and reuse promotion can lead to suboptimal results unless legal provisions are developed concerning product safety and consumer protection; energy rating limits; chemical composition of products; product liability issues; and quality control procedures. 105. From an administrative point of view, WEEE directive implementation will require certain resources both for the private and public sector. Currently the MoEF is reported to have only one and a half person responsible for the WEEE Directive. This presents a major challenge, as the MoEU takes the responsibility to keep a registry of eligible producers and to perform necessary monitoring and control functions for a substantial number of parties estimated to be between 5,000 and 16,000.89. Although it may not possible to estimate the exact number of additional resources to deliver the required performance, the establishment of a dedicated team with sufficient resources would be essential. Estimation of WEEE Quantities in Turkey 106. The availability of representative and reliable information on the quantity, type, geographic distribution and temporal trend of WEEE forms the backbone for a meaningful 86 While this value reflects our estimates, the REC study estimates the WEEE arising between 350,000 to 550,000. 87 The REC study states this number is 10,000 tons. 88 As part of the permitting process, interested parties prepare waste management plans with the municipalities. These are checked and approved by the MoEF and the local environmental directorates that monitor compliance. 89 S. Arcan, (2011) Personal communication. Environmental Engineer, MoEF (13.6.2011) 51 analysis. Recent data is often difficult to get. Therefore, in the absence of the most recent estimates, the first iteration of this note's assessment is based on earlier sources, namely the study conducted by MoEF under UNEP/MAP (2009). The UNEP/MAP study estimates Turkish waste quantities using WEEE arisings for white goods in 2007 from international studies90 and statistics of products sold from Statistical Institution of Turkey (TUİK). The results of this approach are given in Table 8. As a crosscheck, a comparison of sales figures listed in the second column was found to be consistent with sales information from TurkBESD. Table 8: Estimated Waste Quantities for Large Household Appliances for 2007 Sales in 2007 Waste Waste Product (# units) (tons) (kg/capita) Refrigerator 1,899,774 76,117 1.1 Washing machine 1,534,769 45,995 0.7 Dishwasher 983,600 11,488 0.2 Oven 735,411 20,056 0.3 Air conditioner 1,300,000 2,470 0.0 Other white goods 500,000 360 0.0 Total large white goods (WEEE category 1) 6,953,554 156,486 2.22 Source: Adapted from UNEP/MAP (2009) Final Report 107. The UNEP/MAP study also calculated waste quantities arising from the other products and categories as shown in Table 9, using the WEEE distribution data for the European Union in 2005. Note that large household appliances currently constitute nearly 50 percent of total WEEE, and CRTs and monitors comprise over 20 percent. These figures are for 2007, but equally important is the pattern and direction of future product demand and its consequent waste streams. To get a sense of where demand is going Table 10 summarizes growth across several broad WEEE product categories that are regularly tracked by consistent and reliable sources. Table 9: Estimated Waste Quantities for Different EEE Categories for 2007 Waste Product Class Waste (tons) (kg/capita) Rate in total WEEE Large household appliances 156,486 2.22 49.00% CRT TV‘s 42,475 0.60 13.30% CRT monitors 26,507 0.38 8.30% IT and telecom (except CRT) 25,549 0.36 8.00% Consumer electronics (except CRT) 24,910 0.35 7.80% Small household appliances 22,355 0.32 7.00% Electrical and electronic equipment 11,178 0.16 3.50% Lighting equipment 7,665 0.11 2.40% Observation and control tools 639 0.01 0.20% Automats 639 0.01 0.20% 90 The assumptions given in the 2008 Review of Directive 2002/96 on Waste Electrical and Electronic Equipment (WEEE) – Final Report dated 5th August 2007 issued by United Nations University are used. 52 Toys, hobby and sports equipment 319 0.00 0.10% Medical devices 319 0.00 0.10% LCD monitors 0 0.00 0.00% Flat panel TV's 0 0.00 0.00% Total WEEE 319,359 4.52 Source: Adapted from UNEP/MAP Final Report (2009) 53 Table 10: Growth and Population Assumptions 2007-2016 Product category 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017* 2018* Source Electrical appliances & housewares (% real change) 12.4 5.9 -6.3 7.2 5.9 6.4 7.3 7.0 6.7 5.9 5.3 4.9 EIU, March 2011 Household audio & video equipment (% real change) 10.2 -2.3 -6.4 8.6 6.7 6.4 6.2 5.9 5.4 4.8 4.3 3.9 EIU, March 2011 Television sets (stock per 1,000 people) 497 513 528 544 547 551 556 562 569 569 569 569 EIU, March 2011 Television sets (% growth) 1.0 3.2 2.9 3.0 0.6 0.7 0.9 1.1 1.2 0.0 0.0 0.0 Author's calculation PCs ('000 units) 9,500 16,150 18,489 21,131 23,236 25,426 27,674 29,971 32,337 32,337 32,337 32,337 EIU, March 2011 PCs (% growth) 46.2 70.0 14.5 14.3 10.0 9.4 8.8 8.3 7.9 0.0 0.0 0.0 Author's calculation Population demographics Real GDP growth (annual %) 4.7 0.7 -4.8 8.9 5.5 4.7 5.2 5.5 5.2 4.6 4.1 3.8 EIU, March 2011 Population (million) 71.16 71.89 72.83 73.76 74.67 75.42 76.18 76.94 77.71 78.48 79.27 80.06 UN Population Statistics Population growth (annual %) 1.3 1.0 1.3 1.3 1.2 1.0 1.0 1.0 1.0 1.0 1.0 1.0 UN Population Statistics Total domestic WEEE collection target 0.2 0.3 0.5 1.0 4.0 4.0 4.0 Draft WEEE Regulation Notes: Forecasts of consumer product growth were not available, so numbers from 2015 are adjusted using available forecasts of GDP growth from the EIU. Growth in television and PC penetration were not available and are conservatively assumed constant from 2015 onward. Sources: Economist Intelligence Unit (EIU); UN Population Statistics; Draft WEEE regulation; Author‘s calculations. 54 108. The figures in Table 10 represent growth from the retail side, but these may not reflect the WEEE that would be generated at the end-of-product-life stage. Indeed, it is Turkey's experience that certain product turnover is quite low, as consumers pass on products to others who continue to use them for the same or other purposes. As incomes rise in urban and rural settings, however, demand for new products is expected to rise. Additionally awareness of WEEE value is expected to generate further demand for these products, as old appliances are replaced with newer, more efficient units. In this basic representation, these growth estimates are used with the understanding that this simplification may overestimate WEEE to some extent. 109. Growth in traditional household items, such as large appliances and video equipment, fell dramatically during the economic crisis in 2008-2009, whereas the per capita stock of television and PCs was still on the rise. Forecasts beyond 2015 were difficult to obtain for specific product categories of appliances and electronics, but since consumption of these goods is a function of income, 2015 growth rates were adjusted for the first two product categories by forecasted Gross Domestic Product (GDP) growth, a measure of national income growth. Note that GDP growth slows beginning in 2015, and thus the corresponding demand for appliances and electronics also declines. The market penetration of televisions and PCs (units per 1,000 people) is likely to continue to rise in the future well beyond 2018, but corresponding growth figures were unavailable for these products past 2015. In this case, market penetration rates by GDP are not adjustable since annual changes in GDP growth are actually negative (i.e., percentage change in GDP year-over-year). Applying the same technique above would result in a declining penetration rate, which is probably unrealistic. In this case, a conservative assumption is made for constant penetration rates for televisions and PCs after 2015. 110. Returning to the calculation of total waste amounts, growth rates were assigned to each product category and the results are presented in Table 11. Large household appliances dominate overall WEEE volume, however, the share of other forms of electronic waste rise with increased penetration of computers and CRT monitors. Total WEEE arisings reach nearly 583,000 tons by 2018, a number that closely reflects estimates from other studies.91 Per capita WEEE reaches 7.3 kg/person by 2018 and, if the current draft legislation of 4 kg/person were effective, this would imply a collection rate of approximately 55 percent. This amount is twice as high as collection rates commonly achieved in most European countries. 91 Namely the study by the Regional Environment Center (REC), which approximated total annual WEEE arisings from 350,000 to 550,000 tons each year. 55 Table 11: Projection of Waste Quantities to 2018 Waste quantity Code PRODUCT CLASS („000 tons) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1A, 1C Large household appliances 77.9 82.5 77.3 82.9 87.8 93.4 100.2 107.2 114.4 122.0 127.6 133.8 1B Cooling and freezing 78.6 83.2 78.0 83.6 88.5 94.2 101.1 108.1 115.4 123.1 128.7 135.0 2 Small household appliances 22.4 23.7 22.2 23.8 25.2 26.8 28.8 30.8 32.8 35.0 36.6 38.4 3A IT and telecom, excl. CRTs 25.5 25.0 23.4 25.4 27.1 28.8 30.6 32.4 34.1 36.0 37.3 38.8 3B CRT monitors 26.5 45.1 51.6 59.0 64.8 70.9 77.2 83.6 90.2 90.2 90.2 90.2 3C LCD monitors - - - - - - - - - - - - 4A Consumer electronics, excl. CRTs 24.9 24.3 22.8 24.7 26.4 28.1 29.8 31.6 33.3 35.1 36.4 37.8 4B CRT TVs 42.5 43.8 45.1 46.5 46.7 47.1 47.5 48.0 48.6 48.6 48.6 48.6 4C Flat panel TVs 0.0 0.0 0.0 0.0 0.0 23.5 23.7 23.9 24.2 24.2 24.2 24.2 5A Lighting equipment – luminaires - - - - - - - - - - - - 5B Lighting equipment – lamps 7.7 8.1 7.6 8.2 8.6 9.2 9.9 10.5 11.3 12.0 12.6 13.2 6 Electrical and electronic tools 11.2 11.8 11.1 11.9 12.6 13.4 14.4 15.4 16.4 17.5 18.3 19.2 7 Toys, leisure and sports equipment 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 8 Medical devices 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 9 Monitoring and control instruments 0.6 0.7 0.6 0.7 0.7 0.8 0.8 0.9 0.9 1.0 1.0 1.1 10 Automatic dispensers 0.6 0.7 0.6 0.7 0.7 0.8 0.8 0.9 0.9 1.0 1.0 1.1 Total WEEE 319.0 349.6 340.9 367.9 389.9 437.6 465.5 494.2 523.6 546.9 563.6 582.5 Total waste quantity per capita (kg/capita) 4.48 4.86 4.68 4.99 5.22 5.80 6.11 6.42 6.74 6.97 7.11 7.28 Notes: Some categories are blank as they are merged with other categories, such as 5A and 5B. Sources: Numbers from 2007 adapted from UNEP/MAP Final Report; projections using growth assumptions from EIU. 56 Total Costs of Compliance 111. Total costs of compliance are calculated by combining estimates of WEEE amounts from Table 11 with component costs of compliance from Figure 7. At this point, collection targets are not introduced to get a sense of what it would cost to collect and recycle all material. 112. In Figure 7, component costs include transport and collection, processing (shredding, sorting, dismantling and pretreatment), incineration and landfill (where required), and recycling and recovery processes. Recycling and recovery processes include the resale of recycled materials in secondary markets and represent a net benefit from the revenues generated through these (re)sales. To give a more complete picture, an approximation of additional costs is added, which includes administrative costs from the distribution chain for levying fees and other administrative and R&D costs. Figure 7 depicts these unit costs by broad product category. Note that cooling and freezing has substantial processing costs but potentially high recycling revenues, as materials can be sold in secondary markets (negative numbers represent a negative cost or revenue). Also note that for lamps, recycling costs are positive since the materials recycled are considered hazardous waste and strictly speaking cannot be sold in secondary markets. In this case, it represents a positive cost. Figure 7: Technical and Additional Component Costs by Major Product Category (€/ton) 1000 Cost (€/ton) 800 187 600 136 259 400 129 572 95 Transport & collection (incl. access to 409 61 WEEE) 249 8 200 145 Shredding, sorting, dismantling, 59 240 pretreatment 73 76 82 65 12 24 Additional costs ** 0 9 -51 8 -98 -93 -284 Incineration and landfill -200 Recycling + recovery processes * -400 LHHA C&F SHA (small CRT & FDP Lamps (large (cooling and household (CRTs and household freezing) appliances) flat-panel appliances) displays) [1A, 10] [1B] [1C, 2, 3A, [3B, 4B [5B] 4A, 5A, 6, (3C, 4C)] 7, 8, 9] * Negative recycling and recovery process numbers represent revenues from the sale of materials in the secondary markets. 57 ** Additional costs include administrative costs from the distribution chain for levying fees, other costs (including scheme administration, costs for levying funds as financial guarantees, costs for monitoring, enforcement or control, costs for PR or awareness raising, as sometimes defined by law), R&D costs and special costs, for example, costs for sorting and sampling and for specific waste streams, such as batteries or packaging (UNU, 2007). Source: United Nations University (2007) 2008 Review of Directive 2002/96 on Waste Electrical and Electronic Equipment (WEEE). 113. Total costs of recycling all WEEE for 2012 is approximately €194 million (Table 12, with the highest costs in the product areas of cooling and freezing, large household appliances and those concerning CRTs (3B and 4B) (Figure 8). Again, processing is the main driver of these costs. Calculating the cost per kilogram, Figure 9 indicates these product categories are highest along with lighting equipment (5B), which does not have secondary markets for some portions recycled materials. Also note that there are substantial revenues to be made through the recycling of these cost-intensive products, which in some could offset a high percentage of overall costs. Currently these revenues are captured in the informal scrap dealer market and could be additional revenue to producers if they were to engage in this market. 114. The distribution of total costs also reveals some interesting patterns (Figure 10). Cooling and freezing (1B) is about one-third of the total cost, and one-half after the inclusion of CRT TVs (4B) and large household appliances (1A, 1C). WEEE from CRT monitors is roughly 20 percent of total cost. These four product categories together represent over 70 percent of total cost. It is also interesting to note that the percentage share of certain product categories in total cost remains fairly stable over time with the exception of CRT TVs constituting 17 percent of WEEE in 2007 to only 10 percent by 2018. The opposite is true for CRT monitors (3B), which represents 10 percent of total cost in 2007 and 18 percent by 2018. Total Costs of Compliance with Collection Targets 115. Collection targets are now introduced to the analysis to estimate total cost of compliance. The targets selected are those currently under consideration in the draft WEEE legislation (i.e. per capita targets). The EU is also considering collection targets based on the average number of products placed on the market during two previous years (e.g. 65-85%). At the time of writing it was uncertain as to whether this was under any serious consideration by Turkish authorities, thus we followed the per capita targets formulated under current draft WEEE legislation. There is also an argument to be made in favor of using the per capita target on waste generation. WEEE product turnover is quite low in Turkey and setting targets based on (domestic) sales volume may not necessarily be reflective of waste generation. 116. Generally, compliance costs are expected to initially rise over time as greater WEEE quantities are generated by consumers and collection rates begin to rise. In the longer-term, these costs may fall due to scale economies in greater collection and recycling. Ultimately the total costs of compliance are a function of the collection targets set forth in the WEEE Directive. According to the latest draft 0.2 kg/capita are to be collected in 2012 with increasing rates until 2016 or 2018 (4 kg/capita). Estimated waste generation rates are actually higher than this (Table 11) and so the total cost of compliance with the Directive is calculated as only that fraction that is required to be collected and recycled. For example, in 2012 437,600 tons of waste is estimated 58 to be generated or 5.8 kg/capita (Table 11) and it would cost approximately €194 million to collect and recycle this amount (Table 12)). The Directive states that only 0.2 kg/capita is required and this represents only 3.4% of the total amount generated (i.e. 0.2 kg/capita / 5.8 kg/capita). Hence the total cost of compliance is only 3.4% of total cost – or €6.7 million (3.4% of €194 million). Using this calculation approach for future years, it will cost €137-139 million to comply with the 4 kg/capita target by 2016/2018 (Table 13). 59 Table 12: Component Costs of Recycling WEEE in Turkey by Product Category in 2012 („000 €) 2012 Transport & Shredding, collection sorting, Recycling + (incl. access dismantling, Incineration recovery Additional Code Category to WEEE) pretreatment and landfill processes * costs ** Total Cost/kg 1A, 1C Large household appliances 13,538 5,509 840 -4,762 6,835 21,960 0.24 1B Cooling and freezing 17,614 53,878 1,130 -26,751 7,116 52,988 0.56 2 Small household appliances 3,456 6,672 643 -2,626 2,738 10,883 0.41 3A IT and telecom, excl. CRTs 3,716 7,173 691 -2,823 1,629 10,386 0.36 3B CRT monitors 9,648 29,016 568 -6,598 3,926 36,560 0.52 3C LCD monitors - - - - - - - 4A Consumer electronics, excl. CRTs 3,623 6,993 674 -2,752 2,435 10,973 0.39 4B CRT TVs 6,404 19,260 377 -4,379 3,544 25,205 0.54 4C Flat panel TVs 3,191 9,595 188 -2,182 1,765 12,557 5A Lighting equipment - luminaires - - - - - - - 5B Lighting equipment - lamps 2,379 873 73 2,205 564 6,094 0.66 6 Electrical and electronic tools 1,728 3,336 322 -1,313 1,084 5,157 0.38 7 Toys, leisure and sports equipment 49 95 9 -37 39 155 0.40 8 Medical devices 49 95 9 -37 24 140 0.37 9 Monitoring and control instruments 99 191 18 -75 78 311 0.41 10 Automatic dispensers 111 45 7 -39 56 180 0.24 Total 65,607 142,731 5,550 -52,170 31,831 193,550 0.42 * Negative recycling and recovery process numbers represent revenues from the sale of materials in the secondary markets. ** Additional costs include administrative costs from the distribution chain for levying fees, other costs (including scheme administration, costs for levying funds as financial guarantees, costs for monitoring, enforcement or control, costs for PR or awareness raising, as sometimes defined by law), R&D costs and special costs, for example, costs for sorting and sampling and costs for specific waste streams such as batteries or packaging (UNU, 2008). Source: Author‘s calculations. 60 Figure 8: Total Cost of Recycling WEEE in Turkey by Product Category in 2012 (million €) Total costs (million €) 100 80 60 40 20 0 Transport & collection (incl. access to WEEE) -20 Shredding, sorting, dismantling, pretreatment Additional costs ** -40 Incineration and landfill Small household appliances LCD monitors CRT monitors CRT TVs Lighting equipment - lamps Large household appliances Flat panel TVs Lighting equipment - luminaires Electrical and electronic tools Automatic dispensers Monitoring and control instruments Cooling and freezing Medical devices Toys, leisure and sports equipment IT and telecom, excl. CRTs Consumer electronics, excl. CRTs Recycling + recovery processes * 1A, 1B 2 3A 3B 3C 4A 4B 4C 5A 5B 6 7 8 9 10 1C * Negative recycling and recovery process numbers represent revenues from the sale of materials in the secondary markets. ** Additional costs include administrative costs from the distribution chain for levying fees, other costs (including scheme administration, costs for levying funds as financial guarantees, costs for monitoring, enforcement or control, costs for PR or awareness raising, as sometimes defined by law), R&D costs and special costs, for example, costs for sorting and sampling and costs for specific waste streams such as batteries or packaging (UNU, 2008). Source: Author‘s calculations. 61 Cost (€/kg) 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 Large household appliances Cooling and freezing Large household appliances (smaller items) Source: Author‘s calculations. Small household appliances IT and telecom, excl. CRTs CRT monitors LCD monitors Consumer electronics, excl. CRTs CRT TVs Flat panel TVs Lighting equipment - luminaires Lighting equipment - lamps Electrical and electronic tools Figure 9: Cost of Recycling by Product Category in 2012 (€/kg) Toys, leisure and sports equipment Medical devices Monitoring and control instruments Automatic dispensers 62 Figure 10: Composition of Total Cost by Product Category 2007-2018 (percent) 100% 0 0 0 0 0 6 6 6 6 5 5 5 4 4 3 3 3 5A Lighting equipment - luminaires 90% 7 6 6 6 6 3 3 3 3 3 3 3 6 6 6 6 6 6 4C Flat panel TVs 7 6 6 6 6 6 80% 6 6 6 5 5 5 5 5 5 5 3C LCD monitors 7 6 6 6 6 6 6 6 6 8 Medical devices 70% 10 15 18 7 Toys, leisure and sports equipment 19 20 60% 19 19 20 20 19 19 18 10 Automatic dispensers 13 9 Monitoring and control instruments 13 12 50% 12 12 6 Electrical and electronic tools 11 11 12 12 12 12 12 5B Lighting equipment - lamps 40% 17 15 16 15 2 Small household appliances 15 10 13 12 12 11 11 11 30% 3A IT and telecom, excl. CRTs 4A Consumer electronics, excl. CRTs 20% 3B CRT monitors 32 31 29 29 29 29 29 30 27 28 28 28 1A, 1C Large household appliances 10% 4B CRT TVs 0% 1B Cooling and freezing 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Author‘s calculations. 63 Table 13: Total Cost of Compliance with Collection Targets (million €, unless otherwise specified) Code Category 2012 2013 2014 2015 2016 2017 2018 1A, 1C Large household appliances 22.0 23.6 25.2 26.9 28.5 30.0 31.5 1B Cooling and freezing 53.0 56.9 60.8 64.9 68.8 72.4 75.9 2 Small household appliances 10.9 11.7 12.5 13.3 14.1 14.9 15.6 3A IT and telecom, excl. CRTs 10.4 11.0 11.7 12.3 12.9 13.4 14.0 3B CRT monitors 36.6 39.8 43.1 46.5 46.5 46.5 46.5 3C LCD monitors - - - - - - - 4A Consumer electronics, excl. CRTs 11.0 11.7 12.3 13.0 13.6 14.2 14.8 4B CRT TVs 25.2 25.4 25.7 26.0 26.0 26.0 26.0 4C Flat panel TVs 12.6 12.7 12.8 13.0 13.0 13.0 13.0 5A Lighting equipment - luminaires - - - - - - - 5B Lighting equipment - lamps 6.1 6.5 7.0 7.5 7.9 8.3 8.7 6 Electrical and electronic tools 5.2 5.5 5.9 6.3 6.7 7.0 7.4 7 Toys, leisure and sports equipment 0.2 0.2 0.2 0.2 0.2 0.2 0.2 8 Medical devices 0.1 0.2 0.2 0.2 0.2 0.2 0.2 9 Monitoring and control instruments 0.3 0.3 0.4 0.4 0.4 0.4 0.4 10 Automatic dispensers 0.2 0.2 0.2 0.2 0.2 0.2 0.3 Total cost 193.5 205.6 218.0 230.7 239.0 246.9 254.5 WEEE Directive collection targets (kg/capita) 0.2 0.3 0.5 1.0 4.0 4.0 4.0 Total waste quantity per capita (kg/capita) 5.8 6.1 6.4 6.7 6.9 7.1 7.3 Total cost of compliance with collection targets 6.7 10.1 17.0 34.2 137.9 138.9 139.9 Source: Author‘s calculations. 64 Implications on competitiveness 117. The impact of compliance costs on relative profitability, and hence competitiveness, is also of interest. The approach taken here is to measure the effect of an increase in the cost of doing business on domestic sales. Unit costs of compliance were estimated in the previous section (i.e. €/kg), but we need to know how changes in cost or price affect sales. 118. One measure that can aid in assessing this impact is the price elasticity of demand, which measures the relative demand response to a price change of the good. By definition, the price elasticity of demand is the percentage change in price divided by the percentage change in output. For the relevant price information, in 2009 a consumption tax on white goods was eliminated (6.7 percent) between March 15, 2009 and June 15, 2009. The tax was then reinstated on June 16, 2009 (but only by 2 percent). These price changes serve as the price response variable in our calculation. For changes in output, monthly sales data of white goods from the white goods business association TurkBESD are used. Monthly sales data were first "de- seasonalized" to remove trends that normally occur throughout the year, so the consequent changes in month-to-month sales can be attributed to the price change event. Following this procedure, the estimated price elasticity of demand for the 6.7 percent price decrease was 0.36 and for the 2 percent increase was -0.10. Since the elasticity of 0.36 is associated with a price decrease and -0.10 with a price increase, for the remainder of the impact analysis we use the absolute value to create a range of potential impacts (i.e., we use 0.10 instead of -0.10). 119. To measure the cost of compliance impact on sales, the following information obtained from a combination of business associations and a representative major white goods company was used: White goods market: Total sales of white goods in 2009: 16,436,000 units Domestic sales in 2009: 5,011,000 units → 30.5 percent of all sales occur in the domestic market 120. Table 14 summarizes the total cost of compliance for a given production profile of a representative major white goods company. Total production is multiplied by the share of domestic sales to arrive at domestic production. Production is then converted to weight (kg) and multiplied by the estimated costs of compliance per kg, resulting in the total cost of compliance per white good category. Table 14. Production and Product-weight Information from One Major Company Average 2009 Total Share of Domestic Product Cost of Total cost of Production domestic Production Weight Compliance Compliance Product (units) sales (units) (kg) (€/kg) (€) Fridges and coolers 1,024,503 0.305 312,473 68.2 0.56 11,933,985 Washing machines 690,292 0.305 210,539 67.0 0.24 3,385,468 Dishwashers 641,373 0.305 195,619 46.8 0.24 2,197,190 Ovens 304,268 0.305 92,802 50.0 0.24 1,113,621 Total 18,630,264 65 Sources: TurkBESD; author‘s calculations; representative major white goods company. Company-level information: Value of sales: 48 percent of total sales value comes from 30.5 percent of their unit sales (i.e., 48 percent of their sales value comes from domestic unit sales) Net domestic sales value of white goods: €2,044,000,000 x 48 percent = €981,000,000 Impact evaluation: Cost of compliance as a percentage of net domestic sales value: €981,000,000 / €18,630,264 = 1.90 percent Price elasticity of demand: 0.10 to 0.36 Percentage impact on domestic sales: 1.90 / 0.10 to 0.36 = 0.19 to 0.68 percent Impact on sales volume for the white goods sector: 16,436,000 units x 0.0010 to 0.0068 = 31,214 to 112,370 units 121. Depending on the value of the good, the impact on sales value varies. For instance if the cost of the white good ranged from €500–2000/unit, the above results would imply an impact range of €15–62 million for a price elasticity of 0.10 and €56–224 million for a price elasticity of 0.36. These results suggest that the impact of complying with the WEEE Directive is significant in domestic markets. The implications on firm competitiveness may be severe—especially for small or medium firms who operate on thin profit margins. Spatial Distribution of WEEE and Collection Alternatives 122. The UNEP/MAP study makes reference to a study performed by TURKBESD92 that estimates a need for approximately 850 collection points operated by municipalities, which are estimated to have an investment cost of €250,000,000 and an annual operational cost of €50,000,000. The electrical and electronic wastes that will be deposited in these municipal collection points would then be transferred to the recycling facilities. Due to the large number of local collection points in this process, establishment of central collection facilities is also proposed. According to studies of some national collection and recycling enterprises, 15 large collection centers are needed to cover all areas of Turkey and to meet 4 kg/capita target. 123. According to the preliminary findings of the previously mentioned REC study, which investigates the regulatory impacts of WEEE under different scenarios and is a work in progress, the geographic distribution of WEEE quantities at the provincial level is estimated as shown in Figure 11. 92 The representatives from TURKBESD stated to our team that no studies concerning compliance costs have been performed by their organization. 66 Figure 11: Draft Map of Geographic Distribution of WEEE in Turkey93 Source: Adapted from REC Turkey (2011) 124. Interviews conducted during the sector note preparation confirm that the present options for users to dispose WEEE in Turkey are the following: discard as garbage, abandon in the street, sell to scrap dealers, donate, exchange old for new products or sell to producer. 125. As mentioned earlier, WEEE recovery and reuse is not sufficiently acknowledged in Turkey even though the hazardous contents of EEE pose important problems for waste management. Currently the MoEU issues ―certificates of conformity‖ for companies who are willing to undertake collection and treatment of WEEE. By the time of writing, 14 companies have acquired these certificates, which are regarded as preliminary licenses. These firms collect and manually or mechanically breakdown the collected WEEE into parts, such as iron, copper, aluminum, chromium, brass, plastic, cardboard, wood, electronic circuits, electronic components and electrical materials. The electronic circuits, electronic components, electrical materials and plastics are exported to countries, such as Belgium, Germany and France. 126. Successful examples of WEEE collection from licensed companies follow in Box 4. The examples include the Evciler, a company established in 2008 to collect electrical waste in Ankara, and Ugur Metal, a collection company in Istanbul (see Box 5). 93 REC Turkey (2011) Capacity Raising in the Environmental Sector – WEEE Directive. February 2011, Istanbul 67 Box 5: Collection of WEEE Evciler is the only company that currently has a license to collect and treat all ten categories of waste listed in the WEEE Directive with the exception of refrigerators and air conditioning equipment, as the investment for these products is not feasible at this point. In 2010 Evciler invested about €2.2 million in their plant, which has a capacity of 500 tons/month. The company sources around 1 percent (3–5 tons/month) of this amount from collection points operated by the Cankaya municipality and from the landfill site in Mamak in Ankara. The rest is collected from companies and institutional clients all over the country. When the waste amounts to more than 2–3 tons, they offer to pay to the waste owner. Otherwise, they collect it for free. The incoming waste, such as transformers, computers, and printers, is fed into a series of machines, which process the waste and separate iron, copper, aluminum and brass in powder form. The materials are then sold in the market, and the remainder is regarded as their own waste. The plastic portion is sent to an incineration plant, and the rest is landfilled. The company frequently takes part in awareness raising programs and communicates with organizations requesting information. Ugur Metal was prelicensed in 2008 to collect and recycle e-waste in Istanbul, has a collection capacity of 500-600 tons/year and considers the business profitable. They collect various types of EEE, but not all listed in the directive, from big companies, individuals, scrap collectors and the Atlas municipality in Kodikoy. They collect big EEE like computers and TVs from large companies, and from the scrap dealers they mainly buy materials to dismantle, classify and export. They do export electrical circuits, and the other parts, such as, aluminum, copper, steel and iron, are sold to licensed recycling companies. Currently, Ugur Metal is constructing a new plant with a capacity of 16,000 tons/year to include new equipment and specific storage to meet the directive's requirements that the original license will impose. Although the company operates in line with a prelicense issued by MoEF, there is no fixed price that Ugur Metal offers when buying EEE. Their price depends on the materials dismantled and export prices and is balanced against cost so the business remains profitable. They export mainly to Far Eastern countries but also to some EU countries and the US, and they only have agreements only licensed companies. Ugur Metal representatives were involved in meetings at MoEF in Ankara related to WEEE Directives and were consulted on several occasions on e-waste management issues. Source: Authors 68 WEEE and the Industry 127. The white goods industry has been involved in WEEE work since 2004. For a long time, the industry has concentrated its efforts on postponing the introduction of the directive. Studies initiated by the Istanbul Chamber of Commerce to identify the potential impacts on industry of WEEE implementation and to develop a roadmap for preparedness94 did not raise significant industry interest. In recent years, the industry has changed its stand and has taken active part in multistakeholder discussions and provided more constructive input to the efforts of MoEF and REC. Discussions with TURKBESD indicate that the industry is concerned about the regulation's introduction without a clear implementation framework. Industry‘s views and position regarding the implementation of the WEEE Directive, as communicated by TURKBESD,95 can be summarized as follows:  The regulation's development is due to the EU commitment and is not motivated by a real and large enough problem in Turkey. Substantial amounts of WEEE are already collected and valorized by ongoing business dynamics in Turkey. The additional benefits that the directive may provide will have an excessively high cost/benefit ratio.  The sector takes a very clear position that strongly rejects industry responsibility to cover, even partially, the cost associated with WEEE collection from consumers and its storage. In the meantime, the sector communicates clearly its readiness to bear all the necessary physical and financial responsibilities for those WEEE categories that are part of white goods after collection and storage by the municipalities or their delegated parties.  The sector maintains that the collection of municipal solid waste is a responsibility of the municipalities; hence, the responsibilities for household collection and storage of WEEE naturally fall on municipalities. With that reasoning, collection should be financed through currently collected environmental taxes and, if necessary, through raising tax levels.  The sector objects any requirement that obliges them to bear costs associated with municipal collection and storage of WEEE and that they cannot control. It is strongly against any provision that will bring an obligation to provide financial support to municipalities motivated by a fear that this may imply costly engagements with a vast number of municipalities.  The provision that gives the municipalities powers regarding the choice of transport and recycling companies for the WEEE they collect concerns the sector. The sector‘s position is that it should have control over the WEEE belonging to its members, and it objects to bear responsibility for any costs that they cannot control. 94 Z. Yöntem (2007) Assessment of the Industrial Compliance Strategies for EU Environmetnal Acquis: Strategic Action Plan Proposal for Directive Related to WEEE (Unfinished) EkoDenge. 95 R. Öztaşkın and M. Börekçi, personal communication. 69  The sector states that it is still not informed of either how producer and product registration will take place or what kind of enforcement mechanisms will be in place. These, combined with other experiences with unjust implementation of relevant regulations that gives rise to unfair competitiveness impacts, make the industry wary of the directive's equitable implementation.  The sector is concerned that its members represent large and prestigious companies and products with nowhere to hide. It is, therefore, concerned that members might be pushed to cover freeriders.  The sector highlights the importance of a change in consumer attitudes toward EEE.  The sector regards its ecodesign initiatives as sufficient and calls for policy incentives reflected in the directive to support further ecodesign.  The sector is wary of the different nature of the wide product spectrum covered by the directive with some, including the member products, being associated with costly treatment requirements.  The sector indicates its intention to form an organization to take care of necessary member compliance coordination and its openness to discuss the inclusion of others in such a scheme.  The sector is aware of the delays and difficulties in implementing the WEEE Directive in the EU. It, therefore, finds the proposed collection targets overly ambitious for Turkey. Experiences with the implementation of other directives, such as the one concerning packaging waste, indicate that a bumpy road lies ahead.  The sector is aware of the lack of reliable information to guide WEEE-related developments. It considers the scope and implementation time of the pilot studies conducted in different municipalities, such as Kadikoy, Kocaeli, and Muğla, too narrow to generate useful information.  Even if some costs are defined and covered by the industry, the sector is skeptical that the WEEE would be managed according to the directive's spirit with the main barrier being a lack of awareness. It holds that probably some scrap dealers will somehow acquire licenses and will continue to work with materials as always. Although this may be acceptable for some product categories, for others it may entail continuation of status quo behind a new façade.  The sector believes that it would be difficult to bring the useful fractions obtained during recycling back to its own production in a way that can be strategically beneficial.  Based on recent conflicts between waste management companies and industrial and commercial operators regarding the collection of packaging waste, the sector fears similar 70 conflicts may arise during implementation of WEEE Directive, unless there are properly assigned responsibilities and clear communication on regulations.  The sector realizes the need for developing the necessary infrastructure, which takes time. It, therefore, supports the finalization and introduction of necessary provisions as soon as possible. In line with this thinking, the sector has even developed its own road map for compliance. The details of this road map can be seen from Figure 12. Figure 12: Actions Steps to Prepare for WEEE compliance Source: Adapted from TURKBESD. 128. A review of this road map reveals that the industry acknowledges the importance of working with a wide group of stakeholders to assure compliance and is prepared to initiate necessary partnerships. It holds the position that other stakeholders relevant to WEEE implementation should develop their own road maps, and these should set the foundation for the nature and terms of collaboration. 5. Managing the Next steps 129. Currently, Turkey has an extensive system that handles electronic and electrical equipment waste. However, as this system is predominantly informal, information regarding qualitative and quantitative aspects of WEEE generation, collection, treatment, recycling, recovery and disposal is scarce. In the absence of reliable information, it is not possible to assess the extent of adverse environmental impacts or the social and economic implications of the existing situation. It is known, however, that in line with global trends WEEE quantities will be increasing. Certain WEEE categories—at the minimum fridges and other cooling equipment, 71 CRTs, and lighting equipment—are handled in ways that damage the environment and pose a risk for human health. Besides environmental concerns, the economic and social potential of WEEE management is far too significant to be left in informal hands. Consequently developing and implementing policy elements in line with 2002/96/EC that aims to assure safe and accountable management of WEEE and intends to stimulate innovation is seen highly positive. At the same time, ensuring environmental protection without compromising the competitive position of sectors that are important for the development of the country poses a challenge. 130. Turkish white goods sector is of great importance for the country's economy. At the same time, the sector‘s products make up around half of the WEEE generated in the country on a weight basis. The national legislative framework that applies to different life cycle stages of white goods aims at certain environmental performance standards and include the following:  Environmental Law (Official Gazette number 18132, dated 11.8.1983)  Law Concerning Energy Efficiency (Official Gazette number 26510, dated 2.5.2007)  Regulation for the Control of Water Pollution (Official Gazette number 25687, dated 31.12.2004)  Regulation for the Control of Industry Induced Air Pollution (Official Gazette number 27277, dated 3.7.2009)  Regulation for the Control of Hazardous Wastes (Official Gazette number 25755, dated 14.03.2005 and subsequent amendments)  Regulation for the Control of Packaging Wastes (Official Gazette number 26562, dated 24.6.2007)  Regulation Concerning the Reduction of Ozone Depleting Substances (Official Gazette number 27052, dated 12.11.2008)  Regulation Restricting the Use of Certain Hazardous Substances in Electrical and Electronic Equipment, the so-called RoHS (Official Gazette number 26891, dated 30.5.2008) 131. The white goods sector has realized significant improvements in its economic as well as environmental performance. Resource requirements and emissions associated with both production processes and product use have been reduced significantly in the last two decades. Although, the sector fulfills many of the requirements of Directive 2002/96/EC in the European markets, it has made limited progress regarding the management of its products at the end of their service life in the domestic market. 132. As the body responsible for the development of the WEEE Directive in Turkey, the MoEU has shown a remarkable leadership in creating a process that is inclusive, analytical, and facilitates dialogue and consensus building. As it is commonly encountered with the introduction of a new policy instrument, the process has been slow and implementation of the WEEE Directive in Turkey has been facing a number of challenges. One of the chief challenges is linked to the collection of WEEE. Here two factors come to the forefront. On one hand, the lack of consumer awareness about the importance of managing WEEE in a safe and responsible manner is likely to sustain behavior leading to inappropriate dumping or transfer of WEEE. On the other hand, the municipalities that bear the main responsibility to collect and store household WEEE lack both the necessary infrastructure and the resources to develop such infrastructure. 72 Another key challenge is linked to the lack of knowledge about the existing infrastructure that can be of value for some WEEE categories, as well as the known lack of infrastructure critical to handling fridges and cooling equipment in an environmental safe manner. 133. Properly addressing implementation challenges will require time. The provisions of the latest draft of the regulation sets gradually increasing targets, starting with 0.2 kg/capita in 2012 and reaching to a final target of 4 kg/capita in 2018. Although the study does not provide a detailed judgment of whether the set targets are realistic or sufficiently demanding, it supports the gradual phase-in approach taken by MoEU. EU experience shows that countries that have transposed the directive without giving proper consideration to the details of practical application had to introduce secondary regulations and clarifications. There is a need for a proper preparation stage, which among other tasks should identify the requirements for waste arising, collection potentials and necessary treatment standards for product groups. In particular, pilot studies for collection could play an important role. This six year transition period can be used to fill in the information gaps and make the necessary adjustments before the directive reaches its full effect. 134. Implementation targets, whether they are based on percentages or absolute WEEE quantities, should be realistic and supported by a reliable inventory of WEEE, and should factor in geographic distribution and temporal dimensions of WEEE generation, as well as the costs and benefits of different scenarios. The assessment presented in this note, when brought together with experiences from EU countries, indicate that setting an absolute target might be premature. There are discussions in the EU, as part of the development of a recast WEEE directive, to replace the absolute target currently in use96 by one that will be based on a percentage of the weight of electrical and electronic products placed on the markets of Member States.97 Although a percentage based target arguably has shortcomings in capturing the time lag between sales and waste generation – a particularly important issue for durable products like white goods is, that it provides a better yardstick, particularly for a country like Turkey where information on WEEE quantities is scarce but systems that record products placed on the market are mostly in place. In addition, it would be important that the targets are responsive to the significant heterogeneity observed in the country. There could be risks associated with setting national collection targets, as this may concentrate collection and treatment efforts in regions with higher population density—typically the Marmara region and regions around larger cities like Ankara, Izmir, and Adana—and may fail to provide incentives for necessary development in the rest of the country. 135. Providing the necessary collection and recycling infrastructure would be central to implementation of WEEE legislation. Although new entrepreneurs are entering the WEEE arena at a relatively high pace, they are typically focusing on high-value categories, such as ICT equipment. These companies are facing difficulties in sustaining their financial viability. Their struggle is primarily linked to gaining access to WEEE but also to the size of investments and to the lack of knowledge and experience. It would be important to create the right mechanisms to engage the primarily informal scrap dealers as part of the solution to upgrade the infrastructure with relatively low investments. There is growing awareness in the sector regarding 96 Set to 4 kg/person-year 97 Current proposal is 65 percent of the average weight of goods placed on the market in two previous years. 73 environmental and human health impacts and sector performance and willingness to improve. As a response of the anticipated requirements of the WEEE Directive, the sector is also exploring possibilities for consolidation. Both the newly established recycling companies and the producers of white goods see scrap dealers as an important player for compliance. Consequently, this sector, which has valuable knowledge and experience, could be supported by incentives to gradually formalize informal actors. It is worth noting that besides financial and institutional support, the scrap dealers would require assistance to improve their managerial and administrative capabilities. 136. The draft regulation includes provisions that prioritize “reuse of WEEE as a whole� (Article 5(b)). While this provision can have environmental and economic benefits for certain product groups for others, such as all white goods, TVs, and some of the ICT products, it could be counterproductive and may result in prolonging the life of inefficient equipment with potential negative environmental impacts. It may, therefore, be useful to first assess the characteristics of WEEE collected and, based on this, create more specific guidelines for reuse. It would be also necessary to establish a legal basis supporting reuse. 137. It is promising to see that the Turkish Directive is evolving in a direction where a combination of different policy tools (regulatory, market based, or information based) will be in use. More specifically, diverse set actors will be required to meet certain regulatory requirements to enter the WEEE playing field, but once on the field, they will be subject to market forces giving them incentives to innovate and to offer better or lower cost alternatives. The directive also facilitates the flow of the information among key parties, such as obliging producers to share information about their products with recycling companies or obliging producers, municipalities and distributers to inform the general public. In parallel, it noteworthy that additional information support would be available to the actors in the WEEE field from organizations like TUBITAK, Ministry of Science, Industry and Technology, and KOSGEB. 138. Introduction of new policy instruments carries significant importance if it is accompanied by proper enforcement. Turkey has made significant progress particularly since the beginning of membership negotiations with the EU in introducing environmental policy elements. However, enforcement is an area where Turkey has historically remained weak. Certain parties, and notably the producers and recycling companies holding preliminary licenses, are already concerned that the necessary enforcement of WEEE requirements may be lacking, and this may result in continued environmental damage, as well as harming competitiveness. The white goods sector, comprised primarily of large and reputable companies, has generally responded positively to environmental requirements and has taken necessary implementation steps. It has also voluntarily pioneered environmental initiatives that go beyond compliance. With regard to WEEE, it now holds a position that is supportive of the introduction of the directive soon. Quite rightly, however, private sector wants to be assured that the implementation of WEEE regulation will provide a level playing field and fair competition. 139. Fair and effective registration would ensure that parties responsible for taking care of WEEE would be properly identified and forced to meet their responsibilities—a key issue in establishing fairness. In the EU a separate unit is usually established to register the producers and products. Turkey needs a proper and accountable registration system. The MoEU 74 can best serve this function or the Ministry can delegate it to a different body, reporting directly to the Ministry. The registration costs in Turkey are estimated to be in the range of €3–5 million per annum98. In any case, it is of utmost importance that the details of the registration plans are determined and communicated. 140. It is encouraging that draft regulation leaves it to the market to decide tariffs that will govern transactions among key parties. However, given that there is little information on the cost of treating WEEE in an environmentally responsible manner, it might be sensible for the regulating authorities to take the lead in setting initial tariff levels based on investigation of the cost of appropriate handling of WEEE. Yet, the details of the regulation need to be clearly communicated, leaving as little grey area as possible for interpretation. The experiences with the implementation of packaging regulations serve as a good example of problems and possible failures. 141. Stimulating recovery and introducing recycling technologies would be a priority area for consideration in the new legislation. Setting up a national WEEE recycling R&D facility or a "center of excellence" as in Japan and the UK will encourage innovative R&D and technology transfer. Policies that encourage companies to "brand" recycling technologies to reduce energy consumption and secure a long-term supply based on recovered materials would help companies to mitigate the cost imposed by WEEE regulation. Education is a key area both to enlighten the younger generation about fundamental recycling and to instruct the older generation on the use of recovered materials as sustainable products. 142. There is a pressing need for capacity development of scrap dealers whose practices have shortcomings regarding their environmental performance. Since scrap dealers represent a key stakeholder group that can assist with timely and cost-efficient compliance with the WEEE Directive a concentrated capacity building effort could bring mutually beneficial outcomes. Traditionally scrap dealers have been highly interested and remain almost exclusively in charge of handling products, such as washing machines, dishwashers, cookers and, to a certain extent, fridges. Responding to the increase in waste streams containing electronics and in particular ICT products and rising demand for materials that can be derived from these, the scrap dealers have also been expanding into this area. It should be noted such products, although outside the main scope of this study, are associated with significant environmental concerns. Consequently the government could concentrate on upgrading the capabilities of existing scrap dealers for dealing with such traditional fractions. It can also provide support through provision of land, offering low interest credits, and providing tax reductions for formally registered companies. 143. Turkish companies could be proud of their ecodesign achievements, resulting in products with high water and energy efficiency. The WEEE Directive could enhance their potential to leverage further ecodesign improvements to assist recovery, recycling and generate strategic benefits. The draft regulation allows for both collective and individual responsibility in line with the provisions of the original directive of the EU. It is in the interest of producers to take a more active stand in the determination of the directive details, particularly regarding how to organize the structures that will enable compliance. Given the fact that a relatively low 98 D. Temel (2009) WEEE Directive and Turkey. Problems Facing the Implementation of 2002/96/EC on WEEE in Turkey 75 number of producers are serving the majority of the Turkish market, a collective approach within the white goods sector could be strategically sensible. The industry has an advantage like having successfully run trade-in campaigns. Although these were not used to collect WEEE in the past, this can be done relatively easily from now on. The industry can set up its own recycling facility or can establish strong partnerships with third parties. The action plan drawn by the industry looks like a very good starting point and highlights intentions in this direction. In addition, the MoEU could play a guiding role by informing industry about possible benefits of different organizational forms. 144. International experience suggests that countries that get the collection and recycling system up and running before committing themselves to performance and targets face less implementation hurdles. Legislators in EU member states have spent considerable time studying the legal and operational approach in those countries with established WEEE schemes, only to prove that it is of key importance to build systems that meet local specifics of culture, geography and industry, and that take into account existing practices of waste collection. 76 References Arcelik. Arçelik Sustainability Report 2008-2009. BSH Group, Environmental Sustainability, Energy Efficiency. 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Personal communication 78 Annexes Annex 1: WEE Directive 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 Annex 2: ROHS Directive 95 96 97 98 99 100 Annex 3: Draft WEEE Regulation, Key points Draft WEEE Regulation (May 2011) One of the main changes in the current draft regulation is that municipalities are held responsible to establish collection centers and perform the collection. Also a new timeline to start establishing centers and perform collection based on municipal population is introduced: Starting dates to establish collection centers and performing Municipal Population collection 400,000