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The Promise and Pitfalls of E-Waste Takeback

Companies all over the world are starting to realize the positive impact that green business initiatives can have on the bottom line. But for electronics manufacturers, one of the biggest and most-needed improvements is also the most complicated: how to deal with a product at the end of its lifecycle.

There are benefits aplenty to extended producer responsibility (EPR) programs, which require manufacturers to collect and recycle or reuse their products before they end up in landfills. Aside from the environmental and health benefits of diverting consumer electronics from waste streams, the potential business benefits of EPR are significant: fostering a stronger bond with customers, reducing manufacturing and waste expenses, and reusing resources are a few.

But the challenges of funding, developing and ingraining EPR into a corporate structure are daunting. And in the U.S. especially, states have addressed a failure to map an e-waste solution on the federal level with a patchwork of varying laws, making the process all the more difficult. Some of the electronics goliaths have sowed their own, successful recycling programs while others have collaborated with other manufacturers. Which path is easiest? And which is the most successful?

The concept of EPR is not a new one and it has been widely adopted by a number of industries since the 1990s, when Germany passed laws requiring packaging manufacturers to be responsible for the packaging waste they produced, clogging much of the country's dwindling landfill space.

Due to the presence of lead and other toxins, electronics -- everything from desktop computers to cell phones and televisions -- pose a significant risk to human health and the environment. In Europe, the waste electronic and electrical equipment (WEEE) directive was passed in 2006 to force manufacturers of electronics to mitigate these risks by taking back and recycling used product in order to divert it from landfills, illegal dumps and unsafe disassembly practices.

Thus far, WEEE appears to be working-London's Environment Agency completed a study that shows landfills in England and Wales in 2006 received 60 percent less hazardous waste than in 2004, while recycling and re-use increased 64 percent over 2004, according to E-Scrap News. However, attempts to pass similar legislation at the federal level in the U.S. have all failed, a number of states have passed state legislation requiring electronics makers deploy EPR programs.

While these laws are helping divert hundreds of thousands of tons of used electronic products from U.S. landfills, they are also creating major challenges to manufacturers who sell products in those states, because each state has different rules and regulations that manufacturers must now follow. With eight more state governments cranking out their own take-back laws, manufacturers are finding that the morass of regulations is thickening.

Aiming to both comply with the various laws and clear a number of hurdles that have marred the success of electronics take-back programs in the past, many manufacturers are stepping forward with what they say are effective solutions. Electronics manufacturers who have thus far taken a wait-and-see approach stand to learn from the successes and failures of manufacturers who are already taking action. But manufacturers who wait too long to act risk fines for non-compliance with state laws, not to mention a poor reputation with consumers of their products and the ire of activist groups.

The Costs and Lessons Learned So Far

While all types of consumer electronics contain components that raise environmental concerns, such as phthalate plastic softeners, brominated flame retardants and lead used in solder, different electronics-based products have varying degrees of value to the collectors and recyclers that collect them.

The costs associated with recycling consumer electronics break out to three main categories, according to John Dickenson, vice president of business development for AER Worldwide, a recycler of electronics whose clients include many of the top electronics producers in the world.

The first cost involves developing systems for collecting goods to be recycled; then comes the costs around deconstruction, or demanufacture, of the products, in which components such as circuit boards and plastic covers are removed and stockpiled. The third cost factor that Dickenson sites is what he calls destruction, the removal of all traces of a brand name or logo from these components. Recyclers take this step in order to ensure that counterfeiters can't later capture these branded components and use them to make fake products to sell on the black market.

Although recyclers can sell electronics components at the end of this process to companies that reuse the materials or extract the valuable commodities from the components, that value is often diluted by the high costs of collecting and shipping the discarded electronics.

Just how high the logistics and transportation costs associated with collecting used goods are in relation to overall costs of consumer electronics recycling varies, he says Dickenson. "There are no numbers on this because it varies so dramatically depending on where the consumers are and by what means they get the used item or items to the recycler."

Because collection is often the costliest part of the consumer electronics recycling process, producers are looking for ways of lessening these costs.

For example, Panasonic has initiated a number of programs aimed at easing the financial burden of product take-back, with the hope that it could not only comply with state-based EPR regulations, but also realize internal benefits.

One of these was a collaborative effort with Lexmark, JVC, Sharp and Sony, which the companies started early this decade, before U.S. states began passing take-back laws.

The concept behind the collaboration was simple: the manufacturers would locate and work with recyclers around the country, and they would ask the parties that wanted to host take-back events -- communities, retailers or charity groups, for example -- to cover collection costs, while each manufacturer involved would pay for the portion of their items that were collected.

Part of the reason Panasonic and other manufacturers participated in such take-back programs on a voluntary basis was to try to stem the introduction of regulations by showing that they could self-regulate end of life take-back programs. They also hoped that by covering recyclers' costs, those recyclers would be able to cover their costs and also invest in new, more efficient recycling technologies, but the program never reached the scale that its developers hoped it would, says David Thompson, director of the corporate environmental department for Panasonic America, because it could not garner the participation of enough host communities or recyclers.

Douglas Smith, Sony's director of Corporate Environment, Safety and Health, says the concept behind the plan was shared responsibility, but its success was stymied by high collection costs, costs that persist today.

But Wayne Rifer with the Green Electronics Council says the collection problem would have been avoided if the consumer electronics industry had developed a plan to share the financial burdens, back when the e-waste became a hot topic at the federal level.

"Several years ago, when we had a dialogue, hosted by the EPA, with manufacturers and other stakeholders to develop a solution to the e-waste problem, it failed. No agreement was made on how e-waste would be handled."

Still, this early attempt at a take-back program had real benefits for the participants. The program provided manufacturers like Panasonic with insights into how they could alter their design and manufacturing processes in order to make products easier to demanufacture. "We are all trying to design products that are easier to recycle, and we are reducing the number of grades of plastic that are in the products, to make the plastic more of a commodity," says Thompson.

But Dickenson says consumer electronics recycling is still a net cost today because the volume of goods being recycled is still low -- lower than he expected to see by mid-2008. He thinks this could be partly because many electronics are still being illegally diverted to countries such as India where citizens deconstruct machines unsafely to extract gold and copper. As pending legislation requiring producer responsibility comes into effect in many of the states that have recently passed bills, however, the volumes should increase and with them, some financial payback to producers with the largest take-back programs.

Different States, Different Laws

California was the first state in the U.S. to pass a law requiring electronic waste to be recycled. That was in 2003. Since then, nine other states, as well as New York City, have also passed e-waste regulations. However, California remains unique in that it is the only law that uses a fee paid by the consumer, and collected by the retailer, to cover the costs of the state-run e-waste recycling program. All other states place the financial burden on the manufacturer, in line with the extended producer responsibility principle. There is, however, a mixture of rules and regulations within those EPR laws, per each state.

A number of manufacturers call the "patchwork" of laws a major hurdle in their efforts to deploy take-back programs. For example, the Minnesota says that 60 percent of e-waste generated in the state must be recycled, and producers are responsible for paying for their share of that waste. Those who do not must pay the state 50 cents per pound of the e-waste that they manufactured (a markedly higher fee than that charged by collectors and recyclers).

Panasonic's Thompson said the company began discussions last spring with Sharp Electronics Corporation and Toshiba America Consumer Products on working together to address the Minnesota law. "We decided that the best way to address [the law] was to pool resources and develop a management organization that could collectively work to collect higher volumes of goods and, through economies of scale, get better prices from recyclers and collectors [than those individual manufacturers could get with just their own products]," he says.

The result was the creation of the Electronic Manufacturers Recycling Management Co. LLC (MRM), announced early in 2008. Thompson says Hitachi Electronics, JVC, Mitsubishi, Philips, Pioneer, Sanyo and Olevia, Fujitsu, Funai, Toshiba laptops (a separate business group from Toshiba America Consumer Products) have joined MRM so far and it has collected more than 25,000 tons to date. The companies hoped to turn a pitfall (the high cost of collecting and recycling) into the promise of capturing the value of the components, for reuse and replacing virgin materials.

So if high volume of returned product is the goal, why not make MRM's operations nationwide? Thompson, who is also president of MRM, says that's the plan, but that the company is trying to find a means of dealing with the different laws emerging in different states -- the patchwork again -- in order to make its approach in Minnesota applicable elsewhere. He says MRM hopes to begin operations in Oregon as that state's law comes into effect, but only if it can work out a deal that will allow it to comply with the letter of its law, as well.

Banding together may work well, but its impact on the e-waste problem depends on how widely the collective casts its net. Sheila Davis, executive director of Silicon Valley Toxic Coalition, says MRM's partnership take-back model lacks bite. "MRM will increase take back in states that have e-waste recycling laws. States that don't have laws can expect a lot of fanfare from companies about their national recycling programs but can expect very little service," she says, adding that some of MRM's member companies have been among the most vocal in opposition to e-waste recycling laws in states throughout the country.

And Barbara Kyle, the national coordinator of the Electronics TakeBack Coalition, says producers could easily avoid the so-called patchwork problem by deploying nationwide take-back programs and not trying to comply state-by-state. "If producers would have launched national, voluntary programs, we would not have needed state laws in the first place," she says.

Sony rolled out a national program late last year that Douglas Smith, the company's director of Corporate Environment, Safety and Health, says is the means by which it is addressing the various laws in various states by setting an aggressive goal that would help ensure it could comply with new state laws as they emerge. It hopes to eventually recycle one pound of Sony product for each one pound it sells (Minnesota requires .6 pounds per pound sold, and has been criticized for being too high).

Extending Product Life, Finding Internal Benefits and Closing the Loop

PC maker Dell promotes refurbishing and reusing its products as an alternative to recycling them. The benefits of this are twofold: the lifecycle of refurbished products is longer, and the day that Dell must manage the collection, sorting and recycling of them at their end of life, is pushed out. Dell also forged a partnership with Goodwill to collect and either resell or recycle used machines; customers who can't access a participating Goodwill must ship the product back to Dell.

Sony and other producers also offer consumers credit toward a new purchase if they return a used product to the company. Douglas Smith says Sony's approach to recycling consumer product is focused on cultivating internal benefits and was grown from its existing practice of recycling the waste product it collected during manufacturing. He says Sony was also a leader in using a glass-to-lead smelting process in order to recycle glass used in CRT televisions, as well as launching a program for recycling nickel cadmium batteries.

Hewlett-Packard also has a long-standing recycling legacy. It began recycling its LaserJet print cartridges in 1991 and its inkjet print cartridges in 1997. Consumers return the cartridges via post, using labels printed from the HP web site. (They can also return hardware through this means, but must pay a fee to do so.) HP announced in late January that it has developed a manufacturing process that turn used cartridges into new ones, and says it has made more than 200 million cartridges this was. HP used more than 5 million pounds of recycled plastic in its inkjet cartridges last year, and the company is committed to using twice as much in 2008.

Developing relationships with reputable electronics recyclers is also key to a take-back program's success. Producers must demand transparency from the collectors and recyclers with whom they work, in order to ensure that their e-waste is properly and safely recycled. No company wants its product captured in images of underpaid dismantlers toiling over their machines in places such as India or China.

Free and Easy: The Take-Back Mantra

"For consumers, we want to make recycling our products as easy as buying them," says Sony's Smith. And Barbara Kyle says that will require that the producers cover every possible base for consumers. "A lot of people just want to drop off their old electronics at a collection site; others would rather mail back," she says, but most importantly, they want e-waste recycling to be two things: convenient and free. Today, however, most consumers are given only one option-if the maker of their product even offers that much.

Kyle also criticizes Apple Computer's take-back program for having too many strings attached. Apple owners can only return old product if they bought it direct from Apple, not through a reseller. They also must state their intention to return used product(s) when they purchase a new one, and then they have only 30 days to send in the old product. "Most people aren't ready to turn over their old hard drive within 30 days of buying a new computer," she says.

Kyle also stresses the need to get the word out to consumers-and to repeat the message to help remind them of how or where to recycle their products. Making collection easy for consumers will make reaping value from recycling more likely.

It all goes back to the notion that higher volumes of collected goods will lead to lower recycling costs and greater value to the producer.

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