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The Danish Voluntary Agreement on WEEE

February 2015

DIFFERENTIATED PAYMENT

NIRAS A/S

Sortemosevej 19

3450 Allerød

CVR-nr. 37295728

Affiliated to the Danish Associ-

ation of Consulting Engineers

www.niras.dk

T: +45 4810 4200

F: +45 4810 4300

E: [email protected]

D: 40600496

M: 40600496

E: [email protected]

PROJECT Differentiated payment

The Danish Voluntary Agreement on WEEE

Project no. 219042

Version 3

Document no.

1219382958382958

Version 2

The Danish Voluntary Agreement on WEEE is an agreement entered into in

2013 between the Minister for Environment, representatives from producers

and distributors of electronic and electrical equipment (DI, FEHA and BFE)

and three compliance schemes (Elretur, ERP and LWF). The agreement has

run from 2014-2016.

The agreement has been financed in 2014 and 2015 by the three compli-

ance schemes, Elretur, ERP and LWF. In 2016 the agreement was financed

by Elretur and LWF, as ERP decided not to contribute the last year.

Disclaimer

The Danish Voluntary Agreement on WEEE has initiated studies conducted by

external consultants financed by the Danish Voluntary Agreement on WEEE.

It should be noted that such publications do not necessarily reflect the position or

opinion of the Danish Voluntary Agreement on WEEE.

Contact

Chairman of the Danish Voluntary Agreement: Director, Environmental Policy

Karin Klitgaard from DI, [email protected]

Preparation of this report

This report is prepared by: Camilla K. Damgaard (project manager), Maria

Skotte, Jesper Andersen Drescher and Karl Gustav Mattias Holten.

The preparation of the report has been followed by representatives from the

steering committee of the Danish Voluntary Agreement on WEEE.

mailto:[email protected]

CONTENTS

The Danish Voluntary Agreement on WEEE:

Differentiated payment

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1 Background ................................................................................................ 1

1.1 Review of present extent of differentiated payment ................................... 1

2 Price sensitivity analysis .......................................................................... 3

2.1 Price elasticity for different products ........................................................... 3

2.2 Case: Light bulbs ........................................................................................ 4

2.2.1 Assumptions ............................................................................... 5

2.2.2 Results ........................................................................................ 6

2.2.3 Conclusion .................................................................................. 7

3 Willingness-to-pay for eco-friendly design ............................................. 8

4 Foreign experience with differentiated payment .................................... 9

4.1 France ........................................................................................................ 9

4.1.1 General structure of scheme ...................................................... 9

4.1.2 Comparison with Danish system .............................................. 12

4.1.3 Practical experience ................................................................. 12

4.1.4 Future ........................................................................................ 13

4.2 Sweden ..................................................................................................... 13

4.2.1 General structure of scheme .................................................... 13

4.2.2 Comparison with Danish system .............................................. 14

4.2.3 Practical experience ................................................................. 15

5 Administrative complications associated with more

differentiation of environmental fee ................................................................. 15

5.1 Identification of differentiation criteria ....................................................... 16

5.2 Increased administrative burdens ............................................................. 16

6 Conclusion ............................................................................................... 17

7 References................................................................................................ 19

1 The Danish Voluntary Agreement on WEEE:


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1 BACKGROUND

This report has been prepared as part of the area for effort of “Differentiated

payment” - an element of The Danish Voluntary Agreement on WEEE.

The purposes of this report are the following:

Clarification of the extent to which differentiated payment models can

drive the market for eco-design in a positive direction and give sufficient

incentives to promote the willingness to invest.

Assessment of administrative costs associated with a differentiated

payment system.

To meet the defined purposes this report describes two activities answering the

questions behind the above purposes:

A price sensitivity and willingness-to-pay analysis assessing what it

takes to shift consumers from different types of EEE products and how

much each consumer is willing to pay for eco-designed EEE products

that are more readily recyclable when it comes to the different resources

contained in the products.

A screening and summary of experience from abroad with differentiated

models: France and Sweden, respectively.

1.1 Review of present extent of differentiated payment

In WEEE terminology, the concept of “differentiated payment” refers to the use of

dissimilar environmental fees for different products covered by the WEEE Di-

rective. In general, two different types of differentiation exist, the first of which is

true-cost differentiation. Such true-cost differentiation means that the environ-

mental fee corresponds exactly to actual reprocessing and treatment costs. The

other type of differentiation is more arbitrary and takes offset in political consid-

erations. This type of differentiation is not based on actual reprocessing costs; it

is rather based on the desire to reward or punish certain products.

In Denmark as well as in other EU Member States differentiation is used to a

certain degree in relation to WEEE treatment. The degree and type of differenti-

ated payment for WEEE, however, is not similar in the different Member States,

as it will be seen in section 4 of this report.

The degree of differentiation has a potentially major effect on product design

(Kiørboe, et al., 2014). From a purely economic perspective a true-cost differen-

tiated payment scheme in which the environmental fee for a product placed on

the market corresponds exactly to the costs associated with the treatment of the

product at the end of its useful life (end-of-life - EOL) would be efficient; this is

due to the fact that such differentiation would mean that each company would



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develop a product design minimising the overall sum of product costs and costs

for reprocessing.

In practice, however, such differentiation is hardly feasible since a calculation of

the environmental fee for each single product on the market would entail exces-

sive costs of administration. This is the case since the relatively broad categories

of the WEEE Directive (2012/19/EU) cover an endless number of products. A

more detailed assessment of these costs of administration along with other po-

tential barriers to a more true-cost environmental fee is given in section 5.

The evident difficulties in having a true-cost differentiated environmental fee

have lead to the fact that all the countries screened, including Denmark, to a

varying degree have limited the number of fractions under WEEE to a significant-

ly lower number facilitating the administrative task. Furthermore, the French

system has chosen to introduce an additional differentiation reflecting a number

of more or less political criteria. For instance, this has lead to a doubling of the

environmental fee for a mobile phone, if the design is not adapted to a universal

charger (IPR WG, 2012). The French system is discussed in more detail in sec-

tion 4.

In Denmark, WEEE has been categorised in six fractions since 1 September

2014:

Fraction 1: Large household appliances

Fraction 2: Refrigeration equipment

Fraction 3: Small household appliances

Fraction 4: Screens and monitors

Fraction 5: Light sources

Fraction 6: Photovoltaic panels

This division was introduced with the WEEE Order (Statutory Order no. 130,

2014). However, interviews with representatives of different collective schemes

indicated that the degree of differentiation of the environmental fee is in reality

larger within each single fraction. It appears, among others, from the website of

Lyskildebranchens WEEE-forening (LWF – Danish Producer Responsibility or-

ganisation specialised in lamps) that a differentiation of light sources is made in

two categories:

CFL-i and LED retrofit

all other light sources



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While the first group is subject to an environmental fee of DKK 0.85 per light

source, the environmental fee for the latter group amounts to DKK 1.44 (LWF,

2014).

Enhanced differentiation in addition to the six fractions also seems to be used in

elretur, as certain fractions are subdivided into up to three sub-groups (Als &

Lund-Thomsen, 2014).

2 PRICE SENSITIVITY ANALYSIS

To clarify the effect of more differentiation of the environmental fees a price sen-

sitivity analysis is carried out. This analysis will indicate the theoretic impact on

the demand for certain types of EEE further to more differentiation of the envi-

ronmental fees, thereby implicitly also promoting a higher focus on eco-design

among the producers.

The price sensitivity analysis is only carried out for one selected product. As

mentioned above, the WEEE Directive covers a very large number of different

products, so it is not feasible to carry out a price sensitivity study of all WEEE

fractions. In addition, the results are expected to be very similar across the dif-

ferent categories, so one example is found to be sufficient for illustrating the

general potential for the promotion of eco-design through more differentiation.

The selected example takes offset in light bulbs, focusing of the bulb types of

LED and CFL-i from fraction 5 ”Light sources”.

2.1 Price elasticity for different products

Price elasticity is used in economic theory to describe changes in supply and

demand as a result of changes in the price of a product. In this section the start-

ing point is the consumer’s point of view, and therefore the specific focus is on

the price elasticity of the demand for different products.

The price elasticity of a specific product depends on a large number of factors

relating to the nature of the product, but also on external factors such as the

income level of the consumer and the duration of the change in price. Below,

some of the most significant factors associated with the price elasticity of a prod-

uct are described:

Nature of product: The most important factor in the determination of the

price elasticity of a product is evidently the product itself. In general, a

distinction can be made between two types of product: Basic goods that

are an essential part of daily life and non-basic goods that may be con-

venient, but are not necessary in daily life to the same extent. Due to the

fact that basic goods are essential the price elasticity of such goods is

generally lower than that of non-basic goods. A large proportion of the

products of the ten EEE categories under the WEEE Directive

(2012/19/EU) are basically considered to fall under the category of non-



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basic goods with the exception, however, of certain products such as

light bulbs and refrigeration equipment.

Range of substitutes: The price elasticity of a product is very much af-

fected by the number of possible substitutes. For instance, the price

elasticity of a TV set with a LED screen is high, since this product can

easily be replaced by a TV set with a plasma screen and a TV set with

the more recent OLED screen. By contrast, the number of substitutes for

freezers is limited to methods such as salting and pickling, so the price

elasticity of this product will be lower. The range of substitutes is also af-

fected by the impact of brands within the product group. For instance, a

light bulb is a relatively generic product, and different brands of light

bulbs are seen as close substitutes. By contrast, brands play an im-

portant role for smartphones, and other brands are not to the same ex-

tent seen as substitutes, e.g., for Apple’s iPhone.

Product’s general price level: A percentage change in price leads to a

large actual price increase for more expensive products than for cheaper

products. Therefore, the price elasticity of more expensive products is

generally larger than that of cheaper products. For instance, a five per-

cent price increase of a refrigerator at the price of DKK 5,000 (DKK 250)

will lead to a larger decrease in volumes sold than a five percent price

increase of a CFL-i bulb at the price of DKK 60 (DKK 3).

Duration of change in price: Furthermore, the duration of the change

in price has an impact on the price elasticity. In the short term, the price

elasticity of most products is relatively modest, since consumers gener-

ally take quite some time to shift their purchasing patterns and identify

substitutes. In the following examples, a durable change in price will be

used and this will have a major impact on the price elasticity.

Possibility of postponing purchase: If it is possible to postpone the

purchase of a product, this will have a major impact on the price elastici-

ty. This may affect, among others, the sale of flat-screen TV sets; the

purchase is often motivated by the desire to replace a functional product

with a more recent model. By contrast, the purchase of new light bulbs is

often driven by defect bulbs in the home, so the price elasticity of this

type of product will be low.

2.2 Case: Light bulbs

This example is based on a possible differentiation of the environmental fee for

CFL-i and LED, respectively; two different types of light source that are today

subject to the same environmental fee in Lyskildebranchens WEEE-Forening

(LWF).



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This example has been chosen since fraction 5 - Light sources - is a relatively

homogeneous fraction with a relatively small number of product types compared,

for instance, to fraction 3, and since the degree of differentiation between the

products of the different producers is relatively limited. It is therefore assessed

that a higher degree of differentiation will be easier to implement in this fraction

than what is seen for other fractions of WEEE.

Fraction 5, Light sources, is also different from the other categories because they

have the highest environmental fee in relation to the sales price of the product

(Bielefeldt, 2014). Therefore, a true-cost differentiation of the environmental fee

may potentially lead to a large shift in the consumers’ purchasing behaviour. On

the other hand, light sources are relatively cheap products compared with other

types of EEE; together with other factors this leads to a relatively low price elas-

ticity. In general, it is assessed that the chosen example is representative for

WEEE.

The example is based on available information from the LWF website and on

interviews with the CEO of LWF, Mr Jan Bielefeldt.

2.2.1 Assumptions

The results of the example depend very much on the price chosen for the light

sources, since the total price is naturally important in relation to the magnitude of

the environmental fee. This example is based on price information from Coop

Denmark’s website: the average price of a LED bulb with socket is DKK 100.-

while the price of a CFL-i bulb with socket is DKK 60.-. All light bulbs used in the

calculation of the average price are from the producer Philips. It should be men-

tioned that in general there are large deviations in prices among the different

producers and that the price of Philips products is in the more expensive range.

The price elasticities used are based on an article by Galarraga et al. (2011),

calculating own-price elasticity1 and cross-price elasticity

2 for low-energy

whitegoods and traditional whitegoods, respectively. It has not been possible to

find articles on price elasticity specifically for light bulbs, but the close relation to

the subject of the above article makes it reasonable to assume that the price

elasticities found can be used in this example.

The price elasticities used appear from Error! Reference source not found..

1 change in demand for a product further to a change in the product’s own price

2 change in demand for a product further to a change in the price of a substitute product



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Table 1: Summary of price elasticities

Own-price elasticity:

CFL-i bulbs

Cross-price elasticity: CFL-i/LED

Own-price elasticity: LED bulbs

Cross-price elasticity: LED/CFL-i

-0.50 0.10 -0.55 0.15

The interpretation of these price elasticities is as follows: a price increase for

CFL-i bulbs of 1 % will lead to a decrease in the sale of these light bulbs of 0.5

%, while the sale of LED bulbs will increase by 0.15 %. By contrast, a price in-

crease for LED bulbs of 1 % will lead to a decrease in the sale of LED bulbs of

0.55 % and an increase in the sale of CFL-i bulbs of 0.10 %.

The assumption of a low price elasticity for light bulbs seems reasonable. This

product is relatively cheap and it is also an integral necessity of modern life. In

addition, the number of substitutes for light bulbs is limited.

2.2.2 Results

The interview with Mr Bielefeldt indicates that the reprocessing costs for CFL-i

bulbs and the more recent LED bulbs, respectively, will be potentially very differ-

ent, if the two products were collected separately.

The large difference in theoretical reprocessing costs is due to the content of

mercury in the classic CFL-i bulbs. The present commingled collection of the two

products, however, leads to a cross-contamination of the LED bulbs and for that

reason these LED bulbs will have to be treated in the same manner as the mer-

cury-bearing CFL-i bulbs. Potentially, separate collection is assessed to halve

the environmental fee for LED bulbs from the present DKK 0.85 per light source

to DKK 0.425 per light source (Bielefeldt, 2014). This would lead to a price re-

duction from DKK 100 to DKK 99.575, corresponding to a percentage reduction

of 0.425 %.

With the above price elasticities this would lead to an increase in the sale of LED

bulbs of 0.23 %3, while the sale of traditional CFL-i bulbs would decrease by 0.04

%4.

As mentioned, however, the price of LED bulbs varies much: in IKEA they can be

purchased for as low a price as DKK 22. If this is assumed to be the prevailing

market price of LED bulbs the reduction of the environmental fee may lead to a

price decrease of 1.93 %. With the assumed price elasticities this would lead to

3 -0.425 * -0.55

4 -0.425 * 0.10



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an increase in the sale of LED bulbs of 1.07 %5, while the sale of traditional CFL-

i bulbs would decrease by 0.19 %6.

However, both of the above examples are based exclusively on the purchase

price of a light bulb without including further costs associated with its use. If this

additional cost is taken into consideration overall costs would increase, which

would mean that the effect of a halving of the environmental fee would decrease

even more. The potential effects are summarised in the below table.

Table 2: Potential effect of more differentiation of environmental fee for light bulbs

CFL-i LED

Change in demand

further to a halving of

the environmental fee

for LED bulbs

-0.04% - -0.19% 0.23 % - 1.07 %

2.2.3 Conclusion

It is seen from the above price sensitivity analysis of light bulbs that a true-cost

change in the environmental fee may presumably have a very limited effect on

the purchasing patterns of consumers and thereby also on the producers’ incen-

tives for designing more recyclable products. Naturally, the above issues are

only based on the light bulb example, but will probably apply to a certain extent

to other WEEE fractions.

The limited effect of the example seems especially to derive from the low repro-

cessing costs for WEEE, which only make up a very small proportion of the total

sales price of a product. Since the implementation of the WEEE Directive the

reprocessing costs have shown a decreasing trend, and today reprocessors

even pay for receiving certain WEEE categories (Hoelgaard & Therkelsen,

2014).

The interviews conducted with the Danish collective schemes indicate that the

low costs borne by producers for complying with the WEEE Directive require-

ments mean that the producers only see these requirements as an extra tax and

not as an incentive for increasing the use of eco-design. Certain producers have

even expressed a desire to pay a fixed annual sum for the management instead

of a variable payment dependent on the quantities of EEE placed on the market

(Hoelgaard & Therkelsen, 2014).

However, the above example is based on the use of a true-cost differentiation

and it may be argued whether more political differentiation may potentially have

5 -1.932 * -0.55

6 -1.932 * 0.10



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a larger effect. The competition prevailing between the Danish collective

schemes and the homogeneous nature of the services provided suggest, how-

ever, that the environmental fees will show a trend towards the marginal repro-

cessing costs. Furthermore, the low environmental fees mean that any politically

adopted multiplication factors must be of a relatively high magnitude to have an

effect. An example of this latter problem in relation to the reprocessing of mobile

phones is given in section 4.1.

In addition to these economic results that speak for a very limited effect on con-

sumption patterns from more differentiation, there are a number of administrative

issues that may hamper further differentiation. These issues are discussed in

detail in section 5.

3 WILLINGNESS-TO-PAY FOR ECO-FRIENDLY DESIGN

As it appears from section 2, an increased differentiation of the environmental

fees for WEEE will presumably have a limited effect on the purchasing patterns

of consumers. As also described in section 2 it is therefore questionable whether

a higher degree of differentiation will push producers of EEE to using eco-design

to a higher extent.

This section discusses the use of ecolabels and the potential given by such la-

bels to affect consumer behaviour as an alternative to the further use of differen-

tiation. It has not been possible to find studies on willingness-to-pay directly in

relation to eco-designed products; therefore, this section takes offset in analyses

valuing the willingness-to-pay of consumers as well as their consumption pat-

terns in connection with other types of ecolabels (Sammer & Wüstenhagen,

2006; Mills & Schleich, 2010).

Ecolabelling is an easy and clear way for consumers to distinguish between the

environmental burdens of different products, and thereby ecolabelling may push

producers to developing more eco-friendly products. An ecolabel indicates that a

product is among the most eco-friendly in its product group. For instance, a

product carrying the EU Flower or the Swan of the Nordic Council of Ministers

complies with a number of requirements based on an assessment of the life-

cycle of the product. The environmental impacts of a product are assessed from

raw material extraction to production and use and until it is discarded as waste.

On this basis, a number of criteria are set up and they have to be complied with

before the product can use the ecolabel. These criteria are enhanced every three

to five years. The producer pays a fee for the right to use the ecolabel, and the

control is carried out by a public authority or an independent organisation.

A Swiss study (Sammer & Wüstenhagen, 2006) has looked into the effect of the

EU energy labelling on the purchase of washing machines. The study shows that

consumers are willing to pay up to 30 % more for washing machines with energy

label A compared with washing machines with energy label C. This excess price

even surpasses the energy savings to be expected from the purchase of an en-

http://www.denstoredanske.dk/Samfund%2c_jura_og_politik/Samfund/International_politik_og_organisationer/Nordisk_Ministerr%c3%a5d



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ergy label A washing machine. Another study has shown that consumers have

an additional willingness-to-pay for Swan labelled detergents and toilet paper

and are even willing to pay an excess price of 10-17% (Bjørner, et al., 2002).

The so-called visible fees, as they are known in France, are of particular rele-

vance to the subject of this report: they are an example of a labelling scheme

under which it is possible for consumers to see the actual costs of environmental

fee for the product in question (see section 4.1). Whether or not the labelling

actually affects the purchasing patterns of the consumers is, however, uncertain.

In Denmark, the number of ecolabelled and certified products has been on a

steep increase, and producers use them as a strong communication and profiling

tool. It also seems that the labelling schemes have gained a foothold among

consumers and are used in purchasing decisions. Furthermore, many companies

are facing sustainability requirements on behalf of the purchasers of their prod-

ucts, and here a certification under a labelling scheme may be a tool for meeting

these requirements (Andersen, 2010). It should be noted, however, that the

familiarity among consumers is limited to a few labels. A study conducted by the

Danish Competition and Consumer Authority in 2013 revealed that 11 of a total

of 40 ”green” labels had a degree of familiarity over 50% (KFST, 2013). There-

fore, one should be careful to introduce too many labelling schemes, since this

will entail a risk of decreasing effects, both because consumers will lose track

and because they will lose confidence in the quality of the labelling schemes.

Nonetheless, the above results show that ecolabelling has the potential to affect

the purchasing patterns of consumers to a larger extent than true-cost differen-

tiation.

4 FOREIGN EXPERIENCE WITH DIFFERENTIATED PAYMENT

To illustrate practical experience with more differentiated payment systems a

screening of the French and the Swedish systems, respectively, has been car-

ried out. It is a common feature of these systems that the payment structure is

based on a substantially higher degree of differentiation than what is the case for

the Danish collective schemes.

The screenings consist of a general description of the payment system and the

degree of differentiation in the country in question, a review of practical experi-

ence with more differentiation, and an assessment of the development of the

system in the past and in the future.

4.1 France

4.1.1 General structure of scheme

France has implemented the WEEE Directive by Decree no. 2005-829. This

decree covers all ten product categories of the WEEE Directive. In 2010, the

decree was updated and the requirement for differentiated payment was intro-

duced for six WEEE fractions (WEEE Forum, 2012).



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In pursuance of the decree producers of EEE must inform annually of the quanti-

ty of products placed on the market, the quantity of collected WEEE, and the

quantity of resources recovered in the reprocessing of collected WEEE. Produc-

ers may choose to comply with these requirements individually or they may sign

up for a collective scheme, and the major part of French producers have chosen

to do so.

There are four collective schemes for WEEE in France:

Éco-systèmes

ERP France

Ecologic

Récylum

The collective schemes are private non-profit organisations established and run

by the producers (ADEME, 2014). The different schemes must be approved by

the French authorities every six years (Ministry of Ecology, Sustainable

Development and Energy, 2012). This is typically done by involving all stake-

holders (including civil society) in negotiations that result in the terms of refer-

ence of the collective schemes, setting up the general objectives of the scheme

for the coming period (with regard to collection requirements, recycling require-

ments etc.) (ADEME, 2014).

Further to the requirement for differentiated payment the French WEEE schemes

are established on a so-called bonus-malus system, i.e. it rewards producers

who are innovative in respect of eco-design and it punishes producers who do

not work to make their products eco-friendly (IPR WG, 2012). In practice, this

system works in the way that producers of EEE pay an environmental fee to their

collective scheme based on the specifications of the product and on the number

of units of this product that is placed on the market.

In order to avoid that the costs associated with the differentiated environmental

fee is passed on to the consumer the producers of EEE in France are subject to

a requirement for a so-called visible fee: the environmental fee for each product

must be visible to the consumer and distinguishable from the price of the product

(French Republic, 2005). In theory, each collective scheme can fix its own envi-

ronmental fee for the different EEE products. In practice, however, the prices are

very similar from one scheme to another (ERP France, 2015; Ecologic, 2015),

which is believed to be caused, among others, by the visible fees system.

Three factors play a role in the determination of whether to increase or decrease

the environmental fee for a product (IPR WG, 2012):

Product’s life-cycle and durability



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Product’s contents of hazardous materials

Product’s contents of recyclable materials.

The specific requirements for the different fractions appear from the below table.

Table 3: Differentiation criteria in French bonus-malus system

Equipment Criterion for increase/decrease Differentiation

Category 1 Refrigeration equipment

Use of refrigerants with >15 GWP +20%

Category 2 Vacuum cleaners

Containing plastic components with more than 25g of brominated flame retardants

+20%

Category 3 Mobile phones

Cannot be connected to a universal charger (according to international standards, i.e. mini USB)

+100%

Category 4 Computers and laptops

Containing more than 25g of mercury and plastic com-ponents with more than 25g of brominated flame re-tardants

+20%

Category 5 Screens and TV sets

Containing more than 25g of mercury and plastic com-ponents with more than 25g of brominated flame re-tardants

+20%

Category 6 Lamps

Only with use of LED light -20%

The above table is understood in the way that ”+” releases a punishment if the

product exceeds the stipulated limit values and specifications. This means, for

instance, that a mobile phone that cannot be connected to a universal charger

according to international standards will get a 100 % increase of its environmen-

tal fee when the product is placed on the market.

Despite the fact that an increase in the environmental fee of 100 % of certain

types of mobile phones may seem very high, it is not expected to have a major

effect in practice. For example, iPhones would be covered by this system since

they cannot be connected to standard mini USB chargers, but use Apple’s own

chargers. Therefore, Apple will be punished by a 100 % increase in the environ-

mental fee when placing iPhones on the market. With the technical specifications

and weight of an iPhone 6 (129 g) (Apple Inc., 2015), this means in practice an

increase in the environmental fee from €0.02 to €0.04 (ERP France, 2015), i.e.

an increase in the price of an iPhone 6 of €0.02 or 0.003 %7. In practice, this

increase in the environmental fee will hardly result in shifting consumers from

iPhone to other smartphone brands, so the incentive for investing in eco-design

is non-existent.

7 €0.02/€709 = 0.000028



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4.1.2 Comparison with Danish system

WEEE is treated in six fractions in both Denmark and France. The French sys-

tem was expanded with a seventh fraction (photovoltaic panels) in 2014; howev-

er, this fraction does not yet appear on the price list of the French collective

schemes (pvcycle, 2014; ERP France, 2015; Ecologic, 2015). The French sys-

tem is expanded again up to twelve fractions from 1 July 2015.

The Danish and French fractions are not similar. In Denmark, the sixth fraction is

photovoltaic panels while the sixth fraction in France is a division of comput-

ers/laptops and screens/TV sets, respectively.

In Denmark, WEEE must be divided into the six fractions at the municipal collec-

tion points (Order no. 130, 2014). This division means that the environmental

fees with the collective schemes are also differentiated across these fractions,

while the extent of a further differentiation of the environmental fees within each

single fraction is limited and takes place to a varying extent in the different collec-

tive schemes. The more limited differentiation in Denmark is motivated by the

additional administrative costs that are associated with such a scheme8. The

interviews conducted with the Danish collective schemes also indicated a certain

degree of differentiation in the environmental fees that each producer pays for

the management of WEEE. This is in contrast to the French system in which the

environmental fee consists of a fixed visible fee and in which any given company

can only achieve a reduction of the environmental fee if its products comply with

certain fixed eco-design standards. Similarly, French producers placing products

under a certain technical standard on the market are punished through a prede-

termined increase of the environmental fee. Such a politically decided differentia-

tion does not exist in Denmark at the moment.

4.1.3 Practical experience

Practical experience with differentiated payment schemes for WEEE in France is

ambiguous.

On the one hand, the producers in France are satisfied with the bonus-malus

system; they point out that this system promotes a dialogue between producers

and reprocessors of EEE (ADEME, 2014).

On the other hand, it is difficult to establish the precise value of eco-design

measures (or the lack of such measures). This means that the differentiated

payment does not necessarily reflect actual costs of reprocessing of a product,

but it is rather a politically negotiated price sending a price signal to the consum-

er through statutory visible fees (ADEME, 2014).

8 There are examples of differentiation within the fractions in Denmark. This is the case,

for instance, for light sources where CFL and LED bulbs are subject to a lower envi-ronmental fee than fluorescent lamps (LWF).



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The bonus-malus system in combination with visible fees is therefore rather a

kind of labelling scheme for the consumers than a direct financial incentive for

increased investment in eco-design. Furthermore, it does not seem that the pre-

sent environmental fees and any supplements under the bonus-malus system

are sufficient for shifting the consumers away from these products.

It has not been possible to find more concrete results concerning the effect of the

French system, since collection of WEEE is a relatively new phenomenon in

France. The collection was introduced in 2006 and the bonus-malus system was

implemented in 2010 (Danish Environmental Protection Agency, 2012; WEEE

Forum, 2012).

4.1.4 Future

As from 1 July 2015 new rules entered into force in the French bonus-malus

system, which was expanded to twelve fractions. On this occasion the following

product categories were added to the existing fractions as stand-alone groups:

washing machines, dish washers, coffee machines and electric kettles, tablets,

printers, drilling and screwing devices, and game consoles (Ecologic, 2015). This

expansion took place under a politically planned extension of the system in 2012

(Danish Environmental Protection Agency, 2012).

The system continues to enforce either 20% increases or decreases of the envi-

ronmental fees of the different fractions. Exemptions are mobile phones and

tablets that each are subject to a 100% increase if they do not comply with the

criteria for eco-design (Ecologic, 2015).

4.2 Sweden

4.2.1 General structure of scheme

Sweden is among the leading nations in the European Union when it comes to

collection and reprocessing of waste electronics. The EU WEEE Directive was

implemented in Swedish legislation in 2005, but already back in 2001 the first

Swedish producer responsibility legislation was adopted (Watkins, et al., 2012).

This was the outcome of a legislative process that started in the early 1990s. In

this process the producers were involved closely in the statutory work, and this is

mentioned as one of the main reasons for the success of the Swedish system

(Swedish Environmental Protection Agency, 2009).

In Sweden, the Swedish Environmental Protection Agency is in charge of super-

vision and control of compliance with the producer responsibility system. All pro-

ducers must register with the Environmental Protection Agency, and up to 2009

all producers also had to report quantities placed on the market directly to the

Agency. Since then, however, it has become possible to report through the col-

lective schemes (Swedish Environmental Protection Agency, 2009).



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Just as in Denmark the local authorities are in charge of collection of WEEE,

which is delivered to one of around 650 public recycling centres. Subsequent

treatment of collected WEEE is managed and financed by producers, either

through collective schemes or as individual compliers (IPR WG, 2012). In addi-

tion to municipal collection, WEEE is also collected in a few shops around Swe-

den. The success of the Swedish system, however, is attributed primarily to the

collection at the public recycling centres (Watkins, et al., 2012).

Since the beginning of the producer responsibility system the market for WEEE

management has been dominated by one company: El-Kretsen. Today, two

collective schemes exist on the Swedish market:

1. El-Kretsen

El-Kretsen was founded in 2001 and was the only collective scheme on the

Swedish market up to 2007. El-Kretsen is a limited company owned by 21 busi-

ness associations. It has around 1,500 affiliated companies. Just as for elretur

and ERP, payments to El-Kretsen consist of a fixed annual membership fee and

a variable price depending on the quantities of EEE placed on the market within

the different categories.

2. Elektronikåtervinning i Sverige Ekonomisk Förening (EÅF)

EÅA (WEEE Recycling in Sweden) is a non-profit organisation established in

2007. EÅF is substantially smaller than El-Kretsen and has today around 70

affiliated producers. Just as for El-Kretsen members pay a fixed annual fee and a

variable product fee (EÅF, 2014).

El-Kretsen accounts for the treatment of around 75% of total quantities of WEEE

collected in Sweden while EÅF accounts for the treatment of the remaining quar-

ter (EÅF, 2014).

4.2.2 Comparison with Danish system

It is not an obligation for the Swedish collective schemes to differentiate pay-

ments in addition to the ten product categories stipulated in the WEEE Directive

(Förordning om producentansvar för elutrustning, 2014). However, an interview

with El-Kretsen reveals that there is a relatively high degree of differentiation in

addition to the ten product categories. Thus, the degree of differentiation seems

larger with El-Kretsen than what is the case in the Danish collective schemes.

El-Kretsen operates with a total of 38 subcategories under the ten product cate-

gories. Before 2009, however, the number of subcategories in the El-Kretsen

payment model was 65, but since then the number has been reduced to present-

ly 38. This reduction is based on what El-Kretsen refers to as a balance between

”a fair differentiated payment for its members that is also efficient in terms of

costs and administration”. The largest differentiation in El-Kretsen is seen in

category 3, IT and telecommunications equipment, having as much as ten sub-



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categories. The different subcategories are seen in the below figure; it has not,

however, been possible to collect information on actual environmental fees for

the different subcategories.

Figure 1: Outline of subcategories in product category 3

Category 6, Lighting equipment, is subdivided into six subcategories. In addition,

payments are differentiated according to any contents of mercury in the light

source, since mercury-bearing light sources are significantly more expensive to

manage and process than non-mercury bearing light sources. The latter differen-

tiation in relation to mercury contents was adopted in El-Kretsen in consultation

with the industrial organisation of the light source producers. The difference

makes up SEK 0.20 per unit for an ordinary bulb.

4.2.3 Practical experience

In order to secure the best possible knowledge of actual reprocessing costs

these costs are calculated, analysed and documented by El-Kretsen itself at its

own reprocessing facilities. Every product is controlled, weighed and document-

ed along with the product composition of the different collection fractions. A total

of 1.1 % of collected WEEE is reprocessed at El-Kretsen’s own facilities and

data from this random sampling are used as a representative basis when repro-

cessing contracts are negotiated and producer fees are calculated.

5 ADMINISTRATIVE COMPLICATIONS ASSOCIATED WITH MORE

DIFFERENTIATION OF ENVIRONMENTAL FEE

In section 2 a survey was made into the ways in which a true-cost differentiation

of environmental fees will potentially affect the incentives of producers to have a

higher focus on eco-design and higher recyclability of WEEE. The results of sec-

tion 2 indicate that the potential for more eco-design through further differentia-

tion is limited.

In addition to limited economic potentials, higher differentiation is also associated

with a number of administrative problems. In this section, the problems revealed



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in the interviews as well as in screenings of the systems in France and Sweden

are discussed.

5.1 Identification of differentiation criteria

The first administrative barrier associated with true-cost differentiation is related

to the identification of actual reprocessing costs for each product type within the

different fractions.

As it appears from the example of light bulbs it would be relatively simple for

fraction 5 to differentiate the environmental fee for different product types, while

for several other fractions it would be much more difficult to set up differentiation

criteria (IPR WG, 2012). It was seen from the interview with elretur, among oth-

ers, that fraction 2, Refrigeration equipment, is suitable for further differentiation,

since the reprocessing of refrigeration equipment containing CFC gases is sub-

stantially more expensive than other product types. By contrast, it will be much

more extensive to identify differentiation criteria for fraction 3, Small household

appliances, since to a wide extent this is a catch-all fraction including all those

different types of EEE that are not covered by other fractions.

This barrier is further hampered by the fact that producers will probably not dis-

close design and constituents for intellectual property reasons (Als & Lund-

Thomsen, 2014), just as the use of OEM components means that the constitu-

ents of different sub-components are not always known.

5.2 Increased administrative burdens

The screening of the system in Sweden shows that the number of subcategories

in the El-Kretsen system has decreased from 65 to 38. An interview with El-

Kretsen staff members revealed that the background of this decision was a

trade-off between a true-cost system and more administrative burdens. The

same considerations were seen from the interview with elretur: more administra-

tive burdens associated with the calculation of actual reprocessing costs for a

higher number of fractions were emphasized as an argument against higher

differentiation (Als & Lund-Thomsen, 2014).

The French bonus-malus system offers an alternative basis for differentiation

since it is not a precondition that calculations of actual reprocessing costs are

made. As it is described in section 4.1, this system is based on politically negoti-

ated prices. This, however, leads to the fact that the environmental fees are pre-

sumably not on a true-cost basis, which may cause unintended side effects from

the system.

However, not only the collective schemes can expect higher administrative costs

from more differentiation. The interview with Mr Bielefeldt also indicated that

there is a physical barrier in relation to a more differentiated payment system.

The present collection of WEEE at the municipal collection points takes place in

six fractions, so many different products are mixed before ownership is trans-



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ferred to the collective schemes. For certain fractions, such as light sources, this

causes a cross-contamination and thereby a need for all product types in the

fraction to be subjected to the same treatment form; for other fractions this ”only”

means that a costly post-separation is necessary. Thereby, more separation

would be needed already at the public collection points, in order to secure a true-

cost differentiated payment system.

6 CONCLUSION

The purpose of this report is to investigate the options for more differentiation of

the environmental fees paid to the collective schemes.

Based on a case of light sources, notably CFL-i bulbs and LED bulbs, it was

studied whether more true-cost environmental fees will theoretically give produc-

ers higher incentives to produce eco-designed products. The results of this case,

however, revealed a limited potential, which is particularly due to the very low

environmental fees compared with the sales price of the products. Furthermore,

the costs related to reuse and recycling have decreased since the implementa-

tion of the WEEE Directive, so today there are no expectations of higher envi-

ronmental fees in the future.

The report also describes experience from France and Sweden, respectively;

both countries have a higher degree of differentiation than what we have in

Denmark. However, in none of the two countries is was possible to find a direct

correlation between a more differentiated system and more use of eco-design;

furthermore, a review of data from Eurostat shows that among these three coun-

tries Denmark has the highest share of collected WEEE that is either reused or

recycled. The specific figures appear from the below table.

Table 4: Share of collected WEEE reused or recycled

2012 Denmark Sweden France

Reuse and

recycling of

WEEE (% of

collected

quantity)

88.6% 84.3% 77.7%

Source: Eurostat (http://ec.europa.eu/eurostat/web/waste/key-waste-streams/weee)

The report also discusses other problems related to higher differentiation, includ-

ing the problem of identification of differentiation criteria as well as more adminis-

trative burdens associated with the calculation of true-cost environmental fees for

a large number of fractions and the physical collection of this higher number of

fractions.

Finally, it is worthwhile mentioning a conclusion from the report ”20 years of EPR

in France: achievements, lessons learned and challenges ahead” published by

Adème - the French Environment and Energy Management Agency. In this re-



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port, special emphasis is given to a pan-European system, since higher invest-

ments in eco-design are not profitable, if a company can only benefit from it on

the French market (ADEME, 2014). This conclusion is even more relevant in a

Danish context.



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