Waste electrical and electronic equipment reform consultation: business and regulatory impact assessment - partial

2.0 Policy intent and rationale

Background

1. The Scottish Government is committed to reducing the environmental impact of waste electrical and electronic equipment (WEEE) and moving towards a circular economy which keeps all resources in high-value use for as long as possible. In June 2023 Scottish Government introduced the Circular Economy Bill^[1] which will establish the legislative framework to support Scotland’s transition to a zero waste and circular economy, significantly increase reuse and recycling rates, and modernise and improve waste and recycling services.

2. The growth of electrical and electronic equipment (EEE) in recent decades has brought great benefits for Scottish society and has become indispensable in all areas of modern life. New EEE, especially Information and Communication Technology (ICT), has come to play a key role for economic growth and development in all countries. The speed of this development has increased over the past two decades.^[2]

3. These new technologies have simultaneously led to the rapid growth of WEEE, also known as e-waste. Approximately 1.6 - 2 million tonnes of WEEE^{[3] [4]} is disposed of every year in the UK. This includes an estimated 155,000^[5] tonnes of smaller household WEEE items that are disposed of in the residual waste stream annually.

4. The growth of WEEE is three times greater than other sources of household waste,^[6] and has shown significant growth rates worldwide in recent years, particularly in developing countries in Africa and in China and India. WEEE from ICT has seen the highest increase, with an annual growth rate of 4.5%.^[7] As EEE markets expand and innovation cycles become shorter, the replacement of EEE has accelerated, owing to the high obsolescence rate and rapid consumption of EEE.

5. The lifetime of EEE varies greatly, with mobile phones lasting, on average, 2 years, and refrigerators 15 years.^[8] However, technological obsolescence periods are becoming shorter and the acquisition cost demonstrates a downward trend.^[9] This, in turn, leads to the growth of WEEE.^[10] The deeply embedded culture of advertising EEE also contributes to this growth, with the industry tending to promote newer and more attractive devices to the public.^[11]

6. WEEE is recognised as one of the main environmental consequences of the use of EEE and ICT in modern society^[12]. It is a complex and hazardous waste stream, as it is made up of many different components and substances. WEEE that is not collected for recycling or reuse is likely to end up in residual waste streams such as landfill and incineration. Hazardous component materials can contaminate soil and leach into groundwater, while landfill and incineration generates greenhouse gases.^[13][14] Waste disposal can also have social costs for nearby households, such as noise, dust, odours and visual intrusion.^[15] Traffic to and from landfill and incineration sites can generate noise, traffic congestion, and localised air pollution.^[16] Taken together, these effects can undermine public enjoyment of an area, generate adverse health impacts for humans and animals, and reduce the value of the surrounding area.

7. WEEE is also commonly found in fly-tipping, which has both social and environmental costs. Local Authorities in England reported 1.1 million incidents of fly-tipping in 2020/21^[17], with 75,000 incidents involving white goods (refrigerators, freezers, washing machines), and other electrical items showing a 19% increase from 2019/20 (c.62,900)^[18]. Work is currently underway to improve the data on fly-tipping incidents in Scotland^[19]. A recent study commissioned by the Scottish Government estimates that there were 66,159 number of fly-tipping incidents in Scotland in 2019/20, an increase of 8.0% relative to the figure of 61,277 in 2011. The tonnage of all fly-tipping incidents in this period is estimated to be 26,739 tonnes. The most commonly fly-tipped items in Scotland are bulky household waste, electrical items and C&D (construction and demolition) waste.^[20] Fly-tipping is a source of negative externalities and creates disamenity for those who live locally, or travel by it. It is also damaging to the local environment.

8. EEE products contain a variety of critical raw materials which are lost if WEEE is not recycled or reused. Critical materials such as lithium, magnesium, copper and rare earth elements are highly valuable to the economy and essential to the production of EEE, as well as electric vehicles and renewable energy systems^[21] There are also environmental impacts associated with raw material extraction, EEE production and manufacturing.

9. The risks associated with WEEE are amplified if poorly managed or faced with sub-standard recycling/recovery operations. However, the proper management of WEEE can significantly reduce environmental and human health risk^[22], and ensure valuable materials are kept in use.

Purpose and Intended Effect

10. The policy objective is to reduce the amount of WEEE ending up in landfill, EfW and fly-tipping, increase the current recycling and reuse rates of 57% of WEEE across the UK^[23].

11. This would be achieved by reforming the current producer responsibility system by introducing a UK-wide household collection system for WEEE, moving the point of producer responsibility to the household^[24], and extending the role of retailers and internet sellers in fulfilling their take back obligations.

12. A consumer would have greatly increased access to recycling for WEEE, alongside a better understanding of how to responsibly dispose of WEEE items, with convenient collection routes and removal of the financial barriers associated with some existing options.

13. Proposed reforms will address two significant issues with the current system: the inaccessibility of WEEE recycling for householders, and the lack of awareness of where and how to recycle WEEE. These issues have been identified by a Post Implementation Review^[25] of the current WEEE regulations, and in further research^[26].

14. The proposed reforms also intend to (1) address the imbalance in obligations and enforcement between online sellers and traditional sellers, (2) ensure that vape producers are financing the full cost of recycling vapes, (3) incentivise increased eco-design of products, for example through ‘eco-modulation’, and (4) drive up treatment standards and incentivise the recovery of critical raw materials.

15. By increasing the quantity of WEEE that is recycled and reused, the proposed reforms would improve resource efficiency, increase natural capital benefits via a reduction in WEEE sent to landfill and energy from waste, reduce carbon emissions via reduced extraction, processing, and manufacturing, reduce fly-tipping, and increase revenue for material reprocessors.

Existing regulatory landscape

16. WEEE is regulated under UK legislation by the Waste Electrical and Electronic Equipment (WEEE) Regulations 2013.^[27] These Regulations came into force in the UK on 1 January 2014, implementing Directive 2012/19/EU on WEEE,^[28] and provide for a wider range of products to be covered by the Directive with effect from 1^st January 2019.

17. There are fourteen broad categories of WEEE currently outlined within the Regulations:^[29]

Bulky WEEE

1 - Large Household Appliances (LHA) (E.g., washing machines, dishwashers, cookers)

Small Mixed WEEE (SMW)

2 - Small Household Appliances

3 - IT and Telecoms Equipment

4 - Consumer Equipment

5 - Lighting Equipment

6 - Electrical and Electronic Tools

7 - Toys, Leisure, and Sports equipment

8 - Medical Devices

9 - Monitoring and Control Instruments

10 - Automatic Dispensers

Bulky WEEE

11 - Display Equipment (E.g., TVs, Monitors)

12 - Cooling Appliances Containing Refrigerants (E.g., Fridges, Freezers)

N/A^[30]

13 - Gas Discharge Lamps and LED light sources

N/A^[30]

14 - Photovoltaic Panels

18. A key principle in managing WEEE is the “polluter pays” principle, which underpins many environmental measures. EPR, which seeks to ensure that producers of waste are made financially responsible for managing the products they place on the market when they become waste, is an application of the polluter pays principle. WEEE EPR would include the costs of collection, transport, treatment, and disposal of WEEE.

19. The principle of EPR is well established in waste management and the circular economy. EPR has historically focussed on producer-funded, end-of-life waste management systems, though there is increasing focus on the use of modulated fees (eco-modulation) to incentivise better product design. There are already four existing schemes in operation in the UK that deliver a varying degree of producer responsibility, covering packaging waste, end of life vehicles (ELV), batteries and accumulators, and WEEE.

20. The current producer responsibility system for managing WEEE is UK-wide. Scottish Environment Protection Agency (SEPA) is the statutory environmental regulator in Scotland. The UK Environment Agency collates and hosts a shared system through which all regulators publish data and public registers for WEEE EPR. This system aims to reduce the amount of WEEE going to landfill by encouraging separate collection and subsequent treatment, re-use, recovery, and environmentally sound disposal.

Producers

21. Any actor who places EEE on the UK market must register as a producer/distributor. Under the 2013 regulations, obligation can come through: For producers:

• UK-based manufacture under their own brand.
• Buy EEE and then make changes to rebrand the product and resell to the UK market.
• Importing EEE into the UK.
• Selling equipment on behalf of a manufacturer and sold under an organisation’s own brand.

For distributors:

• Those who make EEE available on the UK market, including by distance selling.

22. Producers may also be distributors and can often be the same business. Private individuals importing products, however, are not liable to comply with the regulations. Unlike other EPR schemes, there is no threshold for registration under WEEE regulations. So regardless of company turnover or amount of EEE placed on the UK market, if a business performs one of the two main activities on the obligated EEE (producer/distributor), then that business is obligated under the regulations.

23. Regulations make a distinction between WEEE collected from households (Business to consumer/B2C) and WEEE collected from users other than households (Business to business/B2B). In determining which, the main points to consider are the EEE product’s design specification and function. If useable by both households and non-households, any EEE would be B2C. If used for just non-households, then B2B classification would be most suitable. A product’s normal intended use is also a consideration. For example, if a household purchases a product intended for industrial use, then the product would still classify as B2B.

24. The current system of WEEE EPR is based on ‘collective producer responsibility’. Unlike in an individual producer responsibility scheme, producers do not have to individually finance the collection and reprocessing of exclusively their own equipment. Rather, the entire market’s WEEE is collected, reprocessed and collectively paid for based on the fraction of each producer’s market share, by weight, of each category of WEEE.

25. Producer Compliance Schemes (PCSs) discharge these obligations on members’ behalf. Some PCSs are for-profit whereas others are not-for-profit. Producers have an obligation to report to their chosen PCS the amount of EEE they placed on the market. For producers of household EEE (B2C), the PCS must submit quarterly data confirming the amount of EEE placed on the UK market in the preceding quarter across the 14 WEEE categories. For non-household producers (B2B), the submission must be made annually.

26. There is a specific de minimis threshold for producers who place less than 5 tonnes of EEE on the UK market in a compliance year, who will be considered a ‘small producer’, and will be given the opportunity of direct registration with the relevant agency or registration via a PCS. If at any point the 5-tonne threshold is exceeded the producer must register with a PCS.

27. Annually, the UK Government Department for Environment, Food, and Rural Affairs (Defra) determines the amount of WEEE which needs to be recovered, and this amount is allocated out to the registered PCSs. The PCSs then arrange for the management and collection of enough WEEE from Household Waste and Recycling Centres (HWRCs) to meet their obligations, at no cost to the local authority.^[31]

28. Each local authority in the UK has the option to sign up with a PCS which then provides a service to them, collecting WEEE from HWRCs. Households can return WEEE to HWRCs free of charge, with EEE producers then paying the cost of recycling or reusing the WEEE. Unlike other waste streams, the cost of treatment of fly-tipped household WEEE that is cleared by local authorities and taken to a local “designated collection facility” under the WEEE Regulations (e.g., a Household Waste Recycling Centre) is also financed by producers.

29. If a PCS fails to meet its obligated tonnages, it can buy certificates which cover tonnages from other schemes. If this does not then cover the obligated tonnages, the PCS must notify the WEEE Compliance Fee mechanism and pay a fee equivalent to the missed tonnage obligation; plus an extra fee which acts as a disincentive for inaction.

30. Non-compliance fees are held by the independent industry-led body Material Focus, which are then used to the benefit of the system as a whole, such as through grant funding schemes for HWRC improvements and research.

Distributors

31. Under the regulations distributors can include:

• Retailers
• Wholesalers
• Mail order
• Internet sellers
• TV shopping channels
• Other distance selling methods
• Sellers or retailers of WEEE who sell directly to households

32. Distributors must offer a free take back of WEEE by accepting it either in store for free from customers with like-for-like products or setting up an alternative take back service, regardless of context; retain a record of all WEEE taken back for at least four years; and provide customers access to written information on the service provided and what they should do with their WEEE.

33. When WEEE is collected, it can either be given to Approved Treatment Facilities (ATFs) or Approved Authorised Treatment Facilities (AATFs), which are sites permitted to carry out treatment on WEEE which can include depollution, disassembly, shredding, recovery, or preparation for disposal. Any operator of an appropriately permitted site or sites receiving WEEE direct from designated collection facilities ( DCFs), distributors, or end users can apply to become an ATF/AATF. It is only AATFs which can issue evidence notes for the treatment, recovery, or recycling of WEEE that takes place in the UK. These evidence notes will be required by PCSs operating on behalf of producers who will need to prove that a certain amount of WEEE has been treated, recovered, and recycled^[32]. Because only AATFs can issue evidence, most WEEE ends up in these facilities rather than ATFs.

34. The export of WEEE should only happen if the exporter can demonstrate it will be recovered/recycled safely in the recipient country without endangering human health or harming the environment. Exporters can issue evidence notes on the whole appliance for reuse overseas received from or on behalf of a PCS. They can also export materials extracted from WEEE for treatment, recovery, or recycling outside the UK received from an AATF. If the overseas treatment or recovery site receiving exported WEEE is located outside of the European Economic Area (EAA) it must operate to the equivalent standard^[33] of an AATF in the UK.

35. An exporter must apply to SEPA in Scotland to become an approved exporter to issue evidence of the export of WEEE for reuse to a PCS. Exporters must keep records and quarterly reports must be submitted to SEPA and must include the amount of WEEE exported for recovery, recycling, and reuse as whole appliances, as well as the detail of evidence issued to each compliance scheme.

Rationale for intervention

36. The existing regulatory system of producer responsibility for WEEE has been in place since 2006 and is well understood by the sector. The proposed policy options would represent an extension of the existing system rather than developing a new regulatory system from scratch.

37. Despite some improvements in the recycling rates of WEEE items, the recycling rate for WEEE is currently 57%, with around 450kt of WEEE disposed of through residual waste streams.^[34] The amount of electricals identified at fly-tipping sites has also increased^[35]. The relatively low recycling rate is likely due to the lack of accessibility for householders to recycle WEEE under the existing EPR scheme.

38. WEEE producers have consistently missed collection targets in recent years. Since 2017, producers have only met SMW, and several bulky WEEE (cooling and LHA) targets on one occasion. The average proportion of target tonnage collected over this period was 87% for SMW and 93% for bulky WEEE categories combined (1,11-12). The tonnage of SMW and bulky WEEE collected has also consistently fallen over the last 6 years. The tonnage of SMW collected in 2022 was 15% lower than 2017. Bulky WEEE collected was 9% lower in 2022 than 2017^[36].

39. A post implementation review (PIR) of the 2013 WEEE Regulations was conducted in 2020^[37]. The PIR found that the existing regulations had been effective in ensuring that producers finance the cost of collection and proper treatment of household WEEE currently separately collected. The market-based system, in which Producer Compliance Schemes are placed in “the chain of custody of the waste”, established under the existing regulations, has ensured that compliance costs are largely reflective of the costs incurred in transport and subsequent proper treatment of WEEE that enters the system established under the regulations.

40. However, there were some areas which the PIR recommended should be addressed through a further regulatory reform. These included:

• Making it easier for consumers to responsibly discard of unwanted WEEE to drive up existing levels of separately collected WEEE for reuse and recycling.
• Reviewing the role of different actors across the supply chain of EEE to bring investment in an expanded collections infrastructure for household WEEE.
• Addressing high levels of non-compliance with producer obligations by online sellers.
• Reviewing the scope of distributor WEEE take-back obligations, to ensure parity of obligation between online sellers and retailers.
• Reviewing the role of the “distributor take-back scheme” whose membership provides an alternative to distributors taking back WEEE from customers and instead provides funds to support local authority WEEE collections for reuse and recycling.
• Reviewing the business-to-business (B2B) system so that it is easier to access for business end users of equipment to return WEEE to producers, leading to higher levels of collections of B2B WEEE.

Inconvenience and lack of knowledge of current collection systems

41. Annually, an estimated 155kt of WEEE is disposed of in household residual waste collections in the UK^[38], which is then sent to landfill and energy from waste (EfW). This is equivalent to 5.3kg per household per year.^[39]

42. Research on public behaviour and attitudes has highlighted the greater effort required to recycle WEEE compared to disposal in residual waste. Most householders must go to a household waste recycling centre or a dedicated distributor takeback facility to dispose of WEEE. This poses a barrier to recycling and may not be possible for some groups. There are limited kerbside collections for WEEE.

43. Research also highlighted a lack of awareness and understanding of how and where to recycle WEEE. Public attitudes behavioural research by Material Focus found that 43% of respondents had put WEEE in residual waste in the past 12 months. ^[40] Of those respondents who had disposed of WEEE in residual waste in the past year, 48% stated they were not aware that it could be recycled, 45% did not know how and where to recycle it, and the majority of other respondents referenced the lack of ease and/or effort required to recycle WEEE.^[41]

44. Since the introduction of the current regulations there has been some improvement in accessibility for consumers to dispose of their small mixed WEEE (SMW) responsibly, which has resulted in increased collection levels. For example, retailers with a physical store and selling £100k or more of EEE annually must provide in-store takeback facilities for their customers^[42]. Smaller and non-physical retailers may instead join the Distributor Take-back Scheme.^[43]

45. Three Scottish Local Authorities (LAs) offer household kerbside SMW collections, but this only covers a minority of households. A SMW UK kerbside collection service is not a requirement of LAs under the current regulatory scheme, and so the services which exist cover just 22% of UK households^[44].The mean weight of SMW presented by UK households with access to kerbside collection services is 0.7kg per household per year^[45], just 13% of what is assumed to be going into the average household residual bin.

46. Providing households with accessible and convenient routes to responsibly dispose of SMW, whilst supplying households with more information on how to recycle their WEEE, would likely improve recycling rates and reduce the amount of WEEE entering residual waste flows. Both aims are likely to be difficult for producers to achieve without government intervention. It would be inefficient and expensive for individual producer compliance schemes to establish individual collection systems, while the cost and complexity of the system is likely to be a barrier to a voluntary coordinated approach.

Costs to households

47. Current WEEE regulations place some collection and management costs on producers. However, consumers are still required to take on some costs. Most LAs currently charge households for bulky WEEE collections, with the amount being charged varying across local authorities. Retailers/distributors also generally charge a fee for collecting bulky WEEE upon delivery of a new item of EEE. Alternatively, households can dispose of their WEEE at HWRCs and in-store with obligated retailers (those with a £100k turnover from EEE annually), but this incurs travel and time costs for households.

48. These costs disincentivise household use of available services, and increase use of alternative routes of disposal, most likely through residual waste, but also via fly-tipping or the informal scrap sector. Minimising or removing the cost to households of recycling WEEE is therefore likely to improve WEEE recycling rates.

Online Marketplaces (OMP)

49. Online sales of WEEE have rapidly increased in recent years, allowing consumers to buy products from sellers in other countries more easily^[46]. This has resulted in new opportunities for “free riding” by companies defined as producers and distributors under the current regulations. Producers who are not registered with a Producer Compliance Scheme in the UK but are placing large volumes of EEE on to the UK market, are not meeting their regulatory obligations to finance the collection and treatment of that EEE when it becomes waste.

50. Instead, the cost of collection and treatment of these products when they become WEEE falls on obligated producers complying with the regulations by registering with the regulators. Non-compliant producers will often sell direct to UK customers online, in many instances via online marketplaces, creating a challenging environment for effective enforcement, particularly in the case of overseas sellers.

51. An estimated 33% of EEE being placed on market is being sold by OMPs (520kt of EEE)^[47]. A further 125-220kt of unreported EEE could be being sold by OMPs^[48]. This dynamic creates an unlevel playing field between registered and unregistered producers of EEE, and there have been strong representations from industry to address this issue.

52. The key challenge is the ability of regulators to take meaningful action against non-compliant internet sellers that operate from overseas territories that fall outside of the jurisdiction of UK-based regulators. Although online marketplaces (OMPs) are frequently used by overseas sellers to facilitate sales in the UK, they do not have any obligations under the current regulations in respect of the sellers that use their platforms.

53. This is not an issue specific to an extended producer responsibility (EPR) system for electricals. For example, the reform of regulations that place obligations on producers of packaging^[49], identified the same issue of overseas packaging producers free riding through OMPs, and the UK Government has set out its plans on how it will be addressed. This underlines the need for free riding to be addressed in the EEE market.

Vapes (e-cigarettes)

54. As noted above, EEE products are grouped into 14 categories. Producers of products in a particular category are obligated to finance the cost of collection, treatment, recovery, and recycling, of all products from that category when they become waste, based on their market share, expressed in tonnes, of products placed on the market in that category.

55. Vapes (also known as e-cigarettes) fall within category 7, which covers toys, leisure, and sports equipment. This creates a high probability that all producers of category 7 products (whether vapes or otherwise) share in the cost of recycling vapes. However, the costs of recycling vapes are significantly higher than other category 7 products. For example, research commissioned by Zero Waste Scotland^[50] found that WEEE recycling organisations were facing costs of recycling single-use vapes in the order of 50p per item (some organisations have been quoted £1 per item). Empty single-use vapes weigh of the order 30g , so that a cost of the order 50p per item equates to over £15,000 per tonne.

56. Where vapes are collected for recycling by producer compliance schemes (for example where households return vapes to their local HWRC), there is significant risk that the other category 7 producers will share the significantly higher cost of treating these vapes. This unfairly increases the compliance costs to these producers. The challenge for producer compliance schemes to fairly apportion costs of collection and treatment of vapes acts as a disincentive for them to sign up vape producers.

57. The current inclusion of vapes within category 7 means that producer compliance schemes and producers also do not currently need to ensure that vapes are collected to meet their recycling targets, as targets can be met through financing the collection of other category 7 items.

58. The current categorisation therefore means that it is unlikely that vapes producers are covering the full cost of vapes collected for recycling, which reduces the incentive for them to ensure that their products are easily recyclable.

59. At the point that the WEEE regulations were implemented, vape usage was low, and these products only made up a small proportion of category 7. However, there has been as significant increase in the use of vapes in the UK, with research suggesting that the number of vape users has increased by 400% in the last 10 years^[51]. Recent estimates suggest that around 0.5 billion vapes are now placed on the market each year, of which one third are disposable. Approximately 50% of disposable vapes are thrown away, equating to 67 million disposable vapes annually^[52].

60. Vapes contain plastic, lithium-ion batteries, and may contain other hazardous or harmful substances such as heavy metals, lead, mercury, and nicotine, which can contaminate the natural environment if not properly treated at end of life. Vape batteries can also pose a fire risk, for example at material processing facilities, if incorrectly managed or disposed of via residual waste. The critical, finite raw material components of vapes are also vital for the economy and are lost if vapes are not recycled. For example, an estimated 10 tonnes of lithium is lost from discarded disposable vapes per year, equivalent to the batteries inside 1,200 electric vehicles^[53].

In its 2023 Programme for Government titled ‘Equality, Opportunity, Community’, the^[54] Scottish Government states that it will “take action to reduce vaping among nonsmokers and young people and to tackle the environmental impact of single-use vapes, including consulting on a proposal to ban their sale and other appropriate measures”.