10 April 2018 by letsrecycle

Concerns raised over WEEE scheme for HWRCs

Strong concerns over the system set up to ensure that waste electrical and electronic equipment is collected from civic amenity sites and HWRCs, have been raised by several businesses within the WEEE sector.

The concerns come as the Environment Agency and Defra consider whether or not to make the system mandatory – there was a consultation on this at the end of 2017. Defra is thought to be considering whether to keep the current system as it is, or modifying it in response to feedback and in light of the UK’s struggle to meet recycling targets. And, the Department has to make a big call on whether to make it mandatory for compliance schemes to join.

The system under scrutiny is the Producer Compliance Scheme Balancing System (PBS). Some in the WEEE sector believe that it may be being taken advantage of by schemes short of evidence, because it could come out as a cheaper way to obtain the evidence needed to account for recycling of WEEE.

Councils can use the PBS system to secure a contractor to collect WEEE from civic amenity sites/HWRCs

And, there are suggestions that judicial reviews are being sought over the PBS by some of those concerned with its operations.

The PBS is explained by the Environment Agency as a “collaborative solution” to meet the statutory demands from local authorities for the clearance of WEEE from their CA sites/HWRCs, where it has not been possible to enter a contract with a specific Producer Compliance Scheme (PCS).

This applies when a local authority, normally in a commercially unattractive location (such as Cornwall or the Shetland Islands) and which is logistically difficult to service, struggles to find a contractor to collect WEEE from a site. The council then has the legal right to contact any PCS to request a collection, free of charge from the local authority site. This is known as a Regulation 34 request. But, if the PCS doesn’t want to actually collect the material itself, it then has the option to pass on the request to the PBS to find a scheme to collect the WEEE. Contracts run for a one year period and the PBS is currently run by the Anthesis Group for the WEEE Scheme Forum.

System

Once received, the PBS has five working days to deal with the request, in line with the requirements of Regulation 34. Round One of the process sees the request issued to all compliance schemes in the PBS.  If any PCS would like to collect the material, they accept the request and cover all costs themselves, where it then has nothing more to do with the PBS. In such a situation, the PCS involved would be entitled to the recycling evidence for the WEEE collected.

If no scheme is interested under round one, a Round Two bidding process takes place. Round Two sees the scheme which is willing to collect the WEEE for the lowest cost chosen to carry out the collection. All bidding is anonymous and every PBS member has an opportunity to bid.

‘Subsidised rate’

Importantly, with regard to those critical of the scheme, the costs of the collection, treatment, recycling/treatment and administration are shared out among all PBS scheme members, including the scheme which has opted to collect the material. The evidence is then shared among members with cost and evidence allocations in line with market share, even if members don’t actually need the evidence. This process means, say critics of the scheme, that costs are imposed on schemes who don’t actually need the evidence and could let larger schemes obtain evidence at a “subsidised rate” because other schemes are also involved in paying for the collection and treatment. It is the Round Two process which is causing concern among some schemes and member companies.

(If there are no bidders, which the PBS operator says has never happened, there is a more “emphatic third round of bidding” and if nobody bids, the civic amenity site will be randomly allocated.)

As revealed in statistics released by Defra last month, the UK missed its WEEE collection targets for 2017 by 16%. When the systems was put in place, there was no shortfall.  Critics argue that consequently if there is a shortage of WEEE due to the targets not being met, there should be no need for a Regulation 34 request as compliance schemes should need to go and collect WEEE from local authorities, including those logistically more costly to reach, to gather evidence to meet their scheme targets.

WEEE target

Table shows UK WEEE performance in 2017- target was missed by 16%

Some in the WEEE sector have suggested that the fact that Regulation 34 notices were still being issued by local authorities, was because some schemes might prefer to wait for a collection to go through the PBS, and share the costs, as opposed to arranging a collection themselves, which would be more expensive.

While the internal workings of the PBS are not disclosed, it is said by some in the sector that the cost of evidence traded through the PBS has been at about twice the standard rate, but this is because of the logistics involved with this type of collection and other factors, and this high level of cost is to the detriment of the majority of schemes and their members. In contrast, it is argued, the beneficiaries could be schemes short of a lot of evidence. The losers, it is claimed, are the PBS member who don’t need to be involved in the evidence from more costly council sites as they have access to evidence already. Because of this there have been resignations from the PBS, including a retailer and a compliance scheme.

Perspectives

The consultation over the PBS has prompted a range of perspectives from the sector with strong concerns that the current system is unfair and that if the scheme becomes mandatory, substantial changes are needed, while others are more content with the current approach.

‘Distorting’ – WasteCare

Producer compliance scheme WasteCare said that it estimated that the PBS handled around 45,000 tonnes of WEEE in 2017 in a year when the UK “fell well short of its targets”. And, the PBS, said WasteCare, “means that the focus of this artificial system dilutes the focus away from the overall aims of collecting and treating more WEEE. The PBS is more about control than recycling.”

In a statement, WasteCare told letsrecycle.com, that schemes might opt not to collect from more far-flung and costly locations so that these local authority areas would end up within the PBS. The company continued: “Many argue that if a PBS model was to become mandatory then the Regulations should be amended to ensure that compliance schemes only use the PBS for their local authority collections when they have met their schemes obligations and without the use of the compliance fee option. In summary, if a scheme uses this mechanism with their local authority and waste management partners then they should not be able to use the compliance fee to meet their obligations. Anything else is clearly distorting the market.” [Editor’s note: the Compliance Fee is a separate way schemes can conform at the end of the compliance year if they are short of evidence].

The WasteCare statement continued: “Not only did the UK fail to meet its recycling targets in 2017 but the PBS managed around 20,000 tonnes where the collection wasn’t picked up at the first stage. The estimated cost of this was £4.8 million and was dominated by the expensive WEEE streams to recycle – cooling and display. Estimates suggest that the average price of collection, treatment and recycling these two streams in the PBS was over £300 per tonne or around twice the true cost of recycling and far more in terms of scale and value than the ‘golden fridge’ charges so feared prior to the introduction of the amended Regulations.”

The reference to “golden fridge” noted by WasteCare refers back to the former WEEE system. Under this there were observations that compliance schemes which had access to lots of civic amenity sites, might have lots of WEEE evidence that they would not need and so might charge other scheme above market rates for the evidence.

 ‘Changes’ – Wastepack

Paul Van Danzig, director of policy for compliance company Electrolink, explained that while we wants the PBS to be made mandatory, he would also like to see a number of changes.

“In the first instance compliance schemes and local authorities should be encouraged to work together to ensure that obligated producers are directly funding the collection, treatment and environmentally sound disposal of WEEE in line with their obligations. The WEEE regulations operate on a target-based system and the PBS should only be used as a last resort when a local authority cannot engage with a producer compliance scheme because all schemes targets have been met, potentially leaving the local authority out of contract and with no method of financing the collection and treatment of its WEEE arisings.

“To have a system that on one hand is struggling to meet collection targets and yet on the other is driving what should only be surplus WEEE through the PBS is not sustainable and must be addressed.”

Mr Van Danzig added: “Another important aspect of the PBS that needs addressing is the lack of financial transparency. At present, schemes are given their proportion of PBS evidence split by material but not individually by price, making it incredibly difficult to fairly proportion WEEE costs to producers in line with their obligations.”

‘Statutory’ – Repic

Mark Burrows-Smith, CEO of REPIC the largest WEEE producer compliance scheme in the UK, commented: “We are in favour of the proposal to place the PCS Balancing System (PBS) on a statutory footing. We supported the development of the PCS Balancing System, as a fair and efficient way to manage regulation 34 collection requests between producer compliance schemes.”

Mr Burrows-Smith added: “The PCS Balancing System is a safety valve to ensure that local authorities always have a professional and well-managed service for WEEE, in the eventuality that they haven’t been able to make an arrangement with a producer compliance scheme directly.”

‘Mechanism’ – Anthesis

However, the sharing of costs under the round two allocation was described as a “fair approach” by Richard Peagam, associate director of Anthesis, the consultancy firm which runs the current PBS.

He explained that when the PBS was set up two years ago, while there wasn’t a shortfall of evidence, and the PBS mechanism to allocate regulation 34 requests was deemed necessary at the time because some council areas faced not having WEEE collected.

And, Dr Peagam explained that the PBS does not necessarily go hand-in-hand with collection targets.

“As we know, the UK didn’t hit the 2017 WEEE collection target, but to be clear; the operation of the PBS does not directly impact achieving the target. All it does is manage the collections professionally, and share the costs and the evidence fairly.  It definitely does not take material out of the official UK WEEE system and it doesn’t take evidence out of the system either.  All of the WEEE that was allocated by the PBS, contributed to the official collections reporting in 2017.”

Dr Peagam continued: “Collection agreements subject to Regulation 34 are usually those that are commercially unattractive. Often they are in more remote locations, or with low collection volumes, or both.  When the normal competitive system fails to find a collector for a local authority, we step in and rectify the situation.  Once local authorities have found themselves in our process, the feedback we get (from local authorities on the PBS system) has been very positive.”

And, regarding costs, he said Regulation 34 collections, by their very nature, can incur greater costs than mainstream WEEE collections. By design, the PBS always seeks to ensure healthy competition between PBS members, to minimise these costs.  Every PBS member can bid, and the PBS allocates based on the lowest price.”

Outlook

Now schemes are waiting to see what decision the Department for Environment, Food and Rural Affairs comes to over the future of the PBS.

[updated to correct Electrolink paragraph 10 April]


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