Broken Promises: Extended Producer Responsibility in the USA

Douglas Smith

Sony Electronics Inc

June 2011

The great majority of mankind are satisfied with appearances, as

though they were realities, and are often even more influenced by the

things that seem than by those that are.

--Niccolo Machiavelli,

Italian philosopher, humanist and writer

Outline

Sony’s Road to Zero

– Life Cycle Approach

– Milestones and Measuring

– From End of Life through Supply Chain

US Extended Producer Responsibility

– Outsourced Public Services

– Diffused cost : concentrated benefit

– Industry incentive: Lower cost

Sustainability versus EPR

April 2010, Global Environmental Goals “Road to ZERO”

1. Zero environmental footprint by 2050

2. Mid-range environmental targets for 2015

Innovation for the next generation

Sony Global 2015 Goals

Dye-sensitised solar cell

Reduce mass of products: -10% (from 2008)

Reduce waste generation: -50% (from 2000)

Improve waste recycling rate world-wide: 99%

Reduce water consumption: -30% (from 2000)

Reduce energy consumption of products: -30% (from 2008)

Waste CDs

for new

electronics

Customer Service – Recovering Value

Sony Style Trade-in/Recycle Program

– Trade-in any brand of eligible products

– Receive an offer for the product’s trade-in value

– Get a Sony Style gift card for the value of the

trade in

– Free TV takeaway at time of delivery

Cameras MP3 Players Laptops Camcorders Game Systems Mobile Phones

1996 Sony Product Stewardship Policy

“Product Stewardship is the environmental responsibility

for the fate of a product through its life cycle from

manufacturing to end of life. Sony recognizes that as a

manufacturer of electronic products it shares with its

customers the product stewardship responsibility. It is

the policy of Sony to encourage and promote

environmentally sound recycling of all electronic waste.

Sony will seek to recycle all waste generated in the

manufacture of its electronic products. Sony will design,

manufacture, label and package products in a manner that

will facilitate the recycling of the products once their

useful life is over. For each of the products and

components manufactured by or sold by Sony under the Sony

brand, Sony will determine the most environmentally sound

end of life recycling method or, if applicable, the most

environmentally sound method of disposal. In support of

this policy, Sony will work with its customers to

encourage and facilitate the recycling of electronic

waste”

The False Promise

“Giving the manufacturers the financial

responsibility for managing their old

products gives them a strong incentive to

redesign their products to remove the

toxic materials that make recycling

challenging and expensive.”

(http://www.electronicstakeback.com/wp-

content/uploads/Ewaste-Briefing-Book.pdf.

The Realities

80% of Products Sold by 10% of Retailers

Collection by Manufacturer is nearly impossible

Collection and Transportation are unrelated to product

design yet exceeds 50% of EPR cost

Recycling other brands and extinct product types yields no

learning opportunity

Funding collection and recycling of TVs yields no learning

opportunity for IT company

Gov’t directs EPR cash flow from manufacturers but is not

called a tax

Consumers nationwide are paying higher price for products

WEEE Core Concepts Ignored in US

• Producers should finance collection from collection

facilities

• The responsibility for the financing of the management of

historical waste should be shared by all existing producers

in collective financing schemes to which all producers,

existing on the market when the costs occur, contribute

proportionately.

USA is only Country to ignore these basic concepts

EPR Cost Allocation

Market share works. CA, MN, WEEE, Canada, others

Return share – Only IPR works

Transportation and collection are fixed based only on weight

and exceed 50% of cost

Maine 2006 Sony report:

“Marketed to Retailers” 8,380 pounds of Monitors

Paid for recycling 34,147 pounds of Monitors Being billed to recycle 4 pounds for every pound sold

Minnesota:

Sony is paying recycle printers to reach quota, but never

made a printer

Hundreds of State Differences

Fees

Action dates: CY, FY, and PY

Allocation method – RS, MS, calculation, waste sort

– 80%, 60%, lb/capita, true-up between

plans

Covered Electronic Devices

(CED) – 4”, 7”, or 9” displays

– IT and/or TV

– MP3 and video game

– Free ride for non-CEDs

Covered Entities (CE) – Residents, business, schools, non-

profits

– Only CA controls fraud

CA: creates jobs, control fraud

ME: state runs program

– Selects recyclers, fixes price and

uses triple enforcement threat

WA: quasi gov’t runs program

WA, OR: Fanciful convenience

IN: small business is $10

million/yr

WA: small gov’t (<50) entitled

to free service

TX, HI, OK, VA, MO, WV: Mail-

back

Share1

Cost Disbursed to 100% of Population

Benefits Concentrated to 25% of population

RED: 25% population absorbing

75% of Expense •23 States and CA paying recycling

fees with no benefit

•Upper Midwest –good “freedom factor”

Blue states, limited scope EPR

Yellow: 2011 programs

Manufacturers prevented from Takeback in

ME, CT and WA

Environmental Departments run the programs. Recyclers are

selected authorized to bill manufacturers at state

approved price. The state Attorney General guarantees

payment from manufacturers.

“….Any nonpaying manufacturer is liable to the State for

costs incurred by the State in an amount up to 3 times the

amount incurred as a result of such failure to comply.

The Attorney General is authorized to commence a civil

action against any manufacturer to recover the costs

described in this subsection, which are in addition to any

fines and penalties established pursuant to section 349.”

(http://www.mainelegislature.org/legis/statutes/38/title38

sec1610.html)

By the numbers: Washington State 38,548,674 = pounds collected in 2009. (19,274 US tons)

$9,944,425 = Internalized Fees collected from

manufacturers

At $0.245 per pound, collected $9,444,425 plus additional $500,000 from manufacturers.

$2,023,700 = Landfill diversion savings

Seattle landfill rate is $105 per ton. Applied to 19,274 tons

$944,720 = Sales Tax Revenue

Internalized fees are taxable. Sales tax in Seattle is 9.5%

2.17% = WA % of USA Population

$215,794 = WA customers paid this much of internalized fees

$ 9,728,631 = Subsidy from customers in other 49 states

$45.08 = Receives this much for every $1 spent by WA

consumers

WA income progressive index: $0.88 received for each $1Tax (wealthy state)

EPR – Extra Profit and Revenues Its only about the money

Annual Savings to County:

$380,000 vendor costs

$170,000 income to county

$550,000 TOTAL SAVINGS

Snohomish County Case Study: $550,000 Savings Per

Year

Its really just about the money

“In Maine, which has had an EPR law for electronic

waste since 2004, municipalities save $1.5m-3m

annually because manufacturers have picked up the

cost of collection, according to the Natural

Resources Council of Maine.”

(http://www.economist.com/node/15825706?story_id=158

25706)

Approved Prices for Connecticut DEP Approved Covered Electronic

Recyclers (CER)

The approved CERs are authorized to bill manufacturers at the rates indicated below. The recycling fee is

for eligible costs related to the transportation and recycling of covered electronic devices. The separation

fee is for devices set aside at the request of a manufacturer.

Recycler Approved Recycling Fee Approved Separation

Fee

Universal Recycling

Technologies LLC

23 cents 16 cents

WeRecycle 34 cents 27 cents

eco International 19 cents 13 cents

RMG Enterprise Inc. 30 cents 17.5 cents

Metech Recycling Inc. 25 cents 30 cents

Electronic Recyclers

International

38 cents 20 cents

EPR Tax: Consumer Pays for 46” TV

State run programs States allowing more freedom

Maine: $18.70 Minnesota: $7.61

Washington: $19.59 Illinois: $4.20

Connecticut: $23.75 Rhode Island : $9.40

New York: $20.17 New Jersey: $10.71

California: $10* (POS tax) Indiana: $7.99

Program Lbs Per

Capita 2010

LBs Per

Capita

2009

LBs Per

Capita

2008

LBs Per

Capita

2007

LBs Per

Capita

2006

California 4.9 5.0 5.9 5.0 3.5

Maine 3.9 6.0 4.0 3.5 3.0

Delaware (no regulation) 4.3 4.1 4.1 3.7 3.3

Hennepin County 5.1 5.0 4.7 4.8 4.0

Branford, CT (no

regulation until 2011)

6.1 4.8 5.0 4.4 4.8

Frederick County,

VA

3.4 4.0 3.6 3.8 3.5

Average 4.6 4.7 4.5 4.2 3.7

Does EPR Regulation Improve Collection and

Recycling?

NCER PCCI: http://www.electronicsrecycling.org/public/ContentPage.aspx?pageid=107

EPR Result in WA: No Design Influence

The Washington Materials Management Finance Authority, which runs the state plan in

Washington is required by statute to report on Design For Environment (DFE)

improvement opportunities.

•Cathode Ray Tube (CRT) glass recycling is an expensive obstacle. However, the thin

flat panel displays have already replaced CRTs as preferred design choice before the

law was passed.

•Elimination of difficult to separate laminates will lead to improved potential for

selling the recovered commodities.

•Elimination of leaded solder. This was phased out by most companies by 2003,

again, before passage of the Washington EPR law.

•Faster assembly techniques should result in faster disassembly techniques. This is

something design engineers have been working at for decades.

“These responses are not a new revelation exclusive only to processors in Washington

State. They are consistent with independent surveys conducted by non‐governmental agencies, manufacturers, and environmental research organizations within our

regional area and nationwide….”

http://www.ecy.wa.gov/programs/swfa/eproductrecycle/docs/2009AnnualReportfromWMMFA.p

df .

What is best path Forward

“Based on my efforts to date I am of the opinion

that it would be more effective to attempt to

coordinate participation of Washington State

manufacturers and processors on a national level….”

John Friedrick, WMMFA Executive Director.

(http://www.ecy.wa.gov/programs/swfa/eproductrecycle

/docs/2009AnnualReportfromWMMFA.pdf)

Sony Recommendations

Harmonized Regulations at Federal Level

OEMs take financial responsibility once collected

Product Design

– No hazardous materials

– High recycled content

Consumer involvement

– Active Participants

Collection

– Use existing infrastructure

Most efficient recycling

– efficiency of scale

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Names of Sony products and services are the registered trademarks and/or trademarks of Sony Corporation or its Group companies.

Other company names and product names are the registered trademarks and/or trademarks of the respective companies.