The European End-of-Life Vehicles Directive was finally passed recently. Brussels watchers have been able to enjoy much to-ing and fro-ing as well as threats from the car makers through ACEA of dire consequences if this piece of legislation is passed:

“Full financial responsibility for the collection and treatment of these vehicles would severely affect the economic situation of the whole automobile sector and its competitive situation”.
Source: ACEA

In Germany, the industry mounted a successful challenge to take-back legislation proposed in the mid 1990s and Chancellor Schröder – a former VW director – is fully supportive of the car makers. Not surprisingly, perhaps, Germany has been opposing the directive in its stricter form. Partly as a result of this, there have been several concessions to the vehicle manufacturers, who have been lobbying vigorously through ACEA. What is left is that from 2006 car makers will be responsible for the removal and treatment of the vehicles they produced when they reach the end of the road.

Targets for the level of re-use, recovery and recycling are also included for 2006 and 2015. Most controversial was the fact that the responsibility covers not merely cars entering service from the time the directive comes into force, but also cars already on the road. Removing this retrospective element would effectively have moved the problem for the manufacturers to around 2010-2015 – i.e. after many of the current car bosses are retired. As it stands, action needs to be taken immediately and many member states are ill-prepared. For it is up to individual member states to sort out the details of how the directive is implemented nationally.

At a claimed recyclability of around 85%, cars are already among the most recyclable and recycled of consumer products, although experience in developing countries – where ancient vehicles are somehow kept going forever – suggests that more is technically possible. In practice this is uneconomic in developed industrialised countries, where cars are scrapped once they are beyond ‘economical’ repair. This north-south discrepancy is now leading to calls for exporting European ELVs to less demanding developing markets. Some of this happens already; Japan alone exports over half a million used cars a year. From the EU many older cars go to Eastern Europe and Russia, with the oldest going to Africa and the Caribbean. Whatever the solution, with nine to 13m cars scrapped annually in the EU, the problem cannot simply be ignored.

Some countries, such as Sweden and the Netherlands, have had systems in place for some time. Sweden since the 1970s and the Netherlands since the early 1990s. Here only minor adjustments are needed. Germany has also put some effort into this problem in recent years as the threat of take-back loomed here first. However, other countries, such as – not surprisingly – the UK have a job on their hands.

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It is worth considering the UK in more detail. As one of Europe’s larger markets, the UK scraps over 1.5 million cars annually and an existing dismantling and recycling network does exist and has been handling these ELVs successfully for years. More recently, low metal prices, tighter environmental standards and a range of other problems have put pressure on this sector. It is hoping that the Directive will provide a much-needed boost.

The Dutch system is particularly elegant and has partly inspired the Directive. In the Netherlands new car buyers pay a once-off levy of FL 150,- (around £45). This is put into a dedicated fund, which accrues interest. The fund is used in a number of different ways. First of all, the proceeds are used to compensate dismantlers for processing non-profitable materials from ELVs, such as various plastics and rubber. In addition, the fund is used to invest in the development of processes and markets for such materials. The fund is managed by an autonomous body, Auto Recycling Nederland (ARN), in which various interested bodies, such as the vehicle producers, dismantlers, and the government are represented. The fund has done so well financially, that the levy has already been reduced once. It was also helped by the fact that exports of used cars rose sharply during the 1990s as demand from countries such as Poland, Bielorus and Russia took off – thereby reducing the ELV burden in the Netherlands. The Dutch also pay a recycling levy on domestic appliances, so the concept is well embedded.

On the whole, the main players in the UK are not keen on this approach. First of all, in the present tax-averse climate in the UK, such a levy could be seen as another tax on motoring – a no no for the government, especially after the recent fuel price protests. Also, the scheme would imply a level of government involvement that sits uneasily with New Labour (or Conservative) philosophy. So, although the Departments of Trade and Industry (DTI) and Environment, Transport and the Regions (DETR) are taking an interest, it is essentially up to the industry itself to sort things out. This includes car makers and importers (SMMT), dismantlers, metal trade associations, etc. To give them their due, there have already been a number of initiatives in the UK. ACORD is an end-of-life vehicle co-ordinating body involving most of the stakeholders (materials manufacturers, SMMT, vehicle dismantlers, government departments, etc.) while the related CARE programme develops new dismantling and recycling technologies. However such associations of equal partners can get bogged down by the opposing views held by members without some neutral guidance from a higher body, such as the government.

One issue for example is that some manufacturers feel their share of the ELV responsibility should be based on their current market share, while others believe it should be based on their share of the total parc. Clearly, the traditional main players in the UK, Ford, Vauxhall and Rover, adhere to the first view as they have all lost market share in recent years. Thus their liability would be less than the true number of their vehicles on the roads likely to become ELVs. Recent entrants and those whose market share has risen in recent years prefer the latter option as they feel their potential ELV liability is far less than their current market share would suggest. It is difficult to see how such irreconcilable views can lead to any compromise.

There is also the issue of ‘dead makes’ or firms that have withdrawn from the UK market. Who is responsible for the Ladas, Wartburgs, Sunbeams, Hillmans or DAFs which still roam around on our roads? In some cases the responsibility seems clear and has passed on to existing makers – Sunbeam via Chrysler and Talbot to PSA for example – although these are not necessarily willing to acknowledge such an historical legacy. In practice most of the genuinely old vehicles are now cherished classics unlikely to become ELVs unless crashed. Even then, dismantling by enthusiast collectors seems more likely and this sort of activity is not covered by the directive. The burden of these cars on the system is therefore likely to be negligible.

Since the directive was passed, the EU Commission has moved on and ELVs are now to be reclassified as hazardous waste by the EU. A car does not actually become ‘waste’ in the UK context until nobody wants it. Therefore a car that has been sitting in a farmer’s field for decades, but which the farmer wants to keep is not waste. However a stolen car, or MOT failure abandoned on urban waste ground is waste if nobody lays claim to it. As the cost of disposal mounts, the number of such cars is growing and removal costs UK local councils – in other words council tax payers – on average £85 per car.

As part of the requirements of the Directive, the UK has to introduce a Certificate of Destruction to be issued for each ELV processed, while all ELV processors will need to be issued with a permit. The latter implies some basic standards to which many of Britain’s estimated 2,500 – 3,500 dismantlers will find it difficult to conform. Others will have no problem, but many traditional scrapyards are rapidly disappearing. Scrap metal prices are so low, that end users now have to pay a dismantler for taking the car in. New environmental standards also mean it will be much more difficult for ‘scrappies’ to make money from selling their land – traditionally this tied-up capital has been the key to many businesses in the sector – as expensive decontamination will be needed in many cases.

Car makers are not alone in facing the future with trepidation; the UK dismantling sector is also facing an uncertain future. The hoped-for cash injection from the car makers is unlikely to materialise. If it does it will primarily benefit the already more successful and professional dismantling and recycling businesses and it will come with strings attached – the car industry is not noted for its generosity; this is not surprising as it is itself only just profitable. Another threat comes from the shredders, a high technology, high investment sector that could by-pass traditional dismantlers and take in ELVs for direct metal recovery.

ACORD UK ELV PERFORMANCE SUMMARY 1997-99

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