Switch on, and tune in to WEEE

Matthew Townsend and Owen Lomas, of Allen & Overy's London Environmental Law Group, examine the impacts of the WEEE Directive on electronic waste.

After much political and legal debate, the Directive on Waste Electrical and Electronic Equipment (WEEE) finally came into force on 13 February. The Department of Trade and Industry is now tasked with implementing the proposals and the precise approach to be taken by the DTI has, at least publicly, still to crystallise. What is clear is that the Directive has significant practical and cost implications for both manufacturers and suppliers of electrical and electronic goods.

Importantly, the Directive will cover both WEEE in the domestic and the commercial waste streams. The Directive rather misleadingly talks about 'WEEE from private households' but this includes WEEE from commercial sources which 'because of its nature and quantity is similar to that from private households'. A number of obligations are also imposed in relation to WEEE from commercial sources which is not typically found in the household waste stream. In short, there are very few types of WEEE which are likely to escape attention under the regime.

Producer responsibility

The bulk of obligations will be imposed on producers of electronic equipment. Thus, if you are a manufacturer and sell under your own brand or resell other peoples' products under your own brand you will be caught by the Directive. Unlike the packaging regime, there is no exemption for small businesses (one was originally proposed but dropped at the last minute).

In short, producers will be required to meet the costs of managing WEEE from private households and similar commercial WEEE which bears their brand name. This will include the costs of collecting their WEEE from designated collection points, treating it (to remove certain hazardous substances), recovering and recycling the majority of it and, if necessary, disposing of it. In practical terms, this will mean that either the price of their new electrical products will need to reflect these additional environmental obligations or producers will have to finance them directly from the bottom line.

It is important to stress that these obligations will only apply to the waste which derives from a producer's own goods. As such, the Directive creates a system of individual producer responsibility rather than the collective approach seen under the packaging regime. This raises questions as to how producers should best be tracking their goods as they enter and exit the waste stream. Whilst the obligations are imposed individually on producers, the Directive allows them to be discharged through collective schemes.

This inevitably raises the question of who, in relation to new products, picks up the obligations of a producer which is no longer in existence at the time its equipment enters the waste stream (so-called 'orphan WEEE'). This appears to have been answered by the requirement that guarantees are to be given by producers for each new product placed on the market. This can be achieved either through some form of recycling insurance, a protected bank account or collective schemes.

The only exception to the principle of individual responsibility (which will be important initially in shaping the approach taken to compliance) is in the case of equipment already on the market or placed on the market before 13 August, 2005 (historical WEEE).

One of the more thorny issues which arose from the proposals related to how to treat historical WEEE. The Commission was reluctant to let producers off the hook in relation to this material, the bulk of which has yet to enter the waste stream. In this regard, the Commission did adopt a collective approach to compliance.

Producers are required to share the costs of managing historical WEEE (the proportions will be assessed on the basis of the market share of the producer by type of equipment at the time the costs arise). Unsurprisingly, industry has been concerned that it was being charged retrospectively for products designed many years ago (particularly given that, in the early years of the regime, these costs will have a more significant impact on producers than the costs of dealing with new products).

In an attempt to address these concerns producers will be able to show a visible fee on the price of new electrical products for a limited period to reflect the costs of dealing with historical WEEE. However, the difficulty remains over how these costs will be permitted to be quantified and the extent to which they should be reflected as actual or contingent liabilities in the annual accounts.

Large and small retailers, mail order companies and, potentially, finance companies (amongst others) also find themselves with costly take-back obligations under the regime. Distributors must ensure that a purchaser of new electrical equipment can return equivalent goods to that distributor without charge. In reality, this does not mean that old equipment will be handed over the counter or delivered directly to the shop floor, more likely, that retailers will need to provide their customers with access to nearby drop-off facilities and/or will have to arrange for the collection of larger equipment from households.

Member States are permitted to derogate from this take-back requirement under certain circumstances but there are no firm indications that the UK government intends to do so. As such, retailers now need to start thinking about their waste collection and disposal networks as well as the viability of setting-up local deposit schemes.

Hazardous substances

Somewhat in the shadow of the WEEE Directive, a separate proposal has been progressed concerning the presence of hazardous substances in electrical goods. The Restriction of the Use of Certain Hazardous Substances (ROHS) Directive (2002/95) has run in parallel to the WEEE proposal (coming into force on the same day) and requires that any new electrical products placed on the market from July 2006 should not contain certain substances such as lead, cadmium and mercury. The timing of this ban is tight and, to the extent not done so already, manufacturers should now be looking at how best to phase out the use of these substances from their products.

Producers and suppliers of WEEE as well as relevant players in the waste and logistics industries should now be looking closely at how to meet the challenges and take the opportunities which arise out of both the WEEE and ROHS initiatives. The opportunity remains for industry to influence how the UK's compliance regime will look and, in so doing, it is important that all concerned learn from the mistakes which have hindered the packaging regime.



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