The Producer Pays for Packaging Waste

On a drugstore's shelves in downtown Stuttgart, Germany, the toothpaste tubes are nakedly displayed, sitting upended on their flat caps like rows of little soldiers. Each tube is decorated with a tiny green dot, meaning it's in compliance with the world's most stringent packaging law. In Germany, reducing waste paper and plastic isn't just a nice idea or good public relations, it's mandated.The German law that makes manufacturers rethink the issue of wasteful packaging has its origins in the 1991 Ordinance on the Avoidance of Packaging Waste (Verpackungsverordnung). For the first time anywhere, a national government turned a good idea-"extended producer responsibility" (EPR), or the "polluter pays" principle-into public policy. Thanks to a conservative, Christian Democratic government that was only reflecting mainstream German opinion with an urgency brought on by shrinking landfill space, companies had to start caring about what happened to their packaging after it was sold to the consumer.The "green dot" was not part of the original law. Instead, the packaging ordinance dictated that, beginning in January 1993, retailers had to "take back" primary packaging (cans, jars, boxes) at the point of sale and recycle it -- outside the municipal waste management system. Store owners who had nightmares in which huge bins clogged with blister packs and old cereal boxes lined their aisles got relief through a loophole in the law: manufacturers could get an exemption from the requirement if they set up their own system that would meet the program's ambitious reuse and recycling goals. Thus was born the industry-operated Duales System Deutschland (DSD).With some 600 companies participating from the beginning, DSD established a nationwide collection network involving both curbside collection (for plastics and metals) and dropoff igloos (for glass and paper). By April 1993, 60 to 70 percent of the packages on German shelves displayed the DSD membership badge -- the green dot -- and 12,000 companies (many of them with American parents) had signed up.In a very real way, DSD was soon overwhelmed by its own success, and the enthusiastic participation of the German people. In 1993 DSD collected four times the plastic packaging (400,000 metric tons) it was designed to handle. Much of the excess -- some 680,000 metric tons -- was dumped overseas -- in China, Pakistan, Indonesia and Rumania. According to Greenpeace, some was actually dumped in the ocean. Further, 20 percent of the material collected did not bear the green dot (and many of the manufacturers that did display the symbol failed to pay their required fees). "It was just too successful," says one ranking German official, who asked not to be identified. "There was no market for the surplus, so a lot of it got incinerated."Unsurprisingly, conservative critics of recycling seized on these early growing pains. Crowing that the program "teetered on the brink of financial collapse," Ken Chilton of the Center for Study of American Business concluded that "these costs are borne by German consumers in the form of higher prices." He predicted that a similar program in the U.S. would burden the taxpayers with an $8 to $9 billion a year debt.But, like many critics, Chilton focused only on the first, stumbling years of the Green Dot program. The "recycling by export" which sent 50 percent of collected plastic waste abroad in 1994 had been reduced to only 30 percent by 1995. And DSD now verifies that countries accepting its waste are actually recycling the material.Excuses, ExcusesPractically no recycling expert gives an EPR bill much chance of passage in the U.S. Despite corporate lip service on Earth Day and other cosmetic efforts, the American packaging industry has effectively lobbied against any proposed legislation. Senator Max Baucus (D-Mont.) did introduce a far-reaching "polluter pays" initiative into the 1992 reauthorization of the Resource Conservation and Recovery Act (RCRA). The bill would have required larger companies with annual receipts over $50 million to "recover" 50 percent of their glass, paper, metal or plastic packaging materials by 2000. The companies would have had the option of source reduction, reuse or use of recycled content. The bill failed.State and local initiatives have also been blocked by industry lobbying. In 1971, New York City's environmental agency proposed a "deposit bounty system" for packaging that included a two-cent tax on most plastic containers. Industry trade groups brought a lawsuit, claiming that they were being unfairly singled out. The tax was never levied. The Minnesota legislature passed a broad-based Package Review Act in 1973 that could have given the state considerable oversight in regulating packaging materials. Again, the industry launched a counter-offensive that included a lawsuit and a major public relations campaign. The lawsuit's claims were eventually overturned by the Minnesota Supreme Court in 1979, but the state's highest judicial body also gutted the packaging law by declaring its provisions to be only guidelines.Similarly, California's efforts at reducing waste by establishing a statewide Source Reduction and Packaging Policy Committee were derailed when industry representatives on the committee vetoed any of its proposed actions. In 1991, California did pass a Plastics Recycling Law, which imposed some restrictions on manufacturers of hard plastic containers. Industry, lead by the Grocery Manufacturers of America, has been trying to have the law repealed since 1993, and is currently trying to pass exemptions for food and cosmetic containers, which make up 60 percent of the program.Perhaps the best-known example of environmental source reduction in the U.S. resulted from a 1990 collaboration between the McDonald's Corporation and the Environmental Defense Fund (EDF). Environmental groups, including Friends of the Earth and the Virginia-based Citizens Clearinghouse on Hazardous Wastes (which launched a "McToxics" campaign in the late 1980s), lobbied McDonald's for years to eliminate its non-recyclable polystyrene clamshell at its 8,500 U.S. restaurants. The company, faced with mounting pressure and dozens of pending statewide bans, finally agreed to make the switch to paper-based wraps as part of its voluntary agreement with EDF. In addition to several other environmental initiatives, the company is also phasing in the use of unbleached brown paper for its carry-out bags and Big Mac wraps.A Small CircleThe closest thing to an EPR lobby in the U.S. today is a small coterie of intellectuals who study the Green Dot program in Europe, produce papers about implementing a similar system here, and commiserate about the slim chance of that happening. The group includes Bette Fishbein, a senior fellow at the New York-based INFORM, Inc., and author of Germany, Garbage and the Green Dot; Gary Davis, head of the Center for Clean Products and Clean Technology at the University of Tennessee; Patricia Dillon, a consultant and research associate at Tufts University in Boston; Reid Lifset, a Yale forestry school professor and editor of The Journal of Industrial Ecology; and Clare Lindsay, who works in the solid waste division of the Environmental Protection Agency (EPA). What they have in common is a belief in the efficacy of the German system, and a desire to see it cross the ocean."In the current Congress, there's no likelihood that such a program would be passed," says Fishbein. She adds ironically that "some of the companies that are really vociferous opponents of EPR initiatives here are the same ones whose subsidiaries are running the program there-Colgate, Procter and Gamble, Coca-Cola."As Fishbein notes, the U.S. -- like Holland -- has so far taken a voluntary approach to EPR. And she cites some encouraging examples. Manufacturers have set up the Rechargeable Battery Recycling Corporation (RBRC) to collect and recycle nickel-cadmium (ni-cd) batteries at their own expense. Xerox's Comprehensive Lifecycle program, which is company-wide, provides plans for disassembly and reuse of its products. DuPont takes back its plastic (PET) films, which are chemically reprocessed into raw material for new PET. Interface Flooring leases both its carpeting and its carpet service, providing an incentive to reduce waste and produce a long-lasting program. The company's aim is to recycle all its carpeting at the end of its useful life. And the Vehicle Recycling Partnership, set up by Detroit's Big Three, is working at increasing the percentage of non-recyclable material in cars, and eliminating toxic materials -- like the mercury in switches-from new models.But, Fishbein says, such incremental steps will never equal the systematic overhaul achieved in Germany. "I have a real problem with voluntary initiatives," she says. "Xerox is actually making money from what it is doing, but for other companies taking back their products is a liability, and it benefits their competitors who don't do it. In effect, it penalizes companies for doing the right thing."Still, EPR is at least on the radar screen. As Fishbein points out, "Companies have gotten concerned about what happens to their products when they become waste. In 1990, they wouldn't have been concerned. Industry is terrified that the Green Dot will come here."And because industry is scared, it's doing what it does best: counter-attacking. Ken Chilton takes the stand for the anti-EPR position: "Misguided efforts to force manufacturers to 'take responsibility' for recycling packaging threatens to stifle product innovations and cost consumers more while failing to deliver any significant environmental benefits," he wrote in a paper for the Center for the Study of American Business.Tennessee's Gary Davis acknowledges the Green Dot's growing pains, but he cautions that "an American program would be different in any case. There's no one-size-fits-all for EPR. What we're seeing are some voluntary agreements with pressure from the EPA's Office of Solid Waste. It's moving very tentatively at this point." Davis adds that most European countries -- seriously stressed for landfill space -- had no choice but to adopt some sort of waste reduction measures. Most experts concede that the U.S. is not currently experiencing such a landfill crisis, but that's no reason not to seriously consider waste reduction now.Clare Lindsay is universally described as "the EPA's point person on Green Dot." It was her office that offered a grant to Gary Davis (partially sub-contracted to Bette Fishbein and Patricia Dillon) to produce EPR case studies. "My view is that it's unlikely that there will be any mandates at the federal level in the near future, and possibly for a very long time," Lindsay says. "My sense is that the EPA will work with industry to make it happen voluntarily, because there are a lot of business opportunities in EPR. We don't have the political will -- or the landfill crisis -- that would lead to mandates, but we can do a lot incrementally."In fact, Lindsay thinks that EPR is starting "to catch on with the high-value products, like cars, home electronics and computers." Reuse of old electronic components is the specialty of Patricia Dillon at Tufts. Dillon imagines the idealized electronics recycling center of the future, in which old tape recorders, computers and refrigerators are brought in to be scanned for reusable components and materials. A plug-in "green port" in each unit would provide access to information on hazardous materials and disassembly instructions. The Netherlands and Germany (which produces an estimated 1.5 million tons of electronic scrap a year) are both developing "producer responsibility" initiatives for the electronics industry. Similar programs -- on a voluntary basis -- are in place at such major U.S. electronics companies as Compaq, Hewlett-Packard and the aforementioned Xerox."The Europeans have adapted the concept of sustainability much more than we have in the U.S.," Dillon says. "Europe, particularly northern Europe, is very environmentally aggressive, and it comes from their scarcity of resources. Europeans were the first to deal with the issue of closing material loops."In her work as a consultant, Dillon has performed a market analysis on the U.S. receptability to EPR, and she says, "This is absolutely not the climate. The U.S. had a landfill crisis, but it's perceived as having gone away."Reid Lipset at Yale notes ruefully that environmentalists did not line up behind the 1992 Baucus bill "because they thought they could do better." The bill would have required manufacturers to ensure that set percentages of the materials they introduced into the marketplace ultimately would be recaptured from the waste stream. "It didn't have to go back into the same product," Lipset says. "For various technical reasons, steel cans aren't usually remade into steel cans." Lipset is cautiously optimistic that voluntary EPR will catch on, citing the new industry initiative on rechargeable batteries. But he acknowledges that "now may not be the best time" for federal mandates. "The government would respond to public pressure," he said, "but that's just not there now."American businesses, Lipset says, should take another look at Green Dot. "It's doing a lot better," he says. "One of the big problems was dealing with plastic waste, and they've been working hard on that. There was also a lot of free-riding by companies that participated but didn't pay the fee. The system was ramped up very quickly, and they paid the price for that. They didn't get cost-effective contracts initially, but my impression is that they've gone back and reworked them."On Their OwnAre American businesses taking note of Germany's radical new plan? Some of them are, with a little help from the President's Council on Sustainable Development (PCSD). According to Clare Lindsay, PCSD recommended in early 1996 that extended product responsibility be "explored in a voluntary context." In October, EPA and PCSD are scheduled to hold a joint workshop on gaining wider acceptance for producer responsibility. PCSD's Sustainable America: A New Consensus for the Future recommends that companies, trade associations, wholesalers, retailers and consumer groups "adopt a voluntary system that ensures responsibility for the environmental effects throughout a product's life cycle by all those involved in the life cycle."Battery makers are leading the way for other companies to follow. According to Norm England, president of the Rechargeable Battery Association, the ni-cd battery program began in 1995 with a goal of recycling 25 percent of production. For 2001, the goal will jump to 70 percent. "It's a voluntary program, funded with $5 million from industry," England says. "Green Dot has had problems being cost-effective. We think industry will do a better job of reclaiming waste over the long run than can result from any intrusion by government."At Duracell, for instance, rechargeable batteries can be mailed back to the company by customers who call an 800 number on the package. Duracell then mails them a post-paid zip-lock bag. It's an interesting approach, but not nearly as direct as the program available in Germany, where every store that sells batteries also collects them for recycling through drop-off boxes.Xerox initiated its packaging cutback program in 1994. Used Xerox components are now shrink-wrapped onto reusable pallets for shipment back to the company, where they are remanufactured. Supply shipments are sent in steel and plastic totes, which are returned to suppliers for reuse and have a 10-year lifespan. Some Xerox toner containers are now made of 100 percent post-consumer recycled plastics, a program that, when fully implemented, can divert more than 1,000 tons of plastic from the waste stream every year. Reclaimed toner cartridges are also being remade into plastic lumber and vacuum cleaner housings. "Where elimination [of packaging] is not possible," says Diane Fisher, paper, environment and logistics manager, "we design packaging to maximize reuse by using durable materials and packaging recovery processes."Americans throw away three billion pounds of old carpet a year, and DuPont is taking in some of that waste (including 25,000 square yards from Ford's world headquarters) to be remade into air-cleaner housings and sound insulation for new Ford cars and trucks. "Right now most of the nylon carpet is coming from commercial sources, because residential collection is much more expensive and time-consuming," says Mark Ryan, carpet reclamation manager at DuPont Flooring Systems. "Ford has a list of six or seven under-the-hood parts that can be made with recycled carpeting."Terry Cullum, a staff environmental officer with the Vehicle Recycling Partnership, established in 1993, says the automotive consortium "promotes non-competitive technological development to enhance further recycling of our products. Cars are now 75 percent recycled-we beat out pop bottles and newspapers." Work now concentrates on recycling automotive plastic -- as seen in the easy-to-remove, easy-to-recycle dashboard in the 1997 Chevy Cavalier.These success stories, heartwarming as they may be, are not the whole picture, however. More typical is the rather blunt assessment of Scott Stewart from Procter and Gamble's corporate environmental affairs office. Although P&G is an EPR leader in Germany, it's decidedly bearish on the subject at home. "In America, consumers' primary needs are price and function," Stewart says. "Waste minimization and environment impact are not a big issue for most people. Some items are eco-friendly -- highly concentrated, with reduced packaging -- but people are not demanding them like the Germans do." Green Dot, says Stewart, "is just too expensive. We're not interested in anything similar over here."As Germany's program gains not only in recycling success but in cost-effectiveness, its influence will grow on bottom line-oriented companies in the U.S. Xerox, for instance, gets more than a green image out of its Supplier Packaging Program -- it's estimated to save the company $20 million a year. With results like that, learning from the Green Dot will be in every company's best interests.Bill Huston provided research assistance for this story.CONTACTS: Inform 120 Wall Street, 16th Floor New York, NY 10005-4001 Tel: (212) 361-2400; President's Council on Sustainable Development 730 Jackson Place Washington, DC 20503 Tel: (202) 408-5296

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