NOTE FROM PUBLIC AFFAIRS BA Mo MiDank To: Taj Hjrji Copy: David Stimson Sean Bearnish Terry Mitchell Dave Bedding op From: Gaye Pedlow Date: 2nd September 1991 0 EEC PACKAGING LEGISLAY70N The attached review of the current position repackaging legislation in Europe by far the best that I have seen. Most of the key points are in the Executive Summary, but the additional comments on Germany (pl2) and the attachments giving details of the requirements in the Netherlands and France make inwesting reading. Global Business is a monitoring service subscribed to by BAT Industries and BATCo. Gaye Pedlow 0, - t~ ~'~ t~ "J-s . CD Co Ln _r_-_ ---j 01% BAT Industries document for Legal Services : Health Canada 19 October 1999 46 7.71 B-AT INDUSTRIES B.A.T Industries p.l.c. Windsor House 50 Victoria Street London SW1H ONL with the compliments of Telephone 071-222 7979 Helen McDonald Direct Line 071-233 3259 External Affairs Officer Telex 915195 Group Public Affairs Facsimile 071-222 4515 0, r\j CD Co BAT Industries document for Legal Services : Health Canada 19 October 1999 August 14, 1991 MONITOR BULLETI #91-39 THE MERNA110NAL Busnqas IsSUIES MONMOR Executives Affected: Public Affairs/Government Relations; General Counsel/Legal; Environment; European Manager; International Marketing; Product Development; Strategic Planner Organizations Involved.- European Community (EC) ISSUES: ENVIRONMENT - UPDATE AND OUTLOOK ON THE EC INITIATIVES ON PACKAGING AND PACKAGING WASTE Siqnificance: The EC's plan will affect all producers & users of industrial, commercial & consumer packaging in Europe, changing how every product is packayed, shipped & sold, & the costs producers, distributors & retailers must share in waste management. By its very nature the plan will have trade 7 . mpacts, at minimum on other European nations, but also likely on every j -exporter'to the Community. ~,Zro - EXECUTIVE SUMMARY BACKGROUND: In 1988 the ECJ ruled that Denmark's ban on non-refillable bottles was pemissible, even though it restricted intra-EC trade, because of its environmental benefits. This opened the way for a 1989 German deposit law which,also primarily affected imports. The Commission quickly sought a legislative means to stop such trade barriers while promoting good waste management. At first it considered simply amending the 1985 Liquid Food Containers Directive, but abandoned the idea in 1990 when member states complained either that the proposal was too weak oir should be folded - along with another on plastics waste - into a third directive being prepared on packaging waste streams. EVOLUTION-OF The Commission decided early that wide differences between member THE PACKAGING state approaches (see Attachmentj) made straight harmonization PROPOSA impractical (p. 4). It decided to focus first on reducing waste volume, & addressing overall environmental impact later; it also elected to cover all consumer, industrial & commercial packaging. The Commission's first stab ('Draft 0') called for voluntary agreements or government action to ensure that by the year 2000, the total weight of packaging converted into waste will be at least 10% below 1990 levels, with only IOY* landfilled, at least 50% recycled & only 40% used for energy conversion (p. 5). The draft included safeguards vs. discrimination vs. imported goods. Bans may not be introduced for reasons other than the protection of public N) health, and would have to be approved by the EC. CD AU rightg reseriod. Reproduction prohibited without sprees conserri of the publisher. co ProRr2m and WnaRemenl bY (A(W Busin"s Relations. Inc. '1)1 1-~J,r J211d Str6a - S1111C 140h * Nc%L York. Y4 irk 14911 j - Telcrwh, me - t21:1 2 - Fj,: :I:, Kox-ov-, I - roc%: .10X41,; MIR U co BAT Industries document for Legal Services : Health Canada 19 October 1999 i i A second stab (ffoutline proposal") dropped most of the safeguards & changed the recycling (60%) & energy conversion (30%) targets (p. 6). It featured the Ostandstill principleff: overall EC level of wastes generated per capita must stay at 1990 levels. The draft was criticized for lack of safeguards & the unenforceable nature of a Community-wide,standstill commitment. The latest version (ffDraft I') retained the standstill & recycling target, but dropped other targets (p. 7). It calls for the ffshared responsibility-' of all economic operators in setting up packaging waste management systems, & calls on member states to ensure the efficient organization of separate collection (& a deposit system, where appropriate). At a June 1991 meeting, Germany & the Nether- lands insisted that new proposals not force them to change their own schemes (see Attachment A), while others complained that it still neglected probable Internal Market disruptions. To address the latter concern, Commissioner Ripa di Meana issued a Communication (p. 8) advocating a completely new directive based upon strict harmonization of criteria on which different national practices may be developed. It appears now that Ripa. has ordered DG-XI to draft a directive along these lines. The Commission is considering suggestions just submitted by France (p. 9). France suggests combining (a) technical harmonization of the specifications with which packaging must comply before it can be considered 'valorizableff (i.e., reusable, recyclable into material of the same specification, recyclable into piaterial of a 7 lower specification or used as an energy so setting tar- - gets for the minimum percentage of valorizable pac ng actually valorized in ways which do not harm the environment. Packaging recognized as Ivalorizable' & marked as such must be permitted to circulate freely throughout the EC. Other packaging must,'in time, be excluded from the market. Member states Would not be allowed to impose an exclusive valorization method within their bwn territory. OUTLOOK: The Commission still hopes to propose a directive by year-end, but next spring may be more realistic. The dilemma it faces is that Denmark, Germany & the Netherlands will oppose provisions inter- fering with their own systems; if, as expected, they are supported by Belgium & Luxembourg, they can block a qualified majority Council vote. France & the U.K., supported by Ireland, Portugal & Spain, refuse to have a Dutch or German scheme translated into an EC system; together they can also block a majority. The answer may lie with the French suggestions, which borrow elements of the German system without most of its liabilities. Even so, the Council debate promises to be stormy. Meanwhile, market pressures from multiple retailers & other customers, already affected by the Danish, Dutch & German schemes, may force packaging changes faster than any law the EC can formulate. C) 0:> BAT Industries document for Legal Services: Health Canada 19 October 1999 I UPDATE AND OUTLOOK ON: EC PACKAGING INITIATIVES I. INTRO)UCTION This Bulletin continues the theme of Monitor Bulletin 90-20, that packaging waste legislatton is broadening out from iti original focus on beverage containers to cover all packaging. It describes the EC Commission's efforts to devise a Packagin~ and Packaging Waste Directive that will avoid trade distortions and minimize the creation of waste, and the developments at national level that are interacting with it. The Commission is having great difficulty drafting its proposal, and over the summer officials are attempting a.comprehensive rewrite. Meanwhile, more and more member states are going ahead with their own measures.which are making the formulation of a coherent European. waste management policy ever more difficult to achieve. Packaging manufacturers and manufacturers and distributors of packaged goods are facing a big commercial and political challenge. They know the pressures on them - are often based on an inadequate understanding of environmental realities, but they must also recognize that to ignore the demands for action is to invite being hit with something worse. At company level, all disciplines are affected by calls for a fundamental rethink of how goods are packaged for the market; while at industry level, not only fierce competitors, but also companies which have never needed to have anything to do with each other, are having to get together to develop comprehensive recycling systems. In some European countries, national policy is already clear and companies know what they have to do -- unless EC legislation forces a change of approach. In others, the lack of an immediate threat from their own government or public opinion can tempt companies into a policy of ffwait and see,' and to put off the establishment of national recycling organizations. As. this Bulletin will show, "no action" is Mot a true option, and companies and industries with the foresight to get organized before questions are asked will find their investment well rewarded. 11. BACKGROUND A. Proposed Amendment of the Liouid Food Containers Directive In 1988 the European Court of Justice (ECJ) finally dealt with a legal challenge mounted by the EC Commission against Denmark *(see Monitor Bulletin 88-62). The Commission had argued that the Danish ban on non-refillable beer and soft drink bottles contravened the Treaty of Rome. The Court, however, ruled that the admitted restrictions on the free movement of goods were a price worth paying for the environmental benefits ceemed to result (although these 'environmental benefitso were never quantified, by the Danes or by the Court). co ist 4__ co C) BAT Industries document for Legal Services : Health Canada 19 October 1999 2 This ruling opened the way for a German law imposing a punitive OM 0.50 (US 29t) deposit on plastic beverage containers. The French and Belgian Governments immediately complained that this would wreck their mineral water exports to the Federal Republic. Existing EC legislation did not establish with any clarity where the right balance lay between protection of the environment and the free circulation of goods. The relevant Directive, the 1985 Liquid Food Containers Directive [85/339], took the form of an instruction to member states to set up national programs 'to reduce the impact of liquid food packaging on the environment', but was so loosely worded that national governments were free to do as much or as little as they wanted. The Commission's first thought was to amend the Liquid Food Containers Directive to fix quantitative objectives regarding waste prevention and reduction (see Monitor Bulletin 89-13). It promised a proposal by the end of 1989. A rewrite duly appeared in May 1989, but it met with little enthusiasm from the member states. The Germans, Dutch and Danes thought it was too weak; some of the others thought it was too interventionist, or that there was no justification for singling out beverage containers rather than dealing with all packaging. Further drafts followed, and by early 1990 (see Monitor Bulletin 90-20) the latest draft provided for the recovery of at least 70% of liquid food containers for refilling or recycling (material recycling or energy recovery) within five years of adoption (i.e., by mid-1997). The draft proposal allowed member states the choice of legislation or voluntary agreements to see that this target was met. A mandatory deposit could be imposed on liquid food product sectors which failed to meet their obligations, but if so it would have to be applied to all types of packaging used for those products. It would be up to industry to decide how they organize the return-and-deposit system -- member states would not be allowed to compel retailers to accept the empties back. Whatever industry's concerns about the realism of a Communfty-wide 70Z recuperation rate ('recuperatfono means refilling + recyc7ing), this text did deal effectively with the Commission's concerns about the German plastic bottles law. The Commission had already told Germany that its mandatory deposit on plastic bottles was a Rnima _fag_ie breach of the Treaty, firstly because it discriminated against plastics, but also because by compelling return of the empties to the store it gave retailers sorting problems which they were likely to solve by refusing to stock imports and minor brands. The draft proposal also provided for delegated powers to be given to the Commission to carry out a follow-up operation in which it would define the characteristics that 'refillable or recyclable" containers should have. This would enable types of pack which did not meet the standards to be banned. By this time the target was to publish the liquid food packaging proposal in June 1.090, and then to start work on an overall Packaging N) C) Uri co BAT Industries document for Legal Services: Health Canada 19 October 1999 3 Directive. But the projected amendment to the Liquid Food Containers Directive had already failed in its original purpose, which was to put EC legislation in place to stop Germany introducing unilateral restrictions. The German plastics law had come into force in March 1989, and already a more fundamental German Packaging Regulation was under discussion (see Attachment A). France, Italy and the U.K. now renewed their efforts to persuade the Commission to merge the liquid food containers amendment within an overall Packaging Directive -- and these three countries standing together commanded enough votes to prevent a qualified'majority being achieved for the proposed amendment. Not for the first time in the history of the Liquid Food Containers Directive, the Commission found itself in disarray. By September 1990 it was still debating which of three alternative texts it should put forward. In the event it was decided to abandon them all and to revive the moribund proposal for a Plastics Waste Directive (including plastic packaging) and draft a General Packaging Directive in parallel with it (see Monitor Bulletin 90-63). B. The Draft Plastics Waste Directive - Killed Off a Second Time A revised draft of the Plastics Waste Directive was first to appear. Within five years of adoption, 70% of used plastic packaging was~ to be recycled, along with 80Y. of plastics waste in the retail sector, IOV. of waste at the manufacturing and processing stage, 60% of plastics waste from the construction industry and agriculture, and 50% of plastics from scrapped cars and other 'bulky objects.0 Material recycling was to be given preference over energy recovery, fftaking into account the particular conditions existing in each member country and whether this is economically feasible.' However, by December 1990 the Commission had again decided to abandon this proposal and to include plastics with other materials in a series of ffpriority waste stream' measures. One of these was the proposed Packaging Directive; others would cover car tires and halogenated hydrocarbons. III. EVOLMON OF THE COMMISSION'S PACKAGING PROPOSAL A'. The Commission's ObJectives By the time DG-XI came to write what was first called the ffGeneral Packaging Directive,ff and which subsequently became the draft Packaging and Packaging Waste Directive, officials were clear that the wide differences between the member states' approaches to the management of packaging waste made it impractical to harmonize what member states were already doing. [For an overview the current policies in Europe, IBIM executives should refer to Attachment B.] Instead, they would set targets and leave the member states free to find their own ways of achieving them. ffNigh environmental standards' were essential, otherwise some member states would always insist on going further. But N) how could 'high standards' be defined? C) co _r-_ CC) N) , BAT Industries document for Legal Services: Health Canada 19 October 1999 4 The Commission decided that the first stage of its work would concentrate on the volume of packaging waste generated -- because that was where the political pressure was -- and that it would cover industrial and commercial packaging waste as well as used consumer packaging. In the longer term it would go on to analyze overall environmental impact -- energy, emissions, etc. DG-XI officials were also being asked to come up with ideas on economic instruments to help with packaging waste management. Hence the proposal would aim at keeping the total quantity of packaging waste under control, and reducing the quantity of waste landfilled. Ultimately more important questions like energy and raw materials conservation, and minimization of emissions and effluents,. await life cycle analysis and environmental auditinq and would be dealt with later. In this the Commission was strongly influenced by what was happening at national level, and by the background and experience of the predominantly Dutch and Flemish officials working on waste management. Commission officials were quick to reassure industry that the short-term waste disposal measure would not close off long-term options, but they added that the Commission had no intention of allowing industry to 'use the priority waste streams studies as a way of putting off action through endless discussion.' So if, for example, the EC were to set targets to be reached by the year 2000, they would have something in place in the short-term and could adjust it if necessary in the light of the better information which the long-term study would uncover. The Commission did not intend to prescribe national policy in detail: it wanted to define the results needed, not the methods of achieving them. Hence the directive could require that, say, no more than 20% of packaging waste is landfilled by the year 2000. At this point -- it changed its mind later -- the Commission envisaged accommodating different levels of infrastructure in Northern and Southern Europe by allowing the Southern members longer to meet the target. B. Taroets . In their earlier debates on the feasibility of a new Liquid Food Containers Directive versus a Directive covering all packagi,ng, the Committee on Waste Management (national civil servants advising the Commission) had said that targets for non-drinks packaging would have to be lower than those for drinks packaging, because of the absence of a refillable sector and the impracticability of mandatory deposits for a wider range of goods. But monitoring considerations would always be important in determining how the targets are set. It would not be possible to demand a 70% recycling rate for soft drink cans and a 400%, recycling rate for vegetable cans, so the options were these: rQ 1. Set a high recuperation rate for everything, perhaps with a longer CD time-span to reach the target; cc co BAT Industries document for Legal Services: Health Canada 19 October 1999 5 2. Reduce the percentage recycling target, but impose special restrictions on beverage containers, such as mandatory deposits or a market share quota for refillables (the German policy); 3. Forget about recuperation rates, and introduce waste reduction targets instead (as in Switzerland); 4. Mandate effective waste management systems (e.g., segregated collection or magnetic separation plus incineration in communities above a certain population density), monitor their effectiveness and take further action later to remedy any failures. Option (3) would address the ultimate objective, rather than getting hung up on recycling, which is only a means to an end -- but it presupposes decent statistics, which no member state has, and which is an absolute non-starter in Southern Europe. C. "Draft Zero" DG-XI's first shot at a text -- 'Draft Zero' -- was drawn up with the help of a small group of academics and independent packaging experts. This preliminary draft laid down waste reduction targets as a baseline and suggested safeguards against the creation of trade barriers and other forms of discrimination. It said that by the year 2000, the total weight of packaging converted into waste must be at least 10% below the 190 figure; only 10% of the weight of packaging entering the waste stream may be landfilled; at least 50% by weight of packaging converted into waste must be recycled; and a maximum of 40% by weight of packaging converted into waste may be used for energy conversion. Member states could ensure this through voluntary agreements or legislative or administrative actipn, but whatever measures were taken must be part of a po7icy covering a77 packaging and packaging materials. Account should be taken of any measures proposed by industry which do not give rise to discrimination or trade barriers, and are agreed within x years of the directive coming into force. If voluntary agreements cannot be reached withifn five years, the member state concerned must take legislative or administrative measures -- but these may not create or maintain trade barriers which go beyond restraints justified in the pursuit of the objective. 'Draft Zero' added that measures based on voluntary or mandatory deposit systems must not be imposed on imported products (an acceptance that refill/return systems are not applicable for interstate trade). Bans may not be introduced for reasons other than the protection of public health, and would have to be approved by the EC. r,~1) CD Co . Co _t~b- BAT Industries document for Legal Services: Health Canada 19 October 1999 6 D. The "Outline for a Packaging Directive" The Commission then moved on to a further text produced without the help of external advisers. This was reviewed by the member states at the Committee on Waste Management at the end of April 1991. Although a fully-fledged draft had been promised, what actually appeared was no more than an 'outline for a Packaging Directive.0 Like 'Draft Zero,,w its scope included all packaging and packaging materials, whether used at industrial, commercial, service or household level, and whether outer packaging, multi-packaging or sales packaging. But most of 'Draft Zero's" safeguards against discrimination had disappeared, and the targets were changed. Having regard to the patchy implementation of the Liquid Food Containers Directive whose monitoring requirements were honored by the U.K. only the Commission this time proposed a very elaborate database. Within five years of adoption: 1. the annual average per capita output of packaging waste must not exceed the 1990 level; 2. at least 60% (by weight) of packaging waste must be recycled; 3. no more than 30% may be recycled through energy recovery; 4. no more than 10% may be landfilled. The thinking was that maintaining waste at the 1990 level across the Community -- the "standstill orincipleo -- would take account for packaging growth in Southern Europe, if balanced by source reduction in the North. This 'Was reasonable but unenforceable -- what guidance did it give to individual national governments or Companies? Industry was unhappy with the 'standstill principle': manufacturers said they could not be held responsible for the rate of economic growth or for demographic changes (smaller households), which would be the principal determinants of trends in the volume of packaging -waste. They also pointed out that the 'standstill principle' fails to take into account the trade-off between packaging waste and product waste. The 'outline proposal' also said that 'economic operators' must take Nshared responsibility' for the management Of POSt-CDnsumer waste, through take-back and/or collection systems' -- the German model. 'Modular distribution packaging' must be fostered -- i.e., instead of having shrinkwrapped trays to dispose of, suppliers will be encouraged to use reusable outers, perhaps plastic crates. [This would mean less waste, but higher energy consumption!] Retailers would be given every incentive to act as the agents of government by pressing their suppliers to minimize outer packaging. co Z-1 00 ~_74 BAT Industries document for Legal Services: Health Canada 19 October 1999 7 Among the member states there was no consensus for or against the Commission's draft proposal, except for a general concern at the scale of the database and some doubts as to its usefulness. E. "Draft I- Following consultation with the member states, other departments of the Commission and other interested parties, DG-XI published 'Draft I.' Much of the content of the-'outline proposal' was retained, despite the strong criticisms it had received from industry and from some national governments. It seemed that the Commission was not trying too hard for a general consensus at this stage: realizing that it was not going to get one, its aim was to get its proposal published on schedule (now September 1991) and let the member states fight it out. The 'standstill clause" remained, despite being badly received by both industry and national governments. The target of recycling at least 60% of packaging waste within 5 years of adoption also remained, but the maximum 30% for energy recovery and 10% in landfill were dropped. [Following the Commission's consultation meeting with industry on 'Draft Zero,' industry had suggested setting a single target of reducing the weight of packaging going to landfill by 80% within 10 years of adoption. This proposal was made on the explicit assumption that the public authorities would establish the framework for efficient material recovery facilities and incineration with energy recovery.] 'Draft I' talked about the 'shared responsibility" of all economic operators in the setting up of packaging waste management systems. It was not clear whether companies were to share responsibility only with each other, or to share it also with the public authorities, but 'economic operators and competent authorities' were to organize take-back and/or collection systems for packaging waste rel-eased at all levels (i.e., industrial and commercial waste as well as consumer packaging). The draft Directive also said that ffmember states shall ensure the' efficient organization of separate collection and, where appropriate, the setting-up of a deposit system.' The Commission was no longer proposing quite such an elaborate data collection system as before, but it,was still seeking a lot of information which is not currently available, and which would be difficult and costly to collect. [One of the virtues of the industry proposal for a single waste reduction target was that it would greatly simplify data collection. It would be necessary to do a lot of sampling of waste being disposed of -- to allow for different local consumption patterns -- but there would be no need to measure the amount of packaging coming onto the market.] There was little comfort for the Commission at the mid-June meeting with the member states to consider 'Draft 1.0 The Dutch and German N) delegations insisted that nothing must be written into the directive which would oblige them to unscramble any of the measures they had 4~1 co 0_1% BAT Industries document for Legal Services : Health Canada 19 October 1999 8 already taken at national level. Most of the others strongly criticized the draft's failure to address the Internal Market issue. F. A New Communication Commissioner Carlo Ripa di Meana took up this latter point in a Communication which he presented to his fellow-Commissioners later that month. ffThe environmental effects of the life cycle of different packaging materials and different forms of packaging are not thoroughly understood," he admitted. 'This makes comparison in terms of environmental soundness between different types of packaging, systems of packaging and materials used very difficult (even impossible) ... Responsibility is being put upon economic operators to find solutions to the problems and to develop appropriate substitutes as necessary.' The Communication went on to list examples of the action taken in Belgium, The Netherlands (whose target of actually reducing packaging waste is very ambitious), Germany, Canada, Switzerland, Austria and the Nordic countries. It commented that 'the new German Ordinance may put suppliers from other member states at a disadvantage as compared with their German counterparts at the time of taking back, reusing or recycling their packaging. The obligation of the distributor to take back retail packaging might influence*the retailer in his choice of goods to be sold. Foreign distributors or manufacturers might have to bear a greater cost than local businesses in dealing with their packaging. Penetration of the market could, therefore, be. more difficult." What was to be done about this? Non-action was dismissed as an option. It was too late simply to enlarge the scope of the Liquid Food Containers Directive. Adopting the German approach on a Community scale "would not easily fit with those member states which have already started their own systems or adopted different approaches. Therefore it would not be opportune to transfer the German system to Community level if another solution can be found.ff Fixing Community objectives to be achieved by voluntary agreements 'would depend on the goodwill of trade and industry. However, the number of partners is very large as all trade sectors are concerned and different materials are involved.' ON The most promising course, Ripa concluded, was to propose a completely new directive dealing with all packaging and packaging waste, based upon strict harmonization of criteria on which different national practices may be developed. As the communicator put it: . The management of packaging and packaging waste would be approached through the following :J, 1i hierarchy: reduction and preventiem, refilling and reuse. materials recycling and energy recovery. Mandatory tarpets ~and s ~_measurp;_!T~)d be proposed. industry and comerce would be given -resiGnsibility for post-consumer waste. Commission policy has to aim to bring national rules and practices into harmony ... Besides strengthening the protection of the enviranix4 t by a legal act. it would contribute to the CoWletion of the Internal Market by preventing individual national measures. A harinonization of criteria for national provisions. such as these governing deposit systems. should serve to avoid a distortion of the free moveinant of goods and services. Because of N) C) 00 Url co _~4 BAT Industries document for Legal Services : Health Canada 19 October 1999 9 both the cifferent national situations and the large variety of possible measures to be taken. it is not reasonaole to attempt to extena harmonization to the provisions themselves. G. Back to the Drawina Board The word from Brussels now is that the proposal is to be completely redrafted along these lines, with a view to taking a new text back to the 17 Commissioners for approval before the end of 1991. What is meant by,"criteria on which different national practices may be developed?" This comes from a paper submitted to the Commission by the French Government. The French suggest that the way to reconcile environmental protection with the free movement of goods is to combine: I . technical harmonization of the specifications which packaging must comply with before it can be considered Ivalorizablel (i.e., reusable, recyclable into material of the same specification, recyclable into material of a lower specification or used as an energy source); and 2. setting targets for the minimum percentage of valorizable, packaging actually valorized in ways which do not harm the environment. Packaging recognized as 'valorizable' and marked as such must be permitted to circulate freely throughout the whole EC area. Other packaging must, in time, be excluded from the market. The French Government says it cannot accept the concept of a 'stand- still' in the amount of packaging placed on the market. Freezing production and consumption of packaging at the current average European level would probably be impossible; lightweighting can make a contri- bution, but only up to a certain point, and in any case could contradict the reuse/refilling requirement demanded elsewhere in the text. That leaves only reuse and refilling, which does not make sense in every situationj and contradicts-the spirit of the text, which allows member states the possibility of adapting methods to their own circumstances. Rather than freeze current production levels of packaging waste, France wants to reduce the proportion of it which is not valorized. The paper adds that it is important that member states are not led to impose an exclusive valorization method within their own territory, since that would undermine the recyclability (and therefore the free circulation) of packaging, defined at Community level via technical harmonization. IV. OUTLOOK A. The Balance of Power Germany, The Netherlands and Denmark have made it clear to the C) Commission that they want 'the Packaging and Packaging Waste Directive to be as tough as possible, but that they will oppose any provisions which (X) 00 co BAT Industries document for Legal Services: Health Canada 19 October 1999 10 would interfere with the measures they have already introduced or decided upon at national level. They can probably count on the support of Belgium and Luxembourg. This point of view is quite incompatible with that of another group of member states led by France and the U.K. These countries deplore certain aspects of the new German law, and would be unhappy to see many of the provisions of the new Dutch Covenant written into EC law. France has developed its own distinctive national position which borrows much from the German concept while omitting what it regards as the more objectionable features of the German approach; the U.K. is groping rather more tentatively towards its own national plan. These two countries have a large measure of support from Ireland, Portugal and Spain. All of them intend to press the Commission hard on the Internal Market and environmental impact aspects of the German Regulation, and on the need for the Packaging and Packaging Waste Directive to address these questions. Germany, The Netherlands, Denmark, Belgium and Luxembourg together command 25 votes in the Council of Ministers; their opponents have 36. For a qualified majority to be achieved so that a Commission proposal can be adopted, 54 votes have to be cast in favor, and by not less than 8 of the 12 member states. With 76 votes available altogether, 22 constitutes a blocking minority. The Commission's dilemma is clear. B. The Commission Up to June 1991, the EC Commission was convinced that the only way it could regain the initiative from individual member states was to propose a Packaging and Packaging Waste Directive tough enough to be acceptable to the Germans and Dutch But the German and Dutch hes are not to _~hg,~aAee, so the result ~ an absolute reduction in the volume of packaging placed on.the market, F,11 and the German principle that manufacturers and retailers must take sole responsibility for the collection and disposal of used packaging. However flexible DG-XI officials have been in private and even in formal consultation meetings with industry, the texts t 2-ave issued ham- 0 rom -'-sproposals would effectively ave legit mized all the divergent measures being taken at national level and made it impossible to challenge them through the ECJ. The hard line taken in the published texts clearly reflects the thinking tU-h,av1_i11qg4_hAYp, JX_Igno e i us r r cticalities o _7ilcr -a =~o ve,y,_1arqe ry conceAi 5 gIng waS yr rns ab e __ te 0 CIO waUlte m, nagement and ab)~our free 0 m )_qk. Far m naqe a_ Ment and atou fr pac agin ~j]~i ) Q0 ~AM!n oa Is il q_ E (m i SZ I ~. slon of senior officials in DG-X1, and even the views of Internal Market Commissioner Martin Bangemann. Although DG-III might have been expected to intervene in favor of the free movement of goods, Bangemahn has not regarded the German Regulation as a problem and therefore sees no need N) to override it through EC action. AEn-2 11s igm r ommi ss I ent and abo movemi T `p" ayi g Fto-mi on DTa YJ f eesilablis inq a leYe Y1 cl miss I h i 00 4- 00 BAT Industries document for Legal Services : Health Canada 19 October 1999 il Having seen how little notice was taken of the views they expressed at the April meeting of the Committee on Waste Management, a number of representatives of the member states decided that they had been 'too polite.' Their comments at the June meeting on 'Draft 1" accordingly were more blunt. This, together with.the very cogent counterproposals made by the French Government and the stream of complaints against the German Regulation which came in to the Commission in June, seems to have convinced Commissioner Ripa di Meana that his officials have been leading him up a blind alley. Indications are that he has taken personal charge of the packaging issue and that he has ordered a complete rethink. If there is to be a uniform packaging waste management system, the most promising way forward would appear to be the system the French Govern- ment is proposing. This offers a choice of methods of recovering and valorizing used packaging, and would make it possible to shift the emphasis away from the alternatives and towards recycling as end-use markets for the collected materials are developed. Neither the Commission nor the German Government have given much attention to end-use markets. The French plan also allows for the expansion of energy-to-waste schemes, whereas the German approach (and hitherto the Commission's) would tend to drive energy-efficient composite packaging off the market because of its unsuitability for material recycling. Adoption of the French plan would involve a certain challenge to the German Government, which would be politically unwelcome, but this would be softened by the fact that many German ideas are incorporated within the French plan. If a looser EC framework is envisaged, then again the French have the best answers, with the memorandum they have already submitted to Brussels (see Section III above). The Commission now hopes to have a completely new text on paper by the end of September, and to have it ready for formal approval by the 17 Commissioners I bjefo-re the ~~e 11,ar. It would then be submitted to ,.,o-Ce th , en ~the Council of Mini sterislaNN beginning of 1992. It is unlikely that this timetable can be achieved, other than by a very large-scale borrowing of ideas already fully worked out within one of the member states. However, since of the environment-conscious member states only Denmark and the U.K. have yet to make their move, the EC has already lost its chance of preempting national developments and the only point in rushing is to save the Commission's face. Further slippage of the timetable remains a possibility. C. Non-Statutory Pressures At national level, pressure can come from any or all of three quarters C) from the EC Directive, from national government policy and from the co multiple retailers and other customers. . \D CZ) BAT Industries document for Legal Services : Health Canada 19 October 1999 12 Packaging restrictions are being introduced in various European countries not only through legislation, but also through so-called voluntary agreements and through unilateral retailer delistings to fend off environmental activists or imposition of the "taking-back obligation.' Voluntary delisting of parti cular types of packaging on grounds of 'environmental protection' has been an issue in Holland, Scandinavia and Switzerland. This is a trend which should alarm manufacturers, for there is no appeal to a higher court and no way of ensuring that these important decisions are well grounded in science. Companies supplying a number of national markets from a single source have a strong incentive to standardize on whatever is acceptable in the most restrictive market, whether or not this is the most effective packaging for the product -- so a group of environmental activists in one country may in the end determine what consumers across Europe will be able to have. Meanwhile, the big multiple retailers of Northern Europe are very alarmed indeed by the implications of 'taking-back.' They are keen to be seen to be doing everything to push their suppliers towards reducing the amount of consumer packaging used, and they are taking a closer look at their secondary packaging requirements. Centralized buying chains will speed the spread of Dutch and German retail thinking to the rest of Europe. One major German chain, for instance, has sent its suppliers a brochure detailing its environmental requirements, which for transit packaging include: 1. use of undyed and unbleached tension bands, tapes and film, made from recycled single materials rather than composites wherever possible; 2. avoidance of intermediate layers of paper, cardboard ar film for additional protection; 3. preference for standardized reusable transit packaging over non-returnable systems, and a refusal to accept branded, individual reusable systems; 4. reusable transit packaging to be designed so its volume can be substantially reduced for the return journey if not needed for the return of empties; 5. non-returnable transit packaging to be made only from recyclable and identified materials for which a nationwide disposal system exists, to be made primarily from paper and board and to avoid the use of composite materials; 6. transit packaging to be suitable for on-shelf display, to be either open or quick to open without special tools, and to be foldable flat without the need for special tools. N) CD Co (-.rl _C~:- BAT Industries document for Legal Services: Health Canada 19 October 1999 13 The brochure adds that 'sales packaging,' where several retail packages are combined into one unit, should be avoided wherever possible, as should 'outer wrapping' such as shrinkwrapping of retail packs or toothpaste boxes. Where outer packaging is unavoidable, it should primarily be made from paper and board. 'Design of the retail/end user packaging should make the need for outer packaging superfluous.' Retail packaging should offer maximum protection using the least amount of packaging when handled appropriately. "Additional packaging material required solely for marketing purposes must be avoided." Recyclable materials are preferred, and if possible packaging should be made from one type of material to aid separation and sorting. D. Conclusions Whatever the legislative framework, companies have a formidable task ahead. For political reasons the percentage targets established by the EC are bound to be high -- lobbyists have more chance of getting the definitions amended (e.g., to include energy recovery and refilling in a valorization target rather than establishing separate targets for refilling and material recycling) than of reducing the percentages. The pilot schemes set up in several EC countries by ERRA (the European Recovery and Recycling Association) show that recyclable material can certainly be collected -- if Somebody is prepared to bear the cost -- but industry will undoubtedly be held responsible also for finding end-use markets for it. Energy recovery is no easy answer: in 1988 the proportion of waste incinerated was around 75% in Luxembourg, 30-40% in Belgium, Denmark, France, Germany and Holland, 20% in Italy, less than 10'v in Spain and the U.K., and nil in Greece, Ireland and Portugal. The 1989 EC directive on existing municipal waste incinerators is tightening up emission standards and will mean that quite a lot of existing capacity will have to be replaced before capacity can be expanded. 'In any case, only a small proportion of existing incinerators have energy recovery facilities. Refuse Derived Fuel (RDF) is another waste-tD-energy option, but so far there is almost no market for it. RDF needs to be burned under very tightly controlled conditions because of fts variable composition. Having regard to investment lead-times and costs, it is almost inconceivable that across the Community only 10Z of packaging waste will be landfil7ed by the turn of the century. In 1988 landfill was the disposal method used for 10D% of packaging waste in Greece and Ireland, more than 80% in Portugal and the U.K., more than 60% in Belgium, Germany, Italy and Spain, and more than 50% in France and The Netherlands. Only in Denmark (35%) and Luxembourg (22%) did landfill take second place to incineration. r1l) CD CD LM -I,-- "0 r'li BAT Industries document for Legal Services: Health Canada 19 October 1999 ATTACHMENT A THE INTERNAL POLICIES OF THE KEY PROTAGONISTS 1. Germany Monitor Bulletin 90-20 described the series of statutory and non-statutory demands made by the Federal Government to curb packaging up to April 1990. A draft Regulation published in that month would have (a) made retailers responsible for the reuse or recycling of secondary and primary packaging outside the public waste disposal system; (b) obliged them to remove cardboard outers, foam granules or shaped blocks, film and other transit packaging before offering the product for sale, or else provide a bin so that purchasers can remove this material in-store rather than take it home; (c) obliged retailers to take the goods out of their blisterpacks or film or board wrappers at the point of sale, or else provide-a bin so that purchasers can remove this material in-store rather than take it home; (d) obliged retailers to set up adequate collection facilities for used packaging (including jars and other containers which the consumer must retain until the product has been consumed), either at the store or within the catchment area (this could include curbside collection); (e) obliged retailers to take back, either in-store or through redemption centers or reverse vending machines, refillable and non-refillable containers for all alcoholic and* non-alcoholic beverages (including milk) which are of the type, form and size which they put on sale; and (f) impose a DM 0.50 (US 29t) mandatory deposit on all non-refillable beverage containers. By putting the legal obligation on the retailer, the Federal authorities showed they knew where the troe pressure point lay. Retailers would not necessarily have had to set up their own parallel recycling and incineration facilities -- they could contract third parties, including the public waste management authorities, to do this for them -- but they would have to pay for it. Retailers and their suppliers responded by devising the 'Dual System.' The principle is that household waste management would be segmentea between a private sector system for dealing with packaging and other recyclable consumer goods from the household; and the management of the remaining waste through the statutory waste disposal bodies. The system involves setting up a parallel collection system for recyclable household waste. Collection bins may also be set up outside stores and at other suitable locations. There would be no charge to householders (who currently have to pay for the collection and disposal of all their waste).. Participating industries guarantee to make a continuous and complete pick-up of the relevant materials from the sorting centers. Rebates will not be claimed from the local authorities in respect of waste disposal cost savings. Packaging manufacturers can buy permission to use a 'green spot' symbol to show that their products are covered by the scheme. This will serve as a marketing tool, and as a way of financing the schem . The 'Dual System' funding NJ organization (DSD - Duall System Deutschland) holds the rights for use of the "green spot.' Early on, it was said that by the end of a set transitional period, 0D %-0 BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 2 retailers would not handle products which did not bear the Ogreen spot,ff but this notion now seems to have been dropped. DSO estimates that the Dual System will reduce household waste by 25-30% (i.e., by 5-6 million tons per annum). The collection scheme is expected to cost DM 1500 million (S850 million). With some 75,000-100,000 million units eligible for the Ogreen spot,' this will be covered by a charge of DM 0.02 (US It) per pack. Sectoral recycling schemes, DSD says, are considerably more expensive for the economy than the Dual System. -A mandatory deposit on drinks packaging would ultimately preclude development of the Dual System because of the costs involved. [However, building the infrastructure to reprocess the collected recyclables into usable secondary raw materials is expected to cost something like ten times the DM 1500 million collection cost.] The Dual System was a bo7d move designed to take used packaging outside the scope of the Waste Law and thus end the constant uncertainty created by a continuous stream of new demands and requirements from the Federal Government. German industry was p'repared to pay a high price for this -- there was no suggestion of a formula to share costs and responsibilities with central and local government, such as has been adopted elsewhere, including France. The Federal Government agreed to accept the Dual System. Dual System participants will be exempted from mandatory deposits and compulsory acceptance back by retailers. However, the Government went ahead with an amended version of its Regulation on taking back used packaging, which became law in April 1991. Exemption from the basic provisions of the Regulation will be granted to companies taking part in the Dual System or a similar scheme through a license issued by the appropriate Land (Regional) government. Thus the possibility exists of products being collected through the Dual System in some parts of Germany, and being returned to the store in others. Firms applying for exemption before 1993 have until March 1M to show that a regular collection system is in operation. To ensure that the 'Green Spot' scheme is effective, the Regulation lays down the targets described in Attachment B of this Bulletin. Special conditions apply to containers for liquid foodstuffs. The DM 0.50 (US 29t) mandatory deposit on plastic beverage containers will be lifted when the Regulation comes into force for sales packaging on January 1, 1993, but would be imposed on any type of beverage container if the above targets are not achieved and if refillable containers fail to maintain their present market share in the Land in question and in any case not less than a 72% share. For containers of 1.5 liters or above, however, the deposit would be DM I (US 57t) -- a provision clearly aimed at PET and PVC. Since the market share targets are to be measured by Land, it is possible that the same-brand and pack may eventually bear a deposit in some parts of Germany and be free of deposit in others. The refillable bottle quota applies to soft drinks, waters, juices and nectars, beer and still wines (except dessert wines); there are no separate sectoral quotas as in previous (non-statutory) demands from the Federal Government. There is a separate refillable bottle quota r1i of 17% for pasteurized milk. C> E co I'D Xtz. BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 3 For detergents, cleaning agents and dispersion dyes (unless packed in refillable Soft packaging' or 'cardboard- re i nfDrced soft packagingo) a deposit of DM 0.50 (US 29d) will be applied if the collection and recycling targets are not met. Negotiations are still continuing to-extend the Dual System to packaging left at the store rather than with the consumer. Beginning in December 1991, manufacturers will be obliged to take back transit packaging; as of April 1992, purchasers will have the right to leave multipacks and other outer packaging at the store. If they take it home, it becomes subject to the provisions on sales packaging. Any type of sales packaging not covered by the Dual System will have to be accepted back by the retail trade starting in January 1993. Even all this did not satisfy three of the Laender. Hessen and Lower Saxony (which both have Environment Ministers from the Green Party) and Bavaria (where the Environment Kinister is from Federal Environment Minister Toepfer's own Christian Democratic Union) found the Regulation unacceptable because it did not go far enough. To win the day, Toepfer had to promise to introduce two further Ordinances by the end of 1991. One will Control the reuse and recycling of plastics, and labelling requirements for packaging (e.g., stating that the pack is one-trip or returnable), as well as banning 'packaging made from ecologically harmful materials' and 'any packaging that prejudices achievement of the targets of the furthest possible waste avoidance and waste revalorization and minimization of harmful substances.' The other is intended to stabilize and increase the market shares of refillable beverage containers. The minimum 72% market share quota for refillable bottles provided for in the new Regulation is to be increased to 75% in 1996, 78% in 1998 and 81% in the year 2000. Environmentalist groups and sympathetic politicians in Germany have criti- cized the Dual System because it promotes recycling rather than reuse, and endangers the refillable beverage container system. They found allies in small German bottlers without the capital to invest in modern packaging systems and needing protection against larger firms. The Bavarian Government has been parti- cularly hostile to the Dual System, and there is some doubt as to whether it will licence the Dual System as an approved collection scheme. If it does not, the basic taking-back requirement will come into effect in Bavaria in January 1993. Industry outside Germany criticizes the Dual System because it places all the emphasis on collection for recycling and none on the creation of the end-use markets needed to close the recycling loop. There are fears that it W77 create a glut of recyclable material which German reprocessors cannot possibly absorb, with the result that much wi77 be exported, destroying the economics of recycling operations in neighboring countries (the Germans have already done this once, with an overzealous waste paper campaign). In some cases, provision of recyclables free of charge will distort competition between manufacturers within the r1_J Community. Glass manufacturers have pointed out that while outside Germany they C) X-1 %10 Ul BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 4 have to pay US $50 a ton for the cullet collected in Bottle Banks, German glassmakers will have the advantage of free cullet supplied by DSD- Both German environmentalists and non-German industrialists complain that the Dual System has nothing to contribute to reduction of waste at source (which to the environmentalists means fewer products, and to industry means lightweighting). Formal complaints against the German -Regulation have been submitted to the EC Commission by UNESDA (on behalf of the European soft drinks industry), the French and U.K. Governments and by INCPEN (the U.K.-based Industry Council for Packaging and the Environment). UNESDA complains that the Regulation discriminates against non-German operators in general and the beverage industries in particular, because the taking-back obligation will have a bigger impact on suppliers with higher transport costs and because of the imposition of the refillable bottles quota and (if implemented) mandatory deposits. The French Government complains about the refillable bottles quota and the exclusion of incineration with energy recovery from the recycling targets. It is also concerned that the requirement to recycle and the guarantee of recycling in the contracts which DSD agrees with applicant companies will put German trade associations in a position where they can impose technical or financial conditions on the access of imported products to the German market, and makes the point that exporters to Germany will end up financing German R&D in recycling technology. The British Government complains about Germany's failure to notify its Regulation to Brussels. INCPEN complains that the German kegulation restricts the free movement of goods into Germany; that no evidence of its environmental and economic effects has been produced; that energy recovery is excluded as a recycling method; that the Regulation was not officially notified to the EC Commission; and that since the German recycling industry will be unable to absorb all the material collected, it will be dumped in other countries and either destroy the economics of their own recycling schemes -or else overload their waste disposal systems. This complaint was drawn very widely, being based on Articles 85 and 86 of *the Treaty (competition policy) as well as Article 30 (restrictions on imports) In addition to criticizing the provisions of the Regulation itself, it pointed ;ut that the subsequent grafting of the taking-back requirement and very high material recycling targets onto the Dual System which industry had already established, would have the effect, retrospectively, of giving the Dual System Na virtually exclusive character.0 DG-IV, the Commission's Competition Directorate, was looking into DSD even before INCPEN submitted its complaint, but in linking the Dual System with the German Regulation the INCPEN complaint makes the point that it was the Federal Government, not the industry architects of the Dual System, who were responsible rQ for its anti -competitive aspects. (Z) 01N BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 5 2. The Netherlands In 1988 the Dutch Government published its Afationaal Milieube7eidsplan or National Environmental Policy Plan (NMP), a first step in developing a comprehensive series of measures to reduce carbon dioxide emissions, reduce acid rain, minimize waste creation and maximize reuse and recycling of waste, to improve land and water use and save energy. The NMP was revised in June 1990. The goals were not changed, but the new version, the ONMP+', demands quicker achievement of them. As far as waste management is concerned, there is increased emphasis on increasing product life and reducing the use of primary raw materials. The NMP+ says that much can be achieved in the short term by reusing waste as secondary raw materials. The NMP identified 29 "priority waste streams,' one of which was packaging. It set an overall target of 5% waste prevention, 35% recycling, 25% useful application' (using recycled materials for a lower-grade application), 25% incineration and 25% landfill. NMP+ demands 607. recycling, 407. incineration and no landfill at all. In June 1991, after IS months of intensive negotiations, a "voluntary agreement,' or Covenant, was signed on behalf of the Dutch Government and industry. This Covenant was designed to meet those requirements of the NMP+ relating to packaging. Under it, the flpackaging chain' (packaging manufacturers, fillers and retailers) agreed to: 1. reduce the weight of packaging pl-aced on the market in the year 2000 to below that placed on the market in 1986, and reduce the amount of new (i.e., not refilled or recycled) packaging to no more than 90% of the 1986 figure; 2. reduce the 1997 weight of new packaging to at least 3% below the 1991 weight, with a further commitment to aim for a 10% reduction; 3. replace materials and combinations of materials which cannot be recycled or can only be recycled for a lower-grade purpose, i.e., glass or metals are acceptable, as new bottles or cans can be made from them, but low-grade mixed plastics applications or incineration for energy recovery should not be relied upon; 4. rationalize the plastics used, in order to facilitate high-grade recycling;- use refillable rather than one-way packaging wherever economically feasible if environmental impact studies show refillables to cause less damage to the environment; 5. recycle, by the end of 1995, at least 80% of one-way glass, 60% of paper and board packaging, 50% of plastic bottles and shrink/stretchwrap film and 75% N) of metal packaging; C:) co Xh. BAT Industries document for Legal Services: Health Canada 19 October 1999 ATTACHMENT A age 6 6. commit retailers and fillers to taking back at least 90% of the used recyclable and non-refillab7e packaging by the year 2000; 7. reduce to no more than 40% of the weight of packaging placed on the market in 1986, the weight of packaging that may be landfilled or incinerated without energy recovery by 1996; 8. eliminate by the year 2000, the 7andfi7ling of packaging or its incineration without energy recovery, and to incinerate with energy recovery no more than 407* of it; 9. introduce a series of specific source reduction measures for various industries, including milk cartons, spirits bottles and beer cans, and hold discussions with the retailers about restricting "promotional" packaging; 10. use only water-soluble varnishes on soft drinks packaging from 1991 onward, and establish a preference for 'mono -materi a] s' in new ferrous packaging starting in 1992; 11. expand the stocking of wine in deposit-bearing refillable packaging to 2000 stores by mid-1993; 12. introduce a deposit-bearing milk bottle; 13. study the feasibility of introducing deposit systems for disinfectants; 14. introduce a deposit on all plastic bottles for carbonated waters and soft drinks and start discussions aimed at levying a deposit on plastic bottles for still waters and soft drinksk 15. carry out consumer education campaigns including an anti-litter campaign; 16. increase, in 1991, the recycling capacity for PET bottles by 4000 tons per year; 1 17. introduce, 4ithin one year, two major curbside collection projects; 18. increase, within one year, the total number of collection projects for cardboard drinks packaging to 15 municipalities; 19. draw up a plan for industry to finance the costs of separation, storage, transport, recycling and end-use markets for recyclables; 20. carry out a feasibility study on the recycling of mixed plastics into building materials; 21. carry out a series of comparative environmental impact studies on a range of Consumer packaging, including that for juices (but not soft drinks), and on outer packaging and multi-packaging systems; CD co U1 _P~. 110 00 BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 7 22. carry out trials aimed at. high-value recycling of cardboard, aluminum and PET, the recycling of polyclefins into industrial packaging and the separation for recycling of the materials used in laminated drinks packaging. This comprehensive waste management and product development program was signed by the Stichting Verpakking en Milieu (SVM) on behalf of the 'packaging chain.' The SVM argues that they had little choice but to sign it. The retail trade have already delisted PVC and PVdC and industry has been under pressure to abandon aluminum cans and beverage cartons: this way, they say, they have bought time to defend their right to choose the types of packaging best suited to the job. 3. France In July 1991 Environment Minister Brice Lalonde held a major press conference to announce the findings of a report he had commissioned from Antoine Riboud, Chairman of BSN, and his support for those findings. Riboud had been asked to submit his personal recommendations to the Minister on what should be done about packaging waste management. His proposals were as follows: 1. Local authorities should remain responsible for collection and sorting (the local authorities are very much against a German-style Dual System). 2. Producers of raw materials for packaging should take back sorted materials provided they are guaranteed by the local authorities to be of suitable quality. 3. The State, in consultation with materials manufacturers, should set valorization targets which for some packaging materials would include energy recovery. 4. Recovery, sorting and recycling should be financed through a contribution from packers and importers for each package sold. Contributors*to the scheme will be entitled to use a oBlue Spot.' S. Part of this contribution would be paid to the local authorities to bring down the authorities' cost of collecting and sorting recyciables'to a level comparable with the cost of clean incineration (the local authorities want the cost to be lower than that of clean incineration). 6. The State should ensure that any packer not contributing would be required to take back his own packaging. 7. An Economic Interest Group should be set up to manage the funds, reimburse the local authorities for their work, and be responsible for ensuring that the sorted materials collected are sent on to the appropriate reprocessor. 8. These measures should be accompanied by an extremely strict policy on litter. Ni CD %,0 BAT Industries document for Legal Services: Health Canada 19 October 1999 ATTACH14EW A Page 8 9. Landfilling should be taxed sufficiently to limit the use of this method of waste management. Lalonde accepts these conclusions and says that discussions must now go into detail on the cost of the scheme, the targets (he wants 75% valorization by the year 2000), the conditions for valorization of recycled materials, particularly plastics, and the relationship between industry, government and local authorities. A draft decree will be published after consultation with interested parties. The thinking behind the 757. valorizati , on target is that any target must be objective but ambitious, taking into account other targets, including the draft EC Directive's; it must allow industry to follow different routes (lightweighting, refilling, recycling, energy recovery); there must be no discrimination between materials; and it must be independent of any growth in the use of packaging (i.e., a denial of the Commission's -- and Dutch -- ffstandstill principle"). A 'Packaging Supervisory Group' will be set up to collect data, analyze the effects of the i~easures taken and carry out other studies on environmental impact and waste management methods. 4. The U.K. The British Government has urged industry to set its own targets. They have suggested targets for (a) percentage use of recycled material, (b) percentage of production being recyclable, (c) percentage reduction in the use of packaging, (d) timetable for rationalizing the number of materials in use (e.g., polymers and composites). They are also waiting for industry's proposals on how it will be lfmeeting its responsibility for packaging waste arising from its activities and its products.' Environment Minister David Trippier continues to threaten mandatory deposits if industry fails to take effective voluntary measures to increase recycling -- and while he is vigorously opposed to many.aspects of the new German law, he points out that at least it will make companies think carefully about the amount of packaging they use. There is generally too much packaging, he says, because it is used as much for presentation as for functional reasons. The opposition Labour Party, in its answer to last year's Envirofiment White Paper, declared that it would 'encourage industry to get rid of wasteful packaging and introduce a system of returnable deposits on drinks containers., Opposition front-benchers still see the issue as one of 'good" or 'bad' packaging, rather than of appropriate or inappropriate packaging. The third party, the Liberal Democrats, say they would introduce mandatory deposits 'as a matter of urgency.' Faced with this new and hostile consensus, !NCPEN, with the Government's blessing, has drafted a Consumer Goods Packaging Code and is putting together an independent Packaging Council to administer it. The idea is to have available a 01 ightni ng- conductor' which will adjudicate on consumer complaints about 'wasteful packaging' and other packaging issues and establish some guidelines. 00 T BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT A Page 9 The Ad Hoc Group representing the whole of the Opackaging chain' is Putting together an industry program based on the principle that source reduction, reuse, material recycling, composting and energy recovery are all valid alternatives in appropriate circumstances. The Ld Hoc Group proposes that for each material, the amount of packaging waste going directly to landfill will be reduced by 20% by weight between 1991 and 1996, and by 5o% between 1991 and the year 2000. 0 -le BAT Industries document for Legal Services: Health Canada 19 October 1999 ATTACHMENTS NATIONAL MEASURES Summarized below are the national packaging policies which the Commission is struggling to reconcile. It includes references to the European Free Trade Association (EFTA) countries, which can be influential as ideas pass between legislators in different countries, particularly as EFTA states get a voice in EC affairs via the European Economic Area (EEA) agreement and as several (Austria, Sweden, maybe Finland or Norway) seek to join the Community. 1. Bans Danish law bans soft drink cans, and non-refillable bottles are allowed only if there is a collection and recycling system having equivalent effect to a deposit-and-return system. The Dutch retail trade has delisted PVC. There will be a statutory ban on PVC in Switzerland starting in November 1991. Sweden banned non-refillable PET as of July 1991, but a long lead-time has been allowed for getting old stock through the system and Swedish bottlers have not been in a hurry to get refillable PET onto the shelves. The Dutch Covenant signed in June 1991 (see Attachment A) says that where 'environmentally unfriendly" materials are called into question, industry will commission an independent authority to investigate and report; if the report is unfavorable, industry will stop using the material in question. A joint program of 'voluntary agreements" developed by two of the three Regions of Belgium -- French-speaking Wallonia and the bilingual Brussels Region -- provides for a prior consultation system before any new type of liquid food packaging is allowed onto the market. The Ointer-regional approval commission' will be made up of regional government official$, academics, representatives of the private sector and of the EC Commission (but not the Belgian national government, which is not seen as having a role to play). The Munich city government has passed a by-law banning all non-refillable containers for beer, water and milk, and compelling retailers to display signs warning that non-refillables damage the environment. [Note that Munich has avoided taking on the powerful soft drink companies!] German Federal Environment Minister Toepfer admits that such bans contravene the EEC Treaty and that the Federal Government is responsible for compliance, but it remains to be seen how energetica77y he wi77 intervene. 2. Protection of RefillablRs ro German law says that the national market share of refillables in the CD beverage markets (soft drinks and juices, beer, water and still wines) may not fall below the present 72%, nor must it fall below the present level in co any of the individual states (it is around 90% in Bavaria). If it does, and U-1 (~n BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT B Page 2 if the recycling targets laid down are not met, high mandatory deposits will be imposed -- DM 0.50 (US 29t) on packs below 1.5 liters, DM 1 (US 57t) on packs of 1.5 liters and larger. In Luxembourg, retailers and manufacturers are under pressure to increase refillable bottles' share of the total beverage market from 40% to 55% within three years. Manufacturers and distributors offering non-refillables as part of their range are also asked to supply refillables 'if possible.' Mandatory deposits will be imposed if the refillable target is not met. In Belgium, the Brussels and Walloon program says that the market share of refillable bottles will be maintained or increased through 'measures ranging from mandatory deposit systems to economic measures favoring refillable packaging or discouraging the use of other types of packaging.' The Dutch Covenant contains a number of specific commitments to retain or extend the use of refillable bottles, and a general undertaking to substitute'ref ill able for one-trip packaging wherever on examination this clearly results in less damage to the environment. The current draft of the EC packaging and packaging waste directive -- 'Draft I' -- encourages "the promotion of refi77ab7es,' but does not explain what this means or does not mean. 3. Mandatory DeDosits Apart from the measures described above, the Dutch Covenant says that there will be a NFI I (US 51t) deposit on PET for carbonates as of October 1991 and that discussions will begin on a similar deposit for PET for still drinks. "Draft I' says that member states shall ensure the efficient organization of separate collection of used packaging, and 'where appropriate," the setting-up of a deposit system. It does not define the criteria for "appropriateness.' 4. The "Takino-Back Obliqation' German law says that retailers must take back -- free of charge -- transit packs beginning in December 1991, multipackaging in April 1992 and consumer packaging in January 1993. Industry in turn must take the collected packaging waste from the retailers and wholesalers and get it recycled. Consumer packaging will not have to be accepted back if a comprehensive collection and recycling system is in operation, but the targets are very high and if they are not met, the "'taking-back obligation" will come into force. For drinks packaging, the exemption from the 'taking-back obligation' will be withdrawn in any of the German states in which the market share of rl%) CD cc CD LI,, BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMELT 8 Page 3 refillable bottles falls below its present level, and it will be withdrawn nationally if the national market share falls below 72%. The Dutch Covenant obliges "the packaging chaino to take back 90% of the recyclable material they handle by the year N00. France is working on a packaging waste management plan which will involve industry taking back and recycling materials collected and sorted by the local authorities (full details in the Attachment A). The Brussels and Walloon Regions of Belgium will be introducing a draft law by the end of 1991 that will impose on manufacturers and distributors a 'taking-back obligation' covering transit packaging, secondary packaging and sales packaging. 'Draft.1' says that raw material suWiers, packaging producers and convertors, fillers and packers, wholesalers and retailers, together with the 'competent authorities,' are to organize take-back andlor collection systems for packaging waste. 5. Recyclinq Taroets In Germany, 60% of glass, 40% of tinplate and 30% of other types of soft drink packaging must be collected starting in January 1993; 90% of glass, tinplate and aluminum and 80% of all other materials must be collected beginning in July 1995. The percentage of each material collected that must actually be reprocessed is also laid down. For aseptic cartons, 80% of the 80% collected (i.e., 64% in all) must be recycled as a secondary raw material -- energy-from-waste does not Count towards the target. The Dutch Covenant says that 80% of glass, 75% of cans, 607. of paper and board and 50% of plastic bottles and film must be collected for recycling by January 1996. Italian law requires 50% of glass and metal beverage containers, and 407* of plastic drinks bottles, to be recycled by January 1993. A maximum of 20% of the plastic beverage containers may be recycled through energy. f rom-waste. The three regions of Belgium are to set annual recycling targets for packaging waste. Within an overall collection rate of 70% of all packaging by the year 2000, the aim is to recycle 80% of glass and metals and 60% of plastics and paper and board. By 1995 Wallonia plans to get to 807, for metals, 757. for glass, 307* for plastics and 25% for paper and board. The French Government has just announced that 75% of packaging waste is to be valorized (reused, recycled or incinerated with energy recovery) by the year 2000. The U.K. Government wants 50% of non-putrescible household waste to be N) recycled by the year 2000. That equates to a 25% recycling target for CD packaging. Environmentalists and certain other interest~ groups have been co CD 4- BAT Industries document for Legal Services : Health Canada 19 October 1999 MR--NP-- ATTACHMENT B Page 4 putting pressure on the Government not to allow energy recovery to count towards the achievement of this target, and the Government has decided to set a separate target for energy-from-waste. Austria requires the following 'recuperation rates' (i.e., market share of refillables Dlus recycling rate of non-refillables): for carbonated soft drinks, 60% by 1992, 80% by 1994; for juices and nectars, 25% by 1992, 40% by 1994; for beer, 90% by 1992, unchanged in 1994, 'Draft I' sets its own target - minimum 60Z recycling (not including energy-from-waste) within 5 years of adoption (i.e., by around mid-1998). 6. Waste Reduction The Dutch Covenant requires the weight of packaging placed on the market in 2000 to be less than that in 1986. Swiss law says that the maximum tonnage of beverage containers allowable in waste in relation to 1988 consumption is as follows: glass 60% in 1991, 557. in 1993; PET 2131.1 in 1991, 153% in 1993; aluminum 67% in 1991, 33% in 1993; tinplate 42% in 1991 and the same in 1993. If the volume of drinks imported into Switzerland varies by more than 5% from the reference volume, the maximum quantities of packaging waste left unrecycled may be increased or reduced by the same percentage. The U.K. Government intends to 'reduce or at least stabilize, the amount of waste going into landfill, and to encourage the recovery of energy from waste. 'Draft I" says that, by promoting returnable packaging, avoiding 'unnecessary packaging' and by lightweighting, member states must ensure that within 5 years of adoption their annual per capita output of packaging waste does not exceed the EC average in the year of adoption (1993?). 7. Waste DisDosal German law forbids the disposal of packaging through the public waste disposal system. The Dutch Covenant says that a maximum of 40% (by weight) of packaging may be landfilled or incinerated without energy recovery by 1996, and none may be disposed of this way by 2000. France is to introduce a landfill levy. Early indications were that this would be a modest 20 francs ($5) per ton, but it may be more substantial. 8. Economic Instruments In Gemany, the officially recognized industry-run alternative to the taking-back of used consumer packaging -- the "Dual System' -- involves 00 C) BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT B Page 5 industry paying for the collection, recycling and disposal of packaging waste through a unit packaging levy. Participation in the scheme is denoted by an on-pack 'Green Spot." In France, local authorities are to remain responsible for the collection of recyclable household waste. To encourage them to sort it and to install energy recovery facilities, however, an industry funding system is to be set up to reimburse local authorities the extra costs over and above the cost of 'clean incineration." Packers and importers contributing to this funding scheme will be entitled to use an on-pack 'Blue Spot.' Italian law stipulates a funding formula based on market share, so that industry can collaborate with local authorities on recycling. There is also a 1010 recycling levy on plastic beverage containers. From April 1993 on, a tax will be imposed on non-refillable drinks packs not meeting the recycling targets: LZO (US 1d) for containers up to 30cl, rising to LIDO (US 5d) for containers above 1 liter. A "voluntary agreement" between the Flemish Regional Government and Belgian industry provides for a funding formula to be drawn up for formal industry support for recycling. In the Netherlands, the packaging industry has agreed to take back all the collected recyclables and to try to develop end-use markets. Funding is still under discussion, but there will probably be a one- or 2-cent (US 0.5 or 1.0d) levy on every unit of packaging. A draft Luxembourg law provides for a tax on non-refillable drinks packs to fund recycling and support refillables. In Austria, there is a mandatory deposit of OS 4 (US 34t) on refillable plastic beverage containers; all non-refillable beverage containers' (other than for milk and wine) are about to bear a waste management le~y of OS 1 (US 8.5d) for packs larger than 1 liter, and OS 0.30 (US 2.6t) for smaller sizes. This will be collected by the ArgeV organization, which has been set up to ensure than the beverage container recuperation targets are met. It will later be extended to other types of food and drink packaging, and ultimately to non-food packs. In the U.K., where one tier of local authority is responsible for domestic waste collection and another for waste disposal, a 1990 law provides for disposal authorities to credit collection authorities with the disposal cost savings made through the diversion of household waste to recycling. Collection authorities may, but are not obliged to, pass these recycling credits on to private sector recyclers. This arrangement has not yet come into effect as the Government is still working out the practical details. It follows that the higher the costs of disposing of waste in landfill, the 'more valuable the recycling credits become. Industry is therefore pressing the Government to agree to a landfill tax or levy, but so far with no success at all. cr, UM Un CD CT\ BAT Industries document for Legal Services : Health Canada 19 October 1999 ATTACHMENT B Page 6 "Draft 10 says that member states are "requested' to introduce economic and fiscal instruments to encourage the use of returnable and recyclable packaging, favor the use of recycled materials and facilitate collection and recycling operations. K.) CD Co Ul CD --4 BAT Industries document for Legal Services : Health Canada 19 October 1999