Essay on Assignment 2

Submitted By KatieFornadel
Words: 980
Pages: 4

Executive Summary:
In this paper, the European Recycling Industry’s modern evolution is examined. First the National Consortium is presented, then the European Recycling Platform, and finally, consideration is given to the future of the industry and specifically the question of whether or not the ERP should expand its scope is addressed.
National Consortium Model and its deficiencies:
The European Union recognized that electronic waste was growing very fast especially due towith the proliferation of technology and electronic products. Studies and reports done for the European Commission predicted that e-waste would constantly continue growing, which is particularly gloom-laden prognostic for a space- constrained and comparatively environmentally- conscious Europe. Individual European countries as well as the European Union started working on ordinance and directives aimed at mitigating the e-waste problem.
The National Consortia created in Europe had several deficiencies. The Green Dot system which was one asuch system implemented in Germany that was funded by the industry and contracted with municipal and private waste management firms. Basically, manufacturers paid a membership fee to have a Green Dot on their packaging so that consumers would know how to dispose of the product at the end of its useful life. Other countries had similar industry financed or backed systems to handle e-waste. These Collection and Recycling Organizations (CRO) were created under government direction and were heavily directed by industry trade associations and local politicians. As such, strong industry trade associations and politicians dominated the CROs. The dominant trifecta system ended up being monopolistic and as with most monopolies, it gave rise to a lot of inefficiencies, both in terms of costs and time.
Legislation in most countries had placed the responsibility of recycling and associated e-waste costs on the producer of the product. Within each of the European countries, there was usually only one CRO which increased its power and exposed the producers to high costs and arbitrary price increases. More so, the earlier CRO’s would charge the producers based on unit or weight of product sold which was not in line with the actual costs incurred with takeback and recycling. This model in each country was maintained because of the strong interdependent alliance between the CRO, industry associations, and the governments. The national models worked within each country’s confines but the non-competitive and monopolistic structure proved to be too expensive for customers, consumers and producers. The monopolistic model had high operating costs, secured long contracts, charged high fees, ignored efficiency, and discouraged competition by pushing out small recycling companies.
ERP Model:
The ERP Model was a response to the growing inefficiencies of the models existing until 2002. ERP was determined to promote competition and efficiency in the recycling industry, through a non-profit, low-cost strategy and by special support to foster the Individual Producer Responsibility (IPR).
By operating throughout Europe, ERP started with economies of scale, which played into its low cost profit. As a non-profit, it did not seek to gain more than break even, and furthermore saw no reason to hold reserves. In this way, examining the demand side impact, for citizens and users, recycling costs started dropping dramatically and so competition became more expected. This promoted healthy competition since the costs of ERP reflected realistic costs, and weren’t below true cost. Furthermore, by offering support to IPRs, the ERP model fostered smaller recycling companies to stay in the industry, which also played into the objective of increased competition and greater efficiencies in the industry.
Thanks to the combination of low-costs, financial efficiencies and support to IPRs, the ERP model gave users the freedom of choice, which is a key…