Factors currently in play could lead to a repeat of the challenges that led to the 2004 fridge mountains, warns Roger Miller
This year, intended changes to the methods used to calculate producer targets for those placing electrical and electronic equipment on the market along with the changes in June 2013 regarding the re-definition of fridge panels as hazardous waste could combine to create a situation where it is not viable to collect B2C fridges for certain SMEs.
Fridges are the least cost effective WEEE stream to transport, due to their low weight and high volumes. The combined effect of this and the changes above could easily lead to fridges not being collected and the return of fridge mountains, with no one funding the transportation and recycling of them.
Until 2013, fridge recycling plants competed for inbound volumes, based on rebate values. This created a positive value for approved fridge collectors.
Evidence values had remained consistently strong during the term of the first WEEE directive, resulting in appropriate funding being available to fund fridge collection, transportation and recycling, including innovative kerbside schemes.
In 2013, the Environment Agency re-defined fridges as ‘hazardous’ - whether or not they had been de-gassed and had the oil removed. This was due to the potential release of harmful gasses used as blowing agents in insulation panels of some older fridges. This drove fridges away from traditional scrap metal yards, to fridge processing plants for appropriate treatment. While the right thing to do, it has resulted in such high demand on fridge plants that market forces have reduced the values plants need to offer to secure material.
This is positive for fridge plants in terms of profitability and stability, as they had been under severe pressure to compete for material when there was processing over-capacity. But it has resulted in rebates either dropping or even small gate fees being charged by some plants to receive fridges. This has reduced the value of fridges to collectors, particularly smaller operators, as they do not have the clout to negotiate with larger fridge plants.
The WEEE Directive recast has delivered a second blow to collectors because of the calculation methodology being adopted for 2014 Producer WEEE targets. By April 2014, the EA will issue targets for producers via producer compliance schemes (PCSs) which are to be based on the average UK reported WEEE collections over the previous three years. This is fair and reasonable in principle, but the upsurge of fridges generating evidence at fridge plants from July 2013, continuing into 2014, will result in a surplus of evidence, not required by PCSs so will have no evidence value.
This will reduce the value of all fridge evidence, as the price is linked to supply and demand principles: with too much evidence supply available, holders of evidence want to sell it before it has no value at all.
PCSs will be cautious in committing to funding costs as they could end up with evidence that has no value. But it will result in major cost savings for producers – if able to buy evidence cheaply - who will benefit from not being required to fund all B2C WEEE collected under approved schemes, by approved operators, to approved standards.
The combination of a reduction in material and evidence values to fridge collectors, uncertainty of some evidence not being required and high transportation cost will present a compelling argument to avoid doing fridge collections.
Going back to pre-Directive days of charging councils and consumers the costs associated with collection and recycling could be a way of keeping fridge collection viable. But this feels wrong for a waste stream covered by a ‘producer pays’ European Directive. The only other option would be for regulators to retain the historical link between EEE and WEEE percentage obligation calculations as per the first WEEE Directive (for this category) to ensure producers continue to remain fully responsible for WEEE generated and to remain true to the principle of ‘producer pays’.
Roger Miller is sales director at Three Pin Recycling