May/June 1993
With its new packaging take-back ordinance and Green Dot labeling system, Germany has fired an environmental shot heard 'round the world. Here's a look at the pros and cons of the situation.
BY MAURA J. MACKOWSKI
Maura J. Mackowski is a Hanover, Md.-based freelance writer specializing in business and high-tech topics.
"It's a lovely gravy train for someone."
In a nutshell, that's what the British Waste Paper Association (BWPA) (Aldershot, United Kingdom) thinks of Germany's Verpackungsverordnug, a law that requires manufacturers to take back used packaging for recycling. Set up with the ecologically laudable goal of reducing waste, the ordinance counts among its critics the BWPA and the U.K. Department of Trade and Industry, which claim it's crippling the European recycling industry, creating a barrier to doing business in Germany, and imposing a financial burden on the European public. In the long run, they assert, the law may not even reduce pollution.
The law also has its proponents, of course. Germany's Environment Minister Klaus Topfer, for instance, points out that as the reunified Germany struggles to absorb an environmentally spoiled East Germany—not to mention immense numbers of former Eastern European workers—the new ordinance will promote the country's attractiveness as a business site, save money by preventing costly future cleanups, and pump jobs and money into the economy.
Through this fog of controversy, one fact emerges: The German law has set a precedent that has the potential to transform the scrap recycling business in Europe —even the world. In fact, similar proposals have been introduced at national and international levels.
How the Law Works
The basics of the ordinance are simple: Any entity that sells industrial, commercial, or consumer products in Germany—including manufacturers, distributors, retailers, and even mail order firms—must take back, at no cost to the end user, all of its product packaging at a collection site close to the point of sale. The law also requires that they reduce the amount of packaging used and make it easier to recycle.
When it went into effect in 1991, the law applied only to transport packaging such as wooden pallets, drums, and shrink wrap. In April 1992, secondary packaging used to advertise, protect, or dispense a product came under the law. Sales packaging—the material that encloses the product itself—was phased in at the start of this year. Although the law mandates a 50-percent collection rate, recycling requirements range from 30 to 70 percent, depending on the type of packaging material. In 1995, these mandates increase to 80 percent collected and 80 percent recycled.
To cope with the law, companies that introduce packaging into Germany and the producers of packaging materials have established the Duales System Deutschland (DSD), a packaging collection system that operates alongside Germany 's metropolitan waste collection program. The DSD is funded by fees paid to use its Gruner Punkt—green dot—logo, which is licensed for a variable fee based on the amount and type of packaging involved. Because the DSD has pledged to collect the discards and contract the reclamation—primarily working through the existing scrap processing and recycling infrastructure—the emblem tells consumers that no packaging, from the pallet on which the product left the factory to its demise as an empty cat food can or cereal box, will wind up in a German landfill.
The Perennial Market Problem
Creating an unprecedented, nationwide system like the DSD is an imposing logistical challenge, involving a massive network of collection points, transportation routes, sorting and processing plants, and consumers of reclaimed materials. But if one part of the system has been working efficiently, its the collection end—and therein lies the root of one grievance that some European Community (EC) member nations have against the German law. "The net effect is that Germany has wound up with a mountain of paper and plastics that can't be recycled," says Geoff Jones, BWPA's secretary. "Scrap is going into German mills at negative prices. They are being paid to take the material, and that's a considerable competitive advantage."
The DSD has apparently had no effect on the ferrous and nonferrous scrap metal markets so far because such materials are typically handled outside of the municipal waste stream. Beyond collection considerations, however, the DSD has a more pressing problem: what to do with all the paper and plastics after they are collected. "One of our biggest challenges is to find an end use for the recycled plastics," explains Marina Ashanin, environmental communications manager for Dow Europe SA (Horgen, Switzerland). "The end uses are still not there."
In response, several raw materials industries are forming groups under the DSD to find or create scrap markets to keep the loop cycling. For example, as the guarantor under the DSD for the recycling of plastics, Verwertungsgesellschaft fur gebrauchte Kunststoffverpackungen GmbH (VGK)—which translates to the Used Plastic Packaging Recycling Co.—includes among its shareholders polymer producers such as Dow Europe, as well as converters and waste management companies. Participation in such industry associations has changed the way Dow Europe does business by involving it in projects to recycle plastics into such diverse products as garden mulch, shrink wrap, and automotive parts, Ashanin says.
Companies that can afford it are also developing packaging recycling technologies on their own. Dow, for instance, is currently manufacturing new plastic bottles from old bottles at its DSD-certified Ravago Plastics plant in Virton, Belgium. The company has been most successful so far in recycling high-density polyethylene containers, using a co-extrusion process to make new containers featuring layers of virgin and recycled plastics, Ashanin explains. "We're looking at the economics of all the different materials—everything from bottle wrappers to toothpaste tubes," she says. "There's a lot of information coming out of Germany in terms of the economics, but it's mostly depressing."
Skewing the Market
For the European recycling industry, the greatest concern is that a glut of German packaging scrap will permanently skew the system of gathering and reselling paper and plastics in Europe. "Scrap is coming across the border into other EC states at silly prices," BWPA's Jones says. "The fear in the United Kingdom is that this material will affect the marketing mechanism. If you get into an oversupply situation, the infrastructure for collecting the scrap will simply disappear."
The U.K.'s Department of Trade and Industry seems to agree. It refers questions on the ordinance to the Industry Council for Packaging and the Environment (INCPEN) (London), a group of British companies concerned with the social and environmental impacts of packaging. "Both plastics and paper have been collected to levels that are far greater than Germany's capacity to reprocess them, with the inevitable result that they are being offered free to companies in other European countries," explains Jane Bickerstaffe, INCPEN's technical director. "This, in turn, has led to many U.K. paper collection merchants going out of business and U.K. scrap paper going to landfills instead of being recycled. A similar situation is true of plastics."
Because INCPEN believes the packaging ordinance "would damage the environment rather than provide any benefits," Bickerstaffe says, the group lodged a formal complaint with the EC in June 1991, citing several factors to back up its assertion.
For one thing, the INCPEN complaint says, the ordinance was enacted without benefit of an environmental impact survey, which would have examined factors such as the useful life of refillable bottles, landfill site scarcity, incineration capacity, pollution caused by transporting recyclables to reclamation sites, and energy required to reprocess various materials.
A second point comes from the Jan. 8, 1993 , issue of a German trade journal, Chemische Rundschau, or Chemical Review. The publication makes a case for plastics as the preferred packaging material, stating that using heavier, nonplastic packaging would make it impossible for the DSD to achieve its goals. Where is the DSD's consideration for balance in packaging materials? Bickerstaffe asks. Rather than set arbitrary targets, she says, the DSD should set goals that are achievable, economical, and environmentally optimum.
Redesigning for Recycling
Whether the ordinance will force a pronounced shift in the selection of packaging materials remains to be seen. But one thing that does seem certain is that the law is forcing the issue of product and packaging redesign, which could ultimately mean a more manageable flow of scrap materials. Apple Computer Inc. (Cupertino, Calif.), for example, bought into the German program early and has been reassessing all of its products and packaging. As Omar Khalifa, Apple's manager of sustainable technology, notes, "We dropped bleached board as of October 1991, and there's no more styrofoam in our keyboard boxes, only corrugated cardboard for padding."
Dow Europe is taking a similar approach, focusing on optimizing container size and delivery methods to maximize reuse and minimize washing, Ashanin notes. Implementing tank-to-tank delivery, and increasing the use of reconditioned drums and intermediate bulk containers are also options. In addition, Dow is considering packaging its dry resins in bags made of the same material, which would permit the packaging to be consumed right along with its contents.
And back at Apple, officials are also looking beyond the current German ordinance to potential legislation that could mandate take-backs of electronic products, says Joachim Tabler, environmental specialist for Apple Computer GmbH (Ismaning, Germany). Thus, the company is examining different options to make its computers easier for recyclers to process. Among the steps Apple has taken so far, Khalifa says, are changing assembly procedures to indicate types of plastics, avoiding commingling of coated plastics, using more resellable components, and making parts easy to detach from the circuit boards.
Assessing the Costs
All of these "green" changes cost money, money that is flowing out of the pockets of businesses and consumers into the DSD—hence, Jones's "gravy train" observations. "The DSD has 7 billion Deutsche marks [about $xx million]," he claims. "It's charging 250 Deutsche marks to collect a ton of paper and paperboard, and 1,500 Deutsche marks for a ton of sorted plastics. The paper makers are complaining because they say it doesn't cost that much."
Groups like the VGK assess an additional fee on top of the DSD fee, according to a Dow Europe newsletter, and the ordinance does not address the question of who gets the money German municipalities save by not collecting and disposing of packaging waste, INCPEN says. Moreover, a German university study predicts that Green Dot fees will triple by 1995, Bickerstaffe notes, while a Swiss critique calls the DSD an immense and costly bureaucracy that will grow "under cover of environmental protection."
Much of the money destined for the DSD will come from outside Germany—from the foreign manufacturers that wish to sell their products into Europe 's largest economy—and, thus, comes additional criticism. Asked about complaints that EC members have made against the DSD as a trade barrier, W. Crossmann, head of theGesamtverband Kunststoffverarbeitende Industrie EV, a Frankfurt-based plastic association, points out that "the DSD's Green Dot can be acquired by any foreign company that exports to Germany, but it's not necessary if the manufacturer or importer takes responsibility for the products it has introduced into the waste stream and ensures their proper disposal."
BWPA is helping British firms follow the latter course of action by setting up a collateral system that allows U.K. packaging to be reprocessed in Germany, and vice versa, thus keeping at least some of the fees paid in British hands, Jones explains. The group is also reportedly working out a similar deal with France .
Without the Green Dot on their merchandise, however, non-German producers are at a disadvantage in the German marketplace. "To convince the German buying public your company is a good guy, you have to buy the rights to the Green Dot and display it," Jones says. Apple Germany's Tabler echoes this, noting that "some of the German superstores want all their suppliers to have the Green Dot." This mentality works against the consumer and the environment, argues Bickerstaffe. Buyers will reach for the higher-priced Green Dot products, thinking they are cleaning up Germany , when in reality they may be paying more for still-overpackaged goods.
The Wave of the Future?
For all the protests, no one denies that the goals of the German system are commendable, or that similar packaging and labeling regimes could be implemented worldwide. "The German law gives us some landmarks and a heads-up on what to expect from other governments," says Khalifa. The EC, in fact, is currently considering a draft directive on this topic.
Across the Atlantic, in the United States, "there are rumblings in both houses of Congress, with many legislators calling for a modified version of the German packaging ordinance," says J. Thomas Wolfe, counsel and managing director of government relations for the Institute of Scrap Recycling Industries (Washington, D.C.). "And the U.S.environmental community is certainly four-square in favor of getting such an ordinance into legislation." Last year, Wolfe notes, the House and Senate versions of the Resource Conservation and Recovery Act (RCRA) contained provisions requiring packagers to take responsibility for the recycling or disposal of their spent packaging. Nothing will happen on this issue, however, until RCRA comes up for reauthorization again—an unlikely prospect in 1993—and until the House and Senate can reconcile their different versions of the provisions.
Still, the German ordinance and Green Dot labeling system have set a precedent, one that other countries could view as a green light to implement their own similar laws. Recognizing this, those affected by Germany 's ordinance hope that their environmental efforts will help bring about a less heavy-handed approach to cleaning up packaging scrap—in Germany and elsewhere, Khalifa asserts. "Most laws work best when they act with companies' urge to compete, using a carrot instead of a stick," he says. "Rather than label everyone a bad guy, government can take a `proactive' approach and catalyze industry."
At the moment, Khalifa adds, "Germany is using a cork-in-the-tailpipe approach, which means you have to redesign the whole engine. We would like to see the value and reuse side of the equation emphasized more. It's overlooked right now."
With its new packaging take-back ordinance and Green Dot labeling system, Germany has fired an environmental shot heard 'round the world. Here's a look at the pros and cons of the situation.