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Steer towards clarity
02-NOV-2005

Auto industry seeks improvements to the ELV Directive

The sheer complexity of the End-of-Life
Vehicles Directive has hindered all EU Member States in adapting the regulation
into national laws. To come out of this gridlock, the auto industry has suggested
some critical changes to the regulation. These include clarifying definitions
and evaluating the Directive in relation to other EU regulations. 

Following four years of practical experience with the End-of-Life Vehicles
(ELV) Directive, the automotive industry suggested it should be critically reviewed
and amended to achieve a more harmonized approach across Europe.¹
Such a review would identify redundancies, overlaps and contradictions in legislation
and guidance. It is symptomatic of the complexity of the ELV Directive that
all Member States failed to meet the implementation deadline (21 April 2002
for old Member States and 1 May 2004 for new Member States). In January 2005,
the European Commission published a document²
with guidance on how to comply with the legislation. Although not legally binding,
this document represents a framework within which implementation is protected
from infringements. But the industry has invested heavily in the five years
since the Directive¿s publication. As a result, implementation is now far advanced
and it will be difficult for the industry to change direction because of changed
interpretations. (For more information on Member States¿ progress in implementing
the ELV Directive, see WMW July¿August 2005.)

LEGAL FOUNDATIONS

Because the ELV Directive is based on Article 175(1) of the EC Treaty,³
Member States are entitled to go beyond its requirements and to maintain or
adopt stricter measures at a national level. This has led to non-uniform interpretation
and implementation of the ELV Directive between Member States, affecting the
design of car return systems, recycling standards and legal treatment of the
financial reserves that are necessary. These differences are costly when trying
to meet single market needs and, importantly, are distorting the market in Europe.

`All Member States failed to meet the implementation deadline¿

To solve this structural problem, the industry suggests splitting the Directive
into three sections:

1. Demands for the treatment of waste should be summarized in a part based
   on Article 175 of the EC Treaty, such as demands for the treatment of ELV
   vehicles and standards for treatment facilities.  


2. Demands that suggest a harmonized approach should be summarized in a part
   based on Article 95 of the EC Treaty, such as standards for certificates of
   destruction and standards for consumer information.


3. Restriction of substances should be dealt in a more harmonized and holistic
   approach but not in a productspecific directive, such as ban on certain substances
   (as in Article 4.2 of the ELV Directive).

Such an approach has already been used in other EU directives such as the waste
electrical and electronic equipment (WEEE) and packaging waste directives to
encourage harmonization and implementation. Although such a holistic approach
would remove some of the problems that have become obvious during implementation,
any structural changes would need to be aligned by a critical review of the
current demands of the ELV Directive.

DEFINITIONS IN THE DIRECTIVE

The Commission defines `end-of-life vehicles¿ as waste on the basis that waste
is defined as: `any substance or object ¿ which the holder discards or intends
to discard or is required to discard¿.

But in practice, an ELV can only be defined at the beginning of the de-pollution
process; any decision to classify a used car as an ELV before the pre-treatment/
de-pollution stage (such as at the collection point) limits the freedom of the
operator and opens the door for `used car/ELV tourism¿ ¿ or, in other words,
legal exports of (potential) waste. Since a so-called ELV contains high-value
materials, there are strong reasons for not calling an ELV `waste¿.

The definition of recycling is crucial when establishing the recycling regimes
in Member States. The ELV Directive defines recycling as: `the reprocessing
in a production process of the waste materials for the original purpose or for
other purposes but excluding energy recovery¿.⁴
However, this definition is problematic and open to interpretation. For example,
there are contrasting views on whether using the organic fraction of the shredder
residue as a reducing agent (feedstock recycling) in a blast furnace qualifies
as recycling. In order to provide a level playing field and facilitate sustainable
development, the European Automobile Manufacturers Association (ACEA)⁵
has asked the Commission to maintain its original, broader definition of recycling.
This was that recycling is more than just mechanical recycling (dismantling,
shredding) but that it also includes feedstock recycling (for example, by chemical
processes such as the addition of plastics to produce steel in the blast furnace).

SCOPE OF THE DIRECTIVE

The ELV Directive covers vehicles and end-of-life vehicles, as well as their
components and materials. It includes spare parts and replacement parts such
as lubricants, but not fuels. The industry suggests using the term `spare parts¿
as the overarching definition of components including spare parts, replacement
parts and maintenance parts.

The definition of recycling is crucial when establishing the recycling regimes

Vehicle owners increasingly buy electric or electronic devices such as radios,
CD players, personal digital assistants (PDAs), personal navigation systems
(PNAs) and other so-called `nomadic¿ devices to install in their vehicles. Such
devices largely fall under the WEEE and the restriction of the use of certain
hazardous substances (RoHS) Directives. It is therefore doubtful that they also
need to comply with the demands of the ELV Directive (nobody would leave a PDA
in a vehicle for scrapping). But to avoid double regulation, the industry supports
the Commission¿s view that if the ELV Directive should apply to those devices
primarily designed for use/integration in vehicles (such as car radios), then
the RoHS or WEEE Directives should not apply.

MINIMUM TECHNICAL REQUIREMENTS FOR WASTE TREATMENT (ANNEX I OF THE ELV DIRECTIVE)

The industry has recommended common minimum requirements for de-pollution of
ELVs as well as those for treatments sites and operators. Removal of components
only makes sense if there is a use for them. For example, on-board deployment
of all pyrotechnic devices is seen as the safest way to neutralize these devices
and removal of glass is not necessary, as glass could be segregated during the
shredding process.

BAN ON CERTAIN HEAVY METALS (ANNEX II OF THE ELV DIRECTIVE)

Member States are required to ensure that materials and components of vehicles
put on the market after 1 July 2003 do not contain lead, mercury, cadmium or
hexavalent chromium (other than in specific cases listed in Annex II).

At first, this demand looks clear-cut, but ongoing discussions and practical
experience have shown this to be one of the most complex of the Directive¿s
requirements and one which sets obstructive demands for the automobile industry.
Several matters of concern are highlighted below.

The words `put on the market¿ do not relate to the typeapproval date of a vehicle
but to the initial act of making a product available for the first time on the
EU market. The industry¿s interpretation is that this can apply in EU production
when the product is passed from the manufacturing area to the distribution area
and, for non- EU production, when the product is cleared by customs.

The Commission is of the opinion that the heavy metals ban includes vehicle
spare parts, since those parts are covered by the term `materials and components¿.
Commission Decision 2005/438/EC clarifies that spare parts put on the market
after 1 July 2003 and used in a vehicle put on the market before this date are
exempt from the provisions of Article 4(2)(a) of the Directive.⁶
To solve the problem for the customer, the industry suggests a new Commission
Decision with the following text:

`Spare parts put on the market after 1 July 2003 which are used for vehicles
put on the market after 1 July 2003 are exempted from the provisions of Article
4(2)(a), if at the time when the vehicle was put on the market the affected
material or component were covered by an exemption according to Annex II.(*)
(*) This clause does not apply to wheel balance weights, carbon brushes for
electric motors and brake linings as these components are covered by specific
entries.¿

Another issue is the Commission¿s obligation to amend Annex II regularly according
to technical and scientific progress. Although the comitology process (a decision
taken between the Council and Commission without Parliament) is not public by
definition, a more transparent procedure with early involvement of the main
stakeholders and an open dialogue would ensure better long-range planning of
substitutes and phase-out times.

The Directive mentions that materials and components of vehicles that can be
stripped out before further treatment should be labelled or made identifiable
by other appropriate means. To avoid hindering the development of advanced separation
technologies, however, stripping (dismantling) requirements need to be feasible
from the point of view of recycling/recovery, and processes should not be prescriptive.

COLLECTION

Article 5 of the ELV Directive combines several very diverse demands:

• the establishment of a take-back and recycling network for ELVs


• the introduction of a certificate of destruction (CoD)


• the cost-free return of vehicles under certain conditions and the responsibility
  of the manufacturer to do this.

These demands form the basis for the setting up of a local take-back and recycling
regime. However, the Directive¿s demands are on a generic level and interpretation
is left to individual Member States. This has lead to a lack of harmony in approach
and consequential market distortions. Since the ELV Directive is addressed to
Member States and not to the automotive industry, countries could insist that
manufacturers set up their own networks instead of, or in parallel to, existing
networks. Without offering industry the opportunity to control what it pays
for, this lack of clarity over costs causes insecurity in investment.

Even more important is the definition of `adequate availability¿ of collection
facilities ¿ particularly for new Member States, which are still developing
their recycling infrastructure. This issue not only affects the distance driven
by the last owner to return the vehicle but also the efficiency of the recycling
regime. Consumers might prefer more collection points, but this will lead to
small numbers of collected vehicles per site.

The procedures for issuing CoDs are critical for the recycling businesses dealing
with this on a daily basis. ACEA recommends either issuing a CoD of the vehicle
at the collection point plus a proof of destruction at the shredder site, or
issuing a single CoD at the beginning of the de-pollution process. At minimum,
it should be equal in all markets. Furthermore, it is important to ensure, on
a national basis, that only certified treatment facilities (according to Article
6 of the Directive) are allowed to issue a CoD and that the CoD is protected
against fraud. Efforts to standardize this approach are currently hampered by
the absence of suitable registration/de-registration systems in some Member
States and the lack of treatment facilities in others.

The economic impact of collection is also very important. The Directive requests
that the last holder/owner of an ELV to be able to dispose of it free of charge.
It also requires that, when the ELV has a zero or negative market value (`free
take-back principle¿), vehicle producers must meet all or a significant portion
of the recycling and disposal cost of ELVs. The Directive does not cover the
cost of transporting the vehicle to the collection point. For vehicles put on
the market before 1 July 2002 (that is, `old vehicles¿), the free take-back
scheme only applies from 1 January 2007.

While there is agreement that free take-back only applies to vehicles not containing
any added wastes and that vehicles must contain essential components such as
an engine and coachwork, differences of opinion exist over the following:

• No components or materials of value must be removed from the ELV before
  it is accepted for take-back.


• Producer responsibility is limited to the company¿s own vehicle park.


• Free take-back only applies when ELVs are disposed of in manufacturers¿
  licensed networks as manufacturers have invested heavily in setting these
  up.

REUSE AND RECOVERY

The Directive obliges Member States to take all necessary measures `to encourage
the reuse of components which are suitable for reuse, the recovery of components
which cannot be reused and the giving of preference to recycling [`waste hierarchy¿]
when environmentally viable¿.⁴
The Directive sets reuse, recovery and recycling targets per average weight
of vehicle and year (Table 1).

TABLE 1. Recycling and recovery targets
All vehicles becoming waste (CoD issued) as of:	Reuse		Remarks
	recovery	recycling
1 January 2006 ¿ 1 January 2015	> 75%	> 70%	Optional by Member States for vehicles produced before 1 January 1980
1 January 2006 ¿ 1 January 2015	> 85%	> 80%	All vehicles produced after 1 January 1980
After 1 January 2015	> 95%	> 85%	Re-examination of targets by 31 December 2005

Vehicle manufacturers have limited impact on the processes of ELV recycling
itself (especially outside their own established network) as the processes are
operated by independent businesses. These independent operators (certified/licensed
by local authorities) are responsible for fulfilling the targets.

The industry argues that the main drivers for the reuse of automotive parts
and/or recycled materials are customer/market demand on one side and competitive
supply on the other side, and that any waste hierarchy based on the principle
`reuse is better than recycling, and recycling is better than recovery¿ is not
supported by market needs. Consequently, any targets/quota, and particularly
sub quota, do not meet the essential aim of reducing negative environmental
impacts since further investments and energy are required to dispose of unused/unsold
recycled products. As a result, they distort the market and hinder necessary
investments in new technologies.

According to the Commission, ELV waste accounts for around 1% of the waste
volume in the EU.⁷ The impact of
increasing recycling quota for this specific waste is therefore negligible and
thus recycling of ELVs should be based on the principles of the free market.

CODING STANDARDS/DISMANTLING INFORMATION

Coding is useful only for visual identification and manual dismantling processes.
The industry would therefore like coding requirements to be restricted to those
materials that can be recycled from a technical point of view and which exceed
a threshold value (most likely determined by weight).

The industry took a proactive approach to dismantling information before discussions
started on a European approach. This information is now provided to the recycling
industry on an almost global level via IDIS (International Dismantling Information
System).⁸ This computerized
system in which 25 manufacturers participate (including Japanese, Korean, US
and EU companies) holds details on 48 brands, 427 models and 875 variants in
more than 20 languages.

REPORTING AND INFORMATION

The Directive stipulates that Member States should send a report to the European
Commission every three years. Commission Decision 2005/293/EC describes this
demand in greater detail.⁹
Most Member States have transferred this demand to the industry ¿ particularly
the auto industry ¿ with some demanding that the auto industry presents a report
every year.

The industry feels that reporting annually is too frequent as progress in the
markets is slow and figures are not likely to change much between years. Furthermore,
the potential burden and cost of this reporting request are not yet known. Providing
comparable and comprehensive data on a national level is a difficult task, as
it requires reliable and effective reporting processes in order to collect information
from all economic operators.

If reporting is necessary, then the industry would prefer this to be arranged
at an equal level in all Member States and recommends splitting the requested
information into two packages:

• producer information ¿ relevant aspects of design published by each
  car producer


• shared information ¿ data concerning de-pollution, reuse, recycling
  and recovery as well as waste reduction. Such details can be compiled in co-operation
  with dismantlers, shredders and other recycling companies, and by national
  associations of car producers.

The industry also believes that the current reporting system is flawed. 

The material stream from ELV recovery contains many mass flows, which separate
and merge again. Recovery takes place in numerous locations and there are many
operators with different interests handling many materials from different sources.
Such complexity makes it possible to prove almost everything, in one way or
the other, when manipulating data to produce requested results.

Another problem is highlighted by the SRU (Sachverständigenrat für Umweltfragen
der Deutschen Bundesregierung/German Council of Environmental Advisers), which
commented: `Subsidies also lure unscrupulous suppliers to the market who take
the subsidy and then dispose of the waste elsewhere¿. As a deterrent, inspections
to identify subsidies obtained by fraud need to be strong but are currently
weak.

And yet a further problem is described by a Lower Saxony government commission
in Germany, which found that, in spite of all efforts, possible monitoring results
could not achieve the sufficient legal certainty needed for penalty fines. For
legal certainty, monitoring would have to take into account spreads and uncertainties
of every figure used in the calculation. Thus, ±5% precision on a quota of 85%
gives a spread of between 77% and 94%. Using the measures available today, this
bandwidth has to be accepted as fulfilling the 85% quota. Variances of ±5% are
seen by experts to be small for values aggregated from many operators in some
process chains, with each chain a sequence of some operations. Monitoring results
that do not respect variances/spreads will therefore be worthless. With this
in mind, the industry recommends working with recovery and monitoring experts
to develop solutions that do not need quota systems. The target 2015 revision
process, initiated by the Commission and attended by all key stakeholders, has
taken up this challenge and is expected to present proposals by the end of 2005.

Inspections to identify subsidies obtained by fraud are currently weak

CONCLUSIONS

The industry disputes the value of the sole legal base of Article 175 of the
EC Treaty for the Directive as this allows Member States to introduce even stricter
measures than stipulated by the Directive. The industry suggests splitting the
Directive into three sections as a practical solution to this issue.

Notwithstanding this structural change, several areas of the ELV Directive
require additional explanations to facilitate efficient implementation of the
legal demands in Member States. The experience of the automotive industry with
implementation suggests that:

• the definition of the term ELV needs to be clarified and linked to the start
  of the de-pollution process (Article 2)


• a clear differentiation is needed from other directives such as the WEEE
  Directive (Article 3)


• the term `put on the market¿ relates to `changing ownership¿ and `customs
  clearing¿, respectively (Article 4)


• spare parts for vehicles put on the market after 1 July 2003 must follow
  the principle of repair as produced¿ (Article 4)


• a common and safe certificate of destruction is needed to avoid misuse and
  save cost (Article 5)


• a quota system is not needed but could be replaced by a more holistic approach,
  which would benefit the environment (Article 6)


• coding requirements should be restricted to those materials that can be
  recycled from a technical point of view and where materials exceed a realistic
  weight limit (Article 8)


• when quotas cannot be measured, smarter ways to achieve comparable results
  are required (Article 9).

Dr Wolfgang A. Reinhardt is Director of Regulatory
Affairs at the European Automobile Manufacturers Association (ACEA), based in
Brussels.

e-mail: wr@acea.be

The second edition of Comments of the Automotive Industry on Directive
2000/53/EC can be ordered from ACEA¿s website www.acea.be
or by e-mailing the author.

Dr Reinhardt¿s previous article on the ELV Directive and Member States¿ progress
in implementation was published in WMW July¿August 2005.

NOTES

1. Proposals were made both to the Dutch and Luxemburg Presidency. This has
   now become an activity within CARS 21 (a European initiative to improve the
   competitiveness of the automotive industry in the 21st century).


2. European Commission. Directive 2000/53/EC on end-of-vehicles. Guidance
   Document. Version 1. January 2005. http://europa.eu.int/comm/environment/waste/pdf/guidance_doc.pdf
   


3. Consolidated version of the treaty establishing the European Community.
   Official Journal of the European Communities, C325, pp. 33¿184. 4 December
   2002. http://europa.eu.int/eur-lex/lex/en/treaties/dat/12002E/pdf/12002E_EN.pdf
   


4. Directive 2000/53/EC of the European Parliament and of the Council of 18
   September 2000 on end-of life vehicles. Official Journal of the European
   Communities, L269, pp. 34¿42. 21 October 2000.

   http://europa.eu.int/eur-lex/en/consleg/pdf/2000/en_2000L0053_do_001.pdf
   



5. The ACEA (Association des Constructeurs Européens d¿Automobiles) represents
   the interests of the 13 main European groups manufacturing cars, trucks and
   buses.


6. Commission Decision 2005/438/EC of 5 June 2005 amending Annex II to Directive
   2000/53/EC of the European Parliament and of the Council on end-of-life vehicles
   (spare parts). Official Journal of the European Union, L152, p. 19.
   15 June 2005. http://europa.eu.int/comm/environment/waste/pdf/com_2005_438_ec_adoption.pdf
   


7. European Commission. Communication from the Commission: Towards a thematic
   strategy on the prevention and recycling of waste. COM (2003) 301 final,
   paragraph 3.2.3 Lack of a comprehensive strategy on recycling.

   http://europa.eu.int/comm/environment/waste/waste_prevention_recycling.htm
   



8. www.idis2.com


9. Commission Decision 2005/293/EC of 1 April 2005 laying down detailed rules
   on the monitoring of the reuse/recovery and reuse/recycling targets set out
   in Directive 2000/53/EC of the European Parliament and of the Council on end-of-life
   vehicles. Official Journal of the European Union, L94, pp. 30¿33. 13
   April 2005.

   http://europa.eu.int/comm/environment/waste/pdf/com_2005_293_en.pdf
   

 

 

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