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Title: CostBenefit analysis of RoHS Directive in: A Study on RoHS and WEEE Directives EC DG Enterprise


1
Cost-Benefit analysis of RoHS Directive in A
Study on RoHS and WEEE DirectivesEC DG
Enterprise Industry
  • 3 July 2007
  • Sarah Bogaert ARCADIS ECOLAS

2
Agenda
  • Presentation of the team
  • Goals of the study
  • Scope of the study
  • Approach
  • Preliminary results

3
Presentation of the team ARCADIS ECOLAS (RoHS)
  • Belgian based
  • Part of Arcadis Belgium (Arcadis group)
  • Some EC experience
  • DG Enterprise Framework Service Contract for the
    procurement of services on Commission Impact
    Assessments and Evaluations Lot 5 Impact
    Assessment on Environmental Economics (2006-2010)
  • DG Environment Service contract for the
    evaluation of the environmental component of
    infrastructure investment projects (2000 - 2007)
  • DG Regio Strategic Evaluation on Environment and
    Risk Prevention Under Structural Cohesion Funds
    for the period 2007 2013 (2006)
  • DG Environment Study on the implementation of
    Packaging Directive and options to strengthen
    prevention and re-use (2005)

4
Presentation of the team RPA (WEEE)
  • UK based
  • Some EC experience
  • DG Enterprise Framework contract for Impact
    Assessments on Environmental Economics and
    Industrial Products Services Sectors (2006-7)
  • DG SANCO Establishing a Comparative Inventory of
    Approaches and Methods Used by Enforcement
    Authorities for the Assessment of the Safety of
    Consumer Products Covered by Directive 2001/95/EC
    on General Product Safety and Identification of
    Best Practices (2006)
  • DG Enterprise Cost Benefit Analysis on the Draft
    Amendment of the EC Directive on Electromagnetic
    Compatibility (2002)
  • DG Environment Employment Effects of Waste
    Management Policies (2001)

5
Goals of the study
  • RoHS part
  • Analysis of economic and environmental impacts of
    the RoHS Directive
  • Cost-Benefit Analysis
  • Impact on internal market
  • Impact on innovation
  • Impact on products and sectors not covered by ban
  • Potential synergies and conflicts with other EU
    legislation (REACH, EuP) and other policy
    objectives (e.g. identifying cases where the RoHS
    has increased/reduced world trade integration)
  • Comparison of EU approach with other approaches
  • Recommendations for revision to improve
    cost-effectiveness

6
Goals of the study
  • WEEE part
  • Assessment of impacts on innovation and
    competition
  • Identification of factors and requirements with a
    critical positive or negative impact
  • Comparison of EU approach with other approaches
  • Recommendations for revision to improve
    cost-effectiveness

7
Scope of the study
  • Focus on product groups
  • Criteria
  • Presence and quantity of hazardous substances
  • Economic importance
  • Environmental impact
  • Innovation pace of the sector/innovative
    potential
  • Data availability
  • Selection of product groups
  • Refrigerators
  • PC laptop, incl. spare parts
  • Printers copiers
  • Cellphones
  • Television sets
  • Clocks watches
  • Fluorescent lamps (straight and compact)
  • Lawn mowers gardening equipment
  • Video games handheld video games
  • Dispensers for hot and cold beverages

8
Scope of the study
  • RoHS initially less stringent focus on product
    groups because
  • Companies may have a range of RoHS relevant
    products - costs may be difficult to
    differentiate
  • Any cost information contributes to revealing the
    whole picture
  • WEEE focus on countries
  • Belgium
  • Germany
  • Ireland
  • Lithuania
  • UK

9
Approach - CBA
  • Aim of Cost-Benefit Analysis
  • General quantified information on all product
    groups
  • Quantification of B/C per product group
  • Qualitative description of inefficiencies
  • Approach
  • Literature review
  • Stakeholder consultation written questionnaires
  • Target groups
  • Member States
  • Trade associations
  • Individual companies
  • Environmental organisations
  • Sent out 20 25 April deadline 25... May

10
Identification and quantification of benefits
  • Methodology
  • (1) Quantity of substances in product per product
    group
  • (2) Product volumes brought on the market per
    product group
  • (1)(2) estimated total presence of hazardous
    substances
  • Quantification of environmental impact based on
    life-cycle assessment and dose-response
    relationships
  • Monetization of environmental and health impact
    based on benefit transfer

11
Identification and quantification of benefits
  • Generalisation of the quantity of the hazardous
    substances in the selected products
  • Based mostly on the available information in
    literature and expert judgment
  • An estimation of the quantities
  • in the components of the selected products
  • if possible, for the total of the product
  • Differences in quantities caused by different
    literature sources, reference years, products,
    etc.
  • Preliminary overview for refrigerator and
    PC/laptop in the next slides watches/clocks and
    fluorescent lamps looked at, other product groups
    to be completed

12
Generalisation of the quantity of the hazardous
substances in the selected products
  • Example quantities in the components of the
    product

13
Generalisation of the quantity of the hazardous
substances in the selected products
  • Example quantities for the total of the product

14
Dose-response relationships
  • General (eco)toxicological information on
    substances available
  • Life cycle assessment (LCA) functional units
  • Environmental burden (expressed in environmental
    load units) on
  • natural resources Hg gt Cd gtgtgt Pb gt Cr6
  • air emissions Pb gt Hg gtgt Cd gt Cr6
  • Human toxicity potential (expressed in
    1,4-dichlorobenzene (1,4-DCB) eq.)
  • is different for the different environmental
    compartments and mostly only slightly different
    for the different time horizons
  • there is no hazardous substance that has always
    the highest HTP for the different environmental
    compartments
  • it seems that Pb has never the highest HTP
  • Ecotoxicity potential (expressed in 1,4-DCB
    equivalent) for the different environmental
    compartments types of ecotoxicity (water,
    sediment and terrestrial)
  • Hg has always the highest ecotoxicity potential
  • Pb has always the lowest ecotoxicity potential

15
Dose-response relationships
  • Potential effects of the presence of the
    hazardous substances in the different phases
    (production, users, end-of-life) of the life
    cycle - preliminary results based on emission
    factors to water, air, waste

16
Dose-response relationships - Example
Emission factor
Fluorescent lamps emission during production
use waste management (mg/106 Lh)
waste
air
aquatic (after WWT)
max
min
max
min
max
min
 
100
30
0.2
0.07
n.a.
Pb
2100
1900
0.04
lt 0.00001
Hg
0.6
e.g. for Pb (air, max) emission factor (in
mg/106 Lh) number of Lh per fluor.lamp
(0.2 mg/106 Lh) (10,0001000/106 Lh) 2
mg/fluor.lamp
17
Identification of costs
  • Literature review
  • Overwhelming number of references available...
    but not on impact quantification
  • More or less useful
  • Full RIA UK (May 2006)
  • Belgian Federal Public Service Health, Food Chain
    Safety and Environment (Nov 2005)
  • ERA Technology Investigation of exemptions
  • GreenRose SMEs

18
Identification of costs
  • National authorities - Compliance costs
  • Activities
  • Communication
  • Monitoring and review
  • Exemption procedure
  • Enforcement
  • Quantification of
  • Resource costs
  • Time/staffing requirements

19
Identification of costs
  • Companies - Compliance costs
  • Activities
  • Training or information measures
  • Collecting and reviewing information
  • Exemption procedures
  • (Temporary) monetary losses/gains of e.g. ??
    turnover, discontinuation of non-compliant
    products, delayed introduction of products
  • Quantification of
  • Resource costs
  • Time/staffing requirements

20
Identification of costs
  • Companies - Technical costs of phase-out of RoHS
    substance
  • Capital expenditure
  • Operating expenditure
  • RD expenditure
  • Ability to pass on costs to customers
  • Companies - Trade impact change in sales volumes

21
Identification of costs
  • Social costs/benefits
  • Gain/loss of jobs
  • Implementation of new health and safety measures
    in companies
  • Impact on consumer e.g. pricing out of lower
    income groups

22
Quantification of costs/benefits
  • Stakeholder consultation National authorities
  • Quantified response by 4 MS
  • Reliable quantitative information is difficult
    because budgets are often not yet attributed
  • Monitoring and review costs
  • XRF analysers for testing (30,000 to 45,000
    each)
  • Gas Chromatography Mass Spectrometer analysis
    (20,000 )
  • Studies to prepare RoHS implementation e.g.
    development of inspection methodology

23
Quantification of costs/benefits
  • Stakeholder consultation National authorities
  • Dedication of staff time
  • Activities
  • Communication
  • Placing information on the internet
  • Dealing with scope issues and public queries
  • Training of inspectors
  • Investigations not resulting in prosecution
  • Participation in TAC meetings
  • Participation in EU-wide RoHS enforcement network
  • Etc.
  • Total of 30-100 of FTE

24
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • Profile of respondents
  • Response of 19 companies (of which 5
    non-quantitative)
  • All large companies
  • Activities
  • IT and Telecommunications equipment (12)
  • Monitoring control instruments (6)
  • Large household appliences refrigerators and air
    conditioning (5)
  • Medical devices (4)
  • Consumer equipment audio/video/tv (2)
  • Electrical and electronic tools (1)
  • Small household appliences watches (1)

25
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • Resource costs
  • Figures from 14 companies expressed in and/or
    FTE
  • Very broad range of figures
  • Technical costs of phase-out of RoHS substances
  • Mainly lead (6 companies)
  • Not considerable for other substances?
  • Only one company gave a figure for CrVI

26
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • Technical costs of phase-out of lead
  • Capital expenditures Large ranges in costs of
    replacement or modification/refurbishing of
    machinery
  • Operating expenditure
  • Increased direct material costs (5) from 7,500 to
    62,500 /tonne of Pb phased out
  • 0- 10 increase in energy costs

27
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • RD expenditure
  • Personnel, materials, depreciation costs
  • Adaptation of existing design often requires more
    resources than new design
  • Extreme cases between
  • Companies with relatively high absolute RD
    costs, but low share in total RD
  • Companies with relatively low RD costs, but high
    share in total RD
  • Ability to pass on costs to consumers depends on
    market competitiveness, product lifetime,
    activity (assembler/component supplier), etc.

28
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • Extrapolation per product group is necessary e.g.
    different length of product life
  • Impossible to extrapolate
  • Low response
  • Lack of representativeness per product group
  • Lack of representativeness in company size
  • Lack of economic indicators e.g. turnover
  • Often difficult interpretation e.g.
  • Cumulation of resource costs/staff time
  • Cost of XRF analysers up to 15 million

29
Quantification of costs/benefits
  • Stakeholder consultation Companies
  • Social costs and benefits
  • Gain/Loss of jobs
  • Job loss (0)
  • 0 jobs gained (6)
  • 2 jobs gained (5)
  • 10 jobs gained (3)
  • 30 jobs gained (1)
  • 50 jobs gained (1)
  • Consultancy contracts (2)
  • Mix of permanent/temporary
  • Increased focus to general Material Substance
    requirements (1)

30
Impact on the Internal Market
  • Legal basis of RoHS Art. 95 of EU Treaty
    (measures for the approximation of the provisions
    laid down by law, regulation or administrative
    action in Member States which have as their
    object the establishment and functioning of the
    internal market)
  • Whether and to what extent are differences in
    implementation hindering the functioning of the
    Internal Market?
  • E.g. scope, monitoring, enforcement procedures

31
Selection of inefficiencies reported by
TA/companies
  • Need to involve the whole supply-chain
  • Collection of compliance proof e.g. material
    declarations
  • Education and training e.g. of non-European
    suppliers
  • Testing compliance of products, parts, components
  • Stock management market segmentation issues
  • Markets with and without RoHS legislation
  • Products included and exempted from RoHS
    legislation
  • Compliant and non-compliant products
  • Length and transparancy of exemption process
  • Unequal implementation and transposition in MS
  • Scope-related issues e.g. discrepancy in
    individual Member State enforcement

32
Impact on innovation
  • Whether and to what extent has the RoHS ban an
    impact on innovation
  • Impossibility of using banned substances
  • prolongs the time-to-market (thereby increasing
    the costs of innovation) e.g. checks and
    reporting along supply chain
  • retains companies from exploring new research
    avenues (substitution innovation in other
    field)
  • Innovative products may be discriminated against
    mature products performing a similar function
    that have already been granted an exemption
  • Innovation push towards cleaner electric and
    electronic products provided by the RoHS ban
  • granting of exemptions may hinder innovation as
    industry is not encouraged to further explore
    alternatives

33
Impact on innovation
  • Preliminary information
  • Customer relationships role of advisors as well
    as suppliers
  • Branding opportunity to market green
    credentials
  • Compliance linked strategies RoHS and others
    guide future RD and design strategies
  • Standardisation setup of common reporting
    format, standard definitions, set method for
    testing
  • Technical challenges time derogation is
    unlikely to have a significant impact on
    innovation

34
Other impacts
  • Impacts on markets for raw materials/
    components/inputs to production
  • Price changes
  • Availability or shortages of inputs
  • Quality problems of input
  • Market fragmentation resulting from RoHS
    exemptions
  • RoHS synergies or conflicts with other EU
    legislation (REACH, EuP) and other policy
    objectives (e.g. identifying cases where the RoHS
    has increased/reduced world trade integration)
  • Needs to be further elaborated
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