ENVIRONMENTAL IMPROVEMENT FROM THE POINT OF VIEW OF EU PRACTICE CLOSED LOOP ECONOMY
TAMÁS BÁNYAI
University of Miskolc, Department of Materials Handling and Logistics 3515 Miskolc-Egyetemváros, Hungary
alttamas@gold.uni-miskolc.hu
[Received November 15, 2002]
Abstract: Establishing an environmentally sustainable and economically efficient economy is a long- term aim for Hungary. The future EU-membership makes it not only possible but also necessary.
Providing a suitable quality of life involves substantial responsibilities for today’s society in environmental terms. Within the framework of this paper the author will present the main tasks to be fulfilled in order to harmonise the current Hungarian closed loop economy with EU practice. Because of the high logistic costs of the recycling systems of closed loop economy the author focuses on the logistic aspects and tasks of the improvement phases.
Keywords: closed loop economy, globalisation, logistics, recycling
1. Introduction
Strategies for environmental protection and recycling of used appliances, industrial and communal wastes are helpful in order to create a closed loop economy. In recent years, the notion that for environmental and legislative reasons the improvement of the national environmental policies and practice, including the recycling strategies, is desirable and in many cases might be economically beneficial has been gaining ground. Although according to recent surveys the state of the environment in Hungary is in line with average values of the European Union (OECD 2000), the main challenge for Hungary is to achieve sustainability in economic, environmental and technological terms. With the aim of accession to the European Union, the harmonisation strategy must be worked out and implemented. This harmonisation strategy includes not only legislative aspects, but also social, technological, financial and logistic considerations.
2. Globalisation and EU membership
The changes brought about by the future EU membership in the Hungarian macroeconomic strategy give priority to the problems of globalisation and sustainability. Globalisation includes a great many environmental problems, such as climatic changes, dramatic loss of ozone in the lower stratosphere, eutrophic land, acid rain, waste, water resources, bio- diversity, rain forests and standing timber, land, etc. These environment-related globalisation problems call for global thinking. The EU membership of Hungary gives not only technological, but also moral, legislative and financial support to contributing to the
success in avoiding global environmental catastrophes. Therefore the EU candidate countries should do their best to bring their laws, economy and regulations in line with EU directives and regulations. Hot areas are environment protection, development of environmental awareness, development of the environmental industry, waste management, the application of clean technologies, closed loop production and the introduction of environment control systems in companies.
One of the first steps of this contribution was the definition of the National Environmental Programme. The main objectives of the National Environmental Programme are as follows (Government 2002):
• to ensure the conditions for a healthy environment, reduce and eliminate the impacts endangering human health; preserve and restore environmental and natural conditions necessary for a suitable quality of life;
• to preserve the nature -close state of the living and built environment, to safeguard natural systems and natural values, and ensure their survival as well as preserve biological diversity;
• to provide for sustainable development in natural resources management;
• to ensure a harmonious and reasonable relationship between economic development and the environment, aimed at reasonable use of and minimum damage to the environment.
The objective of the Act on Environmental Product Fees and on Environmental Product Fees of Individual Products is to create financial resources for the reduction and prevention of damage to the environment or one of its elements caused by the production or the use of a product or directly or indirectly imposing harm or stress on the environment in consequence of the consumption of a product and to make a contribution to the reduction of the pollution of the environment and to stimulate economical management of natural resources. The wording of the Act is relevant to the first home market retailer or the importer of the listed products who hereinafter will be referred to as obligee.
Purchasing Production Distribution
Recycling
Users
Used appliances Product recycling
Component recycling
Material recycling
Refurbishment Disassembly
Schredding
Disassembly
Supply chain
open loop closed loop
Figure 1. Closing the loop
The introduction of the product fee was one of the first steps leading to the beginning of the realisation of the idea of national recycling pilot systems or industrial systems.
The National Environmental Programme and the Acts on Environmental Protection project the vision to develop the open loop economy into a cost-efficient closed loop economy and will implement not only macro- but also micro -economic changes in the Hungarian industry. The development and establishment of a future environment friendly economy has begun.
3. Tasks in developing the closed loop economy of waste of electric and electronic equipment (WEEE)
The recycling of the products in question is determined by international agreements as well (Miro 1997):
• the Rio de Janeiro Conference, which stated that "natural load is not restricted and we do not pay enough",
• BS (British Standard) amendment 7750,
• EMAS Environmental Management and Audit System,
• the introduction of ISO 14000 in environmental auditing,
• the Basel Convention on the qualification and export of waste in Europe, the recommendation of the ‘polluter pays’ principle.
The European Union decided that the improvement of closed loop economy is the most important in the field of equipment containing hazardous materials, like electric and electronic equipment. The European Parliament and the Council have made proposals for directives on waste of electric and electronic equipment. On the basis of these directives the milestones of possible future improvement are the following: treatment, selective collection, recovery, financing in terms of WEEE, information for users, information for treatment facilities, information requirements, reporting obligation and adaptation to scientific and technical progress. Thes e milestones show that the Hungarian society has to solve a huge number of problems and bring about changes in the fields of legislation, industrial and information technology, logistic solutions, communication, etc. Within the framework of the harmonisation of legislation, the Hungarian government has to develop legislation, directives and guidelines, which should cover all electrical and electronic equipment used by consumers and electrical and electronic equipment intended for professional use, which is likely to end up in the municipal waste stream.
The EU directive lists the categories of the equipment to be treated and the materials and components to be removed. The directive covers the following categories of electrical and electronic equipment: large household appliances, small household appliances, IT &
telecommunication equipment, consumer equipment, lighting equipment, electrical and electronic tools, toys and leisure equipment, medical equipment systems (with the exception of all implanted and infected products), monitoring and control instruments, automatic dispensers. As a minimum, the following substances, preparations and components have to be removed from any separately collected WEEE (waste of electric and electronic equipment): PCBs containing capacitors, components containing mercury, such as switches, batteries, printed circuit boards, toner cartridges, liquid and pasty, as well as
colour toner, plastics containing brominated flame retardants, asbestos waste, cathode ray tubes, CFC, HCFC or HFC, gas discharge lamps, liquid crystal displays of a surface larger than 100 square centimetres and all those back-lighted with gas discharge lamps (Proposal 2001).
The logistic and technological systems are to be set up after the harmonised national legislation and directives become effective, allowing final holders and distributors to return the WEEE at least free of charge. When supplying a new product, distributors shall be responsible for ensuring that such waste can be returned to them free of charge on a one to one basis as long as the equipment is of equivalent type and has fulfilled the same functions as the supplied equipment; distributors may also establish alternative arrangements (Council 2001). The collection target for private households should be set at a minimum rate of four kilograms on average per inhabitant per year in the EU states. This target is to be reached in the candidate countries after their accession. In the field of WEEE, the recovery rates will be defined for future EU members. For current members the directive defines recovery and recycling rates shown in Table 1.
Category Recovery rate Reuse and recycling rate
Large household appliances 80% 75%
IT and telecommunication equipment,
consumer equipment 75% 65%
Small household appliances, lighting equipment, electrical and electronic tools, toys and leisure equipment, monitoring and control instruments, automatic dispensers
70% 50%
Table 1. Recovery and recycling rates of WEEE in the EU
The European Union has begun to support the EU candidates among the Central Eastern European Countries. Within the framework of this support some SMEs, multinational companies, research institutes and universities have the opportunity to take part in European networks and research projects in the field of sustainability, environmental protection, recycling and closed loop economy. One of the biggest networks was developed within the framework of a Brite-Euram project entitled ‘Closing the loop from the product design to the end of life technologies’. This network defined the milestones of the improvement of an economically beneficial closed loop economy as quality aspects, communication and marketing, logistics and qualification. The quality aspects include the evaluation of existing standards and directives, the evaluation of methods and processes for quality inspection concerning recycling and disassembly, the classification system for assessment of a component’s ability for recycling and reuse and the measures for re - establishment of the original quality. The communication and marketing sectors concentrate on the determination of the remaining value, leasing possibilities, integration of quality assurance, customers need, market of used goods, selling of used goods, structure of communication and the legal situation. Logistics focuses on the improvement of technologies (disassembly, reuse, refurbishment, remanufacturing and recycling), collection systems, creation of the concept for collection logistics and pre-disassembly, market survey in waste management. A relevant objective from the point of view of CEECs is qualification, which includes the following tasks: collection of reliable data for sustainable
product development processes, evaluation of training-on-the-job based learning tools to improve the product development process, establishment of an Internet/Intranet data highway to provide the product designer and the recycler with the latest information about product specifications (concerning recycling, reuse and refurbishment), conception for a networked visual training course for sustainable product development.
4. Logistic aspects
The operation costs of recycling systems are determined by technological and logistic processes. The logistic processes can be divided into external and internal sub-processes.
The external logistic tasks include the collection- and distribution-related operations and the internal logistic tasks to be performed in disassembly plants, collection and distribution storage, refurbishment and reuse plants, etc. Depending on the level of recycling (product, component or material) a great number of global planning aspects have to be taken into consideration (Table 2).
External aspects Internal aspects
Products to be collected and recycled Topology of the collection/distribution system Hierarchical and heterarchical characteristics Collection/distribution routes, route planning Planning of storage
Choosing transport and loading devices Scheduling of supply/distribution
Topology of the disassembly systems Topology of the disassembly plants Choosing material handling devices
Planning of stores of used products and reusable components/materials
Scheduling of disassembly Pre-disassembly possibilities Quality control system
IT tools and methods
Table 2. Logistic aspects of the improvement of recycling systems (Cselényi 2000)
The above mentioned external and internal aspects are general aspects because they depend on the sources of the products to be collected: household appliances, communal wastes, industrial appliances, production-internal industrial wastes. Figure 2 summarises the most characteristic material flow directions of the recycling of WEEE from communal and industrial users. The figure shows the multi-level characteristics of the system and the alternative directions of used products from end users to recyclers depending on the type, quantity and quality of the products and location of the end users.
Figure 2. Material flow of a multi-level recycling system
The different varieties of recycling systems must be evaluated from economic, ecological, technological, logistic and social aspects.
In the logistic evaluation of the whole system the following aspects have to be taken into consideration: delivery times, accuracy of supply, running times, utilisation of capacities, stock quantities, flexibility, transparency of the system, high forwarding capability, quality of product.
In the economic/financial evaluation the following costs and incomes have to be taken into account: investment (resources), costs of operation (collection, storage, disassembly, reprocessing, distribution, waste treatment), income arising from the sale of products deposited at the collection points, amount of financing central and regional environmental funds, contribution of manufacturers and processors involved in the collection, a certain proportion of the product fees included in the retail price (Figure 3).
Figure 3. Costs and incomes of recycling
The importance of logistics can be justified by the high proportion of logistic costs (as investment and operation costs) and these costs show that optimum logistic solutions are able to decrease the financial outcomes and lead to the establishment of a profitable system.
5. State of the art vs. EU practice
The Hungarian government and the Hungarian industry produced the first characteristic results in the fields of computer recycling, refrigerator recycling, collection of batteries and tyres, selective collection of communal wastes, etc. at the end of the 1990s.
One of the most important developments was the establishment of the recycling system of refrigerators. The basic establishment of this collection and recycling (disassembly and reuse) system took a long time and at present does not meet the requirements of EU directives. The collection and recycling system must be set up and harmonised in a few years’ time and meet the collection and recycling rates defined by the directives. The first problem is collection rate. Today Hungarian households buy about 180,000 refrigerators and there are about 60,000 pieces collected and disassembled.
The directive shows that the collection or recovery rate for refrigerators (category: large household appliances) must reach 80%. This recovery rate means the future collection and handling of more than 140,000 pieces of refrigerators. Today’s collection system is not capable of handling this amount and the reuse rate is limited by the disassembly plant capacities. These facts mean that the future improvement of a modified recycling system of refrigerators can be divided into two major directions: logistic and technological development. The interpretation of the logistic system cannot be uniform, as there are several recycling logistic systems and organisations in existence and operation, either exclusively or parallel with each other. An important strategic decision is the range of activities of collection and reuse systems. There are two possible directions to develop systems: the first one is to establish product-specified collection and recycling systems and the second one is to set up integrated systems for product groups (e.g. on the basis of product categories defined within the framework of directives).
The recycling of PCs represents another characteristic of the Hungarian situation. Because of the underdevelopment of technological devices and systems of recycling-related industrial resources some important, profitable processes are outsourced to foreign countries. E.g. after the disassembly of PCs the recovering of gold, silver, palladium and other valuable materials from printed circuit boards is outsourced to Sweden and the plastic parts are handled in Hungary. Technological development and long-term investment in high tech solutions are the keys to keeping the value producing processes.
Although technological development and high tech solutions are required for the economical disassembly and reuse processes, they depend on the quality of the collection.
The inspection of collected products (in the case PCs) showed that the pilot systems realised in the EU showed, the following characteristics of products collected to be recycled: various damage to houses or control covers, permanent labels or markings, some old equipment tampered with prior to collection, many different products, many fewer screens than PCs. It means that the quality of end of life possibilities is decisively determined by the quality of the logistic background and a careful and protective treatment of re-usable equipment raises the percentage of re -use and increases the economic and ecological benefits (Krug 2002).
in order to establish a reliable, effective and profitable system in conformity with EU directives, the IT tools and systems must be improved to meet the require ments of the co- operative work in terms of communication and e-business. It means that Hungary needs to concentrate on the improvement of communication technologies (electronic data interchange with EDIFACT standard, electronic mail with optional multipurpose inter-mail extension, bulletin board system, intranet and world wide web, workflow management system, etc.) as well.
6. Conclusion
Closed loop economy is a major horizontal issue that needs to be addressed in a comprehensive way at all stages of economic activities. To take account of the developments in closed loop economy and other developments affecting it, the following
activities are required: review of waste policy, legal framework and implementation, co- operation, personal and social motivation, instruments (resources and methods).
As the 2002 Regular Report on Hungary’s Progress towards Accession (Commission of the European Communities) acknowledges, in order to complete preparations for membership, Hungary’s efforts need to focus on finalising adaptation (in the sectors of air quality, waste management, nature protection and chemicals) and on strengthening the administrative capacity (Commission 2002). Integration of the environment into the planning and management of industry is being fostered by the development of national, EU and international co-operation.
Acknowledgements: This material is based on work supported by the Bolyai János Scholarship of the Hungarian Academy of Sciences. Any opinions, findings and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the Hungarian Academy of Sciences. I extend my warm thanks to József Cselényi, Gregor Eckerth and Helmut Krug for their invaluable help and contributions, without which this paper would be the poorer.
References
(Commission 2002): 2002 Regular Report on Hungary’s Progress towards Accession, http://www.mfa.gov.hu/euint/ index.html.
(Council 2001): 2355th Council meeting on Environment, Luxembourg, 7 June 2001.
(Cselényi 2000): Cselényi, J., Bányai, T. and Telek, P.: Logistic Aspects of Recycling of Waste of Electric and Electronic Products, Presentation at the Project workshop ‘Closing the loop from product design to the end of life technologies’, Bilbao, 2000.
(Government 2002): Hungary’s EU integration website, http://www.mfa.gov.hu/euint/ index.html.
(Krug 2002): Krug, H.: Experiences of Product and Component Reuse, Green Electronics Public Workshop, Presentation, Miskolc 2002.
(Miro 1997): Requirement by Law, Standards and Guidelines, Scientific Report within the framework of the MIRO project, BZLOGI, 1997.
(OECD 2000): Hungary – Environmental Performance Review (1st cycle), Conclusions and Recommendations, 2000, www.oecd.org.
(Proposal 2001): Proposal for a Directive of the European Parliament and of the Council on Waste Electrical and Electronic Equipment, 2000.
