Regulating the Impact

The information technology boom and bust of the 1990s is leaving a lot more than worthless shares and frustrated investors in its wake; it is producing a mountain of electronic waste as technological advancements make computers and other devices containing toxic products obsolete at a constantly increasing pace.

Governments around the world are taking note, and action. Perhaps the approach that is most aggressive — and disconcerting to the electronics industry — is to be found in Europe.

The European Union has proposed two measures that would require electronics manufacturers to take back and recycle their used products and impose a ban on the use of some key — but toxic — substances, like lead and mercury, in electronics. The full European Parliament is expected next month to consider the two directives that would apply to anyone who sells products in Europe, the biggest foreign market for U.S. electronic goods.

"As a practical matter, it would have global implications," says David Isaacs, Hewlett-Packards manager of federal public policy. "We typically design and manufacture one product for global distribution. You cant have a Danish computer and a Minnesota computer and a Buenos Aires computer."

The ban on hazardous substances like mercury and lead has producers most concerned. If approved in its current form, the ban could force manufacturers around the world to change the way they make their products. The result: Consumers and businesses could end up paying more for electronics that are less energy-efficient, industry officials say.

Still, there are growing calls around the world for producers to take greater responsibility for what happens to their products after they become obsolete.

"This is a major step towards the objective of sustainable production and consumption," said Margot Wallstrom, head of the European Commissions environment directorate, when the directive was formally unveiled last summer. The commission is responsible for developing legislative proposals for the EU. "Due to the fast pace of technological innovation, electrical and electronic equipment constitute one of the fastest growing waste streams in the EU."

Several countries have established take-back and recycle requirements for electronic waste, though none have gone as far as the European Commissions proposal.

"Clearly, whats being proposed in Europe is the most ambitious," says Paul Hagen, an environmental lawyer at the Washington law firm of Beveridge and Diamond who represents several electronics companies. "The proposed prohibitions on certain metals are most problematic for industry. The take-back initiatives are on an order of magnitude lower in terms of their impact on the industry as compared to trying to [tell] them how to design products."

Increased Pressure to Recycle

There is growing concern around the world about the buildup of electronic waste, much of which still ends up in landfills. For example, in 1998, only 11 percent of the 20 million PCs that became obsolete in the U.S. were recycled, according to a National Safety Council study, which is among the few comprehensive reports on the issue.

Computers and other electronics dumped into landfills run the danger of leaking toxic chemicals into the soil that can make their way into the ground water, according to the Silicon Valley Toxics Coalition. A computer monitor alone may contain several pounds of lead, which can damage kidneys and the central nervous system. Mercury, from the monitor, can cause brain damage.

But electronics also pose a problem at the beginning of their life cycles. Countries like Japan and Taiwan have also had serious problems with pollution from electronic manufacturing plants, particularly from waste water discharged at these plants, according to Fumikazu Yoshida, an economics professor at Japans Hokkaido University who has written extensively about ground water pollution caused by technology manufacturing plants. He argues that governments, which are often eager to attract high-tech companies, should more closely scrutinize the manufacturing processes at such plants.

Both industry and environmentalists have had a difficult time assessing the potential scope of the electronic waste problem. There are no global figures on how much electronic waste will be produced in coming years. But the National Safety Council has estimated that by next year the number of personal computers that will become obsolete will exceed the number of new products shipped by more than 3 million units — in the U.S. alone.

The U.S. makes up 30 percent to 50 percent of the worlds market for electronic goods, and "whats true about the U.S. scales up," says H. Scott Matthews, research director at the Green Design Initiative at Carnegie Mellon University.

Within the EUs 15 member states, 6 million tons of electronic waste were produced in 1998, which made up 4 percent of total municipal waste. This is expected to increase 3 percent to 5 percent each year, according to Elena Lymberidi, ecological products policy coordinator at the European Environmental Bureau, a federation of environmental groups from around the world.

Most of the previous efforts to address the problem of electronic waste have focused on take-back and recycling.

In South Korea, consumers pay a fee when they buy a computer and receive a refund if they return it, according to Gary Davis, director at the Center for Clean Products and Clean Technologies at the University of Tennessee at Knoxville.

Taiwan has a program that requires manufacturers to pay fees that fund collection and recycling programs. In Japan, a new law goes into effect this month requiring that household appliances such as televisions and refrigerators be recycled. Environmentalists are hopeful a similar scheme will be extended to computers.

Several Japanese electronics companies, such as Sony, have experimented with using lead-free solders in their products. And Dave McCurdy, president of the Electronic Industries Alliance (EIA), says he is worried that Japan may not be far behind in adopting a lead ban if the EU goes forward with its directive.

In Europe, some EU member states have already passed laws requiring recycling of electronic equipment, while a handful also have proposed some bans on the use of lead in products. The EU legislation is in part aimed at harmonizing laws across the 15 member states.

Outside the EU, both Switzerland and Norway have had take-back and recycling laws covering electronics since 1998.

While there has been some action at the state level, the U.S. has resisted imposing any federal requirements for the recycling of electronic waste. Some companies have established voluntary programs in the U.S. For example, an IBM program promises to recycle any old computer or donate it if the consumer pays $29.95 and sends it to the company, while Hewlett-Packard operates a recycling facility for old equipment used by the company and some of its corporate customers.

Some environmentalists and industry officials have discussed trying to establish a national voluntary scheme to address electronic waste.

The Organization for Economic Cooperation and Development (OECD) has been developing a guide for countries to implement "extended producer responsibility" to shift the onus for recycling obsolete products from government to producers. While many OECD member countries have embraced the concept, industry has managed to push the U.S. to instead support the idea of shared responsibility.

Still, despite all the efforts to promote recycling, industry officials say potential obstacles remain.

Some countries have imposed restrictions on the cross- border shipment of old electronics. Beveridge and Diamonds Hagen and others say that companies must be allowed to ship obsolete electronic materials across national borders because its not feasible for companies to have their own recycling centers in each country. If governments want companies to recycle electronic waste, "we need to allow it to move freely," Hagen says.

EU Action

The environmental proposals are just the latest example of the EU setting tough new technology policies that essentially impose restrictions on companies outside its jurisdiction. The Europeans adopted a directive a few years ago that imposed tough privacy protections on the exchange of data about European consumers.

EU officials and environmentalists argue that the two latest proposals, formally known as the directive on Waste, Electrical and Electronic Equipment (WEEE) and the directive on the Restriction of Hazardous Substances (RHS), are aimed at taking a comprehensive approach to the issue of electronic waste by addressing the problem at the beginning and end of a products life cycle.

"There is a growing realization of the buildup of waste from electronic products and the hazards they pose in terms of volume and substances," says Anders Jessen, counselor for transport, energy and environment at the EUs Washington delegation.

Under the proposals, as drafted by the EUs European Commission, producers of electronics would have to pay for the recovery — most likely at collection points, treatment and "environmentally sound disposal" of electronic waste.

The directives would cover a broad range of products used by consumers and businesses that may end up in dumps, including computers, printers, cell phones, television sets, refrigerators and lamps. >>

Industry officials say they do not oppose the EU legislation, but would like to make it more palatable.

"EIA and the industry we represent . . . is supportive of the broad objective of the WEEE," says McCurdy. Industry, he says, just wants to "make sure its done thoughtfully."

EIA and others worry about how much financial responsibility manufacturers would have under the directive and about when their responsibility for the products begins. Industry representatives say it is not clear who is responsible for picking up old electronics from consumers, and they fear member states may impose different requirements. HPs Isaacs and others argue that municipalities should take responsibility for collecting obsolete electronics because they have the infrastructure to do it.

"We definitely feel that manufacturers have a responsibility, but were not the only ones with a responsibility,"says Mark Small, vice president for corporate environmental affairs at Sony Electronics. "We believe its a shared responsibility."

The electronics industry also has complained about a provision in the proposal requiring companies to take responsibility for "historical waste" — electronics that will become obsolete before the directive is put in place.

In fact, the European Parliaments Environment, Public Health and Consumer Policy Committee, which is expected to vote on the directives at the end of April, has drafted a proposal that would move up the date when companies need to start paying for the collection and disposal of historical waste from five years to 30 months from when the directive goes into effect.

"If youve been in EU markets since 1960 and have to pick up everything on that and you did not anticipate it, itll cut into bone," says Jennifer Guhl, director of international trade policy at AeA, an electronics industry group formerly known as the American Electronics Association.

Still, industry has more serious concerns about the RHS directive, which would ban the use of some substances used in electronics, including lead and mercury, but also cadmium, which is found in some printed circuit board components.

The European Commissions proposal calls for such chemicals to be eliminated from electronics by 2008, though a parliament proposal would move that up to 2006. Industry officials say this phase-out date was arbitrarily chosen without enough consideration as to whether companies can find alternatives. They also claim the proposed bans are not supported by strong scientific evidence.

Despite the tests that have been done with lead-free solders, industry officials argue there are no suitable substitutes yet for all uses of lead in electronics and no alternatives for mercury, which is used to increase energy efficiency and illumination in such products as laptop computers and flat-panel televisions.

"Everyone knows that lead has been associated with environmental problems and no one disputes that," Isaacs says. But he and others argue the EU should do a risk assessment on the use of lead in electronics before banning its use.

Lead has many uses in electronics, including soldering printed circuit boards and in the glass used in cathode ray tubes in personal computers. While substitutes have been identified for lead solders, industry officials argue that there is no guarantee these will be any safer for the environment.

"Even if its feasible [to eliminate these substances], is the alternative to it better?" asks Wayne Balta, director of corporate environmental affairs at IBM. "No one really knows the answers."

The proposed directive does provide for some exceptions to these phase-outs, but it is unclear what uses would still be allowed. Industry plans to seek specific exemptions and more clarity on the process for gaining an exemption, says James Lovegrove, managing director at AeAs European office in Belgium.

Recycling Not Enough?

Environmentalists, on the other hand, argue that there is plenty of scientific evidence of health problems caused by lead, mercury and other substances that would be banned by the EU legislation.

"Whenever youre proposing legislation, there will be conflicting science, and we think there is compelling science that these are substances of concern," the EUs Jessen says.

Adds Michael Bender, a consultant at the Silicon Valley Toxics Coalitions Clean Computer Campaign, "I think the EU is finally turning the tables on industry and shifting the burden of proof of whether products are safe or unsafe to them."

Take-back and recycling are only part of the solution, environmentalists say. They argue that manufacturers need to make it easier to recycle their products and find ways to use less hazardous substances to reduce the health risk from products that do end up in landfills.

Many used electronics will "end up in municipal waste" sites, the European Environmental Bureaus Lymberidi says. "Im not sure the circle is closed by a high recycling and collection rate" alone.

In fact, the EU may propose a plan to push electronics producers to design their products to be more environmentally friendly and more easily recyclable. While insisting the plan is still in the discussion stages, Annika Ostergren, a spokeswoman at the European Commissions environment directorate, says such a proposal would aim to force "producers to think about products from the cradle to the grave."

Industry representatives cringe at the prospects of such a proposal, fearing it will dictate how they should design their products. If they require producers to design their products in a certain way, governments may be "closing the door on alternatives, while alternatives may be better," Matthews says.

But Ostergren argues that industry will benefit in the long run because consumers want to buy "green" products as long as theyre reasonably priced.

The industrys worries about governments dictating product design are overblown, says Davis at the Center for Clean Products and Clean Technologies. They are "not going to tell them how to make a printed circuit board."

Global Implications?

Electronics makers say it is impossible to estimate the potential costs of complying with the EU directives but claim the price tag is likely to be substantial. They argue that the directives will not only drive up the cost of their products for consumers but also force producers to divert research money aimed at developing new products to finding alternatives to the banned chemicals.

For example, many of the alternative solders are silver-based, which is more expensive than lead, and less energy-efficient, according to Holly Evans, EIAs director of environmental affairs.

The European Commission has estimated that the price tag for electrical and electronic products could rise by 1 percent, assuming companies pass on their compliance costs to consumers.

And that impact could be felt far beyond Europes borders.

Multinational electronics producers "have facilities all over the world and if the European continent decides to phase out . . . [some] hazardous constituents over several years, I dont see how they can avoid it in the United States," says Bender at the Silicon Valley Toxics Coalition.

Small, at Sony, however, says his company often produces different products for different markets and would not rule out producing products solely aimed at Europe.

Other companies also make different products to adapt to varying regulations, says Michael Alexander, senior research associate at the National Recycling Coalition. "Its a question of cost-effectiveness," he says.