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In Electronics Business, Waste Matters

The electronics industry, prodded by recent European Union action and hoping to fend off state-by-state regulations, is asking the federal government to lead the way in determining how to recycle consumer-electronic products such as computers and televisions.

Congress began exploring the issue before its August recess and a House subcommittee continued this month. The Commerce Department will issue an overview to Congress soon.

The main legislative vehicle at the moment is a bill sponsored by Sens. Jim Talent (R-Mo.) and Ron Wyden (D-Ore.) that offers a tax credit to consumers and manufacturers who recycle televisions or computers. More importantly to the industry, the legislation directs the Environmental Protection Agency to study the feasibility of establishing a nationwide recycling program for “e-waste” that would preempt any state plan.

A big reason for the flurry of activity is the EU’s Waste Electrical and Electronic Equipment directive, which requires electronics manufacturers to recycle products that have reached “end-of-life” status.

Manufacturers who sell in the U.S. want one system to take root here, rather than as many as 50 different state regulations. Three states — California, Maine and Maryland — have already passed laws, and others, as well as local municipalities such as New York City, are looking to get on board.

California, for instance, has passed an “advance recovery fee,” which consumers pay when they buy new computers, laptops and television sets.

But the electronics industry isn’t wild about using the EU system as a model, either. The WEEE directive is only a framework for member countries to implement, which likely will produce “25 variations on a theme,” said Richard Goss of the Electronics Industries Alliance, a trade association for the consumer-electronics industry. “We can point to Europe and say: ‘This is why it needs to be done on a national level, to avoid 50 different programs.’”

One major player in the industry, Hewlett-Packard, is going even further, offering to take on the responsibility of recycling its own products. But its reasons are not purely altruistic: In the increasingly tight electronics manufacturing market, the Palo Alto, Calif.-based giant sees a competitive advantage if “producer responsibility” becomes federal law.

With its experience in recycling and the facilities it has access to, HP thinks it can recycle its materials better than anyone else. The California approach lumps all products together, “regardless of how easy it is to recycle,” Goss said. “HP thinks they have greener products.”

David Isaacs, HP’s director of government and public policy, said recycling fees are inherently flawed because the government collects and allocates the money. Looking at the IOUs stacked up in the Social Security trust fund, HP does not have much confidence that the government would show the necessary restraint to keep from raiding the recycling kitty to foot the bill for programs that have nothing to do with recycling.

“When given the choice of either absorbing these new costs and being able to manage them or writing a blank check to the government on how much they’re going to tax our customers, we decided we could probably do better than the government,” he said. Fees are “effective at raising a lot of money but not effective at recycling products in a cost-effective manner.”

Furthermore, HP believes the producer responsibility approach will go a long way toward driving down the costs of recycling, which can be considerable.

“If there’s a fee, there’s no incentive to improve product design and reduce the cost of recycling,” Isaacs said.

Still, within the industry, HP more or less stands alone in its willingness to shoulder recycling costs.

Indeed, Panasonic has teamed up with 14 other major name brands, including IBM, Sharp and Sony, to form the Coalition of Electronics Manufacturers for Responsible Recycling, which strongly opposes the HP approach.

This group believes California’s law should be emulated. Mark Sharp, a Panasonic lobbyist, likened advance recovery fees to tire or oil disposal fees. In the Golden State, depending on screen size, consumers pay from $6 to $10 into the electronic recycling fund when they purchase laptops, televisions and computers. The fee is noted as a line item on their invoice and collected by the retailer.

“Everybody is pretty happy with the law,” Sharp said. “It’s getting products out of the landfill and taken care of properly, and that’s our goal. We view this as a way to have a consistent form of funding that is relatively modest.”

For its part, another market leader, Dell, says it backs a “market-driven approach,” according to its spokeswoman. But many major retailers — wanting to stave off the role as fee collector, which they fear may make customers more reluctant to buy the products they sell — are willing to get behind producer responsibility. A Best Buy Co. senior vice president told the Senate Environment and Public Works Committee in July that his company also looks favorably on the Talent-Wyden bill.

Where different manufacturers come down on the issue of who should pay for recycling largely depends on what products a company makes and “on your business model and your business principles, your sales and distribution model and your ability to recycle,” Goss said.

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