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Like other countries, plastics use in Germany has grown rapidly over the last two decades, although very recently there has been a marked levelling-off of production. However, Germany remains the third largest producer and consumer of plastics in the world. Production of plastics grew at a rate of 2.2% per annum from 1976 to 1995 and consumption of plastic products grew at a rate of 3.8% per annum. (OECD, STAN Industrial Database). In addition, Germany is the second largest consumer of plastic packaging in Western Europe. In recent years, this market has shown considerable dynamism, with annual rates of growth averaging 7% a year. The market for plastic packaging is the most fragmented in the entire plastics industry. Germany has some 380 companies operating in this field. The highest concentration of suppliers is in the PET bottle sector, with Schmalbach-Lubeca the largest manufacturer in Europe. From 1996 to 2000, German production increased by an average of 6% per year.

In the 1980's, plastic waste was about 5.5% of German MSW by weight. This comprised 60% to 65% PE, 15% to 20% PS, 10% to 15% PVC and 5% to 10% others. There was very little PET then because of the ban on non-returnable PET bottles in Germany. Total figures for post-consumer plastic waste grew from 2 830 000 tons/year in 1990 to 3 650 000 tons/year in 1996 (Patel, 1996).

Waste and recycling policy

Subsequent to the first "German Waste Law" of 1977, the Government sought to encourage the industries involved in packaging to agree to a standstill agreement to retain the existing reuse packaging systems. Those agreements were enacted in an informal way in 1978. In 1979-80, the Government started to run a market test where reuse packaging and different kinds of one-way packaging were tested in a competitive way in relation to their economic and environmental aspects.

In April 1989, specific agreements with the beverage industry were established as a final option before legal instruments would be brought into force. The Government analysed the developments which followed in the beverage industry, and 6 months later started to outline the first proposal for an ordinance to protect reuse packaging systems for beverages. This proposal came under pressure from a lobby of packaging producers and fillers. The outcome was the German packaging ordinance of 1991 (VVO). This ordinance covers all kinds of packaging and laid down recycling targets for primary packaging. A quota of 72% to cover all primary beverage packaging was fixed. If this quota was not upheld by the industry, a compulsory deposit on one-way packaging would be put into force.

At present, Germany has a compulsory deposit with a high recycling target (Golding, 1999). 74% of mineral water bottles in Germany are re-used. Germany has a substantial pool system covering, beer, mineral water, soft drinks, juices and milk products. The 1986 Waste Avoidance Act had a provision for banning certain items of packaging and this was used in 1987 to force the withdrawal of a one-way PET bottle for soft drinks.

The Duales or Green Dot System

The Duales System Deutschland (DSD) is meant to reduce disposal of packaging material either by recycling or by reduced use.50 It is based on the concept of Producer Responsibility. Packaging was divided into different types each with its own regulation. The basic idea was that packaging should be taken back by producers. Initially, the German government planned to collect 50% of all packaging materials by January 1994. The second and more aggressive step required collection by July 1995 of 80% of all packaging.

In response to the VVO, German industry took advantage of one section which permitted companies to call on third parties to fulfil their obligations. The result was the creation of a dual system, in which a group of over six hundred companies formed the Duales System Deutschland (DSD) and authorised it to work with local governments to collect recyclable packaging materials. The German government gave DSD exclusive rights to handle this business and set certain conditions on its operation. These conditions included requirements that the programme offer national coverage, locate collection bins close to consumers, establish routine collection schedules, integrate the collection plan with state and local systems and meet the qualitative goals for collection and recycling set forth in the packaging ordinance.

Companies who wish to participate in the DSD program, thereby complying with the German statutory take-back requirement without the necessity of creating their own system, must apply for permission to use a "Green Dot" symbol on their packaging materials. A product bearing the Green Dot is guaranteed to be composed of recyclable packaging. For a fee, DSD licenses the use of this symbol to companies whose materials DSD is willing to accept. Consumers and retailers may dispose of sales packaging

50. A basic outline of the "Green Dot" system is given by Klepper and Michaelis (1994), Reynolds (1995) and OECD (1998).

bearing the green dot in DSD collection bins. The practical result is that retailers who do not want to have to send materials back to their suppliers, even if the supplier pays for any expenses, insist on using the symbol. VVO requires collection facilities at or near stores and return to the manufacturer.

To join DSD there is a fee per package based on packaging volume. As DSD also organises recycling there is a cost for that, but for most materials it was envisaged that reprocessing revenues would be sufficient to pay for costs incurred. However, this was not thought to be likely for plastics and so a separate organisation VGK was set up to recycle plastics. Packers and fillers make arrangements with VGK for reprocessing. These fees are much higher than for Green Dot. A charge of 0.02 DM was made by DSD for containers of 0.2 l. to 3 l., whereas the VGK fee is 0.5 DM. This makes the overall Green Dot payment for plastics much higher than for other materials. The figure below shows the financial flows arising out of the Green Dot.

Up until 1998, the reuse quota remained above 72%. Thus PET forms only a small part of waste, which does not have a direct recycling/re-use channel. The highest reuse rates occur with mineral waters (88%), carbonated soft drinks (77%) and beer (78%). 36% of non-carbonated soft drinks like juices and iced tea etc. and 28% of the wine are sold in reuse bottles. Reuse packaging systems were faced with a straight decline beginning in the mid 70's when one-way packaging entered the market. The soft drink market is much more heterogeneous, with carbonated soft drinks being bottled by mineral water bottlers, breweries and specialised soft drink producers like Coca Cola, etc. The decline of reuse systems was even faster and fell to a market share of 72% in the early 1990's. After legal action was taken against one-way plastic bottles in 1989, the introduction of reuse PET bottles brought a new increase to the reuse market share.

Figure 3 .11. Financial flows for plastics recycling in Germany)

3234 DM/t

Fillers &

Plastic users Mechanical recycling

Feedstock users Steel, gas, methanol

Source: Taylor, Nelson, Sofres Consulting (2000).

3234 DM/t

Fillers &

Assessments of the DSD system

Many concerns have been expressed about the DSD system, including the extent to which DSD limits competition. There are two ways, at least, in which this might happen. One is the monopoly position of the DSD system in waste management and recycling in Germany (OECD, 2002). The other is as a trade barrier, for example the concerns expressed by the FAO in relation to the import of fruit and vegetables into Germany especially from outside of the EC (Carter, 1997). A second concern is about economic efficiency, and whether the goals being set are the correct ones. These are covered more fully in the next section. The main concern is that the high recycling rate comes at a high cost and that this is maintained only by high fees for use of the DSD system. Feedstock recycling is expensive and only justified by the need to process large quantities of material in ways which count as material recovery rather than energy recovery. It can be argued that there needs to be a wider interpretation as to what counts as reprocessing/recycling and whether energy recovery should count towards this. Data in Table 3.14 shows that incineration with energy recovery is a substantially more economic option for plastic waste in Germany.51

Economic efficiency

As Green Dot fees are designed to cover the collection and reprocessing costs, then the price of disposal should be reflected in product prices. Further, as different fees are charged for plastics then this will direct packaging material towards packaging materials with lower disposal costs. However, various assessments in the past ten years of the economic efficiency of the programme estimate that the cost of collecting, sorting and reprocessing of plastic packaging by DSD are substantially more than the cost of incineration. Further these costs are substantially higher than the environmental benefits obtained night justify.52

Table 3.11. Recycling costs of DSD and incineration costs

Costs of collection, sorting and reprocessing

Incineration costs

Year

Source

2 500 to 6 600 DM per ton

150 to 330 DM per ton

~1990

Klepper and Michaelis

(1994)

Up to 6 000 DM per ton

300 to 500 DM per ton

1995

OECD (1998)

€ 1 654 per tonne

€ 177 per tonne

1998

Taylor, Nelson, Sofres

(2000)

Where recycling is economically viable, as it is with aluminium and steel materials because of the high value of raw materials and the relatively low costs of processing, and where low processing costs and efficient markets make recycling feasible, government mandates may push industries to reduce packaging waste without enormous economic disruptions. However, when recycling faces higher technical and economic barriers, as it does with plastics, government mandates may create enormous disruptions.

The costs of DSD rose as a consequence of including plastic packaging in the scheme. Thus, despite the fact that the DSD system does take a large amount of plastic material out of the waste stream, it is costly. Figures from Taylor Nelson Sofres (2000) show that whilst DSD achieves a much higher recycling rate than, for example France, the costs are much higher.

  1. See para. 19 of Assessment And Recommendations, OECD Economic Survey of Germany, 2002, www.oecd.org/dataoecd/50/45/2484170.pdf.
  2. See, OECD Economic Survey of Germany, 2002, p. 163 and Staudt and Scholl (1999).

Table 3.12. The costs of recycling plastics in France and Germany

Germany_France

Table 3.12. The costs of recycling plastics in France and Germany

Germany_France

Financing need

€/capita/yr

12.2

1

€/tonne sorted

1 654

1 294

€/tonne on market

1 141

64

Recycling rate (%)

69

5

Quantity recycled

8 kg/cap./yr.

0.8 kg/cap./yr.

HH packaging cons.

12 kg/cap./yr.

15 kg/cap./yr.

Source: Taylor Nelson Sofres (2000).

Source: Taylor Nelson Sofres (2000).

In addition, there may be other distortionary impacts on the economy. Important considerations here are entry barriers for new firms. Indeed, there are three separate aspects of competition that should be considered: competition aspects of waste collection and recycling; competition between firms selling packaged products that are affected by DSD; and, finally competition between domestic and foreign firms, i.e. the extent to which the DSD creates a trade barrier. The first and the third seem to be most problematic.

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