Ewaste: Whose Problem Is IT?

By Olga Kharif BusinessWeek

Media Center – Press Coverage

BusinessWeek, March 17, 2008

by Olga Kharif

E-Waste: Whose Problem Is It?

As more states mandate e-recycling, the financial burden is shifting from consumers to manufacturers

In a movement that may make it easier for consumers to recycle old computers and TVs, states are stepping up pressure on electronics manufacturers to assume responsibility for the millions of tons of e-waste discarded each year.

In mid-2007, Minnesota implemented a law that requires manufacturers to collect and recycle an equivalent of 60% of the weight of electronics they sold in the state the previous year. A different e-recycling law takes effect in Oregon on Jan. 1, 2009. Minnesota and Oregon are among nine states that have passed e-recycling laws in the past five years that require manufacturers to collect and recycle gear including television sets, portable DVD players, computer monitors, and cell phones—or to pay someone else to do the job. New York City and the state of Virginia are on the cusp of following suit.

The legislation represents a sea change from just a few years ago, when consumers bore most of the financial and logistical responsibility for recycling used electronics, if they recycled at all. In 2005, the most recent year for which data is available, 86% of discarded electronics, or 2.2 million tons, ended up in landfills, according to the Environmental Protection Agency. When such materials aren’t disposed of properly, toxins like mercury and lead can seep into water and soil.

Pushing Up Price Tags

Now, the electronics manufacturers are being asked to set up collection and take-back operations, though in some cases the consumer is still paying all or part of the cost. California, the first state to mandate electronics recycling, adds $6 to $10 to the price of certain electronics sold in retail stores to fund e-recycling. In other cases, the maker absorbs the expense. “The policy debate [over e-recycling] has been largely finalized,” says David Thompson, who runs Electronic Manufacturers Recycling Management (MRM), a joint venture that handles recycling for the 14 companies, including Toshiba and Panasonic, it comprises. “And the cost of recycling is going to be internalized by manufacturers into the cost of the product.”

Hewlett-Packard (HPQ), the world’s largest maker of computers, collects 4.5 million to 5 million pounds of electronics in the U.S. a month. The cost “is often pennies for new products sold,” says Renee St. Denis, director of the company’s nationwide recycling program. In Minnesota, HP is able to comply with state regulations by setting up collection points in the state’s sprawling malls. It often makes pickup of used equipment part of the contract with corporate customers.

A Struggle for TV Manufacturers

Smaller manufacturers that sell fewer machines don’t have it as easy. MRM began wih only three manufacturers: Toshiba, Sharp, and Panasonic. Other companies are in talks to join. Many electronics manufacturers enlist the help of outside recyclers. Sony (SNE), for one, hooked up with Waste Management (WMI), which has a collection location in every state.

TV makers may face the biggest hurdles of all, especially in the coming months, with the early 2009 advent of a U.S. regulation that will encourage many consumers to purchase digital TVs, discarding old machines that pick up so-called analog signals. While manufacturers of PCs can often recycle some parts and even refurbish newer units and resell them at a profit, a TV costs between $12 and $15 to recycle, Thompson says. “My guess is, TV manufacturers are going to struggle to meet these requirements,” Thompson says.

State and city governments aren’t the only legislative bodies considering electronic waste mandates. Senator Ron Wyden (D-Ore.) is among eight congressmen circulating a proposal that would require not only manufacturers but retailers to establish a nationwide e-recycling program. The program would reward participants for exceeding minimum collection goals. Today, many electronics retailers such as Best Buy (BBY) only accept TVs from customers who purchase new equipment from its stores. “We think federal legislation is a great idea,” says St. Denis.

A Boon for Nonprofits

Recycling companies that collect fees for handling discarded equipment are among the biggest beneficiaries of e-cycling mandates. In the first 18 months after California began requiring consumers to recycle electronics, Earth Protection Services saw the number of units collected in the state triple, says Greg Sampson, who until recently was a vice-president at Earth Protection. “I think it’s going to increase all recyclers’ revenues, because we’ll see people cleaning out their garages and basements,” he says. As Oregon readies to implement its e-waste program in 2009, the number of recyclers in the state has more than doubled in the past two years, he estimates.

Nonprofits and second-hand goods stores like Goodwill Industries benefit as well. Starting in 2004, Dell (DELL) began providing training and seed money to select Goodwill stores in seven states, including California and Texas, to take in and refurbish old computers. “Our approach is to try and make recycling as easy as a purchase,” says Mark Newton, an environmental strategist at Dell.

The e-waste gravy train may not last, though. California, for one, may consider lowering fees it pays recyclers, or increase fees for consumers, says Jeff Hunts, manager of California’s e-waste programs. Last year, the amount of electronics recovered by the state rose 46%, to more than 185 million pounds. The state had paid nearly as much money for recycling—$88 million—as it collected last year.

For now, though, the e-waste burden on consumers is getting lighter, at least in some states, and for the sake of the environment, that’s a good thing.

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