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Packaging a revolution.

Germany's packaging ordinance has produced some maddeningly unanticipated results, and left both manufacturers and environmentalists dissatisfied. But it represents the first, tenuous foothold for an important idea - one that may eventually be recognized as essential to a sustainable society.

German consumers have begun to notice some subtle but important changes in the aisles of grocery and drug stores over the past two years. A popular brand of ice cream, formerly sold in plastic tubs ensconced in boxes, now comes without the outer boxes. Bottles of perfume, which used to come wrapped in tissue paper inside boxes, are now displayed au naturel. A fertilizer box was redesigned to use less cardboard, saving 30 tons a year of wood pulp. Reusable plastic shipping containers are replacing cardboard trays and breakable wooden pallets, a change that could eliminate more than a million tons of packaging waste each year.

What brought about this sudden, ecologically-conscious creativity? Although some manufacturers insist that these changes flowed solely from the goodness of their green corporate hearts, they were also spurred by a powerful legislative kick. Big business was forced to network its wasteful habits by a 1991 decree - aptly named the German Ordinance for the Avoidance of Packaging Waste - requiring manufacturers to re-use packaging or bear the costs of having it recycled.

Much of Northern Europe is making a fundamental shift in its approach to waste, and Germany is on the cutting edge of that change. Instead of viewing discards as consumers' waste, Northern European nations now consider them the manufacturer's responsibility. If the manufacturer made it, the rationale goes, the manufacturer should be responsible for the product throughout its life cycle, meaning that industries, not municipal governments, must be the ones to keep it out of dumps and incinerators. Germany has tackled the problem by designing a manufacturer-funded system to correct packaging waste for recycling, entirely separate from the public trash collection system.

But Germany has a ways to go before the accolades begin rolling in for its progressive ideas. The same consumers who see slimmed-down containers in the grocery store are watching a markedly different packaging saga on the evening news: the new system has collected so much plastic packaging waste since the law passed that it is piling up much faster than it can be used. Other nations are watching circumspectly to see how Germany handles the hard part of its packaging reform: figuring out how to make sure that the waste materials that are recovered are efficiently re-introduced into the product cycle.

An Avalanche of Trash

As manufacturers use more and more wrappings trimmings in an effort to increase the convenience and marketability of their products, packaging has become the fastest growing portion of the waste stream. It makes up one-third to one-half of municipal wastes in industrialized countries. In the United States alone, it has more than doubled since 1960. This explosion has been fueled by cheap materials and a system that gives manufacturers little incentive to cut down on packaging. They don't have to worry about it once it's in a consumer's bag, so why worry about using elaborate packaging to help get it there?

Although the United States has few rivals in waste production (it averaged 864 kilograms per person in 1989), concern over what to do about waste is greater in Northern Europe. Although Europeans each threw out a comparatively low 327 kilograms of trash in 1989, the costs of both landfill space and waste incineration in Germany, the Netherlands, Denmark, Norway, and Ireland well exceed those in the United States.

In Germany, for example, it costs up to 730 marks ($450) per ton to incinerate waste in new facilities. Although landfill fees average 100 marks ($60) per ton, charges vary by location. Some regions have to pay landfill fees of up to 410 marks ($250) per ton to send trash to landfills outside their jurisdiction, and a lack of open space near population centers makes future landfill sites unlikely. Waste incineration isn't a viable option either, because of virulent public opposition and incineration's high cost.

Political Packaging

The realization that they are running out of space and money to bury trash has thrust more and more governments into the business of recycling - and figuring out how to prevent waste from being created in the first place. Germany, which today produces more than 23 million tons of household wastes a year, began anticipating a garbage crunch in the 1970s. It passed legislation in 1975 and 1986 intended to reduce waste, increase recycling, and allocate costs based on the "polluter pays" principle, but included no mandatory reduction or recycling quotas. Waste kept increasing, landfills reached capacity and incineration prices continued to climb.

In the late 1980s, the German minister of the environment, Klaus Topfer, proposed a system for refillable beverage containers - an extension of a pilot project the government set up in Cologne in 1980. The proposal set minimum refill quotas, ranging from more than 90 percent for mineral water down to 30 percent for milk. But it faced opposition from both the European Community (E.C.) - which can overrule such legislation - and the German packaging industry. The E.C. said that by targeting only beverages, the proposal was an incomplete solution that imposed overly heavy trade burdens compared to its environmental benefits. The beverage industry in particular argued that it was being unfairly singled out and that all packaging should be hit equally. The legislation died in 1989.

In internal discussions, Topfer came back with a more comprehensive proposal, calling for 25 percent of all packaging waste to be reused or recycled and allowing the rest to be incinerated, recalls German environmental official Monika Griefahn. This plan sparked protest in Parliament because it still allowed three-fourths of the country's trash to be incinerated. Lower Saxony and other states then made a counter-proposal for all packaging to be taken back by manufacturers. The idea was to minimize packaging and to create a national system of refillable containers - for all products, not just beverages - that would be driven by a deposit and refund system, says Griefahn, who is Lower Saxony's Minister of Environment and the Social Democrats' candidate for Minister of the Environment on their 1994 election slate.

Manufacturers weren't excited about the plan. Would they have to collect jelly jars and aerosol cans on their doorsteps? Trade groups lobbied fiercely for a way out of this direct take-back requirement. After months of wrangling, Topfer presented a compromise that eventually became the 1991 packaging ordinance, the first in a series of decrees to give teeth to the 1986 waste legislation. Others are in the works for used cars, computers, and household durable goods.

The legislation divides packaging into three distinct categories - transport, secondary, and primary - and specifies reuse and recycling requirements for each. Transport packaging was the first to change. Since December 1991, German distributors and manufacturers have had to take Gcrmany's 2.3 million metric tons per year of transport packaging - the crates, pallets, and corrugated containers used to move products - back from retailers. They must either reuse the packaging or arrange to have it recycled outside of the municipal waste stream.

Before the ordinance, only 13 percent of Germany's transport packaging was reusable - although some 65 percent was recycled because it was mainly made of cardboard. But distributors are shifting away from single-use transport packaging to durable, multi-use containers that can last for years and ultimately be recycled. As transport packaging can hold goods of all sorts, it is comparatively easy to standardize and reuse.

The legislation has also prompted changes in secondary packaging - the extra stuff that does not directly contain the product, such as outer boxes and cellophane wraps. Since April 1992, consumers have been able to discard at stores any excess packaging that they do not want after they pay for their purchases. Retailers then have to pay to have the material in the bins carted off by private companies for recycling or disposal. Because retailers do not want to accumulate mountains of packaging in their stores or pay for it to be taken away, they in turn pressure suppliers not to use superfluous trimmings.

Finally, the ordinance requires that retailers take back primary packaging - the tub that held the ice cream, the tube that held the toothpaste - either in their stores or in the immediate vicinity, beginning this December.

The packages will then make a return trip via distributors to manufacturers. To help ensure that consumers lug their used packages back to the store, the ordinance mandated deposits on beverage bottles, paint cans, and detergents. Manufacturers that have not eliminated packaging must either re-use or privately recycle it.

But the legislation leaves a key loophole. As an alternative to the manufacturer-by-manufacturer take-back, the ordinance allows companies to pool resources to form a mammoth joint collection and recycling system. This option exempts individual manufacturers from the direct take-back requirement by letting them pay someone else to deal with the trash - has long as they meet minimum collection and sorting targets.

Significantly, the government excluded beverage bottles from this pooled take-back scheme. Because of fears that a packaging take-back system oriented toward recycling instead of re-use would wholly wipe out refillable bottle systems, the lawmakers stipulated that beverage manufacturers must refill 72 percent of their beverage bottles, including those for beer, water, soft drinks, juice, wine and milk.

Shortly after the announcement of the pooling provision, proponents of the original direct take-back idea cried foul: they maintained that because manufacturers wouldn't have to deal directly with their own packaging waste, there would be less incentive for them to make fundamental changes. Three of Germany's 16 states voted against the ordinance because of this loophole, but the rest supported it - in some cases because they feared the earlier incineration proposal, according to Lower Saxony's Griefahn.

The Duales System Deutschland

Given a deadline of only a few months, German industry swiftly came up with a way to exploit the pooling loophole. More than 600 companies got together and formed a private, nonprofit company called the Duales System Deutschland (DSD), or "dual German system."

The term "dual" refers to the fact that there are now two separate waste collection systems in Germany for the residential waste stream - a nationwide collection, sorting, and recycling system for primary packaging run by the DSD, and one run by municipal governments for other wastes. Primary packaging is the largest part of the German packaging waste stream, accounting for 7 to 8 million tons of its annual 23 million tons of trash - so if all manufacturers bought into the system, it would handle about one-third of Germany's municipal trash.

How does the DSD work? First, manufacturers submit a sample of their packaging to a contractor hired by the DSD to determine that materials are recyclable. If the system rejects a package, the manufacturer must alter it before receiving certification. Accordingly, for example, the cigarette industry is now smatching to packaging made out of a single type of material instead of several different types, so that empty packs can be recycled easily enough to qualify.

This DSD approval process has led to numerous design changes, according to a survey of 400 DSD members, which found that paper and cardboard are being used in place of harder-to-recycle plastics and laminates. However, some environmentalists are critical that blister packs, laminates, and some types of plastics (including polyvinyl chloride), are still eligible for DSD's recycling sanction, says Olaf Bandt of Bund liar Umwelt und Naturschutz Deutschland (BUND), the German affiliate of Friends of the Earth.

Once approved, the packaging can be given the "green dot," the DSD's trademark logo. Companies pay a fee to the DSD based on every kilogram of packaging they produce, and then have the right to print a green dot on their wares - signifying to consumers that the material will be recycled through the DSD system. For this right, packaging fees have averaged about 20 pfennigs (12 cents) per package, according to DSD spokeswoman Edelgard Bially. And since companies pass along packaging costs to consumers at the cash register, a company that uses less packaging than its competitors can, in theory, charge less for its product and gain a price advantage.

The licensing fees are pooled to pay for the DSD's collection system. Consumers bring glass jars (other than beverage bottles, which are subject to a deposit system) and paper packaging to neighborhood bins and drop them off. Many of these bins were in place before the Dual System existed, then the DSD took over and made them available in more locations. Because consumers separate glass by color in the bins, the DSD saves on sorting costs. However, it has had to pay municipal governments a fee of 75 pfennigs (46 cents) per resident per year to clean and maintain the area around the bins - an unanticipated cost not included in its budget.

For packaging other than glass and paper, all households in Germany were to have special yellow collection bags or bins for green-dotted packaging waste by the beginning of 1993. However, the DSD admits that actual implementation varies greatly by region, with less than 50 percent participation in some areas.

Consumers are supposed to fill the yellow containers with all non-glass packaging, such as yogurt cups, foil or cellophane wrappings, and any other green-dotted materials. This collection is then picked up and taken to DSD sorting stations, where it is separated by material into cardboard, plastics, metals, etc., and then sent to reprocessors for further sorting and recycling. Because the materials are mixed, the sorting process is expensive, averaging about 2,000 marks (about $1,200) for every ton sorted.

The DSD's challenge is enormous. It has to make sure that it reclaims a sizeable proportion of green-dotted materials, according to government quotas for both collection and sorting of recyclables. The quotas will increase dramatically between now and 1995, according to a pre-determined government schedule. By 1993, 42 percent of glass containers were to be both collected and sorted for recycling. In 1995, that quota will shoot to 72 percent. The increase is scheduled to be even more dramatic for plastics - going from 9 percent in 1993 to 64 percent 1995. This means that the DSD must constantly expand both its collection capacity and its search for manufacturers who will recycle these materials.

A Brobdingnagian Bottleneck

Although the DSD has been able to successfully meet the minimum collection and sorting quotas laid out by the German packaging ordinance, it has found that actually getting the stuff recycled is a very different matter. Particularly in the case of plastics, the DSD is foundering.

Although the system only has to assure recycling of a relatively modest 9 percent of all plastics by 1993, the DSD vastly underestimated the amount of plastic the public would throw into the system. It expected 105,000 tons of plastic packaging in 1992, but took in 408,000 tons. And it seems that, for the time being, there is not enough plastics recycling capacity in the world for the DSD to legitimately recycle the plastic it has collected - even if processors are paid to take it.

To give industry an incentive to develop new plastic recycling capacity, the DSD heavily subsidizes plastics wastes. According to the DSD's Bially, the company is currently officially offering a subsidy of 1,000 to 1,400 marks per ton ($610 to $855) to any manufacturer that will recycle it.

Despite these subsidies, technology to recycle mixed plastics is not very advanced, and in some cases the recycling process is of dubious ecological value. An example of highly suspect recycling is a plant in Bottrop, in Western Germany that was originally built in the 1970s to make off out of coal. This was not profitable, so other investors tried unsuccessfully to use the plant to recycle used oil. Now, with the help of DSD subsidies, the plant is profitable for the first time, melting plastics back down into oil, which is then burned as heating oil - which, under the ordinance, counts as recycling. However, many environmentalists believe that this practice is a waste of energy, materials, and money that could be better spent elsewhere.

Even worse, Greenpeace International and other environmental groups attest that much of the plastic subsidized for recycling is being dumped outright - both at sea and in the world's poorest countries. Waste plastics bearing the dual system trademark are showing up in dumps from Indonesia to Bulgaria, at great cost to German consumers. Ironically, Germany's environmentally progressive waste management has turned it into Europe's leading waste exporter.

To counter the dumping problem, the DSD has recently contracted with a technical surveilance company, TUV, which conducts inspections of technologies ranging from automobiles o nuclear power plants. In order to weed out opportunists who are taking plastics and dumping them simply to pocket the subsidies, the DSD has hired TUV to determine whether companies have legitimate recycling capacity. However, although the TUV can determine a plant's reprocessing capacity, it doesn't rate environmental or labor standards, and won't keep track of the flow of materials headed for reprocessing companies. Therefore, it's still very difficult to control where plastics end up, since the large sums of money involved invite illegal disposal.

In a further attempt to keep excess plastics from being dumped while it tries to develop more recycling capacity, the DSD plans to find temporary storage for 125,000 tons of unsorted plastics this year. But finding storage for unwanted mountains of plastic trash has been no easy task. As of July, the DSD was scrambling for storage sites and coming up with desperately inventive solutions. It contracted to store some of the plastics at a former U.S. airbase in Zweibruecken, in the state of Rhineland Pfalz. In a move that was far more disturbing to environmentalists, it also arranged to store 40,000 tons of plastic on ships on the Elbe River, in Magdeburg. Concerned that the barges would disappear during the night and head to the Netherlands - where waste brokers could ship it off to the Third World - environmentalists began vigilantly counting how many boats had been loaded with plastics and keeping track of where they were docked.

Economic Problems

Along with its environmental woes, the DSD is facing a severe financial crisis, because the system costs far more than its planners ever envisioned. Although the system broke even in 1992, costs have soared, from 1.2 billion marks ($780 million) in 1992 to a projected 3 billion marks ($1.83 billion) by the end of 1993. Mid-way through the year, the system was 500 million marks ($305 million) in the red, according to Bially. The company attributes this shortfall mainly to expenses it has had to bear for items thrown into its collection system that do not have green dots; to cheating by licensee companies when they pay their fees; and to unexpectedly high charges from municipal governments for cleaning the space around neighborhood DSD drop-off bins.

In June, the DSD got some industries to pre-pay fees for later this year in order to make it through until October. It also allowed the waste-collection industry to become shareholders of the company in order to attract new money. This had been forbidden before because it was seen as letting the fox guard the henhouse. But by mid-1993, the DSD had little choice.

This financial crisis was expected to abate somewhat by October, when a new fee schedule will begin charging manufacturers dramatically more for green dot privileges. More crucially, instead of charging a uniform amount for every type of material - and hoping that glass would, for example, help subsidize plastic - the new fees differentiate by material type. A kilogram of plastic will cost 15 times as much as a kilogram of glass. This should spur the shift to easier-to-recycle materials. The DSD projects that it will collect an annual 2.5 billion marks ($1.5 million) in fees under the new schedule. It also plans to shave off enough of its current costs to again break even.

The new fee schedule could enable the DSD to collect enough revenue so that it can continue to limp along, but because of the publicity that the plastics problem has received, it is on very shaky ground. "Public confidence in the DSD is zero at this point," says Ernst von Weizsacker, chairman of the DSD advisory board and president of the Wuppertal Institute, a government-funded research group.

Most Germans now agree that the current recycling strategy has serious problems and needs to be fixed, and some believe the country would be better off abandoning the Dual system entirely and starting over. However, given the level of investment in the DSD and the public's interest in having a "closed-loop" processing system in which materials are constantly re-used and there is no waste, most experts think that although the system has flaws, it may still be salvageable. And working to reform it may be better than the chaos that would ensue if it collapses. "The stacks of plastic won't simply disappear if the system falls apart," von Weizsacker points out. The system has been relatively successful collecting packaging, which is an important part of the solution. The questions now is how to work out the rest of it.

The Future

If the DSD is to survive for the long haul, reform will have to come from outside the system as well as from within. To begin with, the materials stream will need to be simplified. There is already talk in Germany of using only three types of plastics for packaging, according to Lower Saxony's Monika Griefahn. If the materials were standardized, it would be much easier to have higher-quality recycling. This would be a better use of resources than simply throwing money into technologies that would handle the current stream of mixed plastics.

The market for recycled materials could be further stimulated by introducing stepped-up content standards, and requiring that new products contain the maximum possible amount of recycled material. This year, for example, Germany produced paper with higher recycled content than ever before - increasing pulp and paper mills' demand for waste paper.

But the system needs to put greater emphasis on overall waste reduction, rather than concentrating so much of its efforts on recycling, say environmentalists. Slimmed-down boxes at the grocery store are an encouraging first sign, but the number of new products added to the shelves is likely to keep increasing. Manufacturers can cut the size of a package, but if they make more and more packages, the problem will continue to grow. As a result, say critics, it is essential to incorporate incentives for decreasing the net amount of packaging produced.

As long as market prices for primary commodities, such as timber and minerals, are kept artificially low by obsolescent subsidies, the DSD - or any other recycling system - will be fighting an uphill battle and trash will continue to pile up. For materials to be used more efficiently, this will have to change. The key is tax reform, says von Weizsacker, who believes Germany and other nations should levy a tax on primary commodities to make products more reflective of their environmental costs.

The German system can be best understood as an experiment in progress - one that has encountered unanticipated difficulties and produced mixed, and sometimes even maddening, results. However, it does represent a significant - perhaps revolutionary - conceptual shift. Perhaps its chief virtue is that it has begun to incorporate into each product some reflection of its ultimate costs. The idea of manufacturers being responsible for what happens to products after they are sold signals the beginning of a new way of viewing the role of the manufacturer. It gives the manufacturer an incentive to look at materials from a different perspective.

Similar experiments aimed at reducing packaging are taking place all over Europe, albeit on smaller scales. France has also set up a national collection system for packaging. However, instead of setting up a central collection organization, the French system - run by a company called Eco-Emballages - works through existing networks, offering cities money for packaging materials based on the quality of their sorting. France endorses more incineration, however. Belgium has placed a tax on packaging as a way of making prices more reflective of a product's costs over its entire life cycle. Denmark and several other nations have established highly efficient returnable bottle programs. The Netherlands is focusing on a strategy of voluntary agreements with industry to meet waste reduction targets for packaging over the next decade.

The European Community is also planning a community-wide packaging directive that would set targets for overall reduction of packaging and eliminate certain types of packaging. It's unclear what will happen with national packaging schemes when this directive finally passes, but given Germany's size and influence in the E.C., it seems likely that its national system will survive.

As European countries grope toward the goal of reducing and reusing packaging, and then recycling what is left, they have the potential to move toward far more efficient economies. If Germany, or any other country, is able to build an economy that conserves materials and re-uses them efficiently, the long-run benefits to its economy will far outweigh the snags and adjustments it has encountered along the way.
COPYRIGHT 1993 Worldwatch Institute
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Title Annotation:waste management and recycling
Author:Ryan, Megan
Publication:World Watch
Date:Sep 1, 1993
Words:4219
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