European response to issues in recycling car plastics

Technovation 19 (1999) 721–734 www.elsevier.com/locate/technovation

European response to issues in recycling car plastics Klaus Bellmann, Anshuman Khare* Universita¨t Mainz FB03, Jakob Welder Weg 9, Mainz 55128, Germany Received 1 February 1999; received in revised form 15 April 1999; accepted 3 May 1999

Abstract This paper discusses the issue of recycling of plastics in the automobile industry which has gained importance due to the proposed European Commission regulation on End-of-Life Vehicles (ELVs) where the EC sets targets on the percent recyclablity or reusability of a car by the year 2015. This proposed regulation puts pressure on the car manufacturers to increase the recyclable and/or reusable components of their product. Plastic poses a critical challenge as on one hand it is necessary to meet the customer demands related to esthetics, light weight and the technological advantages, while on the other hand it is a hurdle in achieving a higher percent recyclability of the ELVs. A closer look on this issue from Europe is necessary as it is expected to set the trend in car recycling regulations all over the world. However, there are many related economic issues that have to be kept in mind while thinking of recycling of plastics (or other components) from ELVs. Tough regulations may not have the solution to the environmental question as the issue has ramifications outside the automotive industry and outside Europe. The significance of plastics in the automotive industry, the proposed ELV directive from the EC and the economic effects of the same, along with the future concerns is discussed here. Further, the paper takes a brief look at the environment in the Indian sub-continent which is considered an emerging market and is flooded with car manufacturers from all over the world, and where issues like recycling are still to attract the attention of the government and the local population.  1999 Elsevier Science Ltd. All rights reserved. Keywords: Automobile; End-of-life vehicles (ELVs); Recycling; Plastics

1. Preamble With its pivotal and increasingly contentious role in society, the car has been forced into the center of the environmental debate, where recycling remains an ever present issue. As pressure, particularly in Europe, gathers momentum for a legislative framework to deal with vehicles reaching the end of their lives, the automotive industry must embrace a “cradle to grave” approach to a global problem. It appears now that the industry increasingly accepts that recycling is an ongoing imperative and has become integral to the process of conceiving, designing, building and ultimately dismantling and disposing of cars and their component elements. It comes, however, as little

* Corresponding author. Tel.: +49-6131-3920 07; fax: +49-61313930 05. E-mail address: [email protected] (A. Khare)

consolation to auto manufacturers that their products are demonstrably the most effectively recycled major consumer item, eclipsing the efforts of their counterparts in white product manufacture (Fig. 1). The world’s largest productive capitalist sector realizes that there is little to be gained by creating systems which will, within two decades, make the vast majority of a car recyclable, unless that process is economically viable. In Europe, car manufacturers face the challenge of anticipating and responding to recycling legislation. They must offer a united front, avoiding the fragmented, piecemeal and ineffective strategy which the European Commission claims was the outcome of a voluntary code within the packaging industry. Directives on the proposed action from the European Commission (EC) on end-of-life vehicles (ELVs) provide an insight into the ‘polluter pays’ principle, and its target group includes those who dismantle and reprocess the ELVs.

0166-4972/99/$ - see front matter  1999 Elsevier Science Ltd. All rights reserved. PII: S 0 1 6 6 - 4 9 7 2 ( 9 9 ) 0 0 0 8 1 - 4

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Fig. 1.

Cars, the most recycled product.

Central to the EC’s document is a plan to restrict increasingly expensive landfill operations, while at the same time inhibiting the amount of burning of waste cited by the industry as a means of thermal recovery. In essence, to meet EC targets on vehicle weight which can be reused or recycled relatively easily, recycled metal and plastics will play a vital role; with recycling plastics posing a more difficult (and critical) challenge as the higher degree of recyclability will be determined by the manufacturer’s ability to deal with plastics.

2. Technological aspects: recycling the “critical mass” plastic 2.1. An introduction to plastics Most plastics are made using the hydrocarbons from natural resources such as oil and natural gas and also other chemicals. In technical terms, plastics are produced by chemical bonding of monomers into polymers. The size and structure of the polymer molecule determines the properties of the plastic material allowing huge variety and versatility. There are two basic types of plastics — thermoplastics and thermosets. Thermoplastics soften on heating and then harden again when cooled. Thermosets never soften once they have been moulded. Plastics are produced as powders, granules, flakes liquids and solutions. The application of heat and pressure to solid raw materials produces the familiar products of everyday life (APME, 1998). Fig. 2 illustrates the process of conversion from raw materials to plastics ready for fabrication and use. Plastics can also be categorized for scientific purposes into five groups: (1) commodity plastics, (2) engineering thermoplastics, (3) high-performance thermoplastics, (4) functional thermoplastics (specialty plastics), and (5)

thermosets. The plastics that are used in the auto industry belong to either the group of engineering thermoplastics or high-performance thermoplastics. The type of plastic used depends on the purpose for which it is being used and the properties of the plastic. Engineering plastics (technical plastics, technoplastics) and high-performance plastics are in general thermoplastics (ETPs) that possess improved mechanical properties. They have load bearing chracteristics that permit them to be used in the same manner as metals and ceramics. Such improved properties may be higher moduli of elasticity, smaller cold flows, higher impact strengths (e.g., for car bumpers), etc. Engineering plastics are also often defined as those thermoplastics that maintain dimensional stability and most mechanical properties above 100°C or below 0°C. The recycling of plastics, however, is a complex issue with at least four factors playing a vital role — technological demands, economic considerations, energy consumption and the environmental concerns. 2.2. Advantages The share of plastics in terms of vehicle weight has steadily increased over the years and decades. In the automobile, plastics do an essential job as bumpers, side impact protectors, roof lining, seat covers and body contoured upholstery, door lining, safety belts, fuel tanks, spoilers and on the instrument panel. And this list could be extended at random, from the screen-washer reservoir through the air filter housing and brake fluid tank all the way to the luggage compartment lining and the entire front end of a car. The plastics are so popular today as they are able to meet the many requirements of a modern automobile. The reasons are many fold. While featuring an increasing number of components and options, the auto-

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Fig. 2.

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How are plastics made?

mobile must constantly become lightweight, as lightweight construction means greater fuel economy and, accordingly, preservation of resources and the environment. This makes unconventional lightweight materials, in particular plastics, absolutely essential. Further, low vehicle weight must nevertheless not detract from occupant safety, meaning that the materials used must be able to withstand significant loads and forces. In addition, they must not cause additional risks and injuries, for example by forming splinters when breaking. Also, lightweight construction must not incur high costs. This means that multi-functional materials must be used wherever possible, serving for example to provide heat insulation and sound deadening at the same time, while remaining within specific cost limits. Last but not least, cars must be as resistant to corrosion as possible and keep their good looks even after years of daily use. In short, plastics offer lower cost, lighter weight, and greater design flexibility than many other materials. Tooling costs for plastics are also much less than for most metal stampings and die castings, particularly if secondary operations are required. Compared to metals, plastic parts typically exhibit 20 to 30 percent weight savings. As far as design flexibility is concerned, plastics possess characteristic properties that allow them to be moulded to tight tolerances and complex shapes. Consolidating several components into one can also reduce assembly costs.

of plastic typically found in today’s automobiles is one of the biggest challenges of recycling.1 Despite all their benefits and versatility, plastics present a bleak outlook once an automobile reaches the end of its running life. The metallic materials contained in cars (steel, cast iron, copper, zinc, etc.) accounting for about 70–75% of the vehicle’s weight are already recycled to a large extent. But the rest so-called shredder light fraction (SLF)2 includes plastics, fabric, wood fibre, rubber, glass and paints (Fig. 3). The residues from shredding (25–30% of the vehicle weight), which consist of a heterogeneous mix of materials such as plastics, rubber, glass, textile, paint, oils and lubricants, paper and cardboard are usually landfilled. These residues contain significant quantities of hazardous substances, such as polychlorinated byphenyls (PCBs) and heavy metals as well as various fluids (petrol, motor and gear oils, hydraulic fluids, brake fluids, anti-freeze), which are particularly hazardous for the environment. A number of vehicles carry air conditioning systems with chlorofluorocarbon (CFCs) and airbags with explosive components which may also present a hazard for the environment and for the treatment facilities where they are dismantled and shredded. Consequently, shredder waste, as well as oil waste from vehicles is considered to be hazardous waste by the international Community and national waste legislation.

2.3. Disadvantages In general, a car is 70.2% of ferrous, 21.1% of nonmetals and 8.7% of non-ferrous metals (AAMA, 1998). Plastics account for nearly 33% of the non-metallic component. Efficiently processing of more than 20 types

1 This is a general expression. The composition varies from country to country and from car-maker to car-maker. 2 Depending on the input materials, the composition of the SLF could vary.

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Fig. 3.

Shredded light fraction (SLF) in a car.

2.4. Recycling plastics — the methods and techniques When plastics become waste, the range of possibilities in their recycling is unexcelled by any other material — no matter whether mechanical recycling, feedstock recycling or enerey recovery is the chosen option (Fig. 4). To find the best solution for the environment it is essential to select the most suitable method, giving due consideration also to economic factors. A mix of the various routes open to old plastics is the only way to

Fig. 4.

optimize recycling and energy recovery, both from ecological and economic aspects (VKE, 1998). In mechanical recycling old plastics are changed back into plastic raw materials for further processing into new plastic products. Only clean and pure grade plastics are suitable for “classical recycling”. Therefore, this is mainly the domain of waste generated during manufacturing and processing. In the post-consumer field it is suitable for a small portion of the total waste only. Feedstock recycling offers the great advantage that

Recovery of plastics.

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Table 1 Plastic recycling — a comparative assessment of various methods Type of plastic waste

Feedstock recycling

Energy recovery

Sorted, single type plastic ++ waste Mixed plastic waste +

+

+

++

Mixed plastics waste plus paper, etc.

-

++ Plastic derived fuel -

-

Refuse derived fuel -

(+): suitable

Municipal solid waste combustion (++): preferred

Costs increase as more collection Plastics waste in and seperation is required for the municipal solid waste recovery process

Mechanical recycling

-

(-): not applicable

mixed and soiled plastics can be used without sorting and cleaning. In feedstock recycling the macromolecular structure of polymeric materials is altered so that lowmolecular chemical intermediates are obtained for reuse in refineries or chemical plants. The obtained starting materials can be unconditionally reintroduced into the economic process. Residual fractions which are suitable neither for mechanical recycling, nor for feedstock recycling are utilized in energy recovery. The incineration of highly soiled and mixed plastics in facilities especially designed for this purpose brings excellent energy recovery rates. In this method, good use is made of the calorific value of plastics which matches the calorific value of petroleum. Table 1 compares the usefulness of the different options available for plastic recycling (APME, 1998). However, it has to be kept in mind that plastics can be recycled only a few times. Recycling leads to “delaying” the final disposal and also the material loses some of its advantageous properties every time it is recycled. Another aspect to consider is the viability of various recycling options — feedstock recycling, mechanical recycling, incineration with heat recovery and disposal by landfilling. At one extreme are depolymerization processes, which include hydrolysis, glycolysis, and methanolysis. These processes require clean waste materials and produce relatively high-valued materials. At the other extreme are processes that can utilize significantly contaminated plastic waste streams as substitutes for crude oil. Others such as pyrolysis,3 utilize plastics wastes with contamination levels in between those suited for depolymerization and refinery recycling to produce basic chemicals, such as distillate naphtha, olefins, aromatics, and organic 3 Pyrolysis is a method for decomposing materials by heat in an oxygen-free atmosphere.

gases. Each of these processes allows closed-loop recycling in the sense of either reducing the polymer to a monomer from which new polymers can be produced or producing more basic chemicals from which new polymers can be manufactured. The viability of current and developmental processes to recycle plastic wastes is (and will be in the future) determined by the abilities of those processes to either: 앫 displace current plastics recycling technologies and approaches; or 앫 extend plastics recycling to new segments of the plastics waste stream that are currently being landfilled or incinerated. The limited information currently available suggests that depolymerization is not a particularly attractive approach from a financial perspective. Current mechanical recycling technologies that utilize clean PET and HDPE appear to be superior in this regard. In addition, depolymerization processes do not appear to hold significant environmental advantages over currently available mechanical recycling processes. Although data on the environmental implications of depolymerization and mechanical recycling processes targeted at clean waste (i.e., depolymerization’s closest competitor) are limited, there is no strong evidence that depolymerization results in lower overall emissions or damages. This position is supported by the fact that both displace virgin resins. From an energy balance perspective or in terms of conservation of materials too, none of the two hold any particular advantage. Technical and cost improvements in recycling technologies offer the potential for significant expansion of plastics recycling, specially so that the plastic waste currently landfilled or incinerated might be recycled. However, if this transition is advisable, society must await

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further research on the financial and environmental character of these technologies. 2.5. The car industry The car industry is now teaming up with producers of raw materials and suppliers in search of processes for avoiding or reducing the shredded light fraction. There are various ways of recycling plastics or plastic components as discussed earlier. In the car industry, the following methods are getting attention as they are considered particularly friendly to the environment and lead to economical use of resources: 앫 앫 앫 앫

Reuse of components, Repair of parts, Recycling of materials, and Chemical recycling.

Recycling for the purpose of generating energy — i.e., incineration — and use of the energy generated in the process, is normally considered as a kind of last resort only acceptable with plastics difficult to recycle in any other way or already reused a number of times. However, it could happen to be the most economical option available depending on the economical aspects (e.g., transportation costs, energy recovery, etc.) and the type of plastic being handled. As the name implies, reuse of components is the use of the component already used in the past, and is therefore the most environment-friendly method. Commercial companies already apply this concept to a large extent, offering a wide range of bumpers, seats or inner lining components from used cars. In terms of the objective of recycling, this has the highest value. Apart from the possibility of re-using existing components, current studies also focus on ways and means of repair of plastic parts. Accordingly, there are already comprehensive repair schemes for bumpers, such expert repair not only avoiding waste, but also maintaining the respective component’s features and properties. Should it prove impossible to recycle a component for qualitative or economic reasons, the recycling of materials as such is the next option to be considered. If the components of the car are made exclusively of one ‘pure’ plastic completely uncontaminated and without a coat of paint on top, the material (specially plastomers) could be recycled without problems and with virtually no loss of quality. Generally, however, functional combinations of materials, aging and contamination, as well as the paint-work itself, change the composition and, accordingly, the properties of the new materials obtained through recycling. Such materials must therefore be checked very carefully before being used again, to make sure that they offer the high level of quality required. To make the recycling of materials as efficient as

possible, the wide variety of materials and combinations thereof used in the automobile production today must be reduced. Chemical recycling serves to break up plastics into their basic substances then used again to make new materials. This procedure is particularly suitable for mixed plastics, the drawback being that it still requires a great deal of energy. Thus, its utility for the environment is still questionable. Barriers still obstructing a technically and economically efficient concept of recycling non-metallic components and materials are the lack of material purity, inadequate logistics, and the poor availability of suitable technologies. Once these barriers have been overcome, however, about 90% by weight of a used vehicle can be recycled.

3. The political and legal aspects 3.1. European commission directives/proposals The EC has a number of points to make on the issue of use and recycling of plastics (EC Proposals, 1997; EC Proposals — Explanatory Memorandum, 1997). The EC points out that recycling of non-metallic fractions of the car would be critical to the success of any effective recycling system. The treatment of end of life vehicles could represent a powerful source of economic profits if appropriate measures are taken, particularly at Community level, to encourage the development of infrastructure for the collection and recycling of the nonmetallic fractions. The cost connected with the recycling of plastic components, which is one of the causes of reduced profits for the industry of end of life vehicle recovery, would be reduced as this infrastructure is set up and markets for the use of recycled materials are developed. European Commission proposal [COM(97) 358 final SYN 9710194 I Official Journal C 337, 07.11.1997] reports that a study by Delft University comparing recycling and energy recovery of the plastic fraction of end of life vehicles showed that ten times more energy is saved by recycling than by performing energy recovery. This is mainly because, by incinerating plastics only a small part of its intrinsic energy can be used to produce electricity, whereas a large quantity of energy is necessary to manufacture a new component. This energy is saved when components are physically recycled instead of incinerated. End of life vehicles are also considered by the Organization for Economic Cooperation and Development (OECD) as one of the priority areas for action in order to minimize waste. A working group on this waste stream was set up and its report discussed at an international Seminar held in Washington in March 1995. Most of the measures advocated by the Project Group

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set up by the European Commission are also present in the OECD report: reduction of hazardous components in new vehicles, reduction of non-recyclable components, re-use, recycling and other forms of recovery (in particular by decreasing the number of polymers in plastics and by marking components as to facilitate the dismantling of end of life vehicles). Among the possible political orientations, the OECD report lists the maximum reuse of re-usable components, the maximum recycling of metals and plastics and the reduction of pollution generated by treatment operations. Among the options to be taken into account to achieve these objectives, the report mentions recycling standards, market incentives, levies and taxes. The report has also recognized the need to take into account the risk of generating market distortions in developing national strategies on end of life vehicles. The significance of plastics in a car is not lost to the EC. By focusing on a vehicle once it has finished its useful life, the EC Proposal provides a balance with a view to measures which until now focused in particular on emission control. Indeed, actions taken to combat air pollution tend to encourage the use of lighter material, in particular plastic components instead of metal, in order to reduce weight and thereby consumption. This shift of materials has a direct impact on the management of end of life vehicles.4 The Commission proposes to consider the scientific evidence concerning PVC and, if necessary, will make appropriate proposals to take such evidence into account. This is because the disposal of PVC through incineration (both with and without energy recovery) poses major problems. In comparison to other polymers, PVC has a lower heat value (15.4 MJ/kg against 36.7 of polyethylene) and a higher content of chloride (which amounts to 47% of PVC and it is almost absent in other polymers). This makes incineration of PVC less attractive in terms of energy gain and very costly, since chloride generates hydrochloric acid and may generate dyoxins (depending on the combustion temperature) and therefore requires more sophisticated and expensive systems for the treatment of flue gases. The incineration of one kg of PVC generates between two and five kg of hazardous wastes (residues of flue gas treatment). The 4 The EC Proposal is based on data which has been collected in an “Information Document” by the French Agence de l’Environement et de la Maıˆtrise de l’Energie. This document was produced in 1994 for the end of life vehicles project group in the context of the “Priority Waste Streams Programme” and was updated in June 1996 by the Institute for European Environmental Policy. A number of other studies and reports have been used in order to prepare the EC Proposal, in particular a study by SOFRES (a marketing/opinion survey organization) on recovery of plastic wastes from end of life vehicles, and a study on recycling of vehicles done by the Institute for Prospective Technological Studies, in the context of the Task Force “Car of Tomorrow”.

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incineration cost of mixed plastics (including 11% PVC) has been estimated at being in a range of ECU 20 to 49/t but skyrockets to ECU 240 to 400/t for PVC alone. The substitution of PVC with other materials is technically possible but at a higher cost, which varies between ECU 25 and 100. In addition high concentrations of dioxins and hydrochloric acids are generated when PVC is subject to accidental fires. EC’s explanatory memorandum on the proposal for ELVs states that from an energy perspective, net savings connected with material recycling of automotive plastics are ten times higher than the net gains obtained by incineration with energy recovery. From a joint environmental and economic perspective, the recycling of combustible components such as bumpers, seat-fillers, dashboard and tyres has been shown to be preferable to the incineration with energy recovery of such components (EC Proposals — Explanatory Memorandum, 1997). Since at present 75% of end of life vehicles are already recycled (the metallic fractions), this provision requires another 10% of the vehicle (plastics, glass, ceramics, textiles and other fibres, paint etc. — at present either land-filled or incinerated) to be re-used/recovered by 2005 and another 10% by 2015. With regard to plastics, it has to be decided initially for which plastic components dismounting for mechanical recycling makes sense, and which components should remain attached to the used car and recycled — either in feedstock recycling or energy recovery. The second step is to organize the recycling quantities. Assuming product responsibility in the meaning of the German cycle management act (Kreislaufwirtschaftsgesetz), and within the self-commitment of Verband der Automobilindustrie e. V. (VDA — German Motor Industry Association) and VDA’s supplier industries, the plastics industry in Germany offers to the motor industry active technical support in the search for solutions (VKE, 1998). For example, together with the motor industry it was determined which plastic components can be dismounted in an economically feasible time and which plastic components must be made available in a suitable design as a prerequisite for potential mechanical recycling. Based on these findings, the issue of the recycling of plastic components from garage disposal is today almost fully solved through systems established by carmakers. There are cooperation agreements between various plastic producers and companies of the motor industry Table 2 sheds some light on the status of feedstock recycling of plastic components (VKE, 1998). Surveys in Germany have shown that basically only around 40% of the plastics used in a vehicle are fit for mechanical recycling. This potential is further reduced by frequently insufficient quantities of suitable waste, low quality of waste (pure grade), lacking markets for recycling products, and negative marginal features of the business environment so a more realistic share stands

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Table 2 Feedstock recycling of plastic components System carriers All carmakers BMW/Mercedes Ford VW

Products

Bumpers Bumpers Bumpers Radiator grills Components from utility vehicles Varta/Bosch/Sonnenschein/Hoppecke Accumulator bixes Mercedes Door sills/Slide parts a

Materials

Recycling companies

End products

PP PC/PBT PC/PBT ABS SMC/BMC

Grannex/Polymerchemie/Hoechst Polymerchemie/Bayer Polymerchemie/GE PEBRA/Grannex/Bayer ERCOM

PP granule PC/PBT granule PC/PBT granule ABS granule Fillers

PP PUR/RIMa

Metaleurop/Hoechst PEBRA

PP granule Polyols

To the extent that mechanical recycling is not possible, processes in feedstock recycling are available for residual waste and components.

at 15–20%. This conclusion means that the objective to landfill “less than 5% of a used car” combined with exclusively mechanical recycling of dismounted plastic components cannot be achieved. Consequently processes in feedstock recycling and energy recovery will assume an important role within the recycling activities. The recycling rate of vehicles present today on the market can be rapidly increased, up to 80%, by means of recycling of glass and of the large plastic components (e.g. bumpers, seat foams). Further increases of the recycling rate will depend mainly on how the design of new vehicles will take recycling aspects into account and on market outlets for the recycled materials. In this respect, the use of shredding residues in civil engineering works would be a possibility. Also the development of integrated treatment centers (i.e. centers where depollution, dismantling, shredding and treatment of shredding residues takes place on the same site) will allow substantial increases of the re-use, recycling and recovery rate of end of life vehicles. Most of the elements contained in the EC Proposal intended to encourage the widespread development of recycling are also advocated by the US Environmental Protection Agency (EPA). In particular, the EPA has identified the following strategies to promote the recycling of the plastic fractions of end of life vehicles: 앫 promote “design-for-dismantling” and “design for recycling”, develop collection infrastructure; 앫 promote economical dismantling methods, particularly improving the systems for the identification of recyclable materials; 앫 encourage “fair” competition between raw materials and recycled materials. It is doubtful however how these strategies could achieve any results if not implemented via legislative measures. There are examples in the EU which show the feasibility of the proposed quantified targets. In one case a recycling rate of 85% has already been achieved, and recyclates made out of the non-metal fractions are rein-

troduced in the market under the form of, inter alia, components for new vehicles, bottles and carpet underlay. The profitability of recycling of plastic components largely depends on the time necessary to disassembly the vehicle. In this context, coding standards and dismantling manuals play a fundamental role as being introduced by Ford, Renault and Daimler-Benz, for example. The EC proposal hopes that components re-usable as second-hand components (within the respect of the corresponding rules on safety) will as far as possible be reused. Where this is not possible, they will be recovered and preferably recycled, when environmentally viable. This provision seeks to give a reasonable incentive to increase the re-use of spare parts and to develop recycling techniques in preference to other forms of recovery such as incineration in cement kilns or in steel plants. It takes into account that for some fractions of the end of life vehicle (in particular light plastic shredding residues), energy recovery may be, under certain conditions, an effective solution both on environmental and economic grounds. EC concedes that vehicles are composed of many different materials (e.g. steel, aluminium, plastics, glass, textiles, fluids, rubber, wood, paper and carton, paint) and components. Therefore, all sectors and branches which produce vehicles as well as materials and components will be affected. In addition to the sectors involved in the production of vehicles, sectors related to vehicle collection, dismantling, recovery and disposal will also be affected. 4. Some economic issues Even today the recovery/reuse of plastics in waste streams involves both large and small companies, but with very few dominant firms (Table 2). These companies are involved in conducting operations such as collecting, transporting, grinding, separating, cleaning and recovering the plastics. The industry of post-consumer plastic recyclers is still evolving, particularly since many of the companies are both young and small, with limited capitalizations.

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Many changes in concepts, technologies and players can be expected in the years ahead. Moreover, the rules that govern the attractiveness of recovery/reuse of plastics are undergoing changes at the local, state and federal levels as the governmental agencies continue their efforts to protect the environment. In the coming decade or so we can expect a steady growth in the recovery/reuse of plastics from waste streams. Major producers of virgin plastics, many of whom have not been particularly active in recycling, will have to increase their activities in response to public, regulatory and market forces. In many cases, they will probably want to work in partnership or even joint ventures with entrepreneurial firms. In this section we attempt to examine some of the critical economic issues that can affect the attractiveness of recovery/reuse of plastics. Economic issues are of critical importance in determining the rate of diffusion of new technologies for plastics recovery/reuse. Unfortunately, it is dangerous to even mention the investment and cost factors without presenting a long series of reservations. Published cost factors tend to be unreliable and are almost never comparable since they have been developed on different bases, e.g., depreciation policies, rate of interest, and distribution of general costs. These problems are common for the cost data in all the industries, but they are believed to be particularly important for plastics recovery/recycling endeavors.

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(expensive) equipment and the depreciation rate of the equipment. 앫 Time necessary to recover parts and materials (hr/car). This is strongly influenced by the design of the vehicle. In order to obtain a profit or earn benefits, these costs have to be offset by revenues. Revenues in automobile recycling can be obtained from: 앫 High value (high demand), undamaged recovered reusable components. Additional processing (cleaning, inspection, upgrading, reassembly, and redistribution) adds to costs. 앫 High value, uncontaminated scrap materials. Any contamination which reduces material properties depreciates the material value. 앫 Energy recovered and sold from incineration. This has the lowest revenue as well as lowest cost of all. Plotting percent of recyclability of a car against the cost of recycling and marginal benefits attained from recycling, one could speculate that 100% recyclability may not give the most optimal solution (Fig. 5). Indications would be that the most optimal and economical percent of recyclability fixed at a level lower than 100% and use of processes like incineration and land-filling for the non-recyclable part. 4.2. Recycled plastics vs. virgin plastics

4.1. A hypothetical cost-benefit analysis Economics form a major concern. In fact, many European car manufacturers have throttled down on their efforts to create “green” cars because they started to realize that there are economic trade-offs. Automobile takeback, dismantling, and recycling can have large associated costs. Some common cost factors could be: 앫 Buy back of car (cost/car). Typically, this is dependent on condition and value of car type. In some cases, there may not be a buy back cost. 앫 Transportation costs (cost/km). These costs may also depend on weight and amount of damage tolerated. Consider, for example, the difference in gas prices between different countries. 앫 Tip and storage fees (cost/car). One typically has to pay for dumping material on a landfill. The property on which cars are stored also costs money. These costs are strongly influenced by location of the recycling facility and local legislation. 앫 Labor cost (cost/hour). This speaks for itself. However, labor costs also depend on the level of skills required. 앫 Equipment investment cost and operating cost (cost/car, cost/hr). Influenced by the need for special

It is obvious that a plastic fabricator will consider the use of recycled resin only if the price of the recycled resin is at least a certain perceived percent points lower than the price of a comparable virgin resin. This lower price is required to compensate a fabricator for the difficulties in handling them. However, the problem that emerges here is that the prices at which discarded plastic parts and objects are available, and the costs required to upgrade them (sortation and reclamation) to generic resins that can compete with virgin resins vary widely. 4.3. Trends in the economics of recycling and recovery Recovery of plastics from waste streams economically presents a number of challenges. For example, reclaiming of industrial plastics waste streams, e.g., scrap film from converters is a relatively simple operation, typically involving grinding, blending and reextrusion into pellets. However, recovery of plastics from post-consumer products is more complicated. Several additional processing steps involving washing, separation, and drying are required to produce resins for recycling (Bisio and Xanthos, 1994).

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Fig. 5.

Cost-benefit analysis for car recycling.

Historically, capital requirements have generally been rather modest, and, as a result, capital-related charges, e.g., depreciation and maintenance, have been rather low. In general, the most significant costs have been those of the waste plastic (sorted to some degree) at the plant gate and the cost of labor; significant labor costs have been incurred for both inspection and manual handling/sorting of the feed. Processes for the separation of plastics in the future will be increasingly automated, reducing to some degree labor charges. However, automation and utilization of recovery technologies, such as micro-sortation5 and solvent separation,6 will significantly increase the unit capital investment. As a result, plants will have to be larger. This, in some cases, will result in higher transportation costs since the feed will have to be transported over a greater average distance. A certain degree of centralization of operations would be inevitable in the beginning for economical as well as high investment requirements.

4.4. Relative prices of recycled plastics and crude oil When recycled plastics are considered as feedstock to fuel, processes or low selectivity monomer processes, e.g., ethylene production, then it is important to consider the price of the recycled plastics relative to the price of the crude oil. Recycled plastics are just another feedstock, they, in general, do not offer any advantages over crude oil. The price of crude oil impacts recycling in at least two ways. First, high crude oil prices drive up the costs of virgin resins more than they drive up the cost of recycling, thereby making the use of recycled resins more attractive relative to virgin resins. Second, recycled plastics can be converted by pyrolysis into ‘synthetic’ crude oil, and this process also becomes more attractive as crude oil price rises. However, doubts regarding dependence on pyrolysis remains due to high energy requirements. 4.5. Issue of subsidies

5 Technologies for sorting ground or flaked resin by types or color can be categorised as micro- sorting technologies. The micro-sorting technologies under development are technically feasible. However, there is doubt at this time as to whether micro-sorting processes will compete both economically and with the level of product quality attainable with the simpler pre-sorted feed wash/float approach (Bisio and Xanthos, 1994). 6 Solution processing of polymer waste streams either to selectively dissolve individual polymers or to dissolve the polymer content and then precipitate them in a way to separate them into individual polymer fractions that can be reused is a subject of considerable interest. Particular emphasis has been placed on finding solvents that are highly selective for specific polymers since this would permit the selective dissolution of the individual polymers from a commingled mixture (Bisio and Xanthos, 1994).

All the methods of solid waste reduction are costly in the sense that they require diversion of resources that have alternative use. Source reduction is costly because it requires modification of production and consumption behavior that firms and households may prefer. Changing behavior implies a higher cost to firms and/or lower levels of satisfaction to household. Recovery/recycling of plastics is costly — a fundamental fact that is perhaps all too often ignored. Many of the costs of recycling are obvious — transportation, storage, sortation, reclamation, and the other processes incurred by the recovery/recycling organizations and the users of recycling materials. The fact that some of these operations are at times performed by volunteer organizations, does not alter the fact that they are costly in terms

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of the use of society’s resources, i.e., what other good works might have been performed or leisure enjoyed had the volunteer effort not been directed to recycling. Aside from the hidden cost of the time of households and firms and other household and firm inputs that are not priced in the markets, some of the costs (in a lifecycle sense) and especially those for landfilling and incineration are not well established. These costs may in practice be estimated incorrectly or, worse, ignored entirely. It is difficult to price solid waste collection and disposal services at their full real cost (including the cost of environmental protection). Underpricing of waste disposal in itself encourages the overuse of the service. Reducing the incentive to consider disposal costs when acquiring materials that will require disposal stimulates the use and production of these materials. In addition, lowering the disposal costs to a waste producer, in effect, reduces the incentive to recycle the materials from waste streams. Obviously, even if the cost of solid waste collection and disposal were priced at their full value, there still remains the question — to what extent, if any, should any disposal fees, that are collected be captured with the recycler and the user of recycled materials? This is an important issue in determining whether a technology is going to be used broadly since the fees (or a part of it) could be a significant income stream to the companies involved in recovery/reprocessing. 4.6. Policies for encouraging recycling In general, four policies to encourage recycling have been advanced by different groups involved/interested in the recovery/recycling of materials produced from natural resources: 앫 Taxes on the use of virgin material; 앫 Deposit/refund programs; 앫 Subsidies to encourage production of recycled material; and 앫 Recycled content standards. Unfortunately, there are few analyses of either the structure of these policies or how one would rank them in terms of the private costs necessary to achieve a given reduction in waste generation. Virgin materials tax and deposit/refund programs may be better policies since they encourage recovery/recycling and discourage consumption. By contrast, a subsidy for recycling may be the worst policy because, by decreasing the price of the recycled plastics, the consumption of all plastics may be encouraged. Further, State funding of such activities is in the long run inferior to individual customer funding as customers, on the one hand they are in a better position to impress

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upon the company and on the other they tend to understand the significance of the issue when they are directly involved. 4.7. Automobile recycling The automotive, materials and recycling industries will be affected in different ways by the regulatory and policy initiatives that will occur during the next few years. Already, many initiatives have been undertaken in the form of joint study groups (e.g., vehicle recycling partnerships) and several joint ventures. These may change the nature of the current infrastructure over the next few years. Participation in this industry may require a partnership of some nature with existing dismantlers and shredders. Closer and more serious participation of the original equipment manufacturers (OEM) holds the key to success for the recycling industry as they have the finances as well as capacities to make recycling operations economically viable. It is important to remember that recycling for its own sake is not enough. Against the undoubted potential benefits must be weighed the cost and environmental effect of collecting, transporting, dismantling, identifying, sorting, shipping, re-manufacturing and all the other processes involved in the recycling process. The environmental viability of 100% recycling of motor vehicles has yet to be determined, but between 90 to 95% could be a realistic objective. Recycled material would gain in value as more uses are discovered for it, and thus the incentive to collect it is provided and less waste remains in the automotive life cycle. In summary, events that could and probably will make recycling an attractive alternative are: 앫 Lowering recycling costs due to larger scale of operations and increased use of automation; 앫 Marginally improved prices of recycled products due to higher costs for crude oil; 앫 Somewhat improved margins if recycling captures a portion of ever-increasing disposal fees; 앫 Increasing activity of major corporations (resin producers, automotive manufacturers, etc.) in investing in recycling operations; 앫 New technology that reduces the cost and increases the value of recycled products; and public pressure and governmental actions. The key to success for companies wishing to participate in the recycled business will not only lie in taking advantage of these trends but in identifying their own particular places in the market and forming linkages with other firms that they need to work with, including establishing relationships with research institutes involved in developing future technologies for recycling.

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5. The concerns for the future There are many tradeoffs and conundrums that emerge from the discussions above. Until increasingly high volumes of plastic are channeled into viable recycling streams that do not qualify for incineration, higher metal contents are likely. The EC makes the steadfast argument that recycling saves far more energy, and risks far less pollution than burning. The irony is that the ecological imperative of recycling could, through regulation, create heavier, less fuel-efficient cars, with the resultant retrograde rise in fuel consumption and pollution. Equally important is to question the environmental validity of more unified design and execution if disposal and treatment of escalating volumes of new cars cannot be dealt with in the same way in different economies. Why should a car in the developed world be regenerated into reusable and useful commodities and yet scar the landscape of emerging nations? How much responsibility lies with the colonizing vehicle manufacturer and how much with the governments clamoring for inward investment? While Europe may be a role model for emerging economies, imbalances persist in the northern hemisphere, illustrated by the steady flow of ELVs from Germany to eastern and central Europe, and even parts like engines finding their way into the Asian and African markets. One nation’s car scrap is another’s source of mobility. How Europe resolves the issue against the background of an already delayed timetable will be crucial to templates established around the world. Environment pollution (and even waste) does not restrict itself to political boundaries. Therefore, there is a need for a uniform, world-wide guideline or directive for handling issues like dealing with recycling in different economies. There are international agencies involved with research on environmental issues like the World Bank. An organization looking after the various environmental aspects from car pollution could be established for setting guidelines and following up their implementation like the International Civil Aviation Organization (ICAO) which regulates the airline industry. Responsibility for the recycling process is a central theme of this paper and, while most auto manufacturers agree that the consumer will not pay extra for a car which is recyclable, there is no going back on the issue. To maintain the initiative, recycling should and could become part of the economic system, with manufacturers creating a closed recovery and reuse loop. This would underpin the accelerating pace of product development and model life cycles. It also raises the question about definition of a “recyclable car”. German industry agreed to take back free of charge only end of life vehicles which are more than 12 years old, provided a number of other conditions (such as that the vehicle must have been intended for the Ger-

man market or have been admitted in Germany at least six months before being discarded and that the vehicle complies with certain technical requirements set out by the industry itself) are met (EC Proposals, 1997). BMW, for example, since 1997, offers to accept all disused cars as long as the car is not more than 12 years old. This take back is free of charge to the owner. If the vehicle’s value is greater than the recovery and dismantling costs, the last owner is paid the difference. With vehicles older than 12 years, standard market costs are charged (BMW, 1998). Such definitions have to accommodate for possibilities when a car has met with an accident or has faced more than the expected wear and tear during use. However, there is an inherent risk that the auto industry will absorb the traditional recovery and scrap industry as legislation forces it to make a necessity out of a virtue. A system of processing ELVs, created at some expense, will dictate a more closely controlled network, with profits staying within the automotive sector. This research attempts to explain how recycling is affecting every aspect of car design and construction. Innovative suppliers, from those who provide raw materials to those who increasingly assemble larger integrated modules, must join the process, but unless there is a saving in time, cost or quality the auto manufacturer will be unwilling to erode any commercial advantage. Arguably the auto manufacturers may have to change their mindset regarding the suppliers’ input to meet regulatory pressures and accept widespread use of more common, recyclable materials in unseen areas and even reusable components. Just as consumers are unwilling to pay a premium for the environmental merit of their cars, they have an ever higher expectation of style, quality, economy and safety. Compromising on the look, feel and performance of a modern vehicle through an idealistic application of recycled materials or techniques is not on the agenda. Conversely, the overall value of metal, plastic, glass, rubber and the sundry minority materials which make up the modern car will rise as global vehicle demand climbs. How the market for that mixture of commodities is consolidated, encouraged and created is at the core of a potentially lucrative environmental revolution. Recycling has to be further ingrained into the culture of the automotive industry. On one hand the auto manufacturers resist compulsion and regulation by individual states or confederations of states, but on the other, they must realize that the car is one element, albeit a major one, in the social, economic and industrial recycling equation. At present the automotive sector generates about 5% of the world’s industrial waste, whether from vehicles or the plants which produce them. Establishing and sustaining a recycling infrastructure and within it the viable, stable and growing markets for the materials generated, is an imperative for the automotive industry

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and its suppliers, at all levels of the development and supply chains. These mechanisms and markets must relate to pragmatic policies involving car makers and legislators. Without a holistic approach to an increasingly pressing issue, social and economic acceptability of the car will be even further compromised. The necessary technology can and must be developed by one of the world’s most powerful and resourceful industries in partnership with an increasingly sophisticated recovery, reprocessing and reapplication network. In recent years, active and passive safety, for too long relegated to the margins of design priorities, have become part of the fabric of the automotive world. It is now the norm, rather than an optional extra, with the industry generally leading, rather than following, legislation. Effective automotive recycling, however complex in application and execution, has to follow suit sooner rather than later. Although plastics recycling has the potential to grow significantly, there are practical limits. It is important to remember that an optimum combination of all recovery options is the only way to ensure that the maximum amount of resources is saved.

6. Implications for the world Europe is a small part of the world. The European regulations would lead to spilling over of the environmental pollution problems to other parts of the world where the pollution control or environmental concerns are not so strict. The first indications of this are already being seen as ELVs move out from countries like Germany to other Eastern European countries. Environment knows no political boundaries and the coming years may just see the shifting of the problem from one geographical location to another; still affecting our lives. It is, therefore, necessary to address the problem globally and to pressurize the still dormant nations to take actions and formulate regulations on the lines of the European regulations. This would plug the holes that the EC directives will bring forth and only then will the world feel the affect of the regulations. 6.1. Implications for the Indian sub-continent End-of-Life Vehicles (ELVs), recycling of car components are issues that have yet to receive serious attention in the Indian sub-continent. Discussions here indicate how complex the issue is and how necessary it is to address it for preventing environmental damage. At present the Asian sub-continent is in a better position to address recycling issues and set recycling/reusing targets. The problem is in its infancy stage and can be controlled; or else, it will finally appear as the colossal pol-

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lution problem (with attention at present only on emission control) which will have no solution given the resources and the political will of the sub-continent. At a later stage, the technology may arrive, but resources and infrastructure would be lacking as a timely start was not made. One needs to just reflect on the absence of the mass transit systems in big cities like Delhi to understand the meaning of the statement made above. If this issue was addressed years ago when the pollution problem was non-existent and the city was small, incremental investments would have been required and the alternative transport system would have developed as the city grew. The same holds true today for recycling and the infrastructure required. The responsibility of introducing the environmental concerns and suggesting measures to protect it lies as much with the car makers (who are not unfamiliar with the issues, having faced tough regulations in their home countries) as the local government and the population. Awareness about pollution and emission control is not enough. There are other related and more serious issues such as recycling which have to be addressed sooner or later. This is the right time to think of recycling centers, regulations regarding reuse and recyclability. This is the time to pressurize the car makers to share their experience in developed countries and protect the environment of the other not so rich and developing countries.

Acknowledgements This research work is supported by the Alexander von Humboldt Foundation in Germany and is being carried out at Universitiit Mainz with University Professor Dr. Klaus Bellmann at the Lehrstuhl fu¨r ABWL und Produktionswirtschaft. We express our thanks to Dr. Manohar Badiger, Humboldt Fellow (Physical Chemistry) at Universitat Mainz for helping us with the technical details regarding plastics and their recycling.

References AAMA, 1998. Internet website of American Automobile Manufacturers Association. APME, 1998. Internet website of Association of Plastic Manufacturers in Europe. Bisio, A.L., Xanthos, M., 1994. How to Manage Plastics Waste — Technology and Market Opportunities. Hanser Publishers, Munich, Germany. BMW Umweltbericht 1997/98 1998. Munich, Germany. European Commission proposal 1997. [COM(97) 358 final SYN 97/0194 /Official Journal C 337,07.11.1997]: Extracts. European Commission proposal 1997. [COM(97) 358 final SYN 97/0194 / Official Journal C 337,09.11.1997]: Explanatory Memorandum. VKE, 1998. Internet website of Verband Kunststofferzeugende Industrie e.V., Frankfurt.

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Klaus Bellmann is a Full Professor at Johannes Gutenberg Universita¨t Mainz, Department of Law and Economics. His research and lectures are focused to the fields of business administration and production management; as well as environmental economics and research and development related to industry. After obtaining his degree in control engineering and technical informatics from Technische Hochschule Darmstadt, he completed his doctoral research in the subjects of economics and technology at the University Mannheim. As an Associate Professor at Mannheim, he pursued intensively post-doctoral research and completed extensive projects for the federal and regional government departments, industrial associations, and industrial corporations on the economics of energy supply, manufacturing, automobiles, and environment. He completed the tenure at Mannheim with his Habilitation. He has published eight books and over 50 articles and papers.

Anshuman Khare works as a Research Scientist for the University Grants Commission, India and is placed at the Motilal Nehru Institute of Research and Business Administration, University of Allahabad, India. He teaches Quantitative Analysis and Business Policy. His research interests are Japanese Business philosophy and responsible manufacturing. He has done his post-doctoral research at Ryukoku University, Kyoto, Japan on a Japanese Government Scholarship (1995–97). He has also delivered lectures at the Kyoto Institute of Technology, Ryukoku University, Kyoto, and Kansai Gaidai, Osaka, Japan. Presently he is a Research Fellow of the Alexander von Humboldt Stiftung at the JohannesGutenberg Universita¨t Mainz, Mainz, Germany and works on environment related techno-managerial issues in automobile manufacturing. He has published three books and over 100 research papers and articles in India and abroad.