2 Product Stewardship

2.1 Wastes with particular management and disposal problems

There are some wastes that cause particular management or disposal problems. These problems derive from the characteristics of the waste material when it is disposed of at the end of its useful life, which cause harm to health or the environment, or create a public nuisance. Many of these products have some residual economic value at the end of their life, but this is usually not enough to ensure the recycling of all the materials or their safe disposal.

Table 1: Products and the problems faced in their disposal

Product	Problems arising from disposal
Tyres 3 to 4 million tyres reach the end of their life each year	Disposal difficulties and costs for councils Visual pollution Risk of fires in stockpiles – causing air pollution and firefighting costs
Used oil An estimated 30 million litres of used oil is generated annually	Risk of waterway contamination Costs for councils Air pollution from low-temperature burning
Cars About 25,000 cars are abandoned annually	Costs to councils of disposing of abandoned vehicles ($6 million a year) Visual pollution Environmental pollution (eg, from leakage of oil) Public safety Difficulty compartmentalising for potential reuse, recycling and safe disposal
Electronic wastes Up to 80,000 tonnes per year	Hazardous substances in products (including lead, mercury, cadmium and hexavalent chromium) present health risks Fast-growing volume Difficulty compartmentalising for potential reuse, recycling and safe disposal
Packaging Comprises 12% of waste to landfill	Major issue of public concern (nuisance) Significant contribution to litter Major part of total waste to landfill

These problems arise because, generally, once products are sold, producers, importers and retailers are no longer responsible for the product's impacts. Also, consumers may not consider the costs of disposal when purchasing a product because these costs often fall on others. In these cases there are no direct links between the problems of disposing of the product, and product design to reduce waste at the end of the product's life. Disposal is often easier – and in many cases is cheaper to the producer and consumer – than recycling or waste minimisation.

The New Zealand Waste Strategy recognises the importance of product stewardship as a mechanism for managing wastes such as those listed in the table above.

2.2 What is product stewardship?

'Product stewardship' is the term used to describe an approach whereby producers, importers, brand owners, retailers, consumers and other parties involved in the life cycle of a product accept a responsibility for the environmental impacts of the products through their life cycle. This can include upstream impacts from the choice of materials and the manufacturing process, through to downstream impacts from the use and disposal of products. The term 'extended producer responsibility' (EPR) is used in a similar way, although usually with a narrower focus on the responsibilities of producers.

Product stewardship aims to encourage producers and other parties to internalise a substantial proportion of the environmental costs arising from the final disposal of their products. Internalising involves creating schemes that help to shift the costs of managing wastes from ratepayers and taxpayers to the producers and consumers. This ensures the costs of wastes get considered when purchase and production decisions are made. Product stewardship schemes can contribute to a reduction in waste and to the recovery of materials from the waste stream.

In many cases producers and others will accept responsibility for their products and undertake activity to manage the environmental impact of the product. This is often done through a variety of methods, including operating a materials recovery scheme, recycling schemes and product redesign. In other cases government can regulate aspects of product stewardship.

Common product stewardship schemes include:

changes to product design
consumer information
collection and recycling
financing mechanisms
deposit–refund schemes
advance disposal fee schemes
materials charges
specified recycling contents
reuse, including remanufacture.

Which mechanisms are used will depend on the nature of the waste problem and the industry concerned. Each scheme will be different from others because they are tailored to individual products and waste situations.

2.3 Product stewardship internationally

Product stewardship (including extendedproducer responsibility) schemes are not new. Several countries have adopted policies, sometimes targeting specific products, and often have legislation that provides for regulation. The Organisation for Economic Co-operation and Development (OECD) provides a forum for governments to consider the policy implications of product stewardship, and it has produced a guide for governments (OECD, 2001a).

While early product stewardship approaches were often based on a prescriptive approach supported by legislation, more recent policies developed in Canada [British Columbia Product Stewardship Regulation Review, http://wlapwww.gov.bc.ca/epd/epdpa/ips/reg_review.html] and Australia rely strongly on industry initiated and led schemes, with regulation being used as a backstop to discourage the operation of 'free-riders'. 'Free-rider' are non-participants who seek to benefit while not complying with the mechanisms or contributing to the costs. In this context free-riders could add waste to the volumes which are being recovered by others. Alternatively, they could under-cut scheme participants in the market as they will not be seeking to cover the costs of dealing with waste.

A mandatory approach to product stewardship has commonly been adopted in Europe, Japan and some other parts of Asia.

The products commonly targeted by product stewardship schemes and regulation overseas include packaging, used oil, used cars and tyres and used electronic goods.

It is important to note that the introduction of product stewardship schemes overseas can have an impact on New Zealand. New Zealand industry supplies products to other countries and these must comply with regulatory requirements where they are used. When New Zealand imports products, these may be designed to meet the requirements of other countries' schemes, which can make recovery and recycling easier. It is also likely that there could be instances of New Zealand being supplied with 'old stock' that does not comply with new standards overseas if our product requirements are lower than those overseas.

2.4 Product stewardship in Australia

In Australia, where the states and territories have principal responsibility for the environment, several states have adopted product stewardship policies for products such as used oil, packaging, computers and televisions. Currently, however, work is underway on a nationally consistent policy and the development of a co-regulatory approach to product stewardship schemes (Environment Protection and Heritage Council, 2004). This work is being done under the direction of the Australian Environment Protection and Heritage Council, comprising both federal and state ministers. The development of this policy has implications for some New Zealand companies that are manufacturing products in Australia or exporting products to Australia.

The Australian proposal involves industry, governments and other stakeholders establishing a product stewardship agreement covering specific products. This provides the basis for approved schemes. Industry is expected to develop such schemes on a voluntary basis. As part of the agreement, however, the federal and state governments would provide a regulatory framework which would penalise parties that did not become members of approved schemes.

The Australian policy proposal is currently being considered through a public discussion paper, with the expectation that Australian ministers will consider the outcomes of the consultation process, either in April 2005 or at a meeting later in the year.

2.5 Product stewardship in New Zealand

In the past, New Zealand had schemes that would now be classed as product stewardship. For example, the old system of deposits on bottles was a form of product stewardship. There are currently several schemes in New Zealand that incorporate elements of product stewardship, including the recovery schemes for vehicle batteries, whiteware and used oil, and the 2004 - 2009 Packaging Accord. All current New Zealand schemes are industry-led and participation is voluntary.

The New Zealand Waste Strategy set the following target:

By December 2005, businesses in at least eight different sectors will have introduced Extended Producer Responsibility pilot programmes for the collection and reuse, recycling or appropriate disposal of at least eight categories of special wastes.

Some of the progress towards this target is presented in Table 2 below.

Table 2: Industry-led extended producer responsibility programmes

Product	Company	Nature
Mobile phones	Vodafone, Telecom	Separate product take-back schemes
Whiteware	Fisher & Paykel	Product take-back and water efficiency labelling
Computers	Hewlett Packard	Product take-back
Used oil	Multiple oil companies	Used oil take-back
Tyres	Multiple companies and the Motor Trades Association	Tracking system
Packaging	Multiple sectors and companies	Accord, including recycling targets and design commitments
Refrigerants	Multiple companies	Voluntary industry levy funding and product (CFC) take-back
Paint	Resene	Take-back of old paint

Other activities underway include the collection of old chemical drums, silage plastic wrap, batteries, toner cartridges and plastic bottles. All New Zealand schemes to date have been voluntary.

Some schemes, such as the collection of mobile phones and the recovery of old paint, have been established without government involvement as industries have responded to overseas trends and customer expectations. In other cases, including the development of the new Packaging Accord and a used-tyres tracking scheme, the Ministry for the Environment has been actively involved. The Ministry has sometimes acted as a facilitator, encouraging the establishment of new schemes or the enhancement of existing schemes. In some cases the Ministry has provided financial support for the establishment of schemes.

In reviewing progress on the targets contained in the New Zealand Waste Strategy, free-riding was identified as an issue that potentially limited the establishment of product stewardship schemes (Ministry for the Environment, 2004a). Experience since suggests that back-stop powers for regulation are needed before difficult issues are tackled because of the market risk that some product stewardship schemes face from non-participants.

2.6 Existing statutory instruments

The legislation affecting waste is outlined in Table 3.

Table 3: New Zealand legislation: what it can and can't do

The Act, and what it can do	The limitations of the Act
Resource Management Act 1991 (RMA)
Promotes sustainable management of natural and physical resources, including avoiding, remedying and mitigating any adverse effects of activities on the environment. Regulates discharges to land, water and air from activities, including manufacturing and facilities that treat or dispose of wastes.	Cannot directly influence the nature and volume of products that become waste, resource recovery from used products, or product design. Does not shift the burden and responsibility for environmental effects of waste so that this is shared among all product-cycle decision-makers.
Hazardous Substances and New Organisms Act 1996 (HSNO)
Puts controls on the importation and manufacture of new hazardous substances. Puts controls on the management and disposal of hazardous substances.	Cannot control wastes that do not meet HSNO thresholds as 'hazardous substances'. (The role of the HSNO Act will be enhanced if current proposals for group standards include some special wastes.) Cannot directly influence decisions about features and volumes of products that become waste (including product design) that do not involve 'hazardous substances'.
Local Government Act 2002 (and LGA 1974 Part XIII)
Provides for waste management planning at the local level including: waste reduction by-laws on waste management providing a variety of funding mechanisms for waste minimisation.	Mechanisms such as tracking, levies and deposits can only be managed separately by each local authority. Does not provide clear powers influencing decisions made at the top end of the product cycle about products. Does not shift the burden and responsibility for the environmental effects of products so that this is shared among all product-cycle decision-makers.
Litter Act 1979
The Litter Act is designed to control litter and directs waste into waste management systems. Provides for council by-laws and the council collection of litter.	Does not influence the nature and volume of products that become waste, resource recovery from used products, or product design. Does not shift the burden and responsibility for the environmental effects of waste so that this is shared among all product-cycle decision-makers.

The existing statutory mechanisms relating to wastes do not regulate for product stewardship. There are provisions dealing with wastes, but none of these cover all stages of a product's life cycle. The result is that government cannot regulate for product stewardship schemes and the schemes that do exist are limited to what can be achieved through voluntary measures.

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