Czech Republic

1
Czech Republic

• PWW Directive Solution
• 1999-2008
• Decision making process

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Initial Situation 1999
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Selected solution

• Integrated waste management was selected because
  it shows high potential in recycling with
  moderate cost while able to achieve all targets
• Deposit system was avoided as integrated waste
  management does create enough recycling to meet
  all targets including plastic material recycling
  while deposits are very costly comparing to added
  recycling
• Mandatory reuse of packaging was avoided as both
  expensive and potentially less environmental in
  long distance and as well creates barrier to
  market

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Implementation

• In general best market conforming implementation
  of PPW recovery system is to make all filler or
  importers to purchase services indirectly through
  tradable certificates similar to emission
  permits. However this solution would work
  properly only when actual recycling in country is
  roughly in balance with legal requirements.
• If this is not a case then such solution is
  unstable and actually does subsidise commercial
  packaging recycling, which does not need any
  support. Only when all B2B packaging waste stream
  is exhausted recyclers will invest in household
  waste separate collection.
• As efficient implementation of household waste
  collection requires at minimum several years such
  situation will either lead to unpredictable
  increase of recycling services cost (or
  certificates cost) or targets are simply not met
  as paying penalties is cheaper than to buy
  certificates.

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Selected legal implementation

• All fillers have to achieve prescribed recovery
  targets, but there are no targets specific to B2B
  or HH packaging.
• All fillers have to give all consumers option to
  return used packaging for recycling or they
  should participate in national scheme providing
  such option
• Fillers may create a special legal entity
  packaging recovery scheme enabling them to
  comply with regulation in more efficient
  collective solution

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Legal solution to avoid discrimination

• PROs in Czech Republic
• Have to be a non-for-profit entity licensed by
  government authority
• Have to be owned by fillers while none of them is
  allowed to own more than 33
• Have to offer same contractual terms to all
  filler in the market
• Have to offer same contractual terms to all
  municipalities in the country
• Should not discriminate any packaging

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Legal solution to avoid conflict of interests

• Waste management companies or recyclers
• Are prohibited to be owners of PROs
• Are prohibited to participate in PROs management
• Members of PRO management are prohibited to
  participate in management of any other company
• Owners of PRO are prohibited to make any business
  in waste management related fields

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Organizational implementation

• One recovery organization was licensed in Czech
  Republic, however law does not exclude more of
  them
• PRO license defines details of its operation
• Fillers are free to use waste management services
  directly when service of recovery organization is
  not needed (merely when recycling B2B packaging)

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Technical implementation

• PRO concluded contracts with all municipalities
  in country to arrange household waste separate
  collection
• Municipalities are free to choose waste
  management company to provide actual service as
  well they are free to use collection equipment
  for non-packaging recyclable waste separation
• Collection centres are placed so to be convenient
  to citizens ie. close to housing not necessarily
  in proximity of shops.

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Technical implementation

• PRO concluded contracts with major waste
  management companies to ensure B2B packaging
  recovery. These are standard commericial
  contracts on waste services.
• PRO concluded contracts with waste separation
  lines to provide municipalities with
  infrastructure to process collected waste.
• PRO concludes contract with recycler when
  necessary to support recycling of commodities
  with negative market value like residual mixed
  plastic.

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Results in packaging waste
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Results in municipal waste
Only half of recycled waste is packaging
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Conclusion

• Integrated household waste and general packaging
  management gives much better results both in
  packaging waste recycling an household waste
  recycling then single focused packaging waste
  recovery
• To achieve this PRO have to be controlled by
  fillers, but co-operating closely with
  municipalities

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Czech RepublicImplementation overview

• From voluntary agreementto
• Packaging Law

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Brief history

• 1997 Packaging mentioned in legislation for
  the first time
• 1999 Voluntary agreement on packaging recovery
  concluded
• 2002 Packaging Law in force
• 2004 Technical amendment of law
• 1997 Pilot projects on packaging recovery
• 1999 Recovery organization on voluntary base
• 2002 Packaging recovery organization licensed

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Legislation 1997-2001

• No specific requirements, packaging producers
  should respect limits on heavy-metal content
• Generally set target of 15 recycling
• Extended producer responsibility defined in law
  applicable from 2002 (never effective)
• Since 1999 voluntary agreement concluded to
  start-up packaging waste recoveryIn 2001 about
  30 of fillers (by amount of packaging)
  participated in agreement

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Status in 2001

• Transition period pre-agreed with EU until 2005
• Recovery organization operating on 70 of
  territory
• Two self-compliance scheme in operation
• 37 of all packaging participating in recovery
  organization
• Recycling rate increased from 11 to 27 within
  three years of voluntary agreement
• About 46 of consumers participated in sorting

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Status 2001
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2002 Packaging Law

• Essential requirements
• Full set of CEN standards implemented as
  mandatory since July 2002
• Packaging marking
• Material marking mandatory on all consumer
  packaging
• Producer responsibility
• Producers have to ensure take-back of consumer
  packaging
• Producers have to meet recycling/recovery targets
  set up to 2005
• Recovery organization
• Defined by law as a special type non-for-profit
  company
• Subjected to licensing procedure carried by
  government

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Shared responsibility

• In Czech Republic all parts of supply chain are
  responsible to packaging recovery
• Packaging manufacturers
• Packers/fillers
• Wholesalers and Retailers
• By law business partners may conclude agreement
  on actual fulfilment of law
• However it is a typical for the market that
  packer/filler take care for take-back and
  recycling (covers the cost)
• and packaging manufacturers are responsible for
  essential requirements

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Fair competition

• Company placing product to market is free to
  comply either
• by registering itself with licensed recovery
  organization
• or by transferring responsibility to customer
  when selling product (but is not possible to
  transfer it to consumer)
• or by self-compliance recovering packaging by its
  own or through contracted party
• Self-complying company
• have to register itself with government office
• each year to proof amount of actually recovered
  packaging
• give evidence of operational collection system
• inform consumer on organization of collection and
  collection places

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Ambitious targets set
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Targets are manageable in principleplastic is
ahead, but glass cannot make 2005
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National waste management plan revision 2004

• National waste management revision is under
  process
• expected is decrease of unrealistic glass target
  80 set to year 2005
• expected is increase of plastic target above 25
  for year 2008
• these changes will influence amendment of
  packaging law expected by the end of year and
  also targets set to recovery organization

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National waste management plan revision 2004
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Current status

• Packaging law ensures pretty good enforcement of
  obligations
• free-riding dropped substantially
• Packaging waste recovery / recycling improvement
  in line with expectations
• 2003 targets were achieved also 2004 estimates
  seems to meet expectations
• Separate collection of household waste is
  improving
• 97 of territory is covered with separate
  collection scheme
• about 65 consumers do participate in separate
  collection
• nation wide communication campaign is expected to
  increase participation to at leas 75

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Free riding is decreasing

• 2001 retailers were not responsible for recovery
• only 600 major companies complied with law
• free-riders placed to market about 60 of all
  packaging
• 2002 retailers were made to proof that their
  suppliers took measures to recover packaging
• about 18 200 registered with recovery
  organization or for self-compliance and presented
  reports
• free-riding dropped to 16 of all packaging in
  market
• 2003 government authorities started to audit
  self-compliance
• about 20 800 companies registered
• free riding dropped to about 6 of all packaging
  in market

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Conclusions

• Czech Republic has well balanced packaging law
• Compatible with EU market
• Strong enforcement makes level ground to all
  companies and to all ways of compliance
• Packaging waste recovery is improving
• Fully developed packaging recovery organization
• Growing consumers participation in selective
  collection
• Almost all territory covered with selective
  collection system
• Self-compliance is under though supervision of
  authorities, such schemes have to meet same
  criteria like PRO

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• Integrated Packaging Recovery System in the Czech
  Republic
• Financial responsibilities in system

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Packaging Act 477/2001

• Any joint stock company may request license to
  operate as PRO providing
• Company prooves its ability to offer compliance
  service in line with legal requirements (is able
  to guarantee collection and recovery)
• Company is owned solely by legal entities placing
  packaging to market (is owned by industry)
• None of company owner is undertaking any business
  activity in waste management (no shareholder is
  in conflict of interest)
• Company is non-for-profit ie. no profit is
  distributed to owners (no shareholder has profit
  from operation)
• Company does not operate in any other business
  than packaging recovery (packaging recovery is
  only company purpose)
• Terms of compliance service are same to all
  business partners including shareholders and no
  packaging is discriminated neither negatively nor
  positively (same conditions to all)
• License is issued by Environment Ministry in
  consensus with Economy Ministry. License may
  include additional requirements on operation.

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Contractual management

• PRO has basically two options how to organize
  household packaging waste collection and recovery
• To contract collection and recovery to waste
  management operators disregarding existing waste
  management system in municipalities
• or to conclude agreements with municipalities and
  use the same waste management operator used by
  municipalities

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Contracting WMC directly Pros

• To contract collection to waste management
  company directly avoiding municipality gives PRO
  direct influence on collection arrangements
• Direct contracts are more flexible as they avoid
  any political decision making in municipalities
• Direct contracts are simplier in administration
  as they are regional
• Direct contracts with WMC operating other
  municipal waste may be less costly to PRO as WMC
  may use income from municipality to cover part of
  packaging waste management cost (hidden transfer
  of cost to municipality) but also may be more
  costly as income from PRO may be used to cover
  other waste cost (hidden transfer of cost to PRO)

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and cons

• Avoiding municipality in collection organization
  may bring conflicting solution in general
  household waste management
• Regional contract on packaging waste to one waste
  management company bring such company competitive
  advantage enabling it to win all municipal
  tenders in area thus creating regional waste
  management service monopoly
• Regional solution avoiding municipal decision
  making leads to one fit all organization of waste
  management disregarding municipal interest
• Operation of two independent waste management
  schemes in one territory is less efficient

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Summary

• Municipal waste is one waste, household waste is
  one waste stream from this stream packaging waste
  should be recycled to achieve PW Directive
  targets and non-packaging waste should be
  recycled to achieve LF Directive targets.
• When household waste management is contracted by
  two independend bodies (municipality and PRO) it
  leads to following
• Waste management solutions are not coordinated,
  may be conflicting efficiency from economy of
  scale is lost
• household waste management financing is less
  transparent as it is financed from two contracts
  under different terms
• waste management operators may use their
  comparative advantage resulting from existing
  contract on one stream part in tenders for other
  part of stream it may result in extra profit and
  increase of waste management cost both to
  municipality and PRO

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Transparent solution?
Financed by municipality. Operated by company X
Financed by PRO. Operated by company Y

• Confusing to citizens.
• Costly because of double infrastructure.
• Never coordinated properly.

Municipal Bin PAPER No paper boxes please! Use
other one.
Packaging Bin PAPER No newspaper please! Use
other one.
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One operator solution?
Operated by company X
Municipality is chargedfor part of cost. How
much depends oncontractconcluded.
PRO is chargedfor part of cost. How much
depends oncontractconcluded.
Waste Bin PAPER Put anything here we will charge
somebody.
Not transparent, nobody actually knows what is
the cost.
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Trilateral solution?
Operated by company X financed in trilateral
contract
PRO
Agreement on joint contract
Municipality

• Fine to citizens
• Not very flexible
• Administration is very complex
• Very efficient coordination

Common Bin PAPER Put anythingwe agreed.
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Subcontract solution?
PRO contracts municipality to organize packaging
waste recovery as partof household waste and pay
municipality for collection and recovery cost
Municipality selects supplier of its choice
Operated by company X

• Fine to citizens
• Very flexible to municipality
• Administration is not so complex
• Municipality has full control over waste
  management

Municipal Bin PAPER For packagingwe are paid.
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Czech solution

• PRO is directly responsible for (does contract
  directly suppliers)
• Recycling capacities (contracts with recyclers
  where necessary, like in case of mixed plastic)
• Sorting capacities (contracts with regional
  sorting centers to provide capacity for municipal
  waste)
• Nation wide communication campaign to citizens
  (contracts with advertising/P.R. agencies)
• Recovery of industrial/commercial packaging
  (contracts with waste management companies)
• PRO does not directly interfere with local
  household waste management, local citizens
  communication and school education

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Czech solution

• PRO is concluding contracts with municipalities
  on financing of selected waste collection, but
  selection of local waste management operator is
  still fully in competency of local municipality
• PRO is offering free of charge project management
  and consultancy to municipalities, but does not
  dictate solutions
• PRO is financing local communication campaigns in
  agreement with municipalities (regions)
• PRO is providing schools with trainings for
  teachers and educational kits, but is not
  directly active in schools

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Czech solution

• To avoid any discrimination of municipalities PRO
  is by law mandated to keep uniform contracts to
  all municipalities and also to conclude contract
  with any municipality interested in
• Contractual payments to municipalities are set
  according to national average costs of selective
  waste collection, municipalities are so
  reimbursed for cost of packaging waste
  collection, but free to select solution best
  suiting local needs

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Czech solution

• Municipalities are free to choose which sorting
  center, recycler or waste management operator
  they will use, however PRO is forced to ensure
  that there is enough capacity on market this
  support competition in waste management and keeps
  solution efficient
• Municipalities are free to refuse contract with
  PRO when not satisfied with conditions, this
  force PRO to set conditions such a way that
  contracts are attractive to most municipalities
• Contractual terms do reflect national waste
  management plan, structure of payments does
  motivate municipalities to improve waste recovery

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Companies Contractual packaging fees
Subsidies for the waste quantities collected
Project Advice and Support
Communication, waste recycling promotion
Municipalities
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Take-back and recovery obligations
Waste Act obligation of the waste separation
and recycling
Packaging recovery organization Authorized
Package Company (according to Packaging Act)
Municipalities
Producers
Contract on Associated Compliance
Contract on support waste collecting
Fillers
Waste management companies
Reporting Packaging Recovery
Retailers
Environment Ministry
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Payments to municipalities

• Municipalities are financially motivated to
  improve waste collection efficiency
• Payments to municipalities depends on actual
  amount of waste collected not on equipment used,
  this motivates municipalities use equipment
  efficiently
• Basic per ton rates depend on per capita
  collection output to motivate municipalities to
  increase overall collection
• Basic rates are modified following changes of
  secondary material prices in market and depend on
  per capita output of municipality
• Quality of collection network and sorting is
  improved by bonus scheme applicable to basic per
  ton rates
• Bonus on collection network density motivates to
  install more equipment and increase overall
  output
• Bonus on three material sorting motivates to
  implement separate plastic collection
• Bonus on white glass collection motivates to
  collect this glass separately improving quality
  of collected waste and its value

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Impact of bonus scheme
Average cost
Average cost
Average cost
Average cost
Average cost
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Financial flow
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Impact in household waste recovery

• Due to integrated approach not only packaging
  recovery increased but also total household waste
  recycling is increasing

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Results in five years
1997-1998 No PRO in place 1999-2001 PRO set
voluntarily 2002-2003 PRO set by law
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Learning from experience

• It is better to set just frame law setting
  targets and principles of PRO operation
• In respect to contractual solutions is better to
  leave the choice to municipalities and PRO how
  they will or will not cooperate
• It is important to achieve good cooperation of
  municipalities and industry to achieve efficient
  solution in short time

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Most important lesson

• Czech Republic has very diverse territory both
  from sociological and geographical point of view
• To ensure efficient household waste recovery in
  all environments need very local approaches. To
  this is best way to leave decisions on local
  communities and not to force uniform solution to
  all areas

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Czech Republic

• Consumer Education Programs

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Communication Public relations

• Towards consumers aimed to promotion of awareness
  of environment and recycling waste
• Towards clients, municipalities and companies
  participating in waste management (WM and
  recycling companies) aimed to explain legal
  framework and operational principles of packaging
  recovery organization

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Consumer communication

• Strategy messages
• 2004 you have to sort (quantity)
• Don't be lazy Sort waste (no more evasion!)
• 2005 you have to sort in the right way (quality)
• Don't be lazy Sort waste in the right way (or
  recycling will be unable)
• 2006 thank you for cooperation (results)
• Thanks your cooperation we made ... nice things