Green Alliance                            EWCE0009

Written evidence submitted by Green Alliance

Electronic waste and the circular economy: follow-up

About Green Alliance

Green Alliance is a charity and independent think tank focused on ambitious
leadership for the environment. Since 1979, we have been working with a growing network
of influential leaders in business, NGOs and politics to stimulate new thinking and dialogue on environmental policy and increase political action and support for environmental solutions in the UK.

This submission draws upon concepts and evidence set out in recent Green Alliance publications and will focus predominantly on implementing a circular economy for electronic goods and the key omissions in the WEEE consultation. Our publications Ready steady grow: how the Treasury can mainstream circular business and Profit without loss: how conserving resources benefits the economy, businesses and consumers cover in greater detail the topics relevant to this inquiry [i],[ii].

Summary

As the Environmental Audit Committee has noted, the government’s recent consultation and call for evidence on WEEE reforms fall far short of what is needed to reduce the impact of e-waste in the UK. They have made no concerted effort to reduce the worryingly high level of e-waste generation in the UK, and other specific shortcomings include failing to consider measures to address the prohibitively high cost of repair, giving consumers a genuine right to repair, or improving ecodesign standards in line with the EU. Proposals also fail to address the issue of export and fail to explore the possibility of jointly tackling digital waste and digital exclusion.

Industry, meanwhile, is showing at least some appetite for progress, with some small and medium sized enterprises in particular adopting resale, repair, rental and servitisation models. Yet the lack of widespread adoption of circular business models by businesses of all sizes is in part a product of a lack of support through effective government interventions. Businesses operating in this space face financial barriers to success, and struggle with consumer unwillingness to adopt circular behaviours. Intervention from government, especially from the Treasury, could support this market, specifically reforming VAT, introducing a kickstart fund for circular businesses, and better understanding the behavioural impacts of taxation.

Detailed comments

Implementing a circular economy for electronic goods

Q1. What steps are being taken by the industry to move towards a circular economy for electronic goods? How is the UK Government supporting this transition?

1.1    Some businesses are moving in the right direction, with fully circular business models being adopted by highly motivated and innovative small and medium enterprises, and larger businesses starting to adopt or advocate for some circular measures. This shift is not yet mainstream and, where it is happening, is often not a product of government interventions. Rather it makes financial sense, allowing customers to save money and enabling businesses to profit.

1.2   Green Alliance research in Profit without loss and Ready steady grow, found that SMEs in particular are often successfully using a variety of different circular models to provide good value circular electronic goods to consumers: resale, repair, rental, and servitisation. 

1.2.1          Resale is becoming more attractive for certain electronics, with more options coming to market for professionally refurbished mobile phones for example. Back Market is one business offering buyer protection, verification tools, and warranties, increasing consumer confidence in the resold goods. Especially given the high cost of living at the moment, resale makes increasing financial sense to many consumers. Our research found that customers looking for the latest iPhone, Samsung Galaxy or Google Pixel models could save an average of 28 per cent by buying a resold phone instead of a new one. In the latter case, this could mean a significant saving of £300, which is well over the average household monthly budget for food and non-alcoholic drinks, or almost two weeks’ rent for an average room in the UK.

1.2.2         Repair of electronics can also save consumers money, divert easily repairable goods away from landfill, and allow businesses to profit. Techbuyer for example buys, decommissions, refurbishes, and then sells used business IT equipment, diverting over one million kilogrammes of e-waste from landfill in 2022. This also makes financial sense for both them and their consumers. Techbuyer’s turnover growth was 24 per cent in 2022, much higher than an average electronics manufacturer’s one to two per cent growth, and buyers save 50 to 70 per cent compared to the original RRP on products over two years old.

1.2.3         Leasing and rental of electronics reduces the upfront cost to consumers to access electronics, which provides an opportunity for the electronics industry. For example, the Library of Things, is a social enterprise and circular economy platform which sets up self-serve kiosks that house rentable household items. Local communities vote to have a kiosk in their area, funded through the council and local organisations, and this demand led approach ensures ongoing costs are mainly covered by revenue from rentals.

1.2.4         Product service systems allow companies to retain ownership of and responsibility for goods, and to provide maintenance as a service to users. For example, ETAP Lighting manufactures and leases lighting as a service to offices, educational buildings and industry. They lease lighting products to consumers on ten to 15 year contracts, covering all installation and maintenance costs. By designing circular, durable, and easily repairable goods, ETAP minimises the additional expenditure required.

1.3   Whilst SMEs are more able to implement fully circular business models, larger existing businesses can also incorporate more circular approaches, and some have started experimenting with circular practices. For example, tech companies such as Microsoft, Samsung and Google have partnered with knowledge sharing platforms that help customers repair certain products themselves.

1.4   Despite these positive advances and innovations on the side of industry, the government is only taking limited steps to support this transition. Whilst their recent consultation included some measures that could in future support the transition, these aren’t fully formed policy proposals, so are not currently having an impact. We encourage the government to take these proposals further to adequately support the industry’s transition.

1.4.1          Improve ecodesign standards: During our membership of the EU and the Brexit transition period, the government adopted highly impactful ecodesign standards, and specifically promised to continue matching or exceeding EU ecodesign measures. But the EU is pulling ahead of the UK. They have already set resource efficiency standards for smartphones and tablets, and the UK has failed to follow suit.  The new requirements include resistance to accidental drops or scratches, protection from dust and water and durable batteries. Producers will have to make critical spare parts available to repairers and offer system upgrades for at least five years, as well as providing information on battery longevity and a repairability score. To quickly address the urgency of our e-waste generation, the UK should do the same.

1.4.2         Implement reuse targets: The call for evidence asked about reuse targets, which we strongly support for separately collected WEEE. This is in line with public opinion, with 83 per cent of respondents to a 2023 YouGov poll commissioned by The Restart Project supporting targets which prioritise reuse.[iii] The country wastes a significant proportion of reusable electronics, and a dedicated target would help to address this. A 2017 WRAP report estimated that over 45 per cent of vacuum cleaners and 40 per cent of laptops in household WEEE were either fit for reuse, or only needed minor repairs.[iv] Similarly, a 2023 study by The Restart Project estimated that 30,000 usable electrical products are being recycled every week.[v] The government must therefore bring in reuse targets to tackle this avoidable waste.

Q2. How can secondary markets for electrical goods be improved? What incentives are required to implement these markets?

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2.1   Our research for Ready steady grow has shown that circular businesses face significant financial barriers and nearly all also consider cultural inertia to be a barrier. Consumers are used to a linear economy where they have total ownership of products, goods only travel in one direction and new is viewed as more reliable and desirable than repaired or second hand.

2.2  We believe that intervention by the Treasury in particular, with its unique powers and economic oversight, would allow these two barriers to be tackled in parallel. Ready steady grow identified three specific areas for action, which would provide the support and incentives required to improve the secondary market for electrical goods.

2.2.1         The Treasury should level the playing field between circular and linear business models by addressing the parts of the tax system that actively discourage circularity.

2.2.1.1                VAT requires reform because it creates perversities which discourage circularity. For instance, VAT is normally charged on resold products, meaning that the same item is subject to taxation multiple times, and this practice should be stopped. Also, unlike in many countries in Europe, including Greece, Ireland, Luxembourg, Malta, Netherlands, Poland and Finland where VAT can be as low as six per cent on repair activities, full VAT is charged in the UK, keeping repair expensive. Now that the UK is no longer subject to EU VAT rules, VAT on repair should be zero rated, prioritising high impact, frequently wasted products like electronics. This should include zero VAT on spare parts and labour. Reducing VAT on repair has public support, with Green Alliance polling in The green light for change and A greener tax system finding that 54 per cent of UK respondents were in favour of greening VAT, and only 12 per cent were opposed. [vi],[vii]

2.2.1.2               Tax relief for new businesses, such as the Seed Enterprise Investment Scheme (SEIS), should be made more accessible to leasing businesses. Currently, they are often ineligible if their gross assets, such as their rental items, reach £200,000.

2.2.2        Circular activities have also been far too neglected by government funds aiming to help businesses and drive economic growth. Innovation funds haven’t resulted in the widespread growth of circular businesses, and funding currently focuses on treating waste from the linear economy instead of on creating an efficient circular economy that designs out waste. To address this Green Alliance has called for a dedicated £800 million fund to help support and kickstart circular businesses. This dedicated fund should be used to help businesses facing high upfront costs to start up or transition, and businesses creating infrastructure for circular logistics and reverse supply chains to support national markets.

2.2.3        Finally, the Treasury must better understand the environmental impacts of the tax system, since a clear understanding of how policies will affect people’s behaviour is essential since to drive widespread change. Despite the Dasgupta review showing that “all our fiscal measures have an environmental impact in so far as they either encourage or disincentivise different behaviours,” the government does not routinely gather evidence on the behavioural impact of tax policies or assess whether environmentally targeted tax reliefs have achieved their intended outcome. Early testing of policy ideas with the public and businesses, addressing concerns around convenience, trust, and fairness, is crucial to ensuring a receptive customer base for secondary electronics. To promote lasting behaviour change, the Treasury must prioritise policies that eliminate structural barriers limiting the ability of individuals and businesses to change.

Q8. Has the UK Government considered all essential aspects of tackling WEEE in its consultation?

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8.1   The government’s recent consultation and call for evidence on WEEE reforms fall far short of what is needed to reduce the impact of e-waste in the UK. Although there is at least some mention of reuse, we are most concerned by the complete lack of recognition of the need to reduce the amount of electronics used in the UK and the particularly high levels of e-waste generation. This is a considerable oversight as the UN has just confirmed in its latest Global e-waste monitor that the UK continues to generate the second highest amount of electronic waste in the world. Each UK citizen is now generating 24.5 kilogrammes of e-waste a year, more than three times the global average (7.8kg) and nearly 40 per cent higher than the EU average of 17.6kg. The UK government, then, should urgently look to address this, setting a sector specific target to reduce e-waste generation, rather than continuing to focus on recycling. We believe this is even more important than targets for reuse, which have been mooted.

8.2  To aid in this overarching goal, there are a number of other aspects to tackling WEEE that government has yet to address, in addition to improving ecodesign standards as set out above. These include addressing high costs, enshrining a genuine right to repair, addressing the problems with export and tackling digital exclusion.

8.3  Cost is a major reason why people do not repair their electronics, with a recent YouGov poll commissioned by Restart, identifying repair cost as the top reason for not repairing a broken device.[viii] Similarly, the French Environment Agency (ADEME) found that people are unlikely to repair something if repair costs over 30 per cent of the price of a new product.[ix]

8.4  In addition to reforming VAT, as set out above, the government should consider offering vouchers as Austria, France, and two German regions have done. Since 2022, Austria has issued over 840,000 vouchers for a 50 per cent rebate on repair costs. The year one evaluation suggests that repair is increasing, not least as, previously prohibitively expensive repairs (e.g., some washing machine repairs, motherboard repairs on PCs) became possible. Cheap devices were repaired more because the vouchers made repair cheaper than buying new. Repair businesses saw revenue increases between 20 per cent to 100 per cent. While the Austrian model uses Next Generation EU funding, France’s scheme is funded by EPR income, and the UK could adopt this financing approach.
 

8.5   Giving UK consumers a genuine right to repair is not considered within the government’s consultation, despite 75 per cent of UK consumers wanting the government to act.[x] Contrary to the government’s claims, the repairability requirements included in the UK’s 2021 ecodesign standards do not represent a genuine right to repair. They only apply to certain products, lack provisions around cost, and largely don’t extend to consumers and community repair groups, giving professional repair services access to the widest range of spare parts. The EU is pulling ahead by bringing in new consumer rights legislation to promote repair over disposal, including by addressing prices. The UK government must follow suit and ideally improve upon the EU’s approach, if it is to successfully tackle WEEE.
 

8.6  A significant oversight in the recent consultation and call for evidence was the failure to mention export of e-waste. As the EAC has previously identified, exporting e-waste to countries without the proper systems in place poses a significant risk. For example, in places like Agbogbloshie in Ghana, informal workers may handle e-waste in dangerous ways, which can expose them to multiple dangers. Workers risk physical injury by manually breaking up electronics without appropriate protective equipment. Burning plastics to access valuable metals like copper also exposes workers to heavy metals and to high levels of dioxins, causing neurotoxic effects, reproductive and developmental problems, damage the immune and endocrine systems, and cancer.[xi] There is considerable scope to improve the enforcement regime for exports, ensuring harmonisation across the UK. Electronics should be tested before export to ensure no goods requiring repair are exported, and the Environment Agency should be actively collecting the data and information needed to prevent illegal exports of e-waste.
 

8.7  This consultation also crucially represented a missed opportunity for joined up policymaking, tackling the joint problems of digital waste and digital exclusion at once. Digital exclusion is a significant problem facing the UK, and redistribution of e-waste to those who need devices should form part of the solution. Without action, 5.8m people in the UK will still be digitally excluded in 2032, and device poverty is part of this.[xii] The Good Things Foundation found in its 2023 survey that 68 per cent of community redistribution organisations need more devices for digitally excluded people.[xiii] A separate 2023 report from the Good Things Foundation correctly identified that device poverty and digital exclusion can be tackled through e-waste redistribution programmes, something that has also been advocated for by the House of Lords Communications and Digital Committee.[xiv],[xv] 
 

8.7.1         Material Focus, for example, has found that UK households are hoarding 11.7 million laptops and 9.17 million tablets that could be reused and Virgin Media O2 has found UK businesses are holding onto almost 12 million unused mobile phones and tablets. There are already schemes operating on the ground to jointly tackle electronic waste and the crisis of digital exclusion by redistributing old electronics, including many that are run by local authorities, as well as businesses, often in conjunction with charities. However, to enable maximum impact, policymakers need a better understanding to promote and scale-up best practice at the national level, increase incentives for such schemes to be established and remove barriers to their success. Unfortunately, the government itself has failed to recognise this or to attempt to gather evidence into how its reforms could help. As it is seeking to increase levels of e-waste collection and potentially to promote reuse in future, it should be identifying the best use for collected products.

Contact:

Libby Peake, head of resource policy, Green Alliance
www.green-alliance.org.uk

April 2024