European Car Recycling Policies Will Cost British Recyclers

New European rules on recycling old cars will force Britain's scrap yards and dismantling companies to invest around $750 million on new tooling and equipment, according to the metals recycling industry.

Under the directive on so-called "end of life vehicles", scrap operators will, in future, need to remove all fluids, glass, and re-usable metal and plastic parts from old cars before they are dismantled.

The British Metals Recycling Association, which represents companies handling 10 million metric tons of ferrous and non-ferrous metals every year, has warned that the investment costs will be passed on to vehicle owners when the ELV directive is implemented.

David Hulse, director-general of the association, said: "The implication is that licensed yards that are willing to comply with the directive would have to charge the last owner of any car between $75-$150 to take them off their hands."

Some 2 million vehicles a year are scrapped or dismantled in Britain, with about 350,000 dumped on the streets.

According to the ELV directive - drawn up by the European Commission to encourage more recycling - vehicle manufacturers should be obliged to meet all or a significant part of the cost of these measures.

The directive applies to all newly built cars from 2002-2007 and all 27 million cars on Britain's roads beyond that.

The government, however, is planning to reduce the car industry's potential liabilities by forcing the last owner of any vehicle - rather than its manufacturer - to assume the scrapping costs at least until 2007.

Carmakers had feared that the government would impose the liabilities on the industry as early as this year.

Later this week, ministers are expected to reveal the financial charging mechanism for vehicle recycling. It will defer any liabilities on carmakers for at least four years, and possibly longer.

Several manufacturers had warned that such charges would force them to make large balance sheet provisions, potentially threatening them with insolvency.

The BMRA claimed that imposing liabilities on car owners would lead to more dumping and a proliferation in unlicensed "cowboy" scrap yards.

It also argued that additional tooling costs could put some dismantlers out of business.

"Many of the operators in the recycling sector are small to medium-sized enterprises and are unable to absorb the cost of new equipment and survive," according to the association.

"Many would be forced to simply not take old cars, or worse, cowboys in the industry would prosper because car owners who don't abandon their cars would take vehicles to the place that charges the least by cutting corners." Financial Times