scrap scrap Germany mulls nationalizing recycling

Private companies are making money recycling and Germany's public authorities want a piece of the action, calling for the business to be nationalized.
How to turn trash into cash.

Recycling may move out of the hands of private companies in Germany as the government considers asking cities and towns to collect and recycle packaging waste.

The disposal of plastics and packaging waste is a huge industry in Germany, where recycling rates are higher than anywhere else in Europe. Here, people are expected to recycle their trash, and willingly dispose of their goods, deciding between glass, paper, plastic and organic waste disposal options, as well as regular trash.

But the industry is changing in Germany, as a new draft law could shift the business away from private waste companies to municipalities in a move that might increase costs for consumers.

Companies were first charged with the issue of taking out the waste 26 years ago when public authorities, faced with mounting quantities of trash, called for help and for the industry to be privatized. At the time, they turned to Klaus Töpfer, the environment minister, asking that the burden be passed onto manufacturers and sellers.

This is a genuine threat to the private sector recycling system. Belland-Vision, A German private waste disposal company

But now, after the private sector has shown it's possible to make money disposing of packaging waste, municipalities are eager to do everything possible to get their business back.

Some 450 cities and towns are mounting a campaign to roll back the previous solution. With the help of Germany's parliament on Friday, they aim to wipe out the Dual System Germany (DSD), a private-sector industry association founded by companies in the industry in 1991.

They want to use the planned German Recyclables Act that the environment ministry hopes to see passed within the first quarter of 2016.

Minister Barbara Hendricks (SPD) published the draft last fall, calling for measures to facilitate the collection of used recyclable materials and to increase the recycling rate from the current level of 60 percent to 72 percent.

The draft law contains changes which would have strengthened the position of the public authorities. One measure it includes is that the yellow recycling bags and bins used in Germany to show people where to throw their packaging waste, should not only be used for packaging but also for “non-packaging of similar materials.” That would mean old hangers, discarded plastic toys, or frying pans. To date, this type of waste has ended up in the gray residual waste bins and then burned, rather than recycled.


Recycled Figures-waste management 01


The draft law also calls for cities and districts to participate directly in the collection process.

But views differ strongly over which services municipalities should provide, and there are also disagreements between the environment minister, from the SPD, and SPD-governed states.

The states not only want to strengthen the role of cities in waste management, they actually want to nationalize the entire collection system.

The state representatives from Baden-Württemberg, North Rhine-Westphalia, Schleswig-Holstein, Bremen, and Lower Saxony have agreed to put forward a proposal on January 29 for packaging waste to no longer be managed by the private sector DSD.

DSD currently outsources collection and recycling contracts to private companies such as Alba or Remondis. But the states say municipalities ought to take charge themselves – and would be able to decide whether they wish to take on collection themselves or hand it off to other parties.

Currently, companies which make goods out of plastic that are to be recycled pay to obtain a license called the Green Dot. This system marks goods that consumers should return to recycling, rather than general trash. The money that the companies pay for the licensing fees is then passed to Green Dot and then on to consumers as an incentive to recycle.

Under Ms. Hendricks' draft law, the DSD and other private collection systems would no longer collect the fees for the Green Dot but instead, a newly-established government agency would take on this responsibility.

But this could mean higher costs. According to waste expert Gunda Rachut’s calculations, expanding what can be thrown out into the yellow recycling bins would translate into €12.50 per capita each year but a new government agency would cost twice as much.

Although producers would at first have to cover these costs by paying the Green Dot fees, these costs would ultimately roll over into retail prices.


Quelle: Pressebild
Michael Wiener, chairman of Duales System Holding in Germany, is concerned about the outlook.
(Source: Pressebild)


Ms. Rachut explains the price difference between the two models by pointing to the new government agency, which is in the process of concluding contracts with the 50,000 current license holders of the Green Dot. Also, as local authorities rarely put waste contracts out to tender, higher costs are likely.

The industry which currently disposes of packaging, generating €850 million per year, is appalled. "This is a genuine threat to the private sector recycling system," said a spokesperson from Belland-Vision, a private waste disposal company that organizes waste collection and disposal in Germany.

Michael Wiener, head of the DSD, says, the measures could lead to job losses, too. “The recycling industry has led to the creation of many highly qualified jobs - and we continue to grow.”

Peter Kurth, Managing Director of the association of the German waste disposal companies (BDE), represents the market leaders in trash disposal, Remondis and Alba, and warned against abolishing private-sector package disposal, arguing that the system works.

But that's only half the story. Twelve months ago, the system nearly collapsed because traders and manufacturers bypassed the collection systems, disposing of the waste themselves. By the end of 2014, of a total of 2.2 million tons of packaging waste, only 800,000 was marked up as participating in the Green Dot system, less than half of the total potentially managed by the system.

Some companies said instead, they were involved in "self-management take-back systems" or "industry solutions."

But eight companies said they would be prepared to feed €20 million into keeping the dual system alive.

If Ms. Hendricks' planned legislation doesn't go through, the situation could sour as companies run out of patience. Marion Sollbach, the Kaufhof department store’s environmental manager, said, "If we see a similar financing gap as we did in 2014, industry won't play along anymore."


Silke Kersting reports for Handelsblatt from Berlin, focusing on consumer protection, construction, environmental policy and climate change. Christoph Schlautmann covers the logistics and waste management sectors for Handelsblatt. To contact the author: [email protected] and [email protected]