This article is the third in a series analysing various aspects of the new EU Regulation on Vehicle Design and Management of End-of-Life Vehicles, co-authored by Fynn Hauschke, Stéphane Arditi and Roberta Arbinolo from the European Environmental Bureau (EEB). The first piece investigated the potential and roadblocks for the regulation to set the automotive sector on a circular path. The second article delved into the topic of circular design. This piece examines how robust Extended Producer Responsibility schemes can increase accountability within the automotive sector.
Who foots the bill for vehicles’ impacts?
“Those responsible for environmental damage should pay to cover the costs”: this no-brainer is a key foundation of EU environmental policy, known as the ‘Polluter Pays Principle’. Extended Producer Responsibility (EPR) systems are one of the go-to measures to implement this principle in practice. As the name suggests, EPR systems extend the responsibility of producers to incorporate the anticipated environmental impacts and the related societal costs of their products.
In the EU, EPR systems have been introduced to varying extents across different sectors, such as batteries, packaging, and electronics, with new systems under development for textiles and wastewater treatment. Globally, EPR is also being explored within the global treaty on plastic pollution. While traditionally focused on covering the cost of waste collection and treatment, properly deployed EPR systems can also promote circular design, cleaner production and waste prevention by facilitating reuse, repair and non-toxic cycles.
The current EU Directive on End-of-Life Vehicles, dating back to 2000, already imposes certain obligations on producers placing vehicles on the EU market. Yet, these requirements have been loosely defined and not harmonised at the EU level, resulting in a patchwork of divergent and inconsistently effective national systems.
Now, the new EU law on Vehicle Design and Management of End-of-Life Vehicles proposed by the European Commission aims to introduce mandatory and harmonised EPR for the sector at the European level. This proposal addresses several challenges within the current system, including:
- insufficient transparency and coverage of costs;
- lack of traceability of end-of-life vehicles exported and treated in an EU country other than the one where they were initially placed on the market; and
- clarification of responsibilities and of the conditions for waste management operators to be compensated through the EPR system.
Revving up: promising steps forward
These EU-wide challenges will be effectively addressed through the implementation and enforcement of the proposed EPR system at the national level.
Member States will be required to establish national EPR schemes based on the collective or individual responsibility of vehicle producers to contribute organisationally and financially to all necessary operations relevant to the collection, treatment and recycling of end-of-life vehicles. This means that producers will be able to choose to either manage the waste stage of their own vehicles or collaborate with other companies to form a Producer Responsible Organisation (PROs) that acts on their behalf. Regardless, producers will have to allocate financial resources to ensure an environmentally sound end-of-life treatment and meet the binding targets proposed in the law:
- 85% of the average weight per vehicle, excluding batteries, must be reused or recycled, and 95% must be reused, recycled or recovered
- 30% of the total weight of plastics contained in the vehicle must be recycled
To enhance the traceability of vehicles treated abroad, the Commission proposes establishing an EU-wide system – the ‘Move Hub’ – to track the movement of vehicles when they are exported within the EU and ensure that fees paid in the initial country can be transferred with the vehicle.
In addition, the proposal clarifies that only treatment facilities authorised by national authorities can receive the fees set aside by producers, and ensures that the net costs for all collection and treatment operations that exceed the revenues generated by the reuse of parts and the selling of recycled materials from the waste vehicles will be covered.
Another clear step forward is the Commission’s proposal to modulate the EPR fees based on common criteria at the EU level, including vehicle weight, drivetrain type, recyclability and reusability rates, as well as the time required to dismantle the vehicle, among others. Essentially, this means that more material-intensive and less circular vehicles will pay more. Notably, using vehicle weight as a proxy for the overall environmental impact is a strong criterion. If confirmed, this could help counter the trend towards heavier vehicles: Transport & Environment has shown that the rising sales of large SUVs have caused vehicle width – and consequently size and weight – to increase by one centimeter every two years over the past two decades. These larger vehicles consume more resources and pose a greater risk to other road users, including car drivers, cyclists and pedestrians.
While heavy vehicles may sometimes be justified, eco-modulating EPR fees based on weight would address this problematic trend. Those opting for heavier vehicles would have to pay more, reflecting the increased resource use and environmental impact more fairly. In this context, additional eco-modulation criteria could be considered to promote circularity (e.g., repairability or durability) while penalising resource-draining features (e.g., environmental or carbon footprint).
Lost turns
Despite these important steps to improve the current EPR framework for vehicles, the European Commission’s proposal fails to address some crucial aspects. First, it still fails to reflect the waste hierarchy, as it lacks focus on waste prevention strategies such as durability, repair and reuse, that aim at extending the lifetime of the product before considering recycling and disposal.
For instance, the proposed end-of-life targets merge reuse and recycling and appear to favour waste incineration by still specifying an energy recovery rate. However, experience from the electronics sector shows that merging reuse and recycling targets provides little incentive for maximising reuse, as recycling is enough to meet compliance requirements. Therefore, a dedicated reuse target is necessary, inspired by Member States that are leading the way in implementing specific reuse targets for other sectors like textiles and electronics. This target should be coupled with mandatory measures to stimulate demand for reused and remanufactured parts and components, such as requiring maintenance and repair operators to systematically offer customers the option of using used, remanufactured or refurbished spare parts and components for repairs alongside an offer to repair the vehicle with new ones.
Secondly, the proposal aims to restrict the export of second-hand vehicles by conditioning it to a ‘roadworthiness’ test and introducing clearer criteria to distinguish used vehicles from waste to avoid exporting waste under disguised reuse status, but fails to sufficiently address the challenges related to vehicles export. For instance, it creates an unfair double regime for non-EU countries, particularly impacting low- and medium-income countries that rely on used but still roadworthy cars. On the African continent, over 60% of vehicles annually added to the fleet are imported used vehicles – and in some countries, like Kenya, the share reaches 99%.
The Move-Hub system will allow tracking the export of vehicles within the EU to ensure that EPR fees set aside for proper waste management reach the receiving country. However, this system does not extend beyond EU borders. Consequently, for importing countries outside the EU, the end-of-life management costs will not be covered by EPR fees collected for that purpose: the EU will delegate the waste management of the exported vehicles while retaining the fees meant to pay for it.
This is particularly unfair for low- and medium-income countries that may lack the infrastructure to handle the environmental hazards associated with managing such complex products. A recent report by the European Environmental Bureau attempted to estimate the financial losses for receiving countries due to forgone EPR fees for end-of-life vehicles: assuming a total of 6.4 to 8.9 million exported vehicles and a conservative estimate of a € 46 EPR fee per vehicle, the total fees that do not accompany vehicles to African countries could range between € 294.6 million and € 409.4 million.
Against this background, it is evident that EPR fees paid by European producers should follow the products wherever they are exported. Under the European Commission’s proposal, this would mean extending the Move Hub beyond EU boundaries. While this poses administrative challenges, the Circularity Vehicles Passport – a digital product passport for vehicles proposed in the same law – could facilitate essential information flows. This would boost circularity by preventing premature recycling while mitigating environmental risks associated with inadequate management of end-of-life vehicles in receiving countries.
The road ahead
If implemented correctly, the EPR system proposed by the European Commission will help tackle existing challenges. Notably, the introduction of eco-modulated fees based on vehicle weight is a welcome step towards circularity and a better application of the ‘polluter pays principle’. However, to fully unleash the potential of producer responsibility, maximise value retention and ensure environmentally sound management of end-of-life vehicles, the EU must establish differentiated reuse targets, broaden the geographical scope of the EPR system, and introduce additional modulation criteria.
About the Authors
Fynn Hauschke is the EEB’s Waste Policy Officer. He advocates for policies that promote responsible resource management and waste reduction across Europe, with a focus on waste, electronics and vehicles.
Stéphane Arditi is the Director for Climate, Circular Economy and Industry at the European Environmental Bureau (EEB). He is responsible for the EEB’s work on circular economy, energy, climate and industrial policies in the EU and beyond, and their integration with other policy dimensions such as chemicals, bioeconomy and Sustainable Development Goals.
Roberta Arbinolo is a Senior Communications Officer at the EEB. She coordinates the communications on circular economy.
About the EEB
The European Environmental Bureau (EEB) is Europe’s largest network of environmental citizens’ organisations, bringing together over 180 member organisations from 40 countries.