Fiscal incentive aid car recycling


Government restraint on imposing market controls, a better-informed public and broader industry cooperation can improve automobile recycling, which is already operating at a very high level in many parts of the world, a policy-study group at MIT has reported.

The research effort by a team from the MIT International Motor Vehicle Program was undertaken in the face of a need by both industry and government to address this growing social concern, one of a burgeoning array of environmental, political and economic challenges facing the industry, said Professor Daniel Roos, director of the program.

"In light of the emerging social agenda centered upon the automobile, we believe that studies of this sort- assembling, expanding and reflecting upon the emerging knowledge base in this area-can lead to more effective and better coordinated industrial and government policy," Professor Roos said. "We expect that this study will serve as a basis for a more effective dialogue among the interested stakeholders in this area."

In a report presented to the Automotive Industry Board of Governors and the Mining and Metals Board of Governors of the World Economic Forum, MIT researchers concluded that government controls would likely reduce the effectiveness of recycling markets for cars and trucks.

"The most thorough recovery of automobiles takes place where the markets for secondary materials and components are strongest and least encumbered," the report found, noting that differences in recycling technology, which is about the same throughout the world, are not a factor. The report also notes that there is no global solution to the problem and that regional economics will play a major role.

In the United States, for example, 90 percent of scrapped vehicles are routinely recycled and 75 percent of their weight recovered and economically reused.

This level of recycling occurs "in the absence of any requirement for disposal or penalty to the last user, or industry specific monitoring. Rather, it is driven by the fact that recycling of the automobile can be a very profitable business, provided the markets for recycled parts and materials operate freely."

The researchers noted that "no other product with such a large number of different materials is as highly recycled" as the automobile. The reason, the researchers said, was the economic incentives for recycling.

And yet, the report said, the public is not generally aware of the high effectiveness of automobile recycling. That is not unusual, the report noted. The public's appreciation for environmental issues in general "has frequently been at odds with that of environmental professionals." Further, the public memory is short, the report said. "Many people are surprised to find that today's automobile recycling issues echo concerns that were raised and resolved during the late 1960s and early 1970s."

The study, presented in February to the World Economic Forum groups at their annual meeting in Davos, Switzerland, is an outgrowth of last year's Industry Summit, a partnership of the World Economic Forum and MIT, in collaboration with Harvard University, which was held in Cambridge. Professor Klaus Schwab, president of the WEF, was pleased with the Governor's reception of the study, saying that "the WEF views these meetings as an important framework within which the automobile industry can act to work cooperatively to resolve the important social questions facing them."

Because recycling is such an intensely market-driven activity, governments can best support it with policies aimed at facilitating market actions rather than directing them, the report said.

"Highly interventionist, loop-closing policies, such as managed recycled content or take-back [a government requirement that the manufacturer accept the product from its last user and dispose of it] have had mixed successes. While there are many examples where recycling has been successful, mandated recycling has been less so," the study said.

As an example of an unsuccessful program, the MIT report cited Germany's recent experience with mandated packaging programs, which "led to a serious restructuring of the institutions developed to carry out the principles of the 1986 Waste Management Act and a slowdown to the expansion of this effort to other product areas."

The German experience, the report said, "has been an object lesson in the economic risks inherent in imposing recycling requirements in the absence of strong market demand for recycled product."

But that is only one example of the problem, the report said.

"A more prosaic example can be found in community curbside recycling programs in the United States. Here, communities have instituted programs for the collection of recyclables in the expectation that such materials would be absorbed by the existing recycling infrastructure. Instead, many such programs have overwhelmed these industries, leading not only to financial ruin of some but also to increased use of landfill space."

Addressing the lack of public knowledge about automobile recycling, the report said the public "has been traumatized by several specific images which have given the impression that automobile recycling is inadequately performed." For example, the report said, the case of automobile tires "has been routinely presented as if the problems of their recycling and disposal were representative of the automobile as a whole. In fact, the problem of tire recycling is atypical of automobile recycling practice, reflecting the relatively low value placed upon the chemical commodities that can be produced from them (low-grade fuels) and the historical aversion of the consumer market for remanufactured tires."

The automaker's principal contribution to recycling is to build cars with a high degree of "recyclability," that is, cars designed so that their components can be salvaged economically, the report said.

"While regional economic conditions militate against global action in the recycling enterprise, there are indications that the industry can act cooperatively to improve recyclability," the report said, citing recycling consortia which research new processing technologies and establish labeling and disassembly standards. Cooperation with suppliers on new materials and cooperation to develop life-cycle analysis tools for cars also indicate "that the industry can work cooperatively in these areas, although better coordination may ultimately lead to less duplication of effort."

Copies of the report, entitled "Automobile Recycling Policy: Findings and Recommendations," can be obtained from Ann Rowbotham at the MIT Center for Technology, Policy and Industrial Development (fax, x3-7140, or voice, x3-0008.)

A version of this
article appeared in the
May 4, 1994

issue of MIT Tech Talk (Volume
38, Number
31).


Topics: Technology and society, Industry, Environment and energy

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