The Economics of e-Waste

Even as efforts are being made to clean up the e-waste mess, the challenge lies in making e-waste management economically viable for various stakeholders in the value chain By Heena Jhingan

After years of being passed around, the proverbial electronic waste buck in India seemed to have come to a stop, with the central government putting the responsibility of disposing of a product on its original producer.

The e-Waste Management and Handling Act was passed in 2011, bringing in the concept of extended producer responsibility (EPR) that puts the responsibility on the producers and proposes an elaborate framework for recycling and warehousing of e-waste.

Though the implementation of the act began in May 2012, observers say very little has changed since then. Some of the reasons being as plain as lack of awareness and willingness to let go of a waste product without getting any reward from it. This is the underlying factor that despite over 70 certified collectors, dismantlers and recyclers in the country,  e-waste heaps continue to grow.

According to the Association of Chamber of Commerce and Industry of India (Assocham) report, India generates close to 1 million MT (metric ton) e-waste (all types of electrical and electronic equipment that has or could enter the waste stream. It can apply to televisions, computers, mobile phones, ‘white goods’ such as refrigerators, home entertainment and stereo systems, toys, toasters, kettles, etc. Essentially, it includes almost any household or business item with circuitry or electrical components, with power or battery supply). This number is expected to rise to 1.72 million MT by 2020.

The report finds that computer equipment accounts for almost 68% of e-waste material followed by telecommunication equipment (12%), electrical equipment (8%) and medical equipment (7%). Other equipment, including household e-waste, account for the remaining five per cent. It notes that less than 5% of all the e-waste generated gets recycled.
Even though there are today, specialized recyclers ready to handle and manage waste, most of them are running much below their capacity, complaining of unavailability of enough e-waste to process while the industry hears the messy bomb ticking.

Priti Mahesh, Senior Programme Coordinator, Toxics Link, reasons that awareness about the potential risks of e-waste existed even before the legislation, unfortunately, most manufacturers have not taken the law very seriously. “Over the last one and a half year, we haven’t seen the OEMs gear up to take the responsibility with the level of sincerity that they were expected to. It is more a matter of tokenism as of now,” she says.

“The OEMs have not been able to incentivize collection or de-incentivize informal channel, which could have been a game changer.”

She adds that though the responsibility of enforcement has been bestowed upon the states, the state Pollution Control Boards have different standards and are not aware of the intricacies involved with the management of hazardous material. There are about 15 pollution control boards in the country, each with its own ways of implementing the law. States like Karnataka, Tamil Nadu, Maharashtra are doing better, while in Bihar and Bengal there is little or no work done.

Responsible OEMs
While the industry feels that the producers have been pulling back from taking up the responsibility, some of the OEMs have already taken strides.

Anwar Shirpurwala, Executive Director, MAIT, says that it is a general perception that the manufacturer community is not doing enough, but that is not true as many players like Dell, Panasonic and Nokia have undertaken several initiatives around take back, green production and procurement. In 2011, Lenovo India offered a voluntary PC recycling service for its products from households and business customers. Under this, they are reported to have collected and recycled 2.12 metric tons of customer returned equipment.

“The pace of things might be slow, but it would be unfair to brand OEMs as insincere. I believe, at the end of the day, the responsibility gets transferred to the end user as he has the ultimate control of the product and choice to give it back or not,” he says.

According to A Prem Ananth, Producer Responsibility & Takeback Manager at Dell India, in FY13, the company recycled more than 170 million pounds of electronics globally.

He says, “We understand that Individual Producer Responsibility allows producers to internalize the costs of responsibly managing their own brand of products at the end of the products’ useful lives, and thus factor those cost impacts into product design decisions.”

Dell, as a producer has been investing in raising awareness among the consumers, Ananth says. And to motivate end users to participate in the company’s e-waste management initiatives in India, Dell launched a free laptop battery recycling program in June 2012.

“When consumers return their non-working lithium ion batteries from the Dell Inspiron, Studio, XPS and Vostro laptop ranges for recycling, Dell offers a discount of Rs. 500 towards the purchase of a replacement Li-Ion Dell laptop battery in return. Similarly, we also launched a special discount coupon program where consumers could send their old computers to us for free recycling and redeem a coupon of Rs. 1,000 on the purchase of their next Dell computer,” he explains.

Chandrasekar Krishnamurthy, Vice President, Global Services, EMC India Center of Excellence informs that in 2012, globally, the company took back an estimated 10,041 metric tons of e-waste. “Our cumulative returns from 2008-2012 stands at approximately 90 million pounds — surpassing our five-year cumulative collection goal of 75 million pounds. Of this material, less than 1% went to landfill,” he says, adding that e-waste management is not as simple as it might appear, especially for global players like them.

“As a global corporation, we must comply with varying local and national regulations around the world. We produce and sell only enterprise class products, but EPR regulations are often written with consumer products in mind, so we need to determine how, or even if, these laws apply to enterprise equipment. With numerous jurisdictions, this can become a challenging process,” he explains.

A greater challenge for the producer or the recyclers is to make sure that the incentive in lieu of products to be recycled makes economic sense to the end user. Besides, collection and management of e-waste is a cost intensive process that includes logistics, segregation, and treatment overheads for the OEM and the recyclers, so it has to be a win-win scenario for all.

Return on waste
Efficient e-waste management is about making it a profitable activity. Only then will the end users like to follow an organized way of recycling or disposing off e-waste.

According to Abhishek Pratap, Senior Energy Campaigner, Greenpeace India, the rate of e-waste collection at present is about 8-12%, where as in Europe the rate goes up to 38%. “India can easily raise it up to 30%, the trick lies in making the deal lucrative.”

Agrees P Parthasarathy, Managing Director, E-Parisara, one of the government certified recyclers in India. He says that last year, they recycled about 2,000 ton of e-waste, most of which came from bulk consumers like the large corporate or the OEMs themselves.

“There is very small business on the individual consumer end. We put out about 100 e-waste collection bins across various locations, we hardly collected anything, and we did not even reach 100 kg. The recycle technology is not cheap, the processes require some substantial volume of e-waste to be recycled to justify the spend on process, equipment and technology involved,” Parthasarathy reasons.

Rohan Gupta, COO, Attero, an electronics and assets management company that works with large enterprises like GE Thermometrics India Pvt Ltd., KPMG, IFFCO Tokio General Insurance Company and Visa, complains of similar concerns. Gupta informs that their recycle facility in India is capable of processing 36,000 tons of e-waste per annum, working three full shifts per day, but as of now they are working only a shift a day.

Going to the root of the issue, Gupta observes that the co-existence of a sprawling informal sector, which though is not equipped to handle this kind of material in a scientific manner, but has excellent penetration, is a key cause of the current situation.

The informal sector does a better job than the specialized service providers as selling e-waste to these vendors does not involve any processes and is a quick way of making some money.
Parthasarathy says that today, e-waste could cost anything between Rs 5-100 per kilogram, depending on various factors. There is no mechanism to control this. Till that is done, the end users, even the bulk users will always weigh higher RoW (return on waste) greater than other drivers of streamlined process of e-waste management.

To get the bulk users involved, the specialized e-waste managers will have to innovate and load their service with value.

The value add
With negligible business drive from individuals, the specialized e-waste managers are innovating with offerings to target the corporates and OEMs that happen to be the bulk producers of the waste.

The definition of e-waste management is now a broader term, suggests Amit Sardana, Managing Director, Dataserv. He says, “It is not about just e-waste anymore, it is about IT asset management. The requirement is to handle the product inventory of which not all products may at end of life. IT assets need to be recycled in a cost effective and sustainable way, above all data security is of prime concern to the enterprises.”
He explains, “At times, companies demand data sanitization at their site before the hardware leaves the premises. Video evidence of the e-waste management is important for audit purposes. The trend is just setting in.”

Most companies today take the pain of e-waste management, either for monetary purposes or as a Corporate Social Responsibility initiative. At times, MNCs need to invest in these activities to comply with the policies of the parent company.  

He further explains that for different downstreams of e-waste management, there could be different vendors. “For example, printed circuit boards need to be treated for gold extraction. India does not have the technology to extract all materials,” Sardana says, adding that there are regulatory hassles in such cases. As per the laws, toxic waste cannot be exported for trade, it can be only sent out for treatment.

In India, not all specialized vendors have the facility and capacity to recycle, most of them are collectors, who segregate and further sell waste to the recyclers.

This is why when Akshat Ghiya co-founded Karma Recycling set up business in March last year, the intent was clear, that they needed to focus on specific areas. “We identified that logistics for e-waste was a weak link. Most enterprises looked at e-waste management as additional paperwork. We designed services to help them ease out those processes and build policies as value add to our offerings.”

To build a strong collection network, Ghiya informs that the company has tied up with Safexpress to channelize the logistics company’s warehouses. “We have warehouses in Delhi, Rajasthan and Haryana where we collect the waste and supply it to the recyclers, ” he says, adding that over a short period of time, they have opened about 30 accounts already and the business is picking up with about two to three fresh accounts pouring in every month.

Not all products that are disposed are obsolete, some can be reintroduced in the value chain.

Hitendra Chaturvedi, Founder, Greendust, found opportunity here. “We are a reverse logistics firm. We collect such products from the manufacturers and dealers, repair the flaws and then offer them to the customers at reasonable prices, as factory seconds.”

He says, “The return rate in India is around 4-6%, every year, products including IT, home appliances, mobile, consumer electronics worth $12-15 billion are returned.”

“We work with brands like LG, Samsung, Lenovo, Haier, Dell, Phillips and retailers like Croma and Homeshop18. We make positive margins, despite selling these products at about 30% lower than the market price,” Chaturvedi explains.

Ghiya says that these products can be reused and their life can be extended. “We also have a similar model and work with some of the dealers like Olx and Quikr. These products have a huge demand in Tier II and Tier III cities like Surat and Chandigarh with people vying for brands.”

“We recently collected 200 laptops from an organization in Rajasthan, 84 of them are still working and can be refurbished,” he adds.

In order to streamline the informal sector, some of the specialized vendors like Attero have tied up with some of the unorganized collectors. “We educate them on toxic wastes and their hazards. We are trying to bring a change by offering them higher value if they choose to follow systematic ways of disposal. For this, we offer them one and half time more the value that they were getting using their traditional methods of e-waste. This will be a time consuming process,” Gupta of Attero says.

With most companies not having an e-waste management policy in place, they are still trying to find ground to walk on. For specialized e-waste managers, getting over the regulatory constraints and thinking of innovative service add-ons is a work in progress.