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About the Japanese End-of-life Vehicles Recycling Law



1. The structure of the Law
  other file (by the Japanese government)

2. Short history of the Law
year
Around 1990      Teshima Case appeared, in which a lot of automobile shredder residue
                 (ASR) was dumped illegally, and industrial waste became a social
                 problem.
1995             The criteria for dumping ASR were strengthened. The holders of ASR
                 became unable to dump it in a simple and cheap landfill site. ASR has
                 to be dumped in a controlled and expensive landfill site.
1997             The government announced a guideline for recycling and disposal of
                 end-of-life vehicles.
Jury 2002        The Law for the Recycling of End-of-Life Vehicles was enacted.
January 2005     The Law for the Recycling of End-of-Life Vehicles took effect.

3. Comparison with German system
                                                        Parts,
              Vehicle Use     ELV        Separating     materials    Recovery or
                                                                     Disposal


                  Japan                                 Germany
Common            •   Producers take back some waste objects free of charge.
characteristic    •   Producers are responsible to dispose of waste.
                  •   When producers delegate the recycling and disposal to some
                      recycling operators, they select and monitor the operators.
                  •   The selection and monitoring is getting stricter with the degree of
                      the responsibility.
Differences       •   Producers take back objects •         Producers take back ELVs
                      after separating ELVs.                before separating them.
                  •   Producers are responsible to •        Producers are responsible to
                      dispose of only the objects.          dispose of the whole ELVs.
                  •   Producers aren't responsible •        Producers aren't responsible
                      for the disposal until the            for the disposal until the ELVs
                      objects are collected.                are taken back.
                  •   Collection fees of the objects •      Delivery fees of the ELVs are
                      are paid to the separating            paid to the holders.
                      operators.                        •   Producers select and monitor
                  •   Producers select and monitor          the separating operators as
                      the recovery and disposal             well as the recovery and
                      operators.                            disposal operators.
ELVs            3,000,000—4,000,000? (see below)      700,000?
Exported        1,000,000-1,400,000? (see below)      2,300,000?
used vehicles



4. The number of the ELVs

When a vehicle becomes end-of-life, the collection operator of the vehicle has to report
the situation to the JARC. Therefore, the JARC and government can compile the
number of ELVs generated in Japan. But if the collection operator doesn’t report it, the
JARC and government cannot monitor the total number of the ELVs. Some dismantlers
don’t have an incentive to report the result. This is illegal behavior. People say that not
reported end-of-life vehicles are from 500 000 to 1 000 000.

               Table 1: The number of the unused vehicles in fiscal 2005
        Total                                                       5 000 000
        (1)Exported used cars                                       1 350 000
        (2)Increased stock of used cars                               100 000
        (3)ELVs dismantled inland                                   3 050 000
        (4)Other                                                      500 000
    Source: Estimation by the METI (Ministry of the Economy, Trade and Industry)
Total number of the unused vehicles in fiscal 2005 = number of vehicles owned in March
2005 + number of new vehicles – number of vehicles owned in March 2005

Some car dismantlers take the cars as secondhand and dismantle them without
reporting the collection to JARC. This is illegal and the number is not included in the
above “(3)ELVs dismantled inland”.

Some legal dismantlers say that the above “(4) Other” is the number of illegal channel.
Recently, auto auction business is developed and it is getting easier to get secondhand.
Substantially end-of-life vehicles are traded at the auction as secondhand.

5. Exported used cars
Table 2: Top 20 (in 2005) countries (calendar year)
     Countries                     2001       2002       2003        2004      2005      2006
  1   Russia                      26143      42771      68123      120052    268584    202603
  2   New Zealand                 86373     125112     144349      135006    132600     60899
  3   United Arab Emirates        40749      87957     108236      144090    113818     74852
  4   Chile                        5984       8461      14410       27400     47487     29899
  5   United Kingdom              18143      29761      55484       57006     31962     16668
  6   South Africa                 8273      14105      22207       37896     31405     17255
  7   Philippines                 14326      25027      28177       32942     21497     13079
  8   Peru                        23865      33870      29463       21834     19510     14656
9   Kenya                         6593     11358     13408      16929      18317     12386
 10   Sri Lanka                     8643     20866     26921      18892      17539     15042
 11   Malaysia                      7312     10840     11023      11586      17531      8348
 12   Kazakhstan                      35       243      4195       6489      16970     19564
 13   Australia                   10792      13792      8074      11036      14157      4905
 14   Cyprus                      12858      18914     15788      20127      12706      6652
 15   Pakistan                       324      1944      1952       2370      11776     29997
 16   Singapore                     7982     10810      9976      12500      11495      9472
 17   Suriname                      4219      7856      9399      10599      11274      5477
 18   Bangladesh                  10083      13072      9073       7573      10559      6112
 19   Jamaica                     13463      18214     15312      15917       9493      5968
 20   Trinidad and Tobago           5961     11526     11127      10298       8930      5459
      Total                      371090     603866    712968     835233     940298    638582
* the data in 2001 is from April to December.
** the data in 2006 is from January to July
source: Trade Statistics of Ministry of Finance (MOF)

In MOF Trade Statistics, vehicles with prices less than the 200,000 yen are not
calculated. Therefore, the real number is more than the above.
In addition, the data in Table 1 is that of the fiscal year and different from the data of
Table 2.

6. Other information

The number of illegal dumping and improper storage of scrapped cars
                       Total      Improper storage Illegal dumping
March, 2006                57 080              44 203         12 877
September, 2005            76 954              62 468         14 486
March, 2005               140 436            122 599          17 837
September, 2004           218 359            195 860          22 499
Source: Ministry of Environment



The number of authorized (licensed) operators
                      March, 2005 September, 2005 March, 2006
Collection operators         85 144          87 513      88 251
Dismantling operators         5 490           6 042       6 279
Shredding operators             123             120         124
Source: Ministry of Environment

Licensed dismantling operators include some car dealers and repairing operators who
don’t dismantle the cars as daily business. However, they sometimes salvage the used
parts. In order to do it, they have to get the license for the dismantling operator. Some
people say that the substantial number of dismantling operators is around 2500.

7. A problem of Japanese ELVs Recycling Law
In Japanese law, the government wants the last car user to pay the recycling fee. But it
does not work. The last user can deliver its car to the car dealer or dismantler without
paying the recycling fee.

The reason is in the payment structure of the recycling fee. In the law,
•   The first vehicle owner pays the recycling fee to the producer.
•   When the owner can find the next owner, the former owner can get the fee from the
    next owner. This means the former owner gets a refund of the fee and the next
    owner pays the fee instead of the former owner.
•   When an owner can not find the next owner, it becomes the last owner of the vehicle
    and delivers it to a collection operator. The collection operator does not pay the fee
    to the owner.
                                                                                         vehicle
   Former                    Last owner               Collection                         price
   owner                                              operator                           fee

The problem is that the last owner is not necessarily equal to the last user. The
dismantler often becomes the last owner and pays the fee.

                                                          (C)             Dismantler
       Producers                                                                            (1)
                                                     secondhand
       (JARC)
                      (A)
                                        Car Dealer        price+fee
                    secondhand
   Recycling fee                                          end-of-life
                            price+fee                                     Dismantler
       User                                               price                             (2)
                        end-of-life
                                                        end-of-life
                    price               Car Dealer                        Dismantler
                                                                                            (3)
                        (B)
                                                        price

*The recycling fee is for the CFC, the airbag and the automobile shredder residue
(ASR).

Case                            Last owner                            Collection operator
(1)                             User                                  Car Dealer
(2)                             Car Dealer                            Dismantler
(3)                             Dismantler                            Dismantler

In the above situation, the car dealer has to decide whether he/she should take the car
from the user as end-of-life or secondhand.
    •   If the dealer takes the car as secondhand, it has to pay recycling fee to the
        user.(situation (A))
    •   If the dealer takes the car as end-of-life, it doesn’t have to pay the recycling fee.
        (situation (B))

The user wants the dealer to take the car as secondhand because it can get the recycling
fee from the dealer.

The car dealer doesn’t have enough bargaining power against the car user. Therefore,
the car dealer often takes the car as secondhand and it pays the recycling fee to the user.

Similarly, the dismantler doesn’t have enough bargaining power against the car dealer.
Therefore, it often takes the car as secondhand and it pays the recycling fee to the dealer.
(situation (C))

As a result, the dismantler becomes the last owner of the car in the eye of the law and
pays the recycling fee. The car user doesn’t pay the recycling fee in the system.

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061218 current situation_ELV

  • 1. About the Japanese End-of-life Vehicles Recycling Law 1. The structure of the Law other file (by the Japanese government) 2. Short history of the Law year Around 1990 Teshima Case appeared, in which a lot of automobile shredder residue (ASR) was dumped illegally, and industrial waste became a social problem. 1995 The criteria for dumping ASR were strengthened. The holders of ASR became unable to dump it in a simple and cheap landfill site. ASR has to be dumped in a controlled and expensive landfill site. 1997 The government announced a guideline for recycling and disposal of end-of-life vehicles. Jury 2002 The Law for the Recycling of End-of-Life Vehicles was enacted. January 2005 The Law for the Recycling of End-of-Life Vehicles took effect. 3. Comparison with German system Parts, Vehicle Use ELV Separating materials Recovery or Disposal Japan Germany Common • Producers take back some waste objects free of charge. characteristic • Producers are responsible to dispose of waste. • When producers delegate the recycling and disposal to some recycling operators, they select and monitor the operators. • The selection and monitoring is getting stricter with the degree of the responsibility. Differences • Producers take back objects • Producers take back ELVs after separating ELVs. before separating them. • Producers are responsible to • Producers are responsible to dispose of only the objects. dispose of the whole ELVs. • Producers aren't responsible • Producers aren't responsible for the disposal until the for the disposal until the ELVs objects are collected. are taken back. • Collection fees of the objects • Delivery fees of the ELVs are are paid to the separating paid to the holders. operators. • Producers select and monitor • Producers select and monitor the separating operators as the recovery and disposal well as the recovery and operators. disposal operators.
  • 2. ELVs 3,000,000—4,000,000? (see below) 700,000? Exported 1,000,000-1,400,000? (see below) 2,300,000? used vehicles 4. The number of the ELVs When a vehicle becomes end-of-life, the collection operator of the vehicle has to report the situation to the JARC. Therefore, the JARC and government can compile the number of ELVs generated in Japan. But if the collection operator doesn’t report it, the JARC and government cannot monitor the total number of the ELVs. Some dismantlers don’t have an incentive to report the result. This is illegal behavior. People say that not reported end-of-life vehicles are from 500 000 to 1 000 000. Table 1: The number of the unused vehicles in fiscal 2005 Total 5 000 000 (1)Exported used cars 1 350 000 (2)Increased stock of used cars 100 000 (3)ELVs dismantled inland 3 050 000 (4)Other 500 000 Source: Estimation by the METI (Ministry of the Economy, Trade and Industry) Total number of the unused vehicles in fiscal 2005 = number of vehicles owned in March 2005 + number of new vehicles – number of vehicles owned in March 2005 Some car dismantlers take the cars as secondhand and dismantle them without reporting the collection to JARC. This is illegal and the number is not included in the above “(3)ELVs dismantled inland”. Some legal dismantlers say that the above “(4) Other” is the number of illegal channel. Recently, auto auction business is developed and it is getting easier to get secondhand. Substantially end-of-life vehicles are traded at the auction as secondhand. 5. Exported used cars Table 2: Top 20 (in 2005) countries (calendar year) Countries 2001 2002 2003 2004 2005 2006 1 Russia 26143 42771 68123 120052 268584 202603 2 New Zealand 86373 125112 144349 135006 132600 60899 3 United Arab Emirates 40749 87957 108236 144090 113818 74852 4 Chile 5984 8461 14410 27400 47487 29899 5 United Kingdom 18143 29761 55484 57006 31962 16668 6 South Africa 8273 14105 22207 37896 31405 17255 7 Philippines 14326 25027 28177 32942 21497 13079 8 Peru 23865 33870 29463 21834 19510 14656
  • 3. 9 Kenya 6593 11358 13408 16929 18317 12386 10 Sri Lanka 8643 20866 26921 18892 17539 15042 11 Malaysia 7312 10840 11023 11586 17531 8348 12 Kazakhstan 35 243 4195 6489 16970 19564 13 Australia 10792 13792 8074 11036 14157 4905 14 Cyprus 12858 18914 15788 20127 12706 6652 15 Pakistan 324 1944 1952 2370 11776 29997 16 Singapore 7982 10810 9976 12500 11495 9472 17 Suriname 4219 7856 9399 10599 11274 5477 18 Bangladesh 10083 13072 9073 7573 10559 6112 19 Jamaica 13463 18214 15312 15917 9493 5968 20 Trinidad and Tobago 5961 11526 11127 10298 8930 5459 Total 371090 603866 712968 835233 940298 638582 * the data in 2001 is from April to December. ** the data in 2006 is from January to July source: Trade Statistics of Ministry of Finance (MOF) In MOF Trade Statistics, vehicles with prices less than the 200,000 yen are not calculated. Therefore, the real number is more than the above. In addition, the data in Table 1 is that of the fiscal year and different from the data of Table 2. 6. Other information The number of illegal dumping and improper storage of scrapped cars Total Improper storage Illegal dumping March, 2006 57 080 44 203 12 877 September, 2005 76 954 62 468 14 486 March, 2005 140 436 122 599 17 837 September, 2004 218 359 195 860 22 499 Source: Ministry of Environment The number of authorized (licensed) operators March, 2005 September, 2005 March, 2006 Collection operators 85 144 87 513 88 251 Dismantling operators 5 490 6 042 6 279 Shredding operators 123 120 124 Source: Ministry of Environment Licensed dismantling operators include some car dealers and repairing operators who don’t dismantle the cars as daily business. However, they sometimes salvage the used parts. In order to do it, they have to get the license for the dismantling operator. Some
  • 4. people say that the substantial number of dismantling operators is around 2500. 7. A problem of Japanese ELVs Recycling Law In Japanese law, the government wants the last car user to pay the recycling fee. But it does not work. The last user can deliver its car to the car dealer or dismantler without paying the recycling fee. The reason is in the payment structure of the recycling fee. In the law, • The first vehicle owner pays the recycling fee to the producer. • When the owner can find the next owner, the former owner can get the fee from the next owner. This means the former owner gets a refund of the fee and the next owner pays the fee instead of the former owner. • When an owner can not find the next owner, it becomes the last owner of the vehicle and delivers it to a collection operator. The collection operator does not pay the fee to the owner. vehicle Former Last owner Collection price owner operator fee The problem is that the last owner is not necessarily equal to the last user. The dismantler often becomes the last owner and pays the fee. (C) Dismantler Producers (1) secondhand (JARC) (A) Car Dealer price+fee secondhand Recycling fee end-of-life price+fee Dismantler User price (2) end-of-life end-of-life price Car Dealer Dismantler (3) (B) price *The recycling fee is for the CFC, the airbag and the automobile shredder residue (ASR). Case Last owner Collection operator (1) User Car Dealer (2) Car Dealer Dismantler (3) Dismantler Dismantler In the above situation, the car dealer has to decide whether he/she should take the car
  • 5. from the user as end-of-life or secondhand. • If the dealer takes the car as secondhand, it has to pay recycling fee to the user.(situation (A)) • If the dealer takes the car as end-of-life, it doesn’t have to pay the recycling fee. (situation (B)) The user wants the dealer to take the car as secondhand because it can get the recycling fee from the dealer. The car dealer doesn’t have enough bargaining power against the car user. Therefore, the car dealer often takes the car as secondhand and it pays the recycling fee to the user. Similarly, the dismantler doesn’t have enough bargaining power against the car dealer. Therefore, it often takes the car as secondhand and it pays the recycling fee to the dealer. (situation (C)) As a result, the dismantler becomes the last owner of the car in the eye of the law and pays the recycling fee. The car user doesn’t pay the recycling fee in the system.