Case Studies 6: Denmark

6.1 Summary Information on EA

6.2 Background and Context

6.2.1 The Country Context

Since the mid 1980s, environmental regulations in Denmark have been subjected to several rounds of reform, on pollution with an emphasis prevention rather than abatement as the overall policy goal. Consequently new policy instruments such as environmental agreements, technology promoting standards, incentives and, to an extent economic instruments have been added to the first generation of science-based emission standards. Over a decade ago, the Danish Federation of Industri, Dansk Industri, said "Industry has reached the regulatory limit, and could take no more" (Dansk Industri, 1983). Industry`s stance has since changed to a more proactive approach that acknowledges that international competitive advantage can be achieved through stringent regulations (Dansk Industri, 1993).

Regulatory reforms have tried to address both problems of administration in reaching policy goals and of relying on direct regulation, rather than market based instruments (Miljøministeriet, 1988). The current Danish environmental policy approach was marked by the publication of the government's Action Plan for the Environment and Development "Our Common Future 1988", which indicated a change to a strategic environmental policy approach. A number of policy changes followed, culminating in revisions of the original 1974 Environmental Protection Act in 1991 and 1994 to form the Consolidated Environmental Protection Act 1994 (CEPA), one of the key elements of policy, which gives priority to pollution prevention via permitting and licensing procedures.

Although Denmark is an unitary state in which the central government has a good overview of the situation and great influence, the practical implementation of environmental policy is now based on the decentralisation of responsibility and authority from the Minister/Ministry of Environmental Protection (EPA) to regional and municipal levels of government. As municipalities account for about 65% of public expenditure on the environment, they have a long tradition of negotiation on laws and bylaws and considerable experience of the imposition of economic obligations and the costs of implementing legislation. Enforcement of regulations is carried out, largely, at the level of the individual municipality. This is because municipalities have a lot of discretionary power, which results in municipal enforcement by consultants/service partners or by policemen (Georg, 1995). Regulatory enforcement is characterised by a low level of conflict and low involvement of the judiciary system (Ministry of the Environment, 1985).

6.2.2 History of Environmental Agreements in Denmark

Denmark has a tradition of high levels of organisation and negotiation in both commercial and environmental matters: realising that the investments necessitated by environmental requirements would have to be paid for by enterprises themselves, the Danish EPA tried to gain the acceptance of trade and industry.

Uniquely in Europe, there are provisions for agreements in administrative law, embodied in S10 of the CEPA 1994 which empowers the Minister to make binding agreements with enterprises or trade associations with the aim of pollution reduction/waste minimisation and enables him/her to decide upon the implementing instruments for the agreement.

The Minister can also appoint persons to be responsible for implementation, set performance rules and reporting arrangements and lay down penalties for breaches, although disputes over content are the domain of industrial tribunals. Such an agreement requires negotiations with relevant national trade and environment organisations, local authorities and other state authorities and the agreement’s requirements may be imposed on other companies/associations not party to the agreement, if they are substantially responsible for the waste in question.

Table 6.1: Danish Industry

Main branches of Danish Trade & Industry (500,000 employees)	% of GDP	Ranking of highest pollution impact
Iron & metal	35	1
Food, drink & tobacco	19	3
Chemical substances	14	2
Paper & printing	10
Wood & furniture	5

The Minister also has authority to change conditions or requirements in the agreement. The provision provoked considerable debate in Parliament in 1991, particularly over the power given to the Minister, the implications for local authorities' influence over industry and the favourable reaction of industry organisations. However, no trade and industry organisation has since been willing to enter into binding agreements of the type suggested in the provision, mainly because of the binding and policy role required of industry organisations to secure compliance. S10 of the Act has, therefore, proved redundant.

In the past decade, the trend has been for new environmental requirements to be intensively negotiated with Dansk Industri or other affected organisations. Only in exceptional circumstances has the Minister for the Environment insisted on unilaterally imposing his will. In return, Dansk Industri has accepted the requirements adopted and has often helped to gain its members' acceptance of them. This has resulted in a number of agreements entered into by Environment Ministers, including agreements on waste, e.g. lead accumulators and cadmium battery agreements (Ostergaard, EPA; Blom, Dansk Industri). Usually the government promises to desist from political intervention if the other party promises to work towards a specific environmental goal. Some of these agreements have brought about the desired environmental results. One example is the Danish Oil Industries Environmental Clean-Up Association and PVC Agreement, where the positive results achieved are attributed to the direct negotiations (EPA Web Site, 1996).

Compliance with the agreements cannot be enforced through the courts, and each of the parties can withdraw from the agreement at any time. The agreements are solely politically binding in character. Although no formal evaluation has been undertaken of the 12 agreements at present in force, partly because they have not been in operation for very long, they are seen as a useful policy tool. However, in one case a tax on nickel-cadmium batteries had to be introduced, after an environmental agreement on the collection of used batteries of this kind had failed (Danish Ministry of Finance, 1995, p. 23f.).

6.2.3 The Environmental Issue

6.2.3.1 Packaging Waste and Its Significance

Industrial pollution is a major problem in Denmark, with commercial waste forming a major waste stream and, of this, transport packaging constitutes about 50% of all packaging waste (Ostergaard, EPA). Packaging waste is, therefore, seen as one of the most rational, highly concentrated ways of achieving both national and EU waste targets (EPA 1996b). Transport packaging plays an important role in the Government's Waste Action Plan, the strategic basis of official waste policy from 1993-1997 and fits into the an overall recycling target of 55% of all waste by the year 2000 (of the remaining waste, 25% waste is to go to energy recovery and 20% to landfill).

Focusing attention on transport packaging also implements the "producer responsibility" principles contained in the CEPA 1994 and partly implements the EC Packaging and Packaging Waste Directive 94/62/EC (hereafter referred to as the EC Packaging Directive).

6.2.3.2 History of Packaging Waste and Transport Packaging

Recycling and waste regulations go back to the mid-1980s, when waste management was already seen as central to environmental policy. CEPA 1994 targets reflects this. Their aim is:

"to reduce the use and wastage of raw materials and other resources, to promote the use of cleaner technology and to promote recycling and reduce problems in connection with waste disposal. When determining the extent and nature of measures to prevent pollution, consideration shall be given to: (1) the nature of the physical surroundings and the likely impact of pollution thereon, and (2) the whole cycle of substances and materials, with a view to minimising wastage of resources" (Ministry of Environment, 1992a).

6.2.4 The Sector

6.2.4.1 Structure of Sectors Affected by the Agreement

Transport packaging covers a long chain of industry sectors, from producers and importers, to manufacturers, converters, packers and fillers, users, retailers and recyclers, many of whom come from very different industrial sectors and are connected only by virute of being users or sellers of transport packaging. The distribution is shown in Table 6.1.Danish enterprises are small by international standards, with 80% of jobs found in SMEs of less than 500 employees and less than 300 companies employing more than 500 employees.

6.2.4.2 Environmental Awareness

The environmental awareness of industry is seen as high in Denmark. This has been attributed, partly, to a number of widely publicised disclosures of companies violating environmental regulations but also to a high level of public awareness from the early 1980s on and to changes in the administrative and regulatory environmental practices of the municipalities (Georg, 1995). The strength of the Danish EPA and Ministry of Environment also plays a key role in industrial awareness.

Awareness of the environmental impact of transport packaging is seen by all parties as medium to high and increasing, partly because of previous regulations in this area for some businesses and industry and, partly and indirectly, to the effects of the agreement, particularly in the case of SMEs via the trade associations. It is also indicative of a willingness of industry to be environmentally aware (Ostergaard, EPA) and this has resulted in a minimum level of concern and positive action, for example in the development of environment friendly products and better supply chain management (Blom, Dansk Industri; Niklasson, Emballageindustrien).

6.2.4.3 Sector Compliance With Legislation

Industry has generally complied with waste management legislation to date. Paper waste for retailers and municipal waste collection schemes , for example, have been seen as ‘fairly successful’, although there are no formal evaluations to support this view (Ostergaard, EPA). There have been problems in regulating this area efficiently and in assessing compliance as there are no data on past recycling rates for many materials apart from paper, the recycling rates of which have been recorded as a result of the 1986 Regulation on recycling paper (Blom, Dansk Industri; Niklasson, Emballageindustrien).

6.3 Negotiation of the Agreement

6.3.1 Negotiation Time

The Agreement took about two and a half years to negotiate. This compares with an average of two years to conclude other agreements and to the lead-in time for environmental legislation, which can be anywhere from between six months to five years (Lorenzen et al 1995; Elmvang, EPA).

6.3.2 Parties Involved in the Negotiations

A total of 10 parties were involved in the negotiations (see Table 6.2). All parties were well established bodies or trade associations at the time of the agreement. With the exception of the EPA, none of the other parties have legally binding powers over their members but are purely representative bodies.

The Danish Ministry of Environment and Energy with its administrative branch, the EPA, is a relatively strong ministry, with power of authority over industrial polluters. The ministries responsible for the sectors in which the polluting industries are located have not played any role. However, the level of environmental awareness in a polluting sector is considered to be an important factor in determining the results achieved (EPA Web page 1996). Dansk Industri is one of the most influential trade associations in Denmark, being long-established and representing most trade and industry.

Table 6.2: Negotiating Actors and Signatories in Danish Transport Packaging Agreement
 

Actors	Type of Actor	Party to Negotiation	Signatory	Agreement Working Group	Comments
Miljøstyrelsen, EPA	Central government	•	•	•	Non-binding main signatory
Kommunernes Landsforening	Local government	•		•	Legislative implementation authority
Frederiksberg Kommune	Local Government			•	Special municipal/county status
Kopenhagen Kommune	Local Government			•	Special municipal/county status
Dansk Industri	Industry	•	•	•	Non-binding main signatory
Emballageindustrien	Industry	•	•	•	Non-binding acceding signatory
Plastindustrien	Industry	•	•	•	Non-binding acceding signatory
Dansk Handel Service	Industry	•		•	Views too disparate from other industry
Paper/Pulp & Recycling Mills	Industry	•		•	Initial consultations over capacity only
Forbrugerrådet	Consumer organisation	•		•	Consultees
CO-Industri	Employees organisation	•		•	Consultees
Danmarks Naturfredningsforening	Environmental NGO	•		•	Consultees

The labour organisation, CO-Industri, does not play such a prominent role in environmental policy as industry sector organisations. However, it is routinely involved in the drawing up of new legislation.The most powerful municipal organisation is the National Association of Local Authorities in Denmark, Kommunernes Landsforening (KL), which represents all Danish municipalities, other than Copenhagen and Frederiksberg, and is extremely powerful in the area of environmental policy. KL’s influence arises from its apolitical nature and its primary objective which is to safeguard and strengthen local self-government. It is legitimated by the fact that rulings on environmental questions are initially made by local politicians and by the considerable practical experience in environmental administration of municipal officials, which adds a professional dimension to KL’s role in environmental policy-making. The Association of County Councils in Denmark does not have the same political clout and weight as municipal politicians. Nor does it present such a united front on environmental matters, although county officials often have considerable expertise and influence.

Danmarks Naturfredningsforening (Danish Society for the Conservation of Nature) (approx 250,000 members) had considerable influence in the 1980s but has since declined, and other ‘green’ organisations, such as Greenpeace (approx. 20,000 members), have occasionally had some influence. Taken together, though, nature and environmental organisations have not had anything like the same influence as the Confederation of Danish Industries or KL.

6.3.3 Their Reasons and Incentives for Participating

A major reason for government’s willingness to participate in the agreement was to find the most cost- and environmentally-effective solutions to meet the targets of the forth-coming EU Packaging Directive. The EPA were also keen to reach a complementary solution through an agreement rather than by going through the full legislative process (Ostergaard, EPA). The Minister was clear that ‘something’ would happen if an agreement was not reached, but never stated exactly what the consequences of failure to reach an agreement would be (Ries, KL).

A major incentive for industry was this implicit, unclear threat of either legislation or other economic/fiscal instruments. This was perceived as a real threat by Dansk Industri and the two trade associations in the event of the agreement failing. Firms are offered no additional benefits for participating in the agreement, other than the promise of no direct regulation of individual firms, only of industry via municipal legislation. Industry is obliged to control its packaging waste under the CEPA 1994, the Waste Action Plan and the EC Packaging Directive. The CEPA requires all manufacturers and users to contribute to the limitation and recycling of waste. The Minister can regulate deposits, impose binding targets to limit the use, discharge or disposal of specified products or materials and has legal authority to claim producer responsibility. The agreement was used to apply the principle of ‘shared responsibility’ to the financing of waste disposal, to enable industry to allocate responsibilities and costs more flexibly and to ensure that the costs of environmentally friendly packaging are fairly allocated and absorbed across industry instead of by consumers (Blom, Dansk Industri; Arnoldsen, Danisco Pack). For individual companies, membership of one of the participating trade associations provides the opportunity for direct representation to the EPA. DHS pointed out that they see little incentive for some producers/industry to participate if they are not bearing the costs of collection or sorting, e.g. when this is passed on to other parties such as retailers, who are not part of the agreement (Biil, DHS).

Local government participated because of its major role in industrial waste collection and recycling. The agreement indirectly binds the Kommunes, as of 1 July 1998 and they have to provide collection and re-use schemes (Bylaw on the Disposal and Re-use, Planning and Registration of Waste 24 June 1996), privately or publicly, and are thus committed to collecting waste from producers. The by-law contains only ‘soft targets’ stating that ‘substantial parts of the waste should be re-used’, but these are in line with the Government`s Waste Action Plan and EC Packaging Directive and therefore also the agreement. The Kommunes also foresaw the agreement as having a unifying effect and used its targets as a base for subsequent standard regulations to deal with transport waste and to standardise the different waste collection and disposal systems developed over the past 20 years by individual or groups of municipalities. As municipalities charge fees to finance waste systems, whether these are operated by the authority or subcontracted privately, it was also important for them to be involved in the negotiations regarding recycling capacities, projections of waste volumes and material types (Environmental Protection Agency 1992, Kommunernes Landforening 1990, Reis, KL).

All parties saw the agreement as a way of further increasing awareness of transport packaging. The good relationship between Dansk Industri and the EPA, the history of largely successful negotiations, and the mutual respect and medium to high levels of trust that developed among all the parties further increased the acceptability of an agreement as a valid first approach to the issue. Dansk Handel Service (DHS), for example, are used to negotiating with the Industry Ministry but agreements are a relatively new element in their working relationship with the EPA with whom they have a more strained and less stable relationship. They believe, however, that the EA is a step in the right direction.

6.3.3.1 Expected Benefits

Industry

• Total packaging chain coverage
• Distribution of obligations over sector, among different branches, and over time
• Responsibility spread across all industry
• Self determined cost allocation
• Flexibility in cost allocation, e.g. importer/exporter obligations.
• Pragmatic approach to capacity and capability
• Generally cost effective (profitability can depend on market prices)
• Cost neutral implementation on average
• Advocates only cost-effective recycling/
• recovery technology
• Long term agreement allows for investment plans
• Representation of interests directly to EPA over future obligations
• Improved co-operation
• Increased influence of industry on measures to achieve goals.

Regulators

• Promotion of a greater understanding of industry
• Positive scope for discussion with all parties
• Securing of compliance with basic measures and beyond legal requirements
• Targeting of a new area e.g. materials previously unrecovered/recycled
• Increased level of dialogue among regulators, authorities and industry
• Provision of a Framework Agreement for national implementation by industry and municipalities.

Table 6.3a: Structure of Signatories and Parties to Danish Transport Packaging Agreement

^{1 Calculated on the basis of proportion of salary turnover in Denmark}

6.4 Structure of Agreement and the Targets

6.4.1 Number and Type of Signatories

Of the four signatories, two main signatories are Miljøstyrelsen (the EPA) and Dansk Industri. The national packaging industry trade associations, Plastindustrien and Emballageindustrien were acceding signatories.

It is important to note that not all parties involved in the negotiations were also signatories to the agreement. This is partly due to the fact that all companies handling transport packaging, from industry to retailers, are obliged to participate in municipal waste collection and sorting schemes. This then extends the issue to the municipalities, who are responsible for ensuring the implementation of waste collection schemes. KL was a party to the negotiations, but felt unable to sign, because of political commitment, its legal role in municipal law making and implementation and uncertainty over the economic and technological feasiblity of the goals. The Executive Order on Waste has been amended (in order to help reach the goals laid down in the EU Directive on Packaging and Packaging Waste), so that, from July 1998, the municipal authorities will be obliged to collect certain types of waste (e.g. plastic transport packaging) from private enterprises. This will mean that the agreement is, in fact, being implemented through formal rules. The retailers association, DHS, was also originally party to negotiations, but left prior to signing, as their views on the responsibility of retailers receiving transport packaging and on a perceived conflict with the 1986 Executive Order on waste paper, were too divergent from the other parties for an agreement to be concluded. Both parties, however, have welcomed the opportunity to be part of the Agreement Working group and feel that this indicates commitment enough to the goals of the agreement.

In contrast, the signatories (industry, producers and central government), all of whom have obligations to reduce packaging, are not necessarily those who are wholly responsible for fully implementing the agreement. The implementers are, rather, the municipalities, retailers and some industry. This means that the responsible parties are not the actual producers of the product that becomes waste, but rather the bodies that ultimately have to get rid of the waste. However, all parties are involved in the Agreement Working Group and work together on a practical basis. This development can partly be explained by the history of the negotiations and the relationships that developed between parties during them with each party trying to allocate responsibilities on a least cost basis.

6.4.2 Coverage as Proportion of Market

Dansk Industri estimates that 90-95% of industry is effectively covered by the agreement. This comes to around 25,000 companies (Blom, Dansk Industri). The other 5-10% are mostly SMEs. In practice, about 80% of the packaging chain is covered: of this, 75% are comprised of signatories to the agreement i.e., central government, industrial manufacturers and producers, and the Working Group members who cover the remaining 25% of retailers and services, local authorities and interest groups. The 20% not included in the agreement are effectively covered indirectly by municipal executive orders governing waste sorting and collection.

6.4.3 Source of Transport Packaging Waste and Proportion of Total Waste

50% of all transport packaging in Denmark, is imported and, conversely, 50% of Danish-produced packaging is exported. However, all packaging waste, whether produced internally or imported, is covered by the agreement.

Industry and commerce generate "most of the waste in Denmark". The quantity of industrial and commercial waste exceeds domestic household waste. Transport packaging waste constitutes 50% of all industrial waste (Ostergaard, EPA). Data on where transport packaging originates and ends up are unavailable. The København Kommune, however, has assessed primary packaging, which goes direct to the consumer, and secondary packaging, which is used along the product chain, for plastics and calculates that of the total of 33,000t of plastic waste involved, 88% came from industry. The approximate proportions of transport packaging waste being handled by the various groups are: manufacturers 25%, retailers 20%, producers/packers/fillers 50% (Blom, Dansk Industri).

6.4.4 Targets Set

The overall target is that 80% of the volume of transport packaging should be collected and recycled, either through direct re-use or material recovery, by the year 2000 (See Table 6.3b). This includes all forms of transport packaging destined for Danish manufacturing firms, excluding exports but including imported transport packaging.

This target was not negotiated but was derived from the 1992 Government Action Plan for Waste and Recycling, from the overall goal of 50% recycling of all waste by year 2000 and from Regulation 882 1986 on the municipal collection of recyclable materials and products from companies which applied, initially, to paper. The overall target contains specific quantitative and qualitative targets. However, the specific goals for materials, the means used to reach targets and the allocation of responsibilities were negotiated. Interim targets for the year 2000 were also negotiated on the basis of predictions of recycling and collection capacities.

There are no targets for individual companies in the agreement and no relation between overall targets and the sum of company targets. The targets are industry-wide goals for everyone dealing in transport packaging. The goals, however, are translated into obligations on individual companies to participate in municipal collection, or other recognised, schemes.

6.4.5 Quantitative Targets

This target is divided further into specific quantitative targets for material types.

6.4.6 The Timescale

Six years: August 1994 to August 2000.

6.4.7 Termination Provision

All parties must give three months' notice in the case of legislation or new regulations significantly changing the prerequisites of the agreement, and if agreement cannot be reached.

6.4.8 Assessment of the Targets

All parties see the targets as moderately ambitious but achievable. They go above the quantities suggested in the packaging directive and beyond a "business-as-usual" approach mainly because this is a new area for recycling of waste. Furthermore, this reflects a "no regrets" policy, where most businesses accepted that recycling was necessary and could even be profitable and good for business. "It is absolutely possible to reach the goals set out in the agreement" (Jens Arnoldsen, Dansico Pack)

6.4.9 Legal Status

The legal status is that of a non-binding, non-legal, gentlemen's agreement. This agreement was not formulated to come under S10 of the CEPA and is not, therefore, legally binding. However, the agreement is, in effect, translated into a legal obligation under municipal law for individual companies who are required to join municipal waste collection, or other recognised, schemes (Reis, KL). There are no legal penalties for non-compliance with the agreement per se but there is a veiled threat of regulation or economic instruments and a strongly felt moral and political pressure to comply. (Blom, Dansk Industri; Ostergaard, EPA).

DHS has raised the question of an apparent contradiction with S9a of the CEPA and the principles of producer responsibility, arguing that these have not been properly applied in this agreement (i.e. that all those responsible are not formally part of the agreement) and raising the possibility of a conflict between the agreement and the law (Biil, DHS). In practice, however, S9 and S10 have been used only once.

Note: No targets are set for:

• distribution between re-use and recovery;
• recycling for packaging purposes;
• reduction in total volume of packaging.

Table 6.3b: Quantitative Targets in the Danish Transport Packaging Agreement

Sources; Status Note on Transport Packaging 28 May 1996, Transportemballage Agreement 1994, Rendan 1996

Table 6.3c: Qualitative Targets in the Danish Transport Packaging Agreement

6.5 Implementation

6.5.1 Distribution of Responsibilities Between the Partners

Responsibilities are assigned to both parties to the agreement, to their members and to members of the Agreement Working Group as prescribed in the agreement targets (See Table 6.3a and 6.3b). Implementation is also via sub-groups of the Agreement Working Group, known as Materials Working Groups, arranged along industry sector and materials types and via negotiations between the industry associations and their members (Østergaard, EPA). Targets will, to a large degree, actually be fulfilled by individual companies joining municipal waste collection schemes and complying to sorting and disposal requirements aimed to meet the agreements targets.

6.5.2 Use of Complementary Measures

• The agreement complements and supplements a number of other regulatory measures:
• Executive Order on Certain Demands for Packaging 1996
• Consolidated Environmental Protection Act No. 590, 27 June 1994 (last amended April 1996)
• EC Packaging and Packaging Waste Directive 94/62/EC
• Regulation 131 on the Disposal, Planning and Registration of Waste, 21 March 1993 (last amended June 1996)
• Government Action Plan for Waste and Recycling 1993-1997 (1992)
• Act 1701 on Taxation of Waste and Raw Materials, 23 December 1992
• Regulation 882 on Municipal Collection Schemes for Recyclable Materials and Products from Commercial Companies, 11 December 1986
• Amendment to the Act on Recycling 1984
• Waste Management Plan 1982 (for completion by municipalities in 1990)
• Act on Recycling 1978
• Municipal regulations on waste sorting, collection, disposal and treatment.

The Waste Action Plan and CEPA play important framework roles, requiring all manufacturers, users and consumers to contribute to the recycling of waste and the limitation of waste disposal problems. It is then ‘up to industry, trade and municipalities to fill in the frame with practical arrangements which ensure fulfilment of the goals in the transport packaging agreement and, thereby the directive’ (Ministry of the Environment, 1996b). Municipal waste collection schemes and regulations further complement and implement the agreement.

6.5.3 Monitoring Arrangements

Monitoring is coordinated by the Agreement Group members. The first report was at the end of the initial 18-month period. Henceforth, reports are to be produced annually. The progress of the agreement and its relation to the targets are also discussed among signatories. In the first year and a half of the agreement, meetings were held every month; now they occur roughly every three months, on an ‘as-and-when-needed’ basis, subject to a minimum of one meeting per annum. The issues monitored (in tonnes) are:

• Volumes of waste recycled
• Waste supplied (i.e. sent to the market)
• Material type (paper, plastics, metal, textiles, wood)
• Proportion of imported/home-produced waste.

6.5.4 Reporting Arrangements

The results of analyses, monitoring, annual reports, developments and statistics are circulated among all parties and the Agreement Working Group and are open to public scrutiny, largely via government-published statistics and bulletins. Information is passed around members of the Working Group as is relevant (e.g. to individual municipalities and to companies in that municipality, to individual companies in associations etc.). The annual report is the main reporting tool. The first of these was published in November 1996, seven months later than the suggested target date. If targets are not met, Dansk Industri is obliged to make information more widely available, which would mean incurring the extra cost of having to target companies that are not members of the trade associations in the Agreement Group.

Table 6.4: Monitoring and Reporting Parties

6.5.5 Arrangements for Participation of NGOs or Consumer/Public Representatives

Under the CEPA 1994, S10, before implementing an agreement made with industry, the Ministry should negotiate, not only with the relevant authorities and organisations but also with the organisations specified in S11, i.e. ‘the most relevant national trade and environment organisations, organisations of local authorities and with other state authorities involved, including the Minister of Labour.’ If an agreement is not made under this section, there appears to be no such requirement, although in practice this is what usually happens (Georg, 1995). However, a low level of public participation is found in practice. Under Danish administrative law, parties with a ‘significant individual interest’ have the right of complaint. Since 1982, this has been available, not just to ‘neighbours’, but also to the major environmental organisations, including Danmarks Naturfredningsforening and Greenpeace. During the initial negotiations on the transport packaging agreement, the EPA invited Danmarks Naturfredningsforening, Forbrugerrådet and CO-Industri for comment. The latter two are part of the Agreement Working Group, although Greenpeace and the Naturfredningsforening appear to be no longer actively involved. The EPA was uncertain about the level of any other public interest or of any requests for information or public participation.

6.5.6 Public Access to Information

Public access to information is not generally an issue in Denmark, due to the well-developed 1970 Freedom of Information Act, an open press and media system and a tradition of free access to administrative information (Ministry of Environment 1996b). Public access to the agreement and all reports, official documents and statistics is possible through the EPA.

6.5.7 Penalties for Non-Compliance

There are no official penalties for non-compliance, i.e. for either party failing to meet the targets. The perceived penalties are, rather, the threat of regulation, other economic instruments (which are seen as a worse threat) and the negative impact on moral and political public commitments (Blom, Dansk Industri; Ostergaard, EPA). However, penalties exist outside the agreement to enforce company responsibilities in municipal collection schemes and, at the end of the day, a municipality can take a company to court or refer it to the Home Affairs Minister, although in practice discussions are usually held to find solutions (Reis, KL)

6.5.8 Enforcement and Measures for Dealing with Free-Riders

The first step in enforcement is seen as gaining acceptance among the majority of industry by negotiating the agreement, following this, measures such as reporting and monitoring requirements, goodwill, political will, co-operation, avoidance of public criticism and bad publicity are seen as the main pressures and tools for enforcing the agreement (Ostergaard, EPA). For example, companies that are not members of the trade associations will be targeted and the Working Group will direct discussions to problem areas in materials flows for the Materials Working Groups to monitor and to implement suggested remedies (Blom, Dansk Industri). This approach is backed up by second-line legislative enforcement: monitoring by municipal environmental officers achieves an annual average of 90% environmental compliance rate; the judicial system is relied on for the remaining 10%, about 200 to 300 cases per year, with criminal or civil penalties (Ministry of Environment 1996b). The EPA states that enforcement will be increased only if the scheme does not reach targets (Ostergaard, EPA).

All industries, except those which are legally exempt, must join either a municipal or a re-cognised waste-collection scheme. In practice, Dansk Industri accepts that there may be a minimal number of physically isolated companies, particularly SMEs, acting illegally as ‘free-riders’. However, none of the parties to the agreement saw free-riders as an issue.

6.5.9 Provisions for Review of Progress, Revision of Targets, Setting New Targets for the Future

There are provisions for both positive and negative revision of targets and to allow parties to revise the agreement, if a number of preconditions are eliminated or radically changed or if new legislation is introduced in the area. This is decided at Agreement Working Group meetings and is based on the results of agreed analyses and attaining interim targets and on the imperative of meeting the EC Directive’s goals and of avoiding subsequent infringements of EC law. Progress is reviewed annually by the Working Group, at which time targets may also be reviewed or changed (Blom, Dansk Industri; Niklasson, Emballageindustrien).

6.6. Outcome

6.6.1 Reported Progress Towards Meeting the Targets

The first progress report, the Status Note, was delivered to the Environment Minister in May 1996, and the first annual report published in November 1996, 18 months after the implementation of the agreement. Progress has been reported by all parties. The report contains a number of estimates concerning the current supply and level of recycling of transport packaging waste fractions, based on surveys and analyses by Dansk Industri and Rendan. The most important results are presented in Tables 6.5a and 6.5b. It should be noted that the recycling targets achieved and reported in the table are drawn from the Rendan monitoring report and are based on the data available on transport packaging supply and recycling volumes for 1994 and 1995.

All parties believe they are on target to achieve current goals.

6.6.2 Proportion of Firms in the Sector Participating in the Agreement

Figures are unavailable on the actual numbers of companies implementing the agreement (Ostergaard, EPA), as this depends on municipal collection schemes. However, some municipalities report a doubling of waste recycling in general to about 60% since 1992, with about 35% of commercial waste being recycled, particularly in cardboard, paper and glass, which can be roughly extrapolated to transport packaging (Maskell, København Kommune).

6.6.3 Effect of External Factors on Progress to Set Targets

World market prices for recycled materials have fluctuated heavily in the past five years (Ministry of the Environment, 1996d), for paper waste in particular and this has severely affected the profit incentive to join recycling schemes by increasing or decreasing the attractiveness of recycling and thus the rate of profit in waste disposal. Dansk Industri attributes the success in signing the agreement partly to favourable economic circumstances at the time.

The situation of municipalities as quasi-legal monopolies for collection and recycling of waste has been questioned by DHS. More competition is thus envisaged, for example through the use of private contractors (Ries, KL).

Anti-competitive behaviour arising from agreements in general has been examined by Konkurrence Rådet. However, this agreement has not yet come under scrutiny, mainly because of its total coverage of the area.

Table 6.5a: Results of the Danish Transport Packaging Agreement: Progress to Quantitative Targets

Sources; Status Note on Transport Packaging 28 May 1996, Transportemballage Agreement 1994, Rendan 1996)

Table 6.5b: Results of the Danish Transport Packaging Agreement: Progress to Qualitative Targets

6.6.4 Information on the Costs of the Agreement

Few data are available or calculated on the costs of implementing the agreement. Dansk Industri suggests one possible way of calculation is on the basis of a proportion of normal operating costs/wages of the parties involved in the agreement, but this was not done, nor thought necessary. The costs of implementation are spread across the EPA for negotiating and monitoring; Dansk Industri and the trade associations for the Working Group’s administration and research; individual companies for sorting and disposal costs; and Municipalities and KL for introducing the necessary schemes and increasing capacity. As the agreement is being implemented through municipal regulations, this makes it complicated to distinguish the effects of the agreement from the effects of the Executive Order and difficult if not impossible to measure the costs of implementing the agreement (Ostergaard; EPA).

København Kommune has carried out an assessment of ‘before-and-after costs’ for companies in its waste-recycling scheme and this illustrates the effects of a general scheme on industry. A total of 70% of companies noticed no increase in costs/price paid for waste disposal, while 20% reported lower costs and 10% reported higher costs. On the whole, smaller companies, found sorting systems a neutral or positive cost, whereas larger companies found them a positive benefit. These results could also be realistically applied to transport packaging.

The EPA carried out a comparative study of systems for packaging waste in neighbouring countries, particularly the German DSD system, and estimated that implementing the same system in Denmark would be five times as costly as the system in the agreement. The Swedish tax-based producer responsibility system, Belgium eco-taxes and French ‘eco-emballage’ systems were also seen as more costly on industry and consumers (Arnoldsen, Dansico Pack; Ostergaard, EPA).

6.6.5 Technical Change

There has been a ‘low to medium-level impact on innovation’, which may be attributed partly to the agreement, particularly in plastics, where the agreement has acted as a spur to the development of technologies for recycling and recovery (Blom; Dansk Industri, Ostergaard; EPA).

6.6.6 Other Impacts

The agreement may have some effects upon the competitiveness of Danish companies at home and abroad. Some minimal negative effects are anticipated as regards imports/exports into and out of the EU, because of the unevenness of the packaging market. However, compared to countries such as Germany and Sweden, industry and the EPA agree that the agreement is conducive to a highly competitive approach (Ostergaard, EPA).

The agreement may ‘vaguely’ contribute towards eco-labelling, especially of plastics.

In general it is too early to see other impacts and it is seen as very hard to separate this agreement from other factors (Ostergaard, EPA).

6.7 Assessment of Effectiveness

6.7.1 Environmental Assessment

6.7.1.1 The Reference Situation

By 1994, the rates of recycling of transport packaging were 30% for plastics and 56% for paper and board. These figures are taken as a point of reference. The amount of plastics used for transport packaging is estimated to have decreased between 1991 and 1994, whilst the amount of paper and cardboard used increased. These rough estimates show the need for better data, the production of which is one of the aims of the EA.

6.7.1.2 The Target

The target of 80% recycling of transport packaging (paper /cardboard and metal) is derived from the 1992 Government Action Plan for Waste and Recycling, from the overall goal of 50% recycling of all waste by year 2000, and from Regulation 882 (1986) on the municipal collection of recyclable materials and products from companies. However, the specific goals for materials, the means to achieve targets and the allocation of responsibilities were negotiated.

Interim targets were also set during the negotiations, on the basis of predictions of recycling and collection capacities. A target for plastic transport packaging has not yet been set but is expected for 1997 and is likely to be at least 50% (pending the final conclusions of a pilot project).

6.7.1.3 The Baseline

Business as Usual

A baseline could not be established due to lack of data.

Alternative Policies

The EA was negotiated under the implicit threat of a regulation or fiscal instrument. There are no details available on the likely structure of an alternative instrument.

6.7.1.4 Environmental Assessment

Environmental Effectiveness/Improvement

Since data on the level of pollution in 1995 (which, when the case study was chosen, were expected to be available by June 1996) are still not available, an environmental assessment against the ‘business-as-usual’ situation or against the reference situation could not be made.

6.7.2 Assessment Against Wider Impact

6.7.2.1 Cost-Effectiveness

An assessment of cost-effectiveness against another instrument could not be carried out. However, at least some assessments against systems operating in other countries were made. The agreement is seen by all parties interviewed as being cost-effective. The major aim was to minimise costs for all parties by concentrating on the end-use and collection system and by allowing for choice in terms of sorting, collection and materials selection. It also largely takes into consideration the economic factors involved in recycling and recovery and, so, is based on both commercial and governmental interests. ‘We have found a good and cheap way to get a reasonable collection of waste material’ (Blom;,Dansk Industri; Niklasson, Emballageindustrien).

Cost-effectiveness was measured against a European baseline; the EPA concluded in 1993 that the Danish system was 80% cheaper than the German DSD system,. This was extrapolated to take account of future developments (e.g. plastics recycling technologies). Compared to the Swedish system, also, the agreement was seen to promote more efficient administrative control.Cost effectiveness was also assessed on the basis of the domestic waste baseline; transport packaging waste was selected as the most cost- and environmentally effective waste stream for recycling and as the most effective in terms also of quantities, qualities and cleanliness.

It compared particularly favourably with the costs of previous schemes for recycling/recovering household waste (Ostergaard; EPA, Reis; KL).Cost-effectiveness is also a question of who it is effective for. Industry believes that the agreement is cost neutral overall (Arnoldsen, Danisco Pack), despite having to bear many of the information and research costs.

For municipalities, effectiveness was ascertained on the basis of comparison with alternatives such as the cost of extending recycling and recovery systems, enforcement costs, the degree of central government financing, and the financial system necessary for collection systems and waste fees. Retailers were less certain about the effectiveness of the agreement, fearing they would bear an unreasonable burden of the costs unless market prices for collected materials were high (Biil, DHS). For the EPA cost-effectiveness was connected with the length of negotiations, which can be compared, in this instance, to the legislative process and, although it is not known if targets will be met faster than if no agreement were signed, it is felt that compliance will be higher and, thus, that implementation could be cost effective. The cost-effectiveness of other policy instruments, such as taxes and legislation, was not considered, as an agreement was seen to be the preferred option (Elmvang, EPA). However, industry in particular was convinced that an agreement was more cost-effective than economic instruments.

6.8 The Future

Agreements are seen very much as a dynamic policy tool which can be revised according to changes in circumstances (e.g. viability of recycling various materials, economic circumstances, changing technologies, increase in data and knowledge, interaction with parties, interaction with economic markets, etc.). Because of this, there appear to be no plans in Denmark for significant revision of the instrument, although there are doubts regarding the continuing validity of agreements and about inconsistencies between practice and the legislation relating to agreements in S10 in the CEPA 1994, a concern which has been raised by DHS.

6.9. Conclusions

The only monitoring data available date from 1994, the first year of the agreement. These data show an increase in the rate of recycling of transport packaging since 1991 (although the 1991 reference points and the 1994 figure for the recycling of plastics are all estimates). It is not likely that the EA had any influence on the rate of recycling at this early stage. As the EA complements a number of waste regulations, it will also be difficult to determine the significance of the EA in bringing about future improvements in recycling. However, the EA is considered by the signatories to provide a lower cost means of meeting the targets of the EU Packaging Directive than alternative policy measures.

6.10 Information Sources

Interviewees

References

Basse E.M., The Transport Packaging Contract, CESAM, 1996

Basse E.M., Environmental contracts – An Example of the Interplay between Environmental Law and Competition Law, Article outline, Aarhus University, 1996

Basse E.M., Environmental Contracts; A New Instrument to be Used in the Danish Regulation of Environmental Law, in van Dunné J.M. (ed); Environmental Contracts and Covenants: New Instruments for a Realistic Environmental Policy?, Vermande, 1993

Basse E.M., The Contract Model – The Merits of a Voluntary Approach, Environmental Liability, 1994a

Basse E.M., Solid Waste Management - Public Power and Monopoly or Private Market?, CESAM Working Paper No 4, September 1994b

Dansk Industri, Collection and Recovery of Used Packaging in Denmark, Paper presented at the European Packaging Recovery Conference, Stockholm, September 1996

Dansk Industri, Dansk Industri No 11, 1983

Dansk Industri, Dansk Industri 1993 + ti aar (Danish Industry plus ten years), 1993

Hove E., Dansk Industri, Environmental Agreements to Regulate Industrial VOC Emissions, Paper presented at UNICE Conference, Brussels, March 1995

Georg S., Regulating the Environment: Changing from Constraint to Gentle Coercion, Business Strategy and the Environment, Vol 3, Part 2, 1995

Kommunernes Landsforening, Local Government in Denmark; Open to the World, 1990

Krarup S., Energy Policy and Voluntary Agreements, AKF Institute of Local Government Studies Denmark, 1996

Lorenzen K., Klemmensen B., Pedersen M., and Thomsen H., Voluntary Strategies in Pollution Prevention: Experience from Denmark and the Netherlands, European Environment, Vol 4, Part 4 1995

Miljøministeriet, Enkelt og Effectivt (The State of the Environment), 1988

Ministry of the Environment, Danish EPA, Division of Industrial Waste, Voluntary and Negotiated Agreements on Lead Accumulators in Denmark, Speech to EC DGXII, 23 May 1996

Ministry of the Environment, Danish EPA, Danish Environmental Law, Web Page, November 1996a

Ministry of the Environment, Danish EPA, Letter Regarding the First Report from the Agreement Group on Transport Packaging (Unofficial English translation of Danish letter), 12 August 1996b

Ministry of the Environment, Danish EPA, Statutory Order No 581 on Disposal, Planning and Registration of Waste, June 1996c (English translation)

Ministry of the Environment, Danish EPA, Statusnotat Vedrørende Transportemballage (Status Note on Transport Packaging), 28 May 1996d (in Danish)

Ministry of the Environment, Danish EPA, Monitoring the Environment, 1985

Ministry of the Environment, Danish EPA and Dansk Industri, Agreement on the Recycling of Transport Packaging, August 1994

Ministry of the Environment, Danish EPA, Consolidated Environmental Protection Act No 590, June 27 1994a (English translation)

Ministry of the Environment, Danish EPA, Waste Minimisation and Recycling in Denmark, January 1992

Ministry of the Environment, Danish EPA, Translation of the Environmental Protection Act, 1992a

Rendan, Emballageforsyningsmaegen i Danmark 1994 (Market Supply of Waste Products in Denmark 1994), Videncentre for Affald & Genanvendelse, 1996 (in Danish).

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