HP’s Vision: Product Stewardship Solution for CRT Devices

1. HP’s Vision: Product Stewardship Solution for CRT Devices Larry King Hewlett-Packard NAHMMA September, 2005

2. Federal Law Our preference is for a harmonized federal approach

3. Overview • HP experience • HP position • Alternative approaches • Summary

4. HP Experience • In-house recycling since 1987; to date over 500M pounds recycled – target is 1B pounds by 2008 • HP has offered web and mail-back take back services (HP Planet Partners) to customers since 2000 • Over 10.7 M pounds collected through a free drop-off program in 2004 run in partnership with Office Depot • Partnered with various other retailers offering take-back opportunities for consumers throughout the US • Member of EPA’s Plug-in To e-Cycling program

5. A Product Stewardship Solution • Implement a market driven system for recycling CRT-containing computer monitors and TVs (“CRT devices”) • Key factors: • Require manufacturers to take responsibility for the recycling of a specified amount of CRT devices • Place limited responsibilities on retailers and state government • Avoid creation of new taxes and government bureaucracies • Provide funds to local governments for CRT device collection, consolidation, and recycling not otherwise covered by a manufacturer program

6. Benefits of This Approach • Provide efficiencies through market based solution • Place key responsibilities on manufacturers, not government, to achieve recycling goals • Place minimal responsibilities on retailers • Limits government involvement to enforcement and other necessary functions • Relieve burden on local governments by: • providing manufacturers with incentives to keep CRTs out of the municipal waste stream • providing a funding source for CRT collection, consolidation, and recycling including orphans • Provides opportunity for design incentives • Avoids new taxes on consumers

7. Roles of Various Actors Return unwanted CRT devices to the manufacturer or other available recycling program Household Local govts & charities Manufacturer • May elect to offer collection and take back programs • Local an state governments may not accept CRT devices for disposal in landfills • Local and state agencies cannot purchase or lease CRT devices produced by manufacturers who are not registered with the State Retailer Legislature • Pass the CRT Device Recycling Act • Establish the roles that manufacturers, state and local governments, retailers, and houeholds play in the recycling system • Prohibited from selling CRT devices from manufacturers not registered with the State • Discretion to partner with manufacturers or others to provide convenient options for consumer collections

8. Enforcement: Achieving a level playing field • The Act contains clear enforcement provisions to use against non-compliant manufacturers and retailers • Manufacturers are accountable to the state to meet their equivalent share obligations • The Act contains a provision to require new entrants to take on a share of orphans and to pay the registration fee that offsets some fixed costs • The Act also requires that state agencies purchase CRT devices only from persons who are in compliance with the Act

9. Alternatives to Product Stewardship • Fees at end of life • Increase in general taxes • New tax at point of sale • Administered by government • Administered by TPO

10. Deficiencies of an ARF Financed Solution (Govt Run) • The ARF system fails to provide the benefits of the Product Stewardship Solution • The ARF “fee” is a new tax on consumers • The ARF is burdensome to retailers • The ARF creates a huge new government program • The ARF does not guarantee that any amount of electronic devices will be recycled • The ARF does not create any incentives to reduce overall cost or increase product performance • Application of fee to remote sellers

11. Deficiencies of an ARF Financed Solution (TPO Run) • A TPO provides additional challenges when compbined with an ARF • The TPO duplicates the existing state tax agency and is of uncertain legality • TPO does not create competition • TPO adds layer of cost and complexity, resulting in decreased efficiencies (increased cost) • Legal questions exist regarding the receipt and spending of government funds • European and Canadian models demonstrate difficulties in oversight an cost management

12. HP view of existing proposals • California: this new tax has done a good job of generating funds • CAW reported that state intends to collect ~$60M-$70M in taxes and recycle ~50M pounds (best case), >$1.20 per pound cost, not including retailer reimbursements of 3%!!! • IWMB reports recycling rate has not increased • 15% - 20% of sales are escaping the fee • Maine: Department is working on finalizing regs; our hope is for a positive outcome • Maryland: “registration” fee clearly will not be high enough to cover costs but good model for legislation and supported broadly by industry

13. Summary • Producer Responsibility system will work without adding new “taxes” or creating a large government agency to collect fees • Easy of transition to National System if implemented at state level • Flexibility in collection and recycling programs • Limited government role • Limited burden on retailers

14. Larry King Hewlett Packard Company 8000 Foothills Blvd, MS RN Roseville, CA 95747 916.785-3093 Larry.r.king@hp.com Contact information: