BRUSSELS - The European Commission's approval of a plan to force carmakers to pay for the recycling of every passenger car on Europe's roads has taken the auto industry by surprise.
Manufacturers had not expected action on the vehicle end-of-life directive until later this year. If approved by the European parliament, carmakers would have to recycle all passenger cars registered from 2001 at no cost to consumers - and all cars beginning in 2006.
The industry calculates that 150 million passenger cars are in use across the European Union. Because vehicles more than 10 years old were not designed to be recycled, the industry says that the regulation could cost automakers more than $10.5 billion to implement.
The only major concession the European Commission made was eliminating the requirement that automakers pay scrappers for vehicles with no value.
The Association of European Car Manufacturers, the European automakers association, told the European Commission it would agree to recycle all new cars as early as 2001. However, the association argued that cars currently on the road should not be included in the recycling legislation. European automakers and the German government oppose the recycling plan and promise to fight for changes when the legislation goes to the European parliament this autumn for a final vote.
Importers, mainly the Asians, are even more worried. They have no recycling facilities of their own in Europe.
'It is not clear whether we have to take over and recycle the cars or use the dismantling operations already in place in many EU countries,' said a spokesman for the Japan Automobile Manufacturers Association Europe in Brussels.
Most European makers operate recycling programs. BMW and DaimlerChrysler, for example, have been building up their recycling operations for several years.
The question of who pays for recycling also must be decided. Costs of complying, estimated at up to $200 per vehicle, likely would be passed on to consumers, said Camille Blum, secretary general of the Association of European Car Manufacturers, based in Brussels.
General Motors subsidiary Adam Opel AG is the first manufacturer to confirm it is considering adding the cost to its sticker prices. Opel has calculated that the legislation would make it responsible for recycling 18 million vehicles.
Meanwhile, the European automakers are considering a challenge to the regulation in European courts. No European law has ever applied retroactively to manufacturers, said Blum.
The automakers have supporters in the parliament ready to sponsor amendments in the industry's favor. The Japan Automobile Manufacturers Association also has stepped up its lobbying. But lobbyists said it is difficult to change legislation in the parliament.
In addition, more than half of the parliament consists of new members elected in June. No major legislation has yet cleared the new parliament, so the newcomers essentially remain unknown.
The cost of recycling every car now in use in Europe could make the difference between profitability and loss for many carmakers, said Blum.
But the industry's credibility on the issue is shaky. When the scrappage proposal was first made three years ago, the automakers fought the entire regulation. They proposed a compromise a year ago, only after it became clear that they were losing the battle.
'We can't be held responsible for cars we produced and sold before we had these additional requirements,' said Didrik de Thibault, director of parliamentary affairs for the Association of European Car Manufacturers.
Under the proposal, the industry - not the last owner - would have to pay the cost of recycling a car at the end of its life. Different countries now charge consumers part of that cost.
In the Netherlands, new-car buyers pay a fee for that purpose. Car owners pay a yearly recycling charge through car insurance premiums in Denmark. In other countries such as England, the last owner is sometimes paid a fee by the dismantler if the car has a residual value.
Fourteen western European countries have car-recycling systems, voluntary agreements with automakers and recyclers, or a law spelling out requirements that operate on the free market, said de Thibault.
'These systems are operating,' he said. 'They have been set up giving responsibility to everyone involved, carmakers and recyclers.'
According to the Japan Automobile Manufacturers Association, England has indicated that it wants to keep the current system in place and will not put the entire responsibility on automakers.
Toyota Motor Europe is not taking chances. On July 22, Toyota signed an agreement with Volkswagen AG to cooperate in recycling cars and plastic components in Europe and bumpers in Japan.
Similarly, Nissan Europe NV is investigating whether its partner Renault SA can help recycle Nissan cars in Europe. Renault has a sophisticated recycling program for its vehicles in Europe, and Nissan is a leader in the field in Japan.
'There is no incentive in the proposal for lowering costs and for competition in the recycling industry,' said Blum.
The EU initiative also would require carmakers to recover and reuse 85 percent of a vehicle's weight beginning in 2006, rising to 95 percent in 2015.
The European automakers are not fighting the 2006 targets. They say that today, an average of 75 percent of a vehicle's curb weight is recycled in EU countries with a state-approved recycling program.
But the Association of European Car Manufacturers argues that reaching the 95 percent level will be very difficult. The major problem: compliance with other EU requirements.
New pollution and fuel economy initiatives will require lighter cars to reduce emissions beginning in 2000 and lower fleet consumption by 2008 for the Europeans and 2009 for Japanese and Korean makes.
To meet both requirements, vehicles may have to use less steel, which is easily recycled, and more composites that are not.
But EU lawmakers aren't buying this argument, said de Thibault. 'They are very rigid on the issue,' he said.
Japanese carmakers say they will have little trouble reaching the targets, however.
In Japan, regulations require 90 percent of a vehicle to be recycled in 2002 and 95 percent by 2015. In Japan, the percentage of the car going to landfill must be reduced 60 percent from 1996 levels by 2002 and 80 percent by 2015.
The industry has won concessions from the council of ministers, which along with the parliament, votes and amends legislation proposed by the European Commission.
Originally, the commission wanted to ban all use of specific polluting substances, including cadmium, lead, mercury and hexavalent chromium in vehicles by July 1, 2001.
Automakers protested that small amounts of some of these materials were needed. Lead is used in batteries and in steel so that it can be molded into a body panel or component.
Mercury is in all light bulbs. Hexavalent chromium is used in anti-corrosion coatings.
The council amended the draft and allows the use of the three materials for specific applications. In some cases, the council restricts the amount that can be used.
The end-of-life regulation was initially proposed in 1997. For nearly two years, European car companies argued that the proposed car recycling law was filled with flaws.
Ritt Bjerregaard, the European Union's environmental commissioner, strongly supported the legislation. She rejected the auto industry's concerns as 'industry laying down the conditions for ministers.'
Bjerregaard tried to put the issue at the top of a June meeting of environmental commissioners. Be-cause of Germany's EU presidency, Jurgen Trittin, German environmental minister and an outspoken member of the Green Party who backs closing all of Germany's nuclear power plants, chaired the session.
Trittin said although there was political agreement on the directive at prior council meetings, Germany no longer backed adoption of the proposal.
The European automakers thought they had won the long-sought delay and even held a press briefing on July 20 outlining their strategy to persuade ministers over the coming two months.
Two days later, the council of ministers announced that a compromise had been reached and scheduled a secret paper ballot on the issue without debate.
The only major changes were a rollback of the date for mandatory recycling of all cars, not just new, from January 2003 to 2006. The council also dropped a requirement that the industry pay for any old cars with a negative value.
The Association of European Car Manufacturers had clearly underestimated the clout of Bjerregaard and environmentalists.
The new European Commission takes office this autumn with a new commissioner for the environment. The industry no longer has to contend with Bjerregaard.
Margot Wallstrom, who has been nominated for the post, is a career bureaucrat with no environmental credentials. But she comes from Sweden, a leader in environmental law.