© 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice IT Product Recycling: A Product Stewardship Solution Heather Bowman Hewlett-Packard COG Recycling Committee Washington, DC July 21, 2005

2 Presentation Overview HP and Product Recycling Solutions Group HP Experience HP Position HP’s Concerns with the ARF Approach Summary

3 HP in brief Leading global supplier of computing and imaging solutions and services for business and home Employ 150,000 employees in 170 countries; doing business in 43 currencies and 15 languages Manage 36,000 active products used by people for personal use and in industry, business, engineering, science and education

4 HP’s Product Take Back Organization Established in 1987 to acquire support materials from retired HP assets Current charter: to provide end-of-life services to HP entities and customers Operated jointly as a strategic alliance with Noranda, Inc. −Occupies 200,000 square feet in Roseville, CA, −140,000 square feet in Nashville, TN Noranda also occupies 80,000 square feet in Brampton, Ontario Canada which is utilized by HP’s Canada operations Take back managed on a global basis from both a business and policy standpoint

5 Why is environmental sustainability important to HP? HP’s commitment to corporate environmental responsibility started with David Packard and William Hewlett in1930’s Reduce environmental footprint of HP products in the market and throughout product life cycle Provide customers with the best value and experiences through innovative, environmentally-sound products Competitive requirement in a global market Compliance with complex environmental standards and government regulations worldwide Environmental concerns for organized interests (NGO’s) and consumer preferences

6 HP’s environmental commitment Reducing impact throughout the product life cycle Design for Environment −Right materials, minimizing parts, enabling recyclability, product stewards across the business −Formal DfE program since 1992 Manufacturing −Production processes to minimize environmental impact Use −Minimize waste (failures, reprints), greater energy and resource efficiency End of Life Management −Convenient return and recycling, material recovery Product Lifecycle

7 HP Experience In-house recycling since 1987 −Monthly volumes: 4,000,000 pounds; or 11,000 pallets; or 160,000 pieces In 2004, with partner Office Depot, HP offered customers the opportunity to drop off any product at an Office Depot Store at no charge −Over 10,600,000 pounds of products were collected −Products collected were recycled by HP in Roseville, CA or Nashville, TN Planet Partners Hardware Recycling program – internet based mail back program over 6 years Through Electronic Industries Alliance sponsored four collection projects (Florida, Massachusetts, EPA Region III, New England) Member/Sponsor of EPA’s Plug-in To e-Cycling Program – Sponsoring events in Florida, Northwest, and with Staples in New England

8 Ideal System: Product Stewardship Solution Producer responsibility model with a level playing field Flexible system, allowing manufacturers to manage recycling costs like any other business expense (including whether to have visible fee) Allow companies to work collectively or individually Responsibility based on specific brand products returned Easy of transition to national system or regional approach Creates an incentive for better design by allowing manufacturers to receive Design For Recycling (DFR)- effects and economies of scale of their own products Gives manufacturers a voice in ongoing decisions in proportion to the take back burden

9 Basic Elements Enactment of basic framework legislation - Governments should enact legislation that requires manufacturers to take responsibility for managing their own products in an environmentally sound manner. Minimal role of government – Other than enacting legislation, the role of government would be limited to the review and approval of manufacturer plans and enforcement of the requirements of the law. Manufacturer obligations - Manufacturers have the obligation of establishing free and convenient collection opportunities for households, and to recycle products in an environmentally sound manner. Manufacturers would also have the flexibility to implement their responsibility through a variety of means, including partnerships with retailers, charities, mail-back services, and others. Cost internalization - Manufacturers internalize these costs just like any other business cost, thereby providing incentives for the lowest cost solutions for consumers; no need for inefficient and costly fees or bureaucratic government programs. Option to pay – Manufacturers may decide not to establish a program, but instead pay a fee based on the reasonable cost of recycling their return share obligation.

10 What does shared responsibility look like? Customer drops off product Collection/ consolidation point Recycling managed by manufacturer (Full truckloads picked up by mfrs) (New products shipped out by mfrs)

11 HP Position - What we SUPPORT: Producer Responsibility Level playing field −All manufacturers −All types of consumer sales (internet, catalog, retail stores) Responsibility assigned to manufacturers based on physical measures (not financial ones) Flexible: −Collective or individual −Own branded products or equivalent share −Option to establish relationships with partners −Option to set up a program or pay

12 HP Position -What we do NOT support Policy that does not reward investments in design Complex fee and reimbursement schemes tied to ambiguous product categories Systems that are run by a bureaucratic administration −Money collected may not be relative to actual costs of system −Less effective recycling, no incentive to be efficient or create new −Higher costs Forcing companies which often have competing needs to collaborate

13 Maine Work in progress – expect regulations in late summer Maine DEP has authority to implement and enforce January 1, 2006: all waste televisions and computer monitors generated by households in Maine must be recycled. March 1, 2005: Manufacturers representing approximately 82% of expected returns submitted plans to comply with the law November 1, 2005: Maine DEP rule-making on reasonable costs complete

14 Maine: Collection and Recycling Model Town “collects” and transports to consolidator. Town decides how to collect and transport; can continue with existing systems. Consolidation facility: count by manufacturer and report annually to DEP (no sort required); ship to recycler that meets environmental standards; and bill the manufacturers Alternatively, manufacturer can take responsibility for their units and/or share from consolidators. Dismantl er/ Recycler Manufacturers responsible for costs from this point on. Waste Flow Who pays?

15 Maine - Enforcement Sales ban on products of non-compliant manufacturers starting 1/1/06 -manufacturers and retailers both responsible for implementation. Standard DEP enforcement authority (38 MRSA §347-A et seq.) to pursue enforcement action for any violations of statutes and rules under Title 38. DEP can pay consolidators for bills left unpaid by responsible manufacturer and seek reimbursement of triple costs from manufacturer.

16 California Fee of $ $10.00 depending on size of screen on video display products, imposed at point of sale Representatives from 5 agencies involved with implementation (DTSC, OEHA, Cal EPA, IWMB, BOE Delayed in order for agencies to get set up Needed loan from CA general fund First quarter – collected over $14.5 Million, only received approximately $2Million in requests for reimbursement for recycling.

17 Maryland – HB 575 Signed by Gov. Ehrlich on May 10 Requires manufacturers of desktop computers, laptops and computer monitors to register with the State and pay a registration of $5,000 for the first year Subsequent years, manufacturers are required to pay either $500 (if the manufacturer implements a take back program) or $5,000 (if the manufacturer does not implement a take back program) in subsequent years

18 Lessons Learned Complex issue – no easy answers State agencies need to be prepared to be involved under either system Clear guidance is necessary for all stakeholders involved Enforcement under either system may be difficult Difficult to predict consumer behavior

19 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 Provides resources or eliminates burdens on local government and recycling system Allows choices for manufacturers – play or pay

20 Contact information: Heather Bowman Hewlett Packard Company 1100 New York Ave, NW Suite 600W Washington, DC