Aims

In this report, we try to answer two key questions:

  • Are market imperfections or failures operating to prevent an expansion of remanufacturing activity in the UK economy?
  • If there are market imperfections, what are the appropriate policy instruments to overcome them?

The paper is divided into three parts:

  • An explanation of what we mean by "remanufacturing".
  • An elucidation of barriers that appear to exist Ė this section will also explore why some manufacturers adopt this business model whilst others do not.
  • An evaluation of the range of policy interventions that may be applicable.

Findings

Current policies, particularly the implementation of EPR, are favouring recycling rather than other alternative used goods processing routes. This could be considered a policy failure which needs to be corrected.

We have identified a number of areas where policy intervention could take place:

  • The removal of policy barriers to create an equal playing field in respect of the different means by which overall policy objectives could be achieved.
  • Improvements in the flow of information between OEMs, customers and remanufacturers so that purchaser confidence can be improved.

In terms of ensuring that an integrated policy is developed which is Ďblindí to the various different disposal routes but reflects overall policy objectives, we concluded that carbon criteria would be useful as focus would then be on incentivising the most effective disposal route in terms of minimisation of CO2 emissions while simultaneously supporting the UK Governmentís current international climate change commitments. We also need to be aware that the established recycling infrastructures and industry already in place may present an obstacle to increased remanufacturing activity.

Economic instruments could potentially be utilised, providing they were based on robust evidence of products/product groups where remanufacturing offered carbon benefits over and above alternative disposal options including recycling. At this point in time, work has barely started on the development of such an evidence base.