Economic Instruments - Charges and taxes

Battery Price Surcharge (Italy)

Aims

To promote recycling by financing the battery recycling consortium COBAT (Consorzio Obbligatorio per Batterie Asciutte) was established, financed by a price surcharge (sometimes called the Italian battery tax).

 

Design

Institutional Arrangements

The Italian law 475/88, required the creation of COBAT (a non-profit organisation), with the specific target of the full separate collection of used lead batteries. The Italian authorities were anticipating the EU Directive 18/3/91, which stated that member countries had to take measures to mark and collect certain batteries separately in order to eliminate their harmful effects. Before the introduction of this law, there was a high level of recycling of this particular waste, but with a high variability due to the fluctuations of lead prices on international markets. COBAT is required to organise both the separate collection of used batteries and the sale of batteries to the recycling industries or their transfer to the disposal plants (if recycling is not economical). To implement these requirements, COBAT stipulates contracts with specific potential owners of used batteries (car industry, machine shops, municipalities, national rail society etc.) in which different collection prices are defined on the basis of weight, distances and type of battery. The Ministry of Industry and the Ministry of Environment have a representative on the board of directors and on the board of auditors of COBAT.

 

Tax Rates

Since 2005, the battery fee has been established by the Ministry of Environment in accordance with the Ministry of Productive Activities, on the basis of the total amount of new batteries produced and sold and also on the pre-established goals of collection and recycling of spent batteries and L.M.E. lead quotations.  There are different fees depending on the type of battery sold (starting/industrial battery) and on its discharge capacity (C) measured in Ampere-hours (Ah).  For the average starting battery (new) sold the fee is around 83 eurocents with a capacity of about 20-30 (Ah) (Cobat, 2006).

 

Table: Battery Fees for starting batteries and industrial monobloc batteries, 2005 in euros

Capacity (C) in Ah	Fee (euro)
Ah<=20	0.20
20	0.80
Ah>95	1.60

Source: Cobat, 2006.

 

Table: Battery fees on elements of industrial batteries of all capacities

Capacity (C) in Ah	Fee (euro) for each single
All capacities	0.0030*C*V/2

Source: Cobat, 2006.

 

Fees on new batteries are paid by manufacturers and importers of lead batteries and importers of goods that use batteries directly incorporated (e.g. auto vehicles, tractors, forklift trucks, phone equipment, UPS, alarms and toys) (Cobat, 2006).

Prior to 1996, the rates of the surcharge on batteries were based on the ampere-hour rating of starting batteries and on the sale price of industrial batteries. Since 1997 the surcharge on industrial batteries has also been based on ampere-hours. The prices of used batteries are mainly related (positively) to the market prices of recycled materials (mainly lead) and (negatively) to the disposal costs of scoriae, which recyclers still have to pay. Hence the movement up and down of the surcharge keeps total revenues more or less constant as material prices fluctuate (Cobat, 2006).

Batteries subject to the fee are hermetic batteries (for alarms etc); starting batteries (for cars etc), batteries for traction (industrial forklift trucks) stationary batteries and batteries with one lead electrical accumulator (Cobat, 2006).

 

Allocation of Revenues

The financial activities of the non-profit organisation are mainly funded through two main sources:

• Revenues obtained from the sale of used batteries to recyclers and
• The specific surcharge on the sale of leaded batteries (paid by manufacturers and importers of batteries), the rate determined by the Ministry of the Environment and of Industry.

 

Performance

In 2004, about 14 million starting batteries were subject to the fee.  There was an annual sales increase of 4.1% for batteries with a small capacity (C<=20Ah), a decrease of 3.5% for batteries used in the majority of cars (20Ah

 

The results regarding starting batteries after export reimbursements are the following:

• an increase of 4.1% for batteries with a small capacity (C <= 20Ah)
• a decrease of 3.5% for batteries used in the majority of cars (20 Ah < C <= Ah)
• an increase of 8.0% of batteries with a capacity over 70 Ah

The decrease of batteries with medium capacity (-294,855 pieces) is counterbalanced by the increase of batteries with a higher capacity (+215,257 pieces), due to the more and more frequent use of this type of batteries in cars. With the new decree on the fee coming into force, the class 20-70 Ah has been changed into the class 20-95 Ah, in order to be more representative of car sector.

From these data it can be observed that the total number of startingbatteries is essentially similar to that registered in 2003 (+0,2%).

Fee applied on industrial batteries

Industrial batteries with a capacity over 70 Ah subjected to the fee in 2004 were more than a billion Ah. In the following table they are divided according to their different classes of capacity:

 

Capacity	2000	2001	2002	2003	2004	Difference 2004-2003	%
< 20 Ah*	4.666.523	4.262.396	4.609.152	4.365.736	4.384.176	18.440	0,4%
20Ah -70Ah*	278.535	314.376	319.398	258.901	256.607	-2.294	-0,9%
> 70Ah**	1.045.269.183	1.063.435.745	979.672.661	1.003.106.307	1.009.068.415	5.962.108	0,6%
Industrial batteries subjected to the fee * number of pieces; ** Ah

 

The following considerations can be done:

• an almost steady trend in the number of accumulators with a small capacity (+0.4%)
• a slight decrease in the number of accumulators with a medium capacity (-0.9%) confirming the reduction registered in this market with respect to the years 2001-2002
• a slight increase in the number of batteries with a high capacity (+0.6%), which is still inferior to that registered in the years 2000 e 2001

  For the industrial batteries (with a capacity over 70 Ah), more than a billion were subject to the fee in 2004.  Sales of accumulators with a small capacity increased very slightly (0.4%). There was a slight decrease in the accumulators with medium sized capacity sold (-0.9%), which has been the trend since 2001.  Batteries with a high capacity increased very slightly (0.6%) but were still below the level of similar batteries sold in 2001 (Cobat, 2006).

  In 1999, the battery fee collected was equal to 10.1 million euro (EEA/OECD, 2006).

  In all the Italian battery price surcharge collected approximately 24 billion Liras (12 MEUR) during 1994. Most spent lead batteries in Italy come from the heaviest users such as ENEL, Telecom, FF.SS (State Railroads), and the Army. A smaller percentage came from auto shops and car mechanics. During 1995 about 130,000 tonnes of starter batteries were put into commerce, along with 30,000 tonnes of industrial and traction batteries.

  Of the batteries collected and recycled, 50.8% came from northern Italy, 13.5% from the Centre, and 29.7% from the South. It has been estimated that COBAT has led to an annual average increase in the percentage of used batteries collected of about 37.5% and that the percentage of separate collection by 1999 was close to 95%. From the 166 500 tonnes of batteries collected in 1999, 90000 tonnes of recycled lead have been reclaimed, almost 35% of national demand (Ecotec, 2001). According to Professor Majocchi of Pavia University, the surcharge is an instrumental charge with small incentive potential, as it is not directly related to the environmental characteristics of batteries. COBAT has claimed record recovery rates for 2003. Nearly 200,000 tonnes were recovered, equal to 96% of annual sales and satisfying 40% of the national demand for lead. As some batteries discarded in the DIY market continue to slip through the net, in 2004 Cobat made an agreement with Italian local authority body UPI to set up additional collection centres where individuals can dispose of car batteries free-of-charge (Cobat, 2004).

   

  References

  Ecotec, 2001. Study on the Economic and Environmental Implications of the Use of Environmental Taxes and Charges in the European Union and its Member States. In association with CESAM, CLM, University of Gothenburg, UCD, IEEP http://europa.eu.int/comm/environment/enveco/taxation/environmental_taxes.htm

  EEA/OECD, 2006, Economic Instruments Website. Available at:

  www2.oecd.org/ecoinst/queries/

  COBAT, 2004. http://www.cobat.it/cobat_com/cb_query?com_st2.html&-recid=37376

  Cobat, 2006, from website: www.cobat.net.

  Majocchi, 2006

   

  Useful Website

  www.cobat.net

Aims

To promote recycling by financing the battery recycling consortium COBAT (Consorzio Obbligatorio per Batterie Asciutte) was established, financed by a price surcharge (sometimes called the Italian battery tax).

Design

Institutional Arrangements

The Italian law 475/88, required the creation of COBAT (a non-profit organisation), with the specific target of the full separate collection of used lead batteries. The Italian authorities were anticipating the EU Directive 18/3/91, which stated that member countries had to take measures to mark and collect certain batteries separately in order to eliminate their harmful effects. Before the introduction of this law, there was a high level of recycling of this particular waste, but with a high variability due to the fluctuations of lead prices on international markets. COBAT is required to organise both the separate collection of used batteries and the sale of batteries to the recycling industries or their transfer to the disposal plants (if recycling is not economical). To implement these requirements, COBAT stipulates contracts with specific potential owners of used batteries (car industry, machine shops, municipalities, national rail society etc.) in which different collection prices are defined on the basis of weight, distances and type of battery. The Ministry of Industry and the Ministry of Environment have a representative on the board of directors and on the board of auditors of COBAT.

Tax Rates

Since 2005, the battery fee has been established by the Ministry of Environment in accordance with the Ministry of Productive Activities, on the basis of the total amount of new batteries produced and sold and also on the pre-established goals of collection and recycling of spent batteries and L.M.E. lead quotations.  There are different fees depending on the type of battery sold (starting/industrial battery) and on its discharge capacity (C) measured in Ampere-hours (Ah).  For the average starting battery (new) sold the fee is around 83 eurocents with a capacity of about 20-30 (Ah) (Cobat, 2006).

Table: Battery Fees for starting batteries and industrial monobloc batteries, 2005 in euros

Source: Cobat, 2006.

Table: Battery fees on elements of industrial batteries of all capacities

Source: Cobat, 2006.

Fees on new batteries are paid by manufacturers and importers of lead batteries and importers of goods that use batteries directly incorporated (e.g. auto vehicles, tractors, forklift trucks, phone equipment, UPS, alarms and toys) (Cobat, 2006).

Prior to 1996, the rates of the surcharge on batteries were based on the ampere-hour rating of starting batteries and on the sale price of industrial batteries. Since 1997 the surcharge on industrial batteries has also been based on ampere-hours. The prices of used batteries are mainly related (positively) to the market prices of recycled materials (mainly lead) and (negatively) to the disposal costs of scoriae, which recyclers still have to pay. Hence the movement up and down of the surcharge keeps total revenues more or less constant as material prices fluctuate (Cobat, 2006).

Batteries subject to the fee are hermetic batteries (for alarms etc); starting batteries (for cars etc), batteries for traction (industrial forklift trucks) stationary batteries and batteries with one lead electrical accumulator (Cobat, 2006).

Allocation of Revenues

The financial activities of the non-profit organisation are mainly funded through two main sources:

• Revenues obtained from the sale of used batteries to recyclers and
• The specific surcharge on the sale of leaded batteries (paid by manufacturers and importers of batteries), the rate determined by the Ministry of the Environment and of Industry.

Performance

In 2004, about 14 million starting batteries were subject to the fee.  There was an annual sales increase of 4.1% for batteries with a small capacity (C<=20Ah), a decrease of 3.5% for batteries used in the majority of cars (20Ah

The results regarding starting batteries after export reimbursements are the following:

• an increase of 4.1% for batteries with a small capacity (C <= 20Ah)
• a decrease of 3.5% for batteries used in the majority of cars (20 Ah < C <= Ah)
• an increase of 8.0% of batteries with a capacity over 70 Ah

The decrease of batteries with medium capacity (-294,855 pieces) is counterbalanced by the increase of batteries with a higher capacity (+215,257 pieces), due to the more and more frequent use of this type of batteries in cars. With the new decree on the fee coming into force, the class 20-70 Ah has been changed into the class 20-95 Ah, in order to be more representative of car sector.

From these data it can be observed that the total number of startingbatteries is essentially similar to that registered in 2003 (+0,2%).

Fee applied on industrial batteries

Industrial batteries with a capacity over 70 Ah subjected to the fee in 2004 were more than a billion Ah. In the following table they are divided according to their different classes of capacity:

The following considerations can be done:

• an almost steady trend in the number of accumulators with a small capacity (+0.4%)
• a slight decrease in the number of accumulators with a medium capacity (-0.9%) confirming the reduction registered in this market with respect to the years 2001-2002
• a slight increase in the number of batteries with a high capacity (+0.6%), which is still inferior to that registered in the years 2000 e 2001

  For the industrial batteries (with a capacity over 70 Ah), more than a billion were subject to the fee in 2004.  Sales of accumulators with a small capacity increased very slightly (0.4%). There was a slight decrease in the accumulators with medium sized capacity sold (-0.9%), which has been the trend since 2001.  Batteries with a high capacity increased very slightly (0.6%) but were still below the level of similar batteries sold in 2001 (Cobat, 2006).

  In 1999, the battery fee collected was equal to 10.1 million euro (EEA/OECD, 2006).

  In all the Italian battery price surcharge collected approximately 24 billion Liras (12 MEUR) during 1994. Most spent lead batteries in Italy come from the heaviest users such as ENEL, Telecom, FF.SS (State Railroads), and the Army. A smaller percentage came from auto shops and car mechanics. During 1995 about 130,000 tonnes of starter batteries were put into commerce, along with 30,000 tonnes of industrial and traction batteries.

  Of the batteries collected and recycled, 50.8% came from northern Italy, 13.5% from the Centre, and 29.7% from the South. It has been estimated that COBAT has led to an annual average increase in the percentage of used batteries collected of about 37.5% and that the percentage of separate collection by 1999 was close to 95%. From the 166 500 tonnes of batteries collected in 1999, 90000 tonnes of recycled lead have been reclaimed, almost 35% of national demand (Ecotec, 2001). According to Professor Majocchi of Pavia University, the surcharge is an instrumental charge with small incentive potential, as it is not directly related to the environmental characteristics of batteries. COBAT has claimed record recovery rates for 2003. Nearly 200,000 tonnes were recovered, equal to 96% of annual sales and satisfying 40% of the national demand for lead. As some batteries discarded in the DIY market continue to slip through the net, in 2004 Cobat made an agreement with Italian local authority body UPI to set up additional collection centres where individuals can dispose of car batteries free-of-charge (Cobat, 2004).

   

  References

  Ecotec, 2001. Study on the Economic and Environmental Implications of the Use of Environmental Taxes and Charges in the European Union and its Member States. In association with CESAM, CLM, University of Gothenburg, UCD, IEEP http://europa.eu.int/comm/environment/enveco/taxation/environmental_taxes.htm

  EEA/OECD, 2006, Economic Instruments Website. Available at:

  www2.oecd.org/ecoinst/queries/

  COBAT, 2004. http://www.cobat.it/cobat_com/cb_query?com_st2.html&-recid=37376

  Cobat, 2006, from website: www.cobat.net.

  Majocchi, 2006

   

  Useful Website

  www.cobat.net

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