The Establishment and Problems of Automobile Recycling Act

Abstract
The Automobile Recycling Act (ARA) has three problems in assigning the recycling cost. These can be summarized as: 1) the Act will have little effect in promoting the design of environment friendly cars since the users are liable for paying the recycling cost, 2) about a trillion yen will remain stagnated and unused in nonprofit foundation for 10 years [ average lifetime of an automobile, and, 3) the administrative cost for monitoring the proper utilization of recycling cost, in terms of individual consumer payments and recycling of the particular car ( "one-to-one accountability" ), will be very high.
To solve these problems, two alternatives are possible: 1) strengthening Extended Producer Responsibility (EPR), by imposing financial responsibility on producers, and, 2) introduction of a recycling policy where cars already sold will be recycled with recycling cost collected from sales of new cars ( "annuity system" ) . From the viewpoint of the aim of EPR, the first alternative is more appropriate.
The ARA is strongly tinged with regulatory system, because the legal responsibility to collect and recycle three items is imposed on producers and others. However, the act does not give any economic incentive to the producers to reduce the environmental impact from new automobiles. The act is in its first stage and it is desirable that in the second stage internalization of the recycling cost by the producers is incorporated.

Key words: Extended Producer Responsibility (EPR), Automobile Recycling Act, polluter-pays-principle, one-to-one accountability