An overview on End-of-Life-Vehicles Scheme Australia

Every year, thousands of vehicles reach the end of their lives, accounting for approximately 1.36 million tonnes of waste creating a considerable waste stream that requires careful management. 

Thousands of tonnes of non-metal materials are directly sent to landfill every year because of a lack of technical possibility and economically applicable processing options being readily available to dismantling and recycling sectors.

In August 2024, a comprehensive study outlined the future of End of Life Vehicles management in Australia, mainly focusing on the benefits and downsides of a national stewardship scheme for vehicle recycling.

In this article we will dig into what is End of Life Vehicles, the key understanding of the ELV Product Scheme report issued by Federal Chamber of Automotive (FCAI) and Motor Trades Association of Australia (MTAA).

Additionally, exploring how the scheme could benefit the environment, the public, and businesses in the scrap car removal industry, while also acknowledging some of the potential challenges.

What Do You Mean By End of Life Vehicles?

An End-of-Life Vehicle (ELV) is a vehicle that has reached the end of its life, making it no longer safe or practical to drive. This might happen for several reasons like:

1. Wear and Tear: Vehicles experience major wear and tear with time, mainly in important systems like the engine, transmission, and many more. When the repair cost exceeds the value of the car, it is considered an ELV.

2. Accidental: Vehicles that are severely damaged in accidents can be written off as unrepairable or not worthy of being fixed. These too become ELVs.

3. Fail to Meet Regulations: Some cars are considered ELVs when they no longer meet safety standards, mainly in countries or states with strict environmental and roadworthiness regulations.

What is the End of Life Vehicle Scheme?

End of Life Vehicle or the ELV Product Scheme is an initiative to improve how end-of-life vehicles are managed and recycled across Australia. The scheme proposes a framework that recycles vehicles more efficiently and helps protect the environment by reducing waste and ensuring the recovery of materials that are generally discarded. 

Its main goal is to achieve the highest reuse and recovery rate for vehicles by not only targeting metal parts but also non-metal materials that have usually been directly sent to landfills such as rubber, glass, aluminum, and others.

The scheme would reduce waste leakage risks by adopting a nationally consistent approach including all states and territories and significantly reduce waste streams to landfill by revealing methods to economically recover a wide range of vehicle components.

Environmental and Economical Benefits of the ELV Scheme

A future End of Life Vehicle Product Stewardship Scheme is going to bring several stakeholders together in future to collectively create a more sustainable ELV recycling and reusing system. The scheme Proposes some of the benefits or opportunities that include:

Environmental Protection

The scheme will help reduce the environmental impact of vehicle disposal by promoting the recycling of parts that are generally overlooked such as plastics, rubber, or glass, and will essentially reduce landfill waste. Additionally, the scheme will also regulate the safe disposal of hazardous materials, including oils, fluids, and batteries, which can harm the environment in future if not handled carefully.

National Consistency

A crucial strength of the presented scheme is its commitment to creating a national, united approach to vehicle recycling. The regulations governing ELV disposal vary across different states and territories, but a constant framework will make it easier for businesses and individuals to abide by the rules, ensuring that End of Life Vehicle disposal practices are standardised Australia-wide.

Job Creation

The scheme is also expected to create job opportunities in several sectors such as vehicle dismantling, material recovery, and recycling. The ELV scheme boosts more extensive recycling practices, increasing the demand for skilled workers in future. This will help encourage local economies, especially in regions where automotive recycling facilities are established.

Building a Platform for Success — Some Key Insights

The work under progress to date has given us some important insights such as:

• A national consistent scheme is very important to achieve success. A national approach is required, viewing the industry’s complexity that is combined with the complexity of differing legislation in states and territories.

• Pioneering efforts in other countries have given Australia a strong foundation for success. The team studied the EU, the Netherlands, Ireland, Germany, the UK, Japan and South Korea, which provides some valuable guidance for making an Australian scheme.

• Co-regulatory is key to success. Unlike many other stewardship schemes, an End of Life Vehicle stewardship scheme cannot work as an entirely voluntary scheme. Overall success in automotive waste management demands close coordination between various industries and levels of government. Some level of regulation is also required.

• The solution is a lengthy process. The solution is complex and will take time, but it will turn out completely worth it. There are numerous ‘levers’ that need to be recognised and adjusted to advance the stewardship scheme.

• The identification of attainable and budget-friendly modern technologies. Extensive technology will be crucial in the processing of non-metal components like foam, glass, and rubber.

• Setting realistic goals to scale programs with time to service regional, metropolitan, and rural locations.

Benefits for Car Removal Companies

The ELV Product Stewardship Scheme presents a wide range of opportunities for businesses in the cash for cars or scrap car removal industry. As the demand for sustainable vehicle disposal processes grows, scrap car removal companies are in the best position to take advantage of new business prospects. 

Some of the key opportunities the scheme offers for these businesses are:

• Increased Recycling Potential: The scheme will expand the range of materials that can be recycled from end-of-life vehicles. The End of Life Vehicle scheme will create several opportunities to recover and recycle non-metal materials including plastics, rubber, and textiles. It will help businesses in increasing their profitability while contributing to environmental sustainability.

• Authorised Treatment Facilities (ATFs): The scheme brings the concept of Authorised Treatment Facilities (ATFs),  playing a major role in the recycling process. They will be required to meet standardised operating procedures and will be responsible for issuing Certificates of Destruction, which certify that a vehicle has been properly dismantled and recycled.

• New Technologies and Processes: To meet the scheme’s ambitious targets for material recovery, scrap car removal companies, providing cash for cars services will need to adopt modern technologies and processes. Companies that invest in these upcoming technologies early will be well-positioned to thrive in the evolving market.

• Collaboration with Government: The scheme boosts collaboration between the government, industry, and other stakeholders. Scrap car removal companies will need to work closely with regulatory bodies to ensure compliance with the new standards, leading to new chances for government support like grants or incentives for adopting sustainable practices.

Potential Challenges

Even when the ELV Product Stewardship Scheme provides several benefits, there are also challenges and potential downsides that are required to be addressed. For the general public and businesses in the scrap car removal industry, the below-mentioned issues are worth considering:

• High Implementation Costs: One of the main challenges faced with the scheme is the cost of implementing the required infrastructure. Establishing Authorised Treatment Facilities and investing in new recycling technologies will require significant financial investment. For smaller businesses, these costs could be restrictive, potentially leading to industry mergers as larger players dominate the market.

• Complex Rules and Regulations: The introduction of nationally consistent regulations could pose challenges for businesses, especially those working in several states or territories. While the aim is to form a uniform framework, complying with the new regulations could be complicated and time-consuming, particularly for small and regional businesses.

• Limited Infrastructure for Non-Metal Materials: One of the main goals of the ELV scheme is to advance the recycling of non-metal materials like plastics and rubber. However, Australia currently lacks the infrastructure needed to process these materials at scale. Without major investment, it may be difficult to meet the scheme’s ambitious recycling targets.

Implementation Roadmap: A Phased Approach

The implementation activities were grouped according to their activity type and chronologically to allow for the strategic, progressive, and achievable delivery of the scheme.

Phase 1

Presently, to move forward and define the details of the co-regulatory ELV scheme pattern, governance structure and financial mechanisms in collaboration with important ecosystem stakeholders. 

Key activities include establishing a stakeholder ecosystem and communication channels, implementing licensing for ELV dismantling businesses, and ensuring traceable destruction linked to vehicle deregistration. It further involves completing necessary regulatory processes and conducting research on non-metal material processing opportunities.

Phase 2

In 2026, they are planning to legally establish a co-regulatory scheme structure and equip the Product Stewardship Organization (PSO) with the procedure, governance, resourcing, technology, and legal enablers to functionalize the co-regulatory ELV scheme framework.

Phase 3

After phase 2, The scheme plans to function the co-regulatory ELV scheme with optimised processes to maximize efficiency and the scheme operations that maximize social and environmental benefits supported by a membership pattern to ensure the financial self-sufficiency of the scheme.  

Conclusion

The number of end-of-life vehicles will grow in the future. This will deliver some compelling challenges. However, despite the several structural, geographical, economic and legislative obstacles, the industry is strongly preparing to advance on a product stewardship journey. All thanks to a Commonwealth grant, a dedicated and productive discovery phase has now become definite which has primed the industry for change.

Australia is in a fortunate position to draw on insights gained from effective end-of-life vehicle (ELV) product stewardship programs in countries such as the UK, Japan, and the EU. This enables the development of a tailored scheme that meets the needs and expectations of the diverse stakeholders involved in this complex industry.

With the support of the industry’s high supply chain, government and the public, we are in a state to drive the industry forward and move towards circularity for the Australian automotive industry.

Note: The full ELV report can be downloaded here.