Readjusting environmental fees for products with a long lifetime: Case of PV module recycling fee in the Czech Republic

In the Czech Republic (as in many other countries), environmental fees belong among commonly applied economic tools of environmental policy. One of the fundamental issues that accompany their practical application is setting of the correct rates of the fees in relation to the time frame and targets to be achieved by the tool application. When setting the rate of an environmental fee for a short term, the price can be adjusted flexibly based on the current situation. For some longer-term environmental policy goals, fees are employed that are collected in the form of “advance” payments years or even decades before the actual meeting of the goals (typically, recycling fees when purchasing electrical appliances, for example, so-called acquisition fees), which entails numerous risks and uncertainties that have to be taken into account when setting the optimum rate of the fee. Moreover, the chance to modify the fee substantially during the period is lost in this case. The paper deals with readjusting the current rate of the recycling fee for PV modules (currently CZK 8.50/kg), which will be utilised in a time frame of 15-30 years after the collection. Its setting is influenced by the complexity and uncertainty of predicting future price trends and technological advancements. Using micro models and applying the precautionary principle, we propose an adjustment to CZK 5.2-7.8/kg based on the technological changes and the market situation.