[SME Regulation Field⑦] Certification Costs and EPR Contributions Raise Concerns, 'Lighting Industry' Faces Crisis

Electronic Wave Certification Costs Increase 50 Times from 1.3 Million to 65 Million Won
"Circuit Changes Inevitable, Certification Costs Exceed 1% of Annual Sales"
265 Billion Won Contribution Expected with Next Year's EPR Implementation... "Industry Faces Crisis, Blame Government"

A testing institute conducting certification tests for LED lighting fixtures using an integrating sphere, a device that measures light brightness.
[Photo by Korea Lighting Fixture LED Industry Cooperative]

[Asia Economy Reporter Kim Jong-hwa] The light-emitting diode (LED) lighting industry is being hampered by the 'Electromagnetic Compatibility (EMC) Evaluation Certification' and will also have to bear the burden of the 'Extended Producer Responsibility (EPR)' system starting next year. This is why there are complaints that "the government is driving the lighting industry to the brink of collapse."

To launch LED lighting products, it is mandatory to obtain electromagnetic compatibility evaluation certification under the Radio Waves Act. The evaluation certification applies a 'range certification' system where if a product model passes the certification test within the same power consumption range, all models in that range are certified. However, very few companies benefit from this range certification.

◆ Certification costs increased 50 times from 1.3 million KRW to 65 million KRW = Company K, which supplies ceiling lights to apartment construction sites in the metropolitan area, has about 50 product models within the 30 to 60 watt (W) power consumption range. Since only one model needs certification, the certification test cost is 1.3 million KRW.

Problems arise when the construction company, which originally planned to use a 60W ceiling light, requests, "The 60W is too bright. 50W would be sufficient. Please supply the 50W model." Company K changes the circuit by reducing the number of LEDs and increasing resistance to lower power consumption, converting the prepared 60W ceiling light to 50W. However, the problem is the cost. In this case, all 50 models must be certified, not just one. Therefore, Company K must bear the certification cost that increases 50 times from 1.3 million KRW to 65 million KRW.

From the construction company's perspective, which must consider energy efficiency when building apartments, this is a natural request, but Company K, which must bear the skyrocketing costs, can no longer expect profits. Han Jin-woo, CEO of Company K, said, "Circuit changes are an unavoidable reality for suppliers who must meet customer needs," adding, "Certification costs have risen to over 1% of annual sales. Due to desk-bound administration that is completely unaware of the field, lighting companies are suffering."

Assembly and inspection of stand lighting.
Photo by K Company

◆ 26.5 billion KRW contribution fee only next year due to EPR enforcement = When the EPR system is implemented next year, companies will also have to bear a contribution fee of about 26.5 billion KRW. The EPR system imposes the obligation of collection and recycling of manufactured products and packaging materials on producers. Lighting companies must pay an additional environmental contribution fee for the collection and recycling of waste LED lighting.

According to the Act on the Promotion of Saving and Recycling of Resources, a contribution fee of 600 KRW per kilogram must be paid for flat-type waste LED lighting. The lighting industry claims, "In last year's pilot project, the collection rate for flat-type waste LED lighting was only 2.5%, but the Ministry of Environment is demanding an impossible 15.7% collection rate from the industry." Flat-type waste LED lighting consists of iron, aluminum, LED packages, etc., and is a popular item in the scrap metal industry, with over 90% recycling rate. Because they disappear as soon as they are noticed, the lighting industry explains that achieving a 15.7% collection rate is unrealistic.

Based on the 15.7% collection rate demanded by the Ministry of Environment, 280,800 tons of waste LED lighting will be generated next year alone. The contribution fee for this is 26.5 billion KRW, exceeding the annual net profit of about 26 billion KRW earned by approximately 3,000 lighting companies estimated by the Korea Lighting Equipment LED Industry Cooperative (Lighting Cooperative). Moreover, as the production share of flat-type LED lighting continues to increase, by 2030, the amount of waste LED lighting will rise to 722,800 tons, and the contribution fee will increase to 68.1 billion KRW.

◆ "No public hearing even once, driving the industry to the brink of collapse" = The Lighting Cooperative and the lighting industry strongly oppose the EPR system, saying that the industry's opinions were not reflected at all during the introduction process. Kim Bok-duk, director of the Lighting Cooperative, criticized, "Although many tasks such as research have been carried out since 2018 for the introduction of the EPR system, there was not a single public hearing to gather opinions from the lighting industry," adding, "At the same time, flat-type waste LED lighting with only a 2.5% collection rate was included in the EPR, driving the lighting industry to the brink of collapse."

The lighting industry demands that the system be improved to allow 'range certification' even when circuit changes are made and calls for a full review of the EPR system introduction. Director Kim said, "To correct the reality where tens of millions of KRW are spent annually on certification costs instead of research and development (R&D), range certification must be fully applied," and added, "The introduction of the EPR system lacks justification, and since the industry cannot afford the contribution fees, it should be reconsidered."

In response, a government official explained, "Since the stabilization of the system is important, it will not be pushed excessively," and added, "We will reflect the industry's position as much as possible through additional meetings and discussions."