The European Union electronic waste directive, which finally came into effect this month, could add up to £30 to the cost of a PC, says analyst Gartner.

Delayed since its inception of August 2005 due to wrangling between government and suppliers, the Waste Electrical and Electronic Equipment (WEEE) came into force on 1 July.

The WEEE directive requires businesses in EU member states, producers and retailers of IT equipment to dispose of unwanted and obsolete hardware in a regulated fashion. This waste is then collected for treatment and recovery to reduce the amount of electronic equipment in landfills. In this way, WEEE aims to reduce the amount of toxic and non-biodegradable waste disposed of by retailers and businesses.

The Department for Trade and Industry (DTI) estimates the UK throws away around 2 million tonnes of electronic waste every year. It is one of the fastest growing waste streams in the UK and the EU.

Under the WEEE Directive, the responsibility for taking back unwanted equipment is put at the door of retailers and producers, where a 'producer' is a manufacturer or importer. From now on, all retailers selling electrical goods are required to offer customers a free in-store take-back service on a "like-for-like" basis, or help fund the expansion of a network of WEEE collection points.

By putting the responsibility on the electrical industry, it will also mean the eventual recycling of products will be considered at the design stage. By providing consumers with more options for returning old products, the hope is it will encourage the reuse of products and it will help create a valuable market in recycled materials.

When a business buys IT equipment from a producer then the payment for taking back of decommissioned IT systems can be negotiated as part of the supply contract. The business will pay, either directly for a specific service or indirectly through a general price rise.

But industry commentators have warned that, while being in aid of a noble cause, the implementation of the WEEE Directive looks to be over-complex and weighted in favour of large retailers and manufacturers. It may well increase the amount of IT equipment being thrown away because it will cost too much to repair. What's more, tor many original equipment manufacturers (OEMs) and retailers the new regulations will be seen as a direct cost, and prices may rise as a result. This price hike could drive many small independent IT manufacturers out of business.

Estimates of how this cost will affect, for example, PC prices, range up to a £30 increase.

According to DTI estimates, the costs for implementing WEEE will be approximately £111m to £133m in the early years, rising to £331m to £434m by 2016.

In the UK, both producer and retailer have to dispose of returned e-waste through a producer compliance scheme (PCS) that is authorised by the government's Department for Business, Enterprise & Regulatory Reform (DBERR) – which is the former DTI and its environment agency.

A PCS is a commercial enterprise. Local authorities will require contracted arrangements with authorised PCSs for their e-waste to be picked up. Under the contract, they must have e-waste picked up from their amenity centres, or a Designated Collection Facility (DCF) that is chosen by the PCS.

The costs of picking up this e-waste will be paid out of public funds, depending on the UK market share of the manufacturers and importers in the PCS. If a PCS's members jointly have a 26% UK market share for printers then, it is hoped, that they pay for the pick-up and recycling of 26% of printers from the local authority sites they pick up from. Naturally periodic returns detailing equipment shipments and e-waste collected have to be made by PCFs to the government. Arrangements have to be in place for over and under-collection.

It costs money to join a PCS and be able to send returned e-waste to an authorised treatment facility (ATF).

Electric International operates an approved PCS. It costs £470 for an IT manufacturer to join it if annual turnover is less than a million pounds and £1,195.00 if over. The cost of treatment of collected e-waste starts from £26.00 per tonne and the business is responsible for transporting the e-waste to the collection point. If e-waste kit can be refurbished and sold-on or revenue-generating materials recovered from it, then a business' account will be credited to some extent.

Hendy Armstrong is the secretary of the Independent Trade Association of Computing Specialists, the forum for small IT manufacturers and assemblers in the UK; the smaller producers in other words. He says the situation for small producers is 'dire' with: "More than 20% of [his association's] small businesses actively winding down their PC business and more than 50% stopping producing PCs."

The reason is the cost. Hendy cites this example: "It's a very simple process for Dixons to take back WEEE-waste. It puts it in a DCF behind a PC World building and a PCS picks it up. For every retail pound at Dixons the cost is £0.005, or half a penny. For our members, if a flat panel screen is bought new a 19-inch CRT monitor could come back, weighing 20kg or more. We have to take that to an ATF. Because it is hazardous waste the transportation cost is £25.00, and we're only making £10 profit on the flat screen. The cost for us per retail pound is 17p." That's 34 times higher than for PC World.

He thinks there was a feeding frenzy in the DTI's WEEE consultations: "I think it's a noble cause but the government has missed the point. We refurbish PCs, whereas Dixons and the others are more interested in the new sale." Armstrong says there are 5,000 to 8,000 small IT producers in the UK. They will scale down their business refurbishing PCs and building them. Customers will get less choice. Dixons and the other big boys will gain market share for new kit but their support costs are higher than the independents. It won't be worth paying to have kit repaired. Instead people will buy new kit and the net effect of the WEEE will be to increase e-waste, precisely the opposite of what was intended.

In essence he is saying: prices up; business costs up; choice down; bureaucracy increased; and, worst of all, e-waste increased too. But at least it will be recycled. The intent is good, the implementation has been botched.