Pursuant to the overhaul dated December 31, 2022, the Framework Act on Resources Circulation will be replaced with the Act on Promotion of the Transition to Circular Society (the “Act”), which will go into effect on January 1, 2024. In this regard, the Ministry of Environment proposed a notification on the designation of circular resources (the “Proposed Notification”) on October 31, 2023.

The current Framework Act on Resource Circulation provides a “circular resource recognition system,” which recognizes a substance or material (among wastes) as a circular resource if it satisfies all criteria relating to hazardness and economic feasibility. If recognized as a circular resource, the substance or material will be excluded from the scope of waste regulations (a total of 543 circular resources were recognized as of November 8, 2023). However, such recognition would be made only upon an application by an individual or corporation.

In addition to the circular resource recognition system, the Act creates a “circular resource designation system” under which the Minister of Environment, in consultation with the Minister of Trade, Industry and Energy, designates and announces certain waste materials as circular resources. Once designated as circular resources, they are not considered waste (without a separate application) as long as they meet certain requirements. As such, when compared to the circular resource recognition system, the circular resource designation system is expected to simplify administrative procedures and ease the industry’s burden arising from waste regulations.
 

The following seven items are designated as circular resources: (i) waste paper, (ii) scrap metal, (iii) waste metal cans, (iv) aluminum (among nonferrous metal), (v) copper (among nonferrous metal) (vi) waste batteries from electric vehicles, and (vii) waste glass and waste glass bottles (Article 2, Annex 1 of the Proposed Notification). In addition, with respect to the purpose, method, and standards of circular use, the Proposed Notification classifies the requirements for individuals or corporations/organizations that generate or use circular resources into two categories: “general requirements” and “requirements for each item” (Article 3, Annex 2 of the Proposed Notification).
 
Under the general requirements, any person who generates or uses circular resources shall (i) manage the circular resources in a manner that does not mix them with other types of waste and meets the criteria for foreign substances of the circular resources, and (ii) comply with the Act on Cross-Border Waste Movement and Disposal if the purpose of generation or use is to export circular resources. In addition, (iii) the information on the type, commencement date, planned volume, etc., of circular resources shall be electronically registered with the Circular Resource Information Center in advance (in case there is a reason for a change, such change shall be registered within 30 days), and (iv) the circular resources shall be deemed as waste, thereby being subject to the Waste Control Act and other applicable laws, until they become suitable for the purpose of circular use in accordance with the method and standards for circular use by item.
 
The requirements for each item, in detail, (i) the scope of application, (ii) the purpose, and (iii) the method and standards of circular use, are set forth in the following table.
 

Items designated as circular resources are considered non-waste to the extent that they comply with all applicable uses, methods, and standards for circular use and, accordingly, are no longer subject to waste regulations with respect to discharge, transportation, storage, treatment, use, etc., of such items. On the other hand, if any of the general requirements or requirements for each item set forth in the Proposed Notification is not satisfied, the materials will be deemed waste, thereby becoming subject to the regulations regarding waste treatment business licenses, etc. (under the Waste Control Act) or the producer-responsible recycling system (under the Act on Promotion of Saving and Recycling of Resources).

With the recent increase in the sales of electric vehicles, waste battery generation is expected to rapidly increase. Companies planning to engage in the electric vehicle waste battery business need to check, in advance, whether their business is within the scope of the Proposed Notification. Among the requirements for waste batteries from electric vehicles, the purpose of circular use is limited to “reuse for the original purpose or reuse for another purpse (R-2-1 or R-2-2) through simple repair, drying and cleaning.” Therefore, if a waste battery is not used for such purposes of circular use, waste-related regulations will apply. In addition, it should be noted that another type of recycling of waste batteries from electric vehicles, (i.e., “R-3 - turning waste batteries from electric vehicles into the state of reuse”), is not included in the purpose of circular use.

In addition, any entity who generates or uses any item designated as circular resources under the Act shall submit an annual performance report.
 

The Proposed Notification is expected to be promulgated this year after going through the administrative announcement and review by the Ministry of Government Legislation, etc. Moreover, the overhaul of the Enforcement Decree and the Enforcement Rule of the Act is underway.

[Korean Version]