European policy approaches to waste management and infrastructure

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1 European policy approaches to waste management and infrastructure A5.0 Overview Appendix 5 Of greatest interest in terms of understanding the policies best suited for Irish waste management, infrastructure development, and exporting are those that work best in other European countries. In this section these policies are explored. An important context is that there is an intermingling between effective waste management policies and effective domestic waste infrastructure policies. That is, good waste management policies naturally incorporate the reduction of waste exports as they view waste as not just something that needs to be managed but also as a national resource that should be managed locally. There is a dearth of policies across Europe specifically aimed at preventing exports. There are a number of caveats about an exploration of European policies in order to determine the best fit for Ireland. The first is that Ireland is a peripheral island with a small population. Clearly policies based on maximising the waste resource benefits due to a population s critical mass (such as for Germany or France), might not suit every aspect of the Irish situation. Similarly, being an island on the outskirts of Europe also makes it difficult to develop policies to enable a cost efficient infrastructure on the premise of importing to make up for waste deficits from Ireland s small population. This point is already more formally explored in the second section of this paper and is not addressed in further detail here. A second point relates to the difficulty of picking singular policies that appear to work in particular countries, when in fact these policies may work primarily due to being part of a network of interweaved policies. The third caveat is somewhat related. A policy might appear to be related to effective waste management, when it is in reality more related to historical happenstance. An analogous example, being a trawl of Irish historical policies to see why Ireland is the global centre for aircraft leasing. Someone unfamiliar with the story of GPA at the root of founding this industry base might attempt to attribute any number of government policies as the cause whether they are merely correlated or fully irrelevant. A final caveat is that a policy might have worked, but it might have done so by transferring too much economic resources in order to achieve its success. There is a risk of a policy overpaying for the desired end result, if the costs outstrip the benefits. Unfortunately these issues are hard to identify. However, the best policies, the best incentives for a strong domestic waste recovery industry, and the best disincentives for the exporting of waste, are probably those that work in a number of countries rather than just one. Multi-country policies have been scrutinised multiple times. Single country policies run the risk of being circumstances of the caveats noted above. In this section European policies on landfill levies are first explored. As noted at the beginning of the report, the introduction of landfill levy increases has been instrumental

2 in Ireland in moving waste from the bottom of the waste hierarchy towards more productive uses. However a number of improvements are noted that can be made to these levies which will help create the waste resources needed to support a domestic waste recovery infrastructure. Next to be examined are the range of policy and economic instruments used in individual countries and across groups of countries to encourage effective waste management and strong domestic waste recovery infrastructure. A4.1. Effective landfill levies Ireland has achieved a landfill disposal reduction to 41% of waste managed (and probably below 30% now if 2013 household waste figures can be generalised to commercial waste). This is a vital driver of waste up the value chain. However, even if the rate of landfilling has dropped to 30%, that would still leave 750,000 tonnes of waste being disposed of rather than utilised as an asset. Clearly a first step is ensuring the end to this disposal. This fits with the stated government policy of virtually eliminating the use of landfills by Of note, therefore, is that the landfill rates in the top performing countries; Switzerland, Netherlands, Germany, Sweden, Belgium, Denmark, Norway and Austria, are less than 10% and close to 0% in many cases (Figure 28). These countries are typically those that have a longer and more established history of dealing sustainably with waste through prevention, re-use, recycling and recovery. But they also implement more refined landfill levies than is done in Ireland and often charge more. These later two policies have contributed to their success, and are something that Ireland could relatively easily implement. Figure 28: Landfilling rates in 32 European countries, 2001 and Source: European Environmental Agency (2013)

3 Fischer et al. in their 2012 report on landfill levies, Overview of the use of landfill taxes in Europe, attribute levies as the key driver in the diversion of waste away from landfill in the EU. Ireland is praised within the report for the progress made through the introduction and gradual increase in the landfill levy over recent years, leading to greater and greater levels of revenues that have been directed towards waste management and environmental measures. Indeed, Ireland is identified as one of the most expensive countries for landfilling to the point that a number of planned landfilling projects have been abandoned in recent years. However, while noting this, more recent figures prepared by the Confederation of European Waste-to-Energy Plants, shows that the landfill levy in Ireland, which now stands at 75 euro per tonne, is below the EU28 average of 80 euro per tonne. 1 There is, of course, a gate fee on top of this levy. Furthermore, of the EU28 countries, 17 have landfill bans of some form in place, with three of the countries reported to be planning further landfill bans. The landfill bans differ between countries but span both organic and non-organic waste. Landfill bans on particular types of waste, in particular biodegradable waste, have proved to be successful policy measures that complement landfill levies and force more sustained treatment of these waste products. Table 11 presents a summary of the types of waste included in landfill tax regulation in different European countries. Unlike other jurisdictions, the landfill levy in Ireland is a uniform levy applied to every tonne of waste that is disposed of at authorised and unauthorised landfill facilities. Many European countries however have introduced a more sophisticated landfill tax regime that differentiates based on the type of waste and applies different landfill tax rates accordingly. Figure 29, illustrates based on 2011 figures (note that levies have almost uniformly been raised since this date), how differentiation in levy rate is made across countries between inert waste, inert waste residues, construction and demolition waste, mixed municipal and other mixed waste, biologically pre-treated waste, and at a high level, non-hazardous and hazardous waste. There is a strong case to be made based on the wide practice across many other European countries that the differentiation of levies based on type of waste would help push behaviours in terms of disposal towards the right outcomes. Not only would this ensure that waste previously being disposed of was instead available for use higher up the waste hierarchy, but it would also encourage greater pre- and post-sorting of waste. The most recent EPA National Waste Report notes that 68% of household waste is presented as mixed residual waste, thus only 3 of 10 tonnes of waste is pre-sorted by households. This might be due to either lack of appropriate sorting facilities, or due to lack of householder incentives. A more refined landfill levy would address this shortcoming through incentivising both waste generator and waste collector to better sort waste. The issue of a general raise in the landfill levy is perhaps more straightforward than it initially appears. Residual waste disposed to landfill fell by 30% or about 300,000 tonnes 1 _landfill_inctaxesbans.pdf

4 between 2012 and 2013 after the levy was raised by 10 to 75. As a result overall residual waste disposal to landfill has fallen by over 1,000,000 tonnes between 2009 and Clearly landfill disposal has crossed a line of being more expensive than its alternatives. Thus, raising the landfill levy would not necessarily impose costs as there are already cheaper (better) options. Raising the levy further is likely to hasten the demise of landfill as a waste management option. The issue then is whether it is still desirable to send some category of waste to disposal (at least temporarily), and in that case refining of the levies by waste category may be the best approach. If eliminating the landfill option altogether is preferred, a general rise in the levy may be best. The former approach might be preferred if the revenue raised from continuing to incentivise some category of waste being sent to landfill can be put to productive use by the Environment Fund in incentivising investment further up the waste hierarchy. The Netherlands, for example, charges a levy below 20 on inert waste, but a levy of around 110 on biodegradable waste (Figure 29).

5 Table 11: Types of waste included in landfill levy regulation in different European countries, Source: Fischer et al. (2012) Overview of the use of landfill taxes in Europe

6 Figure 29: Comparison of landfill levy levels in European countries (euro per tonne, excluding VAT), Source: Fischer et al. (2012) Overview of the use of landfill taxes in Europe A5.2. Policies to promote effective waste management and infrastructure development The EEA in a 2013 report Managing municipal solid waste: A review of achievements in 32 European countries provides an assessment of important national initiatives that have been introduced to improve waste management practice across the EU. The Landfill Directive, the Packaging and Packaging Waste Directive and the Waste Framework Directive naturally provide the regulatory imperative to improve waste management. Performance against these directives however differs considerably across countries. As identified by the EEA, these differences can be partially explained by the chronology of when countries joined the EU and alternative starting levels of sustainable waste management. However, EU policy needs to be complemented with national and regional legislation. Some important trends are identified: Countries that implement a number of instruments generally tend to have higher recycling rates; Countries with waste management initiatives organised on a regional basis (i.e. subject to Regional Waste Management Plans designed to take account of the specificities in the region and that are well implemented) achieve good results in terms of municipal waste recycling; A number of EU countries have implemented more than two national waste management plans but results have varied in terms of recycling rates. National plans need to be supported with additional initiatives to ensure tangible improvements in recycling performance; In general, countries that have increased landfill tax by more than 50% in the past decade and have introduced a landfill ban on organic waste and non-pre-treated

7 municipal waste have achieved good results in terms of sustainable waste management; Separate collection of certain municipal waste materials leads in general to better recycling performance; Countries that have implemented economic instruments targeted to improve household waste management practice (such as pay-as-you-throw schemes) have generally outperformed countries that have not done so. It is concluded in the EEA analysis that although, in general, countries that implement a number of policy and economic instruments generally tend to have higher recycling rates, it is more the way in which instruments are combined that is relevant rather than the number of instruments. Table 16 provides a summary of the main waste management instruments that have been implemented across a range of countries in Europe. It can be seen that Ireland compares favourably with a number of instruments in place. As of 2010, Ireland had six instruments categories in place. A number of instrument categories were also identified as not being in place here in Ireland. Firstly, Ireland had not strictly speaking developed two or more national waste management plans over the period for every planning Region, although this did happen over the period 1998 to Secondly, Ireland also had not implemented a landfill ban on organic waste or non-pre-treated municipal waste. In Ireland s case the provision of two bins to households is considered to constitute pre-treatment of waste, although this is due to change by the beginning of 2016 with black bin waste being required to be pre-treated by landfills before disposal. Thirdly, Ireland had no mandatory separate collection of non-packaging waste. As identified in the previous section, landfill bans on organic waste and non-pre-treated municipal waste have proved to be effective in conjunction with landfill taxes, while separate collection of certain municipal waste materials underlies best practice recycling. There is scope for Ireland to address these current deficiencies in domestic waste management policy. To underscore the point however that it not necessarily the number of instruments but how they combine, it is worth noting that Germany only has three distinct instruments categories in place yet boasts one of the highest recycling rates in Europe with a near negligible level of landfilling. So the overall effectiveness of instruments depends greatly on how they are supported by government, businesses and communities.

8

9 Table 16: Municipal solid waste management and selected policy instruments in European countries, Source: European Environment Agency (2013). The European Commission in a 2012 report, Use of economic instruments and waste management performances, provides a comprehensive assessment of the link between the use of economic instruments by EU member states and the success of waste management activities. An objective of the study is to explore the possibility of moving towards a

10 common approach in terms of economic instrument use across the EU. The study focuses on the following key economic instruments: Charges for waste disposal and treatment: o o Landfill taxes and fees (and restrictions/bans to provide context for the charges); Incineration taxes and fees (and restrictions/bans to provide context for the charges); Pay-as-you-throw (PAYT) schemes; and Producer responsibility schemes for specific waste streams (notably packaging, WEEE, ELV and batteries). In its analysis of landfill taxes, the study concludes (as discussed in the landfill section above) that there is a strong inverse relationship between the level of landfill taxes and the amount of municipal waste sent to landfill, or alternatively a strong positive relationship between the level of landfill taxes and the amount of recycling and composting. For incineration taxes, insufficient data was available to observe a discernible relationship between the level of incineration taxes and the amount of recycling and composting. The general view though is that there is again a strong positive relationship between the two. However, the report identifies that only six member states have set incineration taxes for the disposal of municipal waste. Ireland is one of only three countries identified as having PAYT schemes in place in all municipalities; the other two countries being Austria and Finland. Amongst all EU Member States, it is found that 16 Member States use volume-based schemes, 15 use frequencybased schemes, nine use weight-based schemes, and six use sack-based schemes. Ireland is highlighted as an example of effective use of PAYT schemes. The weight-based PAYT systems that are used in Ireland are cited as having reduced household waste generation by a greater amount than tag-based systems; a reduction differential of about 26% in fact. In terms of producer responsibility schemes, 24 Member States are identified as having such schemes in place. Producer fee schemes for packaging are discussed here and the interested reader is directed to the European Commission report for WEEE, ELV, batteries and other producer responsibility schemes. Packaging producer responsibility schemes require waste producers to directly finance recycling activities. The effectiveness of the schemes is argued to depend on the proportion of costs of collection, sorting and recycling of waste packaging that are actually covered by producers contributions. It appears that countries with schemes that cover the full costs performed better in terms of recycling performance; although this conclusion is tentatively drawn. Establishing the link between producer fee schemes and waste management performance is difficult to ascertain as the study found some anomalies; namely, high fee countries with low recycling rates and low fee countries with high recycling rates. In the context of the EU future policy, three main options are set out. These are then supplemented with other policy options that emerged from the in-house experience of the study team and engagement with industry stakeholders. These three options are: Setting a minimum level of landfill tax to be applied in all MS;

11 Setting criteria/producing guidance for the design of producer responsibility schemes; Encouraging the use of charging that ensures waste generators face incentives in line with the waste hierarchy. The above policy options are of course high level and meant for EU-wide application. The other policy options that are set out in the European Commission study are however worth some consideration from the point of view of Ireland s efforts to improve waste management practice and increase investment in domestic waste recovery infrastructure. Most of these additional policy options could quite readily be adopted or adapted and include: Primary materials taxes The principle here is that in applying taxes to the primary materials, the demand for these materials would decrease in the first instance, and where these materials are consumed there would be an incentive to re-use and recycle material to reduce the need for primary materials. Levy on excess residual household waste The idea proposed here is that as an incentive to reduce residual waste from households a levy would be applied to residual waste above a defined average level and a refund would be awarded against residual waste below a defined average level. Deposit refunds for hazardous materials/materials containing valuable materials The principle behind the offering of deposit refunds is to reduce the poor management of hazardous waste materials. A pertinent example given in the study is that of collecting small WEEE items, where the deposit refund would allow for greater takeback rates of such items for proper and appropriate waste management. Refundable compliance bonds A refundable compliance bond is a financial product whereby building contractors would pay a variable financial sum to the relevant regulatory land-use planning authority, related to the size of the project. Repayment of the bond sum in full would only be made if a specified recycling rate was met, with partial repayment where only partial compliance is achieved. Product taxes and charges The principle here is that taxes and charges if judicially applied to products could provide the appropriate incentive for producers and/or consumers to make substitutions that ultimately reduce the amount of waste generated. The report cites for instance, plastic bags, but of course Ireland already has a plastic bag tax.

12 Subsidies for waste prevention activities The obvious requirement here is that any subsidies granted lead to a net benefit in terms of the waste prevention achieved. Variable VAT rates The principle here is that the reduction of VAT provides a mechanism to encourage particular waste management activities, particularly substitute products and services that are less waste intensive. Examples cited include lower VAT on the repair of white goods (large household appliances), lower VAT where longer warranties are offered by manufacturers, VAT reductions to encourage the use of services over product purchases (where this is applicable), and so on. Recycling credits Recycling could be given increased support to reward the contribution made to reducing greenhouse gas emissions. Within the framework of the EU ETS (Emission Trading Scheme) the proposal is to give explicit recognition to the net benefit to greenhouse gas emissions production that recycling materials offer over the use of primary materials.

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