The Landfill Directive: A Consultation Paper

ANNEX A

Draft Regulatory Impact Assessment: Instruments to limit landfill to meet the EC Landfill Directive’s targets for the landfill of biodegradable municipal waste

Scope

1. The purpose of this Regulatory Impact Assessment (RIA) is to assess the relative costs and benefits of the different policy instruments that could be used to meet the Landfill Directive targets on biodegradable municipal waste. The options for instruments are discussed in this consultation document. The consultation process will help to identify the ‘best’ policy instrument for meeting the biodegradable municipal waste targets.

2. The ‘best’ policy instrument will the one that allows the UK to meet the Landfill Directive targets on biodegradable municipal waste at the lowest overall cost, with the costs of compliance being proportionate to the environmental gains of meeting the targets. This will be achieved if the instrument:

• allows some flexibility in compliance such that the greatest amount of diversion of biodegradable municipal waste from landfill (or reduction of biodegradable municipal waste arisings) occurs where the additional costs of diversion (or reduction) are lowest;
• incentivises innovation in procurement and supply of waste management services for biodegradable municipal waste, such that the costs of diversion (and reduction) will decrease over time; and
• imposes administrative requirements that are practicable and do not entail excessive costs.

3. This RIA does not examine the costs and benefits of diverting waste from landfill in order to meet the biodegradable municipal waste targets, as the consultation considers alternative ways of meeting the targets not the cost of the targets themselves. The draft National Waste Strategy for Scotland included an estimate of the costs of meeting the targets (SEPA 1999).

4. This RIA focuses on the way in which each of the possible instruments that could be used to achieve the targets would work. As required under the guidance on Regulatory Impact Assessments, the Better Regulation Guide this RIA will discuss whether each instrument would work against objectives of fairness; the relative costs and benefits of each instrument and ease of monitoring compliance and enforcement. The instruments will therefore be compared by asking the following questions:

• Will this instrument spread the burden of meeting the targets in a fair manner, helping to avoid a situation where the costs of meeting the targets fall disproportionately on a particular group of people?
• Will this instrument help to maximise the environmental benefits of meeting the targets, or will it introduce barriers to the targets being met through waste reduction, recycling and composting or work against efforts to reduce transport distances and choose the Best Practicable Environmental Option for dealing with waste?
• Will this instrument help to minimise the financial costs to the UK of meeting the targets, by imposing administrative requirements that are practicable and low cost, by allowing waste reduction and diversion to be achieved in the most cost-effective manner, and by incentivising innovation in procurement and supply of waste management services for biodegradable municipal waste?
• Will it be possible to design this instrument such that it will be easy to monitor and enforce compliance, with sanctions that are proportionate to the problem?

Purpose and intended effects of measure

5. The objective of the instruments would be to reduce the amount of biodegradable municipal waste going to landfill, in order that the UK can meet the targets for biodegradable municipal waste set in the Landfill Directive. The Landfill Directive sets targets for biodegradable municipal waste primarily to reduce methane emissions from landfill. Methane is a greenhouse gas and reducing methane emissions from landfill will contribute towards efforts to avoid global climate change. Reducing the amount of biodegradable municipal waste sent to landfill will also help to reduce the total amount of harm caused by landfill, from pollution of water by leachate and disamenity (or ‘nuisance’) effects.

Options

6. The options identified in the consultation document fall into five groups, as summarised in Table A1, Annex A and below:

• ban on landfill of biodegradable municipal waste;
• ban on landfill of specific biodegradable municipal wastes;
• permits for landfill operators to accept biodegradable municipal waste or municipal waste;
• landfill permits for Local Authorities (LAs); and
• changes to the landfill tax.

7. The landfill tax has an important role to play in the Scottish Executive’s overall strategy for promoting more sustainable waste management. The 1999 Budget announced a series of increases in the standard rate of the landfill tax. The standard rate of tax will increase by £1 per year until 2004, when the rate will be £15 per tonne. This sends a strong price signal to waste managers, and should help promote the diversion of waste away from landfill. The regular review of the National Waste Strategy will provide an opportunity to assess the effect of the tax increases in light of experience. The Scottish Executive has considered the role landfill tax may have in achieving the Landfill Directive targets. Economic instruments such as the tax cannot, in the short term, give certainty of outcome. Nevertheless we welcome views on the future role of the landfill tax in helping to achieve the Directive’s targets for reducing the amount of biodegradable municipal waste to landfill.

Equity and Fairness

8. Comments on issues of equity and fairness are presented in Table A2, Annex A. In summary, options 1 and 2 may be perceived as ‘providing a level playing field’ in that bans would have effect throughout the country and at every landfill site. However, the additional cost of diverting or reducing waste arisings will vary across the country and the financial burden imposed by such a ban would be higher in some areas than in others. If permits are tradable, options 3 and 4 would allow some convergence of the costs of meeting the Directive targets in different parts of the country. Tradable permits would also allow those that are willing to give up the right to landfill biodegradable municipal waste (having bid for or been allocated permits) to receive compensation in the form of revenue from the sale of permits.

Benefits

9. Comments on the relative benefits of the different options are presented in Table A3, Annex A. In summary, options 1 and 2 could present barriers to the targets being met though recycling and composting if the only practicable response to bans is to send unsorted waste to incineration with energy recovery. The flexibility provided by options 3 and 4 could mean that waste managers would be better able to take local considerations into account (such as BPEO) when choosing between waste management options.

Compliance costs for business, charities and voluntary organisations and other costs

10. The costs of reducing the amount of biodegradable municipal waste going to landfill in order to comply with each of the instruments would be shared between the waste management industry (particularly landfill operators) and local authorities. Landfill operators would lose business (but could offer alternative waste management services) and local authorities would need to reduce or divert waste. The proportion of the burden accruing to individual operators or local authorities will depend on:

• the extent to which an operator relies on supplying municipal waste services for their business to be profitable;
• the degree of scarcity of municipal waste landfill voidspace in the area;
• operators’ market share in supplying municipal waste landfill services in the area; and
• the costs and feasibility of diversion and reduction options in the area.

11. Small businesses whose waste is collected by a local authority contractor may find that their waste management costs increase, as their waste is categorised as municipal waste and would therefore be subject to the Directive targets.

12. Comments on the relative costs of the different options are presented in Table A4, Annex A. In summary, options 1 and 2 would impose significant administrative costs on landfill operators because of the need to check loads. However, they may be able to pass these costs on to their customers. The administrative costs imposed on landfill operators by options 3 and 4 would be less than for options 1 and 2, particularly if a standard biodegradable content is assumed or if permits are required for municipal waste rather than biodegradable municipal waste. The lack of flexibility provided by options 1 and 2, and that fact that they go further than is required to meet the Directive targets means that the overall costs of meeting the Directive targets would be higher under options 1 and 2 than under options 3 and 4.

Consultation with small business: ‘the litmus test’

13. A small business litmus test has not yet been conducted, as the preferred instrument has not yet been selected. However, it is anticipated small businesses would be affected, for example small businesses that provide waste management services to local authorities (landfill operators, waste hauliers, refuse collection contractors) and small businesses whose waste is collected by a local authority contractor. Small businesses and their representatives are invited to respond to the consultation questions. The costs of compliance for small businesses will be addressed in future RIAs of the preferred instrument.

Results of consultations

14. The views of members of an informal working group of individuals from local government and industry have helped to formulate the options set out in this consultation document. Views are now invited in response to this consultation. Responses to the consultation questions would be particularly welcome, as well as views on the findings of this RIA.

Enforcement, sanctions, monitoring and review

15. No specific sanctions have been proposed as yet as the preferred instrument has not yet been selected. Comments on ease of monitoring compliance and enforcement presented in Table A5, Annex A. In summary, options 1 and 2 would require a lot of high quality monitoring activity and very high fines for non-compliance to make the bans credible. The monitoring and enforcement requirements for options 3 and 4 are less onerous.

Summary and recommendations

16. A preferred option has not yet been selected. The assessment of each instrument against the required criteria points towards options 3 and 4 having merits over options 1 and 2; see Table 1 overleaf, which rates instruments: = poor; = fair; and = good.

17. The Scottish Executive has considered the role landfill tax may have in achieving the Landfill Directive targets. Economic instruments such as the tax cannot, in the short term, give certainty of outcome. Nevertheless we welcome views on the future role of the landfill tax in helping to achieve the Directive’s targets for reducing the amount of biodegradable municipal waste to landfill.