Letter from Biffa Waste Services Ltd to
the Rt Hon Michael Meacher, MP, Minister of State (environment),
Department for Environment, Food and Rural Affairs 30 July 2001
RE: FRIDGE
RECYCLING
Since my letter to you of 17 July subsequent
contact from members of your department suggests the need for
additional thoughts along the following lines:
(i) The indicative price of £30 per
unit is clearly a negotiable one but is unlikely to be less than
£25 unless significant rapid utilisation rates can be achieved
up to the machine process capacity of around 250,000 units annually.
(ii) European experience of process costs
of between £7 and £25 operate but in a framework of
substantial subsidies and market distortions. The important point
is that these reflect huge variations in plant emissions and standards.
As a result the £7 includes treatment of foams and the £15-£20
range in Germany reflects a mature market with price cutting from
outdated technology (which is being upgraded and will cause costs
to rise in expectation of the tighter standards in the WEEE Directive.
(iii) The plant we propose (and have submitted
to the Agency for type approval) reduces emissions to 5 grams
per unit (specification) or 3 grams per unit (target) or 1 per
cent by content of CFCs. Other plants are being marketed but
with emissions as much as 20 per cent. Clearly a cost/price from
a 1per cent emissions plant needs to be comparable to one with
20 per cent+ on a level playing field basis. How can this be achieved?
(iv) First it is necessary to undertake an
EIA (Environmental Impact Assessment). Each fridge averages 80
grams in the liquid plus 400 grams in the foams. Assuming 2.5
million fridges are scrapped each year this equates to 200 tonnes
of emissions from refrigerants and 1,000 tonnes of emissions from
foams. Not all technologies will extract 100 per cent of refrigerant
and the difference between—say—a £20 per unit
technology and a £25 unit technology (£5 x 2.5m units
= £12.5m process fees) is 200 tonnes of "extra"
CFC emissions (at 1 per cent loss versus 20 per cent loss).
This equates to 200 x 4,000 tonnes of CO2 equivalent—or
800,000 tonnes. At the £15 projected valuation on a tonne
of CO2 (£50 per tonne of carbon) the total valuation is thus
£12 million.
How can a system overcome distortions? Indeed
should such differences be tolerated?
(v) First by Tradeable Permits. If process
technologies are targeted at 5 per cent those achieving above
target could issue traded permits to those failing but this is
still a cop out.
(vi) Second, Government/Treasury could charge
for CFCs as an emissions tax—this would then create a level
playing field for superior technologies if a BATNEEC approach
is not adopted. The weakness of this particular suggestion is
that as the "customer" (via the Treasury or 500 + local
authorities) Government pays a flat fee and Treasury may maximise
tax yield by encouraging inefficient, high emissions processes.
This is clearly nonsensical. There is an implicit assumption that
BATNEEC will protect superior technology.
(vii) The single Treasury purchase route
has the advantage of simplicity and speed—if "weighted"
prices can be agreed collectors gather fridges free of charge
from retailers and local authorities and—where appropriate—deduct
the charge from their quarterly landfill tax liability. If collection
agencies are not landfill taxpayers they simply send in a bill
on proof of recycling.
These processes require urgent evaluation and
agreement if we are to avoid the silliness surrounding the conflicting
costs identified in—for instance—BSE on farm fumigation.
We have the investment capability, sites, management experience
and transparency to deliver a solution and—if necessary—to
disclose cost and margin information on an open book basis in
keeping with PFI frameworks.
We cannot operate in a framework where apparently
more expensive solutions are discriminated against on the grounds
that competing technologies appear cheaper by creating unpriced
externalities which add to the problem—not solve it by substantial
increases in pollution loadings. Either government wants the best
available technology or it wants to fudge the issue by raising
the pollution permitted for inefficient plants. If you wish to
go down this route tell us now. The message then becomes quite
simple—invest in the cheapest technology and to hell with
the real environmental impact. Let the most polluting technology
create the market "price". Such a course is irresponsible
given the requirements of the WEEE Directive from 2004 and the
PM's statement that we should be technological leaders—not
laggards—in Europe.
Obviously we are keen to meet the relevant members
of your team to discuss our proposals on a personal basis.
cc: Paul Boateng MP,
HM Treasury
Baroness Young,
Environment Agency
Sue Ellis,
DEFRA
Chris Megainey,
DEFRA
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