Examination of Witnesses (Questions 283-299)
RT HON MR MICHAEL MEACHER MP, MS SUE ELLIS AND MS MARIA NOLAN
MONDAY 15 APRIL 2002
Chairman
282. Minister, you are very welcome indeed in terms of coming to the Committee. I wonder if for the record you would be kind enough to introduce the officials that you have brought with you.
(Mr Meacher) Yes, certainly. On my right is Maria Nolan, who is Head of the Montreal Protocol Policy Branch , ie ozone depletion. On my left is Sue Ellis, who is Head of the Waste Policy Division.
283. Minister, I suppose this particular matter has been doing the rounds since 1999. Our inquiry cannot be said to be in quite that vintage but given that we wrote to you on 11 February, it took two months for your Department to produce its memorandum. Why so long for something that you are clearly aware is known so well?
(Mr Meacher) I am sorry about that. I entirely accept that it was produced late. There was discussion about it before Easter and I was very keen to get it to you before Easter. Easter, as always, with the demands from a whole range of policy issues coming together, is very difficult. I really regret that we did not get it to you before Easter which was the intention and we have got it to you as soon as possible after that. There was a great deal of discussion on numerous items, not least lessons to be learned, which I am sure we are going to turn to at some point, but I do apologise for its lateness.
284. Thank you very much for saying that. We are going to be looking in the course of the next couple of hours at a number of the points of detail that have come up so far as the purpose and implementation of this particular Directive is concerned. In a Parliamentary answer to myself where I asked you what the purpose of Regulation 2037/2000 was actually all about, you replied to me that the proposal for a Council Regulation on substances that deplete the ozone layer was published by the European Commission on 14 August 1998. "The environmental purpose of the Regulation was to further protect the ozone layer during a decade when ozone depletion was expected to peak." That seemed, certainly to my eye, to leave one in no doubt as to what the purpose of this was and yet, as we will see in our questions, there has been quite a discussion particularly about one item, namely the foam in refrigerators, as to whether it was in or out, although I do not want to anticipate the questions on that. Why, when you were so clear what the purpose of this was, should there be any doubt that anything that had an ozone depleting property in a fridge was covered by this particular Regulation?
(Mr Meacher) As you say, Chairman, the aim of 2037 is to supplement the work of the Montreal Protocol and, in particular, to reflect amendments to the Protocol which have been negotiated between 1995 and 1997. It does go further than the Montreal Protocol in a variety of respects: tightening controls on HCFCs and methyl bromide; the recovery, if practicable, of ozone depleting substances from refrigeration and air-conditioning equipment; the ban on the use of CFCs in the servicing of equipment; the decommissioning of halon fire protection systems by 2003; the prohibition on the export of most controlled substances except HCFCs. That is a substantial tightening and one which I think is entirely justified in the international community's efforts to restrict ozone depleting substances. However, as I did indicate—and this of course is critical—the application of "if practicable" to certain forms of recovery is clearly stated in the original Article 15 and indeed of course was—
285. Can I stop you there because we will come back to that in some detail and I do not want us to be sidetracked off our proposed line of enquiry. I was anxious to establish whether you had received any advice at all from your officials that anything in terms of an ozone depleting substance was, at least potentially, covered by this particular Regulation. We will come on to "if practicable" in a moment. Looking at the actual document there seems to be a great long list of CFC-damaging substances in it. As far as I can see, it seems to be quite straightforward that anything with ozone in it was covered.
(Mr Meacher) The Regulation was, of course, drafted by the Commission, not by the United Kingdom and we have to respond to what is in the Commission drafting of the regulation and that is what we did.
286. We will come on to that. You in your evidence to us in paragraph 30 talk about some of the discussions to deal with the ban on the export of products, which was contained in Article 11 of the Regulation. From the papers that we have seen some of your officials appear to have taken up a lot of time in looking at this particular matter rather than perhaps looking at the questions related to the mandatory recovery of CFCs under Article 16. In fact, most of the discussion of the Management Committee on 4 October 2000 was on the subject of the export ban. Two letters from the Department of the Environment, Transport and Rural Affairs to the Commission's DG Environment dated as late as 8 January 2001, which also, interestingly, acknowledged that two Member States had got the plant to recover CFCs in foam, dealt almost exclusively with the question of the export ban. Can you tell us why so much official time was taken on that particular matter in that correspondence of relatively recent vintage, that is the Article 11 issues, as opposed to focusing more closely on Article 16 which you started to tip-toe into in your opening comments. Was the eye taken off the ball as far as this export issue was concerned?
(Mr Meacher) No I do not think so at all. You seem to be suggesting that it was exclusively Article 11; it was not.
287. I am talking about the correspondence which I have specifically mentioned, letters from the DETR to the Commission's DG Environment dated 8 January 2001 and 30 January 2001. Are you aware of that correspondence?
(Mr Meacher) I was not but it seems to me perfectly reasonable that the issue should be raised because it was an issue. It was not the main issue and we never thought it was.
288. A lot of the official correspondence seems at that time to have concentrated on that rather than the point you were making before about "if practicable" (and the other items that are in Article 16.
(Mr Meacher) With respect, Mr Chairman, I think you are a little off the ball there, if I may say so. We were entirely concerned about Article 16 but the question of the ban on the export trade is something of which, first of all, the industry was not aware of I have to say with some surprise of which several departments, including other Member States who were concerned with the export trade, including the Commission, were not aware, nor, indeed, of the extent of it. That is why there was some discussion about it because it did take all parties by surprise—the industry which found it could no longer export and the various departments and Member States and the Commission who found that there was a thriving export trade of which they were unaware.
289. Are you telling us that the way in which Whitehall correspondence is copied around for input and discussion on this occasion failed to flush out an important ingredient on the way in which this particular matter was going to apply in reality? What we seem to have here is a picture of the DTI, Customs and DEFRA all involved in this. Was there no co-ordination within government that was going to bring together information? You just said you were not aware of the export trade. Surely other departments are brought in to try and fill in the gaps of knowledge in the department?
(Mr Meacher) Absolutely. I am saying there was considerable discussion once it emerged, first of all, that the waste industry was not aware of the Regulation preventing exports. That triggered an understanding on our part—and that is all government departments—that there was an issue here about exports of which we had never been told. We were never even told about it in terms of the extensive consultation that we carried through when the issue of exports was not raised. Therefore, for all of these reasons it is perfectly reasonable that there was considerable discussion about this issue. It was never the central issue but it was an important and significant side issue.
290. Are you telling us that you received absolutely no written information whatsoever from any part of the waste disposal industry in the United Kingdom that dealt with this export point?
(Mr Meacher) That is certainly my understanding but perhaps I could ask my official to confirm that.
(Ms Nolan) Not until Customs & Excise started to enforce the ban when the Regulation came into force in October 2000.
Mr Mitchell
291. I just want to question the relationship between your Department and Customs & Excise. I am going on memory but we were told by Dixons, as I recall, that Customs & Excise, with its usual enthusiasm for hindering Britain's export trade in any way it possibly can, came in with a circular in September 2000 telling them and the people exporting their fridges, because they sent their fridges on to the people who exported them, that fridges could no longer be exported. That a circular specified that they could not be exported because of the CFCs not only in the coolants but in the insulating foam. In other words, both points which seem to have eluded DETR were known by Customs & Excise in September 2002.
(Mr Meacher) I am sure that is correct. In other words, it did not matter where the CFCs were, whether they were in the coolants or whether they were also included the foam, the fact is that there are a lot of CFCs in the coolant equipment and that was a perfectly sufficient reason for the ban. The issue about the foam is a separate one as to whether recovery was required under the Regulation or whether it fell under 16 (3) and therefore "if practicable".
292. The argument was that the fridges could not be exported unless the CFCs were taken out of both. DETR's position in 2001 right up until you got notification, and you told Parliament in June 2001 that it did apply to the foam, was that it did not apply to the foam and yet Customs seem to have thought it did.
(Mr Meacher) When we do get on to this issue of the saga from the end of 1998 until June 2001 we will see that there has been a great deal of confusion, which of course is at the heart of this whole issue. I repeat, the issue is that Customs, in indicating to the waste industry that they could not export, were making clear that they could not export because the fridges contained CFCs. For that reason, because it would produce a problem for the developing countries, particularly West Africa and Nigeria in terms of disposal and put them at risk of the Montreal Protocol and because it was prohibited under Article 11, it would no longer take place. I do not think the fact that Customs & Excise regarded CFCs as being in the foam as well as in the liquid coolant meant that this issue of the application of recovery from the foam had been resolved or that they had a particular view. I do not believe that that is the case. This issue was resolved by us in our discussions with the Commission. As we shall soon see, there were very variant views on the application of the Regulation for foam.
293. Customs were telling the disposal people that if it was removed from both then the fridges could be exported.
(Mr Meacher) Indeed.
294. So they knew?
(Mr Meacher) If there is no CFC in the fridge at all then, of course, they could be exported, but that leaves open the question as to whether it could be removed fully from all parts of the fridge. Then we are back to the technical feasibility of this.
Mr Borrow
295. Can we move on to the subject you were touching on, which is this controversy over the "if practicable" bit of the discussions. If we go back to the informal meeting of Member States in June 2000 when I think this issue arose with the lead of the United Kingdom in Brussels and the discussion as to whether or not it was practicable to recover the foam from fridges, at that meeting some Member States felt that it was but the issue was not resolved and there was a later meeting of the Management Committee in October of that year at which again some Member States felt it was not practicable to remove the foam. The United Kingdom at that stage was still not clear whether it was or not. Why did it take until the meeting on 11 June 2001 for the United Kingdom to finally accept that it was practicable to recover the foam from fridges?
(Mr Meacher) I would put it rather differently; why had it taken until 11 June 2001 for the Commission to reach an authorative view as to whether or not recovery applied to foam. If I may go through the main stages of this whole episode. The Regulation was passed in the Council of Ministers in December 1998. There was virtually no discussion of this issue we are talking about today because there was much greater concern, which had been raised by the industry, about the issue of the phase-out of HCFCs in the EU where it was believed it had begun on an international basis so it was not anti-competitive, and the phasing out of methyl bromide. Those were the issues that Ministers examined. As a result of that, we in the UK took the view that the Regulation would only require recovery of CFCs from the coolant equipment and not from the foam for two reasons. One is the definition of "recovery" (under Article 2 of the Regulation which states that recovery means "the collection and the storage of controlled substances from, for example, machinery, equipment and containment vessels, during servicing or before disposal." Since we understood that it was not technically possible to remove controlled substances from rigid foams during servicing or before disposal, we believed that the recovery of CFCs would not be mandatory. Our other reason was that the original reference to "foams" had been deleted from 16(1) and the new draft paragraph 3 inserted "where recovery is required, if practicable". It seemed to us a very good reason to believe that that is where the recovery from foam would fall. Following that, in February 1999 the first of the Management Committee meetings, and there are only two a year, of the EC took place, and as a result of our raising it—and this was the first time we raised it—it was decided to hold a workshop in Oslo to discuss the practicability of this as to whether it was technically possible to recover CFCs from domestic refrigerators. That was held. It was certainly indicated that the costs were high, especially in the case of insulating foam. Whether anything was taken forward from that, I am not aware. Then in October at the second EC Management Committee, the Committee agreed that clarification was needed on a range of definitions in the Regulation. The minutes of the discussion show that the possibility of making technical amendments to the Draft Regulation in the conciliation process was envisaged. However, the Portuguese Presidency and the Commission were much more focused on dealing with the amendments resulting from the second reading by the European Parliament, on which of course there would have to be a compromise, so it was not taken forward. We then get into, which is very important, the list of clarifications offered by the Commission to Member States on 28 February 2000. This gave their interpretation that Article 16(1) did not apply to foams blown with either CFCs or HCFCs and "it was the Commission's understanding that the clarification proposed here is in line with the intention of the Council during negotiations of the new Regulation." The next occasion when the matter was raised was in March 2000 when United Kingdom officials requested that the same clarification should apply to 16(2) because the language in both paragraphs was the same. There was some discussion about that but no conclusion reached. Then in July 2000, as our memorandum indicates, the matter was raised in the margins of a UNEP Montreal Protocol meeting. Some countries—Sweden and Denmark—wanted to go a great deal further and they said that recovery from foam in refrigeration was possible and therefore should be mandatory. We therefore raised it with UNEP's Technology and Economic Assessment Panel as to whether that was feasible. They advised that it would not be possible to remove controlled substances from foam either during maintenance or before dismantling, so removal during service and maintenance was not possible as no such service or maintenance of the foam takes place. They advised that there was a possibility of recovering controlled substances before disposal of equipment but it was not practicable to do so because experience of recovery was mixed, and therefore it was premature to make this mandatory. On 11 September 2000, UK officials therefore wrote to the EU Commission supporting the interpretation that foams should be classified as a "product" under Article 16(3) and that recovery would be only "if practicable". That was the fifth time we raised it. The sixth time was at the fourth Management Committee meeting in October 2000 where the United Kingdom having written the letter, the matter was discussed. The minutes of the meeting 4 to 6 October 2000 record that the Committee agreed that foam containing CFCs was classified as a product and therefore covered by Article 16(3), in other words if practicable. There was no discussion, I have to say, about what practicability meant and there was a further issue as to whether that would require an extended timescale for introduction so that the technology would be in place. There was another EC Management Committee meeting on 25 October 2000. Again, we raised the matter there. Again, the Commission advised that it would be considered. Perhaps, Chairman, it would be helpful, although it is rather tedious and long, if I just completed this which takes it a little bit further than Mr Borrow had raised. We then sought legal advice at the end of December 2000. Here I think we get to the very heart of this extremely vexed issue. There are, in effect, two views. One is that the fridge contains foam as an integral product and that the CFCs are within the foam in the fridge, in which case it could well be that fridge insulation that is foam blown with CFCs comes under 16(2) and not under 16(3). That is one view and, indeed, our legal advice tended to go in that direction. However, that view is contrary to the interpretation of the Commission in its clarification table and the consensus which was reached by Member States that foam contained in the equipment was a product and therefore would fall under the "if practicable" proviso in 16.3. There are two views. One is that the fridge with the foam contains the CFCs, the other is that the foam itself is a product and contains the CFCs and therefore falls under 16.3. It is that fundamental difference of interpretation where the Commission continue to hold the latter view, and did not change until June 2001. If I could, as I say, just try and complete this. On 30 June—this is our eighth attempt to get resolution of it—UK officials wrote to the Commission requesting an urgent interpretation of Article 16 saying that if it was not received it would jeopardise UK compliance with the Regulation. The Commission then produced a revised clarifications paper which was entitled Frequently Asked Questions. It was placed on the agenda for the next Management Committee meeting which was March 2001 and, interestingly, the paper noted that interpretation of Article 16 was still "a grey area", those are their words not mine.
Chairman
296. Can I just stop you there for a second, Minister. I do not want to get lost too much in important points of detail but can I just ask you which part of the refrigerator has the most ozone damaging substances in it?
(Mr Meacher) I think the answer is the foam. Certainly it is a high level of chlorine loading which comes from the foam, that is perfectly true.
297. When this Regulation was first discussed, way back in 1999, was that fact known also?
(Mr Meacher) I am sure it was known.
298. Would I be right in saying that there is a strong adherence to the Montreal Protocol. In answer to my first question the implication you gave was that we were very much willing to take action to safeguard the ozone layer. Would it be the case that if this Regulation had not touched upon that part of refrigerators whether domestic or commercial which contained the most ozone depleting substances that the United Kingdom might have asked a question "why not"?
(Mr Meacher) I entirely support the line of your reasoning, I entirely support that. The issue was whether it fell under—to use this jargon, I am afraid—16.3 and whether it was "if practicable" or whether it was mandatory not whether it was desirable. Certainly it was desirable but the issue was if it was practicable then that would provide time for the technology which was required to achieve this, which was not present at that time in the UK, to be secured. That was the sole issue, not any dispute about the desirability of tightening and making more stringent the Montreal Protocol provisions.
Mr Borrow
299. Minister, you have clarified that quite succinctly but it raises one clear question in my own mind which is if there is a mandatory requirement to get rid of the foam or a mandatory requirement to do it "if practicable" then surely during this period from the summer of 2000 to the summer of 2001 there should have been a clear policy coming from your Department which said "We will have to get rid of the foam. Whether or not it is under 16.2 or 16.3 is immaterial. The bottom line is we have to put in place the measures which are required to ensure we have the capacity in the UK to get rid of the foam" and rather than wasting a full year asking about whether it is 16.2 or 16.3 before we do anything your Department should actually have been doing something to ensure that we have the sort of capacity that exists in Germany and other Members of the EU.
(Mr Meacher) That is a very key question and the answer is it makes all the difference in the world as to whether it is 16.2 or 16.3. It is not a matter of triviality. What we were wanting was clarity from the Commission, only the Commission was able to provide it. The point about it being a Regulation as opposed to a Directive was it was intended, for very good reasons, it should be introduced in exactly the same way across all the Member States. For that reason there had to be clarity which would cover all the Member States. The only one who could provide that was the Commission. I have to say—and I do not say this aggressively at all—on nine separate occasions we did seek clarification and it was not until the 11 June 2001 that we obtained it. Now if we had decided, as, Mr Borrow, you are suggesting that we should have gone ahead and implemented it as a domestic regulation, I think there is no question that we would have been accused of gold plating. I hope this term of abuse is well understood in the Committee, it means where governments are demanding more than the Regulations specifically require and are imposing burdens on the industry which are costly. I think it would have been accepted with difficulty by other Government departments. Certainly I think it would not have been accepted by industry. What the recycling and foam blowing industry were saying to us was "we want certainty one way or the other". That was what they were wanting so that they would then be assured as to what was the date of recovery, when that was going to be enforced and they could make plans for it but they were not going to make plans for it if the date was uncertain, why should they? That was why the whole of the thrust of our policy was to secure their certainty.
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