Examination of Witnesses (Questions 80
- 99)
MONDAY 10 JUNE 2002
MR MICHAEL
AVERILL, MR
JOHN SHAUGHNESSY
AND MR
PATRICK POINTER
80. But if I heard you right earlier on, I got
the impression that you were saying landfill is an out-dated technology
and that incineration is the way forward. We have experience of
that in northern Europe, you were saying, but there are problems
with that, are there not?
(Mr Averill) Indeed there are. I was only giving that
as one example. There are a huge number of alternative technologies
depending on the exact characteristics of the waste you are talking
about. Incineration was just one example. Incineration, I believe,
is probably suitable for no more than 10-15 per cent of the nation's
hazardous wastes.
81. I am just trying to look forward to five
years on and what this framework for hazardous waste is going
to look like. There will be a lot of landfill sites closed down,
and there will perhaps be a bit more incineration. I just have
a worry there will be stock-piling going on.
(Mr Averill) I doubt it. In France and the Netherlands
and Scandinavian countries it is very easy to see exactly what
does happen when you get a regime operating in that way.
82. So it will be a mixed regime.
(Mr Averill) Very definitely, as it is in all of those
countries that I have just described.
83. I asked the CIA about the Environment Agency
and the consistency of response from the EA across the country.
W hat is your relationship with them? How do you find working
with the EA?
(Mr Averill) We have seen significant improvements
in that area with the Environment Agency re-organised towards
the end of last year. They were putting in specialists covering
particular areas that cut across the regional structure that was
there before. I think that is a major step forward to give consistency.
Obviously, it is not perfect or ideal, but I believe that the
Environment Agency is aware and is working on the problem.
84. But until fairly recently the EA has operated
in each of its regions and there has not been consistency of approach;
you might get a permission in one region that you would not get
in another.
(Mr Pointer) We have to be clear about what level
of the Environment Agency we are working with. In terms of implementing
new regulations, I have been working very closely with the Agency
for the last two years, looking at the practicalities of these
regulations, and they have had a very consistent approach to doing
this. They have been frustrated by DEFRA. The main hold-up in
terms of producing a lot of the guidance which we would have wished
to get out earlier has been the negotiations between the Environment
Agency and DEFRA. In terms of the day-to-day interface with the
Agency, yes, there has been historically a problem with the regions.
That is getting better.
Chairman
85. A couple of points arising from your exchange
with Mr Tipping. When you were talking about the process of deciding
which of the current landfill sites will be able to accept different
forms of waste in the future, is that a responsibility for you
as a provider of a service, and if so, how do you decide which
tips are in and which are out for different types of hazardous
waste?
(Mr Averill) Yes, it is a decision for us, and we
do it on a market-based approach. We have customers and we are
trying to serve them.
86. So you will just look at your facility and
say, "This one's OK for this, and that is OK for that"?
(Mr Averill) There are obviously technical characteristics
that are important, particularly geological characteristics, and
we take those into consideration when making our decisions.
87. Earlier the CIA said, and you indicated
too, that market forces would sort out any imbalances, and yet
there is a lot of pressure on the availability of areas which
could be used for landfill. If anything, the impression I am getting
is that that is going to be restricted even further by this classification
process. Are we going to have two things coinciding: the 2004-08
question mark and a lack of capacity?
(Mr Averill) I think it is most unlikely that you
will have a lack of landfill capacity. If there were a lack of
landfill capacity in this country, it would not be so cheap.
88. We talk about hazardous waste without actually
talking about individual streams of waste. I have no knowledge
of what is actually going on in the world of hazardous waste.
Is the total amount to be disposed of increasing? Are there any
trends which show that more hazardous materials are needing the
services of expert disposers like you?
(Mr Averill) What you can say is this. Absent changes
in the regulation which broaden the scope of the net, hazardous
waste volumes are coming down. You have heard that also from the
CIA, how their members have reduced the quantities of hazardous
waste that they generate.
89. Is that universal across all types of waste
that are described as hazardous?
(Mr Averill) Yes. In many ways the hazardous waste
processing industry ultimately will be a victim of its own success.
It will succeed in raising the standards, charging higher prices
for its services, which gives the producer a very strong disincentive
to then manufacture it.
90. You make an interesting point in paragraph
3.4 of your evidence. You say, "The focus of regulatory action
is on the waste processor, not the waste producer." You have
just given an indication that costs of disposal have the effect
of re-balancing that argument. But do you think there ought, even
now, at this stage, to be further legislative effort to put the
responsibility for minimising hazardous waste streams on the producer
as opposed to the processor?
(Mr Averill) I do not think you need any more legislation.
The legislative instruments are already there, for example, IPPC.
At the moment it just seems crazy to me that we are regulated,
perfectly properly—this is not meant in any way to be a
complaint—by the Environment Agency, which says these very
strict standards, again using the example of incineration, must
be adhered to, whilst at the same time the potential customers
of this activity are allowed to send their waste to landfill.
91. So the only constraint on them is the question
of cost of disposing of it.
(Mr Averill) Exactly. I am not suggesting for a moment
that anything illegal is happening, but most waste producers will
choose the minimum legal disposal option. If the whole IPPC regime
was applied to waste producers, where they have to dispose of
their waste according to the best practical environmental option
rather than the minimum legal, you suddenly change the whole thing
overnight.
Paddy Tipping
92. What would that do for your business?
(Mr Averill) It would add an awful lot to our industry.
Landfill pervades because it is cheaper. It therefore follows
that anything that follows will be more expensive. You heard the
CIA say that this is not really an economic argument; it is about
capacity, and this is just the movement forward of the environmental
agenda. As I often say, there was no good economic reason to abolish
the slave trade; it was the advancement of society. There is no
good economic reason for an awful lot of the clean air legislation
that we have already had, and I believe that when we have this
waste-based regulation whereby producers are required to take
the most responsible option with their waste, in a number of years'
time it will just be a cost of business to them like health and
safety regulation is now.
93. So your slogan would be "Reduce quantity,
improve quality."
(Mr Averill) Absolutely, and I think you would automatically
get that. This is again where we have a slight issue with the
CIA. I think you would see that their waste would come tumbling
down when they were paying the new higher rates associated with
the higher quality facilities. At the moment there is insufficient
disincentive because landfill is too cheap.
Chairman
94. One of the problems that besets any solution
to waste disposal is our planning laws. You must have studied
the Green Paper on planning. Is there anything in there which
gives you hope for the future in terms of the provision of facilities
to deal with hazardous waste disposal in the future?
(Mr Averill) Certainly planning applications for processing
facilities for hazardous waste will always be contentious, but
if there is a proper framework whereby local waste plans are implemented
and there is a presumption of granting a permission providing
the need for the facility has been rigorously established as part
of a plan, then I think it is possible that we could have a quicker
planning system.
95. It is said that our continental counterparts
do not suffer from some of the problems in this area that we do,
and you said in your introduction to the company that you had
experience outside the United Kingdom. I wonder if you could just
give us a flavour of your experience, particularly with other
European Union countries, about how they handle the regulatory
framework and compare and contrast it with the way we do it here.
The main message you have got across to us already is that landfill
is the cheap UK alternative; other people use a more sophisticated
approach.
(Mr Averill) We have a number of these higher order
technologies that I was describing—and, incidentally, not
incineration in continental Europe. We have high temperature processes
for the cleaning of contaminated earth which otherwise would go
to landfill here. We have oily sludges which just go to landfill
here, we have a sophisticated plant for separating out the oil
and water and the oil is re-used as a fuel. We have a pyrolysis
plant for dealing with paint waste—old paint tins, half-used
paint tins—where those materials currently go to landfill.
We have another plant which stabilises hazardous waste in concrete
so that it is at this Final Storage Quality, it is in an environmentally
benign state before it is deposited in the landfill. We have other
programmes where we take wastes of high calorific value and blend
them together in a carrier and use them as an alternative fuel
for industrial processes, whereas most of those wastes in this
country would go to landfill. There is a wide range of examples
of different technologies that we already employ in-house to deal
with a spectrum of different wastes when they can no longer to
go landfill.
96. Talk me through some of the factors that
this regulatory hierarchy impose on you when it comes to your
investment decisions. Clearly, the regulatory framework determines
the level of business that you are going to get. That determines
the level of revenues, and that ultimately determines what you
are prepared to invest. Do I read you correctly that you perhaps
find the mainland European regime more conducive to investment
than in the UK? One of the queries that comes at this early stage
of the inquiry is, because of the uncertainty about the regulatory
regime, question mark, are people going to be willing to make
the necessary investment against a background of uncertainty.
What you seem to be saying is that there is greater certainty
on the continent, and you have already given some examples of
pretty hefty investment into sophisticated equipment which is
not currently in use here.
(Mr Averill) Correct, but we would be prepared to
make corresponding investments here, providing you had the certainty
of market that you do there. If you take the big macro-economic
picture, I think the UK is missing out on very significant quantities
of capital investment to implement these technologies, and certainly,
as these technologies become more commonplace, you can develop
an industry in these environmental technologies that we can further
export to other countries as they in their turn catch up.
97. One of the arguments that we are often confronted
with as a Committee is the term "gold-plating"; in other
words, we go over the top with the detail here compared with our
continental counterparts. The picture you paint is slightly different
in the sense that what you are saying is mainland Europe has a
different approach than the UK. Are we missing out on these more
sophisticated techniques to the detriment of waste disposal? Is
it just the fact that they do not have landfill available that
they have had to go down those routes, or is it that they are
ahead of the game in terms of their environmental responsibilities?
(Mr Averill) I believe it is the latter, that what
has happened, as we described before, is you have a scenario where
unacceptable environmental alternatives are outlawed and that
generates the market for the emerging technologies. Naturally,
of course, we invest in these at our own risk—we are a commercial
company—and if we get it wrong because somebody else has
a better technology, or we invest in it at the wrong level and
our capacity is too small or too big, then we risk our returns.
98. What is your view about the way that DEFRA/Environment
Agency are implementing European-based legislation in this area?
Is it sensible, is it practical or does it go over the top?
(Mr Averill) I do not believe it goes over the top
at all. You heard the CIA themselves saying that the costs of
waste disposal for them are much lower than they are for their
continental counterparts, so it is very difficult to say that
we are "gold-plating" in this country when the costs
are so much lower than they are overseas. I believe again that
we do not need new legislation. The regulatory instruments are
already there; they just need to be used in the same way that
they are on the continent, ie to outlaw the environmentally unacceptable
disposal routes.
Paddy Tipping
99. You need to use fiscal routes too. You talk
about landfill tax. To get the kind of change that you would like,
what would you do with the landfill tax? The present escalator
is not adequate, is it?
(Mr Averill) You have to be very careful here, because,
of course, the landfill tax is applied to all wastes, not just
hazardous wastes. Even if you were to double the landfill tax
today, it is not material in the context of many hazardous waste
processing charges. It is highly material in the scheme of municipal
solid wastes. So you do need to be very careful here, and I believe
that the landfill tax instrument is a very good instrument with
respect to municipal solid waste, and with respect to industrial
and commercial non-hazardous waste, but regulation is a much better
instrument with respect to hazardous waste.
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