Memorandum from the CBI
EXECUTIVE SUMMARY
Business is a key player as a producer, converter
and manager of waste and shares the recognition that something
needs to be done to address the challenge of waste.
We support the fundamental objective of the
current waste strategy and find the concept of the waste hierarchy
useful, though the latter needs to be used in a more sophisticated
way to secure an effective mix of waste management approaches
based on Best Practical Environmental Option (BPEO).
We support the use of targets as a way of driving
the waste strategy but these must be used with caution, based
on a rigorous assessment of hard data and current trends.
Despite the poor quality of data on waste arisings
and recovery/recycling rates, there is evidence that business,
for a variety of reasons, is taking positive steps to address
the challenges of waste.
There are four key areas which pose major challenges
to the ability of business to do more: poor design and implementation
of regulation, market imperfections, under developed waste management
options and concerns over the use of taxation.
We recommend 10 actions to help sustain and
promote the contribution of business:
— Create a national waste database;
— Develop a national strategy for industrial/commercial
waste;
— Provide strong leadership from Government
and relevant agencies to back all elements of waste hierarchy;
— Give greater attention to implementation,
oversight and enforcement of waste regulation;
— Review and amend if necessary the
definition of waste where it prevents or restricts particularly
manufacturing and construction sectors from optimising waste minimisation
and resource efficiency;
— Reform the land use planning system;
— Join up with other policy regimes
eg energy, water, resource efficiency;
— Ensure increased waste management
capacity can be funded;
— Consider carefully any options regarding
taxation of business;
— Continue to support and expand recycled
materials market.
1. INTRODUCTION
The CBI is the leading body representing businesses
in the UK accounting for approximately 40% of the workforce. Our
membership is drawn from businesses which have a key role to play
in addressing the challenge of waste as:
— producers of waste in meeting customer
demands for goods and services;
— organisations in direct contact with
the public as individual consumers;
— organisations involved in recycled
product markets.
The activities of our membership extend across
the entire spectrum of the resource management cycle, from primary
extraction of raw materials, to product manufacture, product use,
waste recovery and recycling, and finally to disposal of residual
waste.
The CBI welcomes the House of Commons Environment
Audit Committee Inquiry and the opportunity to provide input to
this study. This inquiry, together with the recent Strategy Unit
study on waste, provides an essential opportunity to evaluate
the Waste Strategy and the UK's ability to meet the targets set
within its framework. Waste is one of the most pressing environmental
challenges facing the UK and its overall management is critical
for sustainable development.
For all businesses the basic requirements of
any successful approach to tackling the waste challenge include
the following:
— Clear objectives, underpinned by
joined-up thinking and action between different but inter-related
policy regimes;
— Flexibility of approach, making use
of the full toolbox of measures, encouraging innovation and responsiveness
to changing circumstances/understanding;
— An approach based on sound science
and robust assessment of risks, costs and benefits;
— Support for competitiveness and recognition
of the needs of different sectors;
— Recognition of the transitional effects
of policies and measures;
— Recognition of the timescales for
business investment.
The current approach to waste captures some
of the above requirements. Progress is being made and it is important
to build on this. However, much work still remains and many obstacles
are currently in place.
This paper highlights the key issues and the
way forward for business by:
— Examining the implications of the
key objectives of the waste strategy, and in particular current
and prospective targets for waste;
— Outlining the performance of business
to date and the key drivers;
— Identifying the main challenges to
further progress;
— Recommending what needs to be done.
OBJECTIVES AND
TARGETS
The fundamental objective is to manage waste
and resources better, not least through a waste hierarchy of reduce,
reuse, recovery and disposal. The CBI supports this objective,
and the hierarchy represents a valuable tool in prioritisation.
Landfill, incineration, composting and recycling all have a vital
part to play in an integrated strategy based on Best Practical
Environmental Option (BPEO). The BPEO principles should be the
first and foremost consideration for waste management decisions.
Promoting improved resource efficiency will
also be critical to the success of any waste strategy. However,
more work is needed to establish a common understanding about
what is meant by the concept, how it can be measured and the extent
to which improvement is realistically possible. The CBI notes
the current initiative by the DTI to develop a strategy on this
issue.
Current UK waste strategy, driven by EU policy,
has a particular focus on targets aimed at reducing both municipal
and industrial/commercial waste to landfill. The Landfill Directive
sets targets for the reduction of municipal waste to landfill,
while the UK has also adopted a target for industrial and commercial
waste. A range of targets governing the reduction of waste to
landfill and increased re-use and recovery have also been set
for a number of specific product streams. Examples of this target-based
regulation include the End of Life Vehicle, the Waste from Electrical
and Electronic Equipment, the Landfill and the Packaging Directive.
This demonstrates the increased moved towards a target-based approach
in attempting to secure environmental gains in waste.
We very much support the principle of targets
but their use gives rise to range of issues:
— There are major obstacles hampering
the ability of businesses to achieve the target set within the
Waste Strategy for industrial/commercial waste. The target, in
effect, requires a reduction of waste sent to landfill by 6 million
tonnes. It is unclear which element of industrial/commercial waste
will be prioritised to achieve this target. To do this, there
needs to be a good understanding of scope regarding different
sectors and waste streams;
— The waste management industry faces
many challenges in helping to deliver recycling/composting targets
for municipal landfill, due to issues of finding, land use planning
and policy uncertainty.
— In the ever evolving working environment
investment in the skills and competence of the business community
will be required;
— An industry target within the Waste
Strategy has been set for 2005 only. This differs from municipal
waste that has targets set up to 2015. Setting targets for 2015
would enable companies to develop longer term plans for the management
of waste. Such targets could be developed via consultation with
industry via an "Industrial Stakeholders Forum" (see
below),
— The Packaging & Packaging Waste
Directive already sets challenging targets for the recovery and
recycling of waste packaging. This Directive is now being revised
with a view to setting even higher recovery and recycling targets
with an impracticable deadline of 2006. The CBI is urging the
government to support an extended deadline of 2008, as proposed
by the European Parliament. This represents a more realistic but
still challenging deadline by which the recycling and recovering
targets could be met.
BUSINESS RECORD
TO DATE
Business has already taken steps to minimise
waste for good economic reasons. One of the main challenges to
making significant progress towards achieving waste strategy targets
is the lack of good data, not just on current performance with
regard to resource use or waste arisings/recovery, but also on
recent trends. The effectiveness of any policies and measures
adopted will be compromised in the absence of such data.
Based on the limited data that is available
(some of which is included in the Annex) , the following key elements
regarding business and waste can be detected:
— Industrial and commercial waste are
important components of total waste arisings (50 and 25 million
tonnes respectively in 1998-99), but other key components include
agriculture (87 million tonnes), demolition and construction (72
million tonnes), mining (114 million tonnes), dredged material
(41 million tonnes) and municipal waste (30 million tonnes)—see
Figure 1;
— Recovery rates (including recycling
and composting) in 1998-99 for industrial and commercial waste
were significantly better than those for municipal waste (45%
and 33%, compared with 19%, respectively);
— The different proportions of industrial
and commercial waste going to landfill in 1998-99 (47% and 66%
respectively) themselves mask significant variation between product
types covered by the two definitions. Figures 2 and 3 give a flavour
of that variety, extrapolating from Environment Agency data. Thus,
for example, in the case of industrial waste, the proportion of
motor vehicle waste going to landfill was significantly less than
that of wearing apparel waste;
— There is some evidence of improved
performance over time. Figure 4 indicates that, in the case of
mineral waste during the period 1990-98, quantities of quarrying,
slate, clay, china clay and colliery waste have all declined,
within the context of relatively constant production;
— For other waste streams, businesses
as producers and as waste managers have played their part in improving
recovery and recycling rates. In the four years to 2001, Valpak
estimate that the level of recycled packaging has risen by 46%
to 4.1 million tonnes. Aluminium recycling rates have risen from
2% to 34% (1989-98, according to DEFRA) and the recycled content
of newsprint feedstock has increased from 26.2% to 52.4% (1990-98,
according to DEFRA).
3.1 Municipal waste targets
As noted above, progress towards recycling and
landfill diversion targets applied to municipal (and specifically
to household) waste has not been as strong as for commercial and
industrial waste. The latest municipal waste survey published
by DEFRA indicates that household waste recycling in England rose
by 0.9% in the previous year, from 10.3% in 1999-2000 to 11.2%
in 2000-01. Judged on the current performance of the UK, the likelihood
of the Government delivering the first target of 25% recycling
of household waste by 2005 is in much doubt. Since this modest
improvement hides an underlying rising trend in the quantity of
municipal waste dispatched to landfill (22.1 Mt in 2000-01 compared
to 20.6 Mt in 1996-97), the prognosis for the UK meeting its higher
longer term recycling targets cannot be encouraging.
One particular anomaly is the incompatibility
of Local Authority targets for diversion from landfill and those
set for recovery/recycling for the packaging industry. Local Authority
targets are expressed in terms of volume/weight diversion from
landfill and, as a result, there is no incentive for them to collect
most post-consumer packaging. Government may therefore wish to
recommend that local authorities collect the different packaging
waste materials for recovery/recycling. This would be a significant
boost towards meeting the requirements of the Directive on Packaging
Waste and would complement existing investment such as that of
the aluminium industry.
3.2 Business Activity
The general picture for industrial and commercial
waste emerging from these figures is clearly underpinned by a
wide variety of activities covering different elements of the
waste hierarchy, ranging from individual programmes by businesses
to broader initiatives. Examples of the latter include:
— A joint project (ongoing) between
CBI, Design Council and Envirowise to identify the key factors
relating to the relationship between sustainable development and
the use by companies of design in their processes and provision
of goods and services;
— The "Realise" project,
which has been established to increase the recycling and reuse
of redundant IT equipment being disposed of by business in central
London. Realise makes this equipment available for use by people
in Lambeth, Southwark, Westminster and the City of London. The
IT equipment is distributed to the voluntary and community sector,
schools, start-up business and individuals. Thus, such projects
secure social as well as environmental benefit;
— Work between Biffa and retailers
such as Sainsbury's, Waitrose and Safeway on composting schemes.
Organic waste is collected and composted with the aim of selling
it back to retailers as compost. Such schemes could lead to more
large scale projects in future;
— The Waste and Resources Action Programme
(WRAP) of 21 projects working with a variety of sectors and businesses
to help create more stable and efficient markets for recycled
materials and products.
For any business or sector, performance on waste
is likely to be driven by a range of factors. Some will be of
greater significance than others to individual firms, but three
broad elements are of particular note:
— Commercial gain. Improved
resource efficiency and the re-use or recovery of products can
have a direct benefit in terms of profitability. In addition the
positive impact on brand and reputation can also be an important
driver. However, levels of awareness or ability to change behaviour
will clearly vary between types and sizes of business;
— Regulation. Business acknowledges
that sensible regulation, properly enforced, can be effective
in tackling waste issues and in ensuring that responsible firms
are not undercut by less responsible operators. However, regulation
can also pose significant challenges for SMEs and carries with
it the risk of variable implementation (eg in different EU member
states);
— Fiscal instruments. In its
1998 and 2002 reports on green taxes, the CBI recognised that
economic instruments generally (including taxation) can be a useful
tool for promoting environmental goals. The ultimate acceptability
of such tools to business, however, very much depends on their
design and the broader context of taxes levied on business.
The performance of business on waste—if
only imperfectly understood—and the drivers underlying such
performance, as briefly outlined in this section, thus constitute
a complex pattern of activity.
Recognition and better understanding of this
complexity are important if the UK is to develop a strategy which
is comprehensive, yet focused on aspects which are most likely
to yield benefit at least cost.
Similarly, this level of complexity calls for
a package of measures which optimises the balance between voluntary
action, market forces, regulation and fiscal levers. For business,
any such package is likely to involve a mix of working with the
grain in some areas, with some significant changes in approach
in others.
Business experience in addressing the waste
question indicates there are some significant challenges in making
use of the various levers available to policy makers in promoting
changes in behaviour. The next section examines four of the more
significant types of challenge before identifying possible recommendations
to address them.
4. CHALLENGES
AND BARRIERS
TO CHANGE
British industry is experiencing major challenges
and obstacles that will hamper the ability of businesses to comply
with impending waste regulation and targets in the Government's
waste strategy. Some of these are structural, in that they derive
from the manner in which legislation is framed and implemented.
Others relate to the lack of a coherent and thoroughly thought
through package of measures which together address the complexity
of business activities and drivers. We discuss some of these issues
below.
4.1 Poor Design and Implementation of Regulation
4.1.1 Definition of
waste
The current definition, as specified under the
1975 Waste Framework Directive, is unclear and confusing. It has,
particularly for manufacturing and commercial businesses, limited
innovative approaches for products. The current definition is
seen by many to hinder waste minimisation and resource efficiency
initiatives such as reuse, recycling and recovery. Further the
immediate classification of the material as waste reduces the
options available for transport and process. Examples of the detrimental
impact this is having are provided below.
Examples of definitional barriers to recycling
and waste-to-energy recovery by business:
Use of "waste" plastics as replacement
for coke/coal in blast furnaces
Use of recovered/recycled plastics in eg blast
furnaces to reduce iron ore to form iron would reduce consumption
of natural resources (coal/oil) and would reduce the amount of
material (plastics) landfilled. As requirements for coke are reduced,
the environmental impact (emissions to air and water) of the cokemaking
process would also be reduced. Dioxins are not formed in the blast
furnace as it is a reduction process (ie there is no available
oxygen, which is a prerequisite for the formation of dioxins).
However, if the plastics are classified as waste,
the blast furnace will be regarded as a waste co-incineration
plant, despite the fact that it is not, nor is it similar to,
an incineration process. This would require more strict process
and emissions control investments, in particular on monitoring.
Perhaps more importantly, despite the clear overall environmental
benefit, there would also be an image problem, with blast furnaces
likely to be viewed by the general public as equivalent or similar
to incinerators.
Re-use of oil
Waste arising from used lubricating oils and
from decommissioning fuel tanks, or cleaning fuel tanks after
contamination, amounts annually to some 400,000 tonnes in the
UK. Collection efficiency is high and currently works well without
subsidy—but this is under threat because of increasing restrictions
on disposal. As a result of an UK High Court ruling last year
on secondary liquid fuels, the product sold by the waste oil collection
industry, known as recovered fuel oil, is now considered to remain
waste until combustion is completed. Traditional purchasers such
as power stations may decide that the burdens of waste management
regulations are now too great. In the longer term, they also face
the Waste Incineration Directive, which comes into effect in January
2005. A clear definition of waste recovery here would greatly
facilitate the sensible re-use of this resource either as industrial
fuel or as refinery feedstock.
Re-use of carbon
A project in the rockwool industry to use waste
carbon as a fuel in a furnace failed, as the material is currently
classified as a "special waste", making the cost of
transporting it to plant excessive. Any contaminants would have
been scrubbed out by afterburners and filter systems, thus avoiding
any harmful emissions from the furnace. Instead, the material
continues to be sent to landfill.
Export of raw materials
When the term waste is applied to raw materials
intended for export this can distort the natural economic flow
of material. The subsequent export of the raw material from the
EU is prohibited to countries which replied no or did not respond
to the EU question—do you wish to import waste? The Italian
steel industry has been deprived of imported raw material "waste"
as a result.
4.1.2 Implementation of Regulations
The CBI understands that the UK Government does
not wish to attract infraction proceedings from the Commission
for failing to implement legislation in full and on time. However,
the process of consultation regarding recent implementation of
European waste directives (such as the Landfill Directive and
End of Life Vehicle Directive) has been protracted and difficult.
It has resulted in late transposition with little or no guidance
in place on which business can rely on. Not only does this situation
leave business in potential jeopardy from groups seeking access
to justice, but also the lack of certainty fails to allow an adequate
basis for business to present a case to financial institutions
for capital to invest in improvements needed for compliance.
The implementation of the Landfill Directive
is a case in point. The timescales to implement the Landfill Directive
have been known for some time. However, the UK legislation setting
down how the Directive is to be implemented was only passed in
June 2002. There were several changes made between the draft and
final regulations. This has made it extremely difficult for landfill
operators and waste producers to assess the true impact of the
regulations, and how they will affect their own landfill sites
or waste disposal routes. This issue has been compounded by the
fact that vital guidance notes and definitions, eg waste acceptance
criteria and pre-treatment, have not yet been finalised. This
means that landfill operators cannot assess the true business
impact from becoming a hazardous or non hazardous landfill site.
This then has the knock-on effect that waste producers cannot
determine if their current waste disposal routes will still be
open, or if their wastes will meet the waste acceptance criteria.
The recent House of Commons Select Committee Inquiry into hazardous
waste highlighted their concern over a number of these issues.
4.1.3 Volume of EU legislation
There has been much activity in recent years
developing new waste legislation at a European level, some examples
include:
— Batteries and Accumulators Directive;
— Directive on End of Life Vehicles;
— Directive on Waste from Electrical
and Electronic Goods;
— Waste Incineration Directive;
— Integrated Pollution Prevention and
Control Regulations;
— Special Waste Regulations;
— Integrated Product Policy;
The process of preparing, transposing and enforcing
a programme of legislation has imposed and continues to impose
significant pressure on the resources of businesses and policy
makers alike. Government must ensure that the UK is adequately
prepared, in terms of data and information flow, guidance, funding
and infrastructure, to implement both UK and EU initiatives on
waste.
4.1.4 Poor Design and Drafting of Regulations
The framing of specific regulations in the UK
has also acted in a way that perversely, prevents or actively
discourages waste from being reused/recycled. For example:
— The New Roads and Street Works Act
which necessitates the use of primary aggregates and the disposal
of excavated material to landfill in almost every circumstance.
— Construction wastes that could be
used rather than landfilled are not diverted because the definition
of "beneficial use", "agricultural" and "ecological"
benefit is inflexible and difficult to apply. From a duty of care
perspective, evidence to demonstrate a site is exempt under waste
management licensing legislation is often difficult to obtain
and so routing of waste to a registered exempt site is prevented.
The Waste Management Licensing Regulations require extra administrative
costs compared to the use of a product, for example registration
of carriers. Although small, these costs are significant to low
value waste competing in mass markets.
— The Environment Agency controls the
introduction of new fuels through the Substitute Fuels Protocol,
which places unique demands on the UK cement and lime industries
through the requirement for expensive, exacting and time-consuming
trials at each and every location a fuel is used. This is enforced
regardless of previous experience and knowledge of use of the
fuel at other sites. This inhibits innovation, enforces continued
reliance on less environmentally friendly fossil fuels and has
an adverse effect on competitiveness. This protocol has inhibited
the use of a variety of waste materials including tyres within
cement kilns.
4.1.5 Enforcing Authorities
The CBI "Shaping Up: Report of the Environment
Protection Survey" (1999), considered the performance of
the Environment Agency (EA) and the Scottish Environmental Protection
Agency. This report highlighted the need to improve the competency
of waste inspectors and the wider efficiency of the regime. A
key recommendation was that resources should be provided across
the EA to ensure the continuation of high standards of professional
service and to improve areas which were underfunded. Improvements
within the EA should be funded through increased efficiency within
the agency, rather than through charges to business.
Accompanying the recent legislative activity
governing waste, there will be an enhanced role for the regulators
in combating fly tipping which can have a severe impact on business.
It is hoped that the majority will act in a responsible way and
dispose of their waste accordingly. However, with the increased
costs for the disposal of waste, fly tipping is a likely outcome.
For example, last owners of vehicles will be responsible up until
2007 for financing their disposal once they have reached the "end
of life". The number of vehicles being abandoned on roadsides
is likely to increase and it is therefore important for an enhanced
role for the EA. Tougher powers will need to be put in place to
discourage illegal dumping. In addition local authorities will
need to consider the possible increase in fly tipping and put
in place the relevant infrastructure.
4.2 Market imperfections
4.2.1 Business awareness
of opportunities and capacity to harness
A variety of businesses may be unaware of the
opportunities available to reduce waste and how practically they
can go about achieving this. This may be particularly problematic
for SMEs. In the same way as the Carbon Trust has sought to reinvigorate
the former Energy Efficiency Best Practice Programme, a similar
exercise could be completed on waste. Such activities could consider
further promotion of waste minimisation initiatives such as Envirowise.
4.2.2 Underdeveloped market for secondary
materials
For many materials, the scope for recycling
is limited by the size of the markets for secondary materials.
The level of recycling can be constrained by lack of clear standards,
poor consumer awareness and the volatility of prices for recyclates.
Barriers are different for different material streams, for varying
economic sectors and for geographical regions.
It is essential that the market for secondary
materials be expanded so that more use can be made of secondary
materials, rather than generating large quantities of highly processed,
expensive waste. This work is being taken forward via the Waste
and Resources Action Programme (WRAP) which focuses on creating
stable and efficient markets for recycled materials and products.
The CBI welcomes the work of WRAP and believes that progress has
been made in developing the market for recycled products. However,
work has been restricted to a number of product areas ie glass,
paper, wood and plastics. This work could be expanded to developing
markets for other recycled products such as oils and vehicles.
The remit of WRAP and its intended lifetime should be extended
to address other market imperfections regarding waste.
4.2.3 Problem of businesses operating in areas
where there is a lack of critical mass of joint initiatives eg
remote areas and cost of transporting recyclables
Technical and logistical constraints can limit
the re-use and recovery of products. This is compounded by the
high volume to weight ratio of many waste streams, for example
packaging and plastic films. These logistical constraints are
more apparent for businesses in remote areas, such as farms, that
often find that reusing/recycling products is far too time consuming
and costly.
4.2.4 Lack of positive financial incentives
to recycle/reuse
The effort to recover an item of waste often
gives marginal cost benefit and not necessarily to the waste producer.
There are many recycled materials that are more expensive than
virgin materials. If this continues, the market will remain constricted.
For example, the plastic used in traffic cones can be removed
and reused. However, the costs associated with doing this are
greater than that of disposal. Recycled waste can also be regarding,
by some, as a lower quality material. For example, the use of
wastes for road building can raise protests at planning inquiries,
where a virgin material may be chosen despite a cheaper recycled
alternative being available. Government should therefore promote
positive incentive schemes to increase recycling and reuse of
products.
4.2.5 Influencing Consumer Behaviour
In addition to targeting industry, a level playing
field must be maintained between all stakeholders. Individual
consumers and households have a vital role in achieving sustainable
waste management. The general public needs to be educated on waste
reduction methods and encouraged to use recycling facilities that
are available. Industry has taken a proactive stance in attempting
to influence consumer behaviour. For example, retailers are taking
part in a national initiative ("Rethink Rubbish") campaign
to encourage the public to think twice about throwing away their
everyday rubbish.
A society that is more inclined to re-use, rather
than replace, will generate less waste overall (the first point
in the waste hierarchy). The Polluter Pays principle, which is
widely applied to industry, should also be applied to consumers.
At the present time, the majority of households are unaware of
the costs involved in the collection and disposal of their waste.
The potential for direct charging of individuals for municipal
waste management should be fully considered as a way both of achieving
changes in behaviour and of providing the necessary increase in
funds to improve municipal waste management standards.
4.3 Under developed waste management options
4.3.1 Government prevarication
Government should provide stakeholders with
a clear steer on HMG commitment to the use of differing waste
management options. For example, a clear indication of the role
of energy from waste and composting should be provided. Fears
of public health impacts arising from these waste treatment methods
also need to be addressed.
4.3.2 Hazardous waste
The Environment Agency estimate that England
and Wales produced approximately 6.1 million tonnes of "special"
or hazardous waste in 2000, of which 43%—2.6 million tonnes
was landfilled. The UK's definition of "special" waste
is soon to be amended to "hazardous", adding approximately
250 waste types to the list. This is likely to triple the number
of shipments and producers of such waste. The UK will therefore
face a significant increase in the quantity of waste classified
as hazardous. In addition, it is becoming increasingly apparent
that there will be a lack of suitable hazardous landfill sites
in the future. This is likely to pose a substantial challenge
for industry and government.
4.3.3 Land use planning
Another issue for urgent consideration is reform
of the interminable process for gaining planning permissions and
operating permits for waste management facilities of all descriptions.
Presently, the planning and permitting processes in the UK are
separate, unlike some systems in continental Europe. Thus, the
developer has to prepare two sets of submissions and two sets
of environmental and technology appraisals, respond to two sets
of consultation processes, and thereafter potentially endure two
sets of inquiries—a planning inquiry and a judicial review.
Determination times currently can run to two to five years depending
on the type of facility. This destroys any certainty in developing
a robust business case, and has proved to be a serious hindrance
to timely investment in the UK.
We would wish to endorse strongly the point
made by many others, that the UK planning system simply does not
allow effective delivery of Government strategy on waste. The
current system is cumbersome and is a major cause of delay in
providing the essential infrastructure required to meet the Waste
Strategy. Due to both the length of time to get permission and
the inconsistency of decisions, planning is a major risk and cost
to business. The current system is too slow and involves many
uncertainties. It is vital that this system is now revised so
that it is more responsive to the huge demand for increased waste
facilities. Leadership will be required to make changes to the
planning procedure and to the waste plans for regions which should
include all waste sources.
4.3.4 Funding Sustainable Waste Management
Government should ensure that the Waste Strategy
is appropriately funded. The ESA has estimated that bringing management
of municipal waste in the UK up to the average EU standard will
require a doubling to about £3 billion of the annual amount
spent on this waste stream.
Certain initiatives intended to develop the
infrastructure of material recovery have also under-performed.
For example, the Packaging Recovery Notes (PRNs) were introduced
as part of the Producer Responsibility Obligations (Packaging
Waste) Regulations. The intention was for the revenue to be used
to fund new capacity for the recycling of waste streams such as
paper and glass. Due to the low price of the PRNs within the first
few years of the scheme being introduced, little revenue was invested
in the recycling restructure.
The review of the Landfill Tax Credit Scheme
recently undertaken by DEFRA/Treasury, discussed proposals to
use revenue raised by the tax to fund the management of municipal
waste. It is estimated that this would only contribute about 5%
of the funding required to deliver the Waste Strategy. Clearly
this amount will have no perceptible effect in reducing municipal
waste sent to landfill. Not only would this have little impact
on municipal waste, but it would divert funds away from achieving
the benefits currently gained by the existing scheme. We believe
that this would prevent local communities receiving benefits and
would inhibit the waste industry's ability to integrate effectively
with residents within the vicinity of landfill sites. The CBI
therefore strongly opposes the revenue derived from the tax being
directed to fund government initiatives to manage municipal waste.
4.4 Mixed track record on tax
The 2002 CBI report, Green taxes: rhetoric
or reality?, showed that the business contribution to total
revenue from UK environmental taxes had increased in the five
years to 2001-02, such that nearly £1 in every £8 of
tax raised from business comes from such taxes. More broadly,
over the same period, overall tax raised from business has increased
by some £13.6 billion.
The two taxes most relevant to the waste question—the
landfill tax and the recently introduced aggregates levy—constitute
only a small proportion of environmental taxes paid by business.
However, their particular importance to certain sectors (as in
the case of the aggregates levy) and the broader context of a
higher business tax burden makes any suggestion of increasing
the rates of such taxes beyond current plans a naturally sensitive
issue for business in general. The CBI continues to stress that
any environmental tax should be fully justified and based on sound
science.
The report indicated that a further reason for
broad business sensitivity arises from the mixed experience to
date of UK environmental taxes. Relevant concerns include:
— A lack of evidence of the actual
employment benefit as a result of claimed positive features and
fiscal neutrality, such as the cuts in employers' NICs which accompanied
the introduction of, among others, the landfill tax;
— Inconclusive evidence on the behavioural
changes stimulated by such taxes—official figures show a
reduction in landfilling of construction and demolition wastes
since the introduction of the landfill tax, yet evidence from
the aggregates industry suggests that a high level of recycling
was already taking place;
— An inadequate acknowledgement of
the potential impact of tax measures on business competitiveness,
particularly in some sectors (in the case of the aggregates levy);
— A failure explicitly and coherently
to justify proposed tax measures in the context of other policy
measures, the introduction of the aggregates levy against the
backdrop of existing land use planning requirements and standards
enforced by the Environment Agency and HSE;
— A perception among some that an unintended
consequence of the landfill tax has been an increase in fly-tipping.
In the current debate on waste, there have been
calls for significant increases in the rates of landfill tax,
beyond those already planned. With UK landfill tax rates among
the lowest in Europe, there may be a strong temptation on the
part of policymakers to consider such action favourably. Much
attention has also been devoted to possible changes in the operation
of the Landfill Tax Credit Scheme (LTCS).
No change should take place until its impacts
on both the environment and business (generally and by key sectors)
have been properly explored. The objectives of any revised instruments
should also be clearly and rigorously understood first; and the
benefits of existing arrangements (particularly in the case of
the LTCS) should be properly recognised.
5. RECOMMENDATIONS
Maximising the different ways in which business
generally can contribute to the challenge of waste will require
a more coherent medium-to-long term strategy based on a better
understanding of current trends, a richer mix of measures, and
improved individual elements of that mix.
Action on 10 key issues is essential:
1. Establish a national industrial/commercial
waste database. The Environment Agency should establish a database
containing the types, quantities and geographical distribution
of industrial waste. The scope to increase recovery of waste from
industry could be co-ordinated through a system of waste exchange.
This would provide an opportunity to maximise cost benefit and
to reduce waste disposed to landfill. Such waste exchange systems
do exist on a limited, local basis but these could be extended
nationally.
2. Establish a national industrial/commercial
waste strategy. The establishment of the database (see recommendation
1) should inform the creation of the national industrial/commercial
strategy. This should be brought forward via a National Industrial
Waste Task Force that consists of all key stakeholders. This forum
should: address the 6 million tonnes of industrial/commercial
waste to be diverted from landfill by 2005; start to work on longer
term targets and consider other factors affecting sectors and
specific waste streams.
3. Provide strong leadership from Government
and relevant agencies to back all elements of the waste hierarchy.
A more holistic and scientific approach must be taken to the evaluation
of the various options so that proper justification can be provided
for difficult decisions.
4. Give greater attention to implementation,
oversight and enforcement of waste regulation. Government departments
and agencies, under scrutiny of the Better Regulation Task Force,
need to learn the lessons of past failure in shaping regulations.
With reference to the Landfill Directive, the Government and Environment
Agency are urged to release guidance so that industry has sufficient
time to meet the requirements of the regulation.
5. Review the definition of useful products
and by-products as wastes. The effects of the current approach
needs to be evaluated and, where appropriate, action taken to
barriers to waste minimisation and resource efficiency.
6. Reform the land use planning process.
It is vital that this system is now revised so that it is more
responsive to the huge demand for increased waste treatment and
recycling facilities.
7. Government should develop a supportive
and consistent approach to other policy regimes which have links
with waste. Policies on energy (currently the subject of a DTI
review), water and resource efficiency will all have a bearing
on waste policies, for example.
8. Provide funds for waste recovery capacity.
It is important to allow flexibility on producer responsibility.
Only a limited amount of costs can be absorbed by business before
their ability to survive in a global competitive market is undermined.
Government should provide sufficient funds to finance the sustainable
management of municipal waste management—this should not
fall on industry.
9. Ensure relevant taxes paid by business
are appropriate. Any change to existing ones or plans for new
ones should be thoroughly considered. Specific regard should be
given to the following:
— Consider the impact of existing commitments
on business due to other policy regimes (eg regulation) and in
the context of general business tax;
— Accurate cost benefit analysis in
general and by key sectors;
— Use the Landfill Tax Credit Scheme
to benefit the local community, deliver recycling obligations
and to develop greener product design and manufacturing processes.
It is vital that this scheme remains within the private sector;
— Revenue raised from the tax should
not be used to finance the Waste Strategy or other such initiatives;
— Improve the sustainability fund established
as part of the aggregates levy arrangements;
— Monitor the aggregates levy in light
of ongoing concerns (eg cross-border trade with Republic of Ireland)
and amend as necessary.
10. Expand recycled materials market. It
is essential that this market be expanded so we can make use of
our recycled products. Business and government will have to work
together:
— to review product standard specifications
in relation to their performance as well as their content;
— provide funding for research and
innovation in product development; and
— provide information and education
to manufacturers and consumers to justify, in terms of sustainable
development, a positive image and desirability of using recycled
products.
CONCLUSION
This paper has outlined the CBI's key messages
and recommendations on a business way forward for sustainable
waste management. We have outlined the implications of the Waste
Strategy with particular reference to the targets that have been
set. In addition we have highlighted the positive steps that business
has taken to reduce waste and increase recovery. Business is keen
to build on the progress it has already made but to do this a
number of challenges need to be met. Tackling issues such as market
imperfections, poor regulation, insufficient capacity for sustainable
waste management and the use of taxes is crucial.
Implementing the above recommendations would
help and promote the overall contribution business can make to
sustainable waste management. Achieving this is no easy task but
business is keen to work with government to resolve the complex
challenges that lie ahead. Taking an integrated approach that
considers all key stakeholders and their specific waste streams
is key. The CBI and its members look forward to making further
contributions to this challenging but fundamental issue of sustainable
waste management.
October 2002
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