The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Joan Ruddock): I beg to move,

It is a pleasure to serve under your chairmanship, Sir John. The regulations will make a technical change to the UK’s packaging regulations, and remove an administrative burden from exporters of metal packaging waste intended for recycling overseas. With the Committee’s indulgence, I shall try to explain exactly what that means. It may take a little while, but it may be helpful.

The change is necessary to ensure that the United Kingdom can show that it meets EU targets for the recovery and recycling of metal packaging waste. I first want to allay any concerns that the amendment will reduce the environmental protection contained in the Transfrontier Shipment of Waste Regulations 2007. All waste that is exported will be subject to the requirements of those regulations, which are not affected by the amendment and will continue to apply to all exports of waste. Scrap metals have high intrinsic value, so there is little or no risk that shipments will be dumped. Metal smelting is a relatively clean process, and market intelligence suggests that most UK metal exports are reprocessed at top-of-the-range industrial plants which are often owned by major multinational companies, and the environmental benefits of recycling metals are beyond doubt, as everyone knows.

This amendment is about ensuring that we count eligible packaging waste towards the achievement of the packaging directive targets for recovery and recycling, which the UK is obliged to make under European law. Tackling waste is the responsibility not only of the Government, but of us all—businesses and individuals. It is important, therefore, that when the Government introduce rules and regulations governing how we deal with waste, our intentions and requirements are clear and easy to understand, and that they do not place unnecessary burdens on law-abiding companies.

The recycling of packaging is subject to what is known as producer responsibility. The cost falls on those who produce the waste. Since the packaging regulations came into force in 1997, the UK’s packaging waste recovery rate has risen from 30 per cent. to about 63 per cent. by the end of 2007. There are genuine environmental and resource benefits from recovery and recycling. For example, it takes 20 times more energy to produce a tonne of aluminium from virgin material than from recovered material. At the same time, we must continue to monitor our achievements closely against the targets for 2008 set by the packaging and packaging waste directive. The directive sets an overall recovery target of 60 per cent., but it also sets a material-specific recycling target for metal of 50 per cent.

The figures for our achievement give us some confidence that, overall, the UK will recover more than is required by the EU packaging directive. However, there is doubt about whether we will be able to show that we have met the specific recycling targets for metals. Under the EU directive on packaging and packaging waste, packaging waste exported out of the Community counts towards the UK’s targets only if there is sound evidence that recovery and recycling took place under environmental conditions broadly equivalent to those in the EU. That is at the heart of this amendment.

Exporters of some sorts of packaging waste are finding it increasingly difficult to obtain such evidence. That is despite significant efforts by the Environment Agency and by exporters. Getting evidence of broadly equivalent status is a particular problem for the metals sector. That is partly due to the nature of the trade, which often involves brokers and middlemen, and partly due to the cost to overseas reprocessors of producing suitable evidence compared with the relatively small amount of material they receive from UK sources.

Those commodities trade in a global market, which at the moment is especially buoyant. In recent years, demand from rapidly developing countries such as China has pushed up global prices. That applies to scrap metal as much as to other commodities. Aluminium is currently trading at up to £1,000 per tonne, and steel at more than £200 per tonne. The extra £20 to £30 per tonne that exporters would receive if they could provide evidence from overseas reprocessors is clearly not enough to lead them to devote the administrative time and resources necessary to obtain the evidence. In almost all cases, the destination is decided by the price available for the material, and not the additional potential packaging waste export recovery note revenue, otherwise known as PERN revenue. That situation is compounded by the lack of benefit, financial or otherwise, to overseas reprocessors from producing the required evidence, especially when the UK’s exports form only a small proportion of the raw material used by reprocessors.

We are confident that the metals are going to the right places, and that they are being handled in broadly equivalent conditions in modern facilities. However, as I have explained, exporters cannot always obtain the evidence to show that that is what is happening. That places the achievement of the packaging directive’s recycling target for metal at risk, as the UK cannot meet that target without exporting. The amendment that we propose to the packaging regulations would ease the problem, as it would give the Environment Agency more discretion in assessing what sound evidence of broadly equivalent conditions means. The regulations will be supported by guidance setting out environmental criteria that the agencies can use to decide whether exports will be reprocessed in conditions broadly equivalent to those in the EU.

Bill Wiggin (Leominster) (Con): I am grateful to the Minister for explaining the regulations. How much demand are we likely to see now that PERNs are less demanding, and how much more metal will we export? Will she say by how much we will miss our targets if the statutory instrument is not introduced?

Joan Ruddock: The hon. Gentleman asks how much more will we export. We believe that we will not export more because of the change, because exports are already taking place.

Bill Wiggin: Illegally?

Joan Ruddock: Not illegally. I was at pains at the outset to stress the shipping regulations, because we are deeply concerned that we should not export waste that could be environmentally or socially damaging in other countries, particularly in developing countries. The amendment affects nothing of that kind.

The shipping regulations remain in place. For example, we cannot export hazardous waste outside the EU. Everything is bound by regulation, and the trade is legitimate. Exports are occurring, but the people who do the exporting have producer responsibilities. At the moment, that is not worth their while, and they have great difficulty getting proof of the type of plant in which their scrap material is reprocessed. The amendment seeks to find a way in which we can deem there to be equivalence. That can be done, and people will be able to obtain export recovery notes on that new basis. That is the whole point of the amendment. It will not change the quantity being exported, and it will not change the destinations to which the material is being exported.

Bill Wiggin: I am grateful to the Minister for giving way again. I understood that earlier she said that we will not make our targets if we do not make it easier for people to gain the evidence and get over that barrier. If it is not going to make any difference to the amount that we trade, how will it help us achieve our targets? [Interruption.]

Joan Ruddock: I am being offered lots of advice. The target that we are working on suggest that for metals we are making 30 to 40 per cent. of the recovery, and our target is 50 per cent. That gap would be closed if we were able to supply the evidence. That is what is lacking, not the fact that a great deal of exporting goes on.

Hon. Members may be concerned about the reasons why we export. In this country, we could not handle the amount of scrap metal that needs to be reprocessed. We do not have any further uses for it, because we do not have the same levels of manufacturing that we used to have, so we do not have such a big appetite for processing metals.

Martin Horwood (Cheltenham) (LD): The hon. Member for Leominster has hit on an important issue. If the value of the PERNs means that it is not worth the reprocessing facilities producing the waste, what happens with the 50 per cent. of steel waste that is exported? Who pays that premium? Is it the people who export the waste? In that case, given the world price of steel, why can they not continue to pay that premium?

Joan Ruddock: No. They make a huge amount of money, which is why we are confident that our proposal is safe. It is a buoyant market. Those metals are valuable and will remain so in the foreseeable future. They are sold on international markets for huge amounts of money. We lack the technical details of proof of the status of the plants in which the reprocessing occurs. Because of the nature of the trade, the skills and the type of plant required, we are confident that where metals are processed in third countries, the facilities used are equivalent to similar facilities within the EU. The hon. Member for Leominster looks puzzled.

Bill Wiggin: From what the Minister has said, and given the matter raised by the hon. Member for Cheltenham, it seems that we are trying to slacken the demands on steel exporters, so that they do not have to come back with the evidence that they need to reach the Government’s target. If that is how the system works—of course the Government are confident that the steel goes to a European-equivalent plant—why do the Government consider the value of the PERN, as opposed to a reduction in the quality of the evidence? Why take the easy way? Why take less evidence as proof of good behaviour?

Joan Ruddock: We are dealing with a market system that was set up to deliver export notes for all packaging materials. It is a producer obligation that covers all packaging waste. It is a common system, and the amendment is appropriate. I am at pains to tell the Committee that that would apply, because of the criteria that would be put in place. Decisions would be taken to say, “Yes, there are equivalents out there” and it would be appropriate for that to apply to the metals sector. That is where the difficulty is, and there are aspects of metals trading that make it different from trading in plastics, paper or other packaging waste. The amendment will mean that more of the eligible metal packaging waste that is exported for recovery and recycling will count towards our directive targets. That is the central point of the proposal.

The proposals have been informed by a major consultation exercise. Copies of our consultation document were sent to the main trade associations and were placed on the Department for Environment, Food and Rural Affairs website. Thirty-one responses were received from representative bodies, individual businesses and compliance schemes on behalf of their members. A summary has been published on the DEFRA website, and the majority of respondents supported the proposed change. I am grateful for the continued work of the members of the Advisory Committee on Packaging, and its chairman, John Turner, for their continuing and valuable advice. In conclusion, the proposed amendment to the regulations will provide greater clarity to businesses, and will remove an unnecessary administrative burden. I commend the new regulations to the Committee.

Bill Wiggin: In 2007, the UK disposed of an estimated 10.5 million tonnes of packaging waste, of which about 59 per cent. was recovered and recycled. Even DEFRA admits that more needs to be done. The UK has one of the highest levels of landfill in the European Union and 22 per cent. of the country’s methane emissions—a gas with 23 times the greenhouse effect of carbon dioxide—is emitted from decomposing landfill. The increasingly urgent need to reduce our greenhouse gas emissions, combined with tough targets on landfill from Brussels, mean that we must ensure that waste materials are recycled whenever possible.

Producer responsibility in the UK is rightly an extension of the “polluter pays” principle, and is aimed at ensuring that businesses that put products on the market take responsibility for those products once they have reached the end of their life. Producer responsibility schemes can give producers an incentive to design products in a way that uses fewer resources; reduces or eliminates the use of hazardous substances or materials in the manufacture of the product; uses greater amounts of recyclates in the product; minimises waste from the product; and can be more easily treated or dismantled and recycled. They can deliver higher levels of recycling, lower lifecycle emissions, and a more responsible use of our resources.

The recycling of waste materials adds value to the economy, by giving refuse, the disposal of which involves costs, a genuine value. So-called secondary raw materials are increasingly big business, as the Minister said, and the economics of recycling are clear. To meet landfill and other European directive objectives, and to play a part in the mix of waste-treatment options, it is estimated that recycling and composting of municipal waste will need to treble from current levels to about 22 million tonnes a year by 2020. The value of that material has been estimated at some £590 million a year, so the efficient achievement of that aim represents a major economic, as well as environmental, opportunity for the United Kingdom. That domestic assessment is paralleled in commercial and industrial waste, which will produce an estimated 35 million tonnes of material a year by 2020, with a projected value of £520 million a year. In the construction and demolition sectors, we need to use at least an estimated 88 million tonnes a year by 2020, with a projected value of £700 million a year.

Against such a backdrop, we have been supportive of the introduction of legislation in the past. The setting of tough targets for business recycling—in this case for packaging—is a good way to close the loop and drive the reuse of materials. We accept the Government’s decision to bring the European Union targets to bear more heavily on the larger companies, which ought to find it easiest, through economies of scale, to make a transition to a higher recycling level. However, as the instrument accepts, it is not pragmatic to demand that all material recycling happens in the United Kingdom or, indeed, within the EU. The practicalities and economics of many recycling processes, particularly energy-intensive ones such as metals recycling, are often best done at the market end. In the case of metal, we produce about 15 megatonnes of recycled ferrous scrap, of which only 3.6 tonnes can be consumed domestically. What is clear, therefore, is that if recycling is to count towards our targets, and is not taking place in the EU, we must find a way of certifying its legitimacy that does not have the adverse effect of disincentivising businesses from bothering to try and account for it. That is the point that the Minister was wrestling with, and I agree with her.

The instrument tries to simplify the issue and we support its goals. The existing regime of packaging waste export recovery notes, or PERNs, has left exporters of waste packaging struggling to obtain evidence of broadly equivalent conditions from overseas reprocessors, despite significant resource input by the Environment Agency and the exporters. The instrument would move us to a more discretionary system based on sound evidence where specific evidence is unavailable, but it should still be subject to specific environmental criteria. Will the Minister clarify those criteria and tell us which agencies will enforce them? Will she also reassure us that we are not simply creating a loophole and explain how the system of “sound evidence” would apply?

As has been noted, the Government have set business targets, which must be met annually by companies to ensure that the UK meets its national targets under the EU directive. DEFRA states:

Will the Minister explain whether, if all those targets are reached, we will hit our EU target? I hope that the regulations will increase businesses’ ability to register their recycling, and in doing so drive up their eagerness to recycle. The shift to a zero-waste culture will benefit the economy, the environment and our quality of life. Ensuring that the proportion of our recycling that happens overseas is better regulated and better for business, is an important part of that process.