Martin
Horwood: It is good to serve under your chairmanship, Sir
John. I
share many of the feelings expressed by the hon. Member for Leominster.
The Government have presented these regulations as a technical response
to a practical problem, but they deal with important issues of
principle, starting with the basic principle of producer
responsibility. The Liberal Democrats have supported for many decades
the “polluter pays” principle, and we have been
increasingly talking about a zero-waste target for the whole of
business and society, because that seems to be the ultimate objective
that we should all strive to achieve. In that respect, we support the
Government’s
intentions. However,
the regulations raise further issues, including the extent to which we
depend on the export of waste to meet our recycling and waste reduction
targets, and they put a question mark over standards and environmental
impacts overseas, as opposed to those in the domestic European market.
In the current market for metals, we are in a slightly strange
situation, and it is unlikely that people will take advantage of that
market to dodge high European environmental standards. Clearly the
driver is economic, and the international metals market is driving the
high export figures.
We are
talking about a large proportion of metal packaging waste. In 2006, 50
per cent. of the evidence for recycling steel was generated by export,
and the equivalent figure for aluminium was 23 per cent. Those are very
large percentages, and a huge proportion of the whole. The value of
those materials pretty well guarantees that they will be recycled in
these circumstances, but there is a question mark over the
environmental conditions in which that recycling takes place, and
whether they are broadly equivalent to the conditions prescribed by the
European
Union. In
our interventions on the Minister, the hon. Member for Leominster and I
raised a little bit of an issue about how those broadly equivalent
conditions are being met. The rationale for the regulations is that it
is not cost-effective for reprocessors overseas, because of the
relatively low
volumes that they obtain from the UK as a proportion of the whole, to
meet those high standards of evidence. Somebody somewhere must
therefore be paying a premium to provide those levels of evidence,
otherwise the producers would be breaking the law. The Minister is
confident that in a buoyant market we can somehow capture that cost and
pass it on to the producers. That may be the case, but it raises the
question of what is happening at the moment, and whether we are seeing
producers baulk at an extra cost, and introducing a loophole, as the
hon. Member for Leominster
suggested. Let
us be generous and say that if this works we will have a more flexible
system, which will achieve broadly the same outcomes. Nevertheless, I
would like to ask some questions about how that will work. First, a lot
of it seems to be based on the current buoyant market for metals, in
which the capacity for reprocessing will increase. However, if we have
a global economic downturn—not impossible under current
circumstances—and suddenly there is a lot of spare reprocessing
capacity and the price for metal drops sharply, will the economics
still work, or will we be left with just a loophole? The explanatory
notes
state: “The
new option will be subject to specific environmental criteria. These
criteria include proper sorting, existence of a quality system for
reprocessing, no environmental dis-benefits and a buoyant
market.” A
buoyant market is a strange environmental criterion, but the point is
whether the system will still work if the market is no longer buoyant?
I would be interested to hear the Minister’s response. The
regulations seem to be designed exclusively with the metals sector in
mind. The explanatory notes
state: “We
expect that only the metals sector will be capable of meeting the
criteria.” Perhaps
we are introducing a loophole. Does the Minister expect that other
sectors will be able to access the new option, and will they be likely
to do so? For example, would producers of plastic packaging enjoy some
flexibility that they do not have at the moment, and take advantage of
that to meet slightly lower environmental
criteria? Will
the Minister give us a guarantee that there will be no compromising of
the environmental standards expected by agencies when accrediting
exporters, on issues such as the level of trace elements and
contaminants tolerated in the environment or affecting local
communities? With the best will in the world, we may be talking about
countries where local environmental health standards are not as
rigorously enforced or are not as high in the first place, so there is
a risk that poor communities in developing countries will suffer from
pollution as a result of the regulations. Can she give us a guarantee
that environmental standards will be adhered
to? Will
the Environment Agency and its equivalent agencies need further
resources to operate the more flexible system? The Government’s
impact assessment optimistically puts the additional cost of the system
at nil, but the Environment Agency’s responsibilities are
increasing. It has recently been given more responsibilities on issues
such as flooding. There are many demands on its efforts, and it is
faces the same kind of resource constraints as many other Government
agencies, so will the new system really operate at zero cost to the
Environment Agency, or will it need more resources to meet this
obligation? The worst-case scenario is that in our keenness to meet
European targets we introduce something that works in
the short term because of the buoyant metals market, but when that
particularly buoyant market does not persist we are left with one big
loophole. 2.57
pm Harry
Cohen (Leyton and Wanstead) (Lab): I shall be brief. The
explanatory notes refer to unintended
consequences: “There
is a risk of legal challenge by other material sectors, which cannot be
totally eliminated.”
I would like to know
how that risk arises. The notes also
state: “On
the other hand, if current requirements were not changed, the UK might
face the risk of legal challenge by the aluminium
industry.” Why,
if we are regulating, do we not make ourselves immune from such legal
challenges? Will the Minister explain
that? 2.58
pm
Joan
Ruddock: I seem to have a huge number of questions to
answer. I encourage hon. Members to intervene if I fail to cover a
point on which they have sought a response.
The hon.
Member for Leominster informed us about the 59 per cent. recycling
rate, which is absolutely true. The recovery rate is higher than the
recycling rate, and we have an obligation to meet a 60 per cent.
recovery rate, of which 55 per cent. is recycling. As I indicated
earlier, we are on course to meet our overall obligations, but we have
a problem in the metals sector. I was glad to have the hon.
Gentleman’s support and that of the Liberal Democrat spokesman,
because I think that we have transposed the European legislation in a
way that works, is fair and transparent and puts the least burdens on
business and industry, while producing proper results on
recycling.
The proposal
gives the Environment Agency more flexibility to assist where
difficulties arise. That does not mean that producers will not get the
packaging notes where they can. The rest of the packaging and recycling
industry will proceed as it does at the moment. We have identified a
limited problem, and we are trying to address it. If all targets are
reached, will we reach our overall combined targets? Yes, we are on
course to do that, but a specific anxiety has been raised repeatedly by
those who represent the metals industry, and we are responding to that.
That covers the issues raised by the hon. Gentleman.
The hon.
Member for Cheltenham asked what we would be left with if the price of
raw materials falls. First, it is not likely that we will see a change
in such a buoyant market, for the obvious reason that much of that
metal is used in the emerging economies, where the demand for metal,
particularly steel, is acute. The situation would not be different if
the value of metals was not as great. The contrast between the amount
of money spent on the PERNs and the money spent to get the evidence
would be different if the price per tonne of a commodity was lower.
There would be a different comparator. At the moment, so much money can
be made that companies feel that it is not worth their while to seek
export recovery notes. They might not want this measure if that
situation pertained. This is a more recent phenomenon, and that is why,
clearly, this is a response to a different market from that which
existed when the original system was set up.
Are other
sectors likely to take advantage of this? We think not, and I shall
refer to the criteria that the Environment Agency would use. The
conditions
include “a)
source segregated or has been processed to ensure that it is exported
within a shipment of similar
material. b)
high economic value a clear environmental benefit of
recycling c)
there is a well-established international technical specification
system for the exported packaging waste material and the exported
material meets the appropriate
specification. d)
the material requires minimal processing overseas prior to being
recovered and the recovery process has a very low rate of process
loss;”. As
I said earlier, in most cases, that includes state of the art
facilities that we and the Environment Agency are satisfied will be of
the equivalent standard to those found in Europe.
We do not
believe that other sectors will be in that position or in the same
economic situation as the metals sector. They will not be able to meet
those criteria if that must be done with the discretion of the
Environment Agency and they are not in the same economic situation. We
do not envisage that plastics could do that at the moment. That does
not mean that they will not do so in the future, but the environmental
criteria will have changed, as will the nature of the plants and the
recovery notes. The cost balance would have to be closer to that of
metals before such things could happen in other sectors.
Is that a
compromise on environmental standards? We do not believe that it is,
and neither does the Environment Agency. It is satisfied, and it
obtains its evidence from the country in which the plant operates,
where it would look at what conditions the host country puts on plants
of that nature. It would make a judgment about the environmental
criteria that apply to the operation of the plant in
question.
Martin
Horwood: Bearing in mind my question on whether the
Environment Agency can deliver the regime for zero cost, is it imagined
that the agency will visit those countries to see the environmental
standards being enforced by the local agencies? What will happen if the
absolute standards required by local environmental agencies or
Government agencies are lower? Will the agency in that country start
investigating to a higher standard, so that its reprocessing facilities
meet EU or British
standards?
Joan
Ruddock: First, I should correct myself. I think that I
spoke of the individual plant at the end of my response. The assessment
will not be done at the individual plant. We are setting criteria that
countries where such plants operate will have to meet. Equivalence will
be based on the national conditions, which will be known to the
Environment Agency. That is the same evidence that must be sought in
producing PERNs. Either there is equivalence or there is not. The
Environment Agency
must take the view that equivalence exists in the place to which
materials are being exported. I stress again that we are discussing
legal export and trade that will take place regardless of the
regulations. We are dealing with the proof of what is being done, which
is a slightly different
matter. Mr.
Richard Benyon (Newbury) (Con):
Confetti.
Joan
Ruddock: I have been passed something that says what I
thought I had said. The evidence used by the Environment Agency is
provided by the local competent
authority. The
hon. Member for Cheltenham asked whether the Environment Agency will
visit the other countries. The answer is no, because it has no
jurisdiction in any other country. He expressed reasonable concerns
about poor people in developing countries not being protected properly.
As I have stressed, waste arriving in those countries is covered by the
Transfrontier Shipment of Waste Regulations 2007. That is where the
safety lies. We cannot just export waste to be dumped in other
countries. We are discussing the export of a particular type of
material for the purpose of recycling in similar plants. I have
explained the criteria for that
material. I
was asked a couple of times whether this process constitutes a
loophole. There is no loophole. As I keep stressing, we are discussing
legitimate trade that is happening anyway. The regulations are about a
requirement to prove that there is equivalence, even though it is
proving problematic to obtain the proof at the
moment. My
hon. Friend the Member for Leyton and Wanstead asked about the legal
challenge. I made no preparations for that question. I have no idea
what the answer is, but I am being given one. Although it is headed
“Legal Challenge”, I do not think that the note that I
have been given answers the question. Instead, I tell my hon. Friend
that he asked an interesting question to which I do not have the
answer, but I will be absolutely delighted to write to
him.
Bill
Wiggin: The whole
Committee.
Joan
Ruddock: I will indeed copy my letter to the whole
Committee. I am sure that all Committee members will be waiting with
bated breath. With that, I hope that I have satisfied the questions of
hon. Members and that we might make our
decision. Question
put and agreed
to. Resolved, That
the Committee has considered the draft Producer Responsibility
Obligations (Packaging Waste) (Amendment No. 2) Regulations
2008. Committee
rose at ten minutes past Three
o’clock.
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