Draft Producer Responsibility Obligations (Packaging Waste) (Amendment No. 2) Regulations 2008

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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.
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.
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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