Examination of Witnesses (Question Numbers
220-237)
MS LINDSAY
MILLINGTON AND
MR GRAEME
CARUS
12 NOVEMBER 2008
Q220 Chairman: Can you explain something
to me in my ignorance? What exactly is comitology? I gather it
is a technique that is used to determine the criteria for classifying
wastes as non-waste but what does it actually mean?
Ms Millington: I understand it
is a process that Europe is planning to adopt in order to look
at the situation of when waste materials cease to be waste. It
is a process—I am not the biggest expert on this—that
relies on experts that come from governments and industry, and
provides an opportunity for the MEPs to put a view. It allows
the decisions on end of waste to be made without the need for
further directives.
Mr Carus: Effectively, that is
done in a committee rather than in the Parliament. We are advised
that is a much more rapid process than relying on these decisions
having to be taken in Parliament.
Chairman: I am glad you have explained
it is a procedure as opposed to a new form of waste recycling.
I though it might be some new technique which I had missed out
on.
Q221 Lynne Jones: The Environment
Agency's new Environmental Permitting Programme was intended to
streamline waste regulation and cut costs, but you are critical
and it does not seem to be achieving that, as far as your members
are concerned. What evidence do you have of the difficulties your
members are experiencing in the first six months of operation?
Ms Millington: We understand that
environmental permitting has brought benefits for some people,
perhaps those who deal with both waste management licences and
PPC or people who are newly applying for licensing, but neither
of those situations apply in any volume to our industry, which
is generally very long established, particularly with some firm
foundations in family-owned companies. What we have found in the
first six months is that we are getting more rather than less
bureaucracy. If I can come to two or three examples, we are in
some protracted discussions about certificating the competence
of managers. We have always had procedures for demonstrating,
on an output-related basis, the competence of managers, but the
new regulations require a certification process. The certification
processes that are being developed are largely being developed
for a more generalised waste industry. We are now into discussion
about how those can be customised. Because it is a generic scheme,
some decisions are being made about the risk banding of our industry,
which we believe are inherently wrong—I am still in the
technical competence area—but there does not seem to be
anybody who can actually take the argument about risk and tell
us why it was decided, because there are a number of different
players. That is relating to competence. A second example is the
standard licences which are being introduced as a simplified form
of environmental permitting for straightforward operations. We
have already had a lot of discussion with Defra and the Environment
Agency on what goes into those licences. If I go back to April
time when EPP came in, we had quite an unfortunate experience
when it was deemed necessary to bring in WEEE standard licences
in a very short period of time. They were produced without consultation.
The new licence was sent out in a letter to sites suggesting to
them that if they did not meet these new criteria or did not sign
on the dotted line, they would not be able to continue to trade
in a matter of weeks. We were able to put that right. We do have
good links with the operations staff in the Environment Agency
but we then went through a couple of other iterations. We have
had a number of such problems with standard licensing where these
are drawn up by the Environment Agency before consultation with
industry about what should go into them. That causes us a lot
of extra work and it can cause a lot of aggravation for the industry.
My third problem is coming now with the review of exemptions.
I am sure you are aware that we have environmental permitting,
but we also have exemptions from what used to be Waste Management
Licensing (Environmental Permitting), which is like a simplified
licensing system. We currently have a situation where round about
one-third of our members operate under an exemption. That system
has been operating for a number of years—my colleagues can
tell me from when—with very few problems. We have asked
for evidence of any need for change; we have not been provided
with any but we have been told that the exemption that applies
to our industry is comparatively complex and so it will be better
dealt with by moving into licensing and having a standard licence
instead. That will bring quite a lot of extra bureaucracy to those
companies in terms of requirements to get renewed planning consents,
accept enhanced surrender conditions and other additional processes
that they have to go through in order to get a new licence. There
are two or three things there; maybe each of them in themselves
is not massive but if we add them altogether with all the other
regulatory things that are going on in the industry, it is generally
regulation creep and more and more being put on an industry that
is essentially a trading industry.
Q222 Lynne Jones: At the start of
your answer you said something like "we have procedures".
Who is the "we" in that context?
Ms Millington: Can you remind
me what I said?
Q223 Lynne Jones: You were suggesting
that you already had procedures for testing competence and therefore
it was unnecessary.
Mr Carus: The current way competence
is assessed for site operators in the metal sector is by Environment
Agency assessment whereby the Environment Agency officer comes
out and goes through a process with the site managers to see if
they are deemed competent to run that site, or by what we call
grandfather rights where people have been running for a long number
of years and they are deemed competent by dint of the period they
have been running the site. The problem with EPP is that it is
a standardised approach which will make life easier for the Agency
and standardise decisions, but we feel we are going to be slotted
in somewhere that classifies us at a higher risk level than we
really are. We have tried over a period of time to get Defra and
the Agency to tell us what criteria they are using to assess the
risk associated with our industry and we have still not had a
proper explanation of that. The upshot of raising this in terms
of our risk assessment is that it brings with it then the idea
that we need technical competence certified by some other group,
by NVQ or some other exam, that we need sites moving out of exemptions
into standard licensing, where there will now have to be further
consultation—harking back to the earlier evidence from the
ESA—and that will bring with it a lot of issues about people
not wanting to be neighbours with waste management sites and seeing
that as an opportunity perhaps to restrict the activity of the
recycling site. Although it is standardising life for the Agency,
it moves us up the risk profile and it brings with it significant
changes to the way we operate. Under the current process, where
the Agency operates a risk assessment, we are one of the better
performing sectors. In their own report, our performance statistics
show that we are at the higher end of those that operate. We are
questioning why it needs to change.
Q224 Lynne Jones: Are there any other
sectors, apart from your own, which are affected by this or is
it just metals?
Ms Millington: In relation to
the exemptions review, our sites are considered comparatively
complex if related to something like a bottle bank. The proposal
to move them into standard licensing appears to apply to most
of the businesses that are concerned with recycling materials.
Q225 Lynne Jones: Moving on now,
you cite the EU Transfrontier Shipment Regulations as being one
of the main regulatory barriers for UK companies in the international
metals trade. What is the case for exempting the metals industry
from such regulations?
Ms Millington: I would like to
relate it back to the point that was made earlier about perhaps
reclassifying the product that we are producing as the secondary
raw material that it is. That is the longer term solution we are
seeking, rather than the exemption from any regulation. May I
explain that as an industry, within the UK, generally we are recycling
round about 15 million tonnes of metal every year; it is a £5
billion industry. Because all of that metal we recover will go
into being melted down to make new metals—as I say, markets
at the moment are in the doldrums but there is long-term demand—and
because we only have a certain amount of demand in the UK, we
export round about 60% of what we collect. That makes us about
fifth in the world in the amount that we export and we are far
and away the largest exporter of materials from Europe. I want
to cast that as the background. If we look at exports from Europe
of recycled metals, and I give you the 2006 figures, in 2006 Europe
exported about 10 million tonnes of recycled metals and 45% of
that came from the UK. So, the export of recycled metals is very
important for the UK, purely because 60% of what we have would
end up in landfill if we were not exporting it. May I come back
to your question on Transfrontier Shipment Regulations? In 2007
we had revised Transfrontier Shipment Regulations which came in
as a result of lengthy European debate about the problems of people
dumping problem wastes in third world countries. All the discussion
that we have subsequently had with MEPs—and we have had
a number of them—confirm their view, and this is MEPs on
the Environment Committee, that they had absolutely no idea that
those regulations were going to apply to a commodity market like
metal recycling. We have found ourselves in the middle of some
regulations that we can quite understand are sensible when dealing
with material of untreated WEEE or materials like that; however,
they are not at all sensible for a processed metal which is already
meeting standards and specifications such as we have in our industry
book, without which nothing will be traded. One way or another
they are bringing barriers to trade. May I very quickly tell you
what sort of barriers they are bringing in? We export to pretty
well every country in the world from the UK. One of the requirements
brought in by the new regulations is that when a country is outside
the OECD, that country must write to Europe and specifically say
if it is prepared to accept waste. If that country does not choose
to reply to the Commission's memorandum asking it to write in
that way, then additional conditions apply, and special permission
has to be obtained each time you want to export to that country.
That has hit us quite a lot. There is also a form that was introduced.
It is very sensible when talking about those problem wastes. There
is a form now which must accompany your load stating where your
material came from originally and who it is going to be eventually
melted by or who it is going to be eventually processed by in
its non-EC country. I think we all know about the London Metal
Exchange. We all hear about prices on the Today programme
in the morning. A lot of metals we are dealing with are traded
on the London Metal Exchange. When you are dealing with a traded
commodity and you are an established market that has been running
for 150 years working through a chain of brokers, it is not commercially
possible or sensible to write down on a sheet of paper exactly
who all the people in that chain are. Those are just a couple
of reasons why those regulations are not designed for us and they
are not working for us. Also, because of our export position,
it is a much bigger problem for the UK than it is for anyone else
in Europe.
Q226 Chairman: These are not the
regulations that affected the so-called ghost ships, are they,
the ones that were brought to Teesside for dismantling? I do recall
when we became involved in that there were some transfrontier
issues surrounding things like the Basle Convention. Whatever
rules pertained at the time were used to make certain that if
those ships were going to be dismantled for their scrap value
in the United Kingdom, they were done in a proper and fit manner.
Is my memory playing tricks on me here?
Ms Millington: I think you may
be into some similar regulations but I would suggest those ships
were untreated material and not fully processed secondary raw
material ready for a market.
Mr Carus: I think the question
there was more about whether the facility they were coming to
was properly licensed to accept them and treat them.
Q227 Chairman: That is true but I
do recall the question when we did the inquiry: when is a ship
waste? These rules did seem to affect it. You are talking about
a semi-processed material.
Mr Carus: It is already furnace-ready
scrap, really.
Ms Millington: I am talking about
a fully processed material. We have specifications for all metals
that are traded, which are fully agreed within the industry, between
our own industry and the metal melting manufacturing industry.
Q228 Chairman: In other words, it
is the state of the scrap before it goes off to the person who
is going to melt it down?
Ms Millington: Absolutely, and
that is how commercial contracts operate.
Mr Carus: What we produce is ready
scrap. We take in old cars and waste electronics; we separate
out the plastic and go over all the items that are not attractive
to the metal recycler. We provide them with material that they
put straight into their furnaces without any further processing.
Q229 Chairman: These are blocks of
compressed materials?
Mr Carus: They can be bales or
generally it is a fragmented loose metal. The issue is that it
is commoditised; it is used interchangeably with pig iron or other
forms of iron that they can use. Because it is commoditised, it
is traded like all commodities through brokers and traders. It
is no longer a waste in the sense that it does not have properties
that you would normally associate with a problem waste. The whole
essence of the Transfrontier Shipment Regulations is that you
have a cradle to grave audit trail for problem waste streams.
We are not a problem waste stream. We are a secondary raw material;
we are furnace ready and traded through brokers and traders. In
the current climate in particular or in any trading environment
disclosing the end consumer to the supplier is always an issue
of commercial sensitivity and is jealously guarded. In the current
climate that is even more the case. We do not always know who
the end consumer is when we sell the product, which means we cannot
always comply with the transportation requirements.
Q230 Mr Williams: You have covered
all the issues on the Transfrontier Shipment Regulations. The
issue that you have just touched upon of commercial sensitivity
is obviously a big one. To have to disclose or be able to disclose
some of those facts is a difficulty as well and in terms of being
able to establish that the final destination is equivalent to
an EU facility. Sometimes, I understand, you have difficulty in
getting that information.
Ms Millington: Sometimes it is
actually physically difficult. We do have anecdotal information
from quite a number of our members that they have lost orders
in countries outside the OECD to countries such as the US, Russia
or Japan, which are major exporters of recycled metals but which
do not have the same laws. They do not treat recycled metals as
waste, basically.
Mr Carus: From our perspective,
we produce a commodity to a specification that is ready to go
into the furnace. Because of the standard to which that furnace
operates, they are not going to melt scrap; they are going to
melt primary raw material. They are still going to operate and
have the same influence. What concerns us is that because we have
this waste tag, we have barriers in front of the recycling of
metal, which is a very good thing both in environmental terms
and in terms of carbon and re-use of resources, but it is a disincentive,
if you like, when we should be providing positive incentives because
of the overall position of what metal does. We do not want to
attract the same constraints on selling primary raw material to
furnaces around the world and yet somehow, because we have the
waste tag in front of it and we have a regulation for being a
problem waste stream which we are not, we then get barriers placed
in the way of recycled metal.
Q231 Mr Williams: You say you bring
it up to a standard that is acceptable within the industry, so
to speak. It is not 100% pure. Could there be and are there sometimes
some parts of the scrap cargo that could be deleterious or could
be a problem in terms of waste? Is the standard one that the industry
sets or one that the EU or the Environment Agency would set?
Mr Carus: It is set by the industry,
by the consumers and the suppliers in the industry. It is not
something that we impose. It has a very high metal content. We
are shipping this material all around the world.
Q232 Mr Williams: What sort of content
are you talking about?
Mr Carus: It is in the high nineties.
If you were to see the ferrous product taken from a car, you would
not see plastic, rubber, glass or foam but all metal. Not only
is it all metal but it has to be low copper content too because
the steelworks do not particularly want the copper. We go to great
lengths to achieve material of an acceptable quality, a high quality,
for the steelworks.
Mr Williams: I went down to see a very
large waste metal processor in Newport Docks employing about 400
people, Sims, and saw quite an extraordinary demonstration of
how to take scrap cars and get everything out.
Q233 Chairman: In terms of the capacity
of our industry to perform recycling, do you have sufficient capacity
for the future?
Ms Millington: I think we have
sufficient capacity for metal recycling. The industry indeed has
gone through quite a lot of its own restructuring over the last
10 years and is in good health. In its technology and developments
it is certainly up at the forefront amongst its international
competitors. We have insufficient capacity in terms of what we
do with the wastes that remain after we have recovered the metals
and, increasingly with the technologies that our companies are
investing in, after we have also recovered plastics and other
recyclable materials. There are particular areas I know you touched
on in earlier evidence today about energy from waste capacity,
et cetera, which is insufficient for our industry's need. I would
also contend it is insufficient for the UK's need in meeting its
targets for Europe.
Q234 Chairman: I presume that because
your industry is spread around there is no opportunity—for
example our witness from the Greater Manchester Waste Disposal
Authority quite clearly has found an industrial partner within
relatively easy travelling distance of where the waste is. I guess
your industry is dispersed and therefore the idea of centralising
something for waste from energy is not possible and so you would
have to ride it on the back of another facility.
Ms Millington: It is not geographically
sensible to say the industry could develop its one facility or
its two facilities.
Mr Carus: The answer is "yes
and no" because of the competitive aspects in the industry
but also regionally moving material around over long distances
is not necessarily the best solution. If I can give you an example,
our company takes in 6 million tonnes of waste product a year,
be it cars, waste electronics or construction waste. We recover
5.5 million tonnes of recyclable metal from that which goes straight
into a furnace. We have half a million tonne of residue. We started
with a pure waste stream—all the materials are problem waste—and
we recover over 90% of it and have 10% left. As Lindsay said,
we have started in recent years to reach into that and to pull
out some of the more recoverable aspects like glass and plastic.
We have invested our own money to do that and it helps us with
targets on end-of-life-vehicle recycling, although they are not
our targets because we are not producers but those of the car
manufacturers. Nonetheless, we are providing a big part of the
solution. To go to the next step, we are then left with that 10%,
which in our case is one million tonnes for the whole of the UK.
To reach into there, we do need access to energy from waste facilities
and we do not have major capacity in the UK. Again, as was touched
on with the ESA and their position earlier, other Member States
have much more capacity and, given our position, find it easier
to gain access to energy from waste in the recovery routes than
we do. The other big aspect is that if we are thinking ahead to
2015 and the increased recycling target for end-of-life vehicles,
there are technologies around at the moment which are there or
thereabouts in terms of being proven but not quite proven. It
would be a significant technological risk to invest in those at
present. They are substantial in cost. Perhaps a year ago when
the climate was different and the economy was very strong and
finance was relatively cheap then some of those projects would
have had a chance of coming to fruition, whereas in the current
climate the position is completely reversed; markets are already
no longer so strong; finances are much more difficult to come
by. Yet these investments to deal with those residual waste streams
will take four to seven years to come to fruition. If we are not
making those decisions soon, then those facilities will not be
around to help with our 2015 target. That is why we say that one
thing the Government could do is provide some kind of relief through
the Landfill Tax system for investments that are made now to divert
material from landfill in the future. If "spend today to
save tomorrow" is now a tenet of public policy, then maybe
we could also apply it in the waste stream and make the Landfill
Tax a more rounded tax. Rather than just being a stick, it could
also be a bit of a carrot.
Q235 Chairman: In terms of materials
that would create waste from energy from your sector, does that
represent another source of income or a reduced cost of disposal?
Mr Carus: Most of the facilities
at the moment, if you are talking about waste from energy, are
predicated on matching the disposal costs through landfill, so
it would be neutral in cost terms if it was made available. I
am not just talking about energy from waste; we are also interested
in some of the emerging technologies whereby you can produce alternative
fuels—methanol, ethanol and things like that—or gasification
processes. These might be more desirable in terms of the waste
hierarchy because of the nature of the product they provide, but,
as I say, the technologies are not yet sufficiently proven for
people to back them with confidence and that is why we need some
kind of incentive to help us take that step.
Q236 Mr Williams: I guess some of
the materials that you are talking about as part of that 10% are
things like fabrics. Is there a possibility, rather than going
into the specific waste for energy, that that could be used for
coal firing, for instance in coal-fired power stations, and be
a renewable source, rather than looking the way you are at the
specific facilities?
Ms Millington: I think, as Graeme
has said, there is a variety of options. The problem is that none
of those options are yet available in this country. If I could
bring it back to the Waste Strategy, we were delighted to read
the headline that said, "The Waste Strategy will be promoting
energy from waste", and then we read the second line that
said "for municipal waste and wood". What we are really
calling for here is a discussion at the appropriate level; we
need a strategy that actually looks at how we deal with this.
Exactly as you say, there is a variety of different options. We
are not locked into saying it has to be energy from waste. As
a country, and this industry is very committed to hitting it,
if we are going to hit the 2015 target to recycle, re-use, recover
95% of vehicles, we do need a solution of that sort because we
will have residual wastes that cannot be economically recycled.
It is important to understand that in this country, in contrast
with some of our European neighbours, we run a system for re-using,
recycling and recovering vehicles which is entirely commercially
operated, and so we are running it entirely on what it is viable
to recover. That is not the same in some other European countries
where, for instance, they take a gate fee on new cars going on
to the road and therefore there is a fund to pay for recycling
things which it is not economic to do. We are looking for a solution
for those things at the end of the chain. We think that is a partnership
responsibility between the country and the industry. We are looking
for the way forward to work together on that and look at all the
solutions.
Q237 Mr Williams: In that gateway,
presumably the recovery is done by hand virtually rather than
by machinery?
Ms Millington: You mean in the
countries that move into the non-economic systems? It can move
into that or equally certainly some of the countries appear to
be recovering materials for which they have not yet developed
markets and that is not too much of a problem for them. In the
case of some of them, the media separation technology that they
are using has been developed with all the capital costs met by
the fund and so the business model does not have to accommodate
any of the investment. Basically they are in a much more subsidised
position than people in the UK.
Chairman: Thank you very much indeed
and for your patience in waiting. This has been a useful session.
Thank you for your written evidence and the supplementary written
evidence; that was very useful indeed. If, as a result of this,
there is anything further you wanted to send us by way of educating
us as to the issues, please feel free to do so.
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