UK: Waste Strategy For England 2007

The Government published on 24^th May 2007 its revised 20-year waste strategy. Rather than re-writing the previous strategy in its entirety, the new strategy document includes proposals which build on those set out in 2000.

Nationally, the most controversial innovations are likely to be the consultation launched simultaneously with the new strategy on removing the current ban preventing local authorities from imposing charges on householders for waste collection, additional to Council Tax.

In this bulletin we examine some of the other new directions forming part of the strategy. We consider first the Government’s key objectives and then examine the impact on the waste management industry, drivers for investment in new infrastructure, and the impacts on business.

There is a clear attempt to harness waste policy to the imperatives of green house gas emission reductions and the wider sustainability agenda. The Government expects an annual net reduction of at least 9.3 million tonnes of carbon dioxide equivalent compared to (2006/07) from management of waste in accordance with its strategy. This is based on forecast increased diversion from landfill of around 25 million tonnes of waste annually.

The strategy reaffirms the importance of the waste hierarchy and of reducing reliance on landfill, together with investment in infrastructure for recycling and energy recovery. It focuses on waste prevention and reuse in order to decouple waste growth from economic growth. It also takes first steps to adopt a lifecycle thinking, product-based approach in addition to addressing waste types and sources, and designates 7 priority wastes.

Additionally, it is considering imposing a target of a 50% reduction in the amount of construction and demolition waste going to landfill and the introduction of further restrictions on landfilling biodegradable waste and recyclable materials. The strategy is supported by the 8% year on year rise in landfill tax announced in the 2007 Budget.

In view of the approaching deadline of October 2007 for pre-treatment of all non-hazardous waste going to landfill, the Government has stated its view that the onus for characterisation and pre-treatment of such waste streams should rest increasingly with the producer rather than the landfill operator. Consultation on this aspect is underway.

The importance of energy from waste projects (and especially combined heat and power) is reaffirmed. The Government is keen to dispel public health fears in connection with incineration and concerns that increased energy from waste will overshadow attempts to increase the amount of recycling. It sees early consultation with stakeholders and flexible waste treatment contracts as key to ensuring the latter does not occur. It appears to be encouraging two separate things:

1. treatment plants that can carry out recycling as well as produce energy from waste – being flexible as to the proportion of waste directed to each over time; and
2. contracts with waste providers that do not fix the amounts of waste to be directed to each of these procedures.

As announced in the 2007 Budget, Enhanced Capital Allowances are to be extended to include all the necessary equipment to enable combined heat and power facilities to burn secondary recovered fuel.

New legislation will address current barriers to accreditation by Ofgem for eligible energy from waste plants for the purposes of the Renewables Obligation and to make Renewables Obligation Certificates (ROCs) available for energy generated by co-firing eligible biomass with non-eligible solid recovered fuels. The Energy White Paper also recently released includes proposals for banded ROCs despite concerns voiced when this idea was floated. There appears to be no intention to drop any energy from waste technologies already included in the scheme. Instead levels of support are to be raised for anaerobic digestion, pyrolysis and gasification. It is not yet clear what priority co-firing with solid recovered fuel will be accorded relative to other processes.

Annexed to the strategy is guidance on energy from waste technology intended to inform local authority procurement. The Government’s favourite for development would appear to be anaerobic digestion of biodegradable wastes, common elsewhere in the EU, but the final decision rests with local authorities. Another strong steer is for the recovery of energy from wood that cannot be recycled or re-used.

Recovery and recycling

The strategy sets a national target for re-use, recycling and composting of household waste plus an overall target for recovery of municipal waste (see box).

The Government will continue to support the work of the Waste & Resources Action Programme (WRAP) to develop national markets for recycled materials but its remit is to be extended to examining the export potential for recycled materials in order to address unspecified "risks to UK recycling levels" and also to achieve compliance with controls on exports of waste.

Legislation allowing local authorities to band together into joint waste authorities and the new Best Value Performance Indicators for waste announced in April 2007 (which include a minimum 20% of recycling and composting across the country) may stimulate investment in new recycling infrastructure. Local authorities are to be actively encouraged to consider non-municipal as well as municipal waste sources and particularly not to preclude treatment of waste from both sources at the same facilities. This may increase the economic viability of new recycling infrastructure.

The drivers for local authority-decision making are to be radically overhauled as part of the proposals announced in the separate Local Government White Paper. This will include the requirement for delivery plans for implementation of sustainability policies to be included as part of Local Area Agreements. These are to reflect local needs and contain targets for improvement agreed between central government and local stakeholders. However, local authority performance will also be judged against national standards for outcomes and 200 mandatory indicators. A number of those 200 indicators, including amounts of municipal and household waste produced, recycled and landfilled, must be adopted by the local authority. The final package is to be published later this year.

The recent Planning White Paper proposes reforms of the planning procedure for nationally significant infrastructure projects and the use of National Policy Statements setting down centralised policy on such infrastructure. We understand that the waste strategy would form the basis of any waste National Policy Statement. Regional and local development plans are to conform to current national planning guidance on waste contained in Planning Policy Statement 10.

Regional Development Agencies are to help identify business waste infrastructure needs, facilitate development of regional and sub-regional recovery and processing facilities and explore potential for co-operation across regions where appropriate. In addition a new DEFRA initiative, the Waste Infrastructure Development Programme (WIDP), will:

• establish and monitor the shortfall in residual waste treatment capacity to achieve landfill diversion targets

• assess to what extent this has been taken into account by planning authorities

• support local authorities by providing PFI credits, grants and advice on technology choice, funding, procurement and contract negotiation

• ensure full use of joint merchant/municipal facilities treating both private sector and municipal waste streams

• monitor the flow of large projects to achieve a better competitive environment for procurement

• ensure the scale of new projects takes account of expected waste growth and recycling levels

• encourage new entrants eg by simplifying documentation and appropriate risk-sharing

• develop markets for secondary recovered fuel

• communicate with local stakeholders

The strategy also makes clear that in order to facilitate entry to the market by smaller waste services providers, contracts for integrated collection, treatment and other services will be discouraged. Authorities may in future also be able to require an element of community benefit alongside project delivery, a so-called "social clause". Financial assistance to local authorities to procure new waste infrastructure (including PFI credits) will depend on their "engagement with the planning process" – the meaning of which is unclear. Future funding needs are currently being reviewed as part of the Government’s Comprehensive Spending Review.

Only 10 local authorities had to buy in or borrow allowances under the Landfill Allowances Trading Scheme (LATS) in its first year (2005/06) with overall biodegradable municipal waste undershooting total allowance allocations by 18.5%. The review of LATS to take place this year will not address allocation of allowances but will consider allowing authorities to take into account increased home composting. As a driver for new infrastructure, LATS is therefore likely to be neutral.

Landfill tax and closures

As referred to above, standard rate landfill tax will rise by 8% year on year. In addition, following the re-licensing of landfills under the pollution prevention and control scheme, an estimated 1,200 currently operational landfills may close, leaving only 450 and probably putting upwards pressure on gate fees.

The Environment Agency is developing further waste protocols to assist business in deciding what materials are regulated by the waste regime and draft updated guidance from DEFRA and the Agency on interpretation of the notoriously opaque definition of waste is to be consulted on. This follows the decision by the European Commission not to amend the definition of waste. It will build on guidance issued by the Commission in February 2007 on the distinction between by-products (not waste) and residues (waste).

Producer responsibility

A new products and materials unit in DEFRA is examining lifecycle impacts within the areas of food and drink, passenger transport, housing and household appliances and clothing. Its first report is expected in Spring 2008 identifying products with the highest impact. There is no clear link with the listed priority wastes.

Included in the strategy are:

• New packaging recycling targets to be set higher than EU requirements, extension of the Courtauld Commitment (a voluntary agreement to minimise packaging waste) amongst food retailers to other retail sectors and new packaging minimisation standards by product class

• A wider waste reduction and recycling agreement with the paper industry

• A sector voluntary agreement for separate collection of decorative paints and garden chemicals

• A statutory producer responsibility scheme for non-packaging farm plastics and implementation of a scheme for batteries as required by the EU Batteries Directive

• Current consultation on mandatory Site Waste Management Plans for the construction industry, following the voluntary code of practice launched by DTI in 2004

• Targets for reduction of waste produced by the food industry: the Food Industry Sustainability Strategy contains a target of reducing food industry wastes by 15–20% by 2010

• Minimum recycled content for glass products

On the whole there are few surprises in the new strategy, although full implementation would introduce some significant changes. A new Waste Strategy Board is charged with its implementation, with input from a Waste Stakeholder Group.

Business will increasingly feel the impact of reduced availability of landfill space plus increases in landfill tax. For the waste management industry, there are opportunities to diversify away from landfill operation to operate the increasing number of recycling and energy from waste facilities that will be needed in order for local authorities to perform against new waste performance standards. Authorities will have greater support in the procurement process from the new WIDP within DEFRA. It remains to be seen whether this will have any effect on the ability of projects to overcome the resistance of local residents to the siting of facilities in their immediate vicinity. A waste National Planning Statement may ease the passage.

To achieve its objectives, the strategy relies heavily on voluntary rather than legally binding initiatives. Opportunities for stakeholder dialogue and entering sector agreements, plus the issue of guidance on best practice abound, with fewer requirements for changes in the law, at least before a period of further policy development and consultation. In that regard, the strategy document does not provide a settled picture of waste strategy for the future, but rather a progress report and snapshot of current thinking.

This is hardly surprising since, whatever the national strategy, the biggest driver for change in recent years has come from Brussels. The European waste framework is currently under review. Hence, the national strategy cannot but retain an air of impermanence until reform at the European level is settled.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.