Flammable Waste Management in the UK

Opinion

Typically, the economic cost of waste management options is the main driver to determine treatment options for waste producers. On the other hand, society also cares about other aspects such as environmental impacts. Therefore, policy makers should intervene to stimulate sustainable waste management practices. In order to give waste producers financial incentives that reflect the environmental costs of waste management options, environmental taxes are key policy instruments. In other words, by implementing the ‘polluter pays’ principle, environmental taxes stimulate sustainable waste management. However, analysis of environmental taxes for the treatment of combustible waste shows that policies in Europe are both disparate and weak in environmental incentives. Disparity between neighboring countries in North Western Europe can best be illustrated by the use of incineration taxes applied per ton of incinerated waste. The UK, Germany and the Netherlands do not have an incineration tax.

Conversely, France, Flanders (Belgium) and Wallonia (Belgium) do have an incineration tax, but the actual tax rate varies significantly between the countries. As the incineration tax can amount up to 15% of the cost of waste incineration, the impact of these taxes can be significant. Clearly, the current situation does not constitute a level playing field for waste processing plants in different European countries. Considering that waste management is increasingly organized at European and even international scales-even for difficult waste streams such as combustible waste (EEA, 2012)-such tax disparity between neighbouring regions may lead to cross-border waste transport to minimize the costs of disposal to the waste haulers. Actually, Sweden and Norway both had incineration taxes in a system that allowed trade across borders. In 2010, first Norway and then Sweden abolished their incineration taxes due to the volume of cross-border waste shipments. This example from Norway and Sweden suggests that these artificial crossborder waste flows may induce strategic behaviour of policy makers that want to protect domestic interests. This may result in a ‘race to the bottom’ that lowers environmental taxes and consequently reduces the financial incentives of more sustainable waste management options. The evolution towards a common European market for waste management should therefore go hand in hand with a reduction of disparity between waste taxes in different European countries Taxes for combustible waste are not only disparate, but also low.

Even in regions where incineration taxes are applied, taxes are typically lower than the direct cost of the environmental impact. For example, the incineration tax rate in Flanders is only 8 euro per ton, while the external cost of environmental damage is estimated at more than the double. If environmental taxes are too low, rational waste producers do not fully account for the environmental damage of waste treatment options. This will lead to increasing amounts of waste to be incinerated, which is contrary to the priority ranking in the European Waste Management Hierarchy. Indeed, low incineration taxes fail to stimulate options higher in the Waste Management Hierarchy, such as prevention or recycling. The failure to internalize environmental costs is equivalent to the effect of an environmentally harmful subsidy. The need to reform these harmful financial incentives is stressed in the ‘Roadmap for a resource efficient Europe’ [1-5].

References

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