Opinion mixed on future of landfill tax and bans

The waste industry has mixed views on the future of landfill tax after 2010/11 and the use of landfill bans. The Environment Department is examining both issues.

The UK’s waste industry has mixed views on what should happen to landfill tax after 2010/11 to ensure commercial and industrial waste is diverted from landfill.

Veolia favours a rise towards £56 per tonne, but Sita says more research is required into the cost of treatment technologies to decide if an increase is genuinely needed. Biffa says a tax hike would not be appropriate in the current economic climate.

In December, Environment Department (DEFRA) officials met several UK waste firms to hear their views on the future of landfill tax. The Treasury requested this after the Environmental Services Association (ESA) appeared before a House of Commons select committee inquiry into the waste strategy (ENDS Report 407, pp 21-22 ).

Giving evidence, the ESA repeatedly called for clarity on the future of landfill tax. This now stands at £32/t, rising by £8 a year to hit £48/t in April 2010. The government has said it "expects" further rises beyond this, but has given no further details.

Veolia told DEFRA that landfill tax should increase until the price of landfill is equivalent to incineration. The price of incineration is around £70-80/t, requiring landfill tax to be £50-56/t.

A Waste Recycling Group (WRG) spokesman gave tacit support to Veolia’s view. The company "supports the strategy of using… landfill tax to help drive more waste out of landfill." However, the government cannot rely on this alone and should use other policies to help develop recycling and energy recovery facilities.

Sita is more cautious. "DEFRA is very fond of talking about the ‘evidence base’ and I don’t think it is strong enough in this case for the government to decide what level [the tax] should be pitched at in future," said Gev Eduljee, the company’s technical director.

The only public information source on current costs of waste treatment is a report on gate fees for the Waste and Resources Action Programme (WRAP). Published last July, this said mechanical-biological treatment could be competitive with landfill when landfill tax hits £40/t (ENDS Report 405, p 18 ). However, it is unclear what is included in the prices. For example, whether the cost of using materials recycling facilities (MRFs) includes the money generated from selling recyclate. WRAP says some MRFs actually pay waste producers up to £7/t for material, while others charge up to £70/t.

"You need to understand those costs, and then project them to 2010/11," Dr Eduljee said. "[The tax in] 2010 should be sufficient." DEFRA also needs to examine whether some operators of treatment technologies, like composting, increase their prices in line with landfill tax.

Biffa is less equivocal. "At £48, the opportunities for commercial waste recycling will largely be determined by what [plant] is available to businesses," said David Savory, Biffa’s director of environment. "We are headed to more treatment capacity and the question is whether increasing the tax would increase development further. In the current financial climate that is questionable."

Waste companies have reported difficulties getting bank finance over the last year.

DEFRA has also started examining whether landfill bans could be used to encourage commercial and industrial waste to be recycled. The government’s waste strategy, issued in 2007, said it would investigate the possibility and would focus on seven "priority materials": aluminium, wood, paper/card, glass, plastics, textiles and food waste (ENDS Report 389, pp 34-38 ).

It recently commissioned thinktank Green Alliance to examine how landfill bans work in other European countries. The report is due in March. Denmark, Germany and Sweden are amongst those already operating bans, but these are for combustible or biodegradable material. They are not for distinct waste types.

The Environment Agency has informally told DEFRA it welcomes the objective of bans, but is concerned about how they could be implemented. It does not feel the responsibility for complying with a ban should fall on businesses, as most rely on waste firms to sort their waste. It would also be difficult for landfill operators to be responsible as they could not be expected to check that every load does not contain, say, aluminium cans.

The pre-treatment requirements of the landfill Directive have a similar problem. All waste has to undergo a pre-treatment - such as sorting - before it can be landfilled. Most landfill operators require waste holders to declare this has occurred. In Germany, the responsibility for meeting bans lies with landfill operators.

The Agency’s concerns are shared by Veolia and WRG. A spokesman for WRG said landfill bans "may have a role eventually in the UK" but this should not be until councils have built the required infrastructure to meet their landfill diversion targets. If landfill bans were introduced before then, it "could destabilise" councils’ procurement schemes. Biffa and Sita are yet to develop firm positions on bans.

Waste firms will no longer pay landfill tax for material used as daily cover or for landfill engineering. WRG has had a long-running battle with Revenue and Customs (HMRC) over whether such material should be taxed. Last July, the Court of Appeal ruled in WRG’s favour.

In January, HMRC announced it would not appeal the decision and issued guidance on when tax could be reimbursed.1

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