DoE, waste industry at odds over licensing costs

With only weeks to go before the introduction of the new waste management licensing system, the Department of the Environment (DoE) and the waste industry remain at loggerheads over its likely economic impacts. The DoE believes that it will add £80 million per year to the industry's costs and push up gate fees by 6% - but the National Association of Waste Disposal Contractors (NAWDC) claims that the cost increase will be closer to £500 million, with gate fees at many landfills doubling.

After two false starts, the licensing system under Part II of the Environmental Protection Act 1990 is due to be brought into force on 1 May.

The new regime will introduce several major additional requirements. Operators will no longer be able to surrender their licences when they wish, but only when waste regulation authorities (WRAs) are satisfied that their sites are no longer likely to pose a pollution or health hazard. Sites will have to be in the hands of "technically competent" persons. Operators will have to show that they have made financial provision adequate to cover all obligations arising from their licences, including those during the extended post-closure period. Improvements in landfill monitoring will also be needed during both the operational and post-closure phases.

While these measures are intended to introduce environmental safeguards in their own right, the DoE says that they will indirectly serve another of its policy goals. In a draft compliance cost assessment (CCA) of the new regime, it notes that raising the cost of waste disposal "is an explicit aim of Government policy; increasing waste disposal costs are intended to provide a strong incentive for industry to cut down the volume of waste it produces and to make more use of cleaner technologies."

How far the DoE would be prepared to see disposal costs rise before it considered them unacceptable is not made clear. But it is not without irony that it is objecting to the proposed EC ban on co-disposal on the grounds that it would add £160 million to the annual waste disposal bill paid by industry (ENDS Report 228, p 38 ) - precisely the sector which it now professes to be targetting.

The principal impacts of the new licensing regime on the waste disposal industry will be three-fold, according to the draft CCA.

Firstly, annual monitoring costs are expected to increase by an average of £23,000 per landfill. This will tot up to £46 million per year for the 2,500 licensed landfills, on the assumption that 20% of these already carry out monitoring in line with forthcoming guidance.

Secondly, training of some 5,000 "technically competent" persons to run landfills and other licensed facilities will involve annual costs of £22.5 million. Thirdly, the cost-recovery charging scheme to be introduced with the licensing system is expected to cost £12 million per year.

The sum of these three costs, £80.5 million per year, is equivalent to 2.7-3.7% of the industry's annual turnover of £2-3 billion, according to the DoE. If passed on in full to customers, it would add £0.80 per tonne to disposal prices. This is equivalent to a 5.9% increase, assuming an average price of £13.60 per tonne for commercial and industrial waste to landfill quoted in the draft CCA.

NAWDC has taken issue with some of these figures - and added several more of its own to bring its overall estimate of the cost of the new licensing regime to £450-500 million per year, roughly six times the DoE's estimate.

The most important discrepancies between the two estimates stem largely from different assumptions about the effects of the new arrangements for post-closure controls on landfills.

Firstly, NAWDC does not accept the DoE's suggestion that it is likely that licences for landfills which have taken biodegradable wastes could be surrendered after 30 years. This period is likely to extend to at least 50, and perhaps even several hundred, years, it believes.

The views expressed by landfill researchers tend to support NAWDC. Current landfill practices, which emphasise the need to minimise ingress of water into completed sites, prolong the period during which full biodegradation of wastes can take place, but until this process is substantially complete WRAs are statutorily obliged not to accept the surrender of a licence. The most difficult substance from this perspective is likely to be ammonia, which may not be fully leached from biodegradable wastes for several hundred years. The need to maintain monitoring for this period will have "an enormous effect on additional costs", according to NAWDC.

NAWDC also disputes the DoE's suggestion that a post-closure monitoring period of only five years will be needed for sites which have taken inert wastes before a licence can be surrendered. A period of 10-15 years is probably more appropriate, it suggests. This may boil down to a matter of semantics: the DoE figure is for sites which have taken only genuinely inert wastes, whereas in practice many supposedly inert-only landfills have accepted some quantity of biodegradable wastes.

Secondly, NAWDC says that the DoE has neglected to mention the need for operators to maintain insurance during the post-closure phase. "They will need to maintain public liability and (in all probability) environmental protection insurances for the whole of this period. This could easily run into £50,000-£100,000 per annum per site," it claims.

It is these figures which account for most of the difference between the two estimates of the overall cost of the licensing system. NAWDC appears to have taken the higher figure of £100,000 per site, which grosses up to £250 million per year for the 2,500 existing landfills, in coming up with its overall estimate of £450-500 million per year. However, its approach should be treated with some caution, since little information is available on current insurance held by landfill operators, and it is also not at all clear what changes in insurance practice will be forced by the new licensing regime.

Those reservations aside, NAWDC goes on to conclude that landfill gate fees are likely to rise by £4-5 per tonne, rather than the DoE's figure of £0.80. It also disputes the DoE's use of an average gate fee of £13.60, since this appears to include transport costs. Many smaller operators, it says, are charging £3-5 per tonne for non-difficult wastes, so the new licensing system could double current prices at these facilities.

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