House of Commons - Environment, Transport and Regional Affairs

Select Committee on Environment, Transport and Regional Affairs Fifth Report

ENERGY FROM WASTE

116. Although the phrase 'energy from waste' encompasses a number of techniques, in practice it is used as shorthand for the process of deriving energy from waste incineration. The future role of energy from waste incineration was a central preoccupation of our inquiry and witnesses were sharply divided in their views. Some argued that incineration should be encouraged as a vital part of a more sustainable waste strategy and that it was the only technique which could deliver the targets resulting from the Landfill Directive. But others believed that incineration of municipal waste represented a lost opportunity to re-use, recycle and compost, that the technique should be seen as no better than landfill and markedly less desirable than the other techniques for recovery and that it posed a real risk to human health. Indeed, for a variety of reasons, the public have developed a deep distrust of incineration and generally object strongly to planning applications for new incinerators in their neighbourhood.[139]

117. Incineration with energy recovery is currently used to dispose of 8% of municipal waste and incineration is also used to deal with large amounts of particular streams such as clinical waste. The Government's attitude to incineration is both blurred and changeable. The draft waste strategy A Way with Waste appeared bullish, suggesting that up to 165 new incineration facilities of capacity up to 200,000 tonnes per year would be needed to meet the aims of the Landfill Directive.[140] However, by the time Waste Strategy 2000 was published, this bold declaration had become rather shy, retreating into an Annex at the back of Part 2 of the Strategy. As acknowledged by officials from the DETR, this shift indicated a "change of tone" by the Government on incineration. By piecing togther the statements from several witnesses, it seems clear that the DETR are generally opposed to a big role for incineration, the DTI are very keen, and the Treasury are cooler but still in favour. These mixed attitudes seem likely to be the cause of the ambivalent tone in the final Strategy. Nevertheless, witnesses thought that one of the main weaknesses of the Waste Strategy 2000 was its over-reliance on incineration as a means of reducing dependence on landfill[141] and Public Interest Consultants even dubbed it a "Charter for Incineration."[142]

118. Concerns about incineration focused on two main areas: the health effects of incineration, and the impact that the construction of incinerators has on the prospects for other techniques such as recycling, re-use and minimisation. We deal with these matters below before considering funding and planning issues, and finally outlining the role which incineration should play in the waste strategy.

HEALTH EFFECTS

119. There is real public concern about the impacts of emissions from incinerators upon human health. These emissions include pollutants with known toxic properties such as dioxins and nitrous oxides. But the health concerns do not centre solely on the gaseous emissions; there are also worries about the content and treatment of the fly ash (which is taken from the filters in the flues and tends to have higher concentrations of toxics) and the bottom ash which is left after combustion of the materials. The quantities of ash are sizeable, at around 30% of the weight of the material which was incinerated.[143]

120. We received much evidence on the impacts of the air pollutants emitted from incinerators. Inevitably, the subject is a complex one and there are many epidemiological studies which the two sides of the argument selectively quote to 'prove' their case. As part of the Regulatory Impact Assessment of the Waste Incineration Directive, the Government employed a consultancy, Entec, to consider the health impacts of incineration. The results were published and using these figures, Public Interest Consultants calculated that the incineration of 1 million tonnes of waste would bring forward 20 deaths and 41 hospitalisations.[144] In subsequent questioning of Mr Meacher, it emerged that an error had been made in the calculations by Entec and that this would have resulted in an over-estimation of the number of deaths being brought forward. Indeed, the 'over-estimation' appears to be almost of an order of magnitude.[145] As a result, the Environment Agency estimate that, "of the estimated 24,000 deaths brought forward annually by all sources of air pollution, fewer than three of these may be attributed to the pollutants from the ten operating municipal waste incinerators."[146] Entec's error is more than unfortunate: where such a study should have brought clarity to the health effects of incineration, instead it has contributed directly to the confusion which surrounds this complex topic.

121. There is a significant body of epidemiological evidence which shows health effects resulting from older incinerators. Even today's exponents of incineration accept that the older incinerators were relatively dirty and probably did have direct health effects. But those exponents go on to make the case that a distinction must be drawn between 'new' incinerators which meet modern emissions standards and 'old' plants which were built before meaningful emissions standards were introduced. Many of these older incinerators were closed down in the mid-1990s as new standards were introduced. Certainly, there is good evidence that the emissions standards have driven down the actual emissions from incinerators and this will continue with the implementation of the Waste Incineration Directive. But it is also generally accepted that emissions standards are still based on what can be measured and what is technologically achievable, rather than what is safe.[147] Inevitably, this simple fact undermines the safety case which can be made from an incinerator meeting modern emissions standards. In particular, the scientific evidence and consensus about the health risk posed by dioxins is not fully developed and the US Environmental Protection Agency have recently published for consultation a review which concludes that dioxins could be some 1000 times more toxic than previously thought.[148] The Environment Agency told us, more generally, that our understanding of the health effects of air pollution is "at an early stage."[149]

122. The subjects of risk and perception of risk are extremely complex ones. Indeed, this point was emphasised during the course of our inquiry with the publication of Lord Phillips' report on the BSE crisis. There are risks associated with any industrial process and any waste management option. Dr Martin Whitworth of the Environment Agency told us: "I cannot give any categoric answer that any waste management option is safe."[150]With the messages from the BSE inquiry still fresh, we were astonished to be told by the Energy from Waste Association that "there is no risk" from incineration.[151] Such bald statements do not help rational analysis of the subject, any more than those which exaggerate the risks of incineration to create undue public concern.

123. No consideration of the health risks of incineration would be complete without reference to the Byker incinerator in Newcastle. The story is a sobering one: poor operating practices went on for many years and this culminated in the spreading of mixed bottom and fly ash on allotments, footpaths and play areas. This ash was untested but now appears to have had elevated levels of many heavy metals and very high dioxin concentrations.[152] Beyond the direct impact on the local community, this experience has scarred the public's perception of incineration.

124. If the public is to believe that incineration is safe, it must be convinced that the regulation and inspection regime is adequate and sufficiently thorough to ensure that an incinerator will be well run. When the Environment Agency came before us, they did not make a convincing case that they could persuade a sceptical public that incineration was safe, nor that the regulatory regime would ensure an incinerator continued to operate as it should.[153] These problems were graphically illustrated by the Capel Action Group who commented that:

154

125. Following technical guidelines is only one part of regulation. The other is making it transparent and ensuring that the public believe in it. It seems inevitable that incinerators will require more frequent inspection if the public's confidence is to be gained and that this must encompass all aspects of the incinerator's operation, including what happens to the ash. Whatever the quality of emissions regulation and emissions reduction equipment, poor management, poor regulation and poor operating practices can produce a real health risk from an incinerator. The arguments about the health effects from incinerators are complex and are based on incomplete knowledge. There are, however, some truths which can be drawn from the debate over the health impacts of incineration. Firstly, that the health effects which result from an incinerator's emissions are not yet fully known. Secondly, that the regulation of incineration to date has been rather poor and that this has resulted in poor practices developing in some incinerators. This, in turn, has raised the levels of anxiety amongst the public. Regulation must encompass emissions, the handling of the ash and all other aspects of the operation. Lastly, the lack of pre-separation of potentially hazardous materials, such as PVC, treated wood and batteries, increases the risk of emission limit values being exceeded.

126. The Environment Agency must provide a better standard of inspection of incinerators if the public's confidence is to be regained. The Agency will also need to examine its strategy for communicating the risks from incineration to the public. In addition, continuous monitoring of the emissions from all incinerator stacks should be carried out and the data made freely and easily available to the public. Where recurrent breaches of limit values are found to occur, the operator should be fined. If breaches continue to occur, the plant should be closed down. Only with the combination of better, more rigorous regulation and greater transparency will it be possible to convince a sceptical public that incinerators need not pose a major risk to human health.

INTERACTION WITH OTHER TECHNIQUES

127. Some witnesses were concerned that an expansion of capacity for incineration would 'crowd out' recycling[155] and this possibility is acknowledged by the DETR.[156] Because building an incinerator is a capital-intensive project, incinerators require a guaranteed waste-stream (with a reasonably high calorific value) over many years for their construction to be cost-effective. Contracts often specify a given amount of waste for a period of up to thirty years. In addition to the construction of new incinerators, there is also a danger that large amounts of waste could be diverted for use as a fuel in cement kilns. By taking a large amount of material out of the waste stream (and also diverting away from landfill, thereby helping to meet the landfill diversion targets based on the EU Landfill Directive), it is argued that efforts to recycle and re-use will be lessened.[157] As such, some have dubbed incineration the "slob" solution to meeting the Landfill Directive targets.[158]

128. Against this, if we are to lessen our dependence on landfill (as we must), it is difficult to see how this will be achieved without increasing the amount of waste which is incinerated. Many witnesses made the point that the legal requirements for diversion of biodegradable waste from landfill would not be met without recourse to incineration.[159] Peter Jones of Biffa wrote that "common sense" would suggest a doubling of incineration capacity.[160] Similarly, the National Association of Waste Disposal Officers noted the need for a "secure" option to deal with the residual waste after recycling and composting.[161] Certainly, in the short- to medium-term, it will not be possible to maximise the levels of waste reduction, re-use and recycling such that the levels of waste left over are relatively small and can continue to be landfilled.

129. The argument about incineration 'crowding out' recycling really comes down to the scale and number of individual incinerators which will be built. The discussion of these numbers produced much disagreement. Part 2 of the Waste Strategy 2000 indicates that up to 166 new incinerators (of average 250,000 tonnes/year capacity) could be required by 2020 to meet the landfill diversion targets. The Government is, however, keen to distance itself from any specification of how many should be built - the DETR told us that:

162

However, perception is skewed in that the gap between the recycling and recovery targets is often taken as the 'requirement' for energy from waste. As such, it seems likely that higher recycling and composting targets would probably reduce the planned incineration capacity.

130. In a slightly curious situation, those who argue for more incineration project fewer numbers of smaller incinerators whilst those who are opposed to the technique told us that there would be large numbers of high-capacity incinerators built. Robin Murray told us that:

163

Peter Jones of Biffa Waste Services Ltd also suggested that around 100 incinerators would be built.[164] Against these figures, the Energy from Waste Association described the projection of up to 166 new incinerators as a "gross exaggeration"[165] and went on to suggest that a maximum of 40-50 plants would be constructed by 2015.[166]

131. The Energy from Waste Association stated that there is no optimum size of incinerator since the appropriate scale will vary according to local conditions.[167] However, many witnesses argued that incinerators above a certain size were inimical to prospects for recycling[168] and it seems to be common sense that smaller plants are less likely to reduce the potential for recycling since they take a smaller portion of the waste stream.[169] The Government has signalled (albeit rather weakly) that it does not want to see very large incinerators being built. Mr Ward from the DETR noted the scale of the Edmonton incinerator (which has an annual input of 600,000 tonnes) and that it burns all materials without sorting. He went on to say that "we are signalling that that sort of style is not what it is all about. That is not what we regard as integrated waste management for the future."[170]

132. But amongst those incinerators which have recently received planning permission are those at Slough (440,000 tonnes per annum) and Maidstone (500,000 tonnes per annum).[171] The average size of new incinerators is smaller, at around 200,000 tonnes per annum, but even at this size, incinerators must still be considered inimical to the prospects for recycling and composting.

133. The scale of an incinerator is, obviously, linked to how much material is to be burned. One of the arguments against mass-burn incineration is that around 30% of the material included is inert and does not burn.[172] Not only does some of the material not ignite but unsorted mixed waste will also contain many components from which value could be gained through recycling or composting. Quite simply, incinerators would be smaller if they were only used to burn waste from which materials for recycling and composting had been source-separated.

134. The nature of incineration is such that it can 'crowd out' recycling: if a significant number of large incinerators, operating on long contracts, are allowed to be built, the long-term prospects for recycling will be diminished. The real challenge, then, is to keep the contribution of incineration to a reasonable level. For this reason, the Government should consider how to ensure that incineration is used only for sorted waste from which materials of value have been reclaimed. Further, the average size of incinerator currently planned is too large and the Government must offer a clear signal that the building of incinerators above a capacity of 100,000 tonnes per annum is unlikely to be approved.

PLANNING FOR INCINERATION

135. It can be argued that planning for new incineration is heading towards crisis-point. Some witnesses expressed concern that the current timescale for planning and constructing incinerators was such that energy from waste would not make a much greater contribution to waste management before 2010.[173] The primary problem is the public's complete lack of acceptance of incineration. There are many reasons for this - the health issues (as discussed above), worries over the amount and type of traffic which an incinerator will bring and a general reluctance to see an industrial facility in their neighbourhood. Indeed, the public appear to have reservations about any waste facility being built: a subject we consider later in this Report.

136. However, we were left in no doubt that it is incineration and incinerators which people object to most: there are now many protest groups set up around the country to oppose the construction of incinerators. By their proposed scale, many incinerators must be considered to be of regional significance - that is, they will handle not only local waste but also that from the surrounding region. Such facilities will often attract greater opposition because of the perception that one neighbourhood is being forced to deal with the waste from elsewhere. This tends to breed further resentment. We have already noted that smaller incinerators could make incineration less of a threat to the prospects for recycling. It may also be that the public find smaller incinerators less objectionable.[174]

137. Seeking planning approval for incineration at present can also be considered to be handicapped by the Government's equivocal level of commitment to incineration as part of the future waste strategy. Indeed, the Planning Officers Society told us just this:

"the bottom line is the determination of a planning application for an incinerator facility which may be the subject of a public inquiry, through call-in or whatever. Whilst the planning officers may seek to support that proposal, they may well not be able to bring in defence of that support, firm Government guidance which states categorically that incineration is supported"[175]

It is estimated that it takes around 7 years to gain planning permission for and build a new incinerator at present.[176]The Energy from Waste Association argued that "rigorous revision of the planning process" would be necessary to meet the targets in the Landfill Directive. Although the planning system can be slow and cumbersome, it is surely the best check on what is built and ensures that the public must be consulted (at least indirectly) about waste management facilities to be built. We consider the planning of waste management facilities more fully later in this Report.

138. Although the planning system is currently delaying the construction of new incinerators, it can be considered to be one of the few factors which is restraining the growth of incineration. Given our severe reservations about the future role of incineration, we are not unduly concerned by these delays. The most worrying aspect of the siting of new incinerators is that they may end up in those areas where it is anticipated that resistance will be least. In practice, this is likely to be poorer areas[177] and there are already indications that the Energy from Waste Association are recognising the need to offer something to the local community where an incinerator is to be sited.[178] We are concerned that incinerators may end up being built according to the 'path of least resistance' rule. If allowed to happen, this may mean that poorer areas of towns and cities are left effectively blighted by the presence of a large incinerator. This must not be allowed to happen. If incineration is safe then a sceptical public must be convinced and incinerators should then be sited in the most appropriate places which could be out-of-town shopping centres or adjacent to town-halls and other offices, rather than the poorest areas. When siting incinerators, the main factor should be the existence of a suitable local demand for the hot water and electricity produced.

139. The problems of planning for incineration will not be easily remedied and it may be that authorities should make use of this situation to motivate and involve the public in waste planning more generally. Several witnesses noted the benefits of producing a draft waste plan which includes the construction of new incineration capacity. Although such a plan is likely to attract protest on the basis of the siting of the new incinerators (if nothing else), it is then possible to engage in a public debate about what should be done with the neighbourhood's waste. Essex Waste Disposal Authority told us of the success of this approach, noting that it had resulted in "the most fantastic debate" about waste management in the county.[179]

140. Some have suggested that this approach be taken one step further and that a local authority could 'shadow plan' for an incinerator.[180] In effect, the authority would develop plans for new incineration capacity but only proceed with construction if attempts to minimise, re-use and recycle left a shortfall from the diversion targets. In most cases this technique is likely to promote greater involvement from the public in waste planning. However, a formalised arrangement of 'shadow planning' for incineration could be considered to have a whiff of bullying about it. Such veiled threats should be used with caution and should only follow after the failure of other efforts to engage the public in the local waste plan. Shadow planning of facilities which the public may oppose must not be used as a short-cut to public engagement.

141. One other issue about planning for incinerators was brought to our attention by Colin Pickthall, Member of Parliament for West Lancashire. There appears to be a possible 'back door' by which any industrial facility may be able to convert to become an incineration plant for BSE-infected cattle without having to go through a full application for planning permission. By applying for a Lawful Development Certificate, the firm avoids any planning considerations being taken into account: the only question to be answered is whether the development in question is lawful for planning purposes. This is wrong: it is vital that facilities which provoke public anxiety such as incinerators are required to go through the full planning route so that those concerns can be aired and considered before a decision over planning permission is given. An increase in incineration must not be allowed to be imposed by any 'back door' route, such as Lawful Development Certificates. In particular, the conversion of existing industrial facilities to incinerators to deal with the remains of BSE-infected cattle should only be allowed if sought through a full application for planning permission.

FUNDING FOR INCINERATION

142. Many witnesses claimed that incineration had been, and continues to be, in receipt of large amounts of public money which are either not available to other options or are more difficult to attract.[181] Robin Murray told us that the existing instruments available to fund new incineration capacity were "like financing an abacus development programme when we have an electronic revolution around the corner."[182] Public Interest Consultants detailed the incentives available:

183

This point was explicitly acknowledged by officials from the DETR who said, simply, that "we recognise that the level of support for incineration is greater than the level of support for recycling."[184] Robin Murray told us that the net effect of these schemes for the Kidderminster incinerator was that it received £100 million of public money out of the total cost of £500 million.[185]

143. As we have already noted, incineration is a capital-intensive technique and many witnesses argued that, as a result, it was effectively more eligible for Private Finance Initiative funding than other, less capital-intensive techniques. This point too was effectively acknowledged by officials from the DETR who noted that the PFI rules had now been "tightened up" to ensure that an incinerator forms "a properly balanced part of the overall package."[186] The DTI memorandum lists the new criteria, the relevant one being that the PFI bid must:

187

Although this is clearly an improvement, the Minister told us that "most, if not all" of the eight PFI projects which have been approved since the change of rules have still involved incineration.[188] Nevertheless, Mr Timms was confident that the new criteria would be reflected in future bids. The nature of the PFI system is such that it will continue to end up funding large-scale incineration or large Materials Reclamation Facilities, rather than the incremental building-up of kerbside recycling facilities.[189]

144. We welcome the Government's amendments to the rules for Private Finance Initiative funding and expect these to be fully enforced to ensure that incineration plays only a moderate role in most bids. Further, the Government should examine whether the PFI rules can be changed so that long-term improvements in recycling and composting facilities can be funded from this source. If not, we recommend that the role of PFI funding for waste management be progressively reduced.

145. A further aspect of PFI funding raised concerns: in many cases, PFI funding has been approved before planning permission for an incinerator has been granted. Not surprisingly, this has provoked resentment from local communities who feel that they are being presented with a fait accompli and are being bounced into accepting a facility without true or full consultation. Consultation must be pursued before seeking PFI funding.[190] We recommend that PFI approval not be given until planning permission has been granted for the facilities required.

146. The other aspects of subsidy to incineration rest largely upon its classification as a source of renewable energy. Proponents argue that energy from waste is renewable on the basis that it displaces fossil fuels, thereby producing a net reduction in emissions of carbon dioxide, the principal greenhouse gas. Critics argue that the net reduction in emissions is not large: for example, Greenpeace stated that energy from waste incineration produced 80% of the emissions produced by a fossil-fuel power station.[191] Leaving aside the question of emissions, Ms Hewitt, the DTI Minister told us that a renewable source of energy is one which is "continuously and sustainably available"[192] and this point was echoed by Stephen Timms, the Treasury Minister. Mr Meacher seemed less convinced, noting that "there is still the question about the conceptualisation of energy from waste and whether that is renewable."[193] Certainly, it is difficult to feel comfortable with a system of renewables classification which categorises energy from waste alongside solar, wind and wave power. Some witnesses argued that by classifying energy from waste as 'renewable', these other sources were being deprived of funding.[194]

147. This confusion over whether energy from waste can be classified as "renewable" seems to extend into the different schemes of taxation, funding and targets. At present, energy from waste incineration is being counted towards the Government's target of generating 10% of electricity from renewable sources by 2010 and the DTI estimate that it will fulfil around one-quarter of the target.[195] Indeed, we strongly suspect that the discrepancy in attitude towards incineration between DETR and the DTI which we have noted elsewhere is the result of DTI's need for incineration if it is to achieve its target on renewable energy.

148. Energy from waste will be exempt from the Climate Change Levy when it is introduced in April of this year on the basis of its classification as 'renewable'. Incineration has also qualified for subsidy under the Non-Fossil Fuel Obligation, receiving some £420 million under this scheme.[196] However, it is now proposed that it is excluded from the successor scheme, the Renewable Energy Obligation, on the grounds that:

197

On the other hand, the Energy from Waste Association told us that it was "absolutely vital" that energy from waste qualified for the Renewable Energy Obligation. However, David Tuthill from the Essex Waste Disposal Authority commented that:

198

149. There is a real question about establishing the right balance of encouragement for energy from waste so that it does form a limited component part of the waste strategy. But we do not accept that energy from waste incineration is a renewable form of energy. Even if one considers that it meets the technical definition of renewable energy, it utterly fails to meet what might be called a 'common-sense' interpretation. A waste stream is only 'sustainable' in the most twisted definition of the word since sustainable waste management has as its cornerstone the minimisation of waste, and the explicit maintenance of waste streams for the purposes of incineration is in complete contradiction of this principle. By classifying energy from waste as renewable energy, a signal is sent to the public and business that it is acceptable to continue producing waste because 'renewable energy' is generated from it. We therefore recommend that:

energy from waste incineration be excluded from counting towards the target for 10% of electricity to be generated from renewable sources;

the Government's exclusion of energy from waste incineration from the Renewable Energy Obligation proposals be maintained;

the exemption of energy from waste incineration from the Climate Change Levy be withdrawn.

153. Despite some changes to the various measures, we are very concerned that incineration may be being favoured by the structure and nature of fiscal instruments. There must be no subsidy to the growth of incineration. If fiscal instruments favour the development of incineration, then the result in 20 years time could be a large and overbearing incineration industry which effectively crowds out the more attractive options of minimisation, re-use, recycling and composting.

THE CASE FOR AN INCINERATION TAX

154. Indeed, having dealt with the subsidies to incineration, a case can be made that it should be subject to a levy. Firstly, there is considerable evidence that incineration has significant 'external costs' or costs to the environment and community which are not currently being met. Certainly, although different studies have produced different results, the external costs of landfill and incineration can be considered to be of a roughly similar magnitude. In 1998, we concluded that "The Government should consult on the likely effectiveness and impact of an incineration tax with a view to introducing the tax before the end of this Parliament. Consideration should be given to means whereby the tax might encourage the development of small, locally situated Combined Heat and Power plants in preference to large regional plants which do not provide direct community benefits."[199] During this inquiry, the Capel Action Group told us that an incineration tax was "absolutely vital to kick-start the rest of the hierarchy, including minimisation."[200]

155. Beyond the purely technical case, it is important to remember that landfill is now subject to a tax which will rise progressively in the future. As a result it can be argued that, without a tax on incineration, we risk swapping a landfill-based waste management system for an incineration-based one. For hazardous waste, it is of course critical that the choice of technique to treat this waste is a decision which is made on purely technical grounds and is not subject to the influence of fiscal instruments. We recommend that the Government introduce a tax on incineration. This tax would ensure that waste management did not simply shift from being a landfill-dominated system to an incineration-centred one. It would help shift strategic thinking from end-of-pipe solutions to materials recovery. Hazardous waste should be exempt from the tax. In the first instance, the incineration tax should be set at the same level as the landfill tax and the revenues from this tax should be hypothecated along with landfill tax revenues to help transform waste management.

THE ROLE OF INCINERATION

156. What, then, should be the role of incineration in waste management? For those looking in the Waste Strategy 2000 for guidance, it is rather blurred, not least by the "toning down" of the Government's warmth towards incineration between the draft strategy and the final document. Witnesses argued that, even if the Strategy does not explicitly back a large-scale increase in the amount of waste incinerated, it does still leave the way open for such an expansion, particularly by defining such a large gap between the recycling and recovery targets. The Government has dodged difficult questions on incineration and has failed to offer a sufficiently detailed vision of the way in which incineration should play its role. It has changed its tone between draft and final strategy, and seems to be avoiding the issue of how many incinerators will need to be built, what scale they should be or indeed any other characteristic of their use. The Government has also failed to rise to the challenge of analysing and communicating the risks from incinerators.

157. Our preference is not only for smaller scale incinerators, consistent with the proximity principle, but also for incineration on a smaller scale to that implied by Waste Strategy 2000, to protect and promote the opportunities for options higher up the waste hierarchy. Incinerators must not only meet environmental criteria by meeting strict emission standards, but environmental benefits claimed for them should not be entirely cancelled out by their being a blot on the landscape and providing no wider benefit to the local community.

158. The energy case for these plants should be based on generating the maximum energy and gaining the maximum usage of that energy from the waste burnt. The desire for plants both to be energy efficient and good neighbours seems to lead naturally to a conclusion that incineration should be carried out within a system of Combined Heat and Power.

159. Incinerating waste will only ever play a limited role in a system which aims for efficient resource use and sustainable waste management. Nevertheless, we accept that some increase in the amount of waste incinerated is inevitable. We are extremely concerned that the facilities which are being planned are, on the whole, large-scale mass-burn facilities for which it will be very difficult, if not impossible, to gain public acceptance, and which risk undermining efforts to increase reduction, reuse and recycling. Government should make clear that:

smaller incinerators are preferred and that these must be used to provide Combined Heat and Power wherever possible;

incineration is only acceptable where it is used to burn sorted, post-recycled waste, not mixed household waste.

162. A further point can be made in relation to the future role of incineration. Witnesses noted with disappointment the limited development of options other than incineration to recover energy from waste.[201] The development of techniques such as pyrolysis, gasification and anaerobic digestion appear to be very slow. Although pilot schemes are running for these techniques we recommend that the number of pilot schemes for new techniques such as pyrolysis, gasification and anaerobic digestion be expanded. The aim of these schemes should be to assess the environmental credentials of the different techniques against those of incineration.

Landfill

163. Landfill has dominated waste disposal in the UK to date. Although the technique has become more refined in recent times with efforts to recover energy and control leachate, it remains a relatively unsophisticated approach. Depositing our waste in holes in the ground (or spreading it on land to raise the overall profile) means that no additional value can be gained from the waste and, for this reason, landfill is at the bottom of the waste hierarchy.

164. Although efforts are now being made to reduce the amount of landfill, we still put 85% of our waste in landfills each year. This cannot go on, not least because the EU Landfill Directive sets the following targets:

by 2010 to reduce biodegradable municipal waste landfilled to 75% of that

produced in 1995;

by 2013 to reduce biodegradable municipal waste landfilled to 50% of that

produced in 1995;

by 2020 to reduce biodegradable municipal waste landfilled to 35% of that

produced in 1995;

To ensure that these targets are met, the Government has established the following targets:

to recover value from 40% of municipal waste by 2005;

to recover value from 45% of municipal waste by 2010;

to recover value from 67% of municipal waste by 2015;

171. The evidence we took on landfill focussed almost exclusively on the Landfill Tax and the Landfill Tax Credit Scheme and we discuss these below. The Government also plan to introduce a system of tradeable credits to limit the amount of waste which local authorities can send to landfill[202] but the details of this scheme have not yet been made clear and we did not consider it further.

THE LANDFILL TAX

172. The Landfill Tax was introduced in 1996 and lays claim to being the first environmental tax introduced in the UK. The current rate of the tax is £11per tonne for active wastes and £2 per tonne for inactive waste. The Government has announced that the rate will be increased by £1 per tonne per annum with a review in 2004. We conducted an inquiry into the Landfill Tax in 1999 and made many recommendations about the way the tax should be changed.

173. If one accepts that the primary purpose of the landfill tax is to reduce the amount of waste being landfilled, then it is currently failing. Many witnesses argued that, even with the £1 escalator in place, these tax levels were too low to divert waste away from landfill and that the tax would continue to fail until the rate of the tax was increased.[203] Eighty per cent of the waste management industry believe it should be increased [204] and several witnesses suggested that the tax needed to double before it would start to have a meaningful effect.[205] The Government argues that it is too early to tell what effect the tax is having and that the introduction of a much higher rate of tax would be inappropriate until it has established itself.[206] But without a higher rate of tax, landfill remains cheap: the average gate fee for landfill in the UK is markedly lower than is found in many other European countries.[207]

174. There are two very good arguments for the landfill tax not being increased to a much higher level without other changes taking place. Firstly, the impact that the landfill tax has on local authorities, which currently contribute around 60% of the gross tax yield.[208] By the nature of the tax, local authorities end up paying out relatively large sums in landfill tax but are unable to access any of the Landfill Tax Credits to change their waste management systems to avoid paying such high amounts of tax.[209] Further, because there is no direct charging to households for waste, the tax is not faced directly by the public. This is not the way that such a tax should work: those who pay it (and particularly those who pay large amounts) must be able to take action to reduce their liability, at least in the long-term. We deal with this matter in the section on the Landfill Tax Credit Scheme below. The other main argument against a higher tax is that in the current climate it would simply act as an additional incentive for the construction of incinerators.[210] We agree that this is likely to be the case but we have made recommendations above which should ensure that the role which incineration plays is a moderate and appropriate one, even in a system which involves a much higher landfill tax. Neither of these arguments against a higher landfill tax is particularly convincing when used by Government, which has power to change the system to ensure that a higher landfill tax has only positive effects.

175. The landfill tax at its present level is too small an incentive to change established behaviour significantly: it is little more than an irritant to those making provision for waste management. We are disappointed that the Government are using the 'wait and see' argument before acting to raise the landfill tax to an effective level. The Government should have the courage of its convictions and use the landfill tax to provide a strong incentive to move away from a landfill-based system of waste disposal. We recommend that the landfill tax be increased to at least £25 per tonne over the next 5 years with all funds from the increased tax rate going into the Landfill Tax Credit Scheme. This recommendation cannot be seen in isolation and must be implemented together with those we make for the Landfill Tax Credit Scheme and our proposal for an incineration tax.

THE LANDFILL TAX CREDIT SCHEME

176. Under the Landfill Tax Credit Scheme, landfill operators can claim up to 90% tax credit against donations they make to approved environmental bodies. These environmental bodies may carry out various activities of general environmental merit as defined by the regulations. Eligible projects include reclamation of contaminated land (category A), the pursuit of more sustainable waste management activities (category C/CC) and the provision of public amenities (category D).

177. Our Report of 1999 made a number of criticisms of the Credit scheme including that it could not be demonstrated that the maximum possible environmental benefit was being gained. Many of the criticisms we made then were echoed in the evidence we received on this inquiry. In particular, witnesses complained that the scheme fails to divert sufficient funds towards sustainable waste management, and lacks co-ordination to achieve this objective, as funding decisions are entirely controlled by landfill operators. To date, £135 million worth of credits has been distributed but only one-third of this has gone into developing a more sustainable waste management system whilst more than half have been spent on the community-based, category D projects.

178. Indeed, there was a strong and almost unbroken consensus that more of the landfill tax credits should be used to promote truly sustainable waste management and the aims of the Waste Strategy 2000.[211] Waste Watch suggested that the credits should be focused on two areas: market development initiatives and education and communication programmes.[212] WyeCycle suggest that a set, high percentage of the credit funds go into category C/CC projects. The LGA summed the problem up rather well when they wrote that:

213

179. In January 2000, the Government broadened the categories of project eligible for funding to encourage more funds into sustainable waste management. However, Mr Timms, the Minister of Trade and Industry, acknowledged that this had not taken place, indeed that "if anything, the proportion of the funds going on sustainable waste management projects has fallen rather than risen."[214] The South West England Environmental Trust told us:

215

Mr Meacher summed the problem up:

216

In line with our recommendation of last year,[217] the Government has announced that it will produce indicative guidelines for the proportion of funding that they would like to see going into the different categories of project. However, there is no mechanism (other than exhortation) to change the proportion of credits going to the different categories. Although we originally hoped that guidelines would be sufficient in themselves to shift credits towards C/CC projects, we are no longer convinced that this will have a significant effect. It is now difficult to avoid the conclusion that the landfill firms are operating with too great a sense of self-interest in the choice of projects they fund.

180. One of the fundamental problems of the Landfill Tax Credit Scheme is that it was designed such that the funding it releases for environmental projects is classified as private sector expenditure, not public expenditure. It is a direct result of this feature that it is not possible for Government - or even the private sector regulator of the Scheme, Entrust - to control where funds released under the scheme are spent. The Financial Secretary noted that "we will need to consider whether that [keeping it as public spending] remains an objective that we will want to stick with or whether the time has come to make some change on that front."[218] The National Audit Office recently concluded that this feature of the scheme "makes external examination of the value-for-money achieved by the scheme difficult to assess."[219] The Landfill Tax Credit Scheme is hamstrung by the need to be classified as private spending: it is de facto public spending, which is (or should be) aimed at furthering the aims of the Waste Strategy 2000. The Community Recycling Network note their conclusion that "the LTCS should be reformed such that the money is in publicly accountable hands ... Sooner or later, for this or another environmental tax or instrument, the bullet of hypothecation must be properly bitten by the Treasury."[220]

181. The Government announced plans to tinker with the credit scheme in the Waste Strategy 2000 and listed possible options for further changes which include reviewing the types of approved projects to see if they can better reflect the Government's priority to deliver more sustainable waste management, increasing the proportion of contributions going to sustainable waste management activities and using the scheme to help local authorities raise recycling levels.[221] Local authorities are currently debarred from receiving any financial benefit from the credit scheme, chiefly to avoid any conflict of interest that may arise as a result of local authorities receiving money from landfill operators who would be competing for waste management companies from those same local authorities. Many local authorities that submitted evidence to the inquiry suggested that, given that local authorities were often having to divert money away from waste management schemes such as recycling projects in order to pay Landfill Tax, they should be able to bid for funds to offset this extra expenditure.[222] One way round this could be to set aside the credits raised as a result of increases in the tax to provide a parallel, separate fund, for which local authorities could make bids.

182. There are other criticisms of the way the scheme works: one is that there is little or no information published about where the credits are spent or how to obtain them.[223] Another is that there has been no cost-effectiveness checking of the projects funded so far. In our Report on the Landfill Tax, we recommended that:

224

Witnesses to this inquiry echoed our previous conclusion[225] as did Entrust themselves who stated that:

226

It is also clear that the credits are not being distributed equitably across the country: there tends to be a bias towards those areas where the landfill companies operate.[227]

183. Witnesses suggested radical mechanisms to overcome the problems of the Credit Scheme. Amongst the ideas put forward were removing some of the categories of acceptable spending (specifically, category D, the 'community' projects), taking half of the credits at source and distributing them separately from the others, bringing a whole new regulator with powers to channel funding, channelling some (or all) of the credits to local authorities directly.[228] We understand that the Government is going to review the scheme although Mr Timms told us that "I do not think the scheme as it is currently constructed makes it impossible to achieve our aims."[229] This seems to be slightly in conflict with the views of the Environment Minister, Mr Meacher, who was asked whether it was possible to change the Landfill Tax sufficiently with its current structure and replied that he was "doubtful of that."[230]

184. The Landfill Tax Credit Scheme provides a convoluted and, to date, ineffective method of funding sustainable waste management. Rather than attempt reform of the existing system whilst protecting its status as 'private expenditure', we recommend that this charade be abandoned. The new system should consist of a fund which takes a given percentage of the revenues from the Landfill Tax (and the incineration tax which we propose) and is bid for by those wishing to undertake work. The landfill operators would no longer control the destination of any of the funding. Community schemes and general environmental projects (categories D and E) should be restricted to a smaller portion of the credits than they receive at present, and we expect all the additional credits raised by the increased landfill tax and the new incineration tax to be put directly towards minimising, re-using and recycling waste. There would be no bar on those wishing to apply for funding and the eligibility of local authorities should be related to their ambition and performance in meeting targets for improving recycling and composting. The fund should be seen, in particular, as a way of covering the transitional costs, for example, of setting up a kerbside recycling scheme. The revenue should also be the source of funds for WRAP to meet its essential task in establishing markets for recycled products.

Entrust

185. Beyond the credit scheme itself, there has been much criticism of the operating practices and behaviour of the regulator of the scheme, Entrust. The Guardian newspaper made various allegations in April 2000 about abuse of the scheme and also suggested that Entrust itself was behaving in an improper fashion. The newspaper submitted a dossier of evidence to this inquiry. We did not investigate these allegations ourselves but Entrust and Customs and Excise have examined the allegations about abuse of the credit scheme and have reported that none constituted a breach of the regulations of the scheme. Nevertheless, many witnesses were directly critical of the performance and behaviour of Entrust. These criticisms echoed our own last year when we concluded that "The structure, operation and accountability of Entrust lacks clarity and openness."[231]

186. We explored one aspect of Entrust's work in particular: its interaction with the landfill tax credit users' group, the Environmental Bodies Council (Ebco). In the first instance, we were struck by the contrast between the draft memorandum from Ebco (which reached us via The Guardian) and the final memorandum from Ebco. We suspect that the dramatic watering down which took place between draft and final may have been the result of falling foul of Ebco's agreed terms of reference with Entrust which state:

232

The terms continue:

"to represent the views of all EBs to ENTRUST and other relevant organisations, which include, HM Customs & Excise, Government Departments, Select Committees of the Houses of Parliament, bearing in mind the last sentence of paragraph 3 above [the quote reproduced above]"

187. We see no reason why Ebco should be hamstrung in this way which, where Select Committees are concerned, borders on being discourtesy to Parliament. Other aspects of this agreement seem to have been barely observed: the numbers of meetings held between Ebco and Entrust have been limited and, as a result of a dispute, no minutes have yet appeared from the meeting between Ebco and Entrust in April 2000. There has been much tension between Ebco and Entrust over the budget for Ebco, a row which continued after the appearance of both Entrust and Ebco's former chairman, Dr Malcolm Aickin.[233]

188. It is clear that the relationship between Ebco and Entrust has been strained but we were struck by the immature attitude of Entrust to this problem. Entrust argued that, under the chairmanship of Dr Malcolm Aickin, Ebco was too focussed on long-term issues, rather than providing practical feedback and advice about the way the scheme works for environmental bodies which Entrust notes is the purpose of the Council.[234] Entrust concluded that Ebco would be much more effective under its new chairman.[235] For Entrust to deal with the apparent conflict with Ebco by burying their heads in the sand, failing to agree minutes for meetings and awaiting a new chairman, seems immature and unprofessional.

189. We have previously pursued the subject of the democratic representation on the board of Ebco. In our Report on The Operation of the Landfill Tax, we concluded that "it is essential that this group [Ebco] reflects the diversity of Environmental Bodies and is accountable to them."[236] Ebco have tried to fill each of its regional posts by holding elections at its regional meetings. When quizzed on this matter, Entrust told us that:

237

This seems weak: an adequate organisation should be able to attract candidates for such posts relatively easily.

190. If Entrust is to remain as the regulator, it must work with Ebco to enable the council to form a representative and effective users group. This will require greater co-operation and professionalism from both Entrust and Ebco. We expressed disappointment with the nature and progress of Ebco nearly two years ago: it is simply unacceptable that Ebco is not established and working well by now.

191. As suggested by the quotation from Ebco's terms of reference above, Entrust also displays an entirely inappropriate - and indeed counterproductive - sensitivity to criticism, even that designed to assist it in doing its job properly. We understand that Entrust has now withdrawn its offer to Malcolm Aickin to chair an "improvement panel", set up by Entrust "to gather opinions from the many stakeholders with an interest in the strategic development and the continuation of the Landfill Tax Credit Scheme". This appears to have been done as a direct result of Dr Aickin's comments on the evidence Entrust gave us.[238] This kind of behaviour is unacceptable for any regulatory body. Entrust, however, is a relatively new body overseeing a unique scheme. For a body in this position not only to ignore constructive criticism, but effectively to sack the giver of such criticism from a job apparently designed expressly for the purpose of offering it, seems perverse in the extreme. It is now clear why Ebco was so reluctant to submit its original memorandum to us. If this is the way Entrust treats those who are in any way critical of it, it is also understandable that there should have been such difficulty attracting nominees for election to Ebco.

192. Other criticisms of Entrust have centred on features like the payment of fees to directors. On the subject of Entrust's constitution and remuneration from the directors, Dr Malcolm Aickin agreed that "Entrust have a remarkable ability to change their constitution and regulations at a whim."[239] Dr Aickin also noted that "to give them the opportunity to set their own remuneration without reference to anyone outside is putting temptation in their way which probably should not be put in their way."[240] Indeed, Lord Cranbrook, chairman of Entrust, acknowledged this to be the case and stated that he would like to see Ministers involved to deal with such matters.[241]

193. More generally, witnesses argued that a regulator which was closer to Government would be required to make a success of the scheme. The South West England Environmental Trust wrote that Entrust is "a rather expensive operation for such a limited role" and went on to suggest that:

242

Similarly, The Guardian concluded that Entrust should be replaced "with a regulatory body committed to transparency and accountability ... We would suggest that a new regulatory body membership include Government, the voluntary and community sector, local government, technical experts, and a representative of the waste industry."[243]

194. Certainly, at a time when waste management should be undergoing a transformation, the regulator of the Landfill Tax Credit Scheme should be able to play an active role in guiding credits into the right projects. The recommendations we have made for the Landfill Tax Credit Scheme will require a regulator which has direct Government backing. Although we found no evidence that Entrust has done anything which can be considered wrong in a strict sense, the way it is set-up, the limited role it can play and, to some extent, its behaviour, have left it a tarnished organisation in need of radical change. To a large extent, this failure must be considered to be a result of the convoluted and unsatisfactory system which defines the way the Landfill Tax Credit Scheme is intended to operate. On reflection, we conclude that the best interests of the Landfill Tax Credit Scheme will be served by the replacement of the regulator, Entrust. The new regulator should be closer to Government and will be required to play an active role in steering the credits available into the most appropriate projects.

Ev p160 (HC 36-II) Back

A Way with Waste: A Draft Waste Strategy for England and Wales, July 1999, Paragraph 3.19 Back

Ev p23, p128 (HC 903-II) Back

Ev p149 (HC 903-II) Back

Ev p92 (HC 903-II). Around 25% is made up by the bottom ash, with the remaining 5% from fly ash. Back

Ev p153 (HC 903-II) Back

Reference to answer to Parliamentary Question on 14 November 2000 [136098-136100]: "It [the Entec study] concluded that the proposed NOx limit would prevent 46 deaths being brought forward and prevent or delay 91 respiratory hospital admissions as a result of the formation of ozone. Entec UK have very recently recognised a mathematical error ... The correct figures for health effects of NOx are in fact significantly lower - 0.7 deaths not brought forward and 0.9 respiratory hospital admissions not brought forward as a result of the formation of ozone." Back

Letter from Environment Agency to The Guardian, 5 December 2000, (DSW 94(a) (Ev not published)) Back

This point was put forward by the Capel Action Group (Q149) and accepted by the Environment Agency (Q896) Back

Draft Exposure and Human Health Reassessment of 2,3,7,8-Tetrachlorodibenzo-p-Dioxin (TCDD) and Related Compounds, US Environmental Protection Agency Website (www.epa.gov) Back

Q914 Back

Q906 Back