Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Letter from Biffa Waste Services Ltd to the Rt Hon Michael Meacher, MP, Minister of State (environment), Department for Environment, Food and Rural Affairs 30 July 2001


  Since my letter to you of 17 July subsequent contact from members of your department suggests the need for additional thoughts along the following lines:

    (i)  The indicative price of £30 per unit is clearly a negotiable one but is unlikely to be less than £25 unless significant rapid utilisation rates can be achieved up to the machine process capacity of around 250,000 units annually.

    (ii)  European experience of process costs of between £7 and £25 operate but in a framework of substantial subsidies and market distortions. The important point is that these reflect huge variations in plant emissions and standards. As a result the £7 includes treatment of foams and the £15-£20 range in Germany reflects a mature market with price cutting from outdated technology (which is being upgraded and will cause costs to rise in expectation of the tighter standards in the WEEE Directive.

    (iii)  The plant we propose (and have submitted to the Agency for type approval) reduces emissions to 5 grams per unit (specification) or 3 grams per unit (target) or 1 per cent by content of CFCs. Other plants are being marketed but with emissions as much as 20 per cent. Clearly a cost/price from a 1per cent emissions plant needs to be comparable to one with 20 per cent+ on a level playing field basis. How can this be achieved?

    (iv)  First it is necessary to undertake an EIA (Environmental Impact Assessment). Each fridge averages 80 grams in the liquid plus 400 grams in the foams. Assuming 2.5 million fridges are scrapped each year this equates to 200 tonnes of emissions from refrigerants and 1,000 tonnes of emissions from foams. Not all technologies will extract 100 per cent of refrigerant and the difference between—say—a £20 per unit technology and a £25 unit technology (£5 x 2.5m units = £12.5m process fees) is 200 tonnes of "extra" CFC emissions (at 1 per cent loss versus 20 per cent loss).

  This equates to 200 x 4,000 tonnes of CO2 equivalent—or 800,000 tonnes. At the £15 projected valuation on a tonne of CO2 (£50 per tonne of carbon) the total valuation is thus £12 million.

  How can a system overcome distortions? Indeed should such differences be tolerated?

    (v)  First by Tradeable Permits. If process technologies are targeted at 5 per cent those achieving above target could issue traded permits to those failing but this is still a cop out.

    (vi)  Second, Government/Treasury could charge for CFCs as an emissions tax—this would then create a level playing field for superior technologies if a BATNEEC approach is not adopted. The weakness of this particular suggestion is that as the "customer" (via the Treasury or 500 + local authorities) Government pays a flat fee and Treasury may maximise tax yield by encouraging inefficient, high emissions processes. This is clearly nonsensical. There is an implicit assumption that BATNEEC will protect superior technology.

    (vii)  The single Treasury purchase route has the advantage of simplicity and speed—if "weighted" prices can be agreed collectors gather fridges free of charge from retailers and local authorities and—where appropriate—deduct the charge from their quarterly landfill tax liability. If collection agencies are not landfill taxpayers they simply send in a bill on proof of recycling.

  These processes require urgent evaluation and agreement if we are to avoid the silliness surrounding the conflicting costs identified in—for instance—BSE on farm fumigation. We have the investment capability, sites, management experience and transparency to deliver a solution and—if necessary—to disclose cost and margin information on an open book basis in keeping with PFI frameworks.

  We cannot operate in a framework where apparently more expensive solutions are discriminated against on the grounds that competing technologies appear cheaper by creating unpriced externalities which add to the problem—not solve it by substantial increases in pollution loadings. Either government wants the best available technology or it wants to fudge the issue by raising the pollution permitted for inefficient plants. If you wish to go down this route tell us now. The message then becomes quite simple—invest in the cheapest technology and to hell with the real environmental impact. Let the most polluting technology create the market "price". Such a course is irresponsible given the requirements of the WEEE Directive from 2004 and the PM's statement that we should be technological leaders—not laggards—in Europe.

  Obviously we are keen to meet the relevant members of your team to discuss our proposals on a personal basis.

cc: Paul Boateng MP,
HM Treasury
Baroness Young,
Environment Agency
Sue Ellis,
Chris Megainey,

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