ELSEVIER Resources, Conservation and Recycling 14 (1995) 133-155

resources, conservation and recycl ing

Does the UK Government's target to recycle 25% of household waste by the year 2000 represent an

economic approach to recycling? A case study of plastic

Joshua Singer * Department of Land Economy, University of Cambridge, Cambridge, UK

Received 18 July 1994; revised 4 January 1995; accepted 25 January 1995

Abstract

The UK Government has set a target for the recycling of domestic waste. There are already some regulations in effect that aim to improve the condition of the market, but the market for recycled materials still remains fragmented and inefficient. When private and social costs and benefits are taken into account, the benefits of recycling in certain sectors may not stack in its favour. This paper examines how current policies place incentives on the various players in the market for recycled plastics and it queries the effectiveness of the target for recycling of domestic waste. It also discusses the roles of incineration and landfill in this context, and suggests an alternative policy initiative.

Keywords: Waste management; Recycling; Incineration; Economics; Policy; Plastic

1. Introduction

In 1990 the UK Government published its strategy for the environment. One of the initiatives was setting a target for recycling of household waste: 14.23 The Government is setting the challenging target of recycling half our recyclable household waste by the end of the century. That is around 25% of all household waste [ 1 ].

The Environmental Protection Act (the Act) of the same year introduced some new provisions specifically aimed at encouraging recycling and also reinforced existing waste facilities licensing provisions established under the Control of Pollution Act 1974.

There seem to be three issues which determine the direction of the Government 's recycling policy. These are financial viability, environmental costs and benefits, and soeio-political

* Knight Frank & Rutley, International Property Consultants, 20 Hanover Square, London WIR 0AH, UK,

0921-3449/95/$09.50 © 1995 Elsevier Science B.V, All rights reserved SSD10921-3449 ( 95 ) 00007-0

134 J. Singer ~Resources, Conservation and Recycling 14 (1995) 133-155

benefits. In economic terms a satisfactory outcome to the recycling debate would be to sustain an optimal level of recycling, which takes into consideration the environmental and other social costs, in addition to private costs.

In the context of the UK plastics recycling industry this report shows how the market for recycled materials would be affected by the policy implications of the Government's target. The recycling process involves private firms and local authorities. Within an economic framework it is shown where current and future proposals provide incentives to recycle. Legislative provisions have affected the market by encouraging supply. The policy approach adopted by government has resulted in one-sided market stimulation. It is suggested that incentives must also be directed to increasing the demand for recycled materials. This assumes that materials recycling itself is the best means to providing a utilisation of resources that is closest to optimal, which may not always be the case.

An alternative target is suggested by way of an example, and it is shown how a material- based voluntary levy could be used to stimulate end-use markets for secondary materials.

Some secondary themes also run through the main argument. The roles of incineration and landfill in conjunction with a material recycling policy are considered. The report also examines the motivation for, and questions the necessity of, a policy specifically targeted at material recycling. In addition, plastic waste can make a positive contribution to a waste management policy and a material specific policy may be more appropriate.

1.1. Definitions

'Household waste' is that part of controlled waste that originates from residential dwell- ings. Controlled waste is all waste arising from household, commercial and industrial sources. 'Material recycling' is the collection and separation of materials from waste and subsequent processing to produce marketable products. This is contrasted with energy recovery processes. 'Re-use' is the cleaning and use of a material for a second time. It does not involve reclamation or recycling. 'Reclamation' is the capture and diversion of poten- tially reeyclable materials from the waste stream and any sorting, cleaning and bailing that is needed in preparation for processing. 'Post-production recycling' involves taking scraps and off-cuts from the production process and reintroducing them at the front end of the production line. 'Postconsumer (post-use) recycling' involves the recovery of value from materials after they have had a service life. 'Waste-to-energy' (WTE) processes involve the recovery of energy from waste. This may occur by two methods: incineration with energy recovery (heat and power); and production of refuse-derived fuel pellets that can be used in furnaces along with more conventional sources of energy, such as coal.

1.2. The target in context

The target officially applies to only a very specific portion of the waste stream: household (domestic) waste. Fig. 1 shows that only 5% of total waste arises from domestic sources [2]. With reference to the occurrence of plastic in waste, Fig. 2 shows that the largest proportion of plastics are used in packaging (35%) and then in building and construction (24%). The typical composition of household waste is shown in Fig. 3. The largest com- ponent is paper and card; 10.2% of domestic waste is plastic. The destination for most waste

J. Singer ~Resources, Conservation and Recycling 14 (1995) 133-155

Waste Arisings in UK million tonnes, 1991

135

Other 79

Agriculture 80

Industry 69

Mining & Quarrying 98

Demolition & Construction

Commer3c~all5 Domestic 20

Fig. 1. Waste arisings in UK -million tonnes, 1991. Source: [3].

UK Plastics Consumption thousand tonnes

Electrical Other 600 345

Agriculture / ¢ ~ [ ~ ~ k Building & 69 ~ ~ Construction

.... ~.,.::~. 827

Packaging Transport 1206 207

Fig. 2. UK plastics consumption -thousand tonnes. Source: [4].

Composition of Household Waste by weight

Putreseibles 2 0 . 2 % ~

Miscellaneous m m m ~ . 9.9%

Fines " ~ 6.8%

Metal Glass 7.3%

9.3% Textiles 2.1%

Dense Plastio 5.9%

Plastic Film 5.3%

Paper & Card 33.2%

Fig. 3. Composition of household waste by weight. Source: [3 ].

136 J. Singer~Resources, Conservation and Recyclhlg 14 (1995) 133-155

arising, excluding hazardous waste, is landfill. Only roughly 7% is incinerated and the remainder is recycled. With regard to household waste, 5% is currently recycled.

2. Energy recovery and plastics

There are four possible methods that can be used to recover energy from waste, some of which are more appropriate than others for plastics waste: waste-to-energy; composting and anaerobic digestion; pyrolysis and gasification; and material recycling. This report concen- trates on material recycling and mentions waste-to-energy methods since these are consid- ered in greater detail in policy terms.

Waste-to-energy processes can be of two types, incineration and refuse-derived fuel (RDF). There are 33 incinerators in the UK today, of which four can recover energy from waste. By 1996 most of them will be forced to close as an EC Directive on emissions comes into force. The estimated running costs of a new advanced municipal solid waste incinerator with energy recovery is £40-45 per tonne (pt). This can be compared with landfill, which can cost £11 pt. However, incineration with energy recovery can provide net benefits. Plastic in particular has a very high energy content. In instances where there is a high proportion of thermosets, or the waste is highly contaminated, the best use of resources may require burning the plastic waste and using the energy to generate heat and power. The calorific value of the pelletised fuel compares favourably to that of fossil fuels -pellets have a calorific value of 18 MJ/kg and coal is 27 MJ/kg.

An attempt has been made to monetarise the environmental costs associated with landfill and incineration in a recent report funded by the Department of the Environment [ 5 ]. The report concluded that new urban landfill with energy recovery (methane gas) would have net external costs of £1-2 pt of waste plus the fixed disamenity element which is not estimated. The externalities that are estimated include global warming, air pollution and acid rain, leaehate, transportation effects and pollution displacement effects. New inciner- ators would have net external benefits of £2--4 pt of waste plus the disamenity effect. These figures should be treated with caution, and the absence of comparable figures for materials recycling means that comparisons are more difficult. Material recycling was omitted because if large quantities of paper and plastic were removed from the waste stream there would be little fuel available for the energy recovery from incineration process. Notwithstanding this, the authors do come to the conclusion that if a landfill levy is to internalise the external costs of landfill, a levy of £5-8 pt would be needed, excluding the disamenity element [ 6].

The secondary market in plastics is still relatively immature compared with the markets for recycled paper and board and glass. According to Moffitt [7], 2% of used plastic, which is about 100 000 tonnes, is recycled in the UK, but only a small proportion of this originates from domestic sources. Markets are still developing for the recycled materials and technol- ogy for sorting and processing is enabling more recycling to take place on a competitive basis.

Plastics are classed as either thermoplastics or thermosetting plastics. Thermoplastics have polymers that change shape when they are heated so they are preferable for recycling. These include polyethylene, polyethylene tetraphthalate (PET), polypropylene, polystyrene and PVC. Thermosetting plastics have a moleenlar structure that does not break down when

J. Singer/Resources, Conservation and Recycling 14 (1995) 133-155 137

heated so they are not suitable for recycling. Examples include epoxy resin, phenolics and polyurethane.

Significant energy savings can be made when using recycled post-use plastic waste for production of consumer products. Low density polyethylene (LDPE) is used for production of carrier bags, refuse sacks and packaging. The total energy used to produce one tonne of virgin LDPE (from 1.8 tonnes of crude oil) is 110 GJ/tonne. The total energy used to produce recycled bags from LDPE is estimated to be between 27 and 35 GJ/tonne, repre- senting an energy saving of up to 75%. Besides this, NOx, SO2 and CO2 emissions are said to be reduced on average by 70% [8].

Materials recycling would seem to be the most desirable option but there are a number of difficulties with plastic which explain why this may not be so for domestic waste.

Household plastic scrap is likely to be highly contaminated with other household waste. This can be minimised by sorting at the point of collection using curbside collection or 'bring' schemes. Alternatively, household waste can be collected en masse, and the reeycl- able materials separated centrally. At Doncaster, a pilot waste treatment plant was built to examine the viability of central processing of waste. As a refuse separator it was marginally successful but was not able to produce secondary materials of sufficient quantity and quality to attract plastics manufacturers away from virgin materials [9]. The quality problems that contamination causes will severely limit the range of markets that this product can enter.

The most marketable plastic scrap would be of a single polymer type. This 'clean scrap' can be crushed and used directly in the production process. Often, however, one tonne of plastic scrap will contain many polymer types. Most will be thermoplastics, but some will be thermosets. It is often too expensive to separate out individual polymers at this stage, and because the technology needed has only just become available it is not widely used. In this case the recyclate cannot be moulded and used in the same way as a pure polymer. The material has a minimum thickness and a coarse finish. In this state it is not a substitute for virgin plastics but can be used as a timber substitute. Superwood, for example, manufacture recycled mixed plastic fence posts. There are still very limited markets for timber substitutes whereas there is an accessible market for single polymer plastic recyclate. The degree to which the plastic scrap available is mixed or separated will depend on the method of collection. It has been estimated in the US that if PET and high density polyethylene (HDPE), comprising 14% of post-consumer plastics, were collected separately from other waste the total collected would be 0.57 million tonnes (mt). If all plastic waste was collected together (totalling 55% of post-consumer plastics), the total potential collection is 10.9 mt [ 10]. Even a small niche in the timber market would generate considerabledemand for mixed plastic waste. It is important that a coordinated approach to recycling is established, that recognises both demand and supply characteristics of the market.

The price of recyclate after processing and price stability are crucial to the development of markets for recycled plastics. These markets are only just emerging. Cost remains the major barrier to recycling. Williamson [ 11 ] suggests that the inherent quality problem that exists when using recyelate dictates that its price ceiling is 80% that of virgin substitutes. He estimates the average pdee of virgin LDPE to be £550 pt and the cost of recycling LDPE about £540 pt. The maximum price that can be expected for secondary material will be £440 pt, so the net cost is £100 pt. On that basis, material recycling should go ahead if the benefits of recycling, such as less material being landfilled and lower resource depletion, outweigh

138 J. Singer ~Resources, Conservation and Recyclhlg 14 (1995) 133-155

the cost, £100 pt. As economies of scale set in and more advanced sorting and processing technologies are developed the net cost of recycled LDPE is likely to fall further.

Recycling can be an environmentally and financially sound option for post-use plastics. If it is decided to increase material recycling it is important to identify the distribution of disincentives in order to modify them. Regulations and economic instruments can intervene especially in those areas.

3. Economic framework

• Financial considerations are becoming increasingly important in the waste management industry. Those outside governmental influence who are responsible for handling waste will make decisions on recycling based on the financial costs of doing so. Under section 51 of the Act, the statutory disposal authorities (waste disposal authorities (WDA)) must dis- charge their duties either by setting up an arms length company (Local Authority Waste Disposal Company), or by contracting out to a fully independent waste disposal contractor (WDC). This is an indication of the Government's intention to increase the number of decisions made in the private sector. Financial costs seem to be given increasing weight.

In an effort to enhance the status of the environmental costs and benefits of various waste management options, the legislation imposes additional regulations and incentives on the players. Incentives will increase the likelihood that, at the margin, net environmental and social costs can outweigh net financial costs and the preferred policy objective will be put into practice.

The 25% material recycling target and the current relevant legislation are an attempt to ensure that environmental and social costs feature more prominently in the decision to recycle. However, the decision to materially recycle is not just in the hands of the waste management industry. Vertical coordination with manufacturers, the reprocessing industry and consumers, as well as statutory collection and disposal authorities is a necessary require- ment in a recycling initiative. The commercial sector is less likely to take environmental and social costs into account unless it receives some financial benefit for doing so.

If there is a trade-off between financial, environmental and social costs then there is an implied efficient level of recycling. An optimal level of recycling could occur where the resources used in the whole process are just equal to the resources saved, or where marginal benefits are equal to marginal costs. The benefits of recycling are seen to be: (i) The revenue raised from the recycled material (PM), assuming the price is constant; (ii) The benefits of avoided disposal (MCAD); and (iii) The benefits from the avoided external costs of disposal (such as local resentment to a landfill site, uncollected landfill gas, or site traffic and pollution) (MECAD). The costs of recycling are considered to be: (iv) The costs of separate collection (MCsc); (v) The actual processing costs (MCp); and (vi) The external costs of processing (such as health risks, pollution) (MECp) [ 12].

Given these costs and benefits an optimal level of recycling exists when:

PM + MC~a~ + MEC^o = MCsc + MCp + MECp.

J. Singer~Resources, Conservation and Recycling 14 (1995) 133-155

Table 1 The status quoprior to intervention in the recycling industry

139

Costs Benefits

Manufacturer Ps + MCo = MCaE ( 1 ) Consumer MC o -I- MCFo = MUAma consumption (2)

MCsa- = MUAI~ disposal (3) Reclamation/WCA MCcc = PR + MECAD (for WCA) (4) Disposal/WDA MCsr = MCAt) + M E C ~ (5) Reprocessing PR + MCR = Ps ( 6 )

Key: Ps = price of secondary material; MC o = marginal cost of quality; MCa~ = MC of resource exploitation; MCm = MC of finished good; MUAan = marginal utility of avoided resource exploitation; MCsr = MC of sepa- ration and transportation; MCAD = MC of avoided disposal; MECAD = marginal external cost of avoided disposal; MCcc = MC of collection, cleaning, bailing and storage; MCR = MC of recycling process; PR = price of reclaimed material.

The equation above does provide an economic foundation for analysing recycling, but it does not aid an analysis of how incentives and regulations will affect the players in the industry. The impacts of incentives and regulations are likely to fall on five interest groups: manufacturer; consumer; reclaimer or statutory collection authority; the disposal authority; and the reproeessing industry (see [13] ). I will assume that all bodies are self-seeking, rational profit maximisers. There are two exceptions to this. First, statutory collection and disposal authorities will take some social costs of their actions into account at the decision making stage, although this is decreasing as local authority waste services become subject to compulsory competitive tendering. Second, consumers are utility maximisers and not profit maximisers, or cost minimisers. I will also assume that the equations apply only to materials recycling and not to other energy recovery processes.

Table 1 shows the status quo in each 'sector' prior to any regulatory intervention. Decisions made by one player will affect the decision making process of the next player in the list. This is a cyclical process, so decisions made by the reprocessing industry will directly affect the manufacturing firms. When a manufacturer makes a decision on whether to include some recycled material in a product it will be necessary to consider the price of the recycled material relative to the price of the virgin grade material and change in quality of the product.

The consumer can make a decision at two stages: buy the product if the increase in price and reduction in quality can be offset against the satisfaction gained from doing so (con- sumption decision); separate out materials for recycling as opposed to confining them to final disposal if the cost of separation and transportation is offset by the satisfaction in doing so (disposal decision).

Whether material is source separated by the consumer or remains in the waste stream it will be transferred either to a statutory collection authority (waste collection authority (WCA)) or to the reclamation industry directly. The reclamation industry may obtain materials directly from the consumer through a 'bring' or curbside collection system. The decision will be a balance between the costs involved in collection and cleaning and the price that can be obtained for the material from reprocessors. The WCA and WDA will:also

140 J. Singer~Resources, Conservation and Recycling 14 (1995) 133-155

exercise some political judgement in making their decision, which is included as MECAo in (4) and (5).

Even at the disposal stage material can be separated in a materials recovery facility. The decision to separate out recyclable materials will be based on the cost of separation and transportation against the avoided disposal cost and the exercise of political judgement, which is mainly the external costs of avoided disposal.

Finally, a reprocessor will continue in operation up to a level where the price of the reclaimed material and the cost of the recycling process is equal to the price it can obtain from manufacturers for the recyclate.

This is the situation prior to intervention. The only external costs that are included are those which are taken into account by the decision maker at that stage. An attempt will now be made to show how these decisions have been altered by government intervention in the waste management industry. Some costs and benefits are added, others are passed on to other sectors. Prior to analysis of how this has changed with legislation and other interven- tion, it is instructive to take a brief look at Government policy.

4. Government policy

UK Government policy towards recycling is set out in Waste Management Paper No. 28 [ 14]. The approach is hierarchical. Waste minimisation from source is most preferable. Incentives should be placed on industry to minimise the use of all materials in goods and packaging. One step below this is reuse. Consumers should be encouraged to reuse goods and packaging (such as shopping bags) instead of disposing of them. Third in the hierarchy is materials recycling. Incentives are needed to encourage collection, sorting, processing and purchasing of secondary materials. If materials recycling is not feasible, then energy recovery is preferred by means of incineration for heat or power or chemical recycling to make fuel. Finally, landfill or incineration without energy recovery are available, both being treated on an equal level. The Government says that at present we are concentrating our energies at the bottom end of the hierarchy and we should be moving to the top, waste minimisation. In any case, waste management decisions should always be in accordance with the best practicable environmental option (BPEO). The Government's aim is to create a framework to encourage an optimum balance between the different waste management options, so it is necessary to ensure that each option bears its full cost, and external costs are borne by the polluter. There is a general presumption in favour of using economic instruments for waste management. The waste hierarchy was restated in slightly varied form in the sustainable development initiative. Previously material recycling was placed above energy recovery at numbers 3 and 4 in the hierarchy, respectively. Now, waste minimisation remains the highest priority followed by reuse, and in joint third position is materials recycling, composting and energy recovery.

The Government is committed to self sufficiency in waste management. This principle has been incorporated by the EC [ 15]. Internationally, each country is to be encouraged to make proper arrangements for dealing with its own waste. At the Basel convention in 1992 on global controls on waste movement an agreement was reached to minimise the production of waste and provide adequate disposal facilities to reduce transboundary movements of

z Singer~Resources, Conservation and Recycling 14 (1995) 133-155 141

waste. Additionally, the Secretary of State has the power to ban the import of waste if he considers it will be a pollution risk, or to conserve disposal capacity. The mandatory collection scheme in Germany has led to oversupply, resulting in plastic and paper scrap being sold very cheaply to other countries. This is putting pressure on materials collectors in the UK as materials processors import cheap scrap from Germany. Nationally, the Government wishes to minimise the interregional movement of waste, and preferably for waste to be dealt with at the point of arising.

A third angle is the Government's new initiative on producer responsibility which it wishes to apply voluntarily to the packaging industry. This is in response to the proposed EC Directive on Packaging and Packaging Waste [ 16]. The Government is opposed to mandatory recycling measures and is encouraging the packaging industry to initiate its own solutions to the packaging waste problem. With the 25% household waste recycling target in mind and the threat of EC Directives the Government has acted through these broad principles.

5. Government action and consequences

The legislation that is relevant to recycling is contained in the Environmental Protection Act 1990. There are a number of relevant provisions. The most important are recycling credits, the duty of care on controlled waste and waste licensing.

5.1. Recycling credits

The most direct form of Government intervention so far in the recycling market is the waste recycling credits scheme in section 52 of the Act. Whereas the Duty of Care and the waste licensing regulations apply to waste arising from every source, recycling credits apply only to household waste. The purpose of this scheme is to provide an incentive for official waste handlers and third parties to divert recyclable waste from the waste stream. The third parties are generally voluntary organisations or WTE facilities. A credit of a fixed amount is paid for every tonne of waste that is diverted from landfill to recycling. There are two types of credit, the waste disposal credit (WDC) and the waste collection credit (WCC). The WDC is paid by the Waste Disposal Authority (WDA) to the Waste Collection Authority (WCA) or third parties. In removing one tonne of waste from the waste stream, the WCA is preventing the liability of that one tonne of waste being passed on to the WDA. The WDA will not have to incur the expense of disposal of that one tonne. The amount of the credit represents the net saving of expenditure on the disposal of the waste made by the WDA. A WCC is paid by a WCA to either the WDA or a third party and represents the WCA's net savings on expenditure on the collection of waste.

Recycling credits are not applied universally. WDAs and WCAs qualify for credits but it is not mandatory for credits to be paid to third parties. Third parties may have either a 'formal contract' with a WDA or WCA or a mere 'arrangement' to divert waste from standard collection and disposal. Under an 'arrangement', the third party would be eligible for credit payments. In cases when a third party has a 'formal contract' with a WDA or WCA to reclaim waste, it is not eligible for credits because the avoided cost of disposal is

142 J. Singer/Resources, Conservation and Recyclhlg 14 (1995) 133-155

already implicitly paid within the contract to recycle - to receive credits it must be proven that the waste will actually be recycled. WDAs and WCAs are reluctant to enter into formal contracts with voluntary organisations directly because the quantity of material diverted from waste by materials reclamation is so small in proportion to their total disposal burden that they would receive little benefit from the reclamation in terms of avoided disposal cost. Of course it is possible, for example, that a third party has a formal contract with a WCA to reclaim waste before disposal. In that case, the WCA would gain credits from the WDA for the disposal that has been avoided, which it can use to offset part of its contract with the third party. Formal contracts would provide stability in the market and a secure source of plastic scrap for reprocessing. Informal arrangements are more risky, so the level of recycling may be lower than otherwise obtainable.

Each WDA and WCA can determine the level of the credit it will give. This has resulted in large regional variations in the level of credit based on transport costs and disposal site value. The Government has estimated that credits should range from £4-£17 pt depending upon the local anthority in which the waste diversion is taking place [ 17]. As a result, recycling is encouraged more in some areas than others. This is consistent with the self sufficiency principle on a regional level and should result in a level of collection that is privately optimal. The credit represents savings in private costs. Landfill costs are likely to be greater in urban areas and where planning provisions restrict the number of possible locations.

Although the scheme addresses the problem of collecting recyclable waste it does not provide incentives for manufacturers to incorporate recycled materials into their products. Stimulating demand for recycled materials must also be carded out, in conjunction with supply-side policies [ 18]. A situation may arise, as it has in Germany, where recyelable materials are collected and sorted but there is insufficient capacity to reprocess all the scrap and markets cannot be found for the quantities available.

The recycling credits scheme could be applied to waste-to-energy plants as well as voluntary organisations. The 25% target refers to 'recycling' which is an all-embracing term. There is no reason why the definition of recycling should not include energy recovery from waste. However, the London Waste Regulation Authority has a policy not to pay credits for incineration. A waste-to-energy facility could, therefore, be eligible to receive recycling credits. It may enter into a formal contract as a third party with the WDA. Alternatively, if it has an arrangement with the WDA, it may receive recycling credits. WTE is a more feasible large scale option for waste diversion, so an arrangement is unlikely to be more attractive than a formal contract. The stability provided by a formal contract will result in the greater encouragement of WTE plants (incineration or RDF facilities) than of reclamation for material recycling.

The payment of credits is left entirely to the discretion of the WDA or WCA which is making the payments. Under section 48 of the Act the WDA may object to paying credits if it can show that it has already made provision for recycling. If a WDA has an arrangement or a contract with a WTE facility it will relinquish its duty to provide further credits to WCAs or third parties for material recycling.

The effect of the credits scheme is to alter the optimal level of reclamation. The reela- marion industry will have an incentive to reclaim beyond PR = MCcc to the point where PR + MCAD = MCcc. Its new optimum will take into account the credit it receives. Due to

z Sh~ger/Resources. Conservation and Recycling 14 (1995) 133-155 143

spatial variations and the uncertainty about receiving credits, they are often not received by reclaimers and even so, the decision to reclaim cannot be based upon credits that may not be paid for months and are discretionary in any case. At the best of times it is only marginally economic to reclaim material from household waste so it is unlikely that the benefit of credits will be passed on round the loop in the form of a lower scrap price to reprocessing plants. If credits were set high enough, their benefits could strengthen the industry as a whole. In relation to post-consumer plastic scrap, recycling credits will provide incentives only for reclamation, and not for reprocessing, and should therefore result in an increase in collection and separation.

5.2. Duty o f care

The Duty of Care on waste may also have an impact on incentives for material recycling. Section 34 of the Act applies to all persons importing, producing, carrying, keeping, treating or disposing of controlled waste. All holders of controlled waste must ensure that there is no unauthorised or harmful deposit, treatment or disposal of the waste. Householders are exempt from the duty of care for their own waste. The holder must also ensure that any transfer is to an authorised person, and a written description of the waste is also transferred. Breach of this duty is a criminal offence.

The question arises whether plastics collected for recycling is waste, and if so, whether it is controlled waste. Just as one person may regard an object as waste, another could find a use for it. The key concept for defining waste is the action of disposal. Material should be looked at from the point of view of the person producing it - ' i s it something produced as a product, or even a by-product, of his business, or is it something to be disposed of as useless?' [ 19]. EC Directive 75/442 on Waste defines 'disposal' as 'the collection, sorting, transport and treatment of waste,...transformation operations necessary for its reuse, recov- ery or recycling'. Thus, EC law considers that plastic collected for recycling is waste. According to national law the definition of waste includes 'any substance which constitutes scrap material' as well as 'anything which is discarded or otherwise dealt with as if it were waste' (s.75 (3) of the Act ). Anything that is discarded, regardless of whether it is reclaimed by someone else, is waste. Materials for recycling is included in this 'catch-all' phrase. The question remains at what point in the recycling process is the duty of care lifted? In a recent English case [20] it was held that the definition of waste in the Control of Pollution Act 1974 means that once material has been discarded it remains waste until it is positively reprocessed and so constituted as 'valuable'. An example is the UK scrap metal industry. Although scrap metal falls technically within the definition of waste under UK and EC law it has gained exemption from the new waste management licensing regulations, having argued that scrap metal should not be treated as waste. The Government should clarify the situation for all recyclable materials.

The value of the reprocessed material will depend on whether there is demand for the secondary product. It is submitted that if demand is not forthcoming then the plastic is still within the duty of care of the reprocessor. Reprocessors may be discouraged from under- taking recycling if their legal responsibility extends to the reprocessed material that may be stockpiled if demand is low. During the recession, virgin polymer producers have been concerned to retain their market share, so they have dropped their prices to such a low level

144 J. Singer/Resources, Conservation and Recycling 14 (1995) 133-155

that secondary polymer firms have been effectively unable to compete. In this scenario, secondary polymer is practically valueless. It would be very difficult for recyclers if waste licensing and the duty of care were to be imposed on them in this situation.

The effect of the duty of care is to provide a disincentive to recycle at sectors (4), (5) and (6). Also, some of the MCAD will shift from (5) to (4).

Accompanying the duty of care is a waste licensing regime. This is designed, inter alia, to make landfill more expensive, which it is expected to achieve. It also imposes on all other waste handlers extra licensing costs. All waste handlers must purchase a waste licence from a Waste Regulation Authority. Since recyclable household plastic remains within the defi- nition of waste for most of its cycle, no incentives are provided for reclamation. British Polythene Industries (BPI) have an arrangement with the supermarkets they supply with plastic packaging to take back used packaging when they deliver new supplies. Initially this had to be stopped because BPI did not have a licence to transport that waste. The need to purchase a waste licence has increased the transport cost component of reclamation. The effect of waste licensing on the status quo will be to add fixed and variable costs to (4), (5) and (6).

If recycling takes the form of incineration with energy recovery an incentive is provided under the Non-Fossil Fuel Obligation (NFFO) Renewables Order 1991. Under the first tranche regional electricity companies must buy at least 261.48 MW from incinerators. Currently, five incinerators are capable of energy recovery (the fifth being in Jersey) and three are planned under the second tranche at Depfford, Belvedere and Northfleet. These extra plants would have a capacity of 2.5 m tonnes pa, although they are expected to be built to a smaller scale. The Royal Commission on Environmental Pollution recommends that a third tranche should continue to require incineration beyond 1998 [21 ]. The report also suggests that the requirement is extended to include heat recovery. This will boost demand for scrap materials and for plastics especially, because they have a high energy content. The effect on Table 1 would be to add a benefit to (5).

In terms of financial assistance to recycling, the Government's aim is 'to make recycling commercially sustainable where it makes environmental sense' [ 14]. To this end, various collection schemes (for example: Leeds, Adur, Milton Keynes) and a composting scheme (North London) have received credit approvals for local authority expenditure of £15 m (1992/3) [22]. The Government's expenditure plans indicate that the level of credit approvals that will be given in 1995 has fallen from £20 m to £16.5 m. The Department of Trade and Industry have provided £3.5 m in grants for industry to tackle market barriers to recycling. Most of the Department of the Environment approvals have been given for collection schemes, implying that local authority effort is not being put into exploring end uses for the reprocessed material. This is not surprising since central government focus has always been on materials collection and reclamation. The effect of financial assistance would be to reduce MCsT in (3) and MCcc in (4).

Section 49 of the Act requires all local authorities to submit recycling plans to the Government. Currently all the plans are being examined by the Government. Leicester City Council's recycling plan may be typical. The Council intends to go 'substantially beyond the (25%) target' with an initial material recycling target of 30%. Interestingly, Leicester- shire County Council also has a recycling target -10% by 1995 and 25% by 2000. The council intends to achieve this using two methods. They will set up a materials recovery

J. Singer/Resources, Conservation and Recycling 14 (1995) 133-155 145

facility (MRF), and also a curbside collection scheme for other parts of the city. The MRF will cost £3.8 m pa to run, with an income estimated at £1.3 m pa, the shortfall being £2.5 m pa, or £10 per capita on a local charge. The curbside scheme will cost about £100 per tonne, or £ 12/house pa. A number of points can be made about this plan. First, there should be more national guidance about the balance between materials recycling and incineration. Even so, local authorities would probably find it politically unacceptable to build an incin- erator in their locality. Second, very little attention was paid in the plan to the creation of end use markets for recycled materials. For plastics this is not surprising because most plastics manufacturers operate on a national scale, and it is not in a local authority's interests to dissuade a manufacturer from locating in its area. Third, substantially higher credit approvals will be necessary if the plans are to be implemented. The main responsibility of local authorities is to collect domestic waste, which is particularly difficult and expensive to recycle. However, the inception of these plans is likely to provide benefits to sectors (3), (4) and (5).

It is evident that the Government's household waste recycling policy has had the effect of encouraging materials reclamation, but not materials reprocessing or incineration to any great degree. The Government is now considering further economic instruments that would increase the level of recycling and enable the target to be reached, as well as reducing the quantity of waste reaching landfill.

5.3. Landfill levy

The instrument that is favoured by the Government to remedy the perceived 'waste problem' is the landfill levy. The Advisory Committee on Business and the Environment (ACBE) was set up jointly by the Department of the Environment and Department of Trade and Industry in 1991 to provide dialogue between business and environment groups on environmental issues. The Government takes the views of the Committee very seriously. Recently, ACBE restated its view in strong terms that it firmly believed that 'increasing landfill costs is the most effective indirect means of stimulating recycling' [23]. It is therefore worthwhile to analyse the effects of a landfill levy on the level of plastics recycling. Indeed, the Chancellor announced in his Budget Statement on 29th November 1994 that he intends to introduce a landfill levy.

Three main reasons for a landfill levy are identified [24]. Firstly, it would internalise the external costs of landfill (referred to earlier as MECAo). These costs will vary depending on many factors including the location, the geology of the area and the waste composition. One must also ensure that the external costs of disposal are not taken twice. In Table 1, recycling credits should bring the MCAD into the reclamation decision, that is from (5) to (4), and the landfill levy will internalise the MECAD, that is reduce MECAD and increase MCAD within (5). As the levy takes effect and the proportion of waste going to landfill is reduced, then the MECAD will also fall, so the levy should be reduced. This rationale may be in conflict with the second reason for a levy which is to promote waste minimisation and recycling. Materials that are harder to recycle should be charged a higher levy if they are landfilled because greater encouragement would be needed to persuade scrap merchants to collect the material. A third reason for a landfill levy is to bring UK landfill costs into line with landfill costs in other EC countries. Due to the high clay content of UK soil and a

146 J. Singer/Resources, Conservation and Recyclhlg 14 (1995) 133-155

Table 2 Estimated costs for waste disposal options, 1990 and 2000

Cost per tonne (£)

current (1990) future (2000)

Landfill in urban high cost area Incineration without energy recovery* Incineration with energy recovery b

Reclamation (bring system)

22.5 31--47 15-20 20-25 20-30 20-25 16-36 16-36

"Includes compliance costs for new emission controls beyond 1996. bAssumes NFFO subsidy is still available, which reduces costs by £5-10 per tonne. Source: [24].

plentiful supply of sites in this country the cost of landfill space in the UK is lower than for other EC countries. This might cause waste to be imported to the UK in large quantities which the government would prefer to avoid and is not in line with the self sufficiency principle.

Two types of landfill levy are being considered, a constant unit charge and a constant ad valorem charge. The constant unit charge would be based on either the weight or volume of material that is landfilled. As weighbridges are becoming more widely used in the waste management industry it is likely that the levy would be weight based.

The second option is a uniform ad valorem charge. It is a charge on the cost of landfilling waste. The additional charge is simply a proportion of the amount charged by the landfill operator for disposal of the waste. The original charge will already be shown on an invoice so the system could be immediately operational. This option would result in the levy having a different impact in different areas of the country. In urban areas where the financial and external costs of landfill are high, the levy would be higher than in low cost areas. Material recycling would be encouraged in areas where landfill costs are high, such as heavily populated areas, sites of special scientific or environmental interest and conservation areas. Whether the external benefits of recycling outweigh the effects of a landfill site is a problem for a full cost-benefit analysis. This levy would have a similar effect on waste minimisation, which would be encouraged more in areas where landfill costs are high.

The impact of a landfill levy on materials recycling and incineration is likely to take effect only in the medium to long term because it would take time for increased capacity to be developed. Due to the high capital costs involved in setting up new plants, government help may be needed to get these projects off the ground.

A recent report shows how the costs of waste disposal options are likely to change in the UK from 1990 to 2000 [24]. Table 2 shows that WTE incineration costs are expected to remain fairly stable due to the availability of NFFO subsidies. At present it is estimated that 8-10 WTE facilities are being planned in the UK. They are running behind schedule so it is important for NFFO subsidies to continue beyond 1998 if these plants are to retain their competitive edge towards the year 2000. The reclamation system highlighted is the 'bring' system because it is the cheapest collection system and would seem to be the most cost effective scheme. The cost of scrap materials collected is unlikely to change because although transport costs are likely to be reduced as higher density systems are used, the

J. Singer/Resources, Conservation and Recycling 14 (1995) 133-155 147

Table 3 Impact of a levy on waste disposal alternatives

Levy (£/tonne)

Urban high cost ('000 tonnes) Total (%)

landfill incineration reclamation landfill incineration reclamation

0 2070 1375 220 84% 14% 2% 5 2070 1375 220 78% 20% 2% 10 2070 1375 220 70% 27% 3% 15 2070 1375 220 63% 32% 5% 20 1335 1375 955 50% 38% 12% Total weightofhousehold waste 3665 11520 ('000tonnes)

Source: [24].

market price of separated material is expected to fall, resulting in a net increase in reclamation costs. This suggests that in high cost urban areas, reclamation might be more cost effective than landfill in the next 10 years, all other things remaining equal.

An estimate has been made of the proportion of waste that is likely to be diverted to incineration and reclamation if a landfill levy is introduced. Table 3 shows that without a levy 2% of domestic waste would be reclaimed and 14% incinerated. As the levy is increased to £ 15 pt the proportion of waste that is reclaimed remains virtually static whilst incineration increases from 14% to 32%. It would require a levy of£20 pt to raise reclamation levels to 12%. That would require an 87% increase in the price of landfill from 1993 prices and would distort the market so severely that it is likely to be an unacceptable option. In practice the levy is likely to be £5-10 pt at which level incineration will be the main beneficiary.

If a levy is introduced one method of passing this on to the reclamation industry is to ensure that if the level of recycling credit represents the avoided cost of landfill, the credit is raised by the amount of the levy and the avoided levy cost is passed on to the reclamation industry.

The revenue that would be raised from a levy is considerable. How this money is used will depend on the objectives of the levy and other relevant government policies. The Government may want to subsidise materials recycling or WTE incineration. Before it does so, the full external costs and benefits of each option should be assessed.

The effect that a landfill levy would have on the level of credits may be quite substantial. At a levy of £5 pt, if the avoided cost of the levy is passed on to reelaimers then credits in some areas would increase by 150%. This incentive to reclaim is not taken into account in the Coopers & Lybrand report [24] and it could provide a further impetus to reclamation. However, the subsidy needed to maintain post-domestic reclamation is estimated to be £100 pt. So whether the credit is £5 or £15 will not make much difference in the competitive sector. In the voluntary sector it may be more influential because reclamation is undertaken with commercial viability secondary to environmental goals.

It was mentioned earlier that in economic terms the recycling credit, before the imposition of a landfill levy, is supposed to represent the marginal cost of avoided disposal. Conversely, it was suggested that the function of a landfill levy should be to internalise the marginal 'external' cost of avoided disposal. In practice it seems that the landfill levy will he based

148 J. Singer~Resources, Conservation and Recyclh)g 14 (1995) 133-155

Table 4 The situation with intervention in the recycling industry

Costs Benefits

Manufacturer Ps + MCQ = MCRE + MCec ~ ( 1 ) Consumer MC o + M C ~ + MCrc = MU^RE consumption (2)

MCsr = MUARI~ disposal (3) Reclamafion/WCA MCcc = Pa+MECAo (for WCA) +MCAa (4) Disposal/WDA MCsr = MCAo + MEC,~o (5) Reprocessing PR + MCR = Ps (6)

Key: MCr, c = MC of packaging charge; italics = a reduction in MC; bold = an increase in MC.

on the weight or volume of waste that is disposed by landfill. This represents the cost of disposal, which is directly related to the quantity of waste landfilled, and not the wider environmental and other external costs of landfill. In this situation, the marginal cost of avoided disposal will be extracted twice; once as a pre-levy recycling credit and once as a landfill levy. If the benefit of the landfill levy is passed on, in addition to recycling credits, to the reclamation industry by the WDA, the market distortions would exceed the level that the government considers will be effective in achieving the correct balance of disposal options to achieve the best environmental option. The landfill levy must be just equal to the external costs of landfill only.

If a landfill levy is implemented it would indicate a desire to encourage incineration mo~?e than material recycling. This instrument, like the recycling credit, is aimed at the disposal end of the loop and will not encourage the formation of end use markets for recycled materials.

As suggested in this report, Government legislation seems to deal only with materials reclamation and not with actual materials reprocessing, market creation for secondary materials or WTE facilities. Table 4 shows how the present policies, and a landfill levy, would affect incentives to recycle. The costs of recycling would be placed on the consumer and manufacturers would have an incentive to recycle if the product charge was reduced as recycling increased. A landfill levy internalises some of the external costs and the burden of recycling is reduced in the reclamation and disposal sectors.

Within any policy framework on waste management there will be conflicts between the policy goals. The government's waste hierarchy places waste minimisation as the most preferred option, followed by reuse, materials recycling, energy recovery from waste and finally landfill or incineration without energy recovery.

5.4. Policy conflicts

There is a possible conflict between materials recycling and incineration of municipal solid waste (MSW). The Government's approach is that every effort should be made to divert waste to materials recycling. Once this has been done the remainder should go to WTE facilities. Incineration plants with energy recovery require large constant quantities of waste at all times to provide a constant high level of power output from generators. The

J. Sbzger/Resources, Conservation and Recycling 14 (1995) 133-155 149

feedstock intake must be monitored to ensure that the furnace does not become too hot, which can damage the machinery. WTE incineration is a particularly attractive option for MSW because the high contamination levels of household waste severely restrict the end uses to which secondary materials can be put at the moment. Plastics have a very high energy content, so although they are roughly only 10% of household waste they contain over 30% of the energy content. If plastics are recovered from the waste stream to be recycled prior to WTE incineration the efficiency of the energy recovery process may be restricted. This would cause WTE plants to be less competitive and on that basis WTE would become a less attractive option for waste disposal in general. There is an argument that the energy from mixed household plastics waste would be more effectively recovered if the plastic is left in the waste stream, and incinerated to recover energy. In policy terms this would require placing materials recycling and WTE incineration at the same level in the hierarchy for plastics waste. However, if glass waste is removed from the MSW stream prior to incineration this would improve the efficiency of WTE processes. Glass is inert and has a very low energy content, so it contributes nothing to the combustion process. For this reason it could be argued that a resources recovery policy should be material specific.

Another conflict is between waste minimisation and the use of all plastics, and secondary plastics in particular, in packaging. Plastics are widely used in packaging alongside other materials such as glass, paper and metals, and comparisons can therefore be made. In terms of kg oil equivalents, 1000 one litre plastic bottles will require 100 kg of oil for production, and 230 kg of oil would be needed to produce the same containers in glass, an energy saving of 57% on production of the bottle [25,26]. Based on this information, it appears that plastic can provide net cost savings when compared with other materials.

The use of plastics in packaging also saves energy in transport costs. With glass containers, 43% by volume of a lorry load would be the packaging whereas with plastic containers, this is reduced to 7% This also results in a reported saving of 39% on fuel costs from glass packaging [25]. Plastics have an essential role in food packaging. They ensure food pro- tection, hygiene, safety and convenience. A recent German study [27] indicated that if German retailers substituted other materials for plastics the volume of domestic waste would rise by approx. 150%, the weight of packaging would increase by 300% and the energy consumed by the packaging industry would increase by 100%. Although minimisation of waste is a sensible environmental goal, for plastics in particular it would seem not to result in the minimisation of the use of resources.

A conflict can also arise between the goal of waste minimisation and legislation on the use of a minimum proportion of secondary materials in new goods and packaging. Apart from the obvious dilemma between reducing material content and increasing secondary material content, there is a more technical difficulty with plastics. Even uncontaminated plastics are of inferior quality to virgin material so products made with secondary plastics will have a lower specification. To achieve the same properties as a virgin product, such as strength and durability, may require using more material. For example, black polythene bin liners must be thicker if they are to be made with secondary plastic for technical reasons. Some local authorities used to specify a limit to the thickness of black bin liners as part of a waste minimisation policy. This was an implied ban on using recycled plastic,

These conflicts show that within a waste management strategy efforts to increase material recycling may adversely affect other policy goals. It may, therefore, be desirable to focus policy on one area at the expense of others if an overall policy is to be effective.

150 z Singer~Resources, Conservation and Recycling 14 (1995) 133-155

6. A resource savings target

The above analysis demonstrates how Government policy has provided incentives for recycling and shows upon which players they have been placed. Recycling credits, which are directly applicable to household waste, provide incentives for reclamation only, and the route of WTE incineration and RDF often does not receive the same attention as materials recycling. The duty of care on waste and the new waste management regime have increased the costs of reclamation and reprocessing, making materials recycling less competitive. Financial assistance by local authorities has largely been in the area of materials reclamation. P91itical objectives dictate that a 'recycling' policy, which is a very voter-friendly concept, must be highly visible. Collecting materials in blue boxes or green bins once a week from the curbside provide very high profile schemes. Given central Government's concentration on household waste which represents such a small fraction of total waste arising, there is clearly a desire to be voter-friendly and not necessarily environmentally friendly. In any ease, material recycling will be able to provide a destination for only a small proportion of household waste in the foreseeable future. In the long run waste will still have to be disposed of by landfill and incineration. The question is that if the Government is willing to distort the market in waste management, where should the policy be focused? The current approach in practice is to recycle, which seems to have been interpreted as materials recycling.

A more scientific approach would be to look at energy and resource usage throughout the life cycle of a particular product. We could then attempt to judge which option would result in the least energy being used. The strategy for energy recovery should be material based, not product market sector based. In general, a resource savings target requires a two part analysis. First, which materials should be used for each purpose, and second, in which eases is it worthwhile to increase the proportion of secondary material in products (the disposal decision) ? The first part could be primarily a commercial decision. Materials have different qualities, but waste minimisation should still be encouraged, along with post production recycling, which is already a well-established production process. The second part could be a decision for a life cycle analysis (LCA) based upon sound data and assumptions so that financial, environmental and other social costs can be taken into account. On a financial basis, landfill in the UK will remain the cheapest method for dealing with domestic waste. If we take into account other costs, an alternative route for the material may be acceptable:

The economic instruments that could be used would depend on where the LCA showed that resource savings were greatest, although they should not duplicate environmental policy measures already in place [28].

There is evidence to suggest that materials recycling may not be the best environmental option, especially for domestic waste. Since household waste is so contaminated, production of marketable secondary plastics at present requires a high degree of sorting, which is very expensive. It has been suggested that materials recycling should be concentrated on agri- cultural and industrial wastes which are more segmented and arise in larger quantities [ 26 ]. There will also be a capacity problem. Although material recycling of one tonne of household plastic waste may provide a net resource saving to landfill, the size of the recycling industry will not be able to deal with the vast quantities of waste. Notwithstanding these remarks,

z Singer~Resources, Conservation and Recycling 14 (1995) 133-155 151

the main drawback of materials recycling remains the huge costs of separate collection, sorting, cleaning and bailing.

This author suggests that the socially optimal level of material recycling of plastics from household waste is very low. Net resource savings may be greater if a different option were chosen at the disposal/recycle decision making stage. This is mainly because of contami- nation problems for household waste and collection costs.

At the moment it is very difficult to undertake a reliable, unambiguous LCA, but within the ambit of a resource savings strategy, some policy measures can be suggested as illustra- tions. Assume that some level of materials recycling is necessary in practice. Firstly, there are political pressures on the Government from environmentalists and local authorities who have invested in reclamation infrastructure. Secondly, our commitment to the EC has resulted in Directives which can restrict our national waste management policy. Regarding packaging waste, of increasing imminence is the proposed Directive on Packaging and Packaging Waste. EC Environment Ministers have eventually reached agreement on the target bands for materials recycling and incineration. Within five years of the Directive's entry into force the targets must be reached. There are minimum and maximum recovery targets of 50% and 65% and minimum and maximum material recycling targets of 25% and 45%. At least 15% of each material must be materially recycled. The upper limits can be exceeded only when the member state can show that there would not be an adverse impact on the single market and that it has adequate capacity to treat recovered materials on its own territory.

If some level of material recycling is required, it would be best if this were at an optimal level, where all costs and benefits are taken into account, preferably at the points where they arise. Beyond that point the policy should be to recover energy from the waste. It is proposed that incineration is the only large scale method for dealing with household waste in an environmentally conscious and financially astute manner (see [21] ).

Based on the premise that material recycling is not a large scale alternative to landfill, and may not even be the BPEO in some cases, and bearing in mind the current distortions of policy to encourage the supply of secondary material, the benefits of a policy that is transparent, the producer responsibility principle and the need to find end use markets, this author suggests a voluntary product charge [29] should be placed on manufacturers.

Conceptually, a voluntary levy would be applied by the material coordinating agent, usually the trade federation. The trade federation is in a much better position to investigate potential markets for reprocessed plastic [ 18]. A precondition must be that markets should be found for the material as recycling is taking place. The Producer Responsibility Group, a representative body of the UK packaging chain, published a report recently on the funding mechanism that would be needed to support recovery of 58% of packaging waste by. 2000. Although it stressed that markets must be created for the recovered material, it did not indicate how this could be achieved in practice [30]. With the money raised from the voluntary levy, a recycling infrastructure would be set up to satisfy the EC Directive and improve upon it, if so desired. Once an acceptable target is reached for plastics, costs may fall, in which case either the charge can fall, or the money can be put into the next BPEO, which may well be WTE incineration. A recent report by the Royal Commission on Envi- ronmental Pollution recommended that incineration is preferable to landfill as a waste disposal option. It also took the view that recycling has limited potential to reduce the

152 J. Singer / Resources, Conservation and Recycling 14 (1995) 133-155

Table 5 Level of charge on PET bottles as an incentive to establish a recycling scheme or to raise revenue (pence)

Per item s Weight Volume b Value c

For recycling scheme 0.27 0.16 0.78 0.49 To raise revenue 0.25 0.15 0.72 0.45 Charge (£ per tonne) 30 18 86 54

*Assumes average weight of beverage container equals average weight of all items in waste stream (84 g). bAssumes total volume of household waste when collected is 125 m 3 (with an average density of 0.16 tonne m-3) . CBased on total household expenditure on products of £ 131 397 m ( 1991 ). Source: [31].

volume of household waste requiring disposal [21 ]. The targets should be realistic and a negotiating process is envisaged between industry and the Govemment. Since the charge is being raised by industry it might be easier to channel funds directly back for environmental purposes.

Such a scheme would result in material recycling efforts being transferred from individual companies to the plastics sector as a whole. The majority of existing reprocessing facilities in the UK are jointly owned by firms in the plastics industry. A firm that already has recycling concerns could be exempt from the charge, although this would be difficult to administer. It may also be more allocatively efficient for a central body to manage the recycling infrastructure for plastics.

In practice, the role of the plastics consortium would be to contract with local authorities who already have collection and disposal infrastructure and facilities for materials recla- mation. The main difference is that the plastics industry would have responsibility for the recyclate once it is collected.

In a report by Environmental Resources Limited the level of charge that would be required under certain assumptions was estimated [ 31 ], Firstly, as a benchmark cost, the annual cost of running a national curbside collection scheme, which would be needed to achieve the 25% target, is £600 m, excluding compostables (£1100 m if compostables are included). There would also be a cost to the Government of levying the charge. It is estimated that it would not be more than 3% of the total revenue.

The formula for the charge could be per item or weight-, volume-or value-based and the charge to raise revenue is taken to be 92% of the charge rate needed to establish recycling schemes directly. Table 5 shows the level of charge needed per PET bottle. If the charge is passed on to the consumer it is unlikely to affect his purchasing decisions. Also in Table 5 is a calculation of the equivalent charge per tonne on the PET bottles for each formula basis. A calculation on a weight basis is equivalent to a charge of£18 pt for the avoided disposal cost of one tonne of PET bottles. A charge based on volume has a much higher disposal equivalent.

Under the current plan, the Government has challenged the packaging industry to prepare a plan which would enable the UK to recover between 50% and 75% of packaging waste by the end of the decade [32]. This approach is a response to the EC action on packaging. However, this author believes it is misleading to direct policy to packaging, and not to other types of waste as well. It would surely be more worthwhile to set materials recycling targets

J. Singer~Resources, Conservation and Recycling 14 (1995) 133-155 153

for each material as components of household waste. The plastics industry would be given a target for material recycling of, say, 20% of plastics arising in household waste. With a different target for each material the beneficial impacts of some materials, and also the difficulties involved in materials recycling of others, can be taken into account. The active cooperation of the plastics manufacturing industry is imperative for the success of this operation.

In some respects this voluntary levy scheme would be similar to the German Packaging Ordinance (GPO) and the French Eco-Emballage scheme. The GPO, which came into effect in January 1993, requires producers to take back their packaging or arrange for it to be taken back. German industry responded to the mandatory ordinance by establishing Duales System Deutschland SA (DSD) to arrange for collection and sorting of all sales packaging resulting from products of manufacturers who are part of the scheme. Partici- paring manufacturers mark their packaging with a 'green dot' which indicates firstly that a payment has been made to DSD and secondly that the packaging can be recycled. Manu- facturers are not obliged to join the DSD scheme, but if they do not, they have to finance their own schemes. DSD is financed by payments made by producers for each item of packaging. DSD can collect and sort packaging themselves but usually subcontract these tasks to private companies or local authorities. The GPO requires that a given quota of all packaging is materially recycled, and there can be no incineration. The basic idea underlying the ordinance is that the producer of packaged goods should be responsible for the packaging after the product has been used. The cost of the green dot sends an economic signal to producers, and there is evidence that they are responding by minimising their use of pack- aging and changing to more easily recycled materials.

The French decree, which came into effect at the same time, places a responsibility on producers to contribute to, or be engaged in, the recovery of all packaging waste. As a result, two companies have been set up, Eco-Emballage SA (EE) for general packaging waste and Adelphe SA for bottled packaging only. EE will initially carry out only pilot trials. Unlike DSD, EE is not responsible for carrying out collection and sorting. Instead, EE enters into agreements with municipalities to induce them to enter the scheme. EE's income comes from a charge on packaged products (charges axe lower than in Germany). Unlike in Germany, the charge is mandatory on all producers of packaged goods unless the producers are engaged in recovery themselves, or have joined a collectively operated retrieval system. The same green dot is used to indicate that payment has been made. EE also arrange contracts between the participating municipalities and material handling firms to take the collected materials. One major difference is that in France, unlike Germany, 'clean incineration with energy recovery' is considered a legitimate means of energy recov- ery.

Both schemes have worked very well in collecting materials. However, the German scheme has run into trouble because no attempt has been made to find end uses for the collected materials. The scheme suggested earlier would hopefully remedy this deficiency. In France, most of the collected waste is incinerated and it is considered a successful scheme.

7. Conclusion

In creating an economic framework this report attempts to show that the effect of the current policy regime is to increase incentives to collect materials for recycling. It does not

154 z Singer~Resources, Conservation and Recyclhzg 14 (1995) 133-155

aid the provision of markets for materials that have been collected, so the market is demand deficient, causing the price of reprocessed material to be low and unstable. A voluntary revenue-raising levy placed on manufacturers could help to alleviate the problem of market creation by actively involving the plastics industry. Such a regime should be material specific as different materials will have different external costs. Also, the feasibility of recycling will vary with the type of material and the source of the waste. To achieve some sort of optimal combination of disposal options different solutions may be necessary for each material. Plastic waste poses particular problems for materials recycling and it has a positive impact on WTE processes ( [33] : para. 105). Targets, if they are set, should be material specific and should be based on financial and external costs.

The Government seems to be recognising the increasing importance of incineration in dealing with our waste, and this shift is reflected in a subtle change in the waste management hierarchy that was restated recently. This seems a more sensible approach but these priorities are only very slowly being put into practice. In a recent House of Lords report the comment was made that strict adherence to the 'hierarchy' has led to the political drive to recycle anything and everything, unsupported by rational or environmental thinking [34]. In a recent statement, the Environment Minister suggested that the target may indeed be clarified to include incineration with energy recovery. The target might also be lowered. Clarification and discussion within a wider context would be most welcome.

References

[ 1 ] Department of the Environment, 1990. This Common Inheritance: Britain's Environmental Strategy, Cm 1200, London, HMSO.

[ 2] Holmes, LR., 1992. The UK Waste Management Industry, Institute of Wastes Management. 13] Ogilvie, S.M, 1993. Materials Recycling: Opportunities and Barriers, Warren Springs Laboratory,

Stevenage, UK. [4] British Plastics Federation, 1990. Handbook, BPF, London. [5] Department of the Environment, 1993. Externalities From Landfill and Incineration, Environmental

Resources Limited, London, HMSO. [6] Bureau of National Affairs, 1993. Environmental Costs, Benefits of Landfill, Incineration Compared,

International Environment Reporter, 15 December, Washington, DC. [ 7] Moffitt, T.W., 1992. Plastics Recycling, British Plastics Federation, London. [8] Warmer Bulletin, 1993. The Warmer Campaign, Kent, UK, 36:12-13. [9] Department of the Environment, 1988. The Doncaster Waste Treatment Plant, London, HMSO.

[ 10] Curlee, R.T., 1990. Targets of Opportunities for Plastics Recycling and Source Reduction, Conference V, 23-24 May, Plastics Institute of America.

[ 11 ] Williamson, CJ., 1992. Economic factors affecting plastics recycling. In: Murphy, M. (Ed.), Packaging and the Environment, Plra International, London.

[ 12] Brisson, I., 1993. Packaging waste and the environment: economics and policy. Res. Cons. Recycl., 8: 183- 292.

[ 13] Curlee, R.T., 1986. Plastics recycling: economic and institutional issues. Conservation and Recycling, 9(4). [ 14] Department of the Environment, 1991. Recycling, Waste Management Paper No. 28, London, HlVISO. [15] Commission for the European Communities, 1990. A Community Strategy for Waste Management,

Communication SEC (89) 934, Brussels. [ 16] Commission for the European Communities, 1992. Packaging and Packaging Waste, Draft Directive 8426/

92, COM ( 92 ) 278, Brussels. [ 17] Department of the Environment, 1993. The Environmental Protection (Waste Recycling Payments)

(Amendments) Regulations, SI No. 445, HMSO, London.

J. Singer/Resources, Conservation and Recycling 14 (1995) 133-155 155

[ 18] Kovacs, W.L., 1988. The coming era of conservation and industrial utilisation of recyclable materials. Ecol. Law Quart., 15: 565.

[ 19] Berridge b,cinerators v. Nottingham C.C., 1987, unreported, but cited in Department of the Environment, Circular 13/88, The Collection and Disposal of Waste Regulations, HMSO, London.

[20] Kent C.C. v. Queenborough Rolling Mill Co. Ltd., 1990. 2 LMLER 28. [ 21 ] Royal Commission on Environmental Pollution, 1993. Seventeenth Report on Incineration of Waste, HMSO,

London. [22] Department of the Environment, 1993. Annual Report, HMSO, London, p. 18. [23] Advisory Committee on Business and the Environment, 1993. Third Progress Report, HMSO, London. [24] Department of the Environment, 1993. Landfill Costs and Prices: Correcting Possible Market Distortions,

Coopers & Lybrand, HMSO, London. [ 25 ] Association of Plastics Manufacturers in Europe, 1989. Plastics in Perspective, APME, Brussels. [26] Alter, H., 1993. The origins of municipal solid waste: II. Policy options for plastics waste management.

Waste Manage. Res., 11. [27] Society for Packaging Market Research, 1992. Gesellschaft f'tir Verpackungsmarkfforsehung (Packaging

Without Plastic), Weisbaden, Germany. [28] Pearce, D.W. and Turner, R.K., 1992. Packaging waste: a taxation solution. J. Environ. Planning Manage.,

35( I): 5-15. [ 29] OECD, 1989. Economic Instruments of Environmental Protection. OECD, Paris. [30] Producer Responsibility Group, 1994. Packaging Levy: Report on Funding, PRG, London. [31] Department of the Environment, 1992. Economic Instruments and Recovery of Resources from Waste,

Environmental Resources Limited, HMSO, London. [32] ENDS, 1994. Packaging Recovery on the Cheap, Report 229:18. [33] House of Commons Environment Committee, Session 1993/94, Recycling, Second Report, 63-1, HMSO,

London. [ 34] House of Lords Select Committee on the European Communities, 1993. Twenty-sixth Report on Packaging

and Packaging Waste. HMSO, London.