SCOTLAND – In this second part of his analysis of ‘Zero Waste Scotland’, Stuart Hoggard examines the implications of an entirely different regulatory system on the responsibility of packaging producers in the UK.
With the publication of Scotland’s New Zero Waste Regulations last October, the Scottish government irrevocably embarked on a separatist solution to waste management. These regulations (see sidebar), which mainly target the ‘end of pipe’ collection and disposal of recyclable resources, initially apply to business and industry.
The objective of Scotland’s new regulations is to prevent valuable resources, such as packaging materials, electrical and electronic items, and foodstuff from getting dumped in landfill sites, instead recovering them by collecting resource streams separately, ultimately channeling them towards the most productive and appropriate recovery process, whether it be reuse, recycling or recovery of energy.
In his Ministerial Foreword to the published regulations, Richard Lochhead, Member of the Scottish Parliament and Cabinet Secretary for Rural Affairs and the Environment wrote: “The Regulations create the statutory framework in which future recycling services and waste treatment will be rolled out across Scotland. A renewed emphasis on source segregation of recyclable materials, complemented by bans on these important resources going to landfill or incineration, will help Scotland achieve its target of 70% recycling by 2025.”
These ‘end-of-pipe’ resources are needed to drive waste up the material hierarchy. Without quality materials, argue the Scots, there is a risk of down-cycling (for example, glass to aggregate rather than back to glass) and the true resource value of the materials is lost.
Inequalities in the system
A report currently before the Edinburgh Assembly takes a hard look at the current PRN/PERN system of funding recycling in the UK, and finds it woefully inadequate for Scotland to achieve its Zero Waste objectives.
The report, Producer Responsibility: Policy Evaluation Final Report to the Scottish Government, by a team led by Dr Dominic Hogg of Eunomia Research & Consulting, drills down to the heart of the matter: “The UK Packaging Obligation was designed to offer financial support to the reprocessing market as PRN/PERN revenue is payable to re-processors and exporters.”
Among the criticisms contained in the report is the inequality of payment: “In the UK, although targets exist for the recycling and recovery of packaging waste, most of the costs fall upon local authorities. This, in effect, means that the companies obligated under the regulations effectively avoid financial responsibility for meeting their obligation, reducing any incentive that such financial responsibility might otherwise have had (in terms of waste prevention, for example).”
Essentially the report highlights that, “households pay for the recycling and recovery of waste streams irrespective of whether they themselves generate such waste”.
Yet the revenue from PRN/PERN is paid to re-processors with little or none of it compensating local authorities for their costs.
The Eunomia report examines, at length, the basic function of the UK’s Producer Responsibility scheme, which “ought to be that the costs of meeting recycling obligations rest with the producers, a responsibility that is not diminished by passing the costs on to taxpayers.
“Where costs are placed solely on producers, they may pass these on to consumers so that the polluters – not the general taxpayer - pay for the recycling and recovery of the waste associated with their production and consumption. In this way, producer responsibility reflects the polluter pays principle.”
Bluntly it adds: “UK producer responsibility schemes have struggled to come to terms with this fairly straightforward principle. Indeed, much time appears to have been spent seeking to minimise the costs to industry of the schemes. Yet minimising the cost to industry generally implies raising the contribution made by the taxpayer.”
The Scottish proposals
Four scenarios are currently under consideration by the Scottish government.
The first scenario is a more pro-active implementation of the Packaging (Essential Requirements) Regulations. The impact of this is an assumed 1.25% reduction in paper and plastics packaging in Scotland, equating to approximately 5,000 tonnes per year of waste prevention. 200 tonnes of this is likely to be paper currently going to landfill.
The cost of this would be some promotion and central co-ordination, although mostly business rectification activity, costing about £1.4 million ($2.2m) a year.
Benefits are likely to include £17m ($27m) net present value over 10 years, mostly due to producers using less packaging. Steady state financial benefits of £3.8m ($6m) will be accrued annually.
|Scotland’s new Zero Waste regulations|
Scenario two is placing full financial responsibility on packaging producers, with the impact that targets should be set to achieve packaging recycling rates of 76% (nearing levels currently seen in Belgium) and give a carbon metric recycling rate of 70% – or 125,000 tonnes per year of additional recycling.
Costs will be redistributed from local authorities and commercial companies who currently fund collection of packaging back to producers. Producers would no longer pay PRN costs of around £8m ($12.8m) per year but instead pay the full system costs (net of recycling revenues) of £57m ($91.2m), of which about half would be local authority waste.
Costs of current annual collection operations are around £45m ($72m); this represents an increase in recycling collection costs of around £12m ($19m) per year. However, the current high disposal costs of about the same amount are avoided.
Therefore, there would be no additional net costs involved when increasing packaging recycling from 62% to 76%.
Benefits include local authorities and commercial companies saving around £29m ($46m) annually with the bill being picked up by producers instead (presumably this would be passed on as reduced local taxes). There would be zero net financial cost since the additional recycling cost is offset by savings in disposal (above). Additional annual environmental benefits would be around £10m ($15.9m).
Scenario three is DRS (deposit refunds on beverage containers), which, from the experience of other EU DRS systems, would be an assumed 92% capture of all beverage containers in the system, resulting in increased recycling of 88,000 tonnes per year.
But this would have to be considered as a UK-wide solution, otherwise measures would be required to identify Scotland specific containers, such as the use of Scotland-only EAN codes. This would require significant changes in packaging and logistics in the effort to overcome the risk of fraudulent labelling.
One-off setup costs paid by government and producers of about £32m ($51m) would be required, followed by annual producer payments of the same amount. Local authority savings would be £77m ($123m) per year.
Unclaimed deposits would amount to about £114m ($182m) per year, but over half of these would be claimed by local authorities through recycling services.
There would also be additional commercial enterprise savings associated with withdrawing from the PRN system and further environmental benefits such as litter reduction.
The final scenario involves amendments to the existing system, including ramping up Scottish targets separately from the UK, or introducing a Scotland-only PRN.
Several measures can have a positive impact on recycling rates. These can include separate Scottish control over recycling targets and rates (both geographically and by material stream), the ability to publish targets seven years in advance, and local control over accreditation of medium sized re-processors.
However this option, while included in the report, is not a recommended route. The report is especially critical of the PRN/PERN system’s fundamentals and does not advocate simply modifying a flawed process simply because it exists.
Cross border issues
Raw material manufacturers, converters and fillers operating in UK countries would either need to be pursued to pay their proportion of EPR charges, or the full charge will have to be placed on the shoulder of the Scotland-specific importer (with only raw material manufacturers, converters and fillers in Scotland receiving the higher charges). This may be a cost burden detrimental to industry operating north of the border.
Alternatively, investment in administration would be required by all companies operating in the UK to disaggregate packaging put onto the Scottish market.
The report concludes that this would not actually be as difficult to achieve as it may appear, as most companies have a record of both total packaging generation and quantities of product placed onto the Scottish market, but reporting this to the Scottish Environment Protection Agency (SEPA) will be an additional administrative duty.
Such systems are already in place for cross-border European trade where no fewer than 27 separate EPR variants are in place.
The Eunomia Report does not consider the political dimension of cross border conflicting systems. After all, that’s the job of those elected to Holyrood.
See Part 1 of PackWebasia.com's analaysis of 'Zero Waste Scotland' here.
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