Waste Recycling Report Footnote 020, 038, 039, 132

Annex A: Impact Assessment

Summary

This Impact Assessment details the impacts, costs and benefits of the policies brought forward under the Waste Strategy for England 2007 (WS2007). The strategy sets out key new policies and actions and sets the framework for further policy development – it does not introduce any actions which would increase regulatory burdens. Where specific policy changes result from carrying forward the further policy development set out in WS2007 they will be assessed in separate impact assessments.

The costs primarily relate to changes in waste management costs and the benefits relate to greenhouse gas impacts and/or reductions in levels of wider financial or public health risks.[1] The impacts assessed are broadly split between municipal waste, where the costs will, on the whole, be borne by local authorities, and commercial and industrial (C&I)/construction and demolition (C&D) wastes, where any financial  costs  are  likely  to  be  borne  by  waste  producers  and  the  waste  management  industry. Greenhouse gas benefits are accrued to society as a whole and, given the international nature of the climate change problem, both domestic and international greenhouse gas impacts are counted.

Table 1 below summarises the costs and benefits calculated for the main scenarios assessed. The strategy is a long-term strategy with key targets up to 2019/20, therefore the costs and benefits presented below are present values over the period 2006/07 to 2019/20. All scenarios are compared to a counterfactual of no change in current policy and are discussed in depth in Appendix 1. The competition and small firm impact tests on the proposals set out in Review of England's Waste Strategy A Consultation Document (published in February 2006)[2] suggest disproportionate impacts in these areas will be limited.

Table A.1: Costs and benefits of main scenarios 2006/07 to 2019/20

Key assumptions

Commercial and industrial wastes:

1. Where waste prevention is assumed to result in lower waste arisings these are assumed to be the result of improved resource efficiency, therefore reduced material costs are assumed to offset the initial costs of reducing waste.
2. Landfill Directive Article 6 pre-treatment requirements are met increasing the costs of waste disposal.
3. Through increased source separation of waste, waste prevention and recycling the landfill tax is assumed to divert waste prior to disposal thus avoiding the costs of pre-treatment of mixed wastes. This comes through in the reduction in treatment costs associated with the landfill tax increase. It can be seen as the benefits of improved resource efficiency that result from the tax.
4. All costs are net of landfill tax.

Municipal Solid Waste (MSW):

5. Ranges of costs and benefits reflect uncertainty in likely future waste growth. Scenarios have been run with constant MSW growth to 2020 of 0%, 0.75%, 1.5% and 2.25% per annum.
6. MSW growth is assumed to be exogenous. Lower arisings, owing to lower waste growth, do not produce benefits from waste prevention.
7. All costs are net of landfill tax.

Contents

Introduction and summary 5 Purpose and intended effect 6

Objective 6 Background 7 Rationale for policy 8

Consultation 8

Within Government 8 Public consultation 8

The final strategy and the consultation options 11

Costs and benefits 11 Qualitative assessment 12 Waste Strategy 2007 (Option A) 12 Simplifying the regulatory framework (Option B) 12 Waste prevention initiatives (Option C) 13 Extending the sectoral approach (Option D) 14 National household waste targets (Option E) 15 Local authority performance standards (Option F) 15 Greater recovery of energy from waste (Option G) 16 Overarching procurement strategy for municipal waste (Option H) 17 Wider role for local authorities in non-municipal waste (Option I) 18 Better collection and management of household hazardous waste (Option J) 19 Extend producer responsibility to priority hazardous waste streams (Option K) 20 Targeted action on illegal waste management (Option L) 20 Household financial incentives (Option M) 20

Sectors and groups affected 21 Small Firms Impact Test (SFIT) 21 Competition assessment 22 Other impacts 22

Equality and fairness 23 Health impacts 24

Enforcement, sanctions and monitoring 24

Appendix 1: Future waste scenarios, forecasts, costs and benefits 25 Introduction 25 Part A Municipal waste 26

MSW arisings 26 Scenario 1: MSW No further policy change' 27 Scenario 2: Delay in MSW facility delivery 33 Scenario 3: Household financial incentives 36 Scenario 4: National household waste recycling and composting targets 37

Part B Commercial, industrial and hazardous waste 40

CI&H waste arisings 40 CI&H waste forecasts 44

Environment Agency targets on PPC regulated industries 44

Chemical sector voluntary reduction target 45

Impact of landfill tax 45

Landfill Directive requirements 46 Scenario 5: CI&H No further policy change' 47 Scenario 6: Reduction in industrial waste growth by 0.75% p.a. 55 Scenario 7: Reduction in commercial waste growth by 0.75% p.a. 58 Scenario 8: Increased recycling and composting of C&I wastes 60

Part C: The Local Authority Waste Recycling Recovery and Disposal

(LAWRRD) Model 63 Part D: – Commercial and industrial waste forecasting 67

REEIO 67 HMRC landfill tax model 67

Part E: – Environmental modelling 68

Emission factors for waste treatment processes 68 MSW Assessment 68

Stage 1 69 Stage 2 69 Stage 3 69 Stage 4 69 CI&H Assessment 69

Appendix 2: Policy web 74 Appendix 3: Competition test 79 Appendix 4: Ministerial declaration 80

Introduction and summary

1. This annex sets out the final Impact Assessment of Waste Strategy for England 2007. This builds on the partial Regulatory Impact Assessment (pRIA)[1] issued in February 2006 which accompanied the consultation document on the review of Waste Strategy 2000 and reflects both the responses to that pRIA and to the proposals set out in the consultation document itself.
2. This Impact Assessment details the impacts, costs and benefits of the policies brought forward under WS2007.
3. The consultation document:

1. set out the progress made since 2000 in meeting the Government's objectives and implementing its policies with respect to waste; and
2. consulted on proposals to revise the objectives of  Waste Strategy 2000 and the policy instruments to support delivery of the vision and outcomes for waste.

4. Over 4,000 participants submitted responses during the twelve-week consultation period.[2] The majority of responses were from action and environmental groups in the form of standard letters and e-mails expressing concern that energy from waste options should not detract from options higher up the waste hierarchy, with particular focus on waste prevention, higher recycling targets and greater use of fiscal instruments. A total of 585 submissions came from a mixture of individuals and organisations expressing broad support for the vision and approach set out in the consultation document with some caveats, notably the need for a greater focus on delivery.
5. Some 24 participants responded with comments on the pRIA, primarily expressing concerns regarding the assumptions and data used in modelling future trends and policy impacts. These assumptions and data have been reviewed and, where possible, updated with data that has become available since publication of the pRIA. In particular, carbon benefits and municipal waste management costs have been revised substantially in light of further Defra-funded research.

Policy proposals

6. The consultation document included a range of suggestions and proposals on which it sought views. The pRIA assessed the impacts, costs and benefits of the eleven main proposals (Options B to L) against the base case of continuing with current policies (Option A). The options focused on using existing policy instruments and spending programmes to improve waste management performance.
7. Option B was a proposal for simplifying part of the waste regulatory system, building on the work already underway within the Environment Permitting Review.[3] This proposal was broadly welcomed and is expected to reduce regulatory burdens. No new regulations on business are proposed.
8. Options C, D, I and K envisaged working with business on a voluntary basis (with some Government financial support) to improve resource efficiency, reduce waste and recover more value from the waste that is produced. Particular help was proposed for small businesses. WS2007 places increased emphasis on resource efficiency.

9. Other Options (E, F, G, H, and J) were designed to help local authorities implement, as cost- effectively as possible, the requirements of existing European Directives. These options include new national recycling targets and help to increase energy recovery to meet the Landfill Directive and Packaging Directive targets. A new Waste Infrastructure Delivery Programme (WIDP) has been established to help bring forward the necessary investment to meet these requirements.
10. WS2007 also includes increases in the landfill tax escalator, as announced in the Budget 2007, and announces a consultation on giving powers to local authorities to introduce household financial incentives. These are assessed as Option M.
11. Alternatives to the preferred options and sub-options were set out in the consultation document. Options were not preferred where, the costs did not justify the benefits; it was not yet possible to assess the costs and benefits, or where a new regulatory burden would be imposed without seeking a voluntary approach first. Accordingly, the strategy does not introduce any actions which would increase regulatory burdens. Proposals carried forward into WS2007 do not impose any new burdens on local authorities. Future policy proposals brought forward when implementing the further policy development work outlined in WS2007 that could increase regulatory burdens on the private, public or third sectors will be subject to their own Impact Assessment in due course.

Purpose and intended effect

Objective

12. WS2007 supersedes England's previous waste strategy,  Waste Strategy 2000. It sets out the Government's long-term vision for waste management in England agreed after consultation, together with key objectives and targets, measures to support achievement of the objectives and a high-level implementation plan.
13. The Government's overall objective for waste policy was set out in  Securing the Future, the Government's sustainable development strategy. This objective is: Protection of human health and the environment by producing less waste and by using it as a resource wherever possible. Through more sustainable waste management – reduction, re-use, recycling, composting and using waste as a source of energy – the Government aims to break the link between economic growth and the environmental impact of waste'.
14. WS2007 sets out the following key objectives:

• decouple waste growth (in all sectors) from economic growth and put more emphasis on waste prevention and re-use;

• meet and exceed the landfill directive diversion targets for biodegradable municipal waste in 2010, 2013 and 2020;

• increase diversion from landfill of non-municipal waste and secure better integration of treatment for municipal and non-municipal waste;

• secure the investment in infrastructure needed to divert waste from landfill and for the management of hazardous waste; and

• get the most environmental benefit from that investment, through increased recycling of resources and recovery of energy from residual waste using a mix of technologies.

15. The overall impact of WS2007 will be increased annual net reductions in global greenhouse gas emissions from waste management reaching a reduction of 16.5 to 21.5 million tonnes of carbon dioxide equivalent per year in 2020. This compares to current net savings of approximately 7.2 million tonnes of carbon dioxide equivalent in 2006/07. The additional greenhouse gas emissions reductions relate to an increase in diversion of waste from landfill of around 25 million tonnes of waste per annum. These benefits are before allowing for significant additional greenhouse gas benefits from the waste prevention measures in the strategy.
16. WS2007 also responds to the requirement under Article 7 of the EU Directive on waste (2006/12/EC of 5 April 2006)[4] for a national plan for the management of waste and sets out its strategy for implementing its obligations under this and other European waste-related Directives, including those on hazardous waste, packaging and landfill.

Background

17. In 2000 the Government set out its strategy for waste management in England and Wales in Waste Strategy 2000. Much progress has been made as a result of this strategy, including a considerable increase in the recycling and composting of household waste and in the development of markets for recovered materials. At the same time, various EU Directives and national policies have been implemented – notably the EU Directive 1999/31/EC on the landfill of waste (the Landfill Directive) – which are radically altering the waste management landscape. The recent EU Thematic Strategy on Waste Prevention and Recycling and the Government's strategy for sustainable development,  Securing the Future,are also impacting on this evolving landscape by placing waste management firmly within the context of sustainable resource use.
18. Against this background of an evolving and increasingly complex waste management landscape, Waste Strategy 2000 was widely regarded as requiring and needing a new strategic focus to drive waste management through this evolving agenda. Therefore, in February 2006 the Government launched a consultation on a review of Waste Strategy 2000. This provided the Government with the opportunity to reflect on existing policies and delivery mechanisms, including those arising from the Government's response to the recommendations made in the Prime Minister's Strategy Unit report on waste,  Waste not Want not, and to consult on proposals for a revised waste strategy to supersede Waste Strategy 2000.
19. The review revisited forecasts made since 2000 about costs, growth in waste and potentially achievable recovery and recycling rates in the light of new data, advances in technology and an improved understanding of the environmental, economic and social impacts of dealing with waste. These were set out in the pRIA accompanying the consultation document. The present Impact Assessment updates the pRIA in light of the consultation, further evidence, information and analyses and the proposals that WS2007 now sets out.

Rationale for policy

20. The rationale for Government policy on waste (and the European policies which it must deliver) remains the reduction of the environmental and health impacts of waste, in particular:

• to reduce the impact of waste on climate change;

• to conserve limited natural resources; and

• to reduce risks to health and the environment from potentially harmful substances within waste.

21. Key issues to be dealt with include: a closer integration in policy between waste and sustainable consumption and production; the optimum framework of targets for recycling, composting and energy recovery; and integrating the management of municipal and non-municipal waste streams.
22. The Waste Strategy Board will have strategic oversight of the implementation of WS2007 in line with the vision and key objectives set out therein. The Board will review the strategy and develop new policy actions as necessary to deliver the outcomes sought in light of progress on delivery and developments, new European developments and obligations and any other significant events. Progress on delivering the strategy will be assessed using a range of national level indicators and monitoring of the high-level implementation plan to ensure realisation of the benefits expected.

Consultation

Within Government

23. The consultation on the review of England's Waste Strategy and development of WS2007 was overseen by a Programme Board which included representation from Department of Trade and Industry (DTI), Communities and Local Government (CLG), Cabinet Office and the Treasury (HMT), as well as Defra, the Environment Agency and the Waste and Resources Action Programme (WRAP). The consultation document, pRIA and supporting Environmental Report were circulated to departments and devolved administrations as part of the stakeholder consultation, and key departments were involved in the development of  WS2007 (including on policy development, drafting and review of relevant sections).

Public consultation

24. Defra consulted widely with interested parties on the scope and key issues for the review of the Waste Strategy. Stakeholder workshops took place in January, February and October 2005 and included representatives from other government departments, government agencies, local and regional government, the waste management industry, waste producers, small- and medium-sized enterprises (SMEs), financial institutions, consultancies, academia, environmental non-government organisations (NGOs), the third sector and consumer groups. Bilateral engagement and consultation were also carried out and views and papers submitted by interested parties were taken into account.
25. Defra subsequently published a consultation document on the strategy review with the aim of securing stakeholders' views on the vision and approach for waste and policy proposals and options that could contribute to attainment of waste objectives. This consultation commenced on 14 February 2006 and remained open for a period of twelve weeks.

26. Consultation  specialists,  Dialogue  by  Design,  were  commissioned  to  manage  the  public consultation process. This process was largely web-based but proactively managed with letters being mailed to all key stakeholders to raise awareness of the consultation process and invite participation. A stakeholder map' was developed and used during the consultation process to ensure that the full breadth of stakeholder interests was addressed.
27. A total of 4,017 participants submitted responses during the consultation period. Of these, 3,432 came from action and environmental groups in the form of standard letters and e-mails. The remaining 585 submissions came from a mixture of individuals and organisations (local authorities, professional institutions, trade associations, academics, consultants, financial institutions, the waste management industry and the third sector). The summary report on the consultation responses was published on the Defra website.[5]
28. Twenty-four participants responded with comments on the pRIA, primarily expressing concerns regarding the assumptions and data used in modelling future trends and policy impacts. A condensed summary of these responses is set out in Table A.2. Where possible assumptions have been updated for this Impact Assessment with data available since publication of the pRIA. In particular, carbon benefits and municipal waste management costs have been revised substantially in light of further Defra-funded research. This analysis is set out in Appendix 1.

Table A.2: Condensed summary of pRIA responses and comments

The final strategy and the consultation options

29. The pRIA set out an assessment of the principal measures proposed within the consultation document together with a re-assessment of continuing with current policies as a baseline. These have been updated for the present Impact Assessment in light of the consultation responses and, where appropriate, in light of new data.

Costs and benefits

30. The costs and benefits of alternative scenarios have been assessed in Annex B. Where sufficient quantification is possible, estimates of the monetary cost and benefits of the options have been presented in this Impact Assessment. Where this is not possible, a more qualitative assessment of costs and benefits has been undertaken.
31. Monetised costs and benefits are based on 2005/06 prices. Total discounted costs and benefits are to society as a whole and summed from 2006/07 to 2019/20.[7] The base year for discounting purposes is 2006/07.
32. MSW costs have been estimated using Defra's LAWRRD model. Commercial, industrial and hazardous (CI&H) waste costs have been based on arisings data from the Environment Agency's Regional Economy – Environment Input – Output (REEIO) model and an assessment of treatment requirements, as set out in Appendix 1.[8]
33. The monetised benefits are presented in terms of carbon savings. These are based on an assessment of climate change impacts as a proxy for total environmental impact. These benefits accrue as:

• direct benefits of reduced landfill emissions; and

• off-set benefits of recycling, recovery and greater resource efficiency within product life cycles.

These benefits have been monetised using the social cost of carbon. Estimates presented in this impact assessment relate to the central estimate of the social cost of carbon. The methodology is set out in Appendix 1, Part D.

34. The evaluation has been substantially revised from that presented in the pRIA following further research on the life cycle greenhouse gas impacts of managing waste streams. However, these impacts remain strongly dependent on the nature of wastes, the treatment routes and how offsets are gained. The analysis should therefore only be viewed as providing a broad indication of the relative benefits of options. The evaluation for CI&H wastes is less robust than that for MSW as less compositional data is available.
35. More detailed evaluation of costs and benefits will be undertaken in separate impact assessments for those options taken forward as part of the strategy implementation.

Qualitative assessment

36. For some impacts, it has been concluded that valuation is not possible at this time. It is important that the non-valued impacts are taken into account when assessing the different policy options, rather than conclusions being drawn solely from the monetary analysis and other quantified impacts. The following impacts have been subject to qualitative assessment where applicable:

• social impacts;

• disamenity impacts from waste management facilities and fly-tipping; and

• competition and small business.

37. Local and global impacts were considered in more detail in the Environmental Report which accompanied the strategy consultation. This considers impacts on biodiversity, flora and fauna, human health, water and soil, air quality, and on cultural heritage and landscape.
38. A qualitative assessment of the overall impact of the strategy objectives is given in the policy web in Appendix 2.

Waste Strategy 2007 (Option A)

39. WS2007 consolidates Waste Strategy 2000 policies and measures undertaken subsequently. This includes measures resulting from the progressive implementation of the Landfill Directive, the Pollution Prevention and Control Regulations 2000 and various Producer Responsibility Directives, such as on packaging and packaging wastes, end-of-life vehicles, and waste electrical and electronic equipment.
40. The strategy implies a continuing and complex evolution of the current waste management landscape. However, it does not introduce any new actions which would increase regulatory burdens over and above current policies. Future proposals brought forward under the strategy that may increase regulatory burdens on the private, public or third sectors will be subject to their own Impact Assessments in due course. These Impact Assessments would also assess the scope to simplify or remove existing regulatory requirements, in line with recommendations from the recent Hampton Review and the Less is More report from the Better Regulation taskforce.
41. The following sections consider other options set out in the consultation document and assess the impact of those to be taken forward in WS2007.

Simplifying the regulatory framework (Option B)

42. The current regulatory framework requires some businesses to operate with both a waste management licence and a pollution prevention and control (PPC) permit, sometimes for the same site. Work to create a common permitting and compliance framework by combining these regimes is already underway and an integrated regime is due to come into effect in April 2008. Consultations on detailed policy options around this new permitting regime have recently been conducted13 and a further consultation on guidance is currently underway.14 This includes a detailed assessment of costs and benefits in its own pRIA, and so is not considered further here. However, savings of around £90 million over ten years are forecast, through a reduction of the administrative burden on business and regulators and through wider economic benefits.

11 Environmental Permitting Programme: Second consultation on proposals for creating a streamlined environmental permitting and compliance

system' is available at: http://www.defra.gov.uk/corporate/consult/envpermitprog2/consultation.pdf

12 See http://www.defra.gov.uk/corporate/consult/envpermitprog3/index.htm for further information.

43. In December 2006 Defra, with the Environment Agency and the Welsh Assembly Government, launched a review of the exemptions from waste management licensing. The primary objective of the review is to provide for a more risk-based approach to deciding which activities should be exempt in the future and which would be better regulated under a licence. The review will identify principles and criteria on which to make decisions about providing for exemptions, one of which will be to encourage re-use, recycling and recovery activities that pose a low environmental risk.
44. The exemption review will provide a new suite of exemptions from April 2009 and therefore the revised exemptions will become exemptions from the need for an environmental permit.
45. The results of the exemptions review are likely to lead to some activities that currently require a waste management licence becoming exempt in the future, while others that currently benefit from an exemption will require an environmental permit. The costs and benefits of such changes will be subject to separate consultation and impact assessment, which will take account of parallel projects such as the Environmental Permitting Programme, so that that regulatory control is more proportionate to the risk posed by the different waste recovery and disposal activities.
46. This review may particularly help smaller businesses (in the private or voluntary sector) as their activities are more likely to be in the lower risk categories.

Waste prevention initiatives (Option C)

47. The consultation document set out a number of approaches to encourage waste prevention as part of the wider sustainable consumption and production agenda. These included initiatives to:

1. identify and prioritise products with the most significant impacts;
2. extend product stewardship by producers and retailers, and reduce waste impacts through eco-design;
3. promote re-use and remanufacture with support from the Business Resource Efficiency and Waste (BREW) programme;
4. further engage businesses (including SMEs) to stimulate resource efficiency; and
5. provide advice to consumers (business and the public) on environmental impacts of products.

48. These initiatives are intended to prevent waste from being generated in the first place by looking across the life cycle of products and services, from design and production through to consumption and end-of-life management.
49. There was strong consultation support for all waste prevention measures, with clear emphasis on the need to target action on materials, products and priority sectors.
50. The Government is taking product policy forward under the sustainable consumption and production agenda, including a new products and material strategy planned for Spring 2008. These measures are aimed at reducing waste impacts throughout the production and consumption cycle over the long term. Their effect is likely to be gradual but cumulative. Their success will be measured by reduced waste in both the business (commercial and industrial) and local authority (municipal) sectors.

51. Current data indicate that the rate of municipal waste growth has been slowing since the turn of the millennium. This already suggests some decoupling from economic growth. Scenario 1 in Appendix 1 illustrates that if waste growth were to fall to 0% per annum then this would yield cost savings of £1 billion as a net present value over the strategy period compared with a central case of 0.75% per annum growth.[9]
52. Similarly, Scenario 7 in Appendix 1 illustrates that if waste prevention measures targeted at the industrial sector led to a reduction in overall industrial waste growth by 0.75% per year to 2020,[10] this would yield benefits of between £1.4 billion and £1.7 billion as a net present value. This would comprise both cost savings from reduced waste management infrastructure and the benefits from carbon savings from reduced emissions and energy and other resources saved, including the benefits of waste prevention where it is assumed that virgin material is not produced at the margin.[11]
53. The costs will comprise central government expenditure on programmes to identify priority products and support to assist businesses to design out' waste, and the costs to business in making the changes. Current Government expenditure (under the BREW programme) is planned to be around £40 million in 2007/08 to support such activities.
54. If similar schemes could be extended to commercial enterprises – reducing waste growth across the board, again by 0.75% p.a. (Scenario 8, Appendix 1), compared to the no policy change scenario' combined carbon benefits and waste treatment cost savings are estimated in the region of £4 billion to £5 billion.

Extending the sectoral approach (Option D)

55. This option considers extending the producer responsibility approach to arrangements (statutory or voluntary) with broad business sectors, which may cover reducing production waste, increasing recycling and recovery of business wastes, and increasing the recycled content of new products.
56. The approach builds on existing voluntary agreements with businesses and sectors, such as the sectoral plans developed by the Environment Agency with the chemicals and cement industries and the Courtauld Commitment with retailers, but includes the use of existing regulatory requirements, such as PPC, where appropriate. For example, the Environment Agency's corporate strategy (2006–11) sets a target to reduce waste disposal by PPC-regulated industry by 15%.
57. The consultation responses showed further strong support for the sectoral approach as providing a generally more targeted and sophisticated focus on business waste prevention and increasing recycling of waste that is produced. Views were mixed as to whether this should be regulatory or voluntary, with the latter generally being considered more flexible. Priority should be given to sectors with highest environmental impact and agreements should be accompanied by reduction targets wherever practicable.

58. The Government has identified the food and retail and construction and demolition sectors as priority sectors. Overall, if agreements led to an increase in recycling of mixed commercial waste from 8% to 28% and an increase in food waste composting of 30% it is estimated that there would be a net benefit of between £200 million and £1.0 billion as a net present value (Scenario 9, Appendix 1). This includes both expected changes in waste management costs and carbon savings.

National household waste targets (Option E)

59. The consultation document proposed to set national household waste recycling and composting targets of 40% by 2010, 45% by 2015 and 50% by 2020. The consultation responses generally supported these targets or argued for higher ones. Many also argued for waste reduction targets.
60. WS2007 confirms the proposed national recycling targets but, to give greater emphasis to waste prevention, also sets a new national aspirational target to reduce the average amount of household waste not re-used, recycled or composted from 370 kg per person in 2005/06 to 310 kg in 2010, 270 kg in 2015 and 225 kg in 2020 – a reduction of 50% from the 2000 level of 450 kg.
61. The level of these targets reflects the fact that there has been much lower and slowing household waste growth since 2000. Appendix 1 sets out scenarios for a range of levels of waste growth. The recent change in waste growth and the effect expected from the planned waste prevention policies (through actions by producers, local authorities and households) are intended to deliver no more household waste in 2020 than in 2005/06. This, together with 50% household recycling in 2020, will deliver the 225 kg per head target.
62. Scenarios 1 and 2 in Appendix 1 set out the costs and benefits of meeting Landfill Directive targets at different levels of waste growth and facility delivery through a cost minimisation approach subject to constraints.[12] Recycling levels are predicted to be in line with national targets. Stabilising waste growth is shown to deliver £0.9 billion of discounted cost savings between now and 2020 compared to waste growth at 0.75% per annum. Scenario 4 in Appendix 1 shows that higher recycling levels of 60% in 2020 could deliver discounted carbon benefits of between £0.5 billion and £2.1 billion at a discounted cost of between £0.6 billion and £1.1 billion compared to Scenario 1.

Local authority performance standards (Option F)

63. The consultation document set out alternative ways in which local authority standards could be set beyond 2007/08 to better incentivise recycling performance while giving authorities flexibility in achieving this. In particular, every local authority will have a role to play in increasing diversion of biodegradable municipal waste (BMW) from landfill in order to meet the requirements of the EC Landfill Directive.
64. Since the consultation document was published, the Government published a White Paper on the new local government performance framework –  Strong and Prosperous Communities.[13] The White Paper sets out a radical simplification of the performance framework for those outcomes secured by local authorities working on their own or in partnership.

65. The main feature of the new framework will be a set of national outcomes and 200 mandatory indicators, set by central government and to be announced in conjunction with the Comprehensive Spending Review 2007. Every local area – led by the local authority – will have to report against all 200 indicators and agree up to 35 of these as local improvement targets'. Each area will also have 18 Department for Education and Skills statutory improvement targets.
66. This new indicator set will replace the many local performance indicators currently set by central Government, including those for waste.
67. The consultation document invited views on whether the Government should set future waste statutory performance standards for local authorities and, if so, what changes should be made to the nature of the targets (their interactions with landfill diversion requirements and consistency with government policy) and the methodology for setting targets (whether to adopt the existing, differentiated approach based on previous performance or set a universal minimum target with/without the option to negotiate locally).
68. An overwhelming majority of respondents agreed that statutory performance standards were important and should be continued into the future.[14] Support was based on experience that targets:

• ensured that resources were allocated to recycling and a perception that targets had raised recycling rates in recent years;

• were essential to ensure investment can be committed at the waste collection authority level to reach and maintain high recycling levels; and

• have encouraged changes in collection methods which have led to implementation of high quality waste and recycling collection schemes.

69. The Government is developing proposals for local authority waste performance indicators to be enshrined in the new performance framework. The indicators will monitor local authorities' contributions to an overall waste outcome that leads towards a sustainable management of waste in England. The proposed indicators focus on the amounts of municipal and household waste produced, recycled and landfilled. It is envisaged that one focus for local improvement targets will be the authority'sperformance on the average amount of waste per household that is not recycled or composted. This would measure an authority's achievements in both reducing waste and in increasing recycling and composting the waste that is produced. The Government is considering setting a floor' target – a minimum level that all authorities should meet. The Government would then agree individual performance targets where appropriate, dependent on current performance and local aspirations in respect of both household and municipal waste. Consideration is also being given to how to include tonnages diverted from landfill via re-use and home composting in the new set of performance indicators.
70. The Government plans to publish the final agreed performance package later in 2007. Consequently, the revised strategy includes no specific proposal for local authority waste outcomes.

Greater recovery of energy from waste (Option G)

71. This option considered support for the greater recovery of energy from residual combustible wastes and to get the right balance between dedicated waste from energy facilities, co-firing with other solid fuels and use by large industrial users.

72. This option drew the greatest number of consultation responses, including 3432 responses in the form of standard letters and e-mails opposing energy from waste (in particular incineration). Concerns generally relate to potential health impacts from emissions and risks of capital-intensive facilities diverting waste from recycling and other actions higher in the waste hierarchy. However, the potential health impacts from modern facilities are small compared with other potential hazards[15] and the balance of waste management options needs to be considered as part of an integrated approach to resource recovery.
73. The majority of the 356 non-standard responses, including those from local authorities, supported energy from waste within the waste hierarchy. The Government's view is that energy from waste makes a valid contribution to the treatment of residual waste.
74. WS2007 envisages some increase in recovery of energy from waste in both the municipal waste and commercial and industrial waste streams (Scenarios 1 and 6 respectively in Appendix 1). This increase is needed for municipal waste to ensure that England meets its share of the Landfill Directive targets (in 2010, 2013 and 2020) and to divert waste from landfill that cannot be practically or economically recycled. The scale of required provision will depend in part on future waste arisings and the level of recycling achieved. The WIDP programme and other policies are designed to ensure future provision is adjusted to changes in these factors and provide flexibility for use of facilities by commercial as well as municipal waste.
75. The consultation drew general support for anaerobic digestion and advanced conversion technologies such as pyrolysis and gasification. This is supported by subsequent life cycle carbon impact analysis, which also demonstrates the benefits of recovering heat in addition to electricity (combined heat and power) and the utilisation of waste wood as a fuel.[16]
76. While the Government remains technology-neutral on energy from waste,  WS2007 seeks to further promote anaerobic digestion and the utilisation of wood waste, including support under the Renewables Obligation. It also seeks to support the market for solid recovered fuel (SRF) produced by mechanical biological treatment (MBT) plants. The Government has started work under the Waste Implementation Programme (WIP) to identify potential end users of SRF and to quantify the potential demand for it. Also, the Chancellor's 2007 Budget announced the Government's intention to review the classes of equipment that can qualify for enhanced capital allowances for good quality combined heat and power (CHP) to ensure that the scheme includes all necessary equipment for CHP facilities to

use solid recovered fuel. This should encourage investment in markets for the outputs of new waste treatment facilities, including for SRF, allowing SRF to compete more fairly with other solid fuels.

Overarching procurement strategy for municipal waste (Option H)

77. The consultation document recognised that considerable further investment in waste management infrastructure would be required in order for local authorities to meet their Landfill Directive requirements. Consequently, it discussed the need for an overarching procurement strategy for municipal waste to strengthen central and regional coordination with clearer advice on procurement and funding options for local authorities, including collaborative options. This was supported by all sectors responding to the consultation.

78. Since the consultation was completed, Defra has established the Waste Infrastructure Delivery Programme (WIDP) to monitor and support local authorities in infrastructure delivery.[17] WIDP aims, in particular, to provide local authorities with expert assistance and a comprehensive support package throughout the complex process of procurement, from the point of decisions on technology choice through the planning process to financing options, while ensuring that synergies with other waste streams are exploited and suitable new entrants are encouraged into the supply market. The Programme aims to accelerate infrastructure delivery by offering this support and will manage the Defra PFI process through a managed delivery pipeline. It will also analyse and monitor the capacity gap to ensure that robust evidence exists on which to take sound decisions. In addition it will raise awareness of, and establish market interest in, the potential for the use of SRF as part of an energy recovery process and raise public awareness of the options and issues relating to waste management infrastructure.
79. The costs of WIDP are the staff and other resources to provide the coordination and support for local authorities, to help them to deliver the estimated £11 billion worth of waste management infrastructure needed. These are estimated to be of the order of £3 million a year.
80. The benefits are to both local authorities and waste management companies. There should be cost savings in terms of bid and procurement costs as well as the costs of the contracts themselves. While these are difficult to quantify, in one recent case the total cost of a failed procurement exercise was estimated at over £50 million.[18]
81. There will also be benefits from faster delivery which will reduce the risk of the UK failing to meet its Landfill Directive targets.

Wider role for local authorities in non-municipal waste (Option I)

82. The consultation document sought views on expanding the role of local authorities in relation to business waste, particularly commercial waste and that from smaller businesses.
83. The potential benefits will be:

1. increased recycling and composting of commercial (and possibly) industrial waste;
2. cost savings to businesses (particularly smaller ones) and public sector organisations; and
3. cost savings to local authorities' waste management costs from potential economies of scale.

84. The environmental benefits of increased commercial waste recycling are illustrated by Scenario 8 in Appendix 1. While there is limited evidence to quantify the potential cost savings, there are examples of establishing recycling collection services for schools and offices that are no more expensive than the existing waste management services.[19]
85. Option I1 envisaged this role being developed on a voluntary basis by local authorities with some financial support from central government, at least initially. This was generally supported by consultation respondents but with some reservations, notably about resources, infrastructure and staffing. Costs to local authorities (or central government) would comprise staff resources and overheads. These are estimated at £200,000–£250,000 per year for each authority or group of authorities.[20] If this option were undertaken across England costs could total £30 million per year.

86. Option I2 envisaged placing new duties on local authorities to offer a recycling service to businesses on a rechargeable basis. This should impose no additional costs on authorities. Equally, businesses would not be required to use the service, so no extra costs would be imposed on them. The implications of taking in additional waste streams on Landfill Allowance Trading Scheme (LATS) targets were raised by numerous consultees. The Government will consider this as part of its operational review of LATS in 2007. Respondents from the waste management companies were generally opposed to this approach – they indicated that they were better resourced to provide the required services.
87. The consultation document also set out a further alternative of setting recycling and composting targets for commercial waste on local authorities. This would result in additional costs on local authorities if the targets were set at a level which meant they could only be met by offering the service to businesses at a less-than-cost price. There is insufficient evidence at present to assess the relative costs and benefits of different target levels. This would need to be considered in more detail if this action were to be pursued.
88. WS2007 promotes the voluntary approach in Option I1 and encourages local authorities to use their role as local community leaders in partnership with businesses, other local, sub-regional and regional public sector organisations and third sector organisations to achieve a more integrated approach to resources and wastes in their area. This includes support through WIDP to consider business waste when planning and procuring facilities. New duties on local authorities will be considered in light of progress with the voluntary approach.

Better collection and management of household hazardous waste (Option J)

89. The consultation document considered proposals to achieve improved collection and appropriate management of hazardous waste in the household stream.
90. As increasing volumes of household waste are collected separately for recycling there may be an increasing concentration of hazardous substances in the remaining waste. This may give rise to problems with treatment options for residual waste (e.g. in landfill leachate and through concentration in incinerator bottom ash). There are, therefore, potential cost and environmental savings from increased separate collection.
91. Option J1 would be to specify a minimum level of service expected of local authorities to meet their current legal obligations. This would secure a minimum standard across the country for duties for which authorities have already received increased funding as part of the revenue support grant system.
92. Option J2 would be to review and, if necessary, strengthen the legal requirements on local authorities to support the required minimum service level. If this resulted in proposals for further duties on local authorities these would need to be assessed before any such proposals were taken forward.
93. Option J3 would be to extend the range of producer responsibility agreements or producer targets for recovery of specific household hazardous wastes, e.g. pesticides, cleaning agents or DIY chemicals. The costs and benefits of such an approach would need to be assessed for each product range before any such proposals were taken forward.

94. Broad support was received for extending producer responsibility agreements. WS2007 seeks to take this forward on a voluntary basis and only if this looks likely to fail would the possibility of statutory approaches be considered at a later stage. Option J1 will also be pursued, with consideration of J2 only if J1 looks likely to fail.

Extend producer responsibility to priority hazardous waste streams (Option K)

95. Waste collection authorities are required to provide for the collection of hazardous household wastes. This proposal would seek to extend producer responsibility in respect of these wastes in order to achieve greater collection (avoiding inappropriate or illegal disposal) and increase recycling or energy recovery. A first candidate might be decorative paints including varnishes.[21] The approach would be to seek voluntary agreement with the producers.

Targeted action on illegal waste management (Option L)

96. This proposal would see more resources targeted at prevention of illegal waste activity and greater enforcement action. The consultation document sought views on what additional action might be necessary for more effective prevention and enforcement. It also asked whether existing powers should be extended for use by a wider range of authorities including waste disposal authorities. Following further investigation, the Government concluded that sufficient powers already exist in current legislation and so no further action on this point was necessary.
97. Respondents said that they would support more resources for enforcement, stronger penalties and education and information campaigns. The benefits of further action could include:

1. reduced levels of fly-tipping;
2. reduced harm to health and wildlife;
3. benefits to the amenity and liveability of area;
4. stronger deterrence; and
5. reduced competition from illegal operators.

The costs of additional action would include initial set-up costs for authorities who might need to expand and train enforcement teams. However, there would be offsetting benefits from reduced clearance costs.

98. It is not possible to quantify these costs and benefits at this stage. Any further regulatory proposals or increases in the use of existing powers would only be considered later after further assessment of the costs and benefits.

Household financial incentives (Option M)

99. The Budget 2007 announced annual increases in the standard rate of landfill tax of £8 per tonne from 2008/09 until at least 2010/11 and an increase of £0.50 per tonne in the rate of landfill tax for inert waste from 2008/09. These changes, in addition to the announcement on Enhanced Capital Allowances (ECAs) (see paragraph 76), have been incorporated into the no policy change' scenarios assessed separately in Appendix 1 for municipal and commercial and industrial wastes in Scenario 1 and Scenario 5, respectively. This is to highlight the fact that landfill tax has a significantly different impact on these waste streams.

100. The major driver on municipal waste is the LATS and the penalty it places on exceeding Landfill Directive targets for the landfilling of biodegradable municipal waste. The impact of increasing landfill tax is primarily to incentivise the further diversion of non-biodegradable materials otherwise not recycled. This results in a small (some two percentage point) increase in the recycling rate and associated carbon benefits to 2019/20 of around £30 million to £140 million for a cost of between £60 million and £170 million as a net present value, depending on the level of waste growth.

101. The strategy announces a consultation on proposals that would remove the ban on local authorities introducing financial incentives to encourage householders to reduce, home-compost and separate their waste. Initial Defra-funded research[22] suggests incentive schemes show that in some local authorities cost savings of up to £17 per household could be achieved with incentives together with a five percentage point increase in total national recycling and composting rate plus a 7% reduction in total national waste quantities. Further assessment, including an assessment of economic, social and environmental impacts, is contained in the consultation document.

Sectors and groups affected

102. WS2007 sets out a new and more ambitious high-level direction for waste policies in England over both the medium and longer term to respond to the challenges of sustainable development, 'One Planet Living[23] and climate change. Meeting these challenges will require behaviour change across all sectors and groups together with considerable future investment to achieve the desired environmental outcomes. Sectors and groups affected will include:

1. businesses, as consumers, producers and retailers of products and generators of waste;
2. the waste management industry;
3. domestic consumers, as purchasers and waste generators;
4. the third sector, as providers of services and in engaging communities in changing behaviour;
5. the public sector as a whole, as purchasers and waste generators; and
6. local authorities, as local community leaders, as responsible for waste management services in particular.

103. However, the strategy does not seek to impose new regulatory burdens without considering a voluntary approach first. Future proposals brought forward in implementing the strategy that may increase burdens on these sectors will be subject to their own impact assessments in due course.

Small Firms Impact Test (SFIT)

104. The advice of the DTI's Small Business Service was sought in the development of the consultation document on the review of England's Waste Strategy in order to consider the impacts of each option on small firms. During Stage 1 of SFIT we carried out sounding exercises with small businesses and representative bodies, such as the Confederation of British Industry (CBI) and the Federation of Small Businesses. Representatives of those organisations took part in the general stakeholder workshops during development of the consultation document. We also ran a workshop specifically looking at the position of small businesses which assisted in the formulation of the consultation document.

105. We subsequently included an article on the review of the waste strategy in the Small Business Service's newsletter inviting SMEs to provide comments during the formal consultation. Comments were received from a number of SMEs and the Federation of Small Businesses.

106. WS2007 does not introduce any new actions which would increase regulatory burdens. Where specific policy proposals resulting from carrying forward the further policy development set out in WS2007 may increase regulatory burdens, these proposals will be subject to their own impact assessment in due course. However, some options are intended to assist small businesses in particular or will have the effect of helping them or reducing regulatory burdens on them. These include:

1. simplifying the exemption system (Option B);
2. waste prevention initiatives (Option C) which seek to find ways to help small businesses improve their resource efficiency;
3. overarching procurement strategy for municipal waste (Option H) which may help smaller firms compete in the market;
4. wider role for local authorities in non-municipal waste (Option I) which will seek to improve availability of recycling services for small businesses in particular; and
5. targeted action on illegal waste management (Option L) which should include help small businesses to ensure their waste is dealt with properly and legally.

107. Appropriate representation will be sought from the SME community for the Waste Stakeholder Group which will have a remit to provide advice and input to delivery of the strategy, and future development of policy and strategy.

Competition assessment

108. The waste management industry is the market that is most directly affected. However, all businesses will be affected to some degree. The waste management industry is relatively concentrated, and is becoming more so.

109. The market is not expected to be significantly affected by the options being considered. Implementing an overarching procurement strategy (Option H) will have some effect on the operation of the waste management industry with a view to achieving a more effective and competitive market for municipal waste contracts.

110. For these reasons, having appraised the options using the competition filter, the view is that there is no need for a detailed competition assessment (see filter assessment at Appendix 3).

Other Impacts

111. The individual actions set out in the Strategy will have a range of social, environmental and economic impacts. The most significant of these have been discussed above. Other impacts are considered in the policy web in Appendix 2. This has been derived using the Defra policy tool stretching the web'.

112. The analysis shows the impact of the actions as broadly positive in aggregate, although costs to central government will increase over the base case through increased support to local authorities and programmes to improve resource efficiency and reduce waste from business and industry. However, it should be borne in mind that costs will rise significantly under the base case, particularly for local authorities in achieving higher rates of recycling and recovery of biodegradable waste in order to meet the requirements of the Landfill Directive. Costs to industry will also rise under the base case, but these increases may be mitigated by increased efforts on waste minimisation, recycling and avoided landfill disposal.

Equality and fairness

113. The programme set out in  WS2007 is expected to be broadly neutral in terms of equality and issues of fairness (including race, gender, rural communities and low income groups). This is illustrated in the policy web, Appendix 2. However, as detailed proposals are developed and implementation plans considered it will be important for service deliverers to consider the particular effects on different groups. For instance, as local authorities expand kerbside recycling services to increase recycling, they will need to consider how these are delivered in rural areas, in high rise flats, to disabled people, etc.[24]

Health impacts

114. Health impacts of waste management have been considered in the  Environmental Report (Section 4) and its Baseline Review (Appendix A) that accompanied the consultation document.

115. The evidence is that waste management has, at most, a minor effect on human health, particularly when compared with other health risks associated with day-to-day living.[25] The programme set out in  WS2007 should not materially affect that conclusion. However, local impacts need to be considered in the planning and implementation of local strategies.

Enforcement, sanctions and monitoring

116. The consultation document proposed that an inter-departmental board be established to drive delivery of the strategy and monitor and review progress against performance indicators.

117. This proposal was widely supported. The Government is establishing the Waste Strategy Board with a remit to:

• drive delivery of this strategy across government;

• monitor and evaluate the implementation of the strategy;

• provide advice, support and direction to government and delivery organisations in achieving the sustainable management of waste; and

• develop new policy actions as necessary to deliver the ambitious outcomes we seek in the light of progress.

118. The Government wishes to see ownership of the strategy and its implementation by all groups with the Government open to challenge and accountable for its performance. A Waste Stakeholder Group will be established to provide advice and input to delivery of the strategy, and future development of policy and strategy. Project sub-groups of both the board and stakeholder group will be developed as appropriate to ensure delivery of specific aspects as required.

119. The overall progress of the strategy will be tracked using a range of national level indicators and monitoring of the high-level implementation plan. This will be shared with the Waste Strategy Stakeholder Group. The Waste Strategy Board will oversee the production of periodic reports on implementation of the strategy and the management and realisation of the benefits expected.

120. The Government will keep this strategy under review. In the light of progress in achieving its aims, new European developments and obligations, and any other significant events, it will consider the need for any revisions to the strategy.

Appendix 1: Future waste scenarios: forecasts, costs and benefits

Introduction

1. This Appendix provides an assessment of the impacts, costs and benefits of a range of future scenarios for the management of both municipal and commercial and industrial wastes. These scenarios build on the policy options set out in the partial Regulatory Impact Assessment (pRIA) issued as part of the waste strategy review consultation and reflect both the responses to that pRIA and to the proposals set out in the consultation document itself.[26]
2. Part A discusses scenarios for municipal solid waste (MSW). These have been assessed using Defra's Local Authority Waste Recycling, Recovery and Disposal (LAWRRD) model. This is a national model which works at waste disposal authority level to predict future facility requirements in response to different policy drivers, including local authority standards, landfill allowances trading and landfill tax pressures. This analysis has been updated with data available since publication of the pRIA. A key uncertainty considered is the impact of waste growth in meeting the Article 5 requirements of the Landfill Directive.[27] Alternative recycling and energy recovery scenarios have been evaluated in terms of costs, facility requirements and environmental benefits.
3. Part B discusses scenarios for commercial, industrial and hazardous (CI&H) wastes. The data presented are largely consistent with those presented in the pRIA, but now takes account of the changes in landfill tax in the Chancellor's 2007 Budget.
4. The climate change impacts of the scenarios have been quantified in terms of carbon savings, which are used as a proxy for total environmental impact. These benefits accrue as:

• direct benefits of reduced landfill emissions; and

• off-set benefits of recycling, recovery and greater resource efficiency within product life cycles

and have been monetised using the social cost of carbon.[28] The methodology is set out in Appendix 3.[29] The evaluation here has been substantially revised from that presented in the pRIA following further research on the lifecycle greenhouse gas impacts of managing waste streams[30]. However, these impacts are strongly dependent on the nature of wastes, the treatment routes and how off-sets are gained. The analysis should therefore only be viewed as providing a broad indication of the relative benefits between scenarios. The evaluation for CI&H wastes is less robust than that for MSW as less compositional data is available.

5. Note that the following conventions are used throughout this Appendix when comparing scenarios:

• costs: positive costs represent increases in cost over a baseline; negative costs represent savings; and

• benefits: positive benefits represent improvements (savings) over a baseline; negative benefits represent increased impacts over a baseline.

Part A Municipal waste

6. Article 5 of Directive 1999/31/EC on the landfill of waste (the Landfill Directive) sets legally binding commitments to reduce biodegradable municipal waste (BMW) to landfill by 2010, 2013 and 2020.
7. Waste Strategy 2000 set national targets for the recycling/composting of household waste to 2015 and provided the framework for the introduction of statutory performance standards for local authorities for 2003/04 and 2005/06. These have acted as major drivers in the management of the estimated 29 million tonnes of MSW generated per annum.
8. Progress with respect to MSW was reviewed in 2002 by the Prime Minister's Strategy Unit. This established the Waste Implementation Programme (WIP) in 2003 to provide additional support to local authorities in achieving the Landfill Directive BMW diversion targets. The Landfill Allowances Trading Scheme (LATS) was introduced under the Waste and Emissions Trading (WET) Act 2003 as the main statutory mechanism for achieving these targets. Additionally, the Household Waste Recycling Act 2003 requires that by 2010 waste collection authorities (WCAs) provide for the separate collection of at least two types of recyclable waste from households. As announced in the Budget 2007, the standard rate of landfill tax will be increased from £24 per tonne in 2007/08 by £8 per year until at least 2010/11, by which time it will have reached £48 per tonne. The lower rate applying to inactive waste will also increase from £2 per tonne to £2.50 per tonne in 2008/09.
9. Consequently, many of the key policy levers are very new and there is a limited evidence base on which to assess their impacts. But the policies and measures introduced since publication of  Waste Strategy 2000 have driven considerable change in local authority waste management, including a substantial increase in the recycling and composting of household waste, and in the development of markets for recovered materials. The interim  Waste Strategy 2000 target for the recycling/ composting of 17% of household waste by 2003/04 has been achieved, as has the 2005/06 target of 25%. The following scenarios have been assessed against this evolving background and pressure to

meet Landfill Directive targets.

MSW arisings

10. WasteDataFlow provides the most comprehensive evidence on the sources, quantities and fates of municipal waste collected by local authorities in England.[31] In 2005/06 local authorities collected
    7. million tonnes of MSW. Of this, 25.5 million tonnes was household waste, the remainder being collected from sources such as industry, commerce, municipal parks and gardens. In total, 37% (10.7 million tonnes) of MSW had some sort of value (recycling, composting, energy recovery) recovered from it and 62% (17.9 million tonnes) was disposed of in landfill. Of the MSW disposed of in landfill an estimated 12.4 million tonnes was biodegradable.
11. Defra's municipal waste survey indicated a growth in waste between 1998/99 and 2003/04. Average growth for MSW was 2.0% per annum. Household waste grew at a slightly lower rate of 1.6% per annum, indicating some decoupling from economic growth.
12. WasteDataFlow figures for 2005/06 show that the rate of growth has slowed since the turn of the millennium. The longer term trend is still for waste growth with total MSW increasing by 0.5% per annum on average over the past five years.

13. WasteDataFlow results for 2006/07, expected in Autumn 2007, will provide useful evidence on whether the trends of recent years are to be sustained. However, past data currently provides insufficient evidence and understanding of recent trends on which to base future projections. Therefore four growth scenarios for MSW have been developed to assess a range of possible future outcomes to 2020:

1. 2.25% per annum reflecting recent trends in growth in consumer spending, representing a total growth of 11.4 million tonnes by 2020 (40% increase);
2. 1.5% per annum in line with waste growth in the five years to 2004/05, representing a total growth of 7.2 million tonnes by 2020 (25% increase);
3. 0.75% per annum, in line with current projections of household growth and reflecting more closely waste growth in the five years to 2005/06, representing a total growth of 3.4 million tonnes by 2020 (12% increase); and

vi. 0% growth, representing the possibility that waste growth will be decoupled from household and economic growth.

Scenario 1: MSW "No further policy change"

14. In this scenario local authorities continue to respond to current drivers, in particular Landfill Directive requirements and pressures to meet recycling performance standards (at least cost) against landfill tax rising to £48 per tonne in 2010/11.
15. Table A.3 summarises the LAWRRD model projections for the four waste growth rates discussed above. This assessment is based on current policy to maintain local authority performance standards for 2007/08 at 2005/06 levels while raising the minimum recycling floor to 20% (from 18%). In addition, locally published medium and longer term targets are assumed to impact on local authority decision-making.
16. In 2009/10, the projections indicate that household recycling/composting rates will increase to between 36% and 37% while, at the same time, energy recovery (including both energy from waste incineration and refuse derived fuels (RDF) from mechanical biological treatments (MBT) processes) will increase to around 13%. Overall, this represents a need for over 200 new facilities more than 2003/04 levels.[32] The amount of residual household waste (household waste that is neither recycled nor composted) is predicted to fall to between 330 kg and 350 kg per head. The results are driven by the economic pressure to avoid landfill allowances penalties (£150 per tonne) and market constraints in the delivery of major treatment facilities.

Table A.3: Impact of waste growth scenarios

17. The projections further indicate that household recycling levels will need to rise to over 40% if the 2012/13 and 2019/20 targets are to be met. This equates to residual household waste levels of between 270 kg and 340 kg per head by 2019/20. In the long term, energy recovery rates of up to 25% are likely to be required, depending on growth rates. This is comparable with the best of current European performance and represents a need for between 300 and 500 new facilities compared to 2003/04. The results are driven by the economic pressure to avoid landfill allowances penalties (£150 per tonne) and market constraints in the delivery of major treatment facilities.
18. The annual and total waste management costs predicted by the LAWWRD model for the four growth scenarios are summarised in Table A.4. These are expressed in actual prices; actual prices net of (all) landfill tax; 2005/06 prices net of landfill tax; and 2005/06 prices net of landfill tax, discounted to 2006/07.[33]
19. LAWRRD indicates net discounted costs rising from £2.3 billion to £2.5 billion in 2009/10 to £2.5 billion to £2.8 billion in 2012/13, reflecting the progressive requirements of the Landfill Directive for diverting BMW from landfill and the continuing growth in waste arisings. The total discounted cost for the period 2006/07 to 2019/20 is estimated at £32 billion to £36 billion.
20. The monetised estimates of carbon benefits are also summarised in Table A.4. This indicates that benefits increase with increasing diversion from landfill with a total discounted benefit in the range £0.7 billion to £2.4 billion with low waste growth and £1.0 billion to £3.2 billion with high waste growth. The carbon benefits are related to the way in which waste is treated, once it has arisen. Since predicted future waste treatments are expected to be beneficial overall, the carbon benefits outlined in Table A.4 rise with higher levels of waste growth.
21. The range of monetised climate change benefit contrasts with the overall waste management cost of £32-£36 billion. However, this excludes daily fines which the European Commission may impose for any breach of the Landfill Directive targets, which is a major driver within current policy. In any case, a comparison of only the overall financial costs with the overall CO2 benefits of the waste management of predefined arisings is not valid because substantial waste management costs would be incurred even if all waste were landfilled.
22. Budget 2007[34] announced annual increases in the standard rate of Landfill Tax of £8 per tonne from 2008/09 until at least 2010/11 and an increase of £0.50 in the rate of Landfill Tax levied on inert waste. In addition, it announced the intention to review the classes of equipment that can qualify for enhanced capital allowances (ECAs) for good quality heat and power (CHP) to ensure that the scheme includes all necessary equipment for CHP facilities to use solid recovered fuel.

Table A.4: Predicted MSW management costs and carbon benefits

Table A.4: Predicted MSW management costs and carbon benefits (continued)

23. In the municipal sector, one of the principal impacts of Budget 2007 will be to incentivise the recycling and treatment of non-biodegradable materials that do not fall within the influence of the Landfill Allowance Trading Scheme. Table A.5 outlines the estimated impacts of Budget 2007 on waste management costs and greenhouse gas emissions at different rates of waste growth. The range of net impacts is estimated to be broadly neutral in the municipal sector with discounted costs are projected by the LAWRRD model to be between £60 million – £170 million and carbon benefits between £30 million and £140 million. Significant positive net benefits are expected to be seen in the CI&H sector (see Scenario 5 below, including Table A.20).

Table A.5: Scenario 1 – impact of Budget 2007

Table A.5: Scenario 1 – impact of Budget 2007 (continued)

Scenario 2: Delay in MSW facility delivery

24. The  projections in  Table  A.3  take  into  account  existing  and  proposed  waste  management infrastructure identified through local authority surveys and assessment of current PFI applications. In Scenario 1 it is assumed that all facilities become available on their planned timescales. However, experience suggests that proposals are often delayed within the planning or implementation process. This scenario examines the impact if the proposed facilities were each delayed by one year.
25. The LAWRRD projections are given in Table A.6. These indicate that the 2012/13 Landfill Directive target could still be met though increased levels of recycling, composting, and additional MBT facilities producing RDF and stabilised residues to landfill. However, at high levels of waste growth, there would be great uncertainty about the achievement of very high levels of recycling as early as 2012/13. For example, at 2.25% p.a. waste growth, recycling rates would have to be 51% in 2012/13; this is nine percentage points higher than the equivalent figure in Table A.3.

Table A.6: Scenario 2 – impact of facility delays at different growth rates

26. Table A.7 shows that the higher levels of recycling seen in these scenarios in 2012/13 and beyond would be expected to provide greater carbon benefits. Waste costs would be saved in the earlier years as the 2009/10 Landfill Directive target is more easily achievable despite the reduced infrastructure. Cost savings fall over time as additional recycling and composting plants are built to divert waste from landfill, meaning that some economies of scale would not be realised.
27. That  the  benefits  might  be  expected  to  outweigh  the  costs  of  infrastructure  delay  is  not surprising, given that recycling levels would have to rise by way of compensation and that the costs of delay do not take into account the very large risks associated with non-compliance with the Landfill Directive.

Table A.7: Scenario 2 – impact of facility delays at different growth rates on MSW management costs and carbon benefits

Table A.7: Scenario 2 – impact of facility delays at different growth rates on MSW management costs and carbon benefits (continued)

Scenario 3: Household financial incentives

28. International evidence suggest that many of the countries achieving the levels of recycling/composting and reductions in waste indicated in table A.3 have done so with a supporting pricing framework on the individual.
29. The  strategy  announces  a  consultation  on  proposals  that  would  remove  the  ban  on  local authorities introducing financial incentives to encourage householders to reduce, home-compost and separate  their  waste.  Further  information,  including  an  assessment  of  economic,  social  and environmental impacts is contained in the consultation document.
30. A Defra-funded research project modelling the likely future impact of financial incentives shows that in some local authorities cost savings of up to £17 per household could be achieved with incentives. The report also predicts a five percentage point increase in the total national recycling and composting rate plus a 7% reduction in total national waste quantities.

Scenario 4: National household waste recycling and composting targets

31. Table  A.8  shows  a  hypothetical  situation  in  which  authorities  are  constrained  in  their  waste management choices through the modelling of a very high recycling pressure factor aimed at meeting a 60% household recycling target in 2020. In this scenario, fewer energy recovery facilities are needed in order to meet Landfill Directive targets but, at the same time, the marginal costs of recycling at such high levels are projected to push up the overall costs of municipal waste management. Table A.9 shows that, relative to the base case in Table A.4, costs are indeed significantly higher (between £590 million and £1,150 million), but with associated higher carbon benefits (valued at between £460 million and £2,130 million).

Table A.8: Scenario 4 – impact of higher recycling rates

Table A.9: Scenario 4 – impact of higher recycling rates on MSW management costs and carbon benefits

Table A.9: Scenario 4 – impact of higher recycling rates on MSW management costs and carbon benefits (continued)

Part B Commercial, industrial and hazardous waste

32. The waste management landscape in England for CI&H wastes has evolved considerably since the publication of Waste Strategy 2000, particularly in response to the progressive implementation of the Landfill Directive, the Pollution Prevention and Control Regulations 2000, the Hazardous Waste Regulations 2005 and various Producer Responsibility Directives such as on packaging and packaging wastes, end-of-life vehicle and waste electrical and electronic equipment. The waste management landscape is therefore subject to a continuing and complex evolution.
33. Major issues in assessing CI&H wastes are the general paucity of waste-related data and the fact that many of the policy drivers are new (such as the landfill tax escalator) or, as in the scenario of landfill re-permitting, have yet to be implemented. An objective of current programmes is therefore to construct a more robust evidence base on which to build future policies. This includes both the Defra waste Research and Development strategy and the Waste Data Strategy.

CI&H waste arisings

34. The Environment Agency's 2002/03 Commercial & Industrial waste survey provides the most comprehensive and current evidence on the sources, quantities and fates of CI&H wastes in England. In addition, the Environment Agency's Special Waste Tracking System (SWaT) database provides time series information on hazardous wastes movements, although not disaggregated waste type (i.e. solid, liquid, sludges, etc.). The two datasets are not entirely consistent; therefore, unless otherwise stated, all CI&H data is derived from the 2002/03 survey.
35. The total CI&H waste stream is estimated at 67.5 million tonnes, comprising 39.3 million tonnes from industrial sources and 28.2 million tonnes from commercial sources. Summary totals and percentages classified by national waste group are given in Table 8 and Table 9.[35] These indicate that 42% of total arisings are recycled or re-used, a further 8% recovered or otherwise treated. Treatment and recovery have therefore overtaken landfill as the dominant method of CI&H waste management.
36. The Environment Agency survey indicates that 6.7 million tonnes (10%) of CI&H wastes are transferred, treated or managed by methods not recorded. For reporting purposes, this tonnage is generally reallocated proportionately between the other categories shown.[36] On this basis, 44% of waste is assumed to be landfilled and 51% recovered. In this assessment, the more conservative assumption is made of allocating the land spread, transferred and managed by methods not recorded' categories to landfill. On this basis, 53% of CI&H waste is deemed to be landfilled.

37. The data includes an estimated 3.6 million tonnes of hazardous waste, of which 1.56 million tonnes is landfilled. This includes 520 kt of hazardous liquid wastes. These wastes were banned from landfill following the survey in 2002/03 and are therefore excluded from this analysis.
38. While combustion residues are included in the aggregate Environment Agency data above, they are excluded from the following analysis. Such wastes principally comprise power station ashes and slags from metallurgical processes. Their arisings will be determined by structural changes within these industries outside the scope of the modelling presented here. However, as these wastes are currently subject to high levels of recycling or otherwise largely inert, their exclusion is unlikely to materially affect conclusions drawn from this analysis.
39. In addition, some 9 million tonnes of construction, demolition and excavation (CD& E) wastes are disposed of as waste to licensed landfill.[37]

CI&H waste forecasts

40. Baseline projections indicate CI&H waste arisings increasing from 57.9 million tonnes in 2002/03 to roughly 70.5 million tonnes in 2019/20. These projections are based on a sectoral growth model of the UK economy[38] which integrates a degree of decoupling between economic growth and waste growth based on the difference between modelled and empirical evidence from the 1998/99 and 2002/03 Environment Agency waste surveys.
41. The historic decoupling cannot be ascribed to particular factors, although Government-funded programmes such as Envirowise will have contributed. Specific economic and regulatory measures have since been introduced that will drive further decoupling, and must be considered in the baseline assessment. These include:

• Environment Agency targets on PPC regulated industries;

• chemical sector voluntary reduction target;

• impact of landfill tax; and

• Landfill Directive requirements.

Environment Agency targets on PPC regulated industries

42. The PPC regime places a statutory obligation on regulated industries to reduce waste. The Environment Agency has set a reduction target of 15% on these industries for the period 2002–07,[39] which covers some 11.5 million tonnes of waste (approximately 30% of all industrial waste). Current indications are that this target will be met. It is estimated that these wastes will reduce by 1.73 million tonnes per annum by 2007, representing a cumulative diversion of 5.2 million tonnes between 2002 and 2007.

43. In addition to this the Environment Agency has rolled forward its target to reduce waste disposal by PPC regulated industries by a further 15% in its 2006/11 corporate strategy. It has also agreed a sector plan with the cement industry[40] with an aim to reduce the volume of cement kiln dust waste disposed, per tonne of cement manufactured, from 22.9 kt in 1998 to 7.5 kt in 2010, and to reduce all other waste disposal by 30% per tonne of cement manufactured over the same period. These further targets were presented as a scenario in the pRIA of the waste strategy review consultation. However, as they are now current policy these targets have been brought into the "no further policy change" scenario as they represent pre-existing plans.

Chemical sector voluntary reduction target

44. The chemical industry is a major producer of hazardous wastes. The Chemical Industries' Association (CIA) as part of its "Responsible Care" programme has established a goal of reducing hazardous waste per tonne of production by its members by 25% between 2000 and 2010. Based on sector growth projections, this represents a reduction of 122,000 tonnes per annum of hazardous wastes by 2010.
45. As a result of these further decoupling measures, total CI&H waste in 2020 (excluding combustion residues) is projected to be around 71 million tonnes, with the share of industrial waste falling from 51% in 2002/03 to 37% in 2019/20 (Table 10). Projections further indicate an average annual growth in commercial wastes of 2.6% and essentially zero industrial waste growth, reflecting the decoupling measures aimed at industrial waste and the expected continued shift towards a service based economy.

Impact of landfill tax

46. Budget 2007 accelerated the rate of increase of the landfill tax for active wastes from £3 per tonne per year (which took the rate to £24 per tonne on 1 April 2007) to £8 per tonne per year at least as far as 2010/11, which corresponds to a landfill tax of £48 per tonne in 2010/11.[41] This increase in the escalator is anticipated to provide a further stimulus to waste producers to reduce waste arisings and for the waste management industry to invest in recycling and alterative treatment facilities. Using the HM Customs and Excise landfill tax model,[42] the central estimate of this diversion is 3.9 million tonnes in 2010/11 (at £48 per tonne) and rising with waste growth to 4.5 million tonnes in 2020. This represents a cumulative diversion of 46.6 million tonnes between 2007 and 2020.

Table A.12: Projected CI&H waste arisings 2002–20 (kt/y)

Source: REEIO model.

Landfill Directive requirements

47. It is also relevant to consider the impact of the current requirements within the Landfill Directive on future waste arisings. The Directive introduces progressive restrictions on the landfilling of BMW and bans the landfill disposal of prescribed wastes, including:

• liquid wastes, both hazardous and non-hazardous;

• wastes that exhibit explosive, oxidising, highly flammable, flammable or corrosive properties;

• hospital and other clinical wastes arising from medical or veterinary establishments that are infectious;

• tyres, whole or shredded;

• untreated waste, unless the waste is inert where treatment is not feasible or is a waste for which treatment will not reduce the quantity of waste or the hazards to human health or the environment; and

• any other waste that does not fulfil the acceptance criteria determined in accordance with the Directive.

The ban on landfilling hazardous liquids was imposed in 2002. The other restrictions are required to be in place by July 2007.[43]

48. Waste acceptance criteria have been established for wastes consigned to inert and hazardous waste landfills. There are currently no proposals to introduce acceptance criteria for non-hazardous wastes, other than the Article 6 requirement for treatment' prior to landfill.[44] Treatment is defined as physical, thermal, chemical or biological processes, including sorting, that change the characteristics of the waste in order to reduce its volume or hazardous nature, facilitate its handling or enhance recovery.

Scenario 5: CI&H "No further policy change"

49. This scenario assumes no additional policy pressures on waste arisings or treatment method beyond those discussed above. However, implicit in this scenario is future compliance with the remaining requirements of the Landfill Directive, in particular Article 6 treatment requirements and the changes introduced in Budget 2007.
50. The impact of current drivers on each category of waste (hazardous solids, non-hazardous mixed wastes, etc.) has been assessed based on knowledge of the current treatment routes derived from the Environment Agency C&I Survey 2002/03 (as summarised in Table A.11) and judgement as to the proportions of additional waste that may require treatment by different methods.
51. For each category of material an assessment of future treatment methods has been made by treatment route and material type. An example is given in Table A.13 for non-hazardous solid waste for arisings in 2009/10.[45] Plant capacities have been assumed for different treatment options to enable assessment of the potential infrastructure needs in different scenarios. This is also indicated in Table A.13.
52. The comparable analyses for hazardous solid wastes and the aggregate analysis for sludges, mixed wastes and non-hazardous liquid wastes are set out in Table A.12 and Table A.13 respectively.
53. Table 16 summarises the resultant aggregate waste flows and facility requirements. This is an aggregate total for all waste streams excluding hazardous liquid wastes (which are assumed to be fully treated at present as a result of being banned from landfill in 2002).
54. The projections indicate that some 87 additional treatment facilities may be required by 2009/10 compared with 2002/03. These are predominantly merchant recycling facilities, for which an additional capacity requirement of 7.25 million tonnes/year is projected to be required, principally for metal scrap and mixed commercial wastes. Some of this capacity may be integrated with local authority recycling facilities for MSW. Similarly, it is indicated that some 2.0 million tonnes/year of additional thermal treatment capacity may be required, including for some hazardous wastes. It is unlikely that significant thermal treatment facilities dedicated to CI&H wastes will be brought forward, but again there may be opportunities to exploit capacity for non-hazardous wastes in municipal facilities and for all CI&H wastes in cement kilns.[46]