Scottish Government

ANNEX B - REGULATORY IMPACT ASSESSMENT OF THE LANDFILL DIRECTIVE

This Regulatory Impact Assessment is concerned with the transposition into legislation in Scotland of EC Directive 1999/31/EC on the landfill of waste (the Directive). It updates a previous Regulatory Impact Assessment undertaken at the draft Directive stage ²⁵, and provides estimates of the cost impacts of implementing the Directive.

The Directive introduces progressive restrictions on the landfilling of biodegradable municipal wastes. These restrictions will necessitate significant changes to the local authority management of household waste. This aspect of the Directive has been considered in the consultation paper The landfill Directive: A Consultation Paper ²⁶. This regulatory impact assessment examines alternative options for transposition of the remainder of the Directive in terms of their equity and fairness, benefits and compliance costs.

PURPOSE AND INTENDED EFFECT OF THE MEASURE

Issue and objectives

Landfilling is the most common means by which waste is disposed of across Europe. However, differences in technical standards and operating practices between member states have led to numerous incidents of gross land and water pollution. In response, the European Commission has introduced a number of measures to regulate landfill disposal and to establish a common framework for waste management that promotes waste prevention, minimisation, re-use and recycling above disposal ²⁷. The Directive now brings forward further measures to strengthen the protection of human health and the environment contained within current regulatory regimes.

The principal additional measures resulting from the Directive are:

• the reclassification of landfills into three categories (hazardous, non-hazardous and inert) and the setting of strict criteria under which wastes may be deposited to each
• a ban on the disposal of all liquids to landfill, both hazardous and non-hazardous
• a ban on infectious hospital, clinical and veterinary wastes, and on wastes that may be corrosive, oxidising, flammable or explosive within a landfill
• a progressive ban on tyres, other than as a construction material
• a requirement for waste to be treated prior to landfilling (other than for some inert wastes and where pre-treatment would not reduce hazard to human health or the environment) ²⁸
• a requirement to re-permit or cease operations at existing sites on the basis of conditioning plans to be submitted by operators that identify remedial actions to meet the Directive requirements
• a requirement for ongoing technical development of landfill operators and staff
• a requirement to utilise, or otherwise flare, landfill gas from sites receiving biodegradable waste.

The Directive was adopted on 26 April 1999. It is required to be transposed by member states into national legislation by 16 July 2001, with its provisions being phased in within the subsequent eight years. The overall effect of the additional measures within the Directive will be to:

• increase disposal costs, and hence provide greater impetus to minimise, recycle and re-use waste
• prohibit the long-established practice of co-disposing both solid and liquid hazardous wastes with non-hazardous wastes
• require the development of additional treatment facilities
• increase landfill gas utilisation, and so reduce global warming impacts.

Risk assessment

The landfilling of wastes has the potential to create a wide range of risks and impacts. These include:

• global warming through the emission of methane, a powerful greenhouse gas
• surface and groundwater pollution, through the release of landfill leachate
• nuisance from odours, and human health impacts from trace gases, fumes and spores released during landfill operations, and seepage of landfill gas post-closure
• vermin and litter
• noise during landfill operations, and the operation of landfill gas flares and engines
• loss of amenity and blight by the location of a site.

The impacts of many of these risks are not readily quantifiable, and even where they are, tend to be prone to significant uncertainty ²⁹. Health impacts tend to be chronic, the result of long-term exposure to low level emissions ³⁰, whilst disamenity impacts tend to be reflected in property prices and public complaints.

The Directive requirements for treating waste prior to landfill, particularly where this reduces the biodegradable content of the waste, may significantly reduce a number of these impacts.

However, some treatment facilities, notably simple windrow compost systems, may themselves have significant odour and other local impacts, which would off-set some of the environmental benefits of pre-treatment.

A key risk indicator is the aftercare requirement for closed landfills. Under the existing regulatory regimes, liability for the landfill remains with the operator until the waste is stabilised and poses no further hazard to the environment (generally taken as potential impact on groundwater). The Directive now requires a financial contingency to be provided for 30 years of aftercare. However, there is considerable uncertainty over the timespan for different wastes to achieve final stability³¹and over the rate at which the overall risk reduces throughout this period.

The impact of the Directive requirements on after care requirements for the different classes of landfill will be:

• For inert landfills, the Directive will restrict acceptance to strictly inert wastes only, such that stabilisation may be achieved rapidly.
• For non-hazardous landfills, the requirement to pre-treat wastes is intended to reduce both initial and long-term impact of the waste. However, some treatments, such as bailing to reduce void requirements, may reduce the rate of biological stabilisation, thereby extending the period of post-closure aftercare. Similarly, the ban on liquids may affect the moisture balance within the landfill, thereby reducing the initial rate of degradation; and reductions in the intake of readily degradable components may reduce the initial climate for microbial activity within the landfill. Such factors may again extend the period of post-closure aftercare.
• For hazardous waste landfills, the time-span to achieve full stability may be significant, especially where the rate of stabilisation is dependent on the rate at which heavy metal and inorganic species are released and removed from the waste mass. However, there is little published information from which to infer probable controlling parameters and leachate flow requirements. For these wastes, the Directive poses an essentially open-ended liability and financial risk to the landfill operator. The acceptability of this to operators will be a company decision taken on commercial grounds. Alternatively, waste producers and waste management companies may invest in facilities to further treat these hazardous wastes to reduce their hazard potential and render them suitable for disposal to non-hazardous landfill. This will be influenced strongly by costs and the option chosen for transposing the Directive requirements. This is discussed in Section 3.

OPTIONS

The regulation of the landfilling of wastes in Scotland currently falls under two regimes:

• Landfills receiving over 10 tonnes a day with a total capacity exceeding 25,000 tonnes, excluding inert waste landfills, are regulated under the Pollution Prevention and Control regime (PPC) ³²
• Other sites, including inert sites, are regulated under the Waste Management Licensing regime under Part II of the Environmental Protection Act 1990 (WML)

There are currently estimated to be some 367 licensed landfills ³³ divided between the two licensing regimes. In addition, there are there some 6 landfills licensed for in-house use by industry.

Three options for transposing the Directive are considered:

Option 1: Do nothing

This represents the base case of business as usual against which all other options are compared. The Directive is not implemented. Landfills therefore continue to be regulated under the existing WML and PPC regimes, with existing large and non-inert landfills still requiring re-authorisation under PPC to implement the requirements of the IPPC Directive.

Option 2: Implement separately for PPC and WML sites

This would fully implement the Directive requirements through modifications to the PPC and WML regulations and licences, thereby maintaining separate regimes for small and large sites.

Option 3: Bringing WML sites within PPC and implementing a single regime, with the withdrawal of the WML regime for landfilling and the issue of new PPC licences for all existing landfill operations.

The impact of these options is essentially on the future cost of waste disposal, although administrative differences would also impact on SEPA as regulator.

Option 1 implies no change to any party over and above the changes resulting from the implementation of the PPC regulations (ie is the baseline), but implies non-compliance with the Directive. Such non-compliance would cause the EC to instigate infraction proceedings and ultimately impose a fine of tens of thousands of Euros per day until compliance is achieved.

Option 2 requires both the PPC and WML regulations to be amended to accommodate the requirements of the Directive, incurring costs in drafting separate legislation and guidance documents. SEPA would also need to maintain two charging regimes and reporting systems for landfills. As separate regimes would in any case be maintained for non-PPC waste management operations (such as transfer stations), the administrative implications of the dual system would be marginal.

Option 3 WML sites would move to a new regulatory regime, which may incur additional one-off costs compared with the variation in authorisations under Option 2 ³⁴. However, this would give SEPA a single regulatory framework for landfill licensing, with transparency of administration, reporting and record keeping. This offers potential long run administrative savings to SEPA, which may be reflected in lower subsistence charges to landfill operators (although these may not in all cases offset the increase in one-off costs).

The PPC regime differs from the WML regime in terms of definitions, the processing of applications, variations and surrender of licences. These include:

• definition of the person to whom the permit is granted
• under PPC applicants for a permit must advertise their application, and the regulator is obliged to take into consideration representations made
• under PPC there are a number of statutory consultees to be consulted on permit applications and applications for substantial change
• PPC allows for appeals against enforcement notices
• PPC allows the partial transfer or surrender of a permit.

The transfer of WML sites to PPC therefore represents elements of both potentially increased regulatory burden (first three bullets) and potentially reduced regulatory burden (last two bullets). The impact of these would only be on new applications and applications for significant change to a site. However, future numbers of sites in these categories are likely to be very small, and hence differences between the regulatory regimes may have relatively little impact in practice.

Issues of equity and fairness

The additional cost of waste management resulting from implementation of the Directive will generally be reflected back to the waste producer through the disposal charges levied by the waste management service provider. This correctly represents the Polluter Pays Principle, and provides an incentive for the waste producer to reuse or recycle the waste, or otherwise minimise waste production.

Option 3 would place more stringent requirements on small and inert landfills than required by the Directive. Limited consultation with the industry, however, indicates that the overriding majority of small operators will withdraw to avoid the burden of preparing and implementing conditioning plans.

Closure of small sites will result in loss of income to operators. Also, many small sites are associated with a company's business (for example, owned by a building contractor for the occasional deposit of demolition waste). In this case, the loss a site may increase transport and disposal costs, and this may not be considered fair.

Increased cost of waste disposal will increase the incentive for unscrupulous waste producers and waste management contractors to dispose of waste through unregulated / illegal routes. Responsibility and costs for removing such tipped wastes generally falls on the local authority as an inequitable burden. The principal option for countering this is stricter monitoring and inspection of waste arisings and disposals by SEPA as regulator. This will increase manpower requirements and regulation costs.

BENEFITS

The principal benefits of the Directive accrue to health and the environment by reducing risks by promoting waste reduction, recycling and reuse. In addition, investment in treatment technologies, rising landfill standards and ongoing staff development could result in new opportunities across the semi-skilled, skilled and managerial employment range.

The Directive requirement for landfill gas to be utilised has environmental benefits. Landfill gas is a powerful contributor to global warming, as well as having local health and hazard impacts. Current regulations require control over its release, which is generally achieved by flaring.

Landfill gas utilisation is well established in Scotland, with support particularly through the Scottish Renewables Obligation scheme introduced under the Electricity Act 1990 ³⁵.

The biogas industry estimates that despite measures to reduce the landfilling of biodegradable municipal waste, an additional 10 Mwe of gas is exploitable. This may now be brought forward from 2002 under the requirements of the Directive. This would displace 35,000 tonnes per year of carbon dioxide from conventional electricity generation ³⁶ saving between 0.03m and 0.79m per year in global warming impacts ³⁷, and contributing to meeting the challenges of tackling climate change. In addition, utilisation in gas engines would save approximately 100 tonnes per year of oxides of nitrogen otherwise emitted from flare stacks ³⁸, saving of the order of 0.46m per year in damage cost (mainly health impacts) ³⁹ and contributing to targets under National Emission Ceilings Directive.

There are marginal differences in benefits between the options for transposing the Directive. These are discussed in Section 5.3. Option 3 would give SEPA a single regulatory framework for landfill licensing, with transparency of administration, reporting and record keeping, and thus offers potential administrative savings to SEPA. This may be reflected in lower subsistence charges to landfill operators. However, WML sites would need to move to a new regulatory regime, which may incur additional one-off costs compared with the variation in authorisations under Option 2.

COMPLIANCE COST FOR BUSINESS, CHARITIES AND VOLUNTARY ORGANISATIONS

Business sectors affected

The Directive will impact on waste producers, waste management contractors, landfill operators and SEPA as regulator.

Waste producers. The direct impact of the Directive on charities, voluntary organisations and businesses, as waste producers will be through increased costs for waste management and disposal, including increased transport costs where wastes must be transported to treatment facilities. Indicative costs are given in Section 5.3. This will provide a further incentive to re-use and recycle or otherwise minimise waste arisings, including the installation of in-house treatment capacity to reduce the quantity or hazard potential of their waste. Producers will also be required to provide more detailed descriptions of their waste to comply with revised landfill acceptance criteria.

Charities and voluntary organisations as waste recyclers. Charities, voluntary organisations and NGOs make a significant contribution to the recycling and re-use of certain wastes, and are increasingly consulted in developing waste reduction programmes (including with support under the landfill tax credit scheme). They may have an increasing role in niche markets, such as aspects of commercial waste recycling.

Merchant recyclers are well established for recovering solvents, oily wastes, food processing residues and the like. Additional treatment capacity will be required, which will provide new investment opportunities. In addition, there is significant potential to increase the recycling of general industrial and commercial waste, particularly through the mechanism of waste exchanges - where waste from one producer is traded as a feedstock to another process. A consequence of the Directive will be to stimulate further waste exchanges, resulting in increased recycling and further employment opportunities.

Waste management contractors. The Directive will require significant investment in new treatment and disposal facilities, particularly for liquid wastes and hazardous solid wastes. This investment may be largely brought forward by increasingly consolidated waste management companies based on commercial views of risk and return. However, companies are awaiting detailed clarification of how the Directive will be implemented before making significant investment decisions. In the interim, there is some residual treatment capacity available in existing works that may be exploited.

Brownfield site developers. The additional costs in treating contaminated soils may inhibit brownfield re-developments, which are particularly cost sensitive.

Landfill industry. The initial impact on the landfill industry is through the need, by July 2002, to prepare conditioning plans for individual sites. In these, operators will need to decide in which category (inert, non-hazardous, hazardous) to seek re-permitting. The number of sites which will transfer or close is uncertain.

As noted above, for non-PPC sites the burden of preparing and subsequently implementing conditioning plans may be uneconomic. Indications are that closure and consolidation at this smaller end of the market is likely, with some small sites being bought up by larger companies, especially where there is scope for extending the site and increasing the scale of operations. This will represent a loss or a transfer of income for some companies.

The loss of small sites may require the diversion of waste, with potential impact through additional transport burdens and disposal costs - especially where these sites served local requirements. Although sites on islands or in remote areas may be exempt from the directive.

Much of the waste regulated outside the PPC regime is inert. The landfill tax (2/t) has significantly stimulated efforts to recycle and reuse this waste as a substitute raw material. This will be further stimulated by the levy on virgin aggregates (1.60/t) to be introduced in April 2002. There will also be increased demand for inert waste in the construction, redevelopment and restoration of landfills, activities which are excluded from the scope of the Directive. The demand for future inert waste disposal capacity is therefore likely to be reduced significantly, with a consequent reduction in future landfill numbers and licensing requirements.

Under current regulations, PPC sites will be required to submit applications for PPC permits in due course (possibly by 2007). This would entail identifying remedial works to operate according to best available techniques. The conditioning plan requirement to identify by July 2002 remedial works essentially brings forward these requirements and, in doing so, may bring forward costs for the permit applications and the remedial works.

The main impact of the conditioning plan requirements will be on current co-disposal sites. Currently, there are some 20 co-disposal landfills in Scotland. Within the plan, an operator will need to elect whether to seek permitting within the hazardous or non-hazardous category. This will be an entirely commercial decision by individual operators.

Indications are that operators will only seek permits as hazardous waste sites for those landfills considered of strategic importance to the company's interests, such as for ultimate residues from their own treatment processes. This may be no more than a dozen sites. Moreover, few waste management companies would accept the planning difficulties and long-term liability associated with establishing hazardous waste landfills at new sites. Sparingly few new hazardous waste landfills are therefore likely to be developed in the future.

A key factor in this decision will be whether a hazardous waste landfill may be co-located with a non-hazardous waste landfill ⁴⁰. In this case, operators may seek re-authorisation of all co-disposal landfills for non-hazardous waste, and, where commercially advantageous, develop an adjacent (smaller) landfill for hazardous waste. The Scottish Executive believes that such co-location would rarely be appropriate and that any such proposal would have to be considered very carefully.

Landfill gas utilisation. The Directive introduces a requirement to recover landfill gas for utilisation. As noted in Section 4, this may bring forward an additional 10 MWe of landfill gas utilisation, at an additional investment cost above simple flaring of 0.75m to 1m per MWe (ie a total additional investment of 7.5m to 10.0m with the costs spread at an increasing rate over eight years from 2002). At the same time, this could generate an additional income to landfill operators of some 1.95m per year ⁴¹.

Professional bodies. The Directive introduces a requirement for landfill operators and staff to receive ongoing training and development. This will place an additional cost and administrative burden on landfill operators ⁴², but provide increased opportunities professional institutions and qualified bodies to provide training.

SEPA. The Directive impact on re-use and recycling will require the development of additional treatment facilities. Additional facilities will also be required to treat many wastes prior to landfill. These facilities will require licensing, either under the WML regime or PPC. There will therefore be an additional administrative burden on SEPA attributable to the Directive beyond the review of conditioning plans and the re-permitting of landfills. These burdens are likely to be passed back to operators through the licensing charges.

The different regulatory regimes under which the Directive may be transposed will have some impact on administrative burdens and costs. These are considered in Section 5.3.

Compliance cost for a typical small business

Small waste producer. The cost impact on waste producers will be through increased disposal costs, which will provide further stimulus to reuse, recycle or otherwise minimise waste production. This may result in significant savings to the company. Alternatively, the company may wish to bear the additional cost of disposal, which may vary from 0 to 120/t depending on the nature of the waste and the cost of pre-treatment required (Table A3, Appendix A).

A typical small business producing 2 tonnes of mainly office waste per week could expect an increase of 1000 to 2100 per year ⁴³.

A small engineering works producing 8 tonnes per week of mixed wastes, including some solid special waste, could expect an increase of around 12,500 to 25,000 per year ⁴⁴.

A construction company disposing of 200 tonnes per week of demolition wastes, including 20 per cent non-inert wastes, could expect an increase of up to 14,600 per year as a result of treatment requirements for the non-inert component ⁴⁵.

In each case, the potential cost increase should provide a stimulus to reducing waste arisings or otherwise seeking opportunities for reuse or recycling. This is particularly the case with the construction waste, where appropriate sorting and recycling have potential to result in a net cost saving.

Operator of a small landfill site. The compliance costs for an existing operator of a small landfill will comprise a number of elements.

By July 2002 a conditioning plan is required to be submitted, at an estimated cost of some 5000, which identifies any remedial works to be undertaken.

The timetable for these works will be established on a case by case basis by SEPA as regulator, but in any case will need to be completed by July 2009. Costs will depend on the extent of remedial works required, and may include both technical requirements (such as additional leachate or gas control) and non-technical requirements (such as additional staff training and increased financial provision).

On a timescale yet to be agreed, re-authorisation will be required. If this is done under Option 2 (amendment to the existing waste management licence), this will entail a modification to the existing licence. The current modification charge is 1944 for a small non-hazardous landfill, and this may be indicative of the level of future charge incurred. Under Option 3 (re-authorisation under PPC), a new PPC licence will be required. Again, as an indication, the current charge for a waste management licence for a small industrial non-hazardous landfill is 3738. However the annual subsistence charge under Option 3 may be lower than under Option 2 (Section 3).

Total compliance cost

The cost to waste producers of additional waste treatment arising from the requirements of the Directive are estimated at between 16.4m and 136.6m per year (Table 3). The detailed analysis of these costs is presented in Appendix A.

The largest contribution to these costs, both in absolute terms and to the range, derives from the 8.0 million tonnes per year of non-special solid waste. This waste stream is least well characterised at present, although SEPA should be able to should provide more robust estimates in due course.

Table 3: Assessment of annual additional cost of landfill disposal

In addition, preparation of conditioning plans will place a one-off cost of between 5000 and 25000 per site (see footnote) on the landfill industry ⁴⁶, which largely will be passed back to waste producers through waste disposal charges.

Investment in additional gas utilisation is likely to be of the order of 7.5 to 10.0m over 8 years, but would be expected to break even over the project life through the sale of electricity (Section 5.1).

In addition, disbenefits may also arise as a result of the impact of additional processing, recycling and transport of wastes, plus from possible health impacts of workers that undertaken additional sorting. It was not possible to quantify these disbenefits.

Different options for transposing the Directive will impact costs. Option 3 potentially provides some reduction to landfill operators in recurring regulation costs compared with Option 2, although the difference is likely to be small compared to the other costs in future landfill disposal. However, Option 3 may provide some cost savings over Option 2 to SEPA as regulator, although since it goes beyond the current regime, in some respects this may increase SEPA's costs. These changes have not been costed for this document.

CONSULTATION WITH SMALL BUSINESSES

We aim to bring small businesses into the consultation process through the Federation of Small Businesses, as well as through waste trade organisations.

Competition between waste management companies is high, and the steady trend over recent years has been towards greater consolidation to achieve cost saving. Previous consultation with the industry suggests that the Directive will accelerate this process. In particular, the need for new treatment facilities will require major investment, especially in treating liquid wastes and hazardous solid wastes, and it is the larger companies who have the resources to pursue the necessary developments though the planning process.

However, there is much uncertainty within the waste industry, and most companies are awaiting detailed clarification of how the Directive will be implemented before making significant investment decisions. In the interim, there is residual treatment capacity available in many existing works which may be utilised to provide some buffer capacity whilst decisions on future treatment facilities are made. These facilities may not be in convenient locations, which may result in additional transport impacts during the transitional phase. This requires further study, as do the planning implications of siting new facilities under the proximity principle.

RESULTS OF CONSULTATIONS

Consultation on regulations to implement the Directive are due to start in early 2001. Representative bodies and trade associations are being consulted throughout the negotiations on the Directive and continue to be invited to comment on the regulations as they are being drafted.

SUMMARY AND RECOMMENDATIONS

The Directive brings forward a number of requirements which will add between 1.80 and 59.50 per tonne to the mean cost of waste disposal (Appendix A), with costs ranging from 0 to 120 per tonne for specific waste streams. These costs will largely be passed back to the waste producers, reflecting the polluter pays principle, and will provide a further incentive to waste producers to reuse, recycling or otherwise minimise their waste production.

The Directive will require significant investment in new treatment and disposal facilities, particularly for liquid wastes and hazardous solid wastes. This investment may be largely brought forward by increasingly consolidated waste management companies based on commercial views of risk and return. However, companies are awaiting detailed clarification of how the Directive will be implemented before making significant investment decisions, and this may delay the rate at which the Directive provisions can be implemented.

Of the alternative regimes under which the Directive may be transposed, Options 3 has the potential for increasing the regulatory burden of non-PPC sites, but this assessment suggests that this will have little practical impact. This option is therefore preferred for its potential to provide a consistent regulatory regime with common reporting requirement and data systems. This has the potential to accrue savings in recurring costs to SEPA as regulator, which may be reflected in reduced charges to operators, and these are judged to outweigh the effects of one-off costs incurred due to changes in the regulatory regime. However, it should be noted that the potential savings have not been costed.