Response by ESRI Authors to Comments on An Economic Approach to Municipal Waste Management in Ireland

Response by ESRI Authors to Comments on An Economic Approach to Municipal Waste Management in Ireland

Embargo 00.01 5 March 2010

The roadmap for municipal waste management policy set out in our Report, An Economic Approach to Municipal Waste Management in Ireland, remains unchanged after a careful review of the comments and criticisms made since the Report was launched on 3 February 2010.  The concerns identified do not change the substance of the Report or its central conclusions. We are thus providing an amendment to the Report and not withdrawing it. The Report’s recommendations include:

• a cap and trade system should be introduced to meet the EU Landfill Directive targets for 2013 and 2016;
• the imposition of levies per tonne of municipal waste, depending on the method of waste disposal. The levies are based on the unpriced environmental and disamenity impact of the particular waste disposal method; and,
• competitive tendering for household waste collection in each region, which would address any market power problems.

  The only valid criticism of any significance arising from the comments is that incinerators are exempted from the Emission Trading System (“ETS”), when we had assumed the contrary in the Report.  When this correction is made, the waste levy per tonne for incineration for an urban incinerator increases from €4.22 to 5.07 per tonne to €9.80 to 10.70 per tonne.  These numbers are still much less than the €26 per tonne (plus non-GHG pollutant related taxes) recommended in the International Review carried out for the Department of the Environment, Heritage and Local Government.  Consequently, such a revision does not alter the substance of our proposed roadmap. Our responses to some of the other criticisms are as follows:

• The International Review argues that external costs of non-GHG air pollutants should be included in the waste levies for incinerators, despite already being subject to direct regulation.  This would lead to needless duplication of regulation and excessive administrative and compliance costs.  Still more important, it would amount to discrimination among polluters.  Environmental emissions have the same environmental impact irrespective of the source, so it is not appropriate to select incineration for special treatment when other sources, such as cement kilns and electricity generating stations, are not included.  Consistency could be preserved by applying a similar levy to the much larger emissions of some substances from electricity generating stations, but we have noted that this would raise energy prices substantially and place Ireland at a competitive disadvantage.
• Projections of future municipal waste growth that rely on simple international benchmarking, such as those published by SLR Consulting on behalf of the Irish Waste Management Association (IWMA), should be regarded with caution.  International benchmarking can be useful in predicting future patterns of activity, but it needs to take proper account of national differences in economic and demographic conditions to be convincing.  This SLR did not do.
• Our Report includes baseline municipal waste projections that draw upon extensive research previously undertaken in the ESRI into likely future developments in the Irish economy and in the related production of waste. The IWMA’s criticisms of the Report’s projections of waste, both at the national and Dublin levels, are unfounded.  For example, the IWMA states that the Report used a recycling rate of 39% rather that the 41% recorded in 2008.  This is incorrect.  The Report did not specify what rate was used, but did use 41%.  The IWMA also states that no account was taken of the incinerator at Carranstown in Meath.  This is incorrect as reference to the Report (p. 30) makes clear.
• The IWMA argues that the Report appears to be abandoning recycling in order to justify building the Poolbeg incinerator.  This is incorrect.  Our projections of waste sent for recycling represent a baseline prior to the imposition of any new policies, construction of new recycling facilities or adoption of extra collection arrangements (also discussed on p.30).  If efficient policies are put in place, this will provide incentives for efficient levels of recycling activity.

  Our comments on the alternative waste management roadmap put forward by the Department of the Environment, Heritage and Local Government also remain unchanged. Our Report questions whether the proposed Section 60 policy direction to cap incineration provides a coherent and feasible basis on which to develop waste policy. Arbitrary limits on incineration and consequent expansion of mechanical biological treatment (MBT) are not appropriate. The International Review's setting of residual waste levies suffers from both double regulation and double counting, with the result that some of the proposed levies are much higher than is appropriate.  It does not provide the basis for a waste management policy that would minimise the economic cost to Ireland of waste disposal or meet the EU Landfill Directive targets. The lead author of the Report, Dr Paul K Gorecki, commented as follows: "We welcome the vigorous debate following the release of our Report.  It is only through such debate and dialogue that waste management policy can be improved thus enhancing the welfare of Irish society.  We hope that the independent research that we have published, drawing on existing research from the ESRI, the Competition Authority and others, will make a positive contribution in that respect."