Economic Instruments - Charges and taxes
Landfill Tax (EU)
Background
Many EU states have introduced landfill taxes. The highest rates are found in the Netherlands, (86 euros per tonne for low density waste and 14 euros per tonne for non-combustible high density waste), Flanders (62) and Denmark, (more than 50 euros per tonne), Austria and Sweden (40 euros per tonne), Wallonia, UK and Finland (more than 20 euros per tonne). Ireland, France, Czech Republic, Italy and recently Cataluna have introduced landfill taxes of 7 to 15 euros per tonne (CEWEP, 2004).
Denmark and the Netherlands, two countries that implemented landfill taxes early on and have set those taxes at relatively high levels, also have the lowest dependency on landfill and highest levels of waste recovery. Bartelings et al., (2005) finds no straightforward correlation between high landfill taxes and low landfill rates. Bartelings et al. also suggests that factors, such as available space and regulations concerning the landfilling of waste play a role in the effectiveness of landfill taxation.
Aims
A major reason for assessing the success of landfill taxes across EU countries is a countries ability to comply with the 1999 EU Landfill Directive (99/31/EC). It has set targets for existing sites to:
Reduce biodegradable municipal waste sent to landfill by 75%, 50% and 35% of that produced in 1995 by 2010, 2013 and 2020 respectively.
Ban landfill of hazardous and non-hazardous wastes together from July 2004
Ban liquid waste, and certain hazardous wastes by 2001
Ban landfill of whole tyres by 2003 and shredded tyres by 2006.
Tax rates
Landfill taxes vary in their ‘structure', for example in Austria, the landfill tax is differentiated by waste and type of landfill, while in the UK the type of waste is only considered. The landfill tax varies across regions in Italy. EU countries differ in the exemption of different activities from the tax (EEA, 2005).
In general though the aim of the tax is to promote diversion from landfill via any other option. For example, mandatory recycling targets are set to encourage diversion to recycling rather than treatment and energy recovery. Landfill bans exist for specific waste streams.
Table: Overview of landfill tax rates in European Countries:
Country Landfill tax euro/tonne Description
2001 2005
Austria 44.0 7.2 Rising to 87 euros per tonne, from 2006.
65.0 21.0 Rate for pre-treated landfill
For construction bulk or ground excavation
Belgium Flanders 61.8
Belgium Wallonie 27.5
Czech Republic 10.0 13.0 Rising to 17 for 2007 onwards
Denmark 50.0 74.0 Landfill of MSW is banned, however in practice bulky waste still goes to landfill.
Finland 23.0 30.0 For MSW
270.0 For hazardous waste
France 7-9.0 7-9.0 Introduced in 2002
18.3 Hazardous waste in HM landfills.
Germany None
Ireland 19.0 19.0
Italy 1-10.0 10-50 Inert waste
5-10.0 Other waste (MSW excluded)
10-25.0 MSW, depending on region
Netherlands 86.0 86.0 per tonne of waste less than 1,100kg/m3 for specific waste
14.0 per tonne for non-municipal waste more than 1,100kg/m3 (non combustible).
Landfill of MSW is banned although where there is insufficient incineration capacity there an annual exemption from the ban of 3 million tonnes.
Portugal None
Spain None 10.0 In Catalonia only. Legislation in Madrid 10 e/t dangerous waste; 7 e/t domestic waste; 3e/t demolition and construction waste
Sweden 31.0 40.0 Rising to 47 from 2006
Switzerland 9.7 For residual landfill
12.9 For reactor landfill (slag)
32.2 For export to disused salt mines (untreated residues from flue-gas clean).
UK 19.0 26.0 Rising in 4.5 euro increments per annum to a maximum of 51 euros per tonne by 2010.
2.0 For inert waste
Source: Confederation of European Waste to Energy Plants, 31 Dec 2005. Available at: www.CEWEP.com and CIWM, 2005 for 2005 figures.
Most EU countries have increased the waste tax rates over time. Finland is the exception, as it kept the same rate between 1996 and 2003, 15 euro per tonne, raising it in 2003 to 23 euros and from January 2005 the waste tax rate in Finland has been 30 euros per tonne. As discussed in the section on Denmark, the structure of the waste tax has created economic incentives to maximise recycling and then use incineration with energy recovery (EEA, 2005). The differentiation of landfill rates will have an impact on the level of landfill. For example, in Austria, a lower tax rate is charged for treated landfill residues from mechanical biological treatment plants. The difference between 87 euro (in 2006) for untreated waste and 21 euro for treated waste is likely to increase the level of pretreated waste going to landfill (EEA, 2005).
In another example, Catalonia in Spain, revenue from the landfill tax is used to help the development of schemes for seperation of biowastes at source. This is administered by the municipalities who receive funding based on a per tonne basis, varying by the level of contamination of the waste (EEA, 2005).
Most waste revenue is passed into the general budget (EEA, 2005, table 3.4, 64). In countries such as Austria and Switzerland, funds that are collected from the waste tax are used to remediate contaminated land. In Finland, even though the waste tax revenue is passed to the general budget, a ‘gentleman's agreement' exists between the Ministry of Finance and the Ministry of the Environment, such that more money is made available to fund contaminated land remediation (EEA, 2005).
Allocation of Revenue
With regard to allocation of landfill tax revenue in the UK, its introduction was in alignment with a reduction in employers' national insurance contributions. The UK landfill tax credit scheme was aimed at encouraging landfill operators to support projects with environmental objectives, such that tax credits can be claimed in respect of funds used (up to a maximum of 20% of their tax liability). This scheme was halted and the UK treasury has yet to decide what to do with the extra revenue generated (EEA, 2005).
Performance
There has been a mixed experience with unit based pricing systems for landfilling across countries. Usually high landfill taxes are associated with higher levels of waste recovery across the EU but other policies such as landfill bans on certain waste streams and regulation on recycling will also influence the outcome. Availability of information and behavioural attitudes of the population seem to impact on the level of recycling in households even more than the cost of waste disposal (Bartelings et al., 2005).
The UK and Ireland are the two EU countries that have not yet reached the first target scheduled under the EU Landfill Directive. Austria, Denmark, Germany, Netherlands and Sweden are already meeting their third target. Spain has also taken up the derogation, but both national and EU data are imprecise as to whether Spain has reached its first target level. Data constraints also hinder analysis of Italy's progress. It has met the first target, but how much further it has progressed is uncertain. France has met the first two targets, but has acknowledged that there is more work to be done prior to 2016 (CIWM, 2005).
In general, performance of the landfill tax is strongly influenced by the tax level (Bartelings et al., 2005). Low levels of landfill tax seem not to be effective (as in the UK). Fixed long-term contracts between waste producers and landfill operators may also influence the level of effectiveness of the landfill tax (as in France) (Bartelings et al., 2005). In both the Austrian and Flanders experience, differentiations in landfill tax rates (taking into account environmental features of the landfill) seem to be effective in speeding up the modernisation of landfills. In conclusion, Bartelings et al., 2005 find that not enough research on the effectiveness of landfill has been carried out to explore which system works best.
In a comparison of the Netherlands and UK Landfill Tax Schemes, Braathen (2006) states that the two systems are quite different, both in the instruments used and the way the systems are managed. The UK has relied very heavily on landfilling as a means of waste disposal while the Netherlands focuses more on recycling and incineration. Case studies by Bartelings et al., 2005 and Dijkgraaf and Vollebergh 2004 both indicate that it is difficult to impact in a significant way on the total amounts of household waste generated. Despite a much more active waste policy in the Netherlands than in the UK over a long time period, total household waste amounts are not any lower in the former than in the latter country (Braathen, 2006).
Compliance with the EU landfill Directive has led to a diversification of instruments used in the UK to reduce the amount of household waste. This means a shift from landfill towards reuse, recycling and incineration. This change had led to an increase in administrative costs, but, according to Braathen (2006), if these costs were passed on to households in the form of variable waste collection charges then a change in household behaviour may occur.
New EU Member States
Both Estonia, Slovakia and the Czech Republic have introduced a landfill tax. In Estonia a comprehensive system of waste disposal charges have been introduced. The charges differ for different types of waste and differ for different locations of sites and whether the site meets environmental regulations (EEA, 2005).
Slovakia has a scheme whereby municipalities pay a levy on landfill to the local authority where the landfill site is located. The charges vary depending on the level of waste collected by the municipality versus the local authority (EEA, 2005).
Institutional Arrangements
In the UK and Finland the customs and exise authorities are in charge of the landfill tax. In France, ADEME, French Agency for Environment and Energy Management, used to collect the tax but over the last few years excise and duty directorate-general, within the department of finance are responsible for collection of the tax. In Denmark, Norway and Sweden, waste taxes are paid to the national authorities (EEA, 2005: 64).
Related Instruments
The successfulness of the landfill tax in diverting waste away from landfill sites is difficult to assess. Usually other instruments are introduced at the same time, such as landfill bans. In the case of the UK, the tax has not been set high enough to result in a significant diversion, and in countries where the tax is high (for example Denmark) other instruments have also been introduced at the same time. Landfill taxes have proved to be a useful source of funding for developing an effective infrastructure for the waste (EEA, 2005).
The Netherlands, Denmark, Norway and Flanders also apply disposal taxes on incineration. Norway has recently revised the incineration tax, from one that partly related to the energy generated by the plant, to one based on emissions from the plants in order to better internalize external costs. The tax is combined with a subsidy scheme for energy produced from waste (EEA, 2005, 63).
With regard to recycling, the performance has been on the increase. In the UK recycling doubled in four years to 2004/05. Households are recycling more than a fifth of their waste (23% estimate) in 2004/05. And are on the way to reaching the target of 30% by 2010. Germany recycles 57% of its waste, the Netherlands recycles 64% and Denmark 41%. Nearly 80% of England's households now have doorstep-recycling schemes (DEFRA, 2005).
In 2007, the recycling rate for steel packaging continued to grow throughout Europe rising by 3% from the 2006 total. Top performers were Belgium and Germany where more than 90% of steel packaging was recycled. Switzerland, Austria and the Netherlands follow closely behind, recycling over 80% of their steel containers.
The trend towards increased recycling for steel packaging is confirmed in Central and Eastern Europe: Latvia, Lithuania, Estonia and the Czech Republic have all boosted their recycling performance by between 16% and 45% (Apeal, 2009).
Quantities of packaging waste ending up in landfill fell by 33 per cent between 1998 and 2006, according to an analysis of EU data published by packaging chain lobby group Europen (ENDS, 2009).
The analysis shows a decoupling of packaging production from economic growth and that per capita consumption of glass packaging fell by seven per cent while demand for plastic and paper packaging grew significantly during the period. Demand for metal remained stable.
Almost all member states required to recycle 55 per cent of waste packaging by December 2008 had either met or exceeded the target in 2006, according to the analysis. Greece, Ireland, Portugal and new member states, which must meet the targets between 2011 and 2015, are well on track (ENDS, 2009).
References
Apea (The Association of European Producers of Steel for Packaging) 2009.Steel Packaging Recycling Rates. http://www.apeal.org/emc.asp?pageId=367
Bartelings, H., P. van Beukering, O. Kuik, V. Linderhof, F. Oosterhuis, 2005, Effectiveness of landfill taxation, Report prepared for the Dutch Ministry of Housing, Spatial Planning and the Environment, Institute for Environmental Studies, Vrije Universiteit, R-05/05, Amsterdam. Available at
www.ivm.falw.vu.nl/research_output/index.cfm/home_subsection.cfm/
subsectionid/FF91BCBD-EAFE-426A-ABB8184073A39BBF
Braathen, Nils Axel, 2006, Instrument Mixes for Environmental Policy, How many stones should be used to kill a bird?, forthcoming.
CIWM, 2005,
Confederation of European Waste to Energy Plants (CEWEP), 2005. Available at: www.CEWEP.com
European Economic Agency (EEA), 2005, Market Based Instruments for Environmental Policy in Europe, EEA Technical Report No. 8/2005.
ENDS, 2009. Drop in Amount of Packaging going to Landfill. ENDS Europe Daily News, 11 Marcy 2009.
OECD, 2004, Addressing the Economics of Waste - Selected Papers from Workshop on the Economics of Waste, Environment & Sustainable Development, Vol. 2004, no. 2, pp. 98-113, Paris. Available at: http://www1.oecd.org/publications/e-book/9704031E.PDF
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