Government

Think tank report claims EU Circular Economy Package could ‘cost UK £2 billion’

Centre-right think tank Policy Exchange has claimed the EU’s ‘ill-defined’ Circular Economy Package (CEP) could cost UK businesses an extra £2 billion over the next 20 years, though others have questioned the report’s conclusions and figures in the report itself demonstrate the net effect of the package will be largely positive.

The report, ‘Going Round in Circles’, argues that the UK government should overhaul its waste and resource policies following Brexit, citing it as an opportunity to ‘reconsider waste policy… and identify the best way forward’.

The report highlights the impact of EU policies on UK waste and resource management, noting successes that include reductions in the use of resources and increased recycling. However, it goes on to criticise the EU approach towards waste, claiming its shortcomings include ‘unclear objectives’, ‘badly designed’ targets and policies that ‘do not reflect the UK context’.

Richard Howard, Policy Exchange’s Head of Environment and Energy said: “The EU’s proposed Circular Economy Package is ill defined and poorly thought through. It focuses too much on the means rather than the ends.

“The UK needs to take back control of our rubbish and develop a more coherent set of waste policies which better serve UK businesses and households, as well as the environment.”

‘Hampering business growth’

The main figure Policy Exchange is highlighting from its report is that the CEP (as the European Commission, but not Parliament, would have it) would impose direct costs on UK businesses of £1.9 billion between 2015 and 2035. The report says this is based on the cost-benefit analysis used by the European Commission itself..

Figures included in the report but not highlighted do show, however, that the commission’s favoured approach (including a 65 per cent recycling target) would result in external benefits to the UK of more than £4 billion and social benefits greater than £2 billion.

Moreover, an option for the CEP that includes a 70 per cent recycling target (as favoured by the European Parliament, meaning it could well be the ultimate target of the CEP following trilogues later this year) would be expected to incur costs for UK businesses of less than £0.5 billion, whilst resulting in combined external benefits and social benefits of roughly £10 billion.

Debate over exporting waste

Another concern expressed in the report that has resulted in debate is the cost of exporting residual waste overseas, where it is then turned into energy. According to figures cited in the report, the UK has spent £900 million in gate fees for sending waste abroad since 2011. Recommendations in the report include measures to ensure all economically recoverable materials are extracted before waste is exported.  

Waste management company FCC Environment has welcomed the report, with Communications Director Kristian Dales commenting: “The issues exposed by Policy Exchange in this report are all too real for us and are hampering business growth and development in the waste and resource sector.

Think tank report claims EU Circular Economy Package could ‘cost UK £2 billion’
The front page of the 'Going Round in Circles' report
“The fact that waste management companies are paying to export waste out of our country for incineration is simply not sustainable. It glosses over the fact that the UK urgently needs increased investment in its own waste infrastructure, which will not only enable us to better manage the waste, but will also help to safeguard the UK’s long-term energy security.”

Other commentators, however, have questioned this call for more waste infrastructure, noting that the emphasis should instead be on increasing recycling rates.

Speaking to Business Green, Dustin Benton from think tank Green Alliance commented: “There’s no environmental reason to oppose waste trade in principle. Sending waste to an energy facility on the continent that's hooked up to a district heating scheme has lower emissions than building a new UK energy from waste plant that just produces electricity – as most UK plants do.

“But the wider point is that recycling rates of 75 per cent to 85 per cent are possible – several Italian cities already achieve these. Far better to focus on innovation and design for recycling than to prematurely optimise on maximising contributions from energy from waste.”

Recommendations going forward

The report concludes with a list of recommendations to be taken into account in developing a new approach to waste policy, aiming at achieving a ‘more sustainable pattern of resource use and waste management’.

It calls for a clearer set of objectives underpinned by a ‘coherent set of targets and policies’ to: maximise resource productivity; minimise environmental impacts; and minimise the burden on society.

Other recommendations in the report include:

  • Local authorities should use one of three standardised systems for collecting waste and recycling – simplifying the more than 400 systems which currently operate across England;
  • Government should encourage innovation in the recycling and reuse of materials, and help to develop markets for scrap materials; and
  • Government should promote efficient forms of energy from waste – for example using black bag waste to create ‘green gas’.

Applying the CEP to the UK

The European Commission, Parliament and Council are due to enter into formal discussions know as trilogues to determine the final Circular Economy Package later this year.

Indications from the Department for Environment, Food & Rural Affairs (Defra), suggest the government is expecting the package to apply to the UK as it is likely to come into force before the anticipated Brexit negotiation deadline in March 2019 and be incorporated into UK law as part of the Great Repeal Bill.

Back in January, the European Parliament’s Environment Committee voted in favour of a 70 per cent recycling and reuse target for 2030, an increase on the goal originally proposed by the European Commission. Many environmental campaign groups hailed this news as a victory, while other organisations feared they were too ‘unrealistic’, and the Environmental Industries Commission last month called for a national debate to take place over UK targets.

However, some critics have suggested that discussion over what the UK can do to take control of the waste and resources situation following Brexit is premature, and that they disregard the fact that the EU also has a say in what responsibilities and regulations the UK takes on as part of its secession, and indeed has a stronger hand in negotiations.

The full ‘Going Round in Circles’ report can be read on Policy Exchange’s website

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