Problems of Market Dislocation and the Introduction of New Waste Regulations
Lead Researchers: Prof Robert Lee, Juma Nyende and Hannah kenyon
Background
Environmental Directives play an important part in environmental regulation within the European Union. From the 1975 Waste Framework Directive onwards, they form the primary mechanism for regulating waste and waste disposal in Europe. Their purpose is to promote a harmonised system of waste management within the community. A Directive is binding on a member state within the European Union, which must implement the demands of the Directive within its legal system. However, the precise way in which the directive’s demands are met is left open to the member state. Usually, the member state is given two years to bring law into line with the requirements of the Directive. This gives rise to a problem however, which this research proposal aims to examine.
A Directive will need to be agreed by both the European Parliament and also by the environment ministers of the member states of the E.U. There is a long period of negotiation leading to the passage of the directive in final form. Indeed the recent Environmental Liability Directive took 15 years from the inception of an initial idea to control the damage caused by waste disposal proposed in 1989. More commonly there may be a year or two in which the directive is broadly agreed in draft before it is finally signed off by the Council of Ministers. Add this to the two years allowed for transposition and there may be three or four years in which parties affected by the directive know that the law is going to change at some particular point of time in the future. This is where the problem can arise, because the actions of those parties may be affected by the knowledge of the change and this can produce dislocations in the markets for wastes.
We have seen a number of such problems arising out of the demands of EU Law. Fridge mountains leap to mind. Abandoned cars (in the light of the End of life Vehicles’ Directive) is another present area of concern. Enormous problems surrounded the implementation of the Waste Electronic and Electrical Equipment (ROHS) Directive control the composition of substances coming onto the market, even though ROHS will take effect only in the summer of 2006, it is effecting the market for substances to be phased out (such as lead) already.
To take one example in greater detail in order to explain the phenomenan and why it was problematic, it is instructive to review the passage of the Landfill Directive. Among other things, this prohibits the co-disposal of wastes – hitherto a common practice in the U.K. By co-disposal we mean the disposal in the same landfill of different categories of waste such as the disposal of hazardous waste together with municipal waste. The prohibition of this practice is a welcome move that ought to lead to safer practices of disposal and more thought being given to diversification of waste streams away from landfill. However, its introduction has proved highly problematic.
It was well known since about 2001 that the practice of co-disposal of waste would be banned as of the summer of 2004. Operators would have to produced site conditioning plans supporting an election to become one type of landfill site (e.g. inert) or another (e.g. hazardous) from July 2004 onwards. In the event few operators would elect to maintain hazardous landfill sites. In Wales there is now no hazardous landfill facility. In England there remain 14 sites. In the interviening period, however, there was no restriction on co-disposal and gate prices for hazardous wastes dropped as operators filled up voids knowing theta the opportunity to take such wastes would disappear.
This had an obvious impact on other routes of disposal for hazardous waste. We saw this in Wales. The Shanks incinerator at Pontypool was closed in 2002. In the 2003 annual report, the chairman stated that:
“The cessation of operations at the Pontypool high temperature incinerator delivered the expected savings of 14m in the year. This decrease in available UK incineration capacity appears to have stabalised prices in the sector.”
Such action proved vital in stemming The Shanks’ losses but is much more disconcerting now that Wales finds itself without any route of waste disposal. In the course of our research into commercial and industrial waste streams in Wales, one company producing hazardous waste admitted to a four-fold increase in waste miles in persuing disposal options in the aftermath of the Landfill Regulations (which transposed the Directive) taking affect.
Aims/Objectives/Key Questions
This research aims to carry out an analysis of waste streams and their relationship to the market before, during and following the implementation of waste directives, and to understand what dislocations occur and how these may be addressed by policy makers and others to ensure more efficient waste and materials management.
The specific objectives are:
1. To carry out market analysis relating to three specific waste streams affected by recent Waste Directives from the EU.
2. To determine the values and costs relating to the management of these waste streams at given points in time during the directive implementation process.
3. To understand and evaluate what actions might be taken by various stakeholders to address the problems generated by the implementation of new waste directives on the waste and materials markets.
Methodology
In order to explore this type of market dislocation following the promise (or threat) of regulatory intervention, more research work is needed. This will pursue three main areas of interest:
• Fridges and disposal in the aftermath of the Ozone Depleting Substances Regulation
• Abandoned cars and the regulation of end life vehicles
• The Landfill Directive and problems of hazardous wastes
The research work will consist of two parts. The first will be careful market analysis, which will examine data such as the values and costs attaching to these waste streams at particular points in time. This analysis will include relevant literature, press comments and company reports (such as that for Shanks’ above). A second part of this analysis will be contact with key players largely through telephone interview to gain an insight into their market choices in the shadow of regulation.
