3 Conclusions

3.1 Summary

This section provides a summary of the discussion above relating to the key questions raised. Specifically these are:

What are the beneficial effects of a waste levy on product stewardship?
What are the detrimental effects?
Can they co-exist?

Beneficial Effects

The beneficial effects of a waste levy on product stewardship are consistent with the objectives for the scheme. A waste levy can provide incentives for product design for waste minimisation and for diversion of waste to reuse or recycling. Waste levies also raise revenues that may be used to fund product stewardship schemes.

The impacts on product redesign are likely to be small. They would occur where there was an incentive on consumers to purchase more products that were designed to produce less consumer waste. However, there are barriers to such incentives, particularly the gaps in time between purchase and disposal decisions.

Added incentives for diversion are likely to be greatest for inert industrial waste, particularly construction waste. This has been the consistent experience of international examples.

A waste levy will raise revenues which can be used to fund a wide variety of waste management activities and product stewardship schemes.

Detrimental Effects

The potential detrimental effects of a waste levy on product stewardship schemes include:

concerns and potential for industry response to the potential of double dipping;
the possibility of increased costs for product redesign for waste minimisation and for recycling schemes;
the potential reaction of existing funders of product stewardship that could limit the additionality of waste levy revenues.

The issue of double dipping is raised because of the argument that some current voluntary product stewardship schemes have been established with industry funding, partly because of industry recognition of the environmental effects of waste. The argument is that, if a waste levy is introduced also in recognition of residual environmental damage, then the damage costs are being paid for twice—once in the additional costs paid for by industry to support recycling and again through payment of a waste levy.

There is some rationale to this argument, but its importance depends on the magnitude of the costs that industry is currently paying that go beyond business as usual and the extent to which the levy fully internalises environmental costs particularly on higher impact products. Estimating this is beyond the scope of this study. On the first point our inclination is to believe that industry is not bearing significant costs beyond business as usual.

The specific issue of costs to existing recycling and design-for-waste-minimisation schemes has been raised by industry representatives. There is some (unquantifiable) risk that some schemes may either stop or reduce their activity as costs will rise to pay for the levy on the waste that arises from these activities and schemes. This risk appears to be real, although its magnitude is not certain. However, it is not a systematic risk across entire waste streams and this suggests that, if any response is deemed necessary, it is best achieved through targeted use of waste levy revenues.

The issue of multiple funders arises because, for some product stewardship schemes, revenue comes from a combination of local government and processors (recyclers). The introduction of waste levy revenue can lead to additional recycling activity or to reductions in funding by these other parties. This heightens issues that are already a potential problem, and that need some clarification, ie the appropriate funding of all waste management services split across industry, local and central government when there are expectations on all parties to support product stewardship.

A related issue is the risk that the funding will not lead to additional levels of recycling or other waste minimisation activities. This may not be a problem if the waste levy revenue is being used to shift the burden from local government to industry, however local government will also be one of the major payers of the levy, whereby, to some extent at least, the levy simply shifts the way in which payments are made.

Co-existence of Levies and Product Stewardship

There is no reason in principle why voluntary product stewardship schemes cannot co-exist with a waste levy. There are international examples where they have done so and other examples where waste levies have been used alongside mandatory product stewardship schemes.

It is possible that some voluntary activity might be scaled back, simply because industry sees the introduction of a levy as a step away from a voluntary approach and towards regulated waste management. This is especially so if industry is currently undertaking voluntary product stewardship activity as a way to avoid government regulation and that introduction of a levy is seen as a step towards such regulation. The expected extent of this adverse reaction depends on views held regarding the motivation for existing voluntary activity and the magnitude of any costs that industry is bearing voluntarily. If current voluntary product stewardship activity is largely consistent with market activity, then any adverse response to the waste levy would be likely to be small or non-existent.

3.2 Recommendations

Any recommendations from this report are limited by the scope of the work. Explicitly it is limited to the interaction of a waste levy and voluntary product stewardship, and does not address whether a waste levy or voluntary product stewardship are good policy measures in their own rights.

In terms of the key issues raised here:

A waste levy can operate alongside voluntary product stewardship.
Introducing a levy may lead to some scaling back of existing activity, particularly if such activity is seen as a means to avoid government regulation. However, such a reaction is not expected to be a systematic response.
There is no obvious reason to redesign the waste levy proposal on the basis of the potential interaction with voluntary product stewardship schemes.
The potential interaction of waste levy revenue with revenues from other funders suggests a need to clarify the existing funding of waste management activity, particularly where there are expectations on both local government and industry to support product stewardship activity financially.

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