A recovery method to dispose of?

Matt Townsend from Allen & Overy's environmental law group examines the implications of the recent decision to classify waste incineration as a disposal rather than recovery operation.

The future role of waste incineration in assisting the UK to meet wide ranging recovery targets has been cast into doubt following a recent European Court of Justice (ECJ) ruling. Earlier this year, the ECJ held that the incineration of household waste should be regarded as a disposal rather than a recovery operation even where energy is recovered from the process. The ruling raises immediate and difficult questions for those Member States that are heavily reliant on meeting ambitious recovery targets set under the Packaging Directive (94/62) by municipal incineration. It also throws open the growing debate about the classification of incineration within the waste hierarchy and adds further uncertainty over its role as the preferred waste management option for many local authorities.

The case was brought by the European Commission against Luxembourg (C-458/00) and concerned the shipment of waste from Luxembourg to France. In 1998, authorisation was sought from the Luxembourg authorities to ship household and similar waste to France under Regulation 259/93 on the Supervision and Control of Shipments of Waste. The notification to the authorities was made on the basis that the waste was to be recovered by incineration and the energy generated would be reclaimed. However, the relevant authorities in Luxembourg decided to reclassify the shipment as waste intended for disposal on the basis that the primary purpose of the incineration plant for which the waste was destined was the thermal treatment of waste with a view to its mineralisation (irrespective of whether any heat generated was reclaimed). The authorities considered that the waste was destined for disposal within point D10 (incineration of waste) of Article IIA of the Framework Directive on Waste (75/442) and, as such, a different (and more onerous) criteria would apply to authorising its shipment. The alternative (and expected) classification would have been under R1 of Annex IIB of the directive (the use of the waste principally as fuel or other means to generate energy). The Commission brought the action on the basis that the authorities had raised unjustified objections to the proposed shipment and had failed to fulfil their duties under Regulation 259/93.

The ECJ agreed with the Luxembourg authorities. It held that recovery within R1 was intended to cover those operations where the main purpose was to enable the waste to be used as a means of generating energy (i.e. to enable the waste to fulfil a useful function). This classification also assumed that the amount of energy generated from the process would be greater than that used in the combustion process itself and that surplus energy is utilised. Finally, the waste must be used principally as a fuel or other means to generate energy, which means that the greater part of the waste must be consumed during the operation. The court concluded that, where the reclamation of heat generated by the process is only a secondary effect of an operation, the principal purpose of which is the disposal of waste, then the operation should be classified as disposal rather than recovery. In this instance, therefore, the ECJ found that the shipment was intended for disposal.

Industrial considerations

The significance of the decision is still being considered by industry as well as the Environment Agency and the Department of Environment, Food and Rural Affairs (DEFRA). Meanwhile, the European Commission has confirmed that, for the purposes of the Packaging Directive, dedicated municipal incineration should be regarded as a disposal rather then a recovery operation. This raises immediate concern over the ability of the UK and other Member States to meet their recovery targets under the Packaging Directive (approximately 10 per cent of the UK’s packaging recovery target is currently being met through municipal incineration). If formally reclassified as disposal, greater reliance will have to be placed on recycling, composting and other forms of recovery (such as co-incineration or the use of refuse-derived fuel (RDF) in other combustion processes) in order to achieve these targets.

The case also raises an interesting question for those compliance schemes which are heavily reliant on Packaging Waste Recovery Notes (PRNs) supplied by incinerators in order to achieve compliance. Schemes should look carefully at how flexible their supply contracts are in the event that incineration-generated PRNs effectively become a defunct currency. Obligated producers that have joined such schemes should also be asking the question as to how their scheme will achieve compliance in the event that incineration is reclassified in this way. Encouragingly, the impact on other producer responsibility initiatives, such as end-of-life vehicles or waste electrical equipment, may be less significant given the more limited reliance on incineration to achieve recovery targets in these waste streams.

It is, however, difficult to imagine (at least in the short term) that action would be taken by the European Commission against the UK Government for a failure to meet recovery targets due to the reclassification of incineration in this way. Reassuringly, there are likely to be a large number of Member States that rely on incineration, alongside the UK, who will be lobbying hard to ensure this issue is resolved in a suitable way (perhaps through revisions to the Framework Directive
on Waste).

On a wider note, the case throws up yet further challenges to the development of energy-from-waste incinerators (EfW) both in the UK and across Europe. Given the existing difficulties in getting such projects started, the reclassification of incineration as a disposal operation is likely to make it even harder for local authorities to adopt EfW as a suitable waste management option (and perhaps even easier for local NIMBYs to object to such schemes). EfW plants will also lose the financial windfall which has arisen since the introduction of the PRN system in 1997. Local authorities may also be looking to any recovery and recycling targets set in local waste plants to see how these can be achieved in the event that assumptions over what is considered to be recovery may now have changed.

Meanwhile, many Member States are focusing on how best to meet the targets set out in the Landfill Directive (99/31) which require the diversion of biodegradable waste from landfill. For the UK and others, these targets are recognised as ambitious given the historical reliance on landfill. Importantly, the directive does not specify how diverted waste should be treated but it would make a mockery of the policy that sits behind the directive to allow increased amounts of waste to be simply switched between different final disposal routes (albeit recognising that EfW would be a more preferred route than landfill) without achieving any increase in the volume of material sent for recycling or recovery.

The ruling adds a long-running debate over how to classify incineration which has led the Commission to formally review whether to reclassify this operation and, possibly, have another look at the Framework Directive on Waste. Whatever the outcome of this process, businesses, local authorities and regulators should be looking closely at the assumptions made in contracts, waste plans or compliance policies over what is to be regarded as recovery to ensure that sufficient flexibility is being built in (or contingencies made) in the event that this issue crystallises in the way that many in government and the waste industry fear.

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