The unfair benefits of Water Discounting

Does the wastewater and sewage industry need to be subsidised by the public purse to continue landfilling sewage waste? Hot Rot Organic Solutions managing director James Lloyd, argues that parts of the Landfill Directive are out of date and operators in the wastewater and sewage treatment industries are continuing to landfill waste, instead of investing in proven recycling technologies which can treat this valuable resource.

The Landfill Directive has been operating for over 12 years. In 1999, its primary aim was to reduce the negative effects on the environment from landfilling waste. Unfortunately, the same Directive, which protects the wastewater and sewage treatment industries, is out of date and the sector is unfairly benefitting from ‘Water Discounting’ a rebate that is subsidised by the British taxpayer.

It’s therefore unsurprising that the wastewater sector has little or no incentive to change its practices and seek out alternative technologies to avoid landfilling screened sewage and grit. With landfill space in the UK running out and almost unanimously regarded as the least sustainable long term solution, the time is now right for ‘Water Discounting’ to be reviewed and brought into line with the treatment of other waste streams.

The incentives and disincentives
Under Landfill Directive legislation the Government, Defra and DECC, supported by Wrap, have dramatically increased recycling and composting rates across the UK in order to meet our 2020 landfill diversion targets and obligations.

The main financial and environmental incentive which has prompted a range of landfill diversion infrastructure to be built in the UK is the Landfill Tax Escalator. Waste producers in the private sector and waste disposal authorities have procured technologies that are diverting millions of tonnes of municipal, commercial and industrial waste away from being landfilled and, in effect, moving these resources up the waste hierarchy.

When the Escalator and ‘Water Discounting’ were first introduced, the tax for landfilling waste stood at £8 per tonne. Today the figure is at £56 per tonne and this is set to increase year on year to a minimum of £86 per tonne. However, operators in the wastewater industry landfilling grit and screening are only paying as little as one third of this. Why?

Under the Landfill Directive, the wastewater industry is allowed to landfill the residue after sewage is screened. Simply put, water companies can reclaim tax on the “process water” content of this landfilled material. The process water, which facilitates the movement of sewage material, passes through the screens at the sewage treatment works, leaving a stackable material with a lower (or predominantly naturally occurring) levels of water content.

However, the current application of the scheme sees the majority of this water content claimed back (up to 66%) as process water. In the municipal waste sector organic wastes similar to the material in screenings are landfilled at around 60% water content, all of which is considered naturally occurring.

The ‘Water Discounting’ rebate is, in essence, a disincentive for the waste water sector to invest in environmentally-friendly, socially acceptable and responsible waste treatment technologies, such as composting.

The exception not the rule
It’s important to highlight that there are exceptions in the wastewater industry. Kent-based Composting Facilities Services Ltd, for example, has invested more than £2m in in-vessel composting technology at their Kingsnorth site, to process grits, screenings and sewer washings from parent company MTS Cleansing Services Ltd as well as directly from wastewater companies in the South East.

The by-product from the fully sealed in-vessel technology is a highly versatile and valuable compost, which has a variety of applications.

This approach to diverting sewage screenings away from landfill is rare in this sector and should be commended. But it’s a drop in the ocean when you consider that the total volumes of ‘Water Discounted’ sewage waste which ends up in landfill sites is each year.

The solution
Realistically, the bulk of the wastewater and sewage treatment industry is unlikely to move away from landfilling thousands of tonnes of screenings every year until the Landfill Escalator rises to at least £80 per tonne. Then the landfill costs offset by the ‘Water Discount’ rebate will finally make this practice less financially attractive.

It therefore needs political intervention, with Her Majesty’s Revenues and Customs, Defra and DECC administering any policy or interpretative guidance changes. This would attract inward investment from waste management specialists in the anaerobic digestion and in-vessel composting sectors and would create large numbers of new direct and indirect employment opportunities; which is in keeping with the Government’s ‘greening’ of the UK economy and creating new private sector employment opportunities.

I’m expecting replies to this piece with arguments that to move away from landfilling practices would increase the price of treating wastewater and sewage for its customers and this would inevitably be reflected in utility bills. However, I would argue that landfill tax is rising to unsustainable levels, that gate fees for in-vessel technology are competitive with landfill rates and failing to invest now will inevitably lead to periods where companies are paying considerably more while they play catch up on treatment capacity. And as highlighted earlier, it also provides a highly versatile compost too.

However, it often takes a combination of industry good will and government department pressures to bring about a shift in corporate behaviour.

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