Landfill Allowance Trading Scheme Report of the Portfolio Holder for Greening of the Council

AGENDA ITEM 18

BOROUGH OF POOLE

CABINET

17th July 2007

LANDFILL ALLOWANCE TRADING SCHEME – REPORT OF THE PORTFOLIO HOLDER FOR THE ENVIRONMENT

1.PURPOSE OF REPORT

1.1To consider the Council’s proposed Policy in respect of its obligations under the Landfill Allowance Trading Scheme.

2.DECISION REQUIRED

2.1That Cabinet approve:-

(i)The Strategy for a Landfill Allowance Trading Scheme;

(ii)Delegated authority to the Head of Environmental and Consumer Protection Services in consultation with the Head of Financial Services to undertake trading activity to ensure the Council can meet its obligations in relation to the Landfill Allowance Trading Scheme.

3.BACKGROUND/INFORMATION

3.1The Environment Overview Group at its Meeting on 21st June 2007 considered a Report by the Head of Environmental and Consumer Protection Services (attached). The Environment Overview Group was made aware that the Government had introduced the Landfill Allowance Trading Scheme for all Waste Disposal Authorities from 1st April 2005 and that the Scheme provided the Council with a tonnage allocation for each year from 2005/06 to 2019/20 as outlined in the attached Report.

3.2The Head of Environmental and Consumer Protection Services proposed a Strategy in relation to the Landfill Allowance Trading Scheme as follows:-

The proposed strategy in relation to Landfill Allowance Trading is as follows:

Policy :

To ensure that the Council is not exposed to any penalties (fines) for failure to hold sufficient landfill allowances. The need to ensure sufficient allowances are maintained will be the priority rather than speculative trading within the market.

Strategy:

To ensure sufficient landfill allowances are maintained at all times to meet the policy. In order to achieve this the Head of EPCS will ensure a robust forecasting system is maintained to constantly monitor the Council’s position with regard to its waste management and allowances.

The Financial Plan is that trading activity will be undertaken once the following conditions are indicated by the monitoring system:

Disposal Policy

The Council is confident that the total LATS allowances that it has available (both in year and from previous years) are sufficient to cover its liabilities
LATS allowances cannot be carried forward to offset future liabilities

Purchase Policy

The Council is confident that the total LATS allowances that it has available are insufficient to cover its liabilities
LATS allowances cannot be brought forward from the following year.

3.3The Council’s Waste Strategy is designed to increase the volume of waste recycled and in doing so limiting the Council’s exposure to any fines under the Governments LATS trading scheme.

3.4This Strategy is being further supported by a consideration of the Council’s trade waste and skip services, as these volumes are also included within the definition of municipal waste.

3.5It is recommended that the Head of Environmental & Consumer Protection Services is given delegated authority to undertake trading activity via the DEFRA virtual market to ensure the Council can meet its obligations in relation to the Landfill Allowance Trading Scheme. Such trading should be in consultation with the Head of Financial Services and also taking into account market conditions.

3.6The Council’s estimated LATS position within the term of its Medium Term Financial Plan is as follows;

Financial
Year / 2005/06 / 2006/07 / 2007/08 / 2008/09
Brought Forward / 0 / 4,473 / 8,773 / 9,359
LATS Allocation / 52,991 / 50,141 / 46,340 / 41,589
Available / 52,991 / 54,614 / 55,113 / 50,948
Estimated Liability / (48,518) / (45,841) / (45,754) / (44,190)
Carried Forward / 4,473 / 8,773 / 9,359 / Not Applicable
Potential Disposal of LATS Allowance / N/a / N/a / N/a / 6,758

3.7Based on these profiles of the Council’s waste volume’s and the proposed strategy, the Council is likely to be in the market to sell in 2008/09.

3.8Based on the market value of LATS allowances in May 2007 could potentially generate a cash receipt of £182,000 in 2008/09

4.0Financial and Legal Implications

4.1Financial Implication are as outlined within the report.

4.2There are no legal implications.

I would therefore ask Cabinet to support the above recommendations which were supported by the Environment Overview Group.

Councillor Don Collier

Portfolio Holder for the Environment

BOROUGH OF POOLE

ENVIRONMENT OVERVIEW GROUP

21st June 2007

LANDFILL ALLOWANCE TRADING SCHEME

PART OF THE PUBLISHED FORWARD PLAN : YES

1.Purpose & Policy Context of Report

1.1This report sets out the Council’s proposed policy in respect of its obligations under the Landfill Allowance Trading Scheme.

2.Recommendations

Environmental Overview recommend to Cabinet:

2.1The approval of the strategy for Landfill Allowance Trading Scheme as outlined in section 4.1

2.2Delegate authority to the Head of Environmental and Consumer Protection Services to undertake trading activity to ensure the Council can meet its obligations in relation to the Landfill Allowance Trading Scheme.

3.Background

3.1The Government introduced the Landfill Allowance Trading scheme for all Waste Disposal Authorities from the 1st April 2005.

3.2The scheme provides the Council with a tonnage allocation for each year from 2005/06 to 2019/20 as outlined below:

Financial
Year / Allowance / Financial
Year / Allowance
2005/06 / 52,991 / 2013/14 / 22,879
2006/07 / 50,141 / 2014/15 / 21,853
2007/08 / 46,340 / 2015/16 / 20,828
2008/09 / 41,589 / 2016/17 / 19,803
2009/10 / 35,888 / 2017/18 / 18,777
2010/11 / 31,893 / 2018/10 / 17,752
2011/12 / 27,899 / 2019/20 / 16,726
2012/13 / 23,904

3.3The allocation relates to the total amount of biodegradable municipal waste which the authority is permitted (if required) to send to landfill.

3.4In 2005/06 the Council sent 48,518 tonnes of biodegradable waste to landfill. By 2019/20 the amount the Council will be permitted to send to landfill is 16,726 tonnes, a reduction of over 65% or 31,792 tonnes.

3.5At the end of each financial year the Council must hold permits to support the quantity of biodegradable waste (in tonnes) that it sends to landfill. Failure to hold such permits will result in a fine that is currently set at £150 per tonne. In target years the Council would also be exposed to a share of any European Union fine levied on the United Kingdom under section 9 (3) and 9 (4) of the Waste and Emissions Trading (WET) Act 2003.

Target Years – 2009/10, 2012/13, 2019/20

These target years tie the Government into the Landfill Directive requirements to reduce the total volume of biodegradable waste in the UK going to landfill to:

75% of the 1995 levels by 2010
50% of the 1995 levels by 2013
35% of the 1995 levels by 2020

3.6LATS allowances can be carried forward into, or brought forward from the following year, with the exception of the “Target Years” or the year before the target years.

3.7An authority whose actual tonnage is below the allowance could either:

Carry forward the provision to meet future liabilities (*)
Sell the spare allowances to other Council’s

3.8An authority whose actual tonnage is above the allowance could either:

Bring forward the allowances from the following year (*)
Purchase allowances from other Council’s

(*) Subject to restrictions outlined in 3.6

3.9The operation of the LATS trading scheme is set out in the Government’s document “Landfill Allowance Trading Scheme: Guidance on Trading, Banking and Borrowing Landfill Allowances”. This creates a “virtual” market place which is managed and controlled by the Department of Environment, Fisheries, and Rural Affairs (DEFRA).

3.10The value of the allowances will be generated based on the principles of supply and demand. As at May 2007 the allowances were being traded for £27.00 per tonne.

3.11The value of the allowances is anticipated to increase in target years and as the volume of the allowances “the supply” reduces as we move towards 2020.

4.Strategy and Policy

4.1 The proposed strategy in relation to Landfill Allowance Trading is as follows:

Policy :

Strategy :

The Financial Plan is that trading activity will be undertaken once the following conditions are indicated by the monitoring system:

Disposal Policy

The Council is confident that the total LATS allowances that it has available (both in year and from previous years) are sufficient to cover its liabilities
LATS allowances cannot be carried forward to offset future liabilities

Purchase Policy

The Council is confident that the total LATS allowances that it has available are insufficient to cover its liabilities
LATS allowances cannot be brought forward from the following year.

4.3 The Council’s Waste Strategy is designed to increase the volume of waste recycled and in doing so limiting the Council’s exposure to any fines under the Governments LATS trading scheme.

4.4This strategy is being further supported by a consideration of the Council’s trade waste and skip services, as these volumes are also included within the definition of municipal waste.

4.5 It is recommended that the Head of Environmental & Consumer Protection Services is given delegated authority to undertake trading activity via the DEFRA virtual market to ensure the Council can meet its obligations in relation to the Landfill Allowance Trading Scheme. Such trading should be in consultation with the Head of Financial Services and also taking into account market conditions.

5. Current Forecast Position

5.1The Council’s estimated LATS position within the term of its Medium Term Financial Plan is as follows;

5.2Based on these profiles of the Council’s waste volume’s and the proposed strategy, the Council is likely to be in the market to sell in 2008/09.

5.3Based on the market value of LATS allowances in May 2007 could potentially generate a cash receipt of £182,000 in 2008/09

6. Financial and Legal Implications

6.1Financial Implication are as outlined within the report.

6.2There are no legal implications.

S ROBSON

HEAD OF ENVIRONMENTAL & CONSUMER PROTECTION SERVICES

CONTACT OFFICER

IAN POULTNEY TEL: 01202-63.1761

BACKGROUND PAPERS : NIL

7th March 2007