DRAFT
PROPOSALS FOR ECONOMIC INSTRUMENTS AND FINANCING MECHANISMS IN SUPPORT OF A BIOWASTE STRATEGY
REPORT TO THE
MINISTRY OF THE ENVIRONMENT
SLOVAK REPUBLIC
Twinning Light Project
No XXXXX
The authors can be reached at:
Marco Ricci , Enzo
Dominic
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Handbook for Management of Biowastes
EXECUTIVE SUMMARY
CONTENTS
1.0INTRODUCTION......
2.0REVIEW OF CURRENT SITUATION......
2.1Waste Management Act (Law 223/2001)......
2.2Municipal Waste Charges......
2.2.1Comment on Existing Charging System......
2.3Landfill Tax......
2.3.1Act No. 17/2003 on Landfill Cost (substitutes # 327 of 1996)......
1.1.2Comment on Existing Landfill Tax......
1.4Structural Funds......
1.1.1Comment on Structural Funds......
1.5Cohesion Funds......
1.5.1Comment on Cohesion Funds......
1.6Recycling Fund......
1.6.1Comment on Recycling Fund......
1.7Other Domestic Financial Sources......
1.8Summary of Existing Situation......
3.0INCENTIVE BASED INSTRUMENTS FOR IMPROVED BIOWASTE MANAGEMENT – AN OVERVIEW
3.1Introduction......
3.2Market-based Instruments, Regulation, or Both?......
3.3Criteria for Assessment of Different Instruments......
3.3.1Implications of Existing Policies......
3.4Instruments Used in the Waste Sector of Relevance to Biowaste Management......
3.4.1Taxes and Charges......
1.1.2Tradable Permits......
1.1.3Non-compliance Fees......
1.5Summary......
4.0PROPOSALS FOR INSTRUMENTS TO INFLUENCE THE BEHAVIOUR OF LOCAL AUTHORITIES
4.1Considerations for the Modelling......
4.1.1Defining ‘Source Separation’......
4.1.2Existing Landfill Tax with Separate Collections Clearly Defined and Escalating Tax Levels....
4.1.3Existing Landfill Tax with Separate Collections Clearly Defined, Escalating Tax Levels and Lower Rate for Pre-treated Wastes
4.1.4Potential for Using Tax Revenue......
1.2Refunded Charges on Waste Disposal......
1.3Permits, Tradable and Otherwise......
1.4Non-compliance Fees / Residual Waste Levies......
1.5Tradable Residual Waste Permits......
1.6Summary......
5.0MUNICIPAL WASTE CHARGES AND PAYT SCHEMES......
5.1Definition......
5.2What Sorts of Scheme Exist?......
5.2.1PAYT-Charges for households......
5.2.2PAYT-Charges for business activities......
5.3Degree to which revenues should be covered by PAYT charges......
5.4Promoting Home-composting......
5.5Instruments for PAYT charges......
6.0CONCLUSIONS AND RECOMMENDATIONS......
6.1Funding the Transition......
6.2Charging Households......
6.3Incentive-based Instruments......
6.4Recommendations......
APPENDIX ONE......
Pricing bags for residual waste - Flemish Brabant (Belgium)......
Description of the Scheme......
Effects of the PAYT scheme......
Charging emptying frequencies for residual waste collection & home composting promotion - Region of Södertörn (Sweden)
Introduction......
Description of the Scheme......
Effects of the variable charging scheme......
Combining Separate Collection of Foodwaste with Pricing of bags for residual waste - Comuni dei Navigli (Italy)
Introduction......
Description of the Scheme......
Cost for applying the charge scheme......
Effects of the PAYT scheme......
INDEX of TABLES
Table 1: Classes of Materials Falling Under the Definition of Biowaste......
Table 2: Structure of Municipal Waste Charges As Described by Act 223/2001......
Table 3: Examples of Charging Systems in Slovak Municipalities......
Table 4: Proposed Taxes on Landfilling of MSW (SKK/tonne)......
Table 5: Projects Listed for Support through Cohesion Funds......
Table 6: Overview of the financial means provided by the Recycling Fund up to 31st of January 2004......
Table 7: Use of Waste Tax Revenues......
Table 8: Datasets Concerning Municipal Waste from Waste Management Plan and Cohesion Fund Plan......
Table 9: Date Used in this Chapter......
Table 10: Revenue from Landfilling Municipal Waste (SKK millions except where stated)......
Table 11: Incentive Provided By Existing Tax for Additional Separate Collection Schemes (2008 rates)......
Table 12: Incentive Provided By Revised Tax for Additional Separate Collection Schemes (rates assumed for 2010)
Table 13: Possible Schedule for a Residual Waste Levy in Slovakia......
Table 14: Structure of Municipal Waste Charges Implemented
Table 15: Price List for Hardware Used to Implement PAYT charges......
Table 16: Mean Prices of Grey Bags in Flemish Brabant, as Compared to the Mean Price in Belgium. (in €, for the year 1998)
Table 17: Change in Collected Waste in Flanders from 1993-96 (kg per inhabitant per year)......
Table 18: Waste Fee for Detached Houses (1 SEK = 0.1077 Euro)......
Table 19: Waste Fee for Summer Houses (1 SEK = 0.1077 Euro)......
Table 20: Collection scheme and frequencies – Navigli Association (I)......
Table 21: Cost estimation for applying the waste charge 2002 – Navigli Association......
Table 22: Residual MSW production from Household and business utilities in 2001 – Navigli Association (I)....
GLOSSARY OF TERMS
The following are definitions of terms used in this report (in alphabetical order):
Agricultural Composting Plant (ACP) see Decentralised composting.
Biowaste: The term used in this report to describe source-separated household organic wastes (kitchen scraps, animal wastes, garden waste) which are to be collected from householders.
Costs: cost are expressed in € or in SKK; the exchange rate used is 1 € = 40 SKK.
Decentralised composting or rural composting: composting plants run by farmers in rural areas (hence the term also used, Agricultural Composting Plant.
Home composting: also backyard composting; the transformation into compost of food- and garden waste by families inside their gardens
Municipal Collection Centres: fenced and guarded structures where waste producers (families and some enterprises) can bring recyclable waste materials and garden-waste.
Municipal Solid Waste (MSW): Solid waste originating from a municipality, composed primarily of household waste.
Pay As You Throw (PAYT): schemes that apply a variable waste fee for each waste producer related to the amount of waste produced (mainly by counting the number of emptyings of bins or bags assigned for residual waste)
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Scuola Agraria del Parco di Monza
Handbook for Management of Biowastes
1.0INTRODUCTION
This Report has been prepared by the Team of Experts co-ordinated by Scuola Agraria del Parco di Monza with contributions, in particular, by
- Marco Ricci and Enzo Favoino, (Scuola Agraria del Parco di Monza, Italy); and
- Dominic Hogg (Eunomia, UK)
in the context of the Phare Twinning Light Project named “Optimisation of handling of Biodegradable Waste” (Project Code: Slo_tlp 0128; Beneficiary: the Ministry of Environment of the Slovak Republic, Project Leader on behalf of the Beneficiary: Mrs. Marta Fratricova, Ministry of Environment).
The aim is to focus on possible incentive mechanism to support proposals for a strategy for managing biowaste; hence by biowaste we mean all relevant materials defined in the EU waste catalog regarding “Municipal Waste“ as stated in Commission decision n° 2000/532/EC and amended in n° 2001/118/EC. Biowastes are those materials described in Table 1.:
Table 1: Classes of Materials Falling Under the Definition of Biowaste
Description / Waste EU-code / NotesKitchen and canteen waste (foodwaste) / 20 01 08 / from households, restaurants, canteens, bars, coffee-shops, hospital and school canteens, etc.
Waste from public markets / 20 03 02 / only biodegradable materials equivalent to codes n°200108 and n°200201
Garden and park waste (yardwaste) / 20 02 01 / from private gardens and public parks and areas, etc.
Wood waste / 20 01 38 / not containing dangerous substances no furniture and bulky household-waste
Source: EU codes according to Commission Decision n° 2001/118/EC
However, besides the above materials, specific organic residues from the processing of agricultural products (agro-industries) may serve as a very valuable source of feedstocks for either composting or anaerobic digestion. A comprehensive list of further clean feedstock materials is provided in the “Recommendations for a Strategy for the Managament of Biowaste in the Slovak Republic”
The Handbook continues with the following structure:
CHAPTER 2: REVIEW OF CURRENT SITUATION
In this Chapter, we summarise the current situation facing Municipalities, and Local Authorities (e.g. District and Regions) as far as management of biowaste, as part of the broader strategies for the management of waste and resources, is concerned;
CHAPTER 3: INCENTIVE BASED INSTRUMENTS FOR IMPROVED BIOWASTE MANAGEMENT – AN OVERVIEW
This Chapter provides a general overview of the use of economic instruments in the area of waste management, particularly as applied to biowaste.
CHAPTER 4: PROPOSALS FOR INSTRUMENTS TO INFLUENCE THE BEHAVIOUR OF LOCAL AUTHORITIES
This Chapter reviews the possible application of new instruments in Slovakia, and also, looks at how the existing landfill tax might be re-designed to strengthen its impact.
CHAPTER 5: MUNICIPAL WASTE CHARGES AND PAYT SCHEMES
This Chapter reviews tools and principles for use in the charging of householders in such a way that they are incentivised to recycle more, and reduce waste set out for collection.
CHAPTER 6:CONCLUSIONS AND RECOMMENDATIONS
This document concludes with a look at the possible combinations of instruments for use in Slovakia.
2.0REVIEW OF CURRENT SITUATION
Slovak municipalities and enterprises face a variety of challenges in dealing with biodegradable wastes generated by households, commerce and industry. These challenges also present opportunities in that they provide the motivation for the development of a more sustainable system of managing biodegradable materials. This more sustainable management process can generate a range of benefits as the management system shifts away from a traditional, unsustainable approach based around landfilling the majority of the waste collected.
It is, of course, far from true that all municipalities, still less, all enterprises, are reliant upon landfilling for the treatment of all biowastes. A number of private industries already compost their biowastes, and in some cases, digestion of biowastes is utilised.
There are now a variety of key drivers which are pushing waste management along a more sustainable path. These include measures at both the EU and the State-specific level. This Chapter describes existing incentive based mechanisms and the existing financing routes to support the sustainable management of biodegradable wastes in Slovakia. It is not the intention of this Report to re-state the existing legislative drivers existing at the EU level, and their various implications. These are covered elsewhere in a report undertaken as part of this Project (see Status quo report).
2.1Waste Management Act (Law 223/2001)
The Waste Management Act of May 2001 provides the framing legislation for Slovak Waste Management. It sets out the competences and obligations of the different bodies who have a role to play in waste management.
2.2Municipal Waste Charges
Article 39 (6) of Act 223 (2001) points out that municipalities are allowed to introduce a charge for the collection, transport and disposal of municipal waste, and that this fee ‘shall be exclusively used to cover the costs related to handling of municipal waste and minor construction waste, in particular the collection, recovery and disposal.’
The change has to be paid by all waste producers (the term used in the Act is ‘generator’) who make use of municipal waste services. The Act, through both Article 39 (7) and Article 82, makes the payment of the fee binding upon producers of municipal waste and construction and demolition (C&D) waste.
Article 82 stipulates a range for residential charges of 80-1200SKK per inhabitant per year, with the minimum to be applied only in cases where the producer uses the bulky collection system only.
In addition, Article 82 defines a set of different producer categories and defines the structure of the charging system.
Table 2: Structure of Municipal Waste Charges As Described by Act 223/2001
Producer Type / Basis for ChargeResidents or Families / Number of Residents
Offices and Commercial Enterprises / Number of Employees
Hotels, Guest Houses and Other Accommodation / Number of Beds and Number of Employees
Bulky Waste / Quantity
Note: The Act foresees the potential for exemptions, full or partial, from the charge for specific categories of residents / families
2.2.1Comment on Existing Charging System
The fact that a fee is to be paid by producers of waste is consistent with the potential to make waste producers aware of the costs of the services they use. The fact that the Act requires that the revenue be used exclusively for the funding of waste services is also a welcome feature. This implies that the ‘fee’ has the characteristics of a charge to the extent that it supports the provision of the service, although strictly speaking, the structure of the fee does not necessarily reflect the amount of the service used (and / or of waste produced). In other words, the existing system exhibits the potential to be adapted in such a way as the charges paid reflect more closely the Polluter Pays Principle.
One limiting factor of the existing scheme is the presence of a maximum charge which can be levied per inhabitant per year. Particularly in the current context, where systems are having to change significantly, the maximum charge may limit the freedom of municipalities to:
- introduce a charge system which includes sufficiently strong incentives for people to change behaviour; and
- raise the necessary finance to fund changes to existing practice, not least since (as we shall see below) there is a landfill tax in place whose level is due to increase in the coming years. In other words, even if municipalities do not change their existing systems, they will be required to generate more revenue to cover the service provision;
Unfortunately, there is a general lack of information concerning
a)the costs of waste management services, and
b) the proportion of these costs supported by revenues from the municipal charges. This information clearly exists at the local level, but there is no systematic means for providing such information to either Districts, Regions or the Government.
In practice, however, one can probably make some general statements concerning the likely consequences of the need to change waste management systems upon the funding of waste management by municipalities. Waste management services of municipalities are funded through a combination of:
- central government grant;
- own resources (from funds raised by activities undertaken by the municipality);
- locally charged user fees;
- the Recycling Fund; and
- grants in support of specific activities identified under the programmes for the Structural Funds and the Cohesion Fund (these are discussed in Sections 2.4 and 2.5 below).
The core funding is likely to remain a. to c. above, with d. and e. supporting specific investments and enhancements in the existing systems.
If a municipality seeks to transform its system, it is likely to need to increase revenues from the categories a. to c., particularly if d. and e. do not cover the full costs of new investments. This means that the choices facing municipalities as they seek to transform existing systems are:
Increase the municipal charges
This is likely to be unpalatable for areas with higher levels of poverty;
Increase use of own resources
This is likely to be possible only for a limited number of authorities (probably those able to generate revenues from the provision of activities to a larger population); or
Use a higher amount of the Central Government grant for waste services
This would imply either an increase in the overall grant, with its own fiscal implications, or a change in priorities at the local level in terms of re-directing scarce resources.
Some examples of existing charging systems are provided in Table 3
2.3Landfill Tax
2.3.1Act No. 17/2003 on Landfill Cost (substitutes # 327 of 1996)
Law 327/1996 was replaced by Law 17/2003 in December 2003. The 1996 law set different tax rates for different waste types, with the rate also depending upon the type of landfill. It required the revenue to be split in differing proportions between the State Environmental Fund and the municipalities. In the case of municipal waste 100% of the revenue was to be channelled back to the local authorities within whose borders the landfills were located.
Law 17/2003 sets progressively increasing taxes on landfill for future years. For municipal waste, the tax to be applied will depend upon the number of waste fractions being separated at source by the municipality concerned. The tax rates proposed are set out in Table 4 below.
The revenues from the tax are not destined for the general budget. As such, this is an instrument which is not typical of a tax. Instead, the revenues are still to be destined for the municipality within whose borders the landfills are located. Our understanding is that the reason for this is that it is thought appropriate to compensate the municipalities for the disamenity associated with the landfill.
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Handbook for Management of Biowastes
Table 3: Examples of Charging Systems in Slovak Municipalities
Household type / Per Inhabitant or per household? / Level of Charge (SKK) / Type of container (e.g., bin, clear sack, coloured sack) / Container size / Frequency (or per emptying?)Palarikovo / all / per inhabitant / 180 / All / All / fortnightly refuse, recyclables every two months
all / per inhabitant / 280 / All / All / fortnightly refuse
Skalice / all / per inhabitant / 600 / All / all / n/a
Kosice / all / per inhabitant / 650 / All / all / n/a
Bratislava / family houses / per household / 83 / Bin / 110l / weekly
family houses / per household / 166 / Bin / 240l / weekly
family houses / per household / 100 / Bin / 110l / fortnightly
family houses / per household / 200 / Bin / 240l / fortnightly
Nove Zamky / 1 person / per inhabitant / 600 / Bin / 60-140l / ?
2 persons / per inhabitant / 564 / Bin / 60-140l / ?
3 persons / per inhabitant / 480 / Bin / 60-140l / ?
4 persons / per inhabitant / 396 / Bin / 60-140l / ?
>4 persons / per inhabitant / 360 / Bin / 60-140l / ?
Pezinok / family house / per household / 350
Previdza / family house / per emptying / 26.11 / Bin / 110l / weekly
Samorin
Topolcany
Drnava
Dubnica nad Váhom / family house / per inhabitant / 432 / 110l / fortnightly
Mesto Žiar nad Hronom / family house / per inhabitant / 400 / sack / 60l / weekly
Levice / family house / per inhabitant / 540 / Bin / 110 / weekly
Bratslava / multi-occupancy / per bin / 100 / Bin / 110l / weekly
multi-occupancy / per bin / 200 / Bin / 240l / weekly
multi-occupancy / per bin / 395 / Bin / 1100l / weekly
Pezinok / high-rise / per household / 450
Nove Zamky / multi-occupancy / per person / 396 / Bin / 1100l / weekly
Previdza / high-rise / per emptying / 94.06 / Bin / 1100l / weekly
Dubnica nad Váhom / high-rise / per household / 432 / Bin / 1100l / twice weekly
Mesto Žiar nad Hronom / high-rise / per inhabitant / 400 / Bin / 1100l / twice weekly
Levice / high-rise / per inhabitant / 432 / Bin / 1100l / Fortnightly
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Scuola Agraria del Parco di Monza
Handbook for Management of Biowastes
Table 4: Proposed Taxes on Landfilling of MSW (SKK/tonne)
Type of Waste / 2004 / 2005 / 2006 / 2007 / 2008Municipal Waste
No source separation scheme / 30 / 50 / 100 / 200 / 300
1 source separation scheme / 27 / 45 / 90 / 180 / 270
2 source separation scheme / 24 / 40 / 80 / 160 / 240
3 source separation scheme / 21 / 35 / 70 / 140 / 210
4 source separation scheme / 18 / 30 / 60 / 120 / 180
5 source separation scheme / 15 / 25 / 50 / 100 / 150
Inert wastes / 1 / 3 / 5 / 8 / 10
Other non-hazardous wastes (industrial) / 20 / 30 / 50 / 100 / 200
Green waste and waste from street sweepings / 30 / 50 / 100 / 200 / 400
Hazardous wastes / 250 / 300 / 500 / 700 / 1000
NOTE: different tax levels apply for other materials such as inert waste, hazardous waste etc. A specific, higher tax (400 SKK in 2008) is also provided for “biodegradable waste”. However, it is not clear how this will be applied.