Towards cohesive taxation policies for combustible waste in Europe Maarten Dubois 9 february 2012

Introduction EEEN –Methodological choice –Side-effects Combustible waste –Why is combustible waste a challenging domain for cohesive policy? –How do European policies currently deal with combustible waste? –How can environmental economics contribute to policy assessment?

Multi-dimensional Interaction energy, resource and waste policies –Renewable energy subsidies Technology –Pre – and post treatment –Incineration –Recycling

Diversity in waste streams Source: ECN Phyllis database for biomass and waste

Challenging domain Combustible waste –Interaction of different policy domains –Diversity of technologies and waste streams –Dynamic environment => a one-fits-all policy is neither efficient nor sustainable Policy makers –Important task –Limited resources Instruments used –Taxes –Subsidies –bans

Current policy Implementation of European Waste Directive –Market for combustible waste liberalized Exceptions possible for municipal waste Free trade calls for a level playing field Heterogeneous European policies –Incineration tax Yes: Flanders, Wallonia, France (+-10 % of price) No: Netherlands, Germany, UK Yes but no: Sweden and Norway –Co-incineration: sometimes –Landfill tax for ashes: sometimes No cohesive European policy & no level playing field

Environmental economics Efficieny and market failures Focus on externalities –Environmental damage –Measurable –Monetary value Market Based Instruments –Taxes and subsidies

Stylized diagram

Stylized diagram with instruments

Incineration tax Proxy for local air pollution Monetary value for local air pollution Monthly emission averages per plant available Tax competition Incineration tax as incentive for ‘clean operations’ –France

EU ETS Industrial carbon emissions in EU ETS –Co-incineration Waste incineration –Industrial point source of carbon emissions Integration of waste incineration in EU ETS –EU level playing field

Landfill tax Non bis in idem –Flanders and France –Exemption of landfill tax for ash residues –Mixing activity and externality Landfill tax for incineration residues –Incentives for prevention and recycling of ashes –F.e. plasma incineration, pre-treatment, co-incineration,…

Energy subsidies for waste Positive –Energy subsidies stimulate WtE –Energy subsidies should be based on electricity produced not on theoretical factor of ‘efficiency recovery’ Negative –Energy subsidies decrease incentives to recycle waste Energy subsidies should correspond to the external benefit

Conclusions Economic methodology: –Focus on externalities –Market Based Instruments Cohesive policy in a diverse and dynamic market Illustration combustible waste –Incineration tax as an incentive to reduce local air pollutants –Waste incineration in EU ETS –Landfill tax as an incentive to reduce incineration residues going to disposal