Landfill levies (or taxes, depending on where you live) are added to the tipping fee at a landfill to increase the cost of disposal to a point where diversion becomes more economically attractive. There are a number of reasons why jurisdictions impose landfill levies. They help preserve landfill capacity which is expensive (or in some locations virtually impossible to replace) and they support local industries that need recycled materials as feedstocks. (Landfill bans are also used to achieve this objective.) Levies may help meet regulatory obligations (e.g., EU Landfill Directive; EU Packaging Directive, etc.), raise funds for diversion infrastructure and/or simply to meet diversion targets.
Landfill taxes and levies are in place across Canada, the US and Europe. The amount of the levy varies depending on the policy objective. The way the funds are collected differs among countries and jurisdictions, as shown in these examples:
• Ireland: Development of municipal, publicly owned diversion infrastructure. (Private sector companies have complained this is unfair.);
• UK: Most of funds are directed to non-waste related community programs and projects and some is directed to WRAP, WIP (Waste Infrastructure Program, LASU (Local Authority Support Unit ) and other DEFRA programs;
• California: In the past, to finance the Integrated Waste Management Board.
What do we know about landfill levies?
They raise a lot of money! But it can be difficult to assess the extent to which they reduce the amount of waste landfilled on their own, as there are usually a number of other things happening at the same time (“confounders”). Other options for management of materials destined for landfill must be available (recycling, composting, etc) for the landfill levies to work as effective incentives. Also, they often have a habit of creeping up to enormous values (as in the UK and Ireland).
UK landfill tax — a case study
The UK Landfill Tax is a great case study of intended and unintended consequences. The landfill tax started off (under the Finance Act in 1996) at £7/tonne and is now £64/tonne. The 1999 budget set the tax at £10/ tonne with a plan to increase it by £1/tonne each year until 2004; this policy was changed to a £3/tonne annual increase with a cap of £35/tonne. The Landfill Tax raised £674 million in 2004, equal to about 0.15 per cent of total tax revenue in the UK.
By 2007, landfill disposal rates were not dropping sufficiently (the UK was at the tail end of a huge economic boom) so the 2007 budget changed the tax increases to £8/tonne per year with a cap of £80/tonne. The increases, targeted at reducing landfilled tonnage, were rolled into the national climate change action plan.
Landfilled rates have decreased in the UK in the years that the tax has been in place, although decreases were minimal between 1997 and 1999 when the tax was at a modest rate (under £10/tonne). Many other factors were at play in the same time period including:
• EU Landfill Directive mandating a reduction in the amount of un-stabilized biodegradable (organic) waste landfilled (using 1995 as a baseline);
• To 50 per cent of 1995 levels by 2009, and
• To 35 per cent of 1995 levels by 2016;
• Compliance with the EU Landfill Directive means that most organic waste is being sent to composting, AD or EFW to stabilize the organic fraction, therefore tonnages to landfill would have decreased during this period anyway.
• EU Packaging Directive mandating packaging reduction targets;
• EU WEEE Directive mandating producer take back schemes for electronics;
• Dramatic economic collapse in late 2008.
Other reported impacts of the Landfill Tax include an increase in generation of residential waste by 5.25 per cent in 1997. (It was suspected that IC&I waste was disposed in residential waste systems to avoid disposal fees.) Some complained that the Landfill Tax increased costs for local municipalities, taking scarce funds away from other programs. There was increased “fly tipping” (illegal dumping) and and increased use of unlicensed sites.
Levies in North America
Landfill levies are in place in some parts of Canada and the US:
• Quebec’s provincial landfill levy is currently at $20.69/tonne which includes a temporary levy of $9.50/tonne to develop organics processing infrastructure;
• Manitoba has a $10/tonne landfill levy;
• Ontario has looked at landfill levies over time but none have been implemented to date.
The Quebec Landfill Levy has two components: a permanent levy that was established at $10/tonne in 2006 and that, with cost of living increases, is currently $11.19/tonne; and, a “temporary” additional levy of $9.50/tonne introduced in October, 2010 for a five year period (to support implementation of the 2011-2015 Waste Management Action Plan).
The policy objectives of the levies are to divert useful material from landfill, meet a 60 per cent diversion objective,and make diversion cost competitive with waste disposal. The levy value was $20.69/tonne as of January 1, 2012. The levy is part of a planned comprehensive strategy on landfill bans that includes bans on disposal of cardboard paper and wood by 2015 and landfill bans on food waste, leaf-and-yard wastes and biosolids by 2020.
In 2011, 85 per cent of the collected permanent landfill levies were distributed to municipalities using a funding formula: 40 per cent based on population, and 60 per cent based on diversion performance. Thirty-five per cent of the temporary levy is also distributed back to municipalities to assist with waste diversion infrastructure implementation.
The total cost of the organics management infrastructure required for the Quebec Waste Management Plan is estimated at $650 million.
Manitoba has a landfill levy of $10/tonne. The collected levies are placed in a dedicated fund for waste reduction and recycling support which is managed by Green Manitoba; 80 per cent of the collected levies are given to municipalities based on the amount of material diverted. Twenty per cent of the collected levies are used by the province to fund e-waste, HHW and administration.
It’s important to be clear on the policy objective of the landfill levy so that the levy and supporting policies meet articulated outcomes. The levy needs to be set at the level that will achieve the objective desired. A good enforcement strategy and monitoring program will ensure that the levy achieves the intended results.
Maria Kelleher is Principal of Kelleher Environmental in Toronto, Ontario. Contact Maria at email@example.com
EU economic instrument study
The European Commission released a research report in April 2012 which explored the use of economic instruments to reduce waste disposed and achieve desired environmental performance. The report Use of Economic Instruments and Waste Management Performances was prepared by BioIntelligence Service S.A.S based in Paris. The research explored the effectiveness of landfill and incineration taxes, bans and fees, pay as you throw (PAYT) and producer responsibility schemes for specific waste streams (p
ackaging, electronics, end of life vehicles and batteries) in achieving lower disposal rates and higher waste diversion rates.
The study reported that nineteen EU member states had landfill taxes in place for the disposal of non-hazardous municipal waste (Lithuania is the most recent EU Member State to add a landfill tax in 2012). The landfill taxes vary widely in amount, ranging from a low of €3/tonne ($4/tonne) in Bulgaria to over €107/tonne ($145/tonne) in the Netherlands. The average range of costs to landfill waste (adding landfill taxes and tipping fees) in the nineteen countries studied ranged from €17.50/tonne ($24/tonne) in Lithuania to over €155/tonne ($210/tonne) in Sweden.
The study found that in most cases (but not all) there was a correlation between high costs to landfill (tipping fees and landfill taxes combined) and high waste diversion rates. The researchers noted that EU Member States with total landfill charges of lower than €40/tonne ($54/tonne) generally landfilled more than 60% of their waste (i.e. had waste diversion rates of 40 per cent or lower). The researchers further noted that EU Member States were much more likely to achieve 50 per cent diversion or higher where landfill charges approached €100/tonne ($136/tonne). While data for countries such as the UK and Austria show that landfill tonnages decrease significantly when landfill taxes increased, data for Ireland and France show a 25 per cent reduction in landfilled waste during times when the landfill levies remained relatively constant. The study also noted 100 per cent compliance with the EU Landfill Directive by France, Ireland and Austria, therefore significant amounts of organic waste were directed away from landfills to composting and AD during this period in these countries.
The Irish chart shows that landfilled waste decreased and the diversion rate increased from 10% to 40% between 2001 and 2005 when the landfill rate was relatively low. It was introduced at a rate of €15/tonne on 1st July, 2002 and remained at this level until 1st July, 2008. By then, the diversion rate had remained relatively constant at 40% for a few years, so a nudge was required to increase the diversion rate. A few substantial increases have been made to the landfill tax rate in Ireland, with a rate of €65/tonne today compared to €15/tonne in 2008. The amount of waste landfilled has decreased substantially, more likely as a result of a collapsing housing market, building market and economy since about mid-2008. Because Ireland is an island it is a relatively closed system, with options to dispose outside of licenced landfills relatively limited.