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