Clause 6 - Borrowing and banking of landfill allowances
Waste and Emissions Trading Bill [Lords]
4:30 pm
Mr Michael Meacher (Minister of State (the Environment), Department for Environment, Food and Rural Affairs; Oldham West and Royton, Labour)
I entirely agree with both hon. Members who have spoken; it is certainly important that we do not allow the flexibility written into the Bill to be abused. I hope that I shall be able to persuade them and the rest of the Committee that that will not be the case. There are several safeguards that I believe will adequately prevent abuse. The Bill enables us to provide a measure of flexibility that we think desirable, so long as it cannot be abused.
The amendments relate to the banking and borrowing of allowances and would prevent allocating authorities from permitting allowances to be used in scheme years other than the one for which they were allocated. On Second Reading, I emphasised that the Bill was the first of its kind in Europe, possibly in the world. I also admitted that that was probably for the wrong reasons, and not because of our great innovation. What is unique about the Bill is that it sets up the framework not only for the system of landfill allowances—which is very important—but for the
method of trading those allowance between waste disposal authorities.
The trading system as a whole is designed to ensure that waste disposal authorities can reduce the amount of biodegradable municipal waste going to landfill in a manner suitable to them, while ensuring that the UK still fulfils its obligation for target years. The system, if one looks at it holistically, will give waste disposal authorities flexibility and ensure cost-effectiveness throughout the UK. It is quite ambitious; it is certainly innovative; and I believe that it can work.
We refer to the inter-year use of allowances—between years as opposed to within a year, to which the amendment refers—as either banking or borrowing. Banking allows waste disposal authorities to keep allowances that have not been used in one year for use in later years. That rewards good performance in waste management. Where a waste disposal authority has put in place good basic systems, it might already be diverting a high proportion of waste from landfill. With a banking system, it can save allowances in early years and either trade them or use them in later years when targets get tighter and it is waiting for new initiatives to come on stream.
Borrowing, which might be more of a problem for some hon. Members, means that waste disposal authorities will be able to bring forward the use of allowances that have been allocated for future years. I understand the arguments and the risks. Borrowing will be possible in England because the aim is, as I have said, for allowances to be distributed for all scheme years at the beginning of the scheme. The objective of that flexibility is to encourage responsible waste management planning by giving waste disposal authorities time to invest in new facilities. We are in the early stages of what will be a steep incline as we increase the system's capacity to facilitate recycling. That will happen only if there are significant increases in investment in plant and infrastructure, which is what the national recycling waste management fund is all about.