Challenges hold waste industry back from making investment

Monday, 28 July, 2008

With the right regulatory signals from government, the waste industry is ready to invest billions of dollars in new recycling technology on the back of the release of the Carbon Pollution Reduction Scheme green paper but has flagged concern about the 'enormous challenge' the industry faces in being ready for the 2010 starting point.

"The waste management industry believes that the right regulatory signals from the government can hasten the introduction of new recycling technology to achieve greenhouse gas savings of 35 million tonnes a year — equivalent to taking all cars off Australian roads,” said Mike Ritchie, chairman of the National Carbon Committee of the Waste Management Association of Australia.

“The industry waits on detail, but on the face of it the Climate Change Action Fund (CCAF) has the potential to encourage greater investment in resource recovery and recycling infrastructure, including multimillion-dollar investment in advanced waste treatment technology."

At the same time, Ritchie said the waste management industry was surprised the government did not heed the Garnaut recommendations to delay inclusion of waste until the specific difficulties of covering waste are dealt with.

“The industry will need every assistance possible in working with the government to be in a position to validly measure emissions and assess liability," Ritchie said.

“It’s much easier to measure the emissions from a stationary emitter like a power station than a landfill."

The Garnaut report had advised deferring coverage of waste until the issues of measurement and liability were clarified.

Ritchie said industry challenges included:

  • Historic liability for waste already in landfills — waste already in landfills for which the operator did not charge an emissions price but now has to buy a permit for — this is effectively a retrospective tax. This liability will need to be grandfathered;
  • Future price uncertainty — how does an operator estimate the gate fee price today to cover methane emissions which might emerge over 30 years and at different permit prices over that period? How does an operator calculate the NPV of future permit prices over 30 years — with the permit price unknown at any time in that period? Otherwise the landfill will have an unfunded 30-year liability when it stops receiving waste;
  • Measurement — there is no technology to accurately measure methane emissions available today or likely in the next five years;
  • Ensuring local and state government landfills are also covered so that their landfills bear the same permit cost increases. Otherwise it will lead to a competitive benefit to publicly owned landfills over those owned privately;
  • The recognition of resource recovery and recycling outside the ETS via an energy-efficiency credit.
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