The Future of European Environmental Regulation to Achieve Sustainable Waste Management

London, 20 October 2005

The Future of European Environmental Regulation to Achieve Sustainable Waste Management

Professor Jacqueline McGlade
Executive Director, European Environment Agency

Environmental Services Association - First Annual Lecture

1. Introductory remarks

Ladies and Gentlemen,

In having a look at your trade association's website the other day, I was intrigued to read one particular statistic in a speech delivered by your Chief Executive in March this year.

Dirk Hazell said that: "The value for money delivered by ESA's Members is phenomenal. Our sector cleans up after all Britain's households and economic activity". And yet, he continued, "Last year, our sector's entire turnover was only half Shell's profits".

Without undermining Dirk's point about value for money, as the boss of an organisation with an annual turnover of around €32 million myself, half of Shell's profits seems like rather a lot of money to me!

The management of waste and secondary resources is big environmental business. It is therefore an honour to have been invited to deliver the first ESA Annual Lecture before this distinguished audience.

It is a fact that the future of your trade association - or more accurately, the commercial future of your individual companies - is driven by European environmental law.

My organisation - the European Environment Agency based in Copenhagen for the last ten years - is not the prime instigator of that law. As you all know, the right of initiative is something that is jealously guarded by the European Commission.

The European Environment Agency - or EEA for short - is the EU body dedicated to providing sound, independent information on Europe's environment. It is important to point out that we are not an Environmental Protection Agency in the style of the US EPA or the EPAs in most of the EU Member States. Rather, we are a major information source for those involved in developing, adopting, implementing and evaluating environmental policy, and also the general public.

Membership is open to countries that are not Member States of the European Union. We now have 31 member countries: the 25 EU Member States together with Bulgaria, Iceland, Lichtenstein, Norway, Romania and Turkey. Switzerland is set to join in the coming months, bringing us up to 32.

Our main clients are the European Commission the European Parliament, the Council of Ministers - especially through the changing presidencies - and of course our member countries.

So while we may not be the motor driving the European environmental law which has such an impact on your companies, we do provide much of the fuel that goes into that engine.

Standing before you here in the heart of London, I cannot resist beginning with a few words of Charles Dickens and the opening sentence of A Tale of Two Cities - "it was the best of times, it was the worst of times".

And no, I am not talking about the state of European environmental law!

To stretch those famous words just a little, addressing you today on the "future of European environmental regulation to achieve sustainable waste management" makes me think that - "it was the best of timing, it was the worst of timing"!

The timing is good because just three days ago, on Monday of this week, the European Union's 25 Environment Ministers, the European Commissioner for the Environment and the Chairman of the European Parliament's Environment Committee met in Luxembourg to debate better regulation in the area of environmental policy. They agreed that "better regulation can contribute to better environmental policy and outcomes without undermining our environmental objectives". In other words, we can do better without this implying wholesale deregulation.

But in other respects, the timing is much worse. The European Commission maintains a forward agenda for the meetings of the college of Commissioners. The latest version of the forward agenda states that the Thematic Strategy on the Prevention and Recycling of Waste, as well as the closely-linked Thematic Strategy on the Sustainable Use of Resources, are scheduled for adoption at the end of next month. It is not my task to speculate on whether this timetable will be met - even less so on what the Thematic Strategy might contain.

During last 30 years of waste policy (starting from the Waste Oil Directive in 1975) a lot has been achieved. Waste legislation in Member States and at the EU level covers the major issues on waste disposal, controlling the point sources of pollution and regulating industrial waste. Rates of recycling and recovery are rising.

But there is plenty of room for improvement: availability and quality of data still leave much to be desired; moreover, waste amounts keep rising; we have problems dealing with waste from diffuse sources; and costs are rising, as waste has to be collected, separated, dismantled and then disposed or recovered.

It is not my intention this evening to enter into the details of European waste policy, to discuss waste definitions, or to analyse recycling standards. In fact, these are not where the strengths of my Agency lie. We do not take a legal approach. Rather, we tend to see waste as part of the resource management chain.

Our key product this year is the 2005 State of the Environment and Outlook Report. It is our weighty, authoritative five-year assessment of the state of Europe's environment. This version does not even have a separate waste chapter!

This doesn't mean that we have lost interest in the topic - rather it reflects our conviction that waste is an issue in which it is necessary to take a broader view, and consider sustainable consumption or sustainable use of resources if we are to achieve any progress.

So for the remainder of the time available to me this evening I intend to address three main issues: first, I would like to pick up the discussion on better regulation and bring to your attention the work of the informal network of Europe's Environmental Protection Agencies in this regard; second, I would like to set out for you some of the specific initiatives being undertaken by the European Environment Agency to contribute to this discussion; and third, I would like to give you a flavour of some of the key messages and trends we will be highlighting when we launch the 2005 State of the Environment and Outlook Report in Brussels on the 29th of November.

2. The Modern Regulation Agenda

So let me turn first to the better regulation agenda and the work that the informal network of European EPAs are leading.

I have already mentioned the ongoing European debate about "better" regulation. The ESA's own Annual Statement for 2004 speaks about "proper regulation" and also about "effective regulation". For their part, the EPA network refers to "modern regulation". Whatever we choose to call it, we all know what it is not! We recognise inappropriate, ineffective and outdated regulation when we see it.

But we should not accept the fuzzy logic that better regulation equates with less regulation which then leads to lower costs, more competitiveness and hence more jobs. On the contrary, good regulation can now be shown to reduce costs for industry and business, create new markets and drive innovation.

This is not an area where environmental policy makers need to be on the back foot. On the contrary, environmental policy has been in the vanguard of better regulation initiatives in relation to the innovative use of market-based instruments, impact assessment, simplification, framework approaches and stakeholder consultation.

The informal network of Environment Protection Agencies is carrying out important work to demonstrate this.

The Heads of the European EPAs met in Prague at the end of September to discuss the contribution of good environmental regulation to competitiveness.

The English and Welsh EPA held the pen on this work and their deliberations will be published in a few weeks time, but let me reveal now a few of their conclusions in the Prague Statement:

• Modern regulation can reduce costs for industry and business: research in the UK suggests that waste minimisation could yield almost 4.4 billion Euros saving in manufacturers' annual operating costs; industry could save 2.7 billion Euros through energy efficiency; and, the agriculture sector could save some 1.3 billion Euros through improved environmental management practices.
• Modern regulation can help create markets for good and services: the world market for environmental goods and services is estimated to be worth 425 billion Euros and is likely to grow to 565 billion Euros over the next five years, a figure comparable with the aerospace and pharmaceutical industries.
• Modern regulation drives innovation for example in the area of environmental technology.
• Modern regulation helps create and sustain jobs: the OECD's review of environmental performance in Sweden in 2004 confirms that the environmental industry there has contributed significantly to the low unemployment rate.
• Modern regulation improves the health of the workforce and the wider public: the European Commission's own figures show that the occupational health benefits of the proposed new chemicals legislation could amount to 54 billion Euros over 30 years.

The Prague Statement will therefore be a powerful vindication of the positive contribution of environmental regulation to growth and jobs. It also will also contribute to the debate that you in the ESA have been calling for on aligning economic and environmental sustainability.

Seen in this light, the better regulation debate should not just be about - how much does a piece of legislation cost to implement and is it cost-effective?

It should also be about making sure we obtain the maximum benefits from environmental legislation. Are we reaping all the financial and economic benefits that modern regulation can offer? This is a question that we cannot afford to ignore.

It is a question that the European Environment Agency wants to help address. We are developing our own capacity through policy effectiveness evaluations and it is important work that we will continue in the future.

So let me now turn to set out for you some of the specific initiatives being undertaken by the European Environment Agency to contribute to this discussion.

3. Effectiveness Evaluation

The Chairman of the EEA Management Board is Lars-Erik Liljelund, Director-General of the Swedish EPA. In his introduction to our 2004-2008 Corporate Strategy he states that:

‘Environmental policy is no longer a free ride. In order to be able to convince politicians and the public alike that environmental policies are necessary and good for society as a whole, we must be able to demonstrate that they are delivering real results in an effective way.'

This is why policy effectiveness studies are so important. Not only do they bring to light issues of policy design, implementation and costs, but they also foster shared learning among public actors and stakeholders, including industry.

We have 30 years of experience of environmental policy legislation at EU level, during which time well over 200 legal acts have been put in place. Over the last ten years, since its creation, the EEA has evolved from an organisation providing environmental information and data on the state of the environment to one which is increasingly being asked by the European Parliament, the European Commission and our member countries to report on the effectiveness of existing environmental polices and their implementation.

We launched two pilot studies at the beginning of this month (available on our website www.eea.europa.eu) addressing two rather different EU environmental directives, namely the Urban Waste Water Treatment Directive and the Packaging and Packaging Waste Directive.

The Urban Waste Water Treatment Directive is one of the cornerstones of EU pollution control. Provision of treatment for urban and industrial waste water has required the extensive construction of sewage plants over recent decades. In fact, such investments have accounted for 50-60% of the total investment for environmental protection in industrialised countries since 1970.

But the pilot study on the Packaging and Packaging Waste Directive will be of more interest to this audience.

It has also driven significant investments in waste collection and recycling infrastructure since its adoption around a decade ago. It is a directive which was warmly welcomed at the time by industry - for example by the drinks industry which was calling for a level playing field across the EU in terms of recycling requirements. And although they might not know it formally as the Packaging Directive, consumers are also directly affected by its provisions. It is as a result of the directive that doorstep collection and recycling schemes have been introduced across several member states.

The countries covered by the packaging waste study were Austria, Denmark, Ireland, Italy and the UK.

So what did we learn?

The overall conclusion from the two studies is that governance is the key to delivering the right outcome - it can make or break the success of a policy. The institutional setup can be as important as the design of the policy itself. Decisions taken down the line with regard to implementation, who is involved, who is responsible, the resources at their disposal and the tools to be used … all of these shape and re-shape the policy outcomes.

Another general lesson was that 'What gets measured, gets done'.

The Directive's targets on packaging waste have helped to stimulate an increase in recycling and recovery across Europe. However, the need to tackle the ever-increasing generation of waste has remained in the form of an objective rather than a specific, quantitative target, and there has been little progress on the issue. Measures at national level are primarily aimed at increasing recovery and recycling, with prevention measures being limited to awareness-raising campaigns, some deposit-refund systems and some taxes.

Countries have different approaches to creating packaging waste management systems. Four of the five countries investigated have chosen a scheme that makes producers responsible. Some countries include all packaging waste in the system, while others focus primarily on commercial waste. In general, the systems include a number of measures and aim mainly at increasing recovery and recycling, while efforts on prevention of packaging waste are clearly less embedded in the systems.

All the EU-15 countries met the target of a minimum of 25 % recycling by 2001 and seven countries have already met the 2008 target of 55 %. The achievement of high recovery rates was to some extent determined by pre-existing arrangements for the collection and treatment of waste. Of the five countries examined, those with initially high levels of recycling are maintaining their level while the others are steadily increasing it.

The Agency's study highlights the importance of this distinction between targets and objectives.

Full compliance with the targets is not the same as achieving the policy's wider objective of reducing waste volumes, as most measures relate to recycling and recovery. Of the five countries examined, those with initially high levels of recycling have maintained these while the others are steadily increasing it.

So let me re-cap:

• what gets measured gets done;
• economic instruments work as part of the policy mix; and,
• governance matters.

I expect that you may be interested in findings specific for the United Kingdom. At the risk that you may know this area much better than me, let me nevertheless make a few observations.

The main measure in the United Kingdom is the producer-responsibility scheme (Packaging Waste Recovery Notes). This focuses on commercial waste, aiming to meet the directive's targets in a cost-effective, competitive manner. Responsibility is shared along the packaging chain, obliging business to take responsibility for a certain amount of packaging according to their activities. Recent figures reveal increasing quantities of packaging.

The recycling rate in 2001 was 42 %, exceeding the directive's targets, but the 50 % recovery target was missed by 2 % in 2001. The financing need fluctuates widely from year to year due to PRN (Packaging Recovery Notes) price fluctuations. Measured per tonne packaging recovered, the system appears to have achieved its goal of meeting the targets at the lowest possible cost to industry. However, because the turnover of the PRN system only shows part of the total costs, it is uncertain whether the system operates at lowest possible cost to society. Although competitive, this industry-orientated approach has resulted in a lack of public involvement and awareness of packaging waste issues compared to other countries.

As I said, the European Environment Agency is increasingly being asked to report on the effectiveness of existing environmental polices and their implementation. So we will build on the lessons learned and now turn to look at other important aspects of waste legislation.

We recently decided to launch a study in an area that is particularly topical in the UK, as in other EU Member States. We call it for short the "Landfill and incineration project". We plan to use a similar methodology to examine the extent to which legislation on disposal and energy recovery can influence prevention and recycling. The big policy question - building on the observation that what gets measured gets done - is "do we really need legislation on prevention?" Perhaps sufficiently strict legislation on disposal would do?

A major issue in this context is data availability. Until the Waste Statistics Regulation starts to deliver we have fairly limited data on waste management. Therefore we chose waste streams where relatively good data should be available - municipal solid waste (MSW) and waste tyres. This project started this year and will probably last into next year with the dissemination of the final report in 2007. This year we are concentrating on the collection of data and description of implementation in selected countries. It seems that as in the packaging report, the UK will be one of the countries assessed.

I would therefore like to extend an invitation to the ESA - through your Chief Executive - to be involved in following this study and ensuring its peer review.

This work on policy effectiveness is rather new for the EEA. But as Executive Director of the Agency I am determined to see that it is an area of work that we expand and strengthen in the coming years.

Our core business over recent years has been in the provision of data and integrated assessments. The flagship publication we issue every five years in the report on the state and outlook for Europe's environment. The 2005 report will go to the publishers next week in order to be ready for launch on 29th November. So let me now turn to the future and give you a flavour of some of the key messages and trends we will be highlighting.

Now, let's take a look at what to expect in the future, as outlooks is another exciting area of EEA's work.

4. Environmental Outlooks

Since the use of resources and generation of waste accompany any economic and social activity, their environmental pressures are far-reaching and range from climate change and water pollution to soil degradation and loss of biodiversity. As mentioned in the EU's 6th Environment Action Programme, decoupling resource use and waste generation from economic growth is a key issue to be addressed by the ‘Thematic Strategy on Sustainable Use of Natural Resources'.

But recent decades have seen consistently growing waste volumes - more than 1.8 billion tonnes of waste are produced in the EU each year (i.e. 3.8 tonnes per person in 2000 in the EU-15 and 5 tonnes per person in central and eastern Europe (Eurostat, 2000)). Total waste generation in the EU-15 increased by nearly 13% between 1990 and 2000. Half of this waste comes from manufacturing industry and construction / demolition activities. Recycling of glass and paper has been increasing but not sufficiently quickly to reduce the overall disposal volumes of these waste streams. Despite increasing recycling rates, landfill remains the most common treatment for waste.

So what does the EEA have to say about the future as far as waste and resources are concerned?

In the European environment outlook, we review the baseline waste projections, which address most of the significant waste streams for the EU-15: municipal waste, industrial waste, waste from construction and demolition, paper and cardboard, glass, packaging, waste oils and used tyres from cars. Due to a lack of data, only municipal waste, waste oils and used tyres from cars are covered for the New-10 and two EU Candidate Countries (Bulgaria and Romania, EU-CC2).

We then make seven forecasts with regard to waste quantities:

1. In the EU-15, most waste streams are expected to decouple relatively from GDP by 2020. However, none are expected to decouple absolutely. Industrial waste and paper and cardboard show the largest increase (about 64%), followed by packaging waste (50%). Municipal waste and waste oil and used tyres are expected to increase by only about 25% over the period.
2. In the 10 new Member States, relative decoupling from GDP is expected, particularly for municipal wastes, which are expected to increase by only 10% by 2020. Similar developments are expected for Bulgaria and Romania (6% increase). Although a promising relative decoupling from GDP is expected for waste oil and used tyres from cars, they are still expected to increase by about 70%. This is due mainly to the strong economic growth and increase in household expenditure expected over the period, which are drivers both of the number of new registrations and End-of-Life vehicles.
3. Overall, the policy target of absolute decoupling is not expected to be met, as relative decoupling fails to counteract increases in waste generation.
4. In absolute terms, the construction & demolition and industrial waste streams are expected to continue to be the most important contributors to waste quantities in the EU-15, with about 650 million tonnes per year by 2020. Municipal waste is expected to contribute 250 million tonnes per year.
5. Spain appears as the EU-15 country with the highest level of municipal waste per household (about 2.2 tonnes in 2030), while the average for the other countries is about 1.3 tonnes. In the New-10, the average is around 1.2 tonnes per household.
6. The paper and cardboard waste projections suggest that the use of paper in Europe in the long term is unlikely to be significantly reduced by the IT revolution.
7. The impacts of the forthcoming implementation in the EU-15 of the Landfill Directive for biodegradable municipal waste have been estimated in terms of environmental pressures. Under the assumption that the Directive's targets are met, landfilling of biodegradable municipal waste is expected to be reduced by about 15 Mt in 2006, 28 Mt by 2009 and 41 Mt by 2016. This diversion towards other waste management options would reduce the related emissions of greenhouse gas (mainly nitrous oxide (N2O) and methane (CH4)) per year by about 31 Mt CO2 eq. in 2006, 57 Mt in 2009 and 85 Mt in 2016; these savings represent 0.8%, 1.4% and 2% respectively of total EU-15 GHG emissions in 2002.

We also reviewed the baseline projections for material flows, which cover industrial minerals and ores, construction minerals, biomass and fossil fuels for the EU-15. Due to limited historic time series, all the minerals have been projected as one single aggregate (i.e. industrial and construction minerals and ores) for the New-10 and three EU Candidate Countries (Bulgaria, Romania and Turkey, EU-CC). The following four projected features can be highlighted:

1. Significant relative decoupling from GDP is expected in the EU-15 and the New-10 over the 2000-2020 period, particularly for fossil fuels and biomass. This reflects an increasing share of natural resources being imported into the EU, which comes from the gradual depletion of domestic resources and economic competition from non-EU natural resources; these developments are known as ‘burden shifting'.
2. In absolute terms, construction minerals and biomass are expected to continue to be the largest contributors to material flow quantities in the EU-15, representing respectively 3.8 and 1.6 billion tonnes per year by 2020.
3. Industrial and construction minerals and ores are expected to increase by about 190% in Bulgaria, Romania and Turkey, as a result of strong economic growth (by 147% between 2000 and 2020).
4. Resource productivity (or material flow efficiency) is about four times lower in the New-10 than in the EU-15, but significant improvement of 2.6% per year has been observed over the 1992-1999 period. Looking forward, resource productivity in the New-10 is expected to increase by about 50% by 2020 (by 2% on average per year, reaching 0.5 Euro of GDP per kg of resource used), with EU-15 resource productivity increasing by about 25% (1.9 Euros of GDP per kg by 2020).

5. Concluding Remarks - The Policy Challenge

I started by saying that the European Environment Agency may not be the motor driving European environmental, but that we do provide much of the fuel that goes into the engine.

In view of the projections that I have just set out, several emerging challenges that are policy-relevant can be highlighted. They are challenges that European environmental regulation must address if we are to achieve sustainable waste management.

The importance of policy actions that address both waste prevention and management is striking, since increasing waste quantities may challenge the limits of waste management options in the future, particularly at specific locations. With regard to material flows and resource productivity, the 10 new Member States present considerable opportunities for benefiting from technology transfer and realising their potential for improvements.

Data on waste quantities are scarce, particularly for the 10 new Member States. The uncertainty surrounding the projections may therefore be significant and the results should be reviewed in the light of the methodological approach used and additional data available at the national level. There also seems to be a need for further development of waste and material flow outlooks, particularly with regard to environmental pressures and economic damage.

A key issue is the extent to which policy/management and technological options available at the EU, national or local levels can reduce environmental pressures, particularly for the recycling, incineration and landfilling routes and the associated emissions.

Upcoming EU waste policy development will probably concentrate on refining of existing policies, checking assumptions behind decisions taken in the past - and finally - enforcing implementation. Gathering knowledge - necessary for better policy making - has now become a major issue for policy making institutions. The keywords for now and near future are "prioritisation", "life cycle thinking", "understanding the mechanics of the system" and "decoupling of environmental impacts."

I hope that I have been able to show you during this lecture that this is reflected in the scope of the European Environment Agency's activities.

I thank you for your attention and I look forward to listening to your comments and answering any questions you may have.