Archive for waste

Do slips in the cost of pollutants threaten environmental targets?

Posted in Other with tags , , , , , , on November 11, 2008 by Dan

It’s generally felt (and I would be surprised if it was not true) that recycling paper is more efficient than sending it to landfill, burning it or leaving it all over the tube.

A story in today’s Guardian caught my eye. It said that a reduction in international prices for waste paper is threatening the government’s recycling targets. The story is based on an unusually interesting press release (pdf) from the Confederation of Paper Industries. The press release says:

The UK relies on global export markets to take well over 50% of the recovered paper it collects with Far East markets taking over 75% of the export total … without these markets UK merchants are left with little option other than to store the material they have paid significant amounts for or sell at loss making prices … With no obvious signs of Far East buyers returning to the market soon there is a serious possibility that storage of [paper] may end up being a very high risk strategy with huge costs to those requiring storage, including the tax payers through Local Authorities.

Well, there are always winners and losers when commodity prices move. But is this actually an environmental issue?

Paper waste prices are collapsing because people worldwide are using less recycled paper. This is due to lower demand in an economic downturn – not a reduction in eco-consumerism (recycled paper is cheaper). Globally, if there is less demand for paper then we don’t need to recycle as much to meet energy and waste targets. And if the UK situation continues, the market should support new domestic processing plant (if recycling is indeed an efficient process).

Similarly, the European carbon price has slipped significantly over recent months and many forecast it will continue to go down. This will kill the business case for some emission reduction investments, but because the consumption baseline is shrinking overall emissions will not increase. The lower carbon price just delays capex to a time when the economy and emissions start to grow again.

Advertisements

Are long-life products too expensive, or do we just want new ones?

Posted in Other with tags , , , , on August 20, 2008 by Dan

I like the suggestion from the House of Lords Science and Technology Committee (Waste Reduction – pdf) that the government should cut VAT on products with long life-cycles and on repair services.

But why is it necessary at all? Given that sturdy products are generally cheaper in the long run, why don’t people just buy them?

Two reasons:

  1. People’s discount rate is sufficiently high (or their access to capital is sufficiently low) that they don’t want to pay higher upfront costs despite long term savings.
  2. In many sectors goods depreciate quickly because they go out of fashion or new, more attractive versions come onto the market.

The tax cut addresses the first reason. The Committee’s chair, Lord O’Neill says:

Currently a lot of people can not justify spending a huge amount on a product just because it lasts longer but if this recommendation is followed through, it should encourage modern electronics manufacturers to produce more sturdy products.

I wonder about the extent to which a tax cut would address the second reason. If it makes longer-life products affordable for more people, many of those people will not believe they save money if the products are not worth anything after a few years. Someone who wants a bigger TV or a faster laptop is unlikely to value several extra years of life in the old one.

Obviously, taxing or otherwise pricing the pollutants we ultimately care about would produce a similar impact to differential VAT with lower risk of unintended environmental consequences or errors in categorising products as ‘sustainable’.

As an aside, there are lots of other (non-tax) things in the report too.