"UK should use waste for power"

From CityAM's What the other papers say this morning:

THE TIMES - As much as 17 per cent of Britain's electricity needs could be met by burning rubbish and the methane produced from landfill sites. David Palmer-Jones, chief executive of Sita UK, which handled nine million tonnes of waste last year – 8 per cent of the total – said that Britain was failing to grasp a huge opportunity.

OT1H, "He would say that, wouldn't he?", but OTOH I am quite sure that there is something in it. Other countries have been doing this for years, so it can't be too difficult to work out whether it's economically viable or not. Plus it winds up Greenies and NIMBYs no end, so that's a bonus.

"Tories unveil recycling pay plans"

Oh dear.

More economic illiteracy from George Osborne.

1. Households can't recycle their rubbish. All they can do is separate it out into its constituent parts, some of which should indeed be recycled (aluminium), some of which burns like tinder (most packaging), some of which can be turned into compost/methane and so on.

2. Aluminium cans do have a modest scrap value, £1 or £2 for a bin liner full. If the value is high enough, then private businesses would go round and collect them and pay on the door. Like rag'n'bone men in days of yore. If the council wants to do this, and can make a profit in it, then great. It does not need legislation or gummint interference.

3. The same goes for everything else that could be recycled - paper, glass and steel. But if it isn't profitable for private businesses to go round collecting and paying for this stuff, why should councils do it?

4. Landfill Tax is the craziest tax of all - it has now gone up to £39.37 per ton. As the blogging boat Raedwald pointed out, there are plenty of quarries that we can fill up first before we need to use agricultural land. And even if we needed to use agricultural land, stripped of agricultural subsidies, it's worth (say) £2,000 an acre. That's 41 pence per square yard. Assuming you can cram ten tons of rubbish on one square yard, the value of the land used for one ton, is ... er ... 4.1p. So that's an effective tax rate of 9,900% give or take.

5. As to EU targets, sod 'em. We can just leave, can't we?

See also MW's more detailed household waste policy.

See also Matt Davies at Woking Libertarians, who rips into this in even closer detail.

"Revolt grows over planning bill"

Let's look at some different takes on what is essentially the same topic:

1. From the BBC: "A Labour revolt is growing over a bill to take away ministers' and councils' planning powers on major projects like airports and nuclear power stations [and hand these powers to] an independent commission".

2. EUReferendum reckon that power cuts will be become ever-more frequent - this is due to  increasing demand; failure to replace and maintain stuff; Greenie opposition to power stations; the EU Large Combustion Plants Directive and restrictive planning laws. Rather unfairly, the list misses off "NIMBY opposition" alongside "Greenie opposition", but apart from that, fair summary.

3. David Starckie's new book "Aviation Markets", "... the book tackles subjects such as ... how airport slots should be allocated (answer: price)."

4. Lord Howell's energy policy, which amounts to "let the markets decide (not the Greenies)". This has been officially adopted as MW policy - don't tax it any higher than other businesses and for Heaven's sake, don't subsidise it. Sensible gummint oversight, sure, that's a different topic.

As ever, the MW manifesto - which is based on understanding and welcoming free markets and building policies around them - has ready answers to this:

a. As many powers as possible (apart from defence, immigration and the voting age at national elections, basically everything) should be delegated down to local councils. So if, for example, Medway Council decides to allow a local power station to be replaced/upgraded, that will be the end of the matter.

b. Local councils will obtain the bulk of their income from licence fees and user charges and Land Value Tax. And rents from social housing, different topic.

i) If there is demand for an airport, of course the Greenies and NIMBYs will be dead set against it, but as councils in the areas affected by the airport will be able to charge, via auction, around £12,000 per take-off/landing slot, there will be plenty of money coming in. Air travel will still be profitable (if not, the price will drop until it is), and if the receipts are more than enough to pay for the transport infrastructure, install secondary double glazing in homes in the flight path, etc, with a bit left over for other local amenities (to buy off the local electorate), then the airport will be built. Else not.

ii) Of course, some homes will still fall in value if they are in the flight path. At least the NIMBYs will have the consolation that their Land Value Tax bill has fallen. Conversely, with more jobs in the area (Heathrow employs 70,000 people), and remembering that house prices are largely a function of local wages, Land Value Tax receipts might even increase.

iii) Greenies and NIMBYs will object to other things that are essential but that nobody wants near them - for example power stations or waste incinerators and landfill sites. Again, local councils have to make the trade-off; if the potential income from charging fees for allowing sites to be used for landfill (EU-imposed landfill tax is a ludicrous £1m-plus per acre!) or for a waste incineration plant is greater than the potential net fall in Land Value Tax receipts (more local jobs, boosting land values, but they can whiff a bit, depressing land values), then the local council will grant permission for that landfill site or waste incineration plant. Else not.

c. When I say "no subsidies", this includes explicit subsidies (e.g. for wind turbines) and implicit ones. Nuclear power only works because of explicit and implicit subsidies - the most iniquitous being what amounts to a taxpayer funded bail-out for decomissioning and the fact that nuclear power stations do not have to insure themselves against 'worst case scenarios'.

d. As to sensible regulation and oversight, the problem with electricity generation is that we need overcapacity (which the market has no reason to provide) to cope with unforeseen power outages. Part of this can be dealt with by chucking more cables in the North Sea so that we can buy and sell capacity from the Dutch and the Belgians (who are an hour ahead of us - so we can fire up our generators an hour earlier and sell it to them in the morning). Altho' the MW manifesto does not recommend State provision of goods and services, there can be no harm in the State buying up old marginal, barely profitable power stations to provide that 5% of spare capacity that we need as a cushion and only firing them up when all else fails.

e. As a final thought, what about the long-mooted Severn Barrage? As an aside, it's nice to see this being proposed as a source of 'clean energy' (to pacify the Greenies) but being opposed by 'environmentalists', but that's not the main point.

The main point is that I, as a non-scientist, have no idea whether it will 'work'. Not the faintest. In much the same way, the Victorians who first proposed the Channel Tunnel had no idea whether it was really viable. But Thatcher (basically) flogged off the rights to build it to private companies, so for the taxpayer it was win-win. If it works, it'll compete against cross-channel ferries and air transport, if it doesn't, tough, private investors lose money. Either way, at least HM Treasury has banked some money. With the benefit of 20/20 hindsight, in economic terms it probably wasn't worth it. But so what? It's there now, so we might as well use it, and we all benefit from more competition on cross-channel routes.

The same applies to the Severn Barrage. An MW-led gummint will steamroller local opposition* and auction off a thirty year lease on permission to build and operate it (to be shared between all the county councils on either side of the estuary). If it works, great. Even if it doesn't, so what? Part of the lease agreement will be that if it doesn't, the winning bidder has to demolish it again. And if it works (in terms of 'it generates electricity') but fails (in terms of 'it doesn't cover its interest costs'), then so what? Once it's built, it will provide us with plenty of electricity at negligible marginal cost.

* Of course, something will be built to compensate local surfers for the loss of The Severn Bore.

"The Waste of Nations"

The Adam Smith Institute have come out in favour of 'Pay-as-you-throw'.

"the report stresses that PAYT must not be used as a 'bin tax' and that its introduction must be accompanied by a corresponding fall in council tax ... The report also calls for the full liberalization of the refuse collection sector, so that private companies would have to compete for customers"

Woah! Slightly wrong on all counts!

The whole topic of refuse collection is a lot of sub-issues, you have to deal with these on a 'divide-and-conquer' basis.

1. Some things are worth recycling, there is a market for waste paper, used aluminium and steel cans and so on. Councils have to rely on the good conscience of their residents to put these into separate bags or boxes, and councils can sell these to private companies for market value, the proceeds should come off the costs of waste collection. Those people who are too lazy or inconsiderate to do this are hardly going to change their behaviour as a result of tweaks to the tax system.

2. Some stuff burns, like plastic, cardboard, polystyrene. This should be taken to incinerators as cheap raw material for electricity generation. Again, this must have some market value to the company that runs the incinerator, so it reduces the cost to the council and hence to households of refuse collection*.

3. Some stuff rots, which the council can use to make into compost for free use at its allotments (like in Waltham Forest) or, remembering that methane is a far more powerful greenhouse gas than CO₂** for methane generation, which in turn can be used to generate electricity or even as an alternative to petrol in cars***.

4. There's glass. Hmm. Seeing as most of our bottles and jars came from abroad, there is more than enough waste glass to provide domestic producers, and it seems a bit mad to sail crushed wine bottles back to South America or Australasia. I suggest we chuck the excess into the ocean where it can turn back into nice shiny sand.

5. There's poisonous stuff, like batteries, oil, paint and the like, this has to be dealt with separately.

6. There's bulky stuff, mattresses, fridges and so on.

7. As to the Adam Smith Institute's final point, privatising refuse collection and allowing companies to compete for customers, they tried that in New York and it got taken over by organised crime who just dump everything in the river. And what do I do if my neighbours 'opt out' of waste collection and just let it pile up in the street? Refuse collection is not just for the benefit of an individual household, it is for the benefit of your neighbours as well, the local council does have a rôle to play here as final arbiter, even if the council itself sub-contracts to private bidders (as most of them do).

Right. Now we can look at taxation.

A cornerstone of my tax policies is to get rid of VAT, which'll be the first thing on the agenda once we've left the EU, just to set the scene ... 

Let's start with bulky stuff, that's easiest. It is pointless trying to make people pay for the council to remove bulky stuff, you just end up with fly-tipping - but for every fridge that is chucked out, a new one is bought. So why not levy the tax on the purchase of new mattresses or fridges instead? If it costs the council £20 to dispose of a fridge, then there should be a £20 tax on new fridges. And it will make second-hand fridges cheaper relative to new ones, so there's your recycling/re-use thrown in!

If the value of recyclable waste (aluminium, paper) exceeds the cost of collection, the council is breaking even. There is no need for any further tax.

It costs about £100 to incinerate a ton of rubbish, so there should be a £100/ton tax on plastic, cardboard and polystyrene at the point of production or import. A plastic bag weighs one-third of an ounce, so that's a tax of one-tenth of a penny per plastic bag, and so on.

The same principles apply to every other category. Assuming that domestically produced waste glass can be sold back to domestic producers, that is cost/raw material neutral. If it costs £10 to transport a ton of excess imported glass to the middle of the ocean and dump it, then you'd have a tax of £10/ton on the imported glass bottles or jars. An empty wine bottle weighs about 1lb, so the tax on that would be half-a-penny. The nasty stuff, like batteries, engine oil, electronic stuff costs £400 a ton to 'process'. An AA-battery weighs half-an-ounce, so there'd be a tax of half-a-penny on an AA-battery, 50p on a Mac Mini, about £5 on a PC, and so on.

Finally, there'll always be residual stuff that goes to landfill. Landfill Tax is one of the most insane taxes we have. £32 a tonne! What are the real costs of landfill? Well, one acre of agricultural land sells for anything up to £5,000. That's £1 a square yard! If you pile waste ten yards deep, you can easily squeeze ten tons of waste on every square yard. So to protect something worth £1, the government wants us to pay £380? Are they completely mad?

I accept that there is some hysteria about the whole country ending up as a giant landfill site, but fear not, fellow citizens! Total waste per household is about 1.3 tons, surely half or three-quarters**** of this can be dealt with as above? That leaves 0.3 tons x 25 million households = 8 million tons per annum, which, piled ten yards deep would cover about a quarter of a square mile. Provided you dig the holes deep enough, you can cover 'em up again afterwards, job done. Even if we didn't cover them up, it would take four millennia before even one percent of the UK were covered with residual household waste.

* As I posted on Blog Action Day "... the proposed waste incinerator at Belvedere, East London, will be able to burn over 500,000 tons of waste a year (the waste generated by about 400,000 households in a year) and generate 66 megawatts of electricity, or enough for 66,000 homes." And all these greenies can shut up - of course, part of the planning permission has to be that they separate out the really poisonous stuff and have proper filters and so on. There has been a massive waste incinerator in the middle of Munich for decades and you can't smell a thing. Fact. And if people don't want to live near them, then build them in the middle of the countryside or something.

** To the extent that you believe in this man-made-climate-change stuff at all, of course. Many don't.

*** The funny thing is that Waltham Forest gives you a separate brown wheelie bin into which you put all your organic kitchen and garden waste, whereas the council where we now live asks you to put kitchen waste into the normal wheelie bin, and asks you to put out garden waste separately. I think that Waltham Forest is correct on this one, but hey...

**** Ten years ago, we used to fill up our wheelie bin every week. Now that we separate out glass, plastic, cans and paper, it takes us one month to fill it with whatever's left (they do alternate fortnightly collections where we live now, but they missed us out two weeks ago and it was just about full). So if they asked us to put organic kitchen waste separately, we'd be down to about one-fifth of the volume of ten years ago.

Festive rubbish

On the topic of charges for refuse collection, I posted this at the Adam Smith blog recently, and it seems to fit in well with Xmas theme (all that wrapping and packaging!) so I'll repeat it here.

There are costs associated with disposing of stuff, let's take fridges, for example. Let us assume that it costs £20 to dispose of a fridge properly (siphon off CFC's, separate out steel parts for re-use, if that is economically rational etc). Rather than charging people £20 to dispose of a fridge, they should put a £20 tax on new fridges (most new fridges are replacements for old fridges) rather than try and charge for getting rid of old fridges (which just leads to fly-tipping).

There is no reason why the same shouldn't apply to everything else. If it costs £10 to collect a ton of rubbish and the waste incineration plant is happy to pay £5 for it to use as fuel for generating electricity, then there should be a £5 per ton tax on plastic, paper, polystyrene etc. 

There is then no need for an additional charge on disposal - it's been paid for! 

This doesn't quite work for garden waste of course, but that would be covered by land value tax (bigger garden = more grass cuttings and so on). 

Simple is good, good is simple. 

Blog Action Day

The EU would like us all to do a Blog Action Day* post on The Environment today**.

Here's my ha'penny worth...

Waste incineration reduces landfill*** and is a cheap and efficient way of generating electricity.

For example, the proposed waste incinerator at Belvedere, East London, will be able to burn over 500,000 tons of waste a year (the waste generated by about 400,000 households in a year) and generate 66 megawatt-hours of electricity per year****, or enough for 66,000 homes.

They seem to have realised the elegance of this up in Scotland as well.

For sure, households should recycle their rubbish first, and sort out the bottles, cans, newspapers and bio-degradable stuff*****, what's left is plastic, cardboard, polystyrene, babies' nappies, broken toys etc, all stuff that doesn't bio-degrade very well but has a killer calorific value, as it consists largely of petro-carbons.

* Acronym 'BAD'

** I'm jumping the gun here by a few minutes.

*** This paranoia about landfill is overrated. Low value agricultural land in the UK goes for £3,000 per acre, but the Landfill Tax you'd have to pay to use it for land fill is nearly £1,000,000 per acre.

**** The company blurb that I linked to says "66 megawatts" but I assume they mean "66 megawatt-hours".

***** Which can be used to creaste compost, or even better, used in methane capture plants, CH4 is a far worse greenhouse gas than CO2.