Municipal Waste Management Policy

The ESRI has published “An Economic Approach to Municipal Waste Management Policy in Ireland“. The Report provides a roadmap for managing municipal waste in an efficient way that minimises the costs to society.

The Report states that Ireland is at an important junction in municipal waste management policy. Significant progress has been made in encouraging the use of recycling as an alternative to landfill. Ireland has to meet legally binding EU Landfill Directive targets that will become increasingly difficult to meet in 2013 and 2016.

The Report argues that markets do not always work well in waste management so government intervention is merited and should be directed at improving the way markets work. If successful, this will enhance Ireland’s economic development and competiveness. It suggests two ways in which waste markets do not work well:

– in handling greenhouse gas emissions such as methane and disamenities such as dust & noise; and,
– in addressing the potential for market power, particularly in household waste collection.

Since geographical markets for waste services such as collection are local or regional, policy making should allow for local variations as well as co-operation for where markets are wider.

The roadmap for municipal waste policy developed in the Report recommends:

(i) a cap and trade system be introduced to meet the EU Landfill Directive targets for 2013 and 2016;

(ii) the imposition of levies per tonne of municipal waste, depending on the method of waste disposal:

– Landfill: €44.24 to €54.89 per tonne
– Urban Incineration: €4.22 to €5.07 per tonne
– Rural Incineration: €0.42 to €0.50 per tonne
– Mechanical Biological Treatment (MBT): €0.92 to €1.45 per tonne.

The levies are based on the unpriced environmental and disamenity impact of the particular waste disposal method; and,

(iii) competitive tendering for household waste collection, which would address any market power problems.

The Department of the Environment, Heritage and Local Government is also proposing a new waste management policy. Two vital ingredients in that policy are:

– the proposed Section 60 policy direction to cap incineration and other matters; and,
– the international review of waste management policy, which contains twenty-five recommendations.

The Report questions whether these ingredients provide a coherent and feasible basis on which to develop waste policy. Arbitrary limits on incineration and consequent expansion of MBT have no place in waste management policy. The international review’s setting of residual waste levies is flawed, suffering from both double regulation and double counting, with the result that some of the proposed levies are much higher than is appropriate. It does not provide the basis for a waste management policy that will create jobs, enhance competitiveness, and meet the EU Landfill Directive targets.

Notes:

The Report was commissioned by Dublin City Council.

Municipal waste is defined as household waste as well as commercial and other waste which, because of its nature or composition, is similar to household waste. It excludes sludges and effluents.

Biodegradable municipal waste means the biodegradable component of municipal waste, which is typically composed of food and garden waste, wood, paper, cardboard and textiles.

A cap and trade system involves trading of allowances or rights to dispose of one tonne of waste into landfill, where the total allowance is strictly limited or ‘capped’. The overall cap would be set by the Landfill Directive targets.

The Minister for the Environment, Heritage and Local Government can issue a Policy Direction under Section 60 of the Waste Management Act 1996, to the Environmental Protection Agency and local authorities concerning the exercise of their relevant functions under the Act in relation to, for example, municipal waste incineration capacity.

Landfill Directive Council Directive1999/31/EC of 26 April 1999 on the landfill of waste. The aim of this directive is, by way of stringent operational and technical requirements on the waste and landfills, to provide for measures, procedures and guidance to prevent or reduce as far as possible negative effects on the environment, in particular the pollution of surface water, groundwater, soil and air, and on the global environment, including the greenhouse effect, as well as any resulting risk to human health, from landfilling of waste, during the whole life-cycle of the landfill.

106 thoughts on “Municipal Waste Management Policy”

  1. It is very welcome that the ESRI exposes this scandal because the gombeen political system does not allow for accountability and good policymaking.

    This looks like the decentralisation stroke politics.

    National policy appears again to be at the mercy of local clientism.

    Who said Planet Bertie is a dying star ? (don’t worry – – I know my astronomy!)

  2. Several media reports refer to an anonymous “spokesman for Minister Gormley,” who is dismissive of the ESRI report.

    It has several errors, the public is informed but no detail is provided.

    In a situation like this, it’s stupid to report such comments as the person is used as a ministerial shield but would not debate the issues in public.

    The anonymous assistant is well paid from public funds and should not be facilitated.

  3. In Brisbane, we create huge open spaces, with trees, play areas and playing fields for baseball, soccer etc. We do it by infill of old quarries. Look at our maps. We pay $2 per trip to the local tip, unless we prove that we are ratepayers. Then we get in free. We can take away a trailer full of free mulch per visit too.

    But organized crime can make it expensive to dump waste and extract money, paying rent and who knows? under the counter to those authorizing the scam. Every one makes money! Just like the Sopranos!

    You guys are living in a gangsta’s paradise!

  4. @ Michael

    Have you read the report? Some parts read remarkably like an undergrad thesis…but then, hey, it was co-authored by an undergrad….

  5. I get a bit jumpy about suppressing markets. For what it’s worth, here’s a contrary view on the risks of market power in waste collection from the Cato Institute, that includes a critique of some of the key research on which expectations of market power in waste collection are based. It estimates that economies of density plateau at 2 residential units to the acre, and that a density of 8 units to the acre should be sufficient to support two competing providers.

    http://www.scribd.com/doc/13672329/-Time-to-Trash-Government-Intervention-in-Garbage-Service-Cato-Policy-Analysis-No-331-

    I’d be interested to hear what people think of it.

  6. @ JC

    I browsed through it.

    I have followed this story since 2007 and the main charges are credible.

    It says alot for the way the country is run that a minister whose credibility is seriusly challenged by a public agency, does not publicy respond to the charges himself.

  7. @JC
    Your remarks would carry more weight if you were not anonymous.

    As far as I can tell, you are Mr Joseph Curtin MSc, Senior Researcher at the Institute for International and Environmental Affairs, and member of the Green Party.

  8. Michael, How about these for errors?

    p.66 “Incinerators are subject to the ETS” (Wrong.)

    p.93 “However, at the bottom of the list is written ‘As €99.00’, which
    could be interpreted as the summation of these non-GHG taxes on incineration.”
    (As is the chemical symbol for arsenic; ESRI have failed to understand the Review which they are criticising.)

    As JC says, these are undergraduate mistakes. There are also mistakes of economic theory, equally important to a proper understanding of the waste situation and the waste review which is being criticised. Undergrads would also be marked down for these. I’m sure Richard will find them for us.

  9. Richard, your source please?

    Mine: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0063:0087:en:PDF
    (The ETS Directive)

    Annex 1 lists the categories of installations to which the directive applies and includes the following:

    “Combustion of fuels in installations with a total rated thermal inputexceeding 20 MW (except in installations for the incineration of hazardous or municipal waste)”

    By the way, can you let us know how much the ESRI was paid to make these basic errors?

  10. @Richard

    “Installations for the incineration of hazardous or municipal waste” are specifically excluded from Annex I of the current ETS Directive (2003/87/EC). This position is not changed in the new ETS Directive (2009/29/EC) and I’m not aware of any proposal to change it.

  11. @Laks/Ryano
    I think you’re straying into technicalities before debating the fundamentals. Do you agree with the ESRI report’s conclusions as given by Richard Tol, in particular with the report’s criticisms of the proposed new policy of the Dept. of the Environment:

    “Arbitrary limits on incineration and consequent expansion of MBT have no place in waste management policy. The international review’s setting of residual waste levies is flawed, suffering from both double regulation and double counting, with the result that some of the proposed levies are much higher than is appropriate.”

  12. I’m wary of Richard Tol who I have noticed on at least one occasion making a statement which he presents to be factual that subsequently turns out not to be. He strikes me as arrogant. This is my perception.

  13. @Oliver

    There are two criticisms in that quotation.

    Taking the second first: The allegation of double regulation and double counting is squarely based on the mistaken understanding that incineration is in the ETS. The error is more than a technicality.

    Re the first criticism: Of course arbitrary limits have no place in waste management policy. Off the cuff, I can’t think of anywhere they have a place. But the limits proposed to incineration capacity aren’t arbitrary. They were determined by the consultants to be the appropriate limits to apply to ensure that waste isn’t drawn to incineration which could otherwise be handled higher up the waste hierarchy. (Of course ESRI considers that the waste hierarchy shouldn’t necessarily be complied with despite that fact that it’s a legal requirement, but that’s a criticism of the EU’s waste law as developed over the last 3 decades, not a criticism of DoE or its consultants.)

  14. @Holbrook Fields
    I’m wary of him too – for me it’s his disturbingly short surname. Be that as it may I am also wary of the government’s policy as described:

    Placing an arbitrary limit on one method of waste management sounds like a recipe for higher cost.

    Setting a flawed waste levy based on double regulation and double counting sounds like a means of cooking up the policy you want, rather than the cheapest one.

  15. Oliver,

    Why would you ask questions and ignore the replies, especially as they invalidate the two criticisms you have chosen to repeat?

  16. @Laks
    But judging by what the cheapest solution would be (the main consideration in a country where we have just cut allowances for the blind and the disabled):

    1. Putting a limit on incineration means you don’t get the cheapest solution.

    2. Can I take it then that the size of the waste levy used by the Dept of the Environment would have been fully accepted by the writers of the ESRI report, if they had interpreted the regulations of the Emissions Trading Scheme (ETS) correctly?
    Also, I don’t know the area but I believe I read Frank McDonald extolling incineration in other countries some years ago. Are all of them no longer building incinerators due to this ETS?

  17. @Richard Tol
    I see that you yourself did not author the report but you are on the staff of the ESRI. It is a truth universally acknowledged that a consultant’s report always supports the views of those who commissioned it. But let’s leave that aside.

    Suppose you, Richard Tol, were a one man country, with the same waste production as Ireland. Suppose you were looking for the cheapest possible solution for your waste. Would you, speaking purely personally, choose to include incineration in your solution? If it was your own money is that what you would spend it on?

  18. @Oliver

    “Can I take it then that the size of the waste levy used by the Dept of the Environment would have been fully accepted by the writers of the ESRI report, if they had interpreted the regulations of the Emissions Trading Scheme (ETS) correctly?”

    That’s more or less what the author of the DoE’s report thinks. See his press release below:

    ESRI MANUFACTURES DISPUTE FROM ITS OWN MISTAKES
    03/02/10
    The lead author of an international review of waste policy, Dr Dominic
    Hogg, raised serious questions regarding the competence of the authors
    of an ESRI report, which has been critical of the review carried out on
    behalf of DoEHLG. [1] Hogg stated:[2]
    “We have read their report and believe that a number of major errors
    have been made which, if corrected, would have a significant bearing
    upon the conclusions.”
    Errors in respect of understanding of waste management policy and
    information, of which there are many, might be understandable (ESRI has
    very limited experience in this area). What cannot pass without comment
    are the factual errors and misplaced assumptions around economics and
    policy which appear throughout the report.
    For example, where the ESRI calculations of the levy for waste treatment
    are concerned:
    The assumption is made that the emissions of carbon dioxide from waste
    facilities can be ignored because these – according to ESRI – are
    already being ‘paid for’ through the existence of the EU Emissions
    Trading Scheme (ETS). The waste sector is, however, specifically
    excluded from the EU ETS:
    They calculate, but then ignore, the environmental costs of air
    pollution. Their justification rests on an erroneous view that because
    the facilities from which the pollution is emitted are regulated under
    permits and licenses issued by the EPA the externalities resulting from
    the remaining emissions that do occur are zero. This line of argument
    might be expected from an industrial lobby group, but not from ESRI, and
    no independent environmental economist would subscribe to their view.
    It is also worthy of note that the carbon dioxide emissions reported in
    the study for incineration are too low by a factor of 10, and that the
    source of data for emissions from MBT is not referring to an MBT
    facility at all.
    Correcting for these factors alone – using ESRI’s own numbers and the
    corrected figure for CO2 emissions – would lead to an increase in the
    size of the levy which was recommended by ESRI of at least €30.76 per
    tonne of waste incinerated for every year beyond 2015. [3] This compares
    with their published figure of no more than €5.07 per tonne of waste
    incinerated.
    Dr Dominic Hogg of Eunomia stated:
    “If ESRI were to correct the errors they have made, they would reach
    similar conclusions to those of our international expert team. I will be
    writing to the Director of ESRI requesting that the necessary changes
    are made. We suspect that it will then become clear that the differences
    in the ESRI and Eunomia figures for the prowould be slight. ESRI has, however, failed to unearth any relevant data
    for MBT facilities.
    ESRI has constructed the basis for a dispute around its own mistakes.”

    Notes for Editors
    [1] In February 2008, a procurement process was initiated to appoint
    consultants to undertake a comprehensive study on the waste sector, to
    underpin the overall review, and to cover a wide range of issues to help
    identify how best to proceed with further efforts to reduce waste
    levels, improve recycling rates and deliver equitable and cost-effective
    waste management solutions. Eunomia Research & Consulting (and partners)
    were selected to undertake the study.
    The report (Eunomia Research & Consulting Ltd., Tobin Consulting
    Engineers, TBU, Oko-Institut, and Arcadis 2009. International Review of
    Waste Management Policy: Summary Report. Dublin: DoEHLG) can be viewed
    and downloaded from:
    http://www.environ.ie/en/Environment/Waste/ReviewofWasteManagementPolicy/
    The ESRI report, entitled ‘An Economic Approach to Municipal waste
    Management Policy in Ireland, can be found at
    http://www.esri.ie/UserFiles/publications/20100202113832/SUSTAT030.pdf

    [2] Dr Dominic Hogg is a Director of Eunomia Research & Consulting Ltd.
    He has a Bachelors degree in Physics from the University of Oxford and a
    PhD in Economics from the University of Cambridge. Prior to setting up
    Eunomia, he was Associate Director at ECOTEC Research & Consulting Ltd
    with responsibility for the company’s Environmental Economics and Policy
    work. He has spent the last 14 years carrying out major policy studies
    and cost benefit analyses in the field of waste management (and other
    environmental policy issues) for UK Government, the European Commission,
    and Governmental departments / bodies in other countries, including
    Ireland. Amongst other projects, he is currently leading a major
    cost-benefit study on the feasibility of landfill bans in the UK, as
    well as a study reviewing the application of damage cost principles to
    the determination of Best Available Techniques for pollution prevention
    and control (for the UK Environment Agency).

    [3] The under-reporting by ESRI of the figure for emissions of CO2 from
    incineration by a factor of 10 becomes important once one understands
    that waste is not included within the EU-ETS. Using the correct figure
    for emissions, and using the ‘CO2 price’ used by ESRI in their Table
    A.1, then the CO2 related externality from incineration would be
    calculated as €13.4 per tonne of waste incinerated in 2009, €31.7 per
    tonne in 2015, and €19.6 per tonne in 2029 (i.e. changing in line with
    the ESRI assumption concerning the change in CO2 damages over time).

    ESRI calculated the environmental costs for air pollutants from
    incineration, though it chose to ignore these. The figure is €11.16 per
    tonne of waste in year 2000 money. Presumably, expressed in 2009 terms,
    it might be reasonable to increase these (in line with inflation).

  19. @JC
    “Member States vary across a whole range of dimensions such as
    productivity by sector, labour costs, urban/rural split, household type (apartment compared to a house), market size, policy interventions, and so on. Differences in recycling rates are thus fully consistent with this general picture and no doubt reflect conditions particular to each Member State. Thus the idea that Ireland and presumably each Member State can achieve the highest recycling rate of the highest Member State without taking into account these differences is extremely unlikely to be successful or cost effective.”
    This is vastly superior to the gobbledygook I used to produce as an undergraduate. In fact it sounds eminently sensible. The economy is in the middle of a great recession. We didn’t begin the recession as one of Europe’s environmental powerhouses. We have a deficit of 15% of GNP.
    It beggars belief then that we can make Gormley’s great leap forward to, “achieve the highest recycling rate of the highest Member State”, without diverting acutely scarce resources.

  20. @JC
    “(The) Government intends to disadvantage incineration by banning local authorities entering into contracts that direct waste to incineration and that contain “take or pay” contracts…
    Since the local authority may be best placed to assume certain risks through a take or pay contract, removing this option is likely to be economically inefficient and needlessly raise costs.”
    That sounds eminently sensible too. By not allowing local authorities to organise the cheapest solution the undergraduates
    (“Paul K. Gorecki is a Research Professor and
    Seán Lyons is a Senior Research Officer at The
    Economic and Social Research Institute (ESRI)
    and Jean Acheson is a final year undergraduate
    in Economics at Trinity College Dublin.”)
    assert that the risk of ending up with a more expensive outcome inevitably increases. Really, economics undergraduates aren’t what they used to be if they come out with sensible stuff like this.

  21. “Government intends (that) landfill levies are to be structured in such a way as to not advantage incineration…Levies should be set to reflect the externalities – environmental and other damage – which may or may not result in landfill paying a higher levy than incineration.”
    More student hijinks – levies should be set to reflect the economic costs!

    “The Strategic Environment Assessment (“SEA”) methodology is we argue inappropriate, on its own, for evaluating the Section 60 policy direction. A cost benefit analysis, which does take costs into account, is the appropriate methodology.”
    Decisions should be made based on Cost Benefit Analysis – pranksters!

    “Turning to the incineration cap, we note that it is a command and control measure as opposed to an economic instrument such as a levy. Command and control mechanisms are likely to impose needless costs on the economy, particularly where, as in the present case of incineration, there is no underlying rationale for the 30% target selected. Much better in our view would be to ensure that the private cost of using each waste processing option will be set at a level reflecting the externalities it causes.”
    End these juvenile japes, end them I say! The Dept of the Environment want to use command and control mechanisms?
    That isn’t smart economy – that’s Soviet economy.

  22. @Oliver
    I work closely with the authors on other issues, and I was involved in discussions on this report.

    Incineration is a relatively clean, relatively cheap way to get rid of waste. This explains its popularity.

    In the case of Poolbeg, it is certain that the incinerator will be paid for and almost certain that it will be build. It is uncertain whether it will be used. If the Poolbeg incinerator will not be used, then we will need alternative technology that is more expensive and will take more time to build. In the interim, Ireland will be fined for exceeding its landfill targets.

    There’s a few hundred million euro on the table.

  23. @Richard Tol
    I understand that you work with the authors and also that you don’t wish to get involved in any sort of political bun fight and I fully respect that.

    @ALL
    From what I have read of it (and I am lazy) this report is eminently sensible and admirably clear. I believe John Gormley (and I don’t often use those words) is completely sincere in wanting Ireland to have a cutting edge waste management policy. Unfortunately, this is a Bertie Bowl aspiration in a broke country.

    I say build the incinerator. If I was a one man country that’s what I would do.

  24. @ Richard

    I never tried to hide my identity and have often linked to articles on IIEA website etc in posts here. You have referred to me on countless occasions as Joseph Curtin, so the Irish Economy Sherlock Holmes award is safe for the moment. As for my political allegiances, they are my business.

    I was not aware that ESRI sold their services. I would have though that aligning oneself so obviously to to a particular side of a politicized debate for money would seriously debases the ESRI brand. I am not aware of a precedent for this nor for polemical language evident in the exec summary for an ESRI report.

    What’s the going rate for such a report these days?

  25. “What’s the going rate for such a report these days?”

    €103,000 plus VAT according to the City Manager at today’s meeting of the Oireachtas environment committee.

  26. @Oliver

    ““Government intends (that) landfill levies are to be structured in such a way as to not advantage incineration…Levies should be set to reflect the externalities – environmental and other damage – which may or may not result in landfill paying a higher levy than incineration.”
    More student hijinks – levies should be set to reflect the economic costs!”

    Except that the report goes on to recommend that in setting the levies most of the externalities associated with incineration should be ignored.

  27. @all
    Without the landfill taxes and restrictions on biodegradable waste, landfill would be way cheaper than incineration. So european and government policy is deliberatly distorting the market away from landfill. If you don’t like market distortion of any kind then you should argue for these interventions to be removed. I accept market interference in this case on environmental grounds. My point is you can’t be purist about market intervention in order to justify incineration because when incineration is only viable because of similar in

  28. @Oliver

    “Suppose you were looking for the cheapest possible solution for your waste.”

    This starting point, which I think it is fair to say the ESRI authors share with you, is not the starting point taken by either the Government, the Minister for Environment or the Review consultants.

    Their starting points are
    a) compliance with EU law and
    b) sustainable waste and resource management.

    So everywhere you use cheapness as your yardstick you stand a good chance of coming up with a different result.

    “1. Putting a limit on incineration means you don’t get the cheapest solution.”

    Putting a limit on incineration means you don’t construct an incineration capacity which effectively closes off your options for waste management and commit yourself to feeding incinerators for decades to come. Economists know this as lock-in. (The ESRI authors know this is the core concern behind the proposed cap but have chosen to ignore this motivation rather than review and assess it.)

    The rocketing capital costs for Poolbeg cast real doubt on the cost estimates used. If this incinerator is so cheap and Covanta is so sure that a) there’ll be enough waste for it and b) it’ll be the cheapest option for that waste, why does the ratepayer have to be locked into a 25 year contract to supply the incinerator?

    “2. Can I take it then that the size of the waste levy used by the Dept of the Environment would have been fully accepted by the writers of the ESRI report, if they had interpreted the regulations of the Emissions Trading Scheme (ETS) correctly?”

    The Review authors suggest that’s more or less the case:
    “If ESRI were to correct the errors they have made, they would reach similar conclusions to those of our international expert team,” Dr Hogg said.”
    http://www.irishtimes.com/newspaper/breaking/2010/0203/breaking13.htm

    “More student hijinks – levies should be set to reflect the economic costs!”

    EU law does not allow member states to simply take the cheapest option. There are a number of legal prinicples which must be complied with such as the waste hierarchy, the polluter pays principle, the proximity principle and the preacautionary principle. The ESRI describes these as rules of thumb and invites Ireland to disregard them. EU law also requires specific targets be achieved. The ESRI also thinks Ireland pays too much attention to complying with these.

    ““The Strategic Environment Assessment (“SEA”) methodology is we argue inappropriate, on its own, for evaluating the Section 60 policy direction. A cost benefit analysis, which does take costs into account, is the appropriate methodology.”
    Decisions should be made based on Cost Benefit Analysis – pranksters!”
    SEA is mandatory under EU law.

  29. @laks
    Lock-in is not an argument for or against incineration. Other waste management options are partly irreversible too.

    One should indeed do an SEA. There is no regulation, however, that one should stop there. SEAs are incomplete and should be complemented with other policy evaluation tools.

  30. @Richard

    “Ancillary services to incineration fall under the ETS, but incineration itself does not.”

    What do you mean by ancillary services? Can you give an example of such a service that’s relevant in an Irish context?

  31. @Laks/Sam
    I respect Minister Gormley’s personal conviction that Ireland should dispose of it’s waste in the cleanest possible way. If we were still in the boom I wouldn’t have minded him choosing the costliest alternative. Unfortunately the country is now so broke we are cutting payments to the widowed, the blind, the disabled and single parents. Therefore cost matters. In this situation, the cheapest solution is the best. That would be landfill according to Sam. If we can’t do landfill we should go for the next cheapest solution, which includes incineration per the ESRI report.

    Minister Gormley wants to choose a more costly alternative. The only honourable thing for him to do is be honest about the fact that it is costlier. He can then explain why public money should be diverted from the widowed, the blind, the disabled and single parents to a costlier but cleaner (I presume?) method of waste treatment.

  32. @jc [aka Joseph Curtin Senior Researcher – The Institute of International and European Affairs

    http://www.iiea.com/staff/joseph-curtin

    Hiya Joe! I do believe I have yet to see an apology from you published here on this blog to Ms Jean Acheson for your disparaging and insulting remarks above. Were you a general joe-soap from the public sphere, one would be inclined to ignore such remarks. This is a very understanding blog! And a bit of cut and thrust is always welcome in any discussion.

    But as a SENIOR RESEARCHER, m’learned friends at the bar (the traditional head-shop variety) suggest that you do not have any legs to stand on here – that you are langered, in other words.

  33. @Richard

    Thanks.

    “The issue of double regulation is unrelated to ETS. It is about using levies and licences at the same time.”

    How are levies and licences double regulation?

    Licences permit you to cause emissions up to certain limits (and usually allow you to exceed these limits within a limit of such exceedences) and are designed to keep the damage caused by such emissions within what’s considered an acceptable or reasonable range. However they don’t do anything to capture the external cost of the emissions within that range. For that you need levies.

    Where there are fines for exceeding licensed limits, there is possibly an argument for not imposing levies on top of such fines (i.e. levying the “unlicensed” emissions), but given that such fines are usually meant to be punitive in nature this is probably a moot point.

  34. @Ryano
    The simple fact that two policy instruments (levies, licences) are used for one policy (emission reduction) should be enough to convince you that there is double regulation.

    If emissions are appropriately limited by a licence, you do not need a levy. If you think that emissions are too high, you should tighten the licence. If you’d rather use levies, you should do away with the licence.

    Using two instruments has unnecessary adminstrative costs and you pose a needless burden on producers and consumers.

    Just read Tinbergen (1952).

  35. @Richard

    Levies and licences serve two different policy purposes, not one. Licences are designed to prevent excess emissions from a particular class of activity, levies are designed to incentivise the choice to use a lower emitting class of activity or to reduce emissions within the same class. These are quite distinct to my mind.

    In terms of administration, there may be an argument for making the levy a function of the licence rather than a separate instrument, given that it is more difficult to levy an unlicensed activity.

  36. @Richard

    I don’t know whether you’re refusing to understand or just refusing to read what I wrote.

    Licenses set emissions limits but don’t incentivise emission reductions below those limits.

  37. You could say that licences allow emissions to increase up to a certain point (in order to allow an otherwise necessary or desirable activity to take place), while levies provide an incentive not to reach that point, or indeed to choose a different activity with lower emissions.

    A simple example from the real world should suffice: if I get an EPA licence to run an incinerator, I avoid fines as long as I stay within the specified limits. I have no incentive to reduce my emissions below these limits unless there is an additional instrument which either rewards low emissions or punishes high emissions.

  38. @Ryano
    Having a licence and a levy doesn’t make sense to me either. I’d issue a licence for x amount of emissions and then charge punitive fines if it was exceeded. Or I’d charge a levy on the emissions to reflect the externality (also giving polluters an incentive to minimise). Unless the pollutants were dangerous above a certain level a policy maker should go for the levy (if administrative costs not a factor).

    Having a licence and a levy sounds like a Michael O’Leary pricing approach, but with the twist that the goal isn’t to eliminate the waste at minimum cost. Combining Michael O’Leary and the soviet economy doesn’t sound like a recipe for success.

  39. @Ryano
    Let’s say that unregulated emissions are 100.

    Licensed emissions are 75.

    Licensed and levied emissions are 50.

    The license is redundant: You only need the levy.

    Alternatively, you could give a license for 50, and then the levy is redundant.

  40. Two post were removed:

    Someone pretending to be Dr Dominic Hogg (4/2/2010, 15:31)
    Forgive me, I don’t remember ESRI demonstrating that incineration was the cheapest solution. Who thinks they did?

    Oliver Vandt
    @Someone pretending to be Dr Dominic Hogg (4/2/2010, 16:09)
    I suppose on this issue it all comes down to who you believe. I have deep reservations about the ESRI’s governance and many questions about its reports on the wider economy up until 2008.

    On the other hand I am expected to believe that the “Soviet economy” policies proposed by Minister Gormley (grounded in his entirely sincere beliefs) will produce the best policy outcome. If even Gorbachev couldn’t make a command and control approach work than I certainly don’t see Gormdropov succeeding.

    I look at who compiled the ESRI report and peer reviewed it and I say, well, I have many questions about the institute, but if ALL of them got this UTTERLY wrong then the ESRI should be shut down.

    Then I look at John Gormley and the Irish Green Party – who are gleefully assaulting the reputation of all those associated with this report – and I see this:
    politics.ie: Green Party Forum

    What I have read in the ESRI report is absolute economic common sense.

    Whereas Gormley is a minister who, two and a half years into office, can’t keep the taps flowing in Dublin weeks after the cold weather. He now believes he can bring Ireland – at no extra cost – a world class waste management system, the best of the best.

    My Conclusion:
    We can’t throw away money any more. I’m going with the ESRI.

  41. @Someone pretending to be Dr Dominic Hogg
    The ESRI indeed does not optimize the portfolio of waste management options. However, walking away from incineration now would trigger a substantial claim for compensation.

  42. Reading the above posts this is my conclusion:

    Richard Tol accepts that the ESRI made at least one serious error (the assumption that incineration falls within EU ETS) which had the result of biasing the conclusions of the report.
    Dominic Hogg says if the errors were corrected then the ESRI would be making similar conclusions to his report.
    The flawed ESRI report cost 124,630 euro (incl VAT) of taxpayers money and it now seems that when corrected it will pretty much just conclude what Hogg concluded.
    Richard Tol acknowledges he has reservations about the standard of previous reports by the ESRI.
    Regardless of the questionable methodology and conclusions of the report, Richard Tol supports the ESRI’s current conclusions for the sole reason that “walking away from incineration now would trigger a substantial claim for compensation”.
    But the ESRI report is completely silent on the cost of such a compensation payout.
    To my knowledge, Dublin City Council has never publically quantified this either and doesn’t seem to have been sufficiently worried about it to ask the ESRI to factor it into their assessment.
    One conclusion may be that this entire exercise represents an error in judgement and errors in fact by the ESRI at the expense of the taxpayer.
    Another conclusion may be that Richard Tol as an economic researcher should be putting the integrity of research above any ‘gut feeling’ he has about an unquantified compensation payout which may not even be real.

  43. One wonders what kind of a fiscal position Dublin City Council is in, particularly with the huge commitment they have taken on in relation to the incinerator and their recent High Court travails with other waste collectors which may impact on their ability to deliver waste to an incinerator.

    What is the position if Dublin City Council becomes insolvent? I understand that there are specific bankruptcy procedures for municipal and State authorities in the USA. What would happen here?

  44. This report comes out strongly against straight competition in waste collection. It suggests there should be tendering for different geographical areas. It is not long since the High Court found that Dublin City Council abused its position by telling waste collectors they had to send waste to the incinerator and that reviews undertaken by Dublin City Council were pre-judged and pre-destined.

    Now the ESRI report suggests that the there should be tenders to see who carries out the waste collection function that Dublin City Council desperately wants to control (in order to save their assess after arrogantly signing an ill judged deal thinking they could hold themselves as hostage and force the Minister’s hand? – Blazing Saddles how are ye?). Are they going to conduct the tender?

    http://www.rte.ie/news/2009/1221/waste.html

    The High Court has found that Dublin City Council abused its dominant position in the capital’s waste market and ruled that the local authority’s decision to change the capital’s waste collection system is invalid.

    Mr Justice Liam McKechnie stated that the private waste collector Panda Recycling could not but come to the view that an earlier review, undertaken by the Council, was prejudged and the outcome predestined.

    He told the High Court that if a private company collects waste – then they own it and can determine where that waste goes.

    AdvertisementMr Justice McKenchie said the planned Poolbeg incinerator was ‘not free from uncertainty.’

    ESRI Report:
    “It may be proportional to address market power problems by reserving exclusive rights for waste authorities and encouraging them to keep costs low by permitting competition for the market, rather than in the market. Thus further use of franchising and contractingout of services should be considered. However, in administering these policies a potential conflict of interest may arise as the local authority is not only a provider of such services but also the purchaser. Mechanisms can be put in place whereby the public operations are separated from the local authority so as to create a level playing field between public and private bidders for any tender.”

    “The international review that the “issue of costs cannot be completely divorced from the matter of configuration of the waste collection market” (Eunomia et al., 2009, p. 20). The current system for household waste collection is characterised by the public and private sector operators competing on the same route. Such arrangements are unusual by international standards, where either the local authority provides the service or it is tendered for a 5 to 7 year period. The international review could only identify Poland and Kosovo within Europe as having household waste collection arrangements similar to Ireland.”

    “There are good reasons why there should be only one supplier of household waste collection in any geographic area; in particular the ability to realise economies of scale, scope and density. Since it is generally recognised that there are these economies the issue becomes how to select the firm – public or private or some combination of the two – that should be given responsibility for collecting waste. The normal mechanism is a tender process when the tender guarantees the winner the exclusive right to collect household waste over a number of years for a defined set of households. Part of the bid is a schedule of collection charges, with the lower the level the greater the probability that the firm will win the tender. In other words we have competition for the market, rather than competition in the market. Under these arrangements, if the public sector provider is the incumbent, then it will like any private sector firm have to bid for the tender. To avoid possible conflicts of interest the public sector operator can be turned into a quasifirm, sometimes referred to as a direct labour organisation, and compete with private sector operators. It would also be necessary to ensure that local authorities were treated no more favourably than the private sector with respect to the application of VAT.”

    “If the efficiency savings that the international review are seeking are to be realised then the overwhelming message from the literature cited by the international review is that a tendering process is required in order to award the right to collect household waste, with any incumbent public (or private) sector operator given no advantage.”

  45. @ALL
    I think I see what is going on here.
    You have the ESRI: who want the lowest cost solution that meets the relevant standards.
    You have the incinerator’s opponents: who want the highest standards of waste management, and absolutely NO incinerator. Minimising cost is not their objective.

    The incinerator’s opponents could be honest and admit this but instead they are trying to intimidate the ESRI into silence. They have adopted an approach – familiar from the debate on NAMA – of muddying the waters at every opportunity. Ask them which is the cheaper alternative and they flee into technicalities. On Nama it was technical details relating to bonds, haircuts, face washing etc. Anything to hide the fact that NAMA is a bailout for bank investors and developers. On the incinerator it is legal bluster and legal bullying to hide the fact that ruling out incineration will lead to a more expensive outcome.

    @Smart Economy
    “Another conclusion may be that Richard Tol as an economic researcher should be putting the integrity of research above any ‘gut feeling’ he has about an unquantified compensation payout which may not even be real.”

    Mr Tol has already explained the crux of the issue:
    “Incineration is a relatively clean, relatively cheap way to get rid of waste. This explains its popularity.

    In the case of Poolbeg, it is certain that the incinerator will be paid for and almost certain that it will be build. It is uncertain whether it will be used. If the Poolbeg incinerator will not be used, then we will need alternative technology that is more expensive and will take more time to build. In the interim, Ireland will be fined for exceeding its landfill targets.”

    I believe that what you want is the highest standards of waste management, and absolutely NO incinerator. Minimising the cost of managing our waste is not your objective. Make an honest man of yourself and admit this.

  46. @zhou
    “One wonders what kind of a fiscal position Dublin City Council is in, particularly with the huge commitment they have taken on in relation to the incinerator and their recent High Court travails with other waste collectors which may impact on their ability to deliver waste to an incinerator.”

    One also has to wonder about the Minister for the Environment’s handling of the DDDA since he became Minister in 2007. Our major broadsheet has called for an inquiry. The final costs to the taxpayer of the fiascoes at the DDDA could run into hundreds of millions. One journalist said half a billion.

    Are you in favour of inquiries into both?

  47. @Zhou
    Competition for the market rather than in the market. Con points out that this is not necessarily the right approach, but the numbers cited are for US wages, prices, and congestion.

    The county & city councils have an obvious conflict of interest, being the regulator and service provider at the same time. That is the case now (competition in the market), and would be the case under the proposed change (competition for the market). The clean solution is to take away either the regulatory or the service function.

    In an unregulated market, the waste collector can choose between various options for disposal. Incineration would need to compete with landfill. However, the EU has put a cap on landfill. This raises the price of landfill (and generates rent) and creates a niche for incineration and recycling.

  48. @all,
    It is not as simple as which technology is the cheapest. As I already mentioned without landfill levies and restriction, landfill would be cheapest. What DCC are trying to do is protect a monopoly in order to maintain their plans. There is plenty of MBT plants in construction that will lower the costs of disposal ‘going foward’. Bord na mona are planning a large ‘100k plant, while panda are already building their plant which I think (based on the plan) can treat mearly 100kpa. Acorn Recycling are nearing completion of a 45Kpa plant but this will mainly be for segregated biodegradable wastes. There is consolidation and great progress for inovative recycling going on in the private waste industry. By contrast the local authorities want to move from one easy solution to another, from landfill to incineration. I think it works for them because these technologies employ few people which is important in the public sector. Incineration may be the cheapest and easiest for the local authorities but it is not for the private sector waste industry. This is why county councils are being outcompeted throughout the country and are pulling out of the market. Where drivers and loader drivers and general operators cost 50-70 k including pensions, incineration makes perfect sense. Personally I think the bigger reason for poolbeg is that it easy for them. One big place where they can dump it all and a big mulinational to look after it from there.
    Apologies for the poor sentences, read this blog on my blackberry. P.s nobody has mentioned the fact that the local authorities are also the environmental regulators for smaller waste facilities. Either they should withdraw from waste collection and recovery/disposal or compete fairly and withdraw from being regulators.

  49. As a biased Green Party supporter, with no expert knowledge of the whole issue, what strikes me is that – the incinerator is not the ideal waste solution; the creation of MBT faciliites by Irish companies appears to be preferable in terms of environmental impact, job creation and promoting indigenous industries that have the potential for international growth; just because incineration is the lowest cost solution does not make it the best solution; Dublin City Council appear to have abused their position.

  50. @Sam
    The government does not have lowest cost as it’s goal. The country desperately needs the cheapest solution. If we’re not getting it then opponents of incineration should be honest about it. By all means let’s ensure the incinerator is as efficient as the best one’s abroad. But that’s not the goal of the opponents.

    Incineration is superior. The government doesn’t want incineration. Therefore it is discrediting supporters of incineration. It all reminds me of this episode from “Yes, Minister”. It’s time for an Irish version:

    http://en.wikipedia.org/wiki/The_Greasy_Pole

    It would also be naive to think that the opponents do not include those behind MBT and other waste disposal methods. We used to just have pork barrel politics. Now I fear we are developing green pork barrel politics. And Green pork is really not a pretty sight.

    Note:
    I believe in the episode Jim Hacker approached Professor Henderson and told him something like: “You have been given a great honour. Your name will be forever associated with the Henderson review. Of course, if something were to go wrong…But nice to have met you.” That did the trick. I bet the government wish they had tried it before the ESRI report!
    But they’re doing their best to make up for it.

  51. @Sam
    Here is the bit referred to above.
    “Jim Hacker now feels that he is in such a position where regardless of the decision he makes, he will be hurt. He then thinks of visiting his old friend Lord Crichton, Provost at the college of Professor Henderson’s.
    While visiting Lord Crichton’s tea-party Jim Hacker “coincidentally” bumps into Professor Henderson. Jim Hacker explains to Professor Henderson that his report will make him immortal, and he points out that if anything would go wrong in the future the press would crucify Professor Henderson. The Professor does not know what to do, but Lord Crichton helps him out to rewrite his conclusion in such a way that there is still doubt about the safety of metadioxin.
    As soon as the Henderson report is published, Jim Hacker announces he will not approve the propanol contract. This decision makes him very popular with the public, and he views it as his best political decision so far. Sir Humphrey however thinks of it as the worst governmental decision ever witnessed.
    Due to a slip of the tongue by Jim Hacker, Sir Humphrey finally begins to suspect that Jim Hacker had something to do with the rewriting of the conclusion of the Henderson report. The decision however stands.”
    http://www.yes-minister.com/ymseas2b.htm#YM 2.4

    I would see the ESRI as Henderson before the fateful encounter.

    “Then Joan Littler, MP for Liverpool Southwest and the PM’s Parliamentary Private Secretary, arrives to discuss this metadioxin contract. The BCC plant is in her (marginal) constituency, and she is very worried.”

    Hmmm. No, can’t think of any similarity to our current discussion.

  52. @oliver
    I don’t think incineration is the cheapest alternative to untreated disposal to landfill. I am honest in making this ascertion. Panda, greenstar, geryhound, country clean, veolia, and all the smaller operaters seem to have come to the same decision. INcineration is a very high tech low labour solution that is hugely expensive on terms of capital investment and maintenance. I think people just don’t understand what MBT is. Basically you screen the waste with a 50mm screen. The ‘unders’ is contains approx 60 Percent biodegradable and this is then composted (air is blown under the material so the bacteria break it down and m

  53. @oliver. Sorry oliver phone problem. The ‘unders’ is composted by blowning air underneath and the bacterial stalilise the material so it can rot no longer. This is very low tech, all you need is a couple od loaders and a big shed. This material can then be landfilled and cause no problems. The ‘overs’ with then be recycled (the market for recycling is returning). As I said the main reason DCC is going for poolbeg is that it is a quick easy fix (get some foreign technology in to solve it all). DCC lost their case remember so they do not have a monopoly over that waste, they are also tied into a huge cost. When the private operators move in they to dublin they will make DCCs operation uncompetitive just as they have done nationwide and DCC will be left with the bill. When the market for recyclables returns even stronger (the doom and gloom will end globally) this will strengthen MBT further. If you factor in job creationN
    Use of indiginous resources, importation of expensive technology with incineration, the case for MBT is further strengthened. The greens may view this as comparible to the nuclear vs renewables issue, and have an irrational ideological perspective but in my veiw the energy and waste debates are not comparible. Incineration is an environmentally sound but economically irrational policy to pursue just like wind turbines

  54. @Sam
    All I have seen of the ESRI report makes perfect sense. My gut instinct too tells me that when one side retreats into legalese and pedantry they really don’t believe that their own case has more merit. The initial response by the government was frankly shocking. It was eerily reminiscent of the tactics used to silence critics in the NAMA debate.

    There is an additional factor. Incineration is proven. Our public service’s record when it tries to innovate is terrible. However, when you warn that the incinerator could turn into another Terminal 2 I could well believe that. If I were to be cynical I would say that the country is going to choose an excessively costly solution whatever happens. It’s a matter of choosing the least excessively costly one.

    The ESRI are focused on minimising cost. The government is, as is its right, taking more factors into account. If the government is honest about wanting to choose the costlier option I have no objection. To take away people’s reputations when their only offence is to have done their jobs is repulsive. If more people had carried out their jobs conscientiously in the past the country would not have had the disasters it has had. I therefore sincerely congratulate the staff of the ESRI for the professional integrity shown in the production of this report. As in the “Yes, Minister” episode though, I believe the incinerator will be stopped.

  55. The ESRI involvement in this issue is welcome and no doubt the people who latch onto the cost of the report, were worried too about the millions spent on an international review where the minister sanctioned the terms of reference and approved the selected “experts.”

    The nitpickers will always find some point to rubbish a challenge to their views or self-interest. In a country dominated by vested interests, while no body or person is infallible, the ESRI has credibility.

    For the comfortable, who would wish to have an ESRI in sotto voce mode as it was during the bubble, go talk to some of the victims of the policymakers who have a lifetime meal ticket, whatever the consequences.

    Too often, political gombeensim had had primacy in Irish policymaking and when politicians go with the convenient flow, it’s positive to have a non-wish-washy response from elsewhere. For example, it has taken a High Court judge to call time on the examinership/insolvency fees bandwagon, while it’s business as usual in the sheltered sectors of the economy.

    Incineration and Corrib gas have been the big NIMBY issues of the past decade and John Gormley has had plenty political company in his own back yard. A lot of the reaction is part of the free lunch syndrome.

    Safety issues are important but you can live in Rossport and a port worker in Rotterdam may not only contribute to your CAP cheque but take risks on the oil supply chain that provides you with a modern life. You can live in Cork and object to an incinerator but without the American pharmachem sector, the local and national economy would be banjaxed. Meanwhile half of hazardous waste is exported — some of it providing an energy source for Hamburg’s extensive district heating system.

    I am suspicious of Gormley because he has always boarded passing public bandwagons. His anti-science position on GM foods is pandering to well-fed extremists. Credit is due to Enda Kenny for resisting pressure to support the Rossport campaign.

    Who believes that a victory for the NIMBIES on incineration would result in general acclaim for mechanical biological treatment (MBT) facilities?

  56. @Sam
    You’re mixing up waste collection and waste disposal.

    The incinerator would burn waste from anywhere and anyone (within legal limits). Any waste collector would offer its waste to the incinerator if it charges a lower price than landfill and MBT facilities.

  57. @ Sam

    “The ‘unders’ is contains approx 60 Percent biodegradable and this is then composted (air is blown under the material so the bacteria break it down”

    There is considerable energy used in blowing the air under the material and you underestimate the difficulty in meeting the stability standards that will be required in 2013 if the waste is to be landfill. MBT overs from a three bin system will end up being incinerated in a cement kiln, power plant or WTE plant.

  58. @J Daly
    Indeed. MBT does not dispose of waste. It sorts a single waste stream into multiple waste streams, to be recycled, composted, landfilled, gasified, or burned.

  59. @Michael Hennigan

    I cannot believe that you are not picking up on the fact that Dublin City Council who commissioned this report have a huge vested interest and bias in this situation. It is gombeenism at its best.

    They signed a stupid deal which they did not have the power to perform in the teeth of strong oppostion and warnings from the Minister for the Environment.

    They then tried to abuse their position vis-a-vis other waste collectors and had their asses kicked in the High Court.

    They are likely to face further problems as waste processors take issue with new coimmercially unfair conditions which Dublin City Council are seeking to put in permits and licences.

    They, along with other local authorities, also have a huge employment problem where they have lost household waste collection business due to poor service and poor charges.

    Now they have commissioned an ESRI report which proposes to resolve all these issues in their favour.

    Their incinerator deal will be saved. they will regain some control over waste collection. They will be entitled to make staff redundant without union opposition if they can off load whole routes ore be barred form waste collection alltogether. They may even be able to transfer staff to private operators on foot of the transfer of undertakings regulations. Add to that the added costs for private operators of haveing to commit to 7 years collection activities at a time.

    Yet you say those who would question the ESRI report are engaging in gombeenism???? Wake up and smell the coffee.

  60. @Michael Hennigan
    “no doubt the people who latch onto the cost of the (ESRI’s) report, were worried too about the millions spent on (the government’s) international review where the minister sanctioned the terms of reference and approved the selected “experts.”

    That is a shocking waste of money by the government. But it is simply outrageous that the government’s review should have produced the conclusions that were most politically convenient. The government have a sacred charge entrusted by ALL the people of the country. For them to politicise the policy-making process in the manner you describe is deeply immoral. To disguise political decisions by claiming they are made under best policy advice is utterly repugnant.

  61. @ Zhou

    The DCC claims to be operating in accordance with existing official waste management policy.

    Whether or not they are acting ultra vires, I don’t have the mental energy to explore.

    Ostensibly, Gormley’s actions appear to be motivated by his desire to prevent an incinerator being built in his constituency.

    The man appears to me to be an empty shell and whether it’s climate change or waste management policy or GM food, the lack of depth in his speeches is striking.

    In some months, he will be a minister 3 years. If he was really in charge of his brief, why would he be still struggling to produce a credible policy?

    Maybe the City Manager is actually acting in the public interest — it would indeed be a surprise for a public official to go against the gombeenism we so readily tolerate.

    As for the ESRI report, Prof. Gorecki and his colleagues were not guns for hire as individuals. Did they have a self-interest in pandering to a paymaster? Everyone isn’t on the take in this Sceptred Isle.

    I do hope that the ESRI can handle this inevitable blowback because we could have done with a countervailing force of strength to sham benchmarking, lucky dip decentralisation and other gombeen decisions.

    It cannot be expected from an Oireachtas of 216 members where most members have no coherent contribution to make on conetmporary issues.

    As I said, the policymakers live in clover, despite appalling decision making, while the victims of bad decision making suffer in a shadowland far from media interest.

  62. @Richard Tol
    “The international review of waste management policy was tendered for €236,000 (incl. VAT).”

    So not even as expensive as the ESRI’s but actually much more expensive.
    There is, to put it mildly, a total lack of self-awareness in what was implied about the source of the funding and the cost of the ESRI report.

  63. @Tony
    Sure.

    We will correct the errors found in the ESRI report, within two weeks, hopefully sooner. Will Eunomia correct the errors we found in their report?

  64. ‘The ESRI involvement in this issue is welcome and no doubt the people who latch onto the cost of the report, were worried too about the millions spent on an international review where the minister sanctioned the terms of reference and approved the selected “experts.”’

    Sorry Michael, but the consultants report in the International Review didn’t quite make it into the millions – if memory serves it only cost about twice what the ESRI response to it cost.

    And if you have doubts about the qualifications of Eunomia and their partners, perhaps you’d tell us what they are rather than just snidely putting “experts” in quotation marks.

  65. @Oliver

    “But it is simply outrageous that the government’s review should have produced the conclusions that were most politically convenient. “

    Have you read the review? Which recommendations would you describe as “politically convenient”?

  66. @Ryano
    From Mr Tol’s opening blog:
    “The international review’s setting of residual waste levies is flawed, suffering from both double regulation and double counting, with the result that some of the proposed levies are much higher than is appropriate. It does not provide the basis for a waste management policy that will create jobs, enhance competitiveness, and meet the EU Landfill Directive targets.”

    The government is brandishing the review in its opposition to incineration.
    The government is opposed to incineration. The government commissioned the review. The review couldn’t be more politically convenient.

    Another issue not touched on in this discussion is the fact that Dublin City Council has corporate interests but not (usually) political ones. When any government goes to war with a city council one would expect there to be a political motivation on the part of the government in 90% of cases.

    Also, that “Yes, Minister” episode was from 1981. Some truths though are eternal. If you believe that reviews commissioned by governments can’t be made to produce a politically convenient outcome then I have to respectfully disagree with you. And when, as in the “Yes, Minister” case, a particular outcome is really, really wanted by the government I would say the chances of their own review disagreeing with them are, well, minute.
    I stress that is not a party political point. It’s how I believe the world works.

    Here is a thought experiment. If the government’s own review had disagreed with them, and Dublin City Council’s report from the ESRI had agreed with the government, what would the government now be saying about those who produced both reports? Call me cynical but I believe the government would be lauding the ESRI’s qualities, their impartiality, their analytical insights and slagging off their own review. “Why, look how much more costly it was”.

    I think we can all agree that this whole debate is deeply political. When politicians get involved in deeply political debates involving public sector decisions affecting their own constituencies it’s inevitable.

    The government should now be honest and admit that they really don’t want incineration. Then we can work out how much their alternative policy will cost and decide if that is what we want to do. Frankly, I find the launching of media wars against people who are just conscientiously doing their jobs nauseating. It must stop.

  67. @Richard Tol
    You really shouldn’t be surprised that saying you will correct any factual errors in the report is spun as meaning that you are completely retracting it. It just illustrates how waste management has stopped being (just barely) a policy issue since the release of your report and has now become an entirely political matter. These Alastair Campbells aren’t interested in the best policy – they just want to win at all costs.

    If I were the ESRI I would say: “We stand unreservedly behind the fundamental conclusions of our report. We are, as always, happy to correct any factual errors identified that were made in good faith. They in no way undermine our report’s fundamental conclusions. We hope that those who compiled the review – at substantially greater cost – will now correct the factual errors they made in good faith”.

    On second thoughts you should omit the bit about substantially greater cost. No need to lower yourselves to the level of the Karl Roves.

  68. @ Ryano

    In political parlance, an “expert” is an individual who supports one’s view.

    It would be surprising if a politician dubbed a critic an “expert.”

    The default response is to query a critic’s motivation and soundbite morsels are fed to supporters and the media to create a donnybrook rather than addressing directly the issues raised.

    If it transpires that the evolution of national waste management policy is based on local political considerations, the cost will be substantial.

    There is little transparency on Irish public spending and we cannot know how much has been spent already since July 2007 in trying to slant an existing policy which the DCC says it’s implementing.

    It would be naive indeed to believe the Dept has only spent €236,000 on it.

    That is of course chump change compared with the €13 million the minister spent on a climate change awareness advertising campaign.

    It is of course much easier to spend others’ money than produce a credible policy.

  69. Can Richard Tol explain how it can cost €100,000 plus to write a report. At a very generous hourly rate of €100/hr that would equate to 1000 hours work = 125 days/work = 25 weeks work. can the ESRI provide a breakdown of the time spent on this report to justify these costs?

  70. @toby

    The loony fringe in the not-so-Anonymous Green_P PR Department …… the party of transparency ………. jc, Holbrook Fields, toby ……….. for polluting the blog with puerile political spinning ……… Ryano, in contrast, appears to have some inkling of the science ……… but c’mon ……. has the GP become so toxic due to its inability to address the big decisons that all its members have resigned themselves to becoming anonymous …. as the party itself is at the mo on Dublin City Councils. Maybe the Green Party might (re)consider the public interest and just GO. Then let the people decide ………….

    Now can we get back to the ‘science’ ……….. there appear to be a few ‘errors of fact’ around ….. in BOTH relevant reports ….. makes a change from all those ‘errors of judg(e)ment’ ………….

  71. I haven’t a clue what this is all about.

    But speaking from experience, if the state or local government is involved we’re paying too much, it’s only a question by how much.

    And if you were to ask me who pays the most, it has to be central government, they reward incompetence, and when it comes to the Greens they actually protect corrupt regulators.

    Just ask Ego Ryan about the CER.

    Speaking as a former Green voter don’t believe the Greens on anything, they have more faces than Worrzell Gummage.

  72. The GP and it Faustian Bargain: Vested interest supports Gormley.

    Press release issued Sunday:

    The Irish Waste Management Association has today called for the complete cessation of works on the Poolbeg incinerator project to allow for a thorough examination of all aspects of the project including the terms of the contract, the size of the facility, and the extraordinary level of monies that have been spent so far.

    This follows the acknowledgement from the ESRI that significant errors were made in their report – An Economic Approach to Municipal Waste Management in Ireland.

    Brendan Keane, Spokesperson for the IWMA, commented: “When the ESRI report was published on Wednesday we highlighted a number of serious errors in the document. The IWMA believes that the report is fundamentally flawed, and that the ESRI has serious questions to answer about the data used in this report.

    “It is inconsequential whether the ESRI report is being withdrawn or re-examined. The point remains the same – the findings of the ESRI report have been seriously undermined.

    “The acknowledgement of significant errors in the report follows the confirmation that Covanta is already planning to import waste – from across Ireland or from abroad – for treatment at Poolbeg. This became clear at the appearance before the Oireachtas Committee on the Environment by Dublin City Council and Covanta last Wednesday, and highlighted again that the facility planned at Poolbeg is way too big for the Dublin Region.

    “The IWMA is now calling for the Poolbeg project to be completely halted. The inspector which is to be appointed by the Minister for the Environment, Heritage and Local Government should undertake the most thorough examination possible of all aspects of the Poolbeg project including the details of the contract, the extraordinary level of monies that have been spent so far, and why such a grossly oversized facility is being planned for Dublin at all.

    “Put simply, Poolbeg must be stopped and examined before any further mistakes are made.

    “The IWMA believes that there are serious problems associated with the Poolbeg project:

    · The incinerator is twice the size it should be – if we build this grossly oversized incinerator it will harm recycling rates in the Dublin Region and lead to significant job losses
    · The taxpayer is exposed to heavy penalties if Dublin City Council fails to provide a high level of waste to the incinerator. The Minister for the Environment has estimated that these penalties could cost the taxpayer up to €450 million over the life of the Poolbeg incinerator.
    · Dublin City Council has spent €120 million on the project so far – this is more than 20 times what a private operator would have spent getting a similar project to the same stage as the Poolbeg incinerator.

  73. @ All,

    I noticed this discussion still active, so I might as well chip in with something.

    From this thread:

    http://www.irisheconomy.ie/index.php/2010/02/05/property-scheme-tax-incentives/#comment-34902

    ““The builder(s) will sometimes maintain, it was planners in their local area who insisted the follow densification guidelines etc. The planners in turn will maintain, they followed national planning guidelines. We can’t lump it all on builders.”

    You could go even further. You could say the national planning guidelines were driven by politics rather than good procedure (which they were). You could say that politics is in turn driven by consultant reports, commissioned by the Construction Industry Federation and so forth. I mean, it all goes around in a circle, until eventually every shred of responsibility has been dissipated, and no one at all is responsible.”

    Is anyone here actually interested in seeing the ‘system dynamic’ which we in this country seem to be held captive of? Does the Green party see it? Does Minister John Gormley see it? I refer here to the work of people like Peter M. Singe, in his book The Fifth Discipline. Has anyoone here ever read the book?

    BOH.

  74. Why not change the dynamic of the ‘system’ which Ireland seems to be held captive inside? We can go on blaming one another till the cows comes how, hoping to find ‘who is at fault’. It is not a fault kind of issue, rather it is a systemic one. If we can spend €22 million on consultation for the incinerator project, I would love to have a shot myself, at doing something without independent consultants who play a ‘hot potato’ game amongst themselves.

    http://designcomment.blogspot.com/2010/02/shoe-box-king.html

    Has Richard Tol, the Green Party, the ESRI, Dublin City Council or DDDA got any idea of how much this %******* is costing the Irish economy – in time we don’t have?

    BOH.

  75. I suggest, a viewing of the PBS documentary The Donner Party.

    http://www.pbs.org/wgbh/americanexperience/donner/introduction

    We are at the point in our journey now in Ireland, of committing beyond the point of no return. We are just at that stage, where we get stuck in the emigrants valley for one month instead of a week, and spend 5 no. days crossing the salt lake flats, whilst losing our oxen. By the time, the snow comes in winter, we may have to turn to cannibalism.

    BOH.

  76. @Michael Hennigan

    I think it is quite unfair on Minister Gormley to suggest that he is only opposing the incinerator because it is in his constituency.

    The Green Party, so far as I can recall, has always opposed incineration as being an all encompassing solution to waste disposal irrespective of where the incinerator is located. That has been their position ever since the incineration PR offensive started a number of years ago.

    BTW, I didn’t mean to suggest that DCC acted ultra vires in signing the deal to provide a guaranteed amount of waste to the incinerator. I meant that it was outside their power to ensure that such an amount of waste would be delivered and therefore they were always in danger of having to pay the operator the penalty of €x per tonne of waste not delivered to the facility.

    Signing up to that clause and then citing it as a reason for forcing others to deliver waste to the facility (or as is now proposed in the ESRI report, eliminating competition for waste collection services at the level of the consumer) was the equivalent of the sheriff threatening to shoot himself in Blazing Saddles.

    As Richard Tol has pointed out, there is a problem with a Local Authority being both a regulator of the market and a competitor within that market. The current position where Local Authorities regulate waste collection and recycling activities makes it very difficult for waste services providers to stand up to Local Authorities.

    BTW – I think charges of “gombeenism” are inappropriate on all sides. I would edit them out of my above post if there were an edit function.

  77. @ Zhou,

    “Signing up to that clause and then citing it as a reason for forcing others to deliver waste to the facility (or as is now proposed in the ESRI report, eliminating competition for waste collection services at the level of the consumer) was the equivalent of the sheriff threatening to shoot himself in Blazing Saddles.”

    Nice way of putting it. Again, I always appreciate the input of someone who manages to see the system view of things. I see your point about regulator and competitor in the same market. I acknowledge that Mr. Tol, obviously pointed it out elsewhere in the thread above, which I have not studied in detail.

    “BTW – I think charges of “gombeenism” are inappropriate on all sides. I would edit them out of my above post if there were an edit function.”

    Sensible thinking, good on you. BOH.

  78. @Richard
    “Incineration is a relatively clean, relatively cheap way to get rid of waste. This explains its popularity.”

    Could you provide us with a study which shows that incineration is “relatively cheap”? Is it cheap for Covanta, cheap for DCC, cheap for the citizens and businesses of Dublin or cheap for Irish society?

    To our knowledge the cost of the Dublin incinerator has not been studied since the 1997 Waste Strategy by MC O’Sullivan et al. At last Wednesday’s meeting of the Oireachtas Committee on the Environment Mr P J Rudden (of MCOS now RPS) confirmed that this study has not been revisited since 1997.

    That study was based on a cost of €146m to build the incinerator.

    At their recent Open Day in Ringsend Dublin City Council confirmed a cost of € 275m to build it.

    Covanta on the other hand have been stating until 3Q 2008 in their quarterly SEC filings that construction would cost € 300m (using project financing). However Covanta upped the cost of construction to € 350m in 1Q 2009 (using debt financing). We do not know why they increased the cost by € 50m at a time when construction costs are dropping but we suspect it has something to do with the high cost of debt financing.

    The rationale for choosing incineration over MBT and other forms of disposal was based on an analysis which omitted the costs of disposing of bottom ash and fly ash. The model also excluded the cost of CO2 and used an incorrect cost for money.

    DCC refused to release the model and have not engaged in any open debate on the real costs of incineration.

    The basic source of remuneration for the project must be the gate fee plus the sale of energy mostly electricity.

    In this case we understand that DCC has contracted 320,000 tonnes pa at a fixed gate fee which we estimate at € 80 (excluding VAT, transport and levies).

    So Covanta can expect an income of € 25.6m pa from DCC for 25 years.
    Would an annuity guaranteed by the municipality of 25.6m be enough to pay for this incinerator?

    If it would, than Covanta are free to sell the remaining capacity into the market at whatever marginal price they can get. Suppose they sold at a gate fee of € 15 per tonne it is easy to see how this would distort the market.

    What now is the meaning of “incineration is… relatively cheap”?

    Most of this blog has focussed on the proposed levies and the various externalities but has neglected the cost of construction or the guaranteed gate fee to be paid by DCC.

    We would like to see an open and public debate on the full costs of this project.

    J&V

  79. @Toby
    Was the ESRI’s report done in good faith? Yes it was. If they wanted to live a quiet life they would have declined to do the report.
    Is the report competently done? From those who put their name to it I am sure it is. What I have read makes perfect sense.
    Are they refusing to correct any errors identified? No, they aren’t. They acknowledged them immediately and are putting them right swiftly.
    There is no question of resignation over this. I also believe until proven otherwise that the broad thrust of their report is correct.

    This is, as I have repeatedly stated, not about the ESRI. This is all political.
    Just look at it:

    Two experts have given opinions. Both identifed mistakes in the other’s reports. One is happy to accept mistakes identified and is correcting them as swiftly as they can. The other is entirely ignoring the mistakes in his own report and is doing his best to identify as many errors as he can in the other’s. This isn’t a policy debate to find the cheapest solution. It’s a PR war for political purposes.

    The government should be honest. They should end the spin war and come clean and make a political decision.

  80. @ j daly. You are correct that there are issues to be resolved with regard the stabilisation of MBT ‘unders’ but at least two facilities are producing very stabile product. I know the EPA are currently doing a lot of work on the issue at the moment and I know that the senior people in the EPA in charge of formulating the guidance docs etc are very positive re MBT from the small quantity of plant currently producing product. All that’s reall need to achieve stabilisation is maintaining moisture and above all time. The energy used to blow air into the material are fairly low tech (similar to grain drying) and from talking to a plant manager of a composting plant (similar process) the energy bills are about 5 percent of operating costs. Not insignificant admittedly but not too bad. I welcome that someone here knows something about the alternatives to landfill though because many are ascerting that incineration is the cheapest when the alternative has not been analysed properly.
    @Richard tol, I am not mixing up collection and disposal, few of the big competitors of DCC will deliver into the incinerator because they are developing there own disposal routes already. DCC are comnitting to supply a quanity of waste that they cannot be sure they can control. Their price per tonne for disposal will therefore sky rocket if the can only
    control say 200 k tonnes. This will further make them uncompetitive and the public purse will end up subsidising it. Also the council will have no incentive to encourage source seperation of recyclables. I certainly think the country needs hazardous waste incinerators like the one in Ringaskiddy.

  81. @all no study to date has adequately looked at the full economic costs of the different waste technolgies that has factored in the job creation, importation of expensive technologies, future markets for recyclables, energy costs, competition within the market. On competion the ERSI are reccomending tendered competition for waste collection but want no competition for disposal. Richard, how you support a situation where there would be no competion in disposal when no study could possibly predict reliabily how the factors just mentioned will change in the future. Perhaps high labour costs and full employment will return in ten years and this will help incineration, great. But there is lots of work going on with with interesting technologies such as the dry fermentation of waste. Panda and Mr Binman both building these plants at present.

  82. I have lost my wits trying to understand why the ESRI are clinging to the claim that the report has not, in effect, been withdrawn when Richard Tol has admitted the study published last week contains errors and will require re-publication. He is unambiguously saying that he and the ESRI’s top boffins can’t stand over the conclusions contained in last weeks report.
    When a new version is re-published the old one will be no more (and may even include new conclusions). The fact that it’s still on the website does not matter, it’s effectively been withdrawn already by Tol’s comments.

  83. @Joe & Valerie
    The ESRI report does not deal with these issues.

    My comment about the relative costs of incineration is based on its widespread use in the rest of Europe.

  84. @Sam
    These matters are not at the heart of the ESRI report.

    I do not see the business case for vertical integration. There are benefits from coordinating waste separation at source and disposal, but not from collection and disposal.

  85. @Fintan
    The report stands. We will address the issues raised, and amend and clarify as needed. However, as you can read above, the critique is on a number of details rather than on the main conclusions. The report stands.

  86. @All
    One of the words I most hate reading is “controversial”, especially when it is put in front of report. Whenever you see, “controversial report”, it almost always means that powerful people or the particular media outlet just don’t agree with the report’s conclusions. It is a big nudge not to listen to what the report’s authors say and make your own mind up, but instead to regard their every utterance as deeply untrustworthy and their overall case as completely wrong. The same word is often used for example for the wacky utterances of dictators and dubiously elected presidents so it is really insulting. It is up to the ESRI’s peers to decide if their report is wrong. I’m almost certain they won’t. It is crazy to allow those who disagree with it’s conclusions to do so.

    Instead why not say the ESRI’s report’s conclusions are completely opposed by the government. That’s the reality in this case.

  87. @Richard.

    Let me ask you a straightforward, yes or no, question if I may:

    Yay or nay, do you and the esri stand over the institute’s waste report in its current form even though you have acknowledged errors and Gorecki said it will need to be ‘re-published’?

    I have no agenda here, but if the answer is no to the above then how does the report ‘stand’? Surely you and esri are merely playing with words here!

  88. @Fintan
    Do the author’s of the government’s report stand over it, given the errors the ESRI identified. “Yes or no? You want the truth? You can’t handle the truth! Don’t wait for the translation, answer the question!” These are academic experts and you are – I strongly suspect – a spinner. It doesn’t work like that, this isn’t a movie. The ESRI will review their report and if the conclusions were wrong they will be honest and revise them. Will they hugely revise them? I doubt it.

    Of course no matter what the ESRI do the government will no more welcome conclusions they don’t agree than they would a planned mustard gas emissions plant in Ringsend.

    Night all.

  89. @Richard

    The latest ESRI financial accounts are for 2008, so obviously they do not cover the period during which this report was prepared.

    In any case, they do not provide the level of detail (e.g., salaries for individual staff grades) that would be necessary to begin to answer the questions that I posed.

    It should be a simple matter for you, or for one of your colleagues, to provide a breakdown of the time input involved in producing this report?

  90. @ all ”The objective of public policy using the economic approach is to maximise societal welfare. Competitive markets serve this purpose. However, markets can fail in various ways. In the waste management sector, the main market failures are externalities (costs created by an activity that do not fall on the person or firm carrying out the activity) and
    market power (the ability of a firm to raise prices above marginal cost in a sustained way). Government intervention may be required to address these externalities.”

    Why are the good externatilies not mentioned in this reprot, particularly economic externatilies. For example the saving of resources, export/import, human resources, etc. If this is an ‘economic analysis’ why does it only consider environmental externalities. Why does it not discuss the financial savings of producing compost from not having to import expensive chemical fertilisers.

    As for market power, the report proposes to give full market power to the local authorities who can then direct the waste to monopoly disposal outlets that have long term contracts (25 years). How is this consistent with the statement below

    ”The most obvious one is that in sectors with long-lived assets, choices made today will determine and restrict options for years to come. If long-lived assets are subject to an uncertain rate of technical progress, selecting a standard today can have the effect of foreclosing future choices.16 If this is so, a higher social discount rate should be applied to such choices than if the technology were static. In effect, the decision maker should take into account the potential value of waiting to see how quickly the technology improves”.

    DCC are trying to determine the future of the waste market for the next 25 years. I can see a situation arise whereby the incinerator will have a competitive advantage becuase of the generous contract will DCC. They can then charge DCCs competitors a reduced rate thereby reducing the quantities of waste that DCC supply them. DCC end up paying for waste that they don’t have further reducing there ability to compete. The incinerator then gets revenue for 300 kpa from DCC and a further revenue for another say 500kpa from DCCs competitors. They will be able to ourcompete MBT and other technologies because DCC are covering the SUNK capital. The government will then be forced to change the law to facilitate DCC, and the ERSI/DCC will get what they want, monopoly on disposal for local authorities. This will be fixed for 25-40 years even though we do not know what technologies might emerge in the mean time.

  91. Richard Tol 2009 ”In my understanding of the contract, Dublin City will pay a guaranteed amount to the company that runs the incinerator. In return, the first 320,000 tonnes of waste will be burned for free. If Dublin City cannot source waste from other counties, then the Council will be paying Coventa/Dong to sit on their hands”.

    Excellent analysis as usual Richard. Have you been feeling ok the last week?

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