Progressive taxation of incineration

The Minister for the Environment has made another announcement on municipal waste policy.

There are two components. One is not new: There is to be a cap on incineration. There is no rationale for creating an artificial scarcity, as explained by Gorecki and Lyons. Using both price and quantity instruments is double regulation. Tinbergen (1952) shows that this is unnecessarily costly.

The new element in the latest announcement is that the incineration levy is not constant, but increases with the size of the incinerator. Both the ESRI and the Eunomia report recommend an incinerator levy, albeit at different levels. However, they recommend the same levy, per tonne, regardless of the size of the incinerator — although one could argue that larger incinerators burn cleaner and therefore should have a lower levy.

There is no economic or environmental rational for putting a higher levy on larger incinerators.

UPDATE: Story in the Irish Times

UPDATE2: PJ Rudden says the proposed levies may be illegal. I’ve heard say that it would be anti-competitive to put one levy on a small incinerator in Cork and another levy of a big incinerator in Dublin, but as inter-county trade in waste will be verboten too, I’m not convinced that that argument holds.

UPDATE3: RTE looked at the letters between the City Manager of Dublin and the Minister for the Environment; they are not particularly friendly to one another.

14 thoughts on “Progressive taxation of incineration”

  1. Richard
    You lack some of the subtleties. You may be a better man for that!
    An economic reason: The other means of disposal make money for others, with whom TPTB have a special relationship?

  2. Well done in your persistence in highlighting that economic illiteracy and bad policy have not been, and are not, confined to fiscal policy and the regulation and supervision of the banking sector. Though I suspect your crystal-clear critique will be submerged by speculation about, and the fall-out from, “Bailout Tuesday”.

    Is it possible that the Minister, having been advised of the serious implications of any attempt to kill DCC’s incinerator, is seeking to strangle it slowly?

  3. @Paul
    This is indeed not the only proposed change to waste policy that would negatively affect the prospects of the Poolbeg incinerator. Other proposals are the incinerator levies relative to the MBT levies (stacked in favour of MBT), and the ban of inter-county waste trade (no economies of scale please). The most far-reaching proposal is to declare incineration ash to be hazardous waste. Not only is there no evidence for that — the Eunomia report incorrectly cites an England and Wales regulation — but it would also set a precedent for coal, peat and biomass burning.

    On current trends, it may well be that in a few years time we’ll have a brand new state-of-the-art incinerator sitting idle. A green elephant.

  4. @Richard,

    Thank you. I was aware of some, but not all, of these anti-incinerator provisions. The way this matter is being dealt with raises important issues about the design and implementation of public policy and the nature of democratic governance – with which, I suspect, you may be reluctant to engage, but which should be of concern to anyone on this board who has an interest in the efficient functioning of the Irish economy.

    First, it highlights the conflict of interest that arises when ministers double-job as members of the executive – ostensibly making decisions in the public interest (and, particularly, where conflicting interests have to be balanced) – and as public representatives – being tender about the concerns of the voters who elected them.

    Secondly, it highlights the impotence of the Oireachtas (or of the relevant and duly appointed Oireachtas Committee) to assess the evidence gathered by all parties and to adjudicate on this conflict of interests.

    And finally, and linked to the previous point, it highlights the need for Oirechtas Committees to be empowered and resourced to evaluate and assess the evidence presented and the conclusions of consultants’ reports commissioned by the various parties to a dispute or to a debate on policy formulation. These committees should provide a public forum where assertions are contested, rebutted and counter rebutted, where evidence presented is tested and where decisions are arrived at in the public interest.

  5. @Richard

    This Minister has gone native. Similar to PDs, blinded by an obsessive ideology – and who ends up paying for all these idiotic ideological obsessions? Joe and Joan Serf (ex-citizens of what was once a republic).

    Do they still do policital asylum in Holland? or Germany? or France? or Denmark?

  6. @Paul Hunt,

    Your arguments are persuasive. In addition, have you noticed the timing of this announcement by the Minister? It appears very cynical given that news will be swamped today and for the rest of the week by the public service agreement and the announcements about the banks this afternoon. A good day to bury a controversial decision! I think Richard might consider coming back to this issue again after Easter.

  7. @Veronica,

    Thank you. In my dealings with North American economists and lawyers I am constantly struck by the way economic, legal and democratic governance principles and practice are combined in the formulation and execution of public policy. Unfortunately, on these islands it appears that the economists, political scientists and lawyers are happy to remain in their own silos. Not only is public understanding and enlightenment diminished as a result, but the formulation and scrutiny of public policy is also deficient.

    On this matter, given Richard’s evident and admirable persistence, I’m sure there’ll be further consideration. This forum is as good as, if not better than, most; but I doubt our effusions here will have any impact on the PTB.

  8. @Paul Hunt

    “on these islands it appears that the economists, political scientists and lawyers are happy to remain in their own silos.”

    … and in the Universities, for the very most part. Policy is inter-disciplinary …… the ‘silo mentality’ is very strongly entrenched ……….

  9. @All
    I really wish the minister would make an honest man of himself and openly negotiate for a reduction in the size of the incinerator, which I believe is the only sensible route open to him. I have said several times that I appreciate the dilemma he is in. However, the Gormleymandering he is now engaging in damages the reputation of government in Ireland, increases the cost of waste disposal and makes evidence based policy seem utterly futile. If he is so confident of the verdict why is he openly rigging the jury?

    Also, to switch to a boxing analogy, people following this story should be aware that this is not an even fight. The county council must be at least partially inhibited, while John Gormley is not only in the ring – he’s also to a large extent the referee.

    @Paul Hunt
    Like abolishing the Seanad, having ministers who are not TDs is something I initially had reservations about. However, I now believe that the constituency time demands and the dangers illustrated above make it essential. Dan O’Brien wrote on this some time back. Politicians, very sincerely, oppose it. But our national history of deep crisis means that it is now safer to be radical than to be incremental.

  10. I still think the incinerator stinks – it’s too big and in an area that would be better used as a public amenity for all of Dublin’s citizens, it will need us to provide a lot of waste that could be disposed of in better manners, it locks us into a sub-optimum waste policy for twenty or so years. The contract was entered into against the wishes of the sitting Minister of Environment. That’s my viewpoint. We need some incineration, not a huge incinerator that was originally envisaged to serve Dublin but in later examination revealed it may source waste from all over Ireland. It is base on waste going up even though recycling rates are increasing and MBT technology is advancing. Is building the incinerator the right thing to do? Some experts say yes, others say no.

  11. @Holbrook
    Your proposal would be more convincing if you would have an alternative with costings and all.

    As the Minister plans to forbid intercounty trade in waste, Dublin will need a waste facility somewhere in the city. If not Poolbeg, Phoenix Park?

  12. @Richard

    I don’t have alternative costings, I am a non-expert person with an interest in the subject (as a Green Party member and resident near Poolbeg). Perhaps you are right that Poolbeg is the only location for the incinerator. I think the charges of Nimbyism ring true in certain cases of opposition to the project. If Poolbeg is the best location in Dublin for an incinerator then so be it. Even then, does it have to be so large so that it crowds out other waste treatment alternatives for the forseeable future and so large that it commits Dublin City Council to guaranteeing large amounts of waste even as other, possibly better, waste disposal methods are being developed? And as Dublin increases its rate of recycling? To my non-expert eye, it seems to me that Dublin City Council has entered into a contract that may be detrimental to Ireland’s waste policy.

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