16 May 2018 by Elizabeth Slow

Reflections on Brexit and the Circular Economy Package

OPINION: Gev Eduljee, non-executive director at Resource Futures, shares his reflections on Brexit and the Circular Economy Package.  

As the saga of the European Commission’s Circular Economy Package (CEP) draws to a close with the European Parliament’s endorsement on 18 April, achieving this milestone affords us an opportunity to take stock of the implications of Brexit for our sector, bearing in mind Defra’s pledge to bring the CEP into UK law.

Gev Eduljee, non-executive director at Resource Futures

While the recycling targets in the CEP, though now more aligned to the UK’s negotiating stance in the Environment Council, will prove difficult to meet, other elements of the Package are likely to be as, if not more, challenging – introducing full cost recovery into EPR schemes, mandatory separate biowaste collections, and 10% landfilling of municipal waste by 2035 being three. Sceptics might argue that the only certain way of keeping the UK from backsliding would be to stay in the single market, exposing the UK to the full weight of EU censuring apparatus in the event of non-performance.

Adopting the CEP but exiting the single market could allow the UK to retain the CEP in its essence but, for example, treat the various targets as aspirational (LARAC has argued that “statutory [recycling] targets should not be adopted for local authorities”) and regard the stricter provisions of Article 8/8a as guidance only, thereby giving our market-based PRN system a (partial?) reprieve.

Equally concerning would be that the CEP as it stands contains a long list of actions placed on the Commission, the delivery of which stretches out beyond the cut-off date of 2020, when UK-EU transitional arrangements are likely to end, as would the 24-month implementation period for the CEP.  Among these include the possibility of introducing targets for food waste reduction by 2030, and for product reuse and waste reduction by 2034.  None of these actioned outcomes would apply to the UK were we to exit the single market, potentially opening an ever-widening gap between us and the EU if the UK chose not to follow suit through domestic policymaking.

Action Plan

Furthermore, the CEP comes with an ambitious Action Plan.  While the intention of the Commission is to deliver the Plan by the end of its mandate in 2019, some actions are more likely to be completed after 2020 – revision of ecodesign principles and the interface between waste, chemicals and product policy (REACH) being two.  These are critical to continued trade, frictionless or otherwise, in waste and waste-derived products with the EU.

Other Commission actions have resulted in an EU Strategy for Plastics, and a Monitoring Framework on Progress towards a Circular Economy, both non-statutory and therefore vulnerable to being cherrypicked or sidelined after the UK is fully out of the single market.  The latter (COM(2015) 614 final) is especially important for our sector, containing as it does indicators relating to Green Public Procurement and resource efficiency through uptake of recyclates, issues that our sector has long championed.

What are the chances of the UK staying in the single market – and for that matter the customs union?  We know the stance of the present government.  In December 2017 Ladbrokes offered odds of 3/1 on Labour becoming a pro-single market/customs union party in 2018, 9/4 on the next general election taking place in 2018, and 5/2 on Jeremy Corbyn becoming the next Prime Minister.  Betfair offers odds of 1/2 on Theresa May remaining Prime Minister when the UK leaves the EU. Given the volatility of Brexit politics at the present time, it would be foolish to offer a prediction either way, though whatever the final outcome over a customs union, present indications suggest that remaining in the single market is unlikely after the transition period.

The UK’s own initiatives on food waste and on plastics have mirrored the intent of EU policy, proof if one was needed that Member States are not hamstrung by EU Directives if they have the vision and commitment to improve environmental and economic outcomes.  Other UK examples include landfill tax, the quality protocols, the Climate Change Act and the fifth carbon budget, various renewable energy support schemes, and the Green Investment Group’s funding of waste infrastructure.  Membership of the EU has never emasculated space for independent thinking, as demonstrated by Scotland and Wales.

Government

With that in mind, our best insurance against inaction, indifference or watering down is to engage with Government to ensure that our domestic policy landscape is progressive and pertinent to the further development of our sector.  To its credit, the Government is putting in place the bones of a supporting structure – the Industrial Strategy, the 25 Year Environment Plan, the forthcoming Resources and Waste Strategy, and the NIC’s infrastructure review being the most significant.

Placing non-labour productivity centre stage will de facto formalise the deployment of secondary materials and recovered energy as preferred resource inputs, and serve as pull mechanisms to bring new investment, technologies and waste handling techniques into play.  Along the way, extant EU legislation can be improved – fine-tuning definitions, extending quality protocols to encourage wider application of waste-derived products, further developing waste-to-energy policy, changing state aid rules to better support transformational technologies to commercialisation, and introducing fiscal measures to promote remanufacture being just some of our options post-Brexit.  Some issues, such as developing new markets and outlets for recyclates, especially in the wake of China’s National Sword restrictions, apply irrespective of the UK’s membership of the EU, though the absence of a reciprocal customs arrangement will hamper future entry into the EU secondary material market.  Domestic legislation is no more immune to tinkering than the CEP could be, particularly when a government changes stripe – witness the withdrawal of national indicators N191-193 and the removal of provisions for pay-as-you-throw from the Climate Change Act – but on balance this is a better strategy than pinning all one’s hopes on the CEP.

Meanwhile, stakeholders have been developing their various positions following Defra’s announcement regarding the CEP. LARAC argue for PRN reform with more revenue flowing to local authorities; INCPEN and others in the packaging chain argue for maintaining the status quo on the basis that business pay quite enough in taxes and rates as it is.  Local government extols the virtues of in-house services, while the private waste management sector argues for a level playing field and fair competition.  The LGA supports a DRS for plastic bottles but cautions against undermining kerbside collections.  Manufacturers are generally against a DRS but others want to see it applied more extensively.  Defra faces the unenviable task of reconciling often diametrically opposing views in the course of developing its Resources and Waste Strategy.  How effective the Government proves in stitching the latter into the other policy strands mentioned above, is an open question.

Incorporation

“There are far too many important loose ends within the CEP as it presently stands, that will likely only be resolved well after the UK exits the EU.”


Gev Eduljee
Resource Futures

To summarise, the incorporation of the CEP into UK law is undeniably valuable but essentially a relatively short-term backstop.  There are far too many important loose ends within the CEP as it presently stands, that will likely only be resolved well after the UK exits the EU.  In a post-Brexit, post-single market world there is no substitute for a robust domestic resources and waste strategy that fully integrates into the UK’s manufacturing and re-manufacturing.  There is no reason why this strategy should not parallel the EU’s own resources policies – the goals are the same.  The UK can fast-track what the EU has struggled fully to deliver despite years of deliberation.

Notwithstanding the success of our domestic policies, there remain areas such as ecodesjgn, product standards and REACH where failure to adhere to EU norms could close this market to our sector.  We need a mechanism that allows us our independence of thought while also engaging and aligning ourselves with the EU on particular critical waste/product policies and legislation.

Finally, the term “UK” has been used rather loosely here – in most cases we mean England.  While the government in Whitehall speaks for the UK on EU matters, it is the prerogative of the devolved administrations to define and articulate their own waste strategies, albeit within the framework of EU legislation.  It remains to be seen how devolved resources and waste policy (already divergent) will evolve post-Brexit, after the underlying common EU policy platform is withdrawn.


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