Packaging - extended producer responsibility: island communities impact assessment

Impact 1: The higher costs of providing recycling and waste services to island communities will need to be fully accounted for within the disposal cost calculation process

Background

49. Local authorities are responsible for providing household waste collections and currently pay the net cost of providing this service (the cost of the service minus income received from the sale of materials and charged services). Under packaging EPR, producers will be obligated to pay the full net cost of efficient and effective household packaging waste collection and disposal services. The full net cost of services applies to both materials collected for recycling and residual packaging waste services from households.

50. The disposal cost calculation for local authorities will be based on efficient and effective service provision, accounting for geographic, socio-economic and other relevant factors. The Scheme Administrator will be responsible for the final payment mechanism but will be legally required to account for different operating environments when calculating service payments. This will include factors such as rurality, levels of deprivation, and the accessibility of dwellings within the local authority area.

51. Work undertaken for previous screening assessments under the Islands (Scotland) Act has identified that island authorities face higher costs per capita in collecting, transporting, and disposing of waste.^[30] It will be important for the scheme administrator to fully account for this cost differential when considering what constitutes an “efficient” service to avoid island authorities incorrectly being deemed “inefficient”.

52. The 8-fold Scottish Government Urban Rural Classification highlights that the majority of the island authorities have high proportions of their populations in very remote small towns and rural areas.^[31]

53. Consultation with island authorities highlighted that the small waste volumes generated on some islands means that collection vehicles and containers may not be filled to capacity on rounds, decreasing the perceived efficiency of services. Some island authorities also noted that they can face challenges with the cost of back-haulage and with ferry capacity during busy periods.

54. The majority of island authorities have recycling rates that are below the Scottish average, in some cases by a substantial margin.^[32] Kerbside recycling services are not universal in island communities. Increasing the amount of packaging that is recycled, and ensuring local authorities are adequately funded for this, is one of the aims of the scheme.

55. Zero Waste Scotland undertook a research exercise with local authorities in 2020 to better understand the costs of waste management, collection and disposal in Scotland. Data collection from rural-inaccessible and rural-accessible councils was prioritised due to the above concerns regarding the future payment calculation. With the exception of Arran, which was included in the rural-accessible classification because most of North Ayrshire’s population lives on the mainland, all of the island authorities were included in the rural-inaccessible category.

56. The research indicated that for the rural-inaccessible category, the annual cost per household of providing waste collections is substantially higher than the average cost in Scotland. Although these figures should be treated with caution as they are based on one year’s data and calculated using a number of assumptions, they do indicate that there is an island premium in the cost to local authorities of managing household waste. These findings are being incorporated into the design process for the disposal cost calculator to be used by the scheme administrator.

Mitigation measures

57. The packaging EPR regulations require the Scheme Administrator to take account of an authority’s circumstances in the payment mechanism, ensuring they are paid appropriate disposal costs for efficient and effective services. As set out above, this includes factors such as rurality, levels of deprivation, and accessibility of dwellings. If correctly implemented, this should ensure that island authorities are fairly treated by the scheme.

58. The packaging EPR regulations also provide for an appeals process which allows authorities to challenge payment amounts. There is therefore a mechanism to address disagreements with modelled costs.

59. Additional costs incurred through the transportation of material off-island, usually by ferry, will be incorporated into the payment calculation as a necessary cost of operating a packaging waste service. See below for discussion on transport capacity.

60. Kerbside recycling services are not universal in island communities due to the remoteness, which may make it more challenging to achieve high recycling rates in a cost-effective manner. The Scheme Administrator will be required to work with authorities to understand barriers to achieving modelled service and performance standards, with mechanisms as above where investment is required. Ensuring local authorities are fully funded to run effective systems is a key aim of packaging EPR.

61. This assessment concludes that the potential disproportionate impacts on island communities are suitably mitigated by the measures outlined above.