Introduction of a UK - wide digital waste tracking system: partial business regulatory impact assessment

4. Options

4.1 Outlining the options

44. In the initial stages of the waste tracking project, non-regulatory options for tracking waste were considered – for example, running communication campaigns and running free training to promote the use of digitally recording waste movements/transfers in IT systems.

45. Non-regulatory options have not been presented in the options appraisal as we do not believe that they are capable of meeting the policy objectives (see section 2.3) and would not offer the same net benefits. For example, communication campaigns have been disregarded as a suitable option given the widespread non-compliance, and the cost to some businesses of transitioning to digital recording of data, communication campaigns alone are unlikely to have the desired impact of bringing all businesses into digitally recording their waste movements/transfers.

46. Effective non-regulatory options would rely on all businesses voluntarily recording their data in a digital format (and using unique ID codes to identify each movement of waste from producer to receiving site). As described above, there are already several voluntary IT systems that can be used to record waste data, however, insufficient uptake of these systems has prevailed. Even if a significant number of businesses voluntarily complied with digital recording (and unique ID codes) but a relatively small number of operators did not voluntarily comply, then the whole system would be undermined and the potential benefits to businesses, governments and regulators would quickly diminish. This is because non-compliance from a small number of operators would create ‘breaks’ in data which would hinder the utility of the dataset. In addition, non-compliance is more likely to be carried out by illegal operators that are motivated by the perceived private benefits of illegal activity and without these operators reporting data, voluntary initiatives will not be able to deliver one of the key objectives of tracking waste – reducing waste crime.

47. A baseline and two regulatory proposals have instead been presented in this Impact Assessment (Outlined in Table 3), briefly, these comprise:

• Option 1 (baseline): The baseline represents a ‘do minimum’ option – due to forthcoming legislative commitments, waste operators will be mandated to digitally record and submit data on movements of hazardous waste and Persistent and Organic Pollutants (POPs) waste.
• Option 2: Baseline, plus mandate that non-hazardous waste transfers are digitally recorded through an application of the waste operators’ choice. Operators won’t be mandated to submit non-hazardous waste data centrally.
• Option 3 (Preferred Option): Mandate that waste holders/businesses moving/transferring waste of any type will need to digitally record these movements/transfers, and submit the data into a central waste tracking service for all waste. This option is the preferred option as the analysis indicates that it offers the best value for money to the taxpayer due to the centralised data system being more efficient and effective than a non-centralised data system. We also expect that Option 3 will result in the greatest reduction in waste crime.

Table 3 – Summary of waste tracking options

	Waste in-scope of regulatory change	Central system for Hazardous waste and POPs waste digital records	Central system for Non-Hazardous waste digital records
Option 1 (baseline)	Hazardous waste and POPs waste only	Yes – hazardous waste and POPs waste transactions to be digitally recorded in a central system.	No – no change to non-hazardous waste recording.
Option 2	All waste	Yes – hazardous waste and POPs waste transactions to be digitally recorded in a central system.	No – non-hazardous waste transactions will need to be recorded digitally, but they will not need to be uploaded to a central system.
Option 3 (preferred option)	All waste	Yes – hazardous waste and POPs waste transactions to be digitally recorded in a central system.	Yes – non-hazardous waste transactions will be digitally recorded within a central tracking service.

4.2 Summary of costs associated with each option

48. The implementation of a mandatory electronic waste tracking system is therefore being developed on a UK wide basis. The cost estimates presented in the UK Impact Assessment (https://consult.defra.gov.uk/environmental-quality/waste-tracking) represent the costs across all 4-nations of the UK. This represents the best available estimates of the cost impact of the options to implement waste tracking across the UK. Where available, aggregating data to a UK level is likely to provide a more reasonable estimate of total costs, since:

• The waste movements across the UK are highly complex and often not limited to a single nation;
• many businesses operate in multiple nations of the UK;
• much of the data is not available on a sufficient scale for individual nations to draw meaningful conclusions.

49. However, where possible, the UK-levels costs have been split to give costs for individual nations, for example, based on populations or the number of waste sites. These costs are available in Annex A5 of the UK Impact Assessment (https://consult.defra.gov.uk/environmental-quality/waste-tracking), and are quoted below where relevant.

50. We aim to gather further information, and possibly more Scottish specific information, throughout the consultation process, which will be used to update the BRIA before final publication.

4.2.1 Option 1: Do minimum (baseline)

51. The baseline is a ‘do minimum’ option. This option will not facilitate the commitments made by the four nations to mandate the digital recording of waste movements^[30] – and the problems that a waste tracking service is looking to address will therefore remain present.

52. In the absence of a central waste tracking service for all waste, the Scottish Government, and each of the other nations will be required to meet legal requirementsfor digitally tracking waste containing Persistent Organic Pollutants (POPs)[31] and to track hazardous waste in order to meet Circular Economy commitments.^[32] The four nations will therefore need to develop a new IT service to enable all records of hazardous waste movements and waste containing POPs to be made available to regulators via a coordinated electronic registry. The costs and benefits associated with this digital waste tracking service (for hazardous waste and waste containing POPs) have therefore been captured in the baseline scenario.

53. In addition, in the baseline scenario WasteDataFlow (WDF)^[33] would need to be rebuilt as the current service is reaching end of life^[34] and local authorities will need an effective way to provide the information they report to governments. According to an internal review from 2016^[35], the current WDF system is not fit for purpose – the four governments and regulatory bodies struggle to access the information within the system and the system is deemed to offer a poor customer experience – the WDF system therefore needs to be rebuilt, rather than renewed.

54. The WDF system will need to be rebuilt only if a waste tracking system for all waste is not built – therefore, the costs associated with building a replacement for WDF are included in the baseline.

55. It is necessary to capture the costs associated with building and running the new IT service to track hazardous waste and waste that contains POPs and the new WDF IT service in the baseline, as a new waste tracking service for all waste would facilitate for the majority of the functions that these services would be built for, and therefore these IT services would not need to be built/run if awaste tracking service for all waste is implemented.

Table 4 – Required changes to IT services in the baseline

Hazardous and POPs waste tracking, (new IT)

Build a mandatory digital waste tracking service that will track hazardous waste (and materials and products produced from hazardous waste) and track waste that contains POPs (that may be hazardous or non-hazardous waste). This is required due to the new POPs regulations^[36] that specify that POPs waste will need to be digitally trackable and due to Circular Economy commitments.^[37]

WasteDataFlow (WDF), (procurement, development and rebuild)

Rebuild WDF^[38] which is reaching end of life.

56. These new IT systems are expected to be built over a 3-year period (2022-2024) in such a way that meets current, and future, regulatory requirements. The digital tracking of hazardous waste is expected to result in some significant benefits compared to the current IT services that are in use to capture hazardous waste data (typically Excel and xml documents sent via email) – the benefits include increased landfill tax receipts and time savings to businesses from no longer needing to submit consignment returns. These are described in further detail in section 7.3.

57. However, a new Hazardous and POPS waste tracking service, and a rebuilt WDF system, will not effectively track and monitor all wastefrom production to disposal as there will be significant gaps in the types of waste covered by these services, most notably a large proportion of non-hazardous commercial and industrial waste and waste exported under green list controls^[39]. As a result, these new IT services will not deliver the benefits that we expect a centralised waste tracking service for all waste to deliver.

4.2.2 Option 2: Implement a waste tracking system for hazardous waste and POPs waste. Mandate that all non-hazardous waste transactions are recorded digitally but do not provide/specify a central service to use for non-hazardous waste

58. Under this option, all those involved in the production or handling of non-hazardous waste would be required to record individual movements and transfers of waste using some form of digital service. This is an extension of the baseline scenario, (where there would already be a specific mandatory service for tracking hazardous waste and any waste (hazardous or non-hazardous) that contains POPs). The choice of what type of digital service to use would be open to businesses to decide. Services could range from an Excel spreadsheet to a bespoke digital solution. This option will therefore have the most significant impact on businesses that do not currently hold digital records of their waste transfers (expected to be ~13% of operators according to responses from the Waste Tracking User Panel^[40]).

59. This additional data would only need to be reported to regulators upon request. However, by mandating that records are held digitally, they would be able to be submitted to regulators more easily and with increased accuracy. Waste Transfer notes will continue to be used in Option 2 for non-hazardous waste transfers – the requirement for businesses to digitally hold information on their waste transfers will be in addition to the current practice of sharing waste transfer notes.

60. A new process would be required to ensure waste transactions between parties could be easily identified from their digital records. A process akin to current hazardous waste requirements whereby a unique code using a prescribed format must be applied to every waste transaction could be used. Those businesses transporting the waste would likely be in the best position to ensure that a unique code, developed in accordance with some centrally provided government guidance, is shared with both the producer of the waste and the receiving party in a waste transaction.

61. These codes would need to be included on relevant records required to be kept digitally by businesses and/or submitted to regulators (if requested)

62. In addition to the recording of waste movements and transfers digitally, waste receiving sites would also be expected to digitally record details of what happens to the waste they have received i.e. how much has been treated, disposed of or recovered, or whether any products or materials have been produced from the waste.

63. As in the baseline scenario, new IT services will need to be built (as described in table 4) to replace the WDF IT service and to meet the new requirement to track hazardous waste and waste containing POPs.

64. This option would result in an NPV of £20m (-£16m to £57m) over 15 years, with a direct net impact on businesses of -£1.7m (£0.7m costs and £2.4m benefits, equivalent annual) at a UK level. Table 5 provides a summary of the non-discounted costs and benefits to businesses, compared to the baseline (option 1). Please refer to the UK IA for more details on the elements and effects of this option (https://consult.defra.gov.uk/environmental-quality/waste-tracking).

Table 5: Summary of non-discounted costs and benefits split by nation (Option 2), £m ^[41]

	Scotland	Wales	England	NI
Option 2 costs (net of the baseline impact)
Regulators – Transition costs	0.01	0.01	0.01	0.01
Businesses - Transition costs	0.7	0.4	7.1	0.2
Option 2 benefits (net of the baseline impact)
Businesses – Ongoing savings from storing waste records digitally	3.07	1.77	31.06	1.03
Total costs	0.71	0.41	7.13	0.24
Total benefits	3.07	1.77	31.06	1.03
Net impact	+2.36	+1.36	+23.93	+0.79

4.2.3 Option 3 (preferred option): Provide a central digital waste tracking service and mandate its use^[42]

65. Under Option 3 a mandatory electronic waste tracking service for all waste will be created. It will provide a means for businesses to record all waste movements/transfers in one central service and will enable the UK to effectively track waste through the economy, as well as products and materials produced from waste.

66. The waste tracking service will be an IT service that will replace the current requirement for written waste transfer notes (for non-hazardous waste), consignee returns (for hazardous waste), waste site returns and Annex VII forms for “Green List” waste imports and exports. The service will be developed with the requirement to record and submit information on hazardous waste and the requirement to trace waste containing POPs in mind to ensure that the requirements set out in the POPs Regulations and circular economy commitments are met. With a central waste tracking service for all waste in place, WDF would not need to be rebuilt as the waste tracking service will include the majority of the functions that are currently carried out by WDF.

67. We intend, depending on the outcomes of further consultation, that businesses will have the option to digitally record their data through their own services, and then upload their data to a central online service. Alternatively, the central waste tracking service will likely offer a data capture function that will provide the necessary infrastructure for businesses to comply with waste tracking, without investing in their own software or spending time building spreadsheets and then uploading them. If a business is digitally excluded (they do not have access to a device or internet), then the regulator will likely accept the required information over the phone and in the post.

68. Waste tracking will go beyond the mere tracking of waste from source via the carrier to the site at which it is recovered or disposed of – it is envisaged that waste tracking will also ‘track’ the transformation of waste within a treatment site, into non-waste ‘products’ and to track at least the first movement of that ‘product’ back in the product economy.

69. It is expected that registration on the waste tracking service will commence in early 2023, and subject to consultation, by September 2023 all waste producers and waste operators in scope of the reform will be required to comply with the waste tracking service. Businesses will be financially responsible for covering the costs of running the service.

70. This option would result in an NPV of £362m (£182m to £452m) over 15 years, with a direct net impact on businesses of -£10.8m (£5.6m costs and £16.4m benefits, equivalent annual) at a UK level. Table 6 provides a summary of the non-discounted costs and benefits to businesses of option 3 (preferred), compared to the baseline (option 1). Please refer to the UK IA for more details on the elements and effects of this option.

Table 6: Summary of non-discounted costs and benefits split by nation (Option 3), £m ^[43]

	Scotland	Wales	England	NI
Option 3 costs (net of the baseline impact)
Regulators – Transition costs	0.01	0.01	3.12	0.01
Businesses - Transition costs	5.7	3.3	57.5	1.9
Government – Cost of decommissioning EDOC			0.01
Businesses – Increased taxation[44]	27.3	15.8	276.4	9.2
Option 3 benefits (net of the baseline impact)
Government - IT development cost savings	0.2	0.1	2.2	0.1
Government - Savings from reduced waste crime	27.3	15.8	276.4	9.2
Government – Savings from no longer running EDOC	0.2	0.1	2.1	0.1
Government – Savings from no longer running WDF	0.4	0.2	4.0	0.1
Local government – Time savings to businesses from no longer needing to submit WDF returns	15.6	9.0	158.0	5.3
Businesses - Time savings to businesses from no longer needing to submit certain waste returns (Permit site returns and waste exemption returns)	14.3	8.2	144.4	4.8
Businesses - Benefits from reduced waste crime	8.3	4.8	84.2	2.8
Businesses – Ongoing savings from storing waste records digitally, and in a central service	6.8	3.9	68.8	2.3
Environment - Benefits from reduced waste crime	1.1	0.6	11.0	0.4
Total costs	32.9	19.0	336.3	11.1
Total benefits	73.6	42.6	746.0	24.8
Net impact	+ 40.7	+ 23.6	+ 409.7	+ 13.7