Big waste generators could pay another $1,300 a year, at an emissions cost of $40 a tonne of CO2e.

Will the emissions trading scheme really make a dent on waste, or is it merely another chance for government to make a buck? By Paul Howlett.

Does the Federal Government really want to change community behaviour in the respect of carbon in waste, or is the emissions trading scheme (ETS) just a cynical exercise in revenue raising? To answer these questions, it is informative to analyse some of the issues.

In the draft Green Paper released in early July, we were told waste destined to large landfills – possibly more than a 10,000 tonne per annum carbon threshold – will become subject to a carbon-based surcharge due to the emissions created, while the sector involved in processing waste will receive no benefit, or offsets, for the avoided emissions through intercepting waste destined for landfill.

If the landfill penalty does little to bridge the price gap with processing, there is very little incentive to change the disposal choice made back upstream where the wastes are generated.

The numbers being talked about in the industry indicate that at a carbon price of about $40 per tonne of CO2e, the penalty on waste disposed to landfill might be in the order of $24 per tonne of commercial and industrial (C&I) waste, $16 per tonne of domestic waste and $4 per tonne of construction and demolition waste.

So what does this mean? From a recent analysis of C&I waste in Adelaide for Zero Waste SA, Wright Corporate Strategy compiled fine-grained waste generation and disposal statistics for business premises across the city (see table). Add on the carbon price and it suggests nearly half of Adelaide’s 22,000-plus businesses will pay less than 50 cents per week extra.

Just over 60 per cent will pay less than $1.80 per week, nothing that would cause great concern to the cost of doing business and certainly not a significant revenue raiser, netting just over $600,000 a year for the coffers in Canberra.

However, the picture is not so sanguine for larger businesses that turn out more than three tonnes of waste a year, which is about 30 per cent of Adelaide firms and some 90 per cent of the C&I stream. They are likely to pay a fair premium on their waste disposal costs, possibly in the order of 60 per cent.

Here it is important to consider the impact on the enterprise’s cost of doing business, rather than just looking at the cost increment per tonne of waste. At over $1,300 a year in additional disposal costs, this may well be a catalyst for change in the way those businesses manage their wastes, either through source separation of the carbon-generating paper and organic fractions or by dispatching it to beneficial processing in lieu of landfill.

Business cost, domestic bliss
On these numbers there is a reasonable argument that an ETS on waste may have a desired impact on the key waste generators in the C&I sector. And if this behaviour change does occur, then revenues from the carbon penalties paid for land-based disposal will fall, along with the argument that the ETS is simply a cynical revenue raiser.

But does the same apply in the domestic sector? The situation is somewhat different given a relative uniform generation rate of waste at the household level – and therefore cost impact.

Australia’s 21 million people generate and discard some 350kg of domestic waste per annum. According to the The Blue Book waste industry intelligence report, that’s about 900kg per household a year.

If the carbon-based penalty for disposal is in the order of $16 per tonne of domestic garbage, this equates to approximately $14 per household per annum. That’s definitely not sufficient to motivate a serious groundswell for change, but certainly a good revenue raising exercise, netting some $100 million per annum from the residential community.

Therefore, an emissions trading scheme may have some validity in being a catalyst for change in the way the major waste generators manage their waste, but one might consider its application to domestic waste more of a revenue raiser really targeted at behaviour change among generators or operational change at the landfill.

Paul Howlett is co-director of Wright Corporate Strategy.