Waste sector on edge?
Businesses involved in the collection and treatment of waste are affected by the new legal requirements imposed on them. As many as half of them are considering suspending trading. This would be a dark scenario for waste management companies, most of whom already find it hard to find an eligible waste recipient. Will strict legal obligations lead to a collapse in the waste management industry?
SSW and the Odpadyy-help.pl portal have carried out a survey covering both waste management Businesses and waste production companies. Both groups of respondents complained about the negative effects of the legal requirements successively imposed on entities in the sector since September 2018. Such obligations include:
- obligatory adjustment of administrative decisions in accordance with the new guidelines;
- execution of firefighting operations and adaptation of plants to the requirements indicated in them;
- mandatory provision of security for claims; and
- the need to ensure monitoring of waste storage sites.
Meeting these requirements is time-consuming and very costly – which often exceeds the financial means of these companies. Therefore, it is not surprising that most of the legal changes are viewed by businesses as having a negative impact on their business, with some of them viewing such legal challenges the reason for closing their existing business.
“As the name suggests, the Closed Circuit Economy is a set of connected elements. The weakening of one of the links has a negative impact on the whole system. The tightening of regulations for waste handlers will be felt by us all in the future. The report shows that 47% of those surveyed are considering closing their business. If such a scenario were to come true, it would further increase the cost of waste management.” – said Anita Palukiewicz, partner at SSW.
While some Businesses are considering liquidation of their operations, others are responding to the increased legal burdens by limiting the scope and amount of collected and processed waste. For instance, over 45% of companies intend to give up hazardous waste management completely.
The authors of the report warn that tightening the provisions of the Waste Act hinders the development of the industry and results in a lack of new investments in waste management. They point out that many Businesses are withdrawing from this industry due to the instability of the law, increased investment costs associated with new legal requirements, very long time of obtaining decisions and the level of complexity of the procedures (many authorities providing opinions, agreeing, controlling), tightening of penal regulations and the amount of administrative fines.
The new stringent waste management regulations are the double-edged sword, as they also have a negative impact on waste companies. According to almost a quarter of the respondents, waste collection and management prices have increased dramatically since September 2018 – even by as much as 500%. This means that the costs of adapting the waste management industry to the new requirements are also passed on to waste producers.
Furthermore, the companies producing waste have so far been able to sell some of them as valuable secondary raw material (such as wastepaper, plastics, etc.). At the moment, due to increasing financial and legal constrains, waste management plants can no longer afford to buy more waste or significantly reduce purchase prices. As a result, the manufacturers are forced to subsidise the disposal of raw materials (for instance, two thirds of the respondents admit that they have to subsidise the wastepaper they collect from them).
Higher costs are not the only concern of waste producers. Increasingly, they also have problems with finding an authorised waste recipient – as many as 84% of the respondents face such a challenge. In the case of certain types of waste (especially hazardous waste), businesses have difficulties in finding any authorised recipient at all.
Virus, Shield and Waste
Experts from SSW and the Odpadyy-help.pl portal indicate that the waste sector signalled the negative impact of the new requirements even before the coronavirus epidemic was declared in Poland. The government’s so-called ‘anti-crisis shield’ introduced legislative measures, which also affect waste management, including medical and hazardous waste. It is too early to make a comprehensive assessment of the impact of the ‘shield’ regulation on the waste industry, but it may be believed that, like other sectors, it will suffer the negative effects of the economic slowdown caused by COVID-19.
“The amendment to the provisions of the Waste Act was intended to be aimed against the black market. Meanwhile, the opposite effect can be observed – the regulations are too complicated, some solutions inadequate to the scale and type of activity. Unfortunately, there was a lack of dialogue and the amended regulations were not subject to social consultations, with consequences for Businesses.” – said Dr Anna Piotrowska, senior associate at SSW.
- The systematic tightening of the provisions of the Waste Act since September 2018 (as a quick response to the wave of wildfires) has significantly affected the waste industry. Businesses operating in accordance with the existing regulations were burdened with new regulations in a very short period of time, such as the adjusting of their decisions in accordance with the new guidelines, caring out of fire protection operations and adjustment of plants to the requirements indicated in them, establishing of security of claims, and monitoring of waste storage sites. Businesses view most of the legal changes as having a negative impact on their business, and in some of them they see the reason for the closure of their current operations.
- Nearly half of the respondents (47%) contemplate ceasing of their waste collection or processing activities, and 14% of the respondents actually plan to do so due to overly-restrictive regulations, often requiring investments exceeding the means of their business.
- The respondents think that both the market of waste treatment operators and the market of waste producers have a negative opinion of the current regulations imposing the obligations to establishing the new safeguards in the waste sector. For example, 15% of the respondents indicated that it is simply impossible to finance the security of claims. In this respect, few insurance companies have an offer and the offer addressed to small and medium-sized enterprises is limited.
- The tightening of the provisions of the Act on Waste hinders the development of the industry and results in a lack of new investments in waste management. Many investors are withdrawing from the industry due to legal risks and associated increased investment costs, the very long time of obtaining decisions and the level of complexity of the procedures (many authorities giving opinions, agreeing, controlling), harsher penalties and the level of administrative fines.
- The instances of waste abandonment, illegal landfills and other “creative solutions”, such as the abandonment of trailers filled with waste in car parks, are becoming more common. The costs of managing this type of waste usually fall on local governments.
- Difficulties in finding an authorised waste recipient were indicated by 84% of the waste managers and 78% of the manufacturers, which in turn makes it necessary to diversify the recipients. At present, companies are forced to look for a few/a few dozen different recipients due to the limited scope of waste accepted. In the case of some types of waste (especially hazardous waste), respondents reported a problem with finding any eligible customer.
- After the regulations were tightened, the purchase prices of secondary raw materials, such as wastepaper or plastics, have additionally decreased. 66% of the respondents indicated the need to subsidize the collection of wastepaper, 53% of plastics, 14% of wood, and 25% indicated the need to subsidize the collection of other raw material waste (including metals).
- Since September 2018, the prices of waste collection and management have increased dramatically (by as much as 500% according to 23% of those surveyed) as a response of the waste management industry to adapt to the new requirements.
- Only 3% of Businesses indicated that they had already received a decision adapting their permits. This means that over 97% of the proceedings were pending and, bearing in mind the provisions of the government’s Second Anti-Crisis Shield, it is expected that many of these proceedings will be suspended or will not be continued. Therefore, the objective of adapting waste management decisions to the requirements of the Waste Act as soon as possible will not be achieved, which will further exacerbate the chaos in this sector of the economy. It is likely that Businesses will refuse to cooperate with waste recipients who will not have the opportunity to identify themselves with an adjusted decision in the scope of their activity, due to possible consequences.
- Stricter regulations have resulted in the closure of some companies dealing with legal waste management, which has resulted in the loss of jobs for people working in the waste management industry. The remaining entities on the market have significantly reduced the scope and quantities of waste collected and processed, e.g. more than 45% of companies intend to completely give up managing hazardous waste.
- The underdeveloped BDO system additionally burdens both waste producers and companies dealing with waste management, e.g. its operation has forced many companies to employ additional people and has introduced information chaos. In the survey, the respondents assessed the BDO system’s recording module (after almost 2 months of use) on a scale from 1 to 10, where 1 meant a very bad rating and 10 meant a very good rating. Waste management companies rated the system at an average of 2.64, similarly to waste generators – 2.85.
- The costs incurred by waste managers include investments in water and sewage management. By an unfortunate definition of wastewater, rainwater that comes into contact with any waste (even with undamaged wastepaper, PET bottles or rubble) should be called wastewater. This makes it necessary to build roofed warehouses or separate sewerage systems for this sewage, and then to obtain a water permit and to conduct sewage research. The research shows that more than 22% of companies have to invest in roofing, sealing the yard or non-effluent tanks. More than one third of these companies will incur costs ranging from 5,000 to 50,000 PLN for these purposes, while for 22% of these companies the costs will exceed 100,000 PLN.
The second Act of 2 March 2020 on special solutions related to the prevention, prevention and control of COVID-19 other infectious diseases and crisis situations caused by them (Journal of Laws of 2020, item 374 with amendments).