Evaluation of waste tax

At the request of the Ministry of Finance (Ministerie van Financiën), a combined Ecorys/CE Delft team has evaluated the waste tax. Waste management companies pay waste tax on the amount of waste they process, i.e. landfill or incineration. This evaluation study examined the effectiveness and efficiency of the waste tax since its introduction and reintroduction from 1 April 2014 to date. This analysed the extent to which the waste tax, in conjunction with the CO2 levy on industry, contributes to accelerating the transition to the circular economy and reducing CO2 emissions.

The review is based on a desk study of policy documents and literature on price elasticities, data analysis and interviews with relevant stakeholders. In the review, we pay special attention to refinements to the instrument implemented since 2013, such as tariff increases, export duty and waste tax on imported waste. We also studied the interaction between waste tax and the CO2 levy on industry.

The main conclusions are:

• The waste tax is very effective in generating revenue for the government. The average revenue over the period 2019-2023 is €238 million per year.
• The waste tax has contributed to some extent to the prevention of waste generation by businesses and households.
• As an instrument, the waste tax is an incentive at the ‘entrance’ for waste incineration plants while the CO2 levy on industry is an incentive at the ‘exit’. The combination of instruments actually allows the government to manage the various policy goals more effectively.
• Recent changes, such tariff increases, export levies, the inclusion of incineration and landfill of foreign waste, are generally perceived as improving the instrument.
• Based on the information received and interviews, it can be concluded that the waste tax is a financially efficient policy instrument. Particularly in terms of revenue generation, the instrument is very effective with a relatively low cost-to-revenue ratio. A less straightforward answer can be formulated for the other goals of promoting a circular economy and reducing CO2 emissions due to the indirect knock-on effect of the waste tax.

Recommendations for the future:

1. Analysis gives grounds for continuing the waste tax.
2. A tariff increase may have a more regulatory effect from an environmental perspective.
3. Abolish the exemption for sewage sludge incineration.
4. Include a sunset clause for the exemption for dumping dredged sludge and asbestos.
5. Clarify the law on the application of the in/out method.
6. Ensure refinement within the incentive mix, in collaboration with other relevant ministries.

Keep combustion capacity in balance with demand.