3.6 Cost of BPEO

A broad estimate of the cost of implementing the BPEO for Ayrshire, Dumfries and Galloway has been calculated using a standard approach adopted by all Waste Strategy Areas as developed by ERM. This provides an indication of the likely cost of the BPEO for collection, treatment and disposal of municipal solid waste over the next 20 years. It includes likely revenues from sale of materials and energy recovered from waste and the effect of possible increases in landfill tax.

It is estimated that the annual cost of operating municipal waste (collection, treatment and disposal only) will increase from £71 per tonne today to £98 per tonne in 2010 and £92 per tonne in 2020, as new approaches to waste collection, recycling, treatment and final disposal are introduced. This is based on waste arisings growing at 2% per year until 2020.

In addition to these regular running costs, Ayrshire, Dumfries and Galloway is projected to need to spend £106.8m on new waste-management infrastructure over the next 20 years. Indications of the likely additional infrastructure have been set out in the previous sections.

Taking the operating and capital cost together the average overall cost per tonne of waste over the next 20 years is estimated to be about £104/tonne⁴.

It should be noted that the figures quoted above are only approximate and are provided to give an indication of the potential level of capital investment and added day-to-day costs needed to meet our objectives. There are many uncertainties and assumptions in the data used, but we can be reasonably confident about the likely scale of change required. It should be noted that the per tonne figures should not be compared with the price of current waste operations (e.g. the gate fee for landfill or energy from waste facilities) as these include only some of the elements of cost included in the calculation.

The focus of the process to establish the BPEO was to find the optimum methods of waste treatment that should be used to at least meet the three landfill reduction targets set by the Landfill Directive (i.e. permitted to landfill 75%, 50% and 35% of 1995 levels of BMW sent to landfill, by 2010, 2013, and 2020 respectively). In the light of the draft AWPs published in spring 2002, the Executive has calculated that an interim overall national target of recycling and composting of 25% of waste collected by local authorities is achievable by 2006 by implementation of AWPs, and has allocated £230 million for the financial years 2003/04, 2004/05, 2005/06 through the Strategic Waste fund to achieve that target. The indicative costings set out in this plan will be further refined in each of the local authorities implementation plans for the purpose of Strategic Waste Fund bids. Further information on national costings is provided in the National Waste Plan (2003), available at www.sepa.org.uk/nws.

Authorities will be expected to seek grant support from the Strategic Waste Fund to assist with the additional costs of implementing the AWPs and will be expected to ensure that delivery of the plans will contribute to the 2006 targets.

⁴This figure is calculated from the net present value of costs of waste management over 20 years derived using a 6% discount rate, divided by the net present value of the total quantity of waste over 20 years, also at 6% discount. All figures are at current prices. No allowance is made for potential revenues from surplus landfill permits, packaging recovery notes or renewables obligation certificates, or potential costs of purchasing landfill permits if there is a deficit. he value of landfill gas is also not included.