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LATS Allowances “Worthless” as Councils Achieve Targets

Councils write off “worthless” landfill allowances
28-07-2008

A new LATS market place is to be launched later this year, but both levels of trading and prices remain low, forcing many waste disposal authorities to write off their ever-growing amounts of surplus allowances.

The government-funded Regional Improvement & Efficiency Partnerships, led by Improvement Efficiency South East, is to set up a market place for trading under the Landfill Allowance Trading Scheme (LATS) this summer.

Defra’s second LATS news letter, circulated amongst councils last week, states that an advert will be placed to select a provider of the service to “deliver confidentiality, contractual security, a ‘level playing field’ for all involved and fixed transaction fees”.

Among the goals of the new market place are to “save time spent on price and volume discovery and administration”, “provide commonly agreed simple, standardised contracts for transactions” and to “allow buyers or sellers to buy or sell into the best available price at any pre-agreed time”.

The service will also be able to notify the Department, and the Environment Agency, of any potential market abuse, and will work closely with both of them, and the Local Government Association, to provide a “valuable service” to councils.

Avenues currently available for LATS trading include the Defra-run LATS Bulletin Board, direct trades between councils and also the use of a broker as an intermediary to arrange transfers of the allowances.

Trading

However, ahead of its introduction, both levels of trading and prices remain low, with a number of local authorities indicating that they are still unable to sell their large number of surplus allowances.

Last year, councils expressed their disappointment about being unable to make money from the surplus allowances they had hoped to sell (see letsrecycle.com story).

This situation has arisen as councils have introduced waste minimisation measures, boosted their recycling rates, and, in some cases, brought new waste treatment facilities on-line.

As a result, more and more councils hold a surplus of allowances, but an ever-decreasing number need to buy additional LATS allowances to allow them to send more waste to landfill.

And, while the system has allowed councils to bank their surplus allowances for either future use or to be traded, with 2009-10 being the first target year for the UK under the EU Landfill Directive, they will not be able to bank any in either 2008-09 or 2009-10.

As a result, councils with a surplus of allowances for the period 2005-06 to 2008-09 will not be able to carry them forward, and, with cash trading minimal at best, they are being forced to write them off.

Surplus

The 2007-08 accounts for the Greater Manchester Waste Disposal Authority indicated that: “Despite its best efforts, the Authority has been unable to sell any of its surplus allowances during the year and current market indications are that there is a surfeit of prospective sellers and no apparent buyers for current allowances.

“In view of this the Authority considers that the current batch of LATS allowances are of no value and allowances held have been written down accordingly,” it added.

Full article at Letsrecycle.

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