Landfill Allowance Trading Scheme
Introduction
How does the scheme work?
The Waste and Emissions Trading Act (2003) provides the legal framework for the scheme and for the allocation of tradable landfill allowances to each waste disposal authority in England. These allowances convey the right for a waste disposal authority to landfill a certain amount of biodegradable municipal waste in a specified scheme year.
Each waste disposal authority can determine how to use its allocation of allowances in the most effective way. It will be able to trade allowances with other authorities, save them for future years (bank) or use some of its future allowances in advance (borrow). This will allow individual waste disposal authorities to use their allowances in accordance with their investment strategy.
The ten most important things to know about the Landfill Allowance Trading Scheme
- Allowances have been allocated to each waste disposal authority at a level that will enable England to meet its targets, as a contribution to the UK targets, under the Landfill Directive.
- The flexibilities of trading, banking and borrowing enable waste disposal authorities to meet their obligations under the scheme in the most cost effective way.
- Trading is not mandatory, but it is an opportunity! The advantage of trading is that overcomes the fact that different waste disposal authorities face different diversion costs depending on their particular circumstances.
- Unlimited banking is allowed between target years but allowances cannot be banked out of a target year or the year preceding a target year.
- Authorities are able to borrow up to 5% of the next year's allowance, although allowances cannot be borrowed into the target year or the year preceding a target year as this may cause England as a whole to breach its target.
- Trading and Borrowing must be recorded on the web-based allowance Register developed by Defra and known as the LATS Register. Part of this online tool is availble to the public so that anyone in the country can see how any particular authority, group of authorities, region or country in the UK is doing or has done since LATS went live in April 2005.
- The Environment Agency, the monitoring authority for England, uses the mass balance calculation to monitor the amount of BMW sent to landfill in any year by each waste disposal authority (WDA).
- A fixed penalty of £150/tonne will be incurred if a WDA fails to hold sufficient allowances for the amount of biodegradable waste it sends to landfill in a scheme year.
- There is no reason why an authority should ever need to pay a penalty - the six month reconciliation period at the end of each scheme year gives authorities the opportunity to trade or in non target years, borrow allowances (from their future allocation) to ensure that they comply with their obligations.
- There is nothing to stop an authority borrowing allowances from other authorities in any year. This would be equivalent to an in-kind or non- financial trade but both authorities would have to agree on how the receiving authority recompensed the lending authority.
Landfill Allowance Trading Scheme (LATS) - A beginners guide
This beginners guide outlines the operation of the Landfill Allowance Trading Scheme and how the scheme can be used to help authorities that are striving to meet their obligations under the Landfill Directive. It also forms a useful guide for those that need to develop a basic understanding of the scheme.
(500 KB)Information for councillors
To assist local authorities in explaining the LATS to colleagues and elected members, Defra has produced a presentation template highlighting the most important aspects on the operation and benefits of the scheme.
- The Landfill Allowance Trading Scheme - presentation (PDF 460 KB) (Updated May 2005)
Page last modified:
9 January 2009
Page published: 5 February 2003