This report 2020-11-24 The Finnish approach to municipal solid waste from other sources than households is written on behalf of the Swedish investigation about municipal waste from companies - M2020:05 Utredningen om verksamheters kommunala avfall.
The author of the report Raimo Lilja is responsible for the content and conclusions of the report. Raimo Lilja is Dr. Sc. (Technology) in Environmental technology from Institution Helsinki University of Technology, member of the Waste Management Association of Finland, member of the Finnish Association for Environmental Law and has worked in the following countries during his last 10 years: Myanmar, Laos PDR, Vietnam, Nepal, Egypt, South Africa, and Finland.
Conclusions on pros and cons of companies handling their own waste
Companies handling their own waste is the default principle in Finland. As each company has the responsibility to arrange the waste management of their production waste, including hazardous waste, it is difficult to justify, why they should not be able to manage their MSW. The free choice of a service provider is the basic principle in a market economy and exemptions from this must be based on heavy arguments related to ensuring important public goods, such as public health or sustainable development.
Obliging companies to use the municipal system for MSW and private services for all other wastes is a source of administrative burden and may cause extra cost for them. This applies to bigger companies and companies that generate also other waste than MSW. Differences between municipal regulations may cause extra burden for companies that operate in several regions of the country. Private WM services tend to be more flexible in tailoring their services according to the individual needs of companies.
Companies that generate only MSW are usually content with the municipal service. For companies that operate in rural areas or areas with difficult transport connections municipal service may be the only option available for reasonable cost. This can be seen from the popularity of using the secondary responsibility of municipalities to accept MSW from companies. It seems that the costs or details of these services are not significant to them. The reliability, continuity and simplicity of the service seems most important to them. Appeal cases have usually been raised by the private sector waste companies, not the waste producers.
The private sector waste companies and their association have been aggressively against the municipal monopoly. The municipal monopoly in MSW transport has been shown to be economically beneficial for waste producers, especially households. This is because the procurement of transports for a certain area is more cost efficient than the situation where each waste producer procures the service individually. For private service producers the situation with free choice of transporter is more lucrative. In some areas, such as smaller cities, the free competition can lead to domination by one big service provider. Municipalities taking over the control of the transport of waste has been a subject of multiple struggles in the appeal and supreme court.
The regulation of MSW transport is the weak point in Finnish legislation. It would be logical to have municipal monopoly of household waste transport by law. Now it is up to the choice of each municipality and this situation is prone to be framed as a political struggle for free competition. In practice municipal monopoly in waste transport is not against private enterprise because the municipalities procure 100 % of the transport services from the private sector.
One aspect of administrative burden arises from the predictability of waste policy. In Finland changes in the municipal monopoly have been enacted in 1993, 2007, 2011, 2018 and new changes are in process. This piecemeal transition has burdened all stakeholders and caused the tensions between the private and municipal sector to rise repeatedly.
This study reveals that the changes in the municipal monopoly has juridical repercussions in other aspects of waste management regulation. The waste management services that are essential services to the society should be clearly defined and the responsibility of the municipality to provide these services should be balanced with the long-term rights to control these flows. Monopoly should be balanced with an adequate quality of service including the high level of environmental and resource efficiency goals. Municipal capacity for exceptional situations and the provision of secondary services to vulnerable waste producers should be ensured. The environmental requirements should be on the same level for public and private actors. So far, the municipal waste companies have been more regulated than the private sector actors. Even the waste tax on landfills was in the beginning only applied to municipal landfills, not private ones.
The strength of the Finnish system has been in efficient organization of the municipal MSW service into strong regional municipal waste companies. They have together accumulated enough economic capacity and waste flow to realize investments, first in regional landfills, then into composting and anaerobic digestion plants and finally, into long-term agreements with energy producers for establishing waste incineration plants.
All this would not have been possible by individual private sector waste companies, because they usually cannot control waste flows big enough to enable investments of such magnitude. The release of private and public sector MSW from the municipal monopoly has not changed this picture much. Capacity for material recycling of MSW has been slow to emerge. Energy recovery competes with recycling depending on market prices. Stricter policy instruments are expected to promote circular economy also in the private sector.
The EPR system for packaging waste has changed the picture by inviting treatment tenders for big quantities of packaging waste from services. The regulation of packaging waste management from households is in the pipeline and can provide tools to prevent the fragmentation of MSW management.
Fair competition between public and private WM companies is a relevant objective, except for essential services that are difficult to ensure without public service structures and long-term arrangements. But reducing the coverage of the waste flows that are under the municipal monopoly can risk their ability to invest in the waste management infrastructure.
Promoting private enterprise or promoting the administrative burden (deregulation) of companies by restricting public services can conflict with environmental goals if implemented in an unbalanced way.
Municipal monopoly is not in conflict with promoting innovation. The municipal companies in Finland have been successful in offering technology platforms and large, steady waste flows for private sector waste management innovation.