The recycling credit scheme was an early initiative introduced to provide incentives for the recycling and composting of household waste by waste collection authorities and by third parties. It makes available to recyclers the savings in disposal (and, if appropriate, collection) costs that result from recycling household waste, where the body which collects the household waste for recycling is not also responsible for disposing of that waste.

The scheme was introduced in the absence of other policy levers to encourage local authorities to recycle, but now operates in conjunction (and sometimes in conflict) with a number of other economic and regulatory measures designed to promote recycling. There is evidence that the current design of the recycling credit scheme can inhibit effective and sustainable waste management.

The consultation document seeks views on proposed amendments to the recycling credit scheme. Views are sought in particular on proposals to:
increase flexibility of payments from waste disposal to waste collection authorities in two-tier areas
update and make statutory the Government‘‘s guidance on recycling credit payments to third parties
modify the basis on which the financial value of recycling credits is calculated
widen the scope of the scheme to include all re-use and, potentially, minimisation credits
Background

The recycling credits scheme was introduced under the Environmental Protection Act 1990 and was the first policy lever of its kind, intended to encourage recycling by waste collection authorities and third parties through a form of financial incentive. It was designed to reflect the net saving a waste disposal authority (WDA) or waste collection authority (WCA) makes by not having to collect or dispose of waste diverted into recycling schemes.

Under the Act WDAs have a duty to pay recycling credits to WCAs for any waste which they collect and then recycle. In addition, both WDAs and WCAs have the option, but not a duty, to pay recycling credits to third parties, eg businesses or community groups.