The Environment Agency has released guidance (4 July) that sets out the agency’s approach to managing the financial provision requirements of the Landfill Directive.

Guidance on Financial Provision for Landfill explains what is required for businesses applying for landfill permits under the Environmental Permitting (England and Wales) Regulations 2010 andestablishes what financial provisions need to be in place.

These provisions on behalf of the operator need to be sufficient, secure and be available for “as long as the competent authority considers that a landfill is likely to cause a hazard to the environment”.

Permits will not be granted if sufficient financial provision is not available. Funds are set out to cover, among other things:

• Environmental monitoring

• Capping

• Cap maintenance

• Leachate management

• Landfill gas management

• Surface water management

• Security (e.g. gates and fencing)

Sufficient, secure and available

The guidance states that financial provision must be ‘adequate’ for site operators to discharge their obligations of their permit for as long as the landfill poses a hazard, this means that it must be:

• Sufficient enough to meet all the obligations of the permit, including closure and aftercare options;
• Secure for the duration of the period – including any financial risk to the mechanism chosen, and;
• Available to access at the relevant time, usually after the work has been done.

The financial provision must be kept under review and the ‘exposure liability’ (any gap between the amount provided and the liability at any point in time) must not exceed 10 per cent of the total amount.

Calculation of financial provision

The assessment must include the cost of capping, installation of the drainage layer and protection of the cap for the final phase of the landfill. The assessment must include ongoing costs throughout the ‘aftercare’ phases.

Applicants should decide the likely aftercare period before handing in any applications, but the Landfill Directive states that the financial provision should be in place for at least 30 years.

For landfills for hazardous and non-hazardous waste the EA suggests applicants estimate detailed costs for an aftercare period of 60 years, with a contingency fund available thereafter.

The type of site will depend on the provision, for example operators of landfills for inert waste must provide detailed cost estimates for a minimum of three years post-closure. This will cover post-closure monitoring for a minimum of two years, plus one year for the operator to produce a report and for the EA to assess any data arising from that monitoring.

Irrespective of the time estimated for aftercare, the operator’s calculation must include a ‘contingency’ sum. This is to ensure that once the period estimated for managed aftercare is over, there are funds available should continued site management be necessary.

Accepted financial provisions and risk assessment

The following are the principal mechanisms that the EA will accept for demonstrating financial provisions:

• Renewable bonds
• Escrow accounts
• Cash deposits with the Agency
• Local Authority Deed Agreement
• Trust based investment portfolios

Applicants must take into account inflation, and not discount future expenditure when calculating.

When deciding on the correct mechanism, applications should take into account that the funds have to be available to them when required. They need to consider the risks associated with their site and provide a detailed risk assessment that includes the size of the hazard and the potential impact on the environment should their control methods fail.

The financial provisions must cover the cost of repair of each risk.

Read the full EA guidance.