The new Law on waste and contaminated land for a circular economy: challenges and chances

The recent approval of the Law on waste and contaminated land for a circular economy (Law 7/2022, of April 8, 2022) poses a whole range of challenges for companies, which will have to familiarize themselves with the new obligations and tax mechanisms introduced by the law. The new rules came into force on April 10, apart from the tax measures, which will do so on January 1, 2023. Writing into Spanish law the Directive that amended the Waste Framework in 2018 and the Directive on the reduction of the impact of certain plastic products, the new provisions present an opportunity to bring waste management back on track and reduce the environmental impact of plastics.

The importance of this law – arriving after an intense parliamentary process lasting a year and with more than 1,300 amendments submitted between the lower and the upper houses of the Spanish parliament - was the subject of a new edition of Garrigues Sustainable Dialogs.

Javier Fernández Rivaya, partner in the Garrigues Administrative Law Department and roundtable moderator, explained that the goals of the new rules are to step up the fight against climate change, protect the environment and health, make progress with fulfillment of a number of Sustainable Development Goals (ODS) in the 2030 Agenda and fulfill the European goal of advancing a circular economy (with a particular focus on the plastics industry).

This expert also reminded us that the new law pays attention to elements such as continuing reinforcing application of the waste hierarchy principle, strengthening waste prevention, increasing the goals for preparing waste for reuse and recycling (with a timeline for implementation of new separate collections), or specifying the minimum mandatory requirements regarding producer responsibility. The law also introduces measures for reducing consumption and raising awareness, along with the labeling and ecodesign of certain single-use plastic products which include prohibiting a few of them from being placed on the market. Alongside this new legislation is an important list of tax measures related to the environment.

Victoria Esteban, counsel in the administrative law, zoning and planning, and environment practice at Garrigues, highlighted that one of the main changes affects the current model for managing waste collection. The law lays down an obligation for separate collection of new fractions of waste, to be added to the existing ones. These new obligations specifically include biowaste, textile waste, used cooking oil, hazardous domestic waste and large waste items (furniture, household items, among others). This separate collection is not confined to the domestic sphere, it will also apply to commercial and industrial waste. The timeline for implementation varies according to the fraction of waste involved and the person responsible for its collection.

Victoria Esteban also spoke about another of the major new parts of the law: measures to restrict single-use plastics. She described how the law sets out goals for reducing food packaging and cups: in 2026 levels must be 50% lower (in weight) compared with 2022. and 70%, in 2030. While it will not be allowed for oxo-degradable plastics, such as cutlery, plates and cups, to be placed on the market.

She reminded us that the new rules also touch on extended producer responsibility, by implementing their obligations more precisely. Among other requirements, they introduce the need for a greater degree of information to be given to the general public and public authorities alike. The law also contains new extended responsibility rules for textiles, furniture and household items, and non-packaging plastics used in agriculture, as well as for single-use plastics such as food containers, cups, lightweight plastic bags or wet wipes and tobacco products.

On the subject of funding obligations, she underlined that all costs will need to be covered, for both separate collection and for subsequent transportation and treatment.

José María Cobos, partner in the Garrigues tax department and specialist in environmental taxes, analyzed the novel tax measures in the law: introduction of a new excise tax on non-reusable plastic packaging; a tax on the disposal of waste in landfill sites, incineration or co-incineration of waste; or the obligation for local government to set a fee, or otherwise, a charge that is not a tax on the collection, transportation and treatment of waste, among other measures. He recalled in this respect that the law imposes an obligation on the authorities to use economic instruments and other measures providing incentives to apply the waste hierarchy principle and also specifically sets out measures for reducing food waste.

In this expert’s opinion, to date there has been a slightly haphazard quality to the rules on environmental taxes in Spain. The Law on waste and contaminated land for a circular economy has brought some order in relation to taxes on disposal of waste in landfill sites and has sought harmonization, by setting the tax at central government level - although it is managed and collected by  autonomous community government authorities -, thereby avoiding the proliferation of taxes at the various autonomous community governments.

Lastly, Máximo Martín, partner at G-advisory, a Garrigues subsidiary providing technical, economic and strategic advisory services on all types of energy and ESG services, called for an urgent response towards adopting measures to achieve sustainability, bearing in mind that in Spain half of all urban waste ends up in landfill sites and the goals for improvement set in 2020 have not been achieved. Although he did leave room for optimism: in his opinion, the new rules may be an opportunity for private initiative in areas such as biogas, solid recovered fuels or the new collective EPR systems (Extended Producer Responsibility) it contains. He also explained that a number of questions have emerged such as, for example, in relation to recycling electric car batteries, which is absolutely necessary for the future growth of electric vehicles.

Máximo Martín emphasized that the new law places the spotlight on plastics, a subject which, as he commented, needs deep thought and poses an important technological challenge, especially in view of the existing range of types of plastic. Lastly, he confirmed that extended producer responsibility is the topic that is causing most concern among clients, as a result of the new collective EPR systems (for plastics, textiles, among others), and the extension of existing or potential Deposit-Refund Systems (DRS) for items of packaging.

For further information, in this document Garrigues analyzes all the key elements of the Law on waste and contaminated land for a circular economy.