A Cost-Effectiveness Analysis for Incineration or Recycling of Dutch Household Plastics

Tinbergen Institute Discussion Paper 16-039/VI

21 Pages Posted: 27 May 2016

See all articles by Raymond Gradus

Raymond Gradus

School of Business and Economics

Rick van Koppen

Price Waterhouse Coopers (PwC)

Elbert Dijkgraaf

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus University Rotterdam, SEOR-ECRi

Paul Nillesen

Independent

Date Written: May 19, 2016

Abstract

The cost-effectiveness of plastic recycling is compared to energy recovery from plastic incineration in a waste-to-energy plant using data for the Netherlands. Both options have specific benefits and costs. The benefits of recycling are the avoidance of both CO2 that otherwise would be emitted during incineration and the production of virgin (new) material. There are significant costs, such as collection costs and recycling costs involved for plastic recycling by municipalities. The benefits of energy recovery from plastic are heat and electricity production leading to fewer emissions in the regular energy production sector, but this requires a waste-to-energy plant with the associated capital investments. Summing all the costs and benefits results in an implicit CO2 abatement price of 172 Euro per tonne of CO2 in case of plastic recycling. In general, this implicit price is much higher than current (or historic) ETS prices, the estimated external costs of CO2 emissions, or alternatives to reduce CO2 emissions (e.g. renewable energy). A sensitivity analysis shows that this conclusion is robust.

Keywords: Recycling, Incineration, Plastics, Cost-Effectiveness Analysis

JEL Classification: H43, Q38, Q42

Suggested Citation

Gradus, Raymond and van Koppen, Rick and Dijkgraaf, Elbert and Nillesen, Paul, A Cost-Effectiveness Analysis for Incineration or Recycling of Dutch Household Plastics (May 19, 2016). Tinbergen Institute Discussion Paper 16-039/VI, Available at SSRN: https://ssrn.com/abstract=2781933 or http://dx.doi.org/10.2139/ssrn.2781933

Raymond Gradus (Contact Author)

School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Rick Van Koppen

Price Waterhouse Coopers (PwC) ( email )

Thaltej Cross Road, S.G. Highway
Ahmedabad, Gujarat 380054
India

Elbert Dijkgraaf

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus University Rotterdam, SEOR-ECRi ( email )

P.O. Box 1738
H 7-34
Rotterdam, 3000 DR
Netherlands
+31 10 4082590 (Phone)
+31 10 4089650 (Fax)

HOME PAGE: http://www.ecri.nl

Paul Nillesen

Independent ( email )

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