Question Mark Over WRAP Recycling Subsidies

The European Commission is to open a formal investigation procedure into recycling subsidies of the Waste and Resources Action Programme.

This is because the Commission has expressed doubts as to whether certain grant funding instruments of the WRAP, to assist companies in investing in recycling facilities, are compatible with EU state aid rules.

WRAP was set up in 2001 as a private company under the UK Government’s Waste Strategy 2000. It aims to promote waste recycling in the UK by creating stable and efficient markets for recycled materials and products.

In accordance with EU state aid rules, WRAP notified the Commission in July 2002 of its wish to proceed with a $60 million program of various measures to boost recycling in the UK.

The Commission has found the following: the operation of the WRAP Pilot Fund complies with the Commission guidelines on state aid and risk capital;

decided the WRAP Lease Guarantee Fund and the grant funding instruments of the WRAP Regional and Small to Medium Sized Enterprises Schemes are compatible with rules on state aid to SMEs and the EU guidelines on national regional aid;

expressed doubts on whether certain grant funding instruments for recycling, grouped by the Commission under the heading of the “WRAP Environmental Scheme”, can be considered to be compatible with the EC state aid rules.

As a result, the Commission has granted partial approval to the WRAP aid programme but is launching an investigation into the WRAP Environmental Scheme. A decision is not expected for at least six months. In the meantime, WRAP said it would prepare to roll out the projects that have won approval.