The Commission's report, Well disposed: responding to the waste challenge, says the UK can meet European Union Landfill Directive targets to reduce the amount of waste that gets dumped in landfill by 2013.
However, the report says that this target cannot be achieved if councils rely solely on creating less waste and recycling more.
It says investment in waste disposal technologies that convert waste into energy or fuel will have the most significant impact on landfill reduction and that delays to the projects currently underway pose the greatest threat to achieving the target.
These are major, often controversial, projects that cost a minimum of £20M and can take ten years or more to deliver. Together they will create additional capacity for 6.4M tonnes of waste. But if schemes already planned were delayed by just two years, England would exceed its landfill allocation by 13% and incur £140M in penalties which would be picked up by the taxpayer.
Audit Commission chairman Michael O'Higgins said: "People are waking up to waste. Millions of cans, bottles and plastic bags now get recycled into other things instead of getting dumped in a hole in the ground. But you only have to look in your own bin to see that not everything you throw away can be recycled, so we've got to find somewhere other than landfill to put it. We must keep up the pressure to reduce, reuse and recycle but if we are to avoid being heavily fined for failing to meet the 2013 target then we must also push ahead with the treatment plants that are in the pipeline."
The European Union Landfill Directive requires the UK to reduce the amount of biodegradable municipal waste landfilled to 75%, 50% and 35% of its 1995 level by 2010, 2013 and 2020 respectively. If the UK does not meet these targets, the government and therefore taxpayers face the threat of fines at a national level. If the national target was exceeded by ten per cent, English councils would share penalties of around £100M.
Even if England as a whole meets the 2013 target, the Commission is threatening those authorities that exceed their individual landfill allocations with fines of as much as £2M each. This bill could only be paid by increasing council tax or cutting services.
The Commission says these authorities must act quickly but carefully and choose which of the range of disposal options available gives them a solution which is both value for money and environmentally sound.