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Hinterland for fuel gets further from the UK

The boom in refuse-derived fuel (RDF) and solid recovered fuel (SRF) exports from the UK in recent years has been well documented.

But, as the initial export markets have started to get saturated, the UK is having to look at markets further afield.

It is this ability to identify new markets and take an innovative approach to finding a home for RDF that Knutsford-based Totus Environmental claims sets it apart. Managing director and founder Andy Jones explains that what makes the business unique is having experienced logistics personnel within its management team. Specifically, it has a specialist in shipping and another in freight forwarding.

Jones explains: “We look at where the flows of material are. So we start with the logistics.”

This involves identifying routes where there are materials coming into the UK but empty containers going back to the original destina­tions. This makes it cost-effective to send materials back on the return journey.

Jones adds: “Logistics work with RDF in what we call a ‘backload business’. Because the UK imports more materials than it exports, there is a massive amount of empty equipment being returned back to the conti­nent – containers, lorries and so on.”

As the UK has seen more European brands come on-line and car manufacturers have started using eastern European labour, there is now a flow of traffic from countries such as Poland, Bulgaria and Romania, as well as traffic to go back.

Totus started trading at the start of 2013. In January 2014 it comprised a team of just two but now there are 26. Jones says that, when it  

 started, the market for RDF exports had more or less flooded capacity in the Netherlands and was starting to venture into Germany, particularly the Ruhr region including Dus­seldorf, Cologne, Dortmund and Essen.

Jones counts several of the big national and regional waste management companies as customers: “The bigger waste management companies are our customer base and they all have their own traffic moving alongside what we do for them.”

Jones adds that he cannot get any material into the Netherlands now as the bigger play­ers dominate that market. Totus has therefore looked further afield. As well as Germany, it exports to Norway and Denmark and emerg­ing markets such as Romania, Bulgaria and southern Europe.

He says: “From an economic point of view, as the years go on, landfill tax is racking up. So you find that the base movement hinterland for RDF starts to get further from the UK. Effectively there is more money in the pot to be able to move the material further.

“If you want to work outside of that and start moving in the band of an area that is a bit further away, you have got to be innovative. You have to find ways to save money and do things cheaper.”

RDF CHANGE IN GATE FEES

Totus prospects its own facilities abroad, and is currently involved in the indirect ship­ment – where it handles just the logistics – for about 130,000-150,000 tonnes a year on behalf of its large waste management clients. It handles another 150,000 tonnes of its own material that it sources from UK waste man­agement companies and exports to facilities that it has its own arrangements with, sorting out all the necessary paperwork.

The company is now looking at markets outside the EU. Jones explains that exportation of municipal solid waste (MSW) and material derived from MSW is banned out­side the EU, but there is no export ban on commercial and industrial (C&I) waste. How­ever, businesses exporting such waste outside the EU must ensure that the facilities exported to operate to the same standards as EU facilities.

He adds: “We are about to export our first load to Morocco. The Moroccans have in the past few months lifted a ban on importation of SRF material and we are due to move our first load at the end of this year. We are cur­rently in discussions with the Environment Agency and the Moroccan regulators to facil­itate that happening.”

He adds that many companies in the UK are currently talking about exporting pre-treated materials and SRF-type materials to countries such as India, Sri Lanka, Vietnam, Malaysia and Thailand, where there are cement plants which could use such fuel. Jones says that Totus is also “looking hard” at India. It has suitable material for the country, whose facilities want the material, but at the moment there is a ban on the importation of SRF materials. Jones predicts this may change in the next two to three years because, in the past year, India has lifted restrictions on the import of tyres and he believes it will do the same for SRF.

In general he says the waste-derived fuel market is hardening: “Prices are going up [in terms of] capacity – put simply, the Neth­erlands is full, Germany is full, Sweden is full, Norway is nearly full and Denmark is full-ish. Denmark is slightly behind because it had an import tax that was removed only about 12 months ago.”

Some markets, such as Sweden, are starting to ‘kick back’ materials: Jones cites recent issues at Malmö port, which has banned open shipments of RDF because of issues such as smell and pest control.

A graduate chemist, Jones’ career has been in the hazardous waste sector. Pre­vious roles involved the import and export of such waste, where he gained knowledge in handling the regulatory aspects involved.

His original plan for Totus was for it to be primarily a hazardous waste busi­ness, but he found himself increasingly asked about exporting RDF. The growth strategy for the business now is to go back to doing some of the hazardous waste as well, where there are better margins although there is less material.

As the UK’s domestic capacity for RDF and SRF increases, Jones predicts that, by around 2018, certain operators will disappear. But he believes there will still be a requirement for fuel from “the more difficult areas in the world”.

He explains: “If you look at the eco­nomics around Romania, for instance, it landfills its waste free of charge. It is govern­ment-backed. One of the big issues I have with the regulator is ‘am I looking to provide a fuel to Lafarge or am I trying to take advan­tage of their free landfill?’

“For a lot of countries which are land­fill-based, I have to go through hoops to get fuels through the door. But it is all about pro­viding a business that has some longevity rather than simply taking advantage of the near markets now. There will be a smaller market and the economics will be very differ­ent because you will be paying higher gate fees for more refined material, and that material will be pre-treated in the UK.

“One of the areas I see as growth for Totus is to use our alternative fuel business to pre-treat hazardous waste into a form where it can be used as a fuel as well. Effectively, the tech­nology is that you take adhesives, inks and paints, which are all classed as hazardous, and you mix them with sawdust and you can basi­cally make a fuel.”

He says that, as with other materials in the waste stream, the RDF/SRF market will get more sophisticated and involve the creation of specific products for specific markets. Some of his off-takers are already specifying metrics such as acceptable moisture and chlorine levels. Totus is part of a Eunomia group that is looking at setting up baseline specifications for RDF to make sure there is at least some pre-treatment of the waste.

“The regulation framework in the UK requires pre-treatment,” he says. “The million dollar question is what classes as pre-treat­ment and what does not. That framework will set up, I think, a minimum specification for RDF and, once they have set that minimum specification, the regulator can start to turn the handle to make that specification tighter and tighter as each year goes on.

“So, by the end of the decade, I think there will be an RDF/SRF market but it will be for specifically prepared products.”

Jones adds that there will be smaller tonnage requirements of these “more selec-tive products from the UK”, and the hope is that it will be supplied by companies such as Totus which “have the technical expertise to provide it”.

View of the exporter

RDF Exports: practical considerations

Totus also applies its logistics expertise to the physical moving of waste. This includes ensuring it uses polythene liners, that the material is baled properly with the correct number of layers of wrap, that there is the correct compression on the balers, and that any material loaded on ships is done so correctly, with the right space between bales so that the crane operators are able to move it without ripping the bales.

Totus managing director Andy Jones says: “This is where having people working for us who have spent 20-30 years loading and unloading ships works for us in terms of ensuring the materials are fit for being shipped in the first place and that the shipping is being done correctly.

“Unless you are used to shipping, you can lose a lot of money if you are not careful because the economics are relatively fixed: you are paying a fixed price to move that ship from A to B. What you get loaded on a ship determines how profitable it will be for you. So you need to get on as much as possible to make sure your tonnage price is as low as possible.”

Jones explains that exporters also need to avoid the phenomenon of ‘dead freight’ – when you have paid a fixed price but your tonnage price does not add up to the cost of the ship. Keeping a ship in port outside its contract period usually costs around e3,000 (£2,197) an hour, so it is critical to get ships going in and out on time, make sure they are serviced correctly, the bales are at the port waiting, that crane drivers are correctly trained and so on.

“[You need to make sure the crane drivers] pick up the bales four at a time, and all the paperwork ties up so the crane drivers at the other end know what is coming to them. They need to see how the thing is stowed, and there are photographs and stowage plans to show how the whole thing is done – that is where you avoid disasters.”

Totus will be exhibiting at RWM on stand 4C70-D71

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