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Barriers to more waste infrastructure must be overcome

Alan Whitehead

In the next decade, the UK will face increasingly stringent landfill targets from the EU, alongside rising costs for landfill waste. Concurrently, there is an increasing recognition of the role resource management can play in carbon emission avoidance and low carbon energy policy.

So it is time to employ a more comprehensive approach to waste and resource management. This would move the UK up the waste hierarchy, improve our resource efficiency and advance the renewable energy sector.

But dealing with our waste differently will cost. The UK will need to invest some £8bn in its waste infrastructure by 2020 if we are to avoid the expense of landfill and fully recognise the value of waste as a commodity. Although this investment is vital, there are a number of roadblocks in the way of securing necessary finance.

Constraints placed on government spending, along with the end of private finance initiative credit support means that most of this investment must emanate from the private sector. But an effect of the financial crisis has been a scarcity of bank lending for waste infrastructure.

“Waste infrastructure projects are perceived to be inherently risky”

We must also acknowledge that waste infrastructure projects are perceived to be inherently risky. This has resulted in reducing the number of investors willing to provide finance to waste infrastructure projects, with those willing to do so only at a higher price.

So what can be done to overcome barriers and encourage investment?

For six months, I have chaired a parliamentary inquiry by the Associate Parliamentary Sustainable Resource Group to investigate these challenges. We have taken evidence from a range of individuals, and the public and private sectors, to produce a set of recommendations.

First, although the Renewables Obligation, Feed-in Tariff and Renewable Heat Incentive have the potential to stimulate investment in energy-related waste infrastructure, constant reviews and consultations on these schemes mean that investors and developers view them with trepidation. Infrastructure projects must become eligible for the incentive support at financial close, with all support grandfathered.

Second, the much needed development of commercial and industrial (C&I) waste infrastructure capacity is being undermined by the risk of uncertain and insecure waste supply. But a Green Investment Bank guarantee underwriting this risk, used in conjunction with council waste, could enable the Government to catalyse a pipeline of C&I waste capacity through hybrid facilities.

Third, we must move away from traditional project finance to ensure the delivery of waste infrastructure. Through greater links with property investors, landowners and developers, the waste industry can benefit from lower cost forms of capital.

We must invest in our waste infrastructure now so that we can benefit from being more resourceful with our waste. I hope the recommendations in the report will be looked at carefully by everyone who wants waste and resource management to move forward; so that our environmental, economic and social wellbeing will not be compromised.

Alan Whitehead MP is co-chair of the Associate Parliamentary Sustainable Resource Group

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