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Investing in fluff is a step too far

By 1 January 2015, there will be a requirement that the reuse and recovery of end-of-life vehicles (ELVs) “shall be increased to a minimum of 95% by an average weight per vehicle and year,” according to the ELV Directive. Yet almost a million tonnes of automotive shredder residue (ASR), or shredder ‘fluff’, is generated a year by metals recyclers, all of which is currently sent to landfill.

Created by the shredding of ELVs, residue is passed through variable density flotation technologies and air filters to remove any remaining metal and plastic, leaving the ASR which, until 2005, was considered a hazardous waste.

Despite the growing pressure to reprocess more and more ELVs, and the growing financial opportunities available for those who do, few metals recyclers have been able to enter the market for shredder fluff until now. British Metals Recycling Association director general Ian Hetherington believes this is due to a lack of reprocessing technology.

“We are talking of the absolute final bit of residue after metals and plastics recovery. It’s only just becoming even technically feasible to extract anything further from that, and the technologies and processes employed are only just beginning to come on-stream,” says Hetherington. “There aren’t any effective technologies on a production scale, although that is due to change radically during the next 18 months.”

“For the percentage of fluff I’ve got coming out, the infrastructure that’s available at the moment is far too expensive”

Technologies include more refined extraction techniques and energy-from-waste (EfW) facilities such as pyrolysis, gasification and other conversion technologies, which will turn the fluff into energy or refuse-derived fuel (RDF). But for such plants to represent an effective reprocessing solution for shredder fluff, and a viable destination for metals recyclers to send their product, Hetherington says that more waste infrastructure is required.

“This is where capacity becomes an issue,” he says, “because the planning system needs to provide for adequate land use for these plants. They’re not EfW in the traditional sense - processing household waste, which doesn’t tend to be very popular. These plants are tarred with a similar brush, but they do need to be provided for in terms of district plans and similar.”

But for metals recyclers on the ground, a lack of EfW infrastructure is only part of the problem. A much greater concern is the cost on small-and medium-sized metal recyclers of reprocessing ASR. Ipswich-based Sackers Recycling joint managing director Adrian Dodds says: “At the moment, the only option we’ve got is landfill. We would very much like to look into processing ASR into some sort of RDF, or processing it further and getting more metal out of it, but because we’re a small operator we don’t have as much fluff as the bigger boys do.

“The shredders that EMR and Sims use - well, they’re looking at thousands of tonnes a week compared with our hundreds, so it’s easier for them to invest that sort of money and their payback will be a lot better. But for the percentage of fluff I’ve got coming out, the infrastructure that’s available at the moment is far too expensive.”

Part of the problem, argues Hetherington, is the complex nature of the previous Government’s multi-tiered planning system, which he believes has not benefited metals recycling infrastructure. He is now looking to the newly formed coalition Government, with its remit of localism and the idea of a ‘Big Society’, to provide the solution to the current challenge of providing adequate EfW infrastructure to support shredder fluff reprocessing.

He says: “Will localism help? I think that, initially, it will possibly make life more difficult. But I can see that more communities [will want to take] more responsibility for the sort of facility they need to recycle the waste generated within those communities. That’s the hope we have of the Government’s move to a bigger, responsible society and localism.”

Hetherington explains that the other difficulty with providing EfW capacity is a funding gap, which is often provided by banks backed by Government guarantee. “If a bank is faced with a commercial EfW installation as an investment proposition that does not have guarantees, then it looks very long and hard at it. And if it’s a competitive situation, the bank is going to go for one with a Government guarantee.

“So even though these mechanisms have been very helpful in stimulating investment in household waste processing, they actually get in the way when you want to do some of these things commercially. So the sorts of mechanisms we are encouraging the Government to embrace would be things like relief from upper levels of landfill tax for those companies using advanced technologies to replace landfilling with EfW.”

Dodds agrees, arguing that the rising cost of landfill tax is one of the obstacles preventing him from investing in ASR. He says: “If other firms, like EMR and Sims, had outlets for their shredder fluff and it’s at zero value, and I’m still paying £50 into landfill, then I’m worse off than them because I’ve got a portion of my scrap coming in that I’ve got to pay landfill on - and that’s only going to get higher.”

However, one metals recycler, who declined to be named, explained that gasification is still a fledgling technology which has not yet become cheap enough to warrant the investment required to turn ASR into a commodity, regardless of the backer.

“Gasification technology is becoming more mainstream, although shredder fluff is still a very harsh product to process,” he explains. “Long-term, large-scale gasification plants may struggle to reach their payback, if the time-scale is very long. There are all sorts of companies offering alternatives to landfill and, as such, the price of waste should start to drop in the short to medium term because people need volume to make plants work. We all expect the £8 landfill tax escalator to continue, but if competition drives this price down through capacity filling plants, the payback will not happen.”

Another difficulty for shredder fluff reprocessing is the current definition of the recovery process, which currently does not qualify as recycling. Hsetherington explains: “In order to meet recycling targets in the UK and the rest of Europe, these processes need to be classified as recovery because, obviously, everyone concerned is keen to meet the recycling targets.

“For example, in 2015 we have a target for recovering 95% of ELVs. Now, the last 5% of that is going to be energy. There is no other option for those materials, but the current classification [which is unclear] would suggest that gaining energy from the shredder residue would be classed as disposal. But then it wouldn’t count towards those targets, so it needs some concentrated work by the Government to make sure the classification of these processes are up to date.

“At the moment, it is a non-political process; we’re talking to officials about getting these rules changed. If we have difficulty doing that, we will move to lobbying, but I’m very confident that the Government will see the light.”

However, Dodds is sceptical that metals recyclers will receive the Government support they require to turn ASR into a commodity: “The Government is not interested in us. The waste disposal industry may be slightly different, but as far as the scrap metal industry goes, they might talk about it, but the [last Government] never helped us out with the ELV [Directive targets]. Whether this new Government will or not, I don’t know.”

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