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Investors eye up energy from waste

Great potential for investment exists in energy from waste technology and scarce materials recovery, according to a new report.

Investor Perspectives on Waste and Resource Recovery published by Carbon International is based on the views of five investment firms experienced in municipal and commercial waste recovery technology investment.  

Carbon International chief executive Tom Whitehouse said: “Whatever the future holds – slow recovery, no recovery, stagflation or inflation – investing in waste and resource recovery has growing appeal.”

Three key findings are highlighted by the report:

  • Scarcity of metals and other important raw materials is driving the application of extraction and recycling technologies particularly in developing countries
  • There is big potential for efficient waste to energy technologies, particularly within the UK, which is a European laggard and in a fast-growing developing countries such as China, India and Brazil, that need more energy
  • The biggest risks are to be found in the ‘upstream’ control of the waste supply, consistency of waste regulation, technology and a lack of finance for what can be capital-intensive projects.

Impax Asset Management managing director Nigel Taunt said: “With [UK] private finance initiative projects struggling to close, we hope to see more [UK] local authorities proposing medium term contracts as an alternative. More fundamentally, waste to energy will increasingly be the story. Every non-incineration waste treatment will need an energy solution as part of the package.”

Curzon Park Capital director Cedriane de Boucaud added: “Municipal waste to energy is still difficult and not sufficiently efficient. However, this is where big money is if we can get it right in the medium to long term.”

But the investors also highlighted the risks associated with the sector. De Boucaud said: “If all you do is resource recovery, the risk is all in the access to the waste and ability to maintain output prices despite volatility in input prices.”

Taunt added that “the number one risk continues to be availability of financing as these [companies] are heavy users of investment capital”. He said securing investment for technology that had little or no track record in commercial scale applications was particularly challenging: “Gasification is one technology that needs proving and anaerobic digestion will always require careful management to get the fuel mix and operating conditions correct.”

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