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Lord de Mauley considers hedging market for waste

The UK recycling market could be put on a firmer footing by allowing waste to be traded on the basis of future prices, according to resource minister Lord de Mauley.

In a letter sent earlier this month to waste industry representatives who attended the Investor Symposium held in May by Defra and WRAP, Lord de Mauley outlined a proposal to introduce hedging in the waste and recycling sector.

This would mirror practices in traditional markets where intermediaries buy and sell commodities on the basis of future prices.

He said the move would help keep valuable resources in the UK, help to stabilise prices in the face of global variability and drive up quality. In addition he said it would bring about long-term contracts to the market.

He said: “All of these would drive the installation of more reprocessing infrastructure in the UK and the production of higher quality outputs for global markets thereby contributing to economic growth.”

WRAP is setting up a “small working group” to look at the viability of this type of market.

Lord de Mauley added: “The resources management sector would be expected to take the lead on this matter after the initial convening discussions as that is where the expertise sits. It may be possible to link this up with the commercial and procurement expertise within the Green Investment Bank.”

Government action

Many attendees of the Investor Symposium had called for stronger waste policy from Government and for stronger enforcement and legal penalties in order to clamp down on waste crime.

Lord de Mauley’s letter outlined what the Government was doing in response to these and other concerns. He said three issues had been identified, including the publication of the Materials Recovery Facility (MRF) Regulations, “better publicity” of discussions with the Ministry of Justice on waste crime and further liaison of UK Government departments with regulators.

Lord de Mauley said: “Input would be required by the Government on all these actions, by Defra specifically regarding discussions with the Ministry of Justice on waste crime.

“We expect WRAP, the Environment Agency and relevant trade associations to continue to contribute to the publication of the Material Recovery Facility Regulations. Further information will be made available at the appropriate time.”

Internal restructuring

In response to concerns over a lack of joined-up policies and action on issues such as issues such as the waste collection not just within Defra but between Government departments, Lord de Mauley said: “Over recent months the department has been reviewing its priorities and structures with a view to ensuring that it delivers best value for money.

“Part of this review has led to the internal restructuring of work relating to resource management, resource efficiency and sustainability policies being brought together under one directorship. This we believe will improve the co-ordination of policies affecting the resource management sector.”

Other issues addressed in the letter included improving data provision and sector training and development.

Readers' comments (2)

  • The Minister is right to identify the opportunities which a functioning futures market could offer. A key to delivering that will be the establishment of verifiable quality standards. Before people will commit to buying a tonne of plastic bottles, they will want to know what is meant by that and be confident they will get a tonne of bottles and not 700Kg mixed with 300 Kg of assorted junk.

    The starting point is a robust sampling regime under the MRF Code of Practice.

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  • Our friend de Mauley states the obvious, and Philip Ward has hit the nail on the head about what needs to be done before such a system will work. I'm sure most large businesses involved in markets for recycled materials will have investigated this route, and probably came to the same conclusions that we did at Waste Management International in 1996/7 and at WRAP in 2002, namely, (a) there isn't enough quality consistency in these markets, and (b) grade specifications varied from market to market. Trust is also a significant factor, and there isn't much of that! It would be good to hear from those involved in the market today who have views about this - are you out there, Angus McPherson?!

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