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Rapid growth in RDF market could slow development of waste infrastructure, says Tolvik

Stakeholders must debate waste export policy to prevent the rapid growth of the refuse derived fuel (RDF) market undermining investor confidence in UK energy from waste (EfW) facilities and slowing down the development of waste infrastructure, says a report by Tolvik Consulting.

The document, UK Waste Exports – An Opportunity or a Threat? explains that the RDF market has experienced a huge amount of interest from stakeholders in the waste sector wanting to export RDF to northern Europe. This is being driven by the rising cost of landfill in the UK and the demand for fuel to feed facilities in Europe which has “significant over-capacity in the thermal treatment market”.

Tolvik claims the UK is exporting 240,000 tonnes of RDF each year but this could rise to 500,000 tonnes next year and there is scope for the UK to eventually produce between 2.3m tonnes and 4.8mt of RDF in the UK. This upward trend is demonstrated in recent EA figures which MRW reported on this week.

However, over 15m tonnes of new UK EfW capacity is either consented or proposed. Tolvik reports: “There is a clear risk that sustained high levels of RDF exports could undermine investor confidence in these facilities – particularly those with a large merchant waste element.” It says this is particularly the case if the gate fee for RDF falls below landfill tax, which will encourage waste companies to prefer RDF export over landfill. This could lead to less feedstock being available for UK facilities. In addition, because RDF lends itself to short-term contracts, feedstock suppliers may become less willing to enter into long-term agreements, favoured by investors.

In addition, the report highlighted that the Environment Agency may decide to review its position statement on RDF export, which would also be an indication of where UK policy would move. Currently, exporters have to renew their permit to export each year.

Highlighting four potential future scenarios (see box) for the UK, Tolvik believes it is “a critical time for waste export policy to be debated by stakeholders” to clarify the future of the rapidly growing UK waste exportmarket.

Potential future scenarios:

·         Market recovery - In north Europe, leading to EfW overcapacity reducing, so there is no longer a need for UK RDF. In the process, UK infrastructure development has been delayed.

·         Export solution – Overcapacity in Europe remains at current levels, gate fees become even more competitive. UK waste infrastructure is less than needed to deal with all waste in the UK.

·         Interventionist – The EA tightens up its position statement, only allowing exports of high quality waste derived fuel. There is little long-term impact on UK infrastructure development.

·         Controlled – RDF exporters provide the EA with justification that insufficient UK treatment capacity is available to meet RDF production. Creates initial investor uncertainty but only limited delays in developing UK waste infrastructure.

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