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It’s time for a new economic realism

It’s a frosty Saturday morning in Amsterdam at the Museumplein. My young daughter and I fight the bitter cold of an open air ice rink to take in the last of the winter season’s skating.

Taking a break to dry out wet gloves in a brasserie, it’s time for something warm. And when only a cappuccino will do, the counter assistant breaks the news that it’s black coffee or nothing. And there it is, illustrated perfectly by a simple coffee cup: the challenge and opportunity facing the waste sector.

The opportunities are real and significant. The core waste sector generated £3.8bn in gross value added and supported 103,000 jobs in the UK economy in 2013. In 2014-15, Viridor alone completed around £875m in investments in UK energy recovery and recycling infrastructure, releasing over one million tonnes of resource recovery and landfill diversion capacity.

An ever more circular economy, where the UK increasingly reuses and recycles the resources it already has, could help generate 50,000 new jobs with £10bn investment, boosting GDP by £3bn.

But we need to move from the language of waste to the rhetoric of resource, recognising that waste is a zero-value concept. It is time to reposition waste as undesirable, environmentally and for its economic impact; nationally and locally where spending on waste displaces investment in schools, infrastructure or social care.

We need to define and recognise the value of resources, ensuring that the value concept connects with corporates, councils, communities and children like my daughter.

The challenges are significant. UK resources policy has been left in a pickle by a combination of a lack of joined-up Government, Defra ‘stepping-back’ from waste policy, mixed messages from politicians and the impact of austerity on local government.

A ‘double whammy’ of policy problems, combined with sustained declines in the value of commodities on global markets, presents a significant threat to sustaining progress made to date and to the achievement of 2020 sector targets.

Now is therefore the right time to reassess the opportunities and economics of moving towards a circular economy. Put simply, we need a new economic realism if we are to progress UK recycling and resource efficiency.

While landfill levies and public and private sector innovation have driven multi-billion pound investment in anaerobic digestion and residual waste technologies, the reality is we have a resource sector with rapidly ageing, increasingly obsolete, recycling technology and systems.

recycling sector

As the CIWM/Ricardo-AEA report Waste On The Front Line – Challenges and Innovations highlighted, input material is increasingly contaminated as councils count the cost of cuts in front-end waste communication and collections. Out-of-specification waste has risen by 3% in each of the past two years.

Recycling systems are being stretched to the limits, regardless of collection method, which pushes up processing costs as material requires increasing ‘re-work’ to meet market demands. This against a backdrop of unprecedented resource price volatility and rising quality demands.

Such a ‘perfect storm’, which includes a dysfunctional PRN system and rising waste crime, is undermining the economics of the industry, UK resilience and its ability to hit targets.

But with spring approaching, our challenge is for change. We need real resource leadership as a policy priority in the next Parliament. Commodity markets want cappuccino, not black coffee – and technology alone is no longer the answer.

It is time for a National Resources Council to strengthen the Government’s ability to respond strategically to resource supply threats. A re-connect in Whitehall needs resource leadership at Westminster: strong, stable, clear and consistent policy from political leaders.

Combined with combating waste crime, Britain needs a stronger regulatory regime that supports quality and compliance in this essential utility sector. The core cities and devolution agendas provide opportunities to examine resource efficiency opportunities at a devolved level.

We need to lock-in and institutionalise quality by prioritising preventive spending and smarter commercial contracts. This will refocus resources for councils and recycling partners on shared risk, and on engaging, consistent communication to arrest declines in recycling performance. Here the MRF Code of Conduct will help.

The UK faces a stark choice: further success or substantial failure. It is time for economic realism and a new economic model – one of connectivity, scale and consistency with effective and efficient regulation.  

Herman van der Meij is managing director of Viridor Resource Management

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