Brexit is throwing up plenty of uncertainties for the energy-from-waste (EfW) sector – including media-driven fears about ‘putrefying stockpiles’ of rubbish and genuine industry uncertainty about more red tape, higher costs from export tariffs and the ongoing impact of exchange rate movements.
It has been an unwelcome distraction when layered on top of the UK’s existing uncertainties about recycling levels and waste arisings for the 25-plus year horizon of new-build EfW facilities.
But the opportunities for the sector remain healthy, and the impact of Brexit is likely to be more balanced in reality.
The demand from Sweden and Denmark for waste for their incinerators will persist, and waste management firms are supporting the construction of more UK facilities, on an unsubsidised basis, with long-term commitments of gate fees.
These waste supply contracts create a certainty of disposal and cost for the waste managers while, for the investor, the gate fees fix a portion of the revenues.
Developers of new plants are finding that the weak pound is driving up the cost of European technology. But sterling is probably undervalued, and we will see a steady improvement to encourage further investment in UK plants throughout 2019.
The unsubsidised environment is influencing choice of technology, too, with a move away from gasification.
The EfW facilities which will get built are likely to be those that can offer convenience in terms of drive times and location for waste management businesses. They will also need to accept a wide range of waste, with on-site front-end processing available.
The convenience factor also highlights the need to identify underserved areas of the UK. We need solutions for waste for the highly populated south of England, where planning consents for new plants are hard to come by.
So what lies ahead? It would be helpful if we saw more regulation to divert waste streams from landfill, further subsidy support or an allocation for the Contracts for Difference aimed at EfW but, in the meantime, developers are managing to make the unsubsidised world work for new plants.
The increased certainty of the post-Brexit world should see the Government’s focus return to the important task of delivering on its waste strategy, and hitting targets for recycling and decarbonisation.
Whatever the outcomes, there is a lot of untapped potential in the EfW market.
Beth Watkins is director at Foresight Group