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Brexit alters Eunomia capacity predictions

Eunomia has predicted that a ‘hard Brexit’ could mean the UK will not achieve the surplus of residual waste treatment capacity previously expected.

Following the UK’s vote to leave the EU in June, the consultancy has plotted two potential scenarios depending on how ambitious the country’s recycling ambitions are after 2020.

One scenario, a ‘soft Brexit’, assumed that the UK will try to meet the EU’s proposed 65% municipal recycling target for 2030 and subsequently reduce the residual waste it produces. This indicates a surplus capacity by 2020-21.

The most acute ‘hard Brexit’ scenario, however, assumes the UK’s residual waste levels will remain the same, meaning there will not be a surplus in domestic treatment capacity.

Eunomia’s latest Residual Waste Infrastructure Review says that a ’hard Brexit’ would create a difficult environment in which to plan for facilities to meet the UK’s needs, and the uncertainty could lead developers to consider additional investment in UK treatment capacity.

Both scenarios assume refuse-derived fuel (RDF) exports will increase to 3.5 million tonnes in 2016 and plateau afterwards.

Eunomia previously made a “conservative” prediction in May that RDF exported from the UK would reach 3.7 million tonnes this year, but has revised this downwards.

It says reductions in residual waste and the development of new facilities have closed the UK’s capacity gap from 12.9 million tonnes to 10.2 million tonnes.

The report suggests that, when the UK completes its EU exit, taxes on RDF exports could rise.

It says: “Municipal waste imported to the EU from any third country is subject to VAT at the standard rate and a most favoured nation duty of 6.5%, unless subject to other measures.

“While the implications of defaulting to World Trade Organization rules require further examination, a tariff could increase the cost of waste exports from the UK and potentially make this option less competitive.”

But it also suggests that facilities on the continent receiving RDF could lower gate fees after the UK leaves the EU because they will still require British feedstock.


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