The UK’s departure from the EU will affect labour and equipment costs of the national energy-from-waste (EfW) sector but is unlikely to have a significantly wider effect, a conference has been told.
Ian Crummack, chairing the 13th International Energy from Waste event in London, considered how fluctuating exchange rates, the supply chain, energy prices and policy positions would influence the industry.
Crummack is chief executive of Cobalt Energy, which specialises in engineering services in power generation, utilities and waste.
He told the conference that he was starting on the premise that it was “politically inconceivable” that a British Government after Brexit could tone down the Industrial Emissions Directive, which regulates discharges from factories and other plants, particularly given public concerns about air quality.
But a weakening pound would increase the cost of process and equipment given that in the UK there are:
- no major waste combustion suppliers
- few gasification suppliers
- no boiler suppliers
- no major turbine suppliers
Crummack pointed out that the process line, heat recovery and power generation elements typically accounted for more than 30% of the cost of an EfW plant and much of the expertise came from elsewhere in the EU. All were negatively affected by weaker sterling against the euro.
He also thought the cost of labour would increase post-Brexit, given the current reliance on ‘foreign’ workers and a “brutal truth” that the UK does not have a large enough or sufficiently trained workforce to replace them. He said there was also pressure from the trades unions about relative pay rates.
Because the skills and the workers were essential, he thought there would be additional costs as a result of Brexit.
But Crummack thought that no change was likely when it came to operating plants because they were heavily influenced by the cost of retained and permanent staff, life-cycle maintenance, locally available reagents and consumables, and the UK’s best practice treatment of incinerator bottom ash and air pollution control residues.
The UK also had its own spares and specialist service along with a growing base of knowledge and expertise in running plants.
He also expected that a more decentralised energy policy in the UK and with industrial consumers being more worried about energy security would both work in favour of a sector generating power from waste.
An unknown factor, though, was the focus of ministers – “never high at the best of times” – which was currently being distracted by the Brexit process, he added.
Crummock concluded that the sector would have to cope with an increased cost base but it had overcome obstacles before.
“The solution is in our hands to make our industry and plants more efficient and to work harder at getting people to realise the benefits.”
Another speaker, David Newman, regional managing director for infrastructure at the Bank of Tokyo-Mitsubishi UFG, said there was now more investment activity in the UK sector than in the past three to four years with new lenders on the scene.
There had been a change in mindset for developers, he said, as contractors realised there was “life outside public-private partnerships”.
james snape efw 2017
James Snape, a partner in the Nabarro law firm (pictured), looked back five years and said merchant plants were no longer considered such a risk, and he expected a decline in the export of refuse-derived fuel, the feedstock for EfW plants.
He said the “limited and shrinking pool” of engineering, procurement and construction contractors was a continuing concern, as was uncertainty about support mechanisms such as Contracts for Difference and Renewable Heat Incentives.
Snape also said there was a move away from traditional waste management companies sponsoring major waste projects.