The impact of Brexit on demand for UK Refuse Derived Fuel (RDF)

09 June 2016

Lenny van Klink, director of Rebel, an international financial consultancy group, looks at the potential impact of a UK exit from the European Union on the continental Refuse Derived Fuel (RDF) market.

The market for the export of UK waste to the mainland, especially the Netherlands, is to be viewed as one which has a high degree of certainty going forward: Brexit or no Brexit. The export of UK waste is one in which industry participants can continue to invest on the back of continuing UK waste export streams. There are three reasons that support this conclusion.

The UK’s Environment Agency estimates that in 2015 2.75 million tonnes (approximately 10%) of UK municipal and commercial waste volume is being exported, particularly to the Netherlands, Sweden and Germany. This process therefore represents a very important aspect of UK waste treatment capability. The participation of the waste sector on the mainland has enabled key benefits for the UK. Among others it helped the UK to meet landfill diversion targets.

There is increasing discussion within the UK waste industry on the implications of a possible Brexit and what implications this may have for the sector. The first issue to address in this discussion is the growing appetite of the current industry players to continue to participate in the export of UK waste.

Would a Brexit affect demand for UK RDF?

  • The EfW-facilities represent large sums of sunk capital in both the public and private sectors. There is a desire to continue to fill the existing capacity. Indeed the Dutch government is aiming at an increase in the recycling rate up to 75% in 2020 and decreasing the total volume of residual household waste to 100 kg per inhabitant in 2020. UK waste will remain a stable and possibly an increasing input stream for these assets.
  • The port and logistics chain are subject to efficiency improvements through the increasing volumes being handled. There is now every economic incentive for these specialised ports and hauliers to handle more volumes.
  • The UK based waste companies are viewed largely as trusted and dependable business partners. The waste streams are all year round leading to a good degree of business certainty.

The second issue concerns the regulations and standards around the export of waste. EU targets have historically tended to be more challenging and the waste composition specifications are most likely to become more onerous in terms of compliance requirements. UK waste exporters will have to meet EU requirements if the material is to move out of the UK. The UK has not historically been in the vanguard in setting EU waste specifications and therefore ongoing compliance to standards where the UK has had little or no say is not likely to create distress in the market.

The third and last issue is the greater uncertainty in the UK itself and the UK government position on UK disposed waste streams and landfill taxes post any Brexit. Waste streams will follow the most economically beneficial route to disposal but there appears no obvious incentive for the UK government to relax its current position and signal a move back of volumes from export to UK Landfill. Certainly, any such move would lose environmental gains already made and be seen by many as a real backward step in terms of UK environmental credentials.


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