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

09 June 2016 Consultancy.uk

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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WEF finds no progress made on greening economy

01 April 2019 Consultancy.uk

The reports of two influential bodies, in the space of a day, have warned that no progress is being made to prevent major climate change. The World Economic Forum has warned that greening of the global energy transition has stagnated over last five years, while the International Energy Agency has confirmed coal use rose again last year.

The position of the Academies of Science from 80 countries, plus a majority of scientific organisations that study climate science, is that humans are causing rapid climate change – often referred to as global warming. Roughly 95% of active climate researchers publishing climate papers endorse the consensus position that since the industrial revolution, the boom in carbon emissions from fossil fuel powered human activity has heavily impacted the planet, with rising levels of CO2 and other greenhouse gases trapping heat from the sun causing global temperatures to rise – something which will have catastrophic results in the near future.

Despite the steadfast consensus among the scientific community on the matter, however, there has been little to no meaningful action to avert disaster. In fact, while the signing of the Paris Accord was met with great excitement, since it came into force, global carbon dioxide emissions have continued to rise. Today, they sit at their highest levels yet, after a strong economy and extreme weather stoked a surge in energy demand last year.WEF finds no progress made on greening economyAccording to the world’s energy watchdog, the Paris-based International Energy Agency (IEA), energy spiked by 2.3% in 2018 – the biggest leap since 2010 – with that demand largely being met with fossil fuels. As a result, global emissions of carbon dioxide hit the record high of 33 billion tonnes in 2018, a rise of 1.7% on 2017’s figures. Commenting on the findings, IEA chief Fatih Birol said the rise in energy demand was “exceptional” and a “surprise for many.”

Birol added, “We have seen an extraordinary increase in global energy demand in 2018, growing at its fastest pace this decade. Looking at the global economy in 2019, it will be rather a surprise to see the same level of growth as 2018.”

The suggestion from Birol that 2018 is likely to be an anomaly which will not be seen again is strange, considering the added strain which the boom in emissions will place on the environment. To suggest that heightened energy demand was driven by extreme weather – which is increasingly difficult to claim is unrelated to man-made climate change – and then to suggest that such a thing is unlikely to occur any time soon in spite of emissions having increased seems contradictory.

Regardless of this, the bad news was further compounded within hours of the IEA’s release. A report from the World Economic Forum released on the same day concluded that the world's energy systems have not become any greener in the last five years. Despite the agreement of global climate targets, falling green power costs, and mounting public and business concern over the catastrophic impacts runaway climate change could wreak, the WEF’s damning assessment warned that little to no progress has been made on making energy systems more environmentally sustainable since 2014.

Coal is the largest hindrance of change on this front, according to the report. Recent years have seen improvements in energy access and security, but far too many nations remain dependent on coal power for the new energy systems to have made any environmental gains. At the same time, major economies have failed to decrease or even slow the amount of energy they use per unit of GDP, leaving smaller actors who have made changes micturating into a gale. Change on the part of the world’s largest economies is therefore crucial to driving the development of a greener, more efficient global economy, the WEF concluded.

Commenting on the findings, Roberto Bocca, leader of the WEF's future of energy and materials division, said urgent action is now needed to move toward decarbonisation. He added, "We need a future where energy is affordable, sustainable and accessible to all. Solid progress in bringing energy within the reach of more and more people is not enough to mask wider failures, which are already having an impact on our climate and on our societies."

The news comes even as sustainability continues to be talked about as a ‘top agenda item’ at the majority of the world’s largest corporations. While 85% say that it will be more important still in another five years, it is clear that the majority of the world’s most powerful businesses are failing to walk the talk on the matter, regardless of what governments do.