How much is enough?
The UK currently lacks the infrastructure capacity needed to treat all of its residual waste domestically, but how much will we need in the future? As the debate heats up, Resource attempts to weigh up both sides.
Until such time as we reach the promised land of a Zero Waste society, there will always be a need for residual waste treatment. In recent years, recycling rates in the UK have stalled, reaching 45.2 per cent in 2016, representing an increase of 2.3 per cent since 2013, meaning the majority of the UK’s waste is not being recycled and is treated as residual waste. A lack of significant government policy regarding waste and resources has contributed to this stagnation in the UK’s recycling progress.
Furthermore, the UK’s reliance on residual waste infrastructure – we mainly mean energy-from-waste (EfW) processes, such as incineration, gasification, pyrolysis, mechanical biological treatment – has grown markedly since 2010, effectively doubling, largely to cope with the displacement of residual waste from landfill triggered by the EU Landfill Directive.
However, with the Department for Environment, Food and Rural Affairs (Defra) now announcing a raft of policy – albeit from a low starting point – and public understanding of waste issues increasing, the prospect of pushing more waste out of the residual stream looks increasingly likely, posing the question: how much infrastructure capacity is enough to deal with our residual waste? Resource examines the issues.
Last summer, several reports were published by waste management companies, including SUEZ and Viridor, as well as from Eunomia Research & Consulting, offering contrasting forecasts of the UK’s waste situation and corollary capacity needs up to 2030 and sparking a heated back-and-forth over which side had it right. Eunomia’s ‘Residual Waste Infrastructure report (12th Edition)’, released at the start of August 2017, stated that there is currently an under-capacity of around seven million tonnes, which is set to become an overcapacity of between 3.4 to 9.5 million tonnes by 2030 (scenarios modelling a recycling rate of 50 per cent and 65 per cent). SUEZ recycling and recovery’s ‘Mind the Gap 2017-2030’ report was released in response to Eunomia’s claims, estimating a current total UK treatment capacity shortfall of 13.6 million tonnes, which will fall but still be left short by 2.4 million tonnes in 2030. Other major reports were then released by Biffa, FCC Environment and Viridor in response to Eunomia’s findings.
In a bid to find common ground in the marketplace, Tolvik Consulting produced a market review for the Environmental Services Association (ESA), comparing the findings of each report before estimating the UK’s likely capacity needs by 2030 using its own tonnage model across five scenarios, from low to high recycling. The majority of the scenarios found an under-capacity, the upper limit of which was 13 million tonnes when excluding additional EfW capacity and RDF exports, 11 million tonnes when just excluding RDF exports, and 8.5 million tonnes when including both additional EfW and RDF exports.
From looking at the above, it is clear that there is a great divide between Eunomia on one side and SUEZ and other waste management companies on the other. The implications of over or under-capacity for both sides, and the perceived likelihood of either situation happening, also diverge. For Adrian Judge of Tolvik Consulting, the firm that put together the ESA Market Review, believes that an under-capacity would “sustain landfill tonnages” and struggles “to see how in an environment, unless something fundamentally changed, how we would reach a point of overcapacity.” Stuart Hayward-Higham, Technical Director at SUEZ, focuses on the price side, stating: “Overcapacity, if it occurred, which we don’t think it will do, would cause EfW prices to drop and under-capacity means you retain higher prices than the market necessarily needs to have.” On the other side, Harriet Parke, Senior Consultant at Eunomia, again indicates that in a context of market overcapacity, prices for EfW would drop as operators compete for residual waste. However, Parke and Eunomia’s report then takes a logical step forward by linking lower EfW gate fees to the potential recycling rate, adding: “If gate fees are dropping in the residual market, that then undermines the business case for pulling out recyclable materials. If you think about B&I waste, for a business if the cost for their residual waste becomes far cheaper than for recyclables, then they may be minded economically to send it for residual treatment rather than separating out the materials for recycling.”
A further point, from Shlomo Dowen, National Coordinator of the UK Without Incineration Network (UKWIN), refers to the long-term nature of EfW contracts and the economic model we use to measure their impact: “You have to think about whether it will become a stranded asset long before it will pay itself off, and you will have to think about whether or not that capacity would still be economically viable if it had to pay for the environmental harm caused by all of the greenhouse gases it would release.” Judge, however, denies that future contracts based on market capacity will be of the 25-year kind that we have seen in the past, while Hayward-Higham suggests under-capacity facilities could be adapted to other kinds of treatment.
A number of points of divergence arise within the reports. Firstly, there is a divergence on current capacity and the projected capacity due to come online by 2030. Eunomia believes there is currently 13.5 million tonnes of ‘effective’ operational capacity in the UK, with a further 4.8 million tonnes of capacity under construction or committed, in addition to a constant level of 3.6 million tonnes of RDF exports through to 2030, with total committed capacity to rise to 21.4 million tonnes. A 95 per cent availability of a facility’s designed capacity is assumed, with a further 20 per cent reduction for MBT and advanced conversion technologies (ACT), due to unplanned downtime, while avoiding double-counting of waste that goes through pre-treatment facilities linked to thermal treatment facilities.
Meanwhile, at the other end, SUEZ assumes a treatment capacity of 18.6 million, including RDF export, and projects an increase to 28 million tonnes in 2030, with a decline in RDF exports to 1.1 million tonnes. SUEZ is far more ambitious than Eunomia in its assumptions for facilities with financial backing or planning consent to come online, largely owing to its regional assessment of capacity needs, dividing the country into 14 trading zones based on transport and logistical considerations, before combining that into a national total. The regional assessment provides a larger total because, although total capacity may be at a certain level, SUEZ argues that if all treatment facilities were based in the South East, for example, there would be no logistically suitable facilities for somewhere like the North East, skewing the national capacity picture.
Tolvik’s report exposes the difference in operational capacity assumptions between Eunomia on one side and many of the waste management companies on the other. Eunomia is far more ambitious in its assumptions regarding the potential of MBT and co-incineration facilities to accept more residual waste and of innovation to drive increases in existing facility capacity. SUEZ, meanwhile, is more reserved, factoring in expected facility downtime and operational difficulties. The issue here is that both assumptions are valid points, and consensus needs to be reached between the two to provide a more accurate assessment of the UK’s current operational capacity.
Regards to RDF exports, SUEZ assumes reduced export tonnages of 1.1 million tonnes per year due to the uncertain future of the UK’s relationship with the EU and questions over whether they will be affected by tariffs or excessive gate fees “where the price point [estimated at £55-65 per tonne] encourages more on-shoring”. However, with the ESA calling for tariff-free export of waste to Europe and the government suffering defeats in the House of Lords on an amendment to the Brexit Bill over staying in the Customs Union, it seems possible that an overflow in Europe could remain. Parke and Eunomia assume RDF will remain constant and even increase as European states chase the 60 per cent recycling target for 2030 set by the EU’s Circular Economy Package (CEP), stating that their capacity “will only increase and therefore we can make use of that overcapacity on the continent.”
Landfill capacity will also affect what infrastructure planners will need to take into account. All reports recognise the role landfill can play, with Judge saying: “While landfill is environmentally the worst option, but as part of a round solution it may be the best solution for a very small proportion of the waste.” The amount of waste sent to landfill has fallen – though we still send around 15 million tonnes a year to landfill according to an Isonomia report on 2015 figures – but, we must assume, owing to the EU’s Circular Economy Package and its 10 per cent limit on municipal waste going to landfill by 2035,which Defra has confirmed the UK will be beholden to, that landfill capacity will continue to fall, providing less overspill capacity, and indeed, the Eunomia report assumes a two-million tonne capacity for 2030.
Probably of most significance are assumptions and estimates regarding total residual waste arisings currently and how they are projected to change in the future. Despite both Eunomia and SUEZ both assuming similar growth rates – Eunomia predicts a 0.5 per cent increase in household waste while SUEZ predicts 0.6 per cent – along with the population growth estimates from the Office forNational Statistics of 0.5 per cent per year, their predictions diverge sharply, with Eunomia’s two scenarios predicting residual waste arisings to fall from 26 million tonnes per year to 15.9 million in the best case and to 22 million in the second case by 2030, while SUEZ estimates that residual waste is currently 32.2 million tonnes a year and will only fall modestly to 30.4 million tonnes.
Where the two reports differ – besides on recycling rate assumptions, to which we will arrive later – is that Eunomia does not include landfilled waste ncorrectly classified as inactive, treatable waste passing through exempt waste sites, material rejected from recycling processes, a proportion of C&I waste requiring non-landfill treatment and illegal waste that would have gone to residual treatment, while SUEZ does. SUEZ’s assumptions have also been informed by its operational experience, customer feedback and market conditions.
There is a great amount of uncertainty in waste arisings estimates largely due to limitations in C&I data, which were significantly revised down to an estimated 27.7 million tonnes arising in 2014 and then revised back up to 41.9 million tonnes by Defra in its latest revision in February 2018, thanks to industry input, to which Hayward-Higham attests: “C&I waste is difficult because Defra doesn’t see a lot of C&I data because it’s not consolidated nationally, so we help them understand how C&I data works and how we can interpret their data to get back to that point.” Despite SUEZ’s figures, we must pose the question of how much of this waste is truly residual waste? According to Harriet Parke, if we link our capacity needs to the amount of waste that is currently treated as residual waste, projecting that into the future, we will be building capacity based on projections that include a significant amount of recyclable waste. Parke says: "If you look at the latest compositional studies, the latest one is for Wales in 2016, but a full UK-wide survey hasn't been done since 2010. In the latest Welsh survey done by Resource Futures, you've still got between 50-70 per cent of material in household residual waste that is recyclable."
Efforts to assuage such fears by those calling for more capacity are unconvincing, with Adrian Judge stating that if too much capacity is built, “plants would operate half-full”, rather than search for more waste – an unlikely outcome, considering the supply and demand model at the heart of our current economic model. The argument for pulling out recyclable waste from the residual waste stream is summed up succinctly by Shlomo Dowen, who says: “You cannot have your resources and burn them too. The best way to deal with residual waste is to prevent it from becoming residual waste in the first place.” If we understand that a vast proportion of the waste in the residual waste stream is actually recyclable, we understand that increasing the recycling rate can lessen capacity needs. Less recyclable waste in the residual waste stream means less waste and less capacity requirements.
Some reports have a high and low recycling projection, or have modeled as such, with Eunomia modelling a 50 per cent rate and a 65 per cent rate by 2030, while others such as FCC Environment and SUEZ take a central recycling prediction, forecasting 57 and 56 per cent respectively. In terms of C&I recycling rates, Eunomia take a very optimistic outlook, predicting 70/75 per cent for commercial waste recycling and 75/80 per cent for industrial, while SUEZ assumes a flat 65 per cent across both streams.
Of course, ambition can be a driver, but, how likely is the UK to reach the higher recycling rates in the various reports? Considering recycling has stagnated and only increased by 2.3 per cent in the UK since 2013, and it is already highly unlikely that we will meet the 50 per cent EU statutory target for 2020. What must be remembered is that when these reports were compiled we were living in a policy vacuum with very little indication that the government had any coherent plan for the resources and waste sector. Now, with the publication of the government’s Industrial Strategy, 25 Year Environment Plan and the upcoming Resources and Waste Strategy, detailing how the government plans to stimulate recycling through secondary markets, extended producer responsibility (EPR) and minimum recycled content, we now have a raft of policy identifying the path forward for our sector, allied with an unprecedented surge in interest and understanding of waste and resources from the general public, which Parke likens to the surge in waste understanding at the start of the 2000s, saying: “Behaviours changed significantly. We then had a plateau and we’re now on the second wave. It’s exactly the right time for policy to be ambitious.”
The certainty of direction is now there, and we should now see a push towards the higher rates of recycling. As Hayward-Higham says: “Policy reduces the number of variables, the government picks the recycling target and we all work off the back of that and we’ll be more aligned when trying to hit the recycling target.”
Where does that leave us? In the policy context we were in this time last year, it appears reasonable to believe that the UK was heading for an under-capacity of residual waste treatment facilities. Given a collective lethargy and disinterest towards waste and resources from government, even eternal optimists would have been hard-pressed to hold much hope of a turnaround in the UK’s waste fortunes. However, we are now living in a moment characterised by unprecedented public interest in waste and its impact on our planet and government dedicating serious policy to the issue. With the EU’s CEP setting a 60 per cent target for recycling by 2030, with a target of 65 per cent by 2035, and Defra confirming that the UK will be signing up to the package, there is a real foundation to push on towards a high recycling society.
In order for the industry to get it right on the UK’s future residual waste infrastructure, a number of things need to be addressed. The lack of central reporting of and reliable data for C&I waste tonnages is an impediment to accurately predicting the UK’s future residual waste needs, while consensus must be reached on how much operational capacity there currently is and the potential for efficiency gains to be made at existing facilities to increase their capacity. Planners must also recognise the composition of residual waste and how much of that is actually recyclable waste. It then becomes a question of: ‘where do you want to spend your money?’ Residual treatment will remain part of a multi-faceted approach to waste management, but, with a clear sense of direction now emanating from government policy regarding moving towards higher recycling targets, do we want to invest in more residual waste infrastructure or do we want to invest in building the recycling infrastructure that will allow the UK to achieve a higher recycling rate? Our industry must seriously consider this question, with some level of ambition, if it is to accurately prepare for future residual waste arisings in a way that does not impede the UK’s move towards a circular economy.