Brexit: Making The Most Of Opportunities

Luke-PrazskyLuke Prazsky, technical director and waste resource management specialist at Wardell Armstrong, says that Brexit might well deliver some exciting opportunities for the waste sector, and we need to be ready to make the most of them…

brexit-or-bremainThe vote to leave was the single biggest change for the UK in the last 43 years. The future is less certain and uncertainty fuels economic turmoil, usually with a negative impact that can take years to recover. This economic turmoil is a risk to our industry and a threat to the UK economy and in turn our overall prosperity.

In the days and weeks since the referendum there have been many voices within the waste sector focussing on the potential negative impacts. Whilst there is nervousness about what the future now holds for our sector given the uncertainty and potential economic distress that may result, there will surely be opportunities created too which we should focus on maximising as we head for the Brexit gate.

Can we take advantage of the valuable resources and energy to reduce exposure to global market trends?

The vote to leave the EU has been seen as a sign of the nation’s desire take back control and independence from Europe. And if we are to become more independent, a key part of this is likely to include renewed focus on energy security, which could well bring opportunities for the waste sector.

With the right incentives from Government, Brexit could in fact offer opportunities to develop more energy producing facilities in the UK, create markets for products made from our recycled materials or promote organic waste treatment to maximise fertiliser creation ‘in-house’ as well as simple for energy generation.

Glass-CulletFunding/incentives for utilising recovered UK recyclate streams such as separated glass, metal, plastic etc. would have the benefit of driving up recycling rates as materials are likely to have a value. This is real circular economy theory in action for the benefit of the UK. Our separation (both physical and political) from Europe may allow us to exclude or reduce the use of non-UK derived materials and promote a UK circular economy.

One particular issue that affects our industry is global market volatility, both in terms of the price of recovered recyclates and energy prices. Brexit does offer the chance to do something positive to reduce our reliance on resource and energy imports from Europe. Let’s be clear about one thing – it is economics that drives how waste is managed in the UK and we have an opportunity to change things for the better (increased recycling, energy supply from waste etc.) which will in turn provide protection against global market volatility. So if we can control our waste and resource market economics then we can at least partially protect ourselves from that volatility.

Could this actually be an opportunity to develop more of our own energy recovery infrastructure rather than relying on our neighbours? The UK exported approximately 3m tonnes of RDF in 2015 and the trend was set to increase until Sterling dropped so markedly, making the cost of buying thermal treatment capacity in Euros more expensive, in some instances by up to 12-15%. Considering that the amount of waste available already exceeds the current energy recovery capacity in the UK, this imbalance is only going to increase if we export less. Given the impact of the vote on the value of the pound thus far (and with no predictions for an immediate bounce back), the cost of buying foreign energy from waste capacity looks set to be more expensive for the short and medium term and who knows, maybe even more in the long term if tariffs are introduced as part of the divorce settlement with the EU.

In light of the above I disagree with those in the industry who are predicting a dip in the appetite for large scale infrastructure projects and a move towards smaller-scale modular (and less capital-intense) technologies, such as pyrolysis. Rather, I would suggest we could in fact be looking at more favourable conditions where additional energy recovery capacity could be financially viable, especially the larger facilities (>500,000 tpa) where economies of scale really take effect.

If we are genuine about our desire to be more independent and self-reliant as an island, maybe we should also be thinking more widely about how our industry can contribute to the UK economy as a whole. Maybe we could have a think about some of the big British businesses like the car manufacturing industry for example, and think about how the waste sector to help to feed in to that for mutual gain, eg supplying energy (heat and power) from neighbouring waste facilities, supplying materials such as recycled metal, plastic, textiles, coming up with ways to reuse/recycle more of the car industries waste materials to help them save money and to retain the resources within the UK, such as used tyres, for example. These largest plants take away the chicken and egg problem for industries that needs heat and power but don’t know where to locate in the hope that an energy provider will land next door.

Opportunities To Streamline Our Legislation?

We also have the opportunity to sort the legislation to give UK companies an advantage in the global market. I can’t deny that the EU’s directives have acted as a major driving force in transforming our industry from one of waste disposal to one of resource management. Whilst we may wish to retain many of the positive pieces of legislation (not least because we will clearly need to demonstrate minimum standards for products and environmental protection if we are to continue to trade with European partners and beyond) there are clearly opportunities to review legislation and revise or remove some elements that are particularly onerous or implement new legislation to positively promote home grown energy generation and resource markets.

Whatever happens from Brexit we need to make sure we take all the opportunities to get the most out the situation we find ourselves in.



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