In June we said goodbye to Tom Hatch, our student placement who spent 12 months working within our waste and recycling division, where he assisted our waste to fuel operations. As part of his continued studies at Brighton University, Tom researched the RDF market, reviewing the growth of exports into Europe since 2010, and analysing the debates on what lies ahead for the industry.
The UK has been exporting significant quantities of refuse-derived fuels (RDF) into European markets since 2010. Although exports of RDF were relatively insignificant prior to this, between 2010 and 2011 the number of businesses that were permitted to export RDF into Europe increased from just 3 to 12. It is clear that 2010 was a flash point for the rapid increases of RDF exports to mainland Europe.
There are a variety of reasons that have been attributed to this increase. Firstly, it began to make economic sense for RDF waste producers to export material to mainland Europe rather than utilise the other options for residual waste in the UK. A Waste & Resource Action Programme (WRAP) report in 2011 found that landfill gate fees in the UK, inclusive of landfill tax were on average £76 per tonne, whereas gate fees across European RDF facilities were between €30- €50 per tonne. This is clearly a significantly cost saving, even when considering the favourable exchange rates for the pound during this period. It is important to note, however, that additional costs such as transport, fuel and permits must be added to the gate fee.
As well as the obvious economic benefits, there are also arguments for the environmental benefits to exporting RDF as opposed to sending the material to landfill, even with increased travel distances. Research carried out on behalf of Dutch energy firm Afval argued that RDF remains more environmentally beneficial than landfill if the waste travels 2,300 kilometres (km) by boat or 1265km by road. An RDF Industry Group report issued in 2015 also claimed that there would be “virtually no environmental benefit to domestically processing the RDF currently being exported from the UK.”
The rapid rise of UK RDF exports to the continent can also be attributed to demand for feedstock from Energy from Waste facility’s (EfW’s), especially from the Netherlands and Germany.
The exportation of UK waste as RDF remains a contentious topic, with strong opinions on both sides of debate. Those who support the exportation of RDF argue that there is limited capacity to treat the residual waste produced in the UK. However, a counter argument to this is that if there is a continuation of RDF exports the UK’s development of RDF processing facilities will be hindered.
Environment agency figures show that exports of waste derived fuels from England exceeded 3 million tonnes in 2016. While this material consisted predominantly of RDF, there are also growing levels of solid recovered fuel (SRF).
The latest data shows that the UK’s RDF exports are beginning to level out. In 2014, the amount of waste derived fuels (WDF) exported had grown by 750,000 tonnes from the previous year, but between 2014 and 2015, exports rose by 450,000 tonnes, showing that growth rates are declining. This has been attributed to the fact that facilities in North/West Europe are at capacity, and as a result the UK is producing significantly more RDF than we can export.
The Netherlands is the largest importer of the UK’s RDF, taking in around half of all exported material, with Germany and Demark making up the majority of the rest.
It has been suggested that RDF exports have now peaked, and any additional growth and extra tonnages in the waste to fuel export market are due to SRF exports. However, there is evidence of new contracts being signed between UK firms and facilities in Europe, including a contract to export 170,000 tonnes of RDF to Sweden. This shows that material is still available to be exported, and the demand remains in Europe. The key drivers of this deal are said to be the increases in landfill tax, which rose to £86.10 on the 1 April 2017 and is due to rise to £88.95 next year. So, with the landfill tax continuing to rise annually it may push more of the UK’s material oversea via exports.
The UK’s decision to leave the European Union on the 24 June 2016 was expected to have many repercussions, especially to the import/export market. Moving legislation away from Brussels could see the UK change their waste management policies. The UK could be inclined to set aside EU targets, such as the waste framework directive, which in the event of a hard Brexit could be abandoned.
Large amounts of the UK waste industry recycling regulations are derived from EU legislation, and the news that the UK was going to leave the EU created fears of enormous holes where EU legislation currently sits, or a watering down of environmental legislation.
However, the government put to rest many of these post Brexit concerns in March with confirmation of the Great Repeal Bill, which means the whole body of existing environmental laws derived from EU legislation will be maintained within UK law. Perhaps one of the most important part of EU legislation that will impact RDF exports is landfill legislation, the government has said that these parts of legislation will continue to apply at least until alternative legislation is in place. There are also several international treaties, such as the Basel convention and the UKS membership to the OCED organisation, that will continue to support the UK’s export arrangements.
Brexit will not only impact upon the competitiveness of exports for UK based companies, but also the attractiveness of UK material to the European EfW facilities. The EU RDF export market is argued to be robust, and according to the director of Dutch financial consultancy, there is a “high degree of certainty going forward; Brexit or no Brexit.”
Attributing three main reasons to this, he says that there has been a large quantity of financial investment already sunk into European EfW facilities that cannot be removed. With capital already invested into the EfW infrastructure, there will be a continued desire to fill existing capacity. Ports and logistics chains will also continue to be subject to efficiency improvements, due to increasing volumes of material being exported. Finally, he comments that UK waste companies are viewed as dependable and trustworthy business partners. This means the European EfW facilities can be sure that there will be a steady stream of RDF, providing them with some business certainty. In addition, there is concern as to whether EU countries will apply an import levy, or the UK government would apply an export levy, either of which could have an effect on export prices and tonnages.
Brexit could, however, have negative implications on the EU’s demand for UK RDF. EU targets regarding waste composition have historically been difficult. This means that even though the UK is no longer part of the EU, waste exports will still have to meet these specifications if they wish to continue exporting to mainland Europe. The UK exporters will have little to no say with regards to material specification.
Export costs have also been increasing, which along with the UK landfill tax increases, could assist UK-based waste to energy developments to attract funding. Whilst there are several new facilities at various stages of planning, construction and commissioning, with circa 9m tonnes of suitable waste for fuel production still going to landfill, there is a long way to go before the UK can cease exports.
It is evident that the UK remains a vital part of the European RDF market. As negotiations continue into the UK’s exit from the EU, some of the uncertainty around future legislation and trade agreements will become clearer, but with cost being the key motivator, many expect exports of RDF material to European facilities to continue for as long as it makes economic sense to do so.
Author: Tom Hatch
Clarity provides cost-effective waste to fuel solutions, facilitating the diversion of waste from landfill to energy from waste plants (EfW). If you are a waste producer or an energy from waste facility and would like to know more about the services we provide, contact us on 0845 129 7177 to hear about our expanding network, and discover how we can help.