Renewi’s contracts to send East London’s waste to two energy from waste (EfW) facilities in Europe are “under review”, following the introduction of the Dutch RDF import tax, it emerged this week.
And, a report from Renewi on its Annual Budget and Service Delivery Plan (ABSDP) which went before the East London Waste Authority (ELWA) yesterday (February 10) said that landfill capacity is in place if the authority’s waste cannot be moved abroad or to an alternative offtake within the UK.
The actual need for landfill was only identified as a “potential risk” in the report and it records that Renewi has managed to maintain a 99% diversion from landfill rate for the ELWA in 2018/19.
The Renewi report assessed its preparations for future waste management arrangements in East London.
It began with a review of 2019/20 so far, where the company said it has “demonstrated positive improvements in its performance on diversion and recycling”.
“The recycling performance has showed improvement on a year-on-year basis at a level of 27% of total household waste in 2018/19 and an anticipated 29% in 2019/20,” Renewi explained.
However, the British/Dutch firm said that 2019/20 had been a challenging year in regards to the offtake market for RDF, described as the main residual material produced by the two MBT sites in East London.
“This [the RDF tax] has clearly impacted on waste exports of RDF and capacity within countries that have no tax is at a premium. These market forces have led Renewi to consider alternative outlets,” the report said.
This led to the business saying it is “currently exposed on a number of waste streams to the applicable spot-market”, whereby contracts are for minimal lengths. Whilst this can potentially offer short-term financial benefits, it can also represent long-term risk due to price fluctuations.
This is all against the market background where the Dutch parliament passed carbon tax measures last year which have seen a tax on of €32.63 per tonne from 01 January 2020 (see letsrecycle.com story).
As Renewi looks to source other options, the report notes that it is currently in negotiations with a UK-based energy-from-waste facility that is looking to receive RDF material for power generation.
However, the specification of the material is different to the requirements worked to for the EU energy from waste facilities. Trials are underway to ensure production is viable.
Earlier this year, Renewi said that its contract with the ELWA was ‘onerous’ in a trading update, and the report yesterday said that this has been the case “for a number of years”.
Despite this, Renewi said it continues “to strive for improved recycling there is not a risk to the continuation of service to the ELWA.”.
There is also no risk of the service being discontinued, the document added.
Going forward, Renewi said that working with ELWA is now on a “more collaborative basis”, in order to achieve and exceed recycling targets.
Renewi added that while it recognises that there are some significant challenges to overcome, “we are confident and excited about our new working relationship”.
“We have some exciting and very challenging times ahead”
ELWA is the waste disposal authority responsible for the East London boroughs of Newham, Barking and Dagenham, Havering and Redbridge.
The authority has seven years to run on its 25-year contract it signed with Renewi in 2002 (see letsrecycle.com story).
Kevin Bell, ELWA contract director at Renewi, said: “We have managed to divert 99% of total contract waste (with the exception of asbestos) from landfill successfully for over 12 months, even in the event we had an export ban imposed on us last year for over 3 months.
“We have some exciting and very challenging times ahead as we work hard in a tough trading market to continue diverting waste from landfill. Brexit related issues will arise and be mitigated to prevent seeing any issues in the service Renewi provide to ELWA.”
[article updated 12 February 2020]