OPINION: Having been working independently now for over a decade and having been heavily involved in the introduction of packaging legislation in 1998 I have been able to observe across the whole waste sector how fundamental changes to the norm can lead to uncertainty in the Sector.
The UK is committed to reducing carbon emissions and certainly moving UK EFW facilities into an existing, well established scheme has some real merit as long as, in doing so, it does not place an unacceptable financial burden on local authorities and commercial suppliers to the treatment facilities.
The current uncertainty will inevitably lead to delays in infrastructure development with carbon capture projects, fossil fuel based products to be extracted and potential changes to collection fleets and systems all to be decided upon an implementation that is only 4 years away.
As the ETS price will be in many ways set by the government, the sector needs to see a clear indication that the driver for ETS pricing i.e. the volume of cvredits that will be auctioned every two weeks will continue to decline. If we go back a few months the price was in the £80’s now the price is in the £30’s because demand has dropped.
If we briefly go back to the introduction of the packaging legislation, the PRN was the method by which additional finance flowed through the system to stimulate recycling. What happened in reality was that the UK never missed its targets and provided the lowest cost of compliance right across Europe with PRN prices apart from the odd spike and with the exception of plastics never getting much above nominal prices.
Investment
Investment in the sector will be costly.
Some carbon capture schemes are being quoted at a cost of £250 per tonne and even though the government is said to be supporting the price difference through Contract for Difference Auctions historically this has proved spectacularly ineffective in the EFW sector.
The cost of diverting fossil fuel based materials from the residual stream will also prove to be extremely costly. Bulk density and quality issues will be a huge concern and collection costs and low material worth, or most probably charge, will make diversion expensive and can only be affordable of the back of a consistently high ETS charge as the alternative.
One suggested way to offset this is through extended producer responsibility with UK industry having shared responsibility in the way that the PRN system works now. The problem with this is that it will still only impact a relatively small volume of the target material and making sure that the cost support goes to the appropriate area.
Reality
The reality is that the initial ETS charges will be insufficient to drive change in the UK for both the public and private sectors. It will just be a tax like landfill tax that did not really drive change until it reached a consistent level where the cost of diversion was less than the cost of disposal. The energy windfall tax is due to end in 2028 and it is hard to see how this will replace that revenue when so much of it from local authority sources.
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