It is a long and tortuous journey. A conscientious householder drops a plastic
drinks bottle into a green recycling box in Hackney, east London. A few days
later the bottle is collected by the council’s recycling team and sorted
from the paper, tins and jars. The bottle is then carried a few miles to a
depot. There, it joins a further 375,000 plastic containers that are crushed
into bales for a five-hour haul by lorry to Merseyside.
And there, the bottle is mechanically sorted: it will go into a different
hopper from the plastic milk container that sat next to it in the Hackney
recycling bin. The drinks bottle is washed, chopped up and washed again. And
now, reduced to plastic flakes, it is ready to start its journey once more.
The plastic that was discarded 200 miles to the southeast can now go back to
a food or drinks manufacturer to become a new piece of packaging. The
recycling loop is complete.
A convoluted tale? Certainly. But it is one that will become increasingly
common as British households strive – and are forced – to recycle more
household waste. One bottle does not make much difference. But multiply that
by a hundred million and the impact is clear. And for companies in the
recycling industry, there is serious money to be made.
David Miliband, the environment secretary, last week laid out the government’s
strategy to encourage the minimisation and recycling of household waste in
England. He rightly pointed out that some progress had been made: the
proportion of household waste that goes for recycling and composting has
almost quadrupled over the past decade.
But in truth, Britain’s recycling industry is scarcely beyond its infancy.
Compared with continental Europe, Britain still lags way behind. Nearly 60%
of German household waste is recycled. In the Netherlands virtually nothing
goes to landfill.
And the fact that Britain is a latecomer to recycling helps to explain why
some of the biggest players in the British industry are foreign-owned.
Veolia and Sita are French. Last year, Spain’s FCC paid £1.4 billion to buy
Waste Recycling Group from Guy Hands’s Terra Firma.
Dirk Hazell, chief executive of the Environmental Services Association that
represents recycling firms, said: “We are a long way behind the rest of
Europe. In the [1980s and 1990s] other countries were putting schemes in
place, so companies there developed some expertise. They saw that European
regulations would make Britain follow suit and so, quite naturally, they
moved into the market.”
It is reckoned that the British recycling industry is already worth up to £10
billion a year. That figure is bound to increase.
And if government recycling targets are to be met, enormous investment will be
required. Over the coming decades, there will be far more to waste disposal
than filling up holes in the ground.
THE notional journey of the drinks bottle from Hackney is, at the moment, only
notional: the Merseyside plant that will allow the plastic to be turned back
into food packaging will be commissioned only in July. In the meantime,
material recycled at the plant, run by Irish-controlled JFC Plastics, is
turned into items such as drainage pipes. About two-thirds of plastics
collected for recycling in Britain go abroad. Better than going to landfill,
certainly, but not the greenest of solutions. Between 2001 and 2005, the
amount of plastic exported for recycling rose from 67,000 tonnes to 238,000
tonnes.
With paper, the picture is similar. British mills that can take paper for
recycling are running at almost full capacity: about half goes abroad.
The government’s targets look laudable – even if critics complain that they
are insufficiently ambitious. But waste operators point out that not all
households will embrace recycling with unbridled enthusiasm. “Some will,
some won’t,” said Mike Averill, chief executive of Shanks, a specialist
waste group. “If you live in a house with a bit of land round it where you
can put all the bins, then it’s not too hard. If you live in a tower block,
it’s bloody difficult.”
It will be difficult for many householders – and it will demand far greater
sophistication on the part of the companies involved. Barriers to entry at
the collection end of the rubbish cycle are low. But building an
incineration plant can cost £100m.
Strikingly, Miliband’s document on waste came just after the publication of
two other government papers – one on the planning system and the other on
energy policy. Both will have a crucial impact on the waste industry.
Planning has for years been one of the waste groups’ biggest bugbears. Nobody
wants to live next to a waste-treatment plant or, heaven forbid, an
incinerator. The white paper on planning proposed fast-tracking such large
infrastructure projects by appointing panels of independent experts to
decide their merits. Once central government has set the overall policy
goals, the experts will be free to act.
That could make a huge difference. Local opposition to projects can lead to
mind-boggling delays, as in the case of Cory Environmental’s plan for a
plant in Bexley, Kent, that will burn rubbish and generate electricity. Cory
first applied for planning permission in 1991, and the local council,
appalled at the prospect of hosting what would be one of the largest plants
of its kind in Europe, handling 670,000 tonnes of rubbish a year, resisted
stoutly.
The impasse was settled only in March, when the council said it would not
appeal against a judicial review that found in favour of the plant. But Cory
has not yet appointed a contractor, and construction is likely to take three
years: it is therefore likely that the plant will have taken fully two
decades to come to fruition.
Another helping hand for the waste industry came from the energy white paper.
Buried in the fine print was a provision that will make it easier for plants
burning waste to qualify for renewables obligation certificates – the
government subsidy scheme that encourages the use of renewable fuels. “This
should help with the economics of waste-to-energy schemes,” said Averill.
Shanks operates a scheme for four boroughs in east London to turn 500,000
tonnes of waste a year into fuel. “Until now this fuel has not been
eligible,” he said.
Shanks’s east London scheme is typical of a new type of long-term contract
that is putting local-authority waste disposal in the hands of a few large,
well-financed and technically capable companies.
The new deals are the result of the host of legislative demands, which will be
tightened if last week’s white paper becomes law, that are stopping councils
sending rubbish to landfill sites. Local authorities now need to build
expensive new treatment plants – plants they cannot afford.
Instead, they are asking contractors to build them, and in return giving them
25-year deals to handle all council waste. The contractors recoup their
upfront investment from fees over the life of the deal – fees that could
mount to more than £2 billion for some of the larger local authorities, such
as Manchester.
Biffa has two such contracts, for Leicester city council and the Isle of
Wight. “We do the whole thing, from collection to treatment to disposal,”
said Biffa’s chief executive, Martin Bettington.
Such big contracts are making it difficult for smaller players to fight their
way into the local-council market. “The waste sector is becoming much more
sophisticated and complex, with successful companies needing to be
well-financed and with good technology,” added Bettington.
But this has not stopped companies with Private Finance Initiative (PFI)
experience in other industries trying to break in. VT Group, which has PFI
contracts in defence, education and services training, has made the
shortlist for a contract with Wakefield metropolitan council, which is
estimated to be worth about £1 billion. It is vying with the industry
stalwarts Waste Recycling Group and Cleanaway, now part of Veolia.
Paul Lester, VT’s chief executive, said the company first became
interested in the waste market 18 months ago. “It was only when it started
going down the route of these large PFI contracts that we became serious
about it. It ticks all the boxes for us – we have a lot of PFI experience,
we know about construction and operation of complicated facilities, and we
are already involved on several big council contracts.”
Lester said VT believed there was a shortage of expertise and capacity in
large waste-to-energy PFI projects. “Given the strictures on the use of
landfill, there will be big demand. We think the market could be worth £5
billion a year,” he said.
Averill believes last week’s welter of policy announcements, highlights a
subtle trend in the industry – the convergence of the interests of waste
groups with those of energy companies, and the big users of energy, such as
building-materials groups. “There is something similar going on here to what
happened in the telecoms and computing industries,” he said. “Twenty years
ago they were two separate industries – now you would be hard put to draw a
line between them.” IT is reckoned that already about 30% of Britain’s
renewable energy is derived from burning the methane that is released from
landfill. Besides yielding energy, there is a second, significant
environmental benefit: methane’s greenhouse-gas effect is almost 20 times
that of carbon dioxide. Keeping it out of the atmosphere is hugely important.
Of course, dealing with household waste is only part of the problem.
Businesses already pay to have their waste taken away. The tax on waste that
goes to landfill, £24 a tonne, will rise by £8 a tonne annually for at least
the next three years. The government predicts that the amount of
biodegradable waste going to landfill should, by 2010, be 25% less than it
was in 1995. And by 2020, it aims for 65% less.
There is a problem, however: the higher the tax and the higher the cost of
sending rubbish to landfill, the greater the incentive for flytipping. The
Environmental Services Association calculates there is a flytipping incident
every 38 seconds in England. “Criminal and antisocial elements will try to
buck the system by dumping even more waste illegally, putting the
environment and human health at risk,” said Hazell at the association.
“Britain must now adopt zero tolerance for flytipping.”
DOMESTIC WASTE IS LESS THAN 10% OF THE TOTAL
BRITONS are becoming better at recycling. In 2001-2, 11% of household waste
went to recycling or compost. By 2005-6, the proportion had risen to 26.7%.
The government’s new waste strategy, published last week, sets a target of
40% by 2010 and 50% by 2020.
But there are vast disparities in the performance of local councils. More than
half of the waste from households in St Edmundsbury in Suffolk, for example,
is already recycled. At the other end of the scale, the London borough of
Newham manages only 6.2%.
And although the national increase in recycling looks impressive, the
quantities of waste thrown away by households are still huge, equivalent to
more than half a tonne for every man, woman and child in the country.
Garden waste accounts for a fifth of all domestic rubbish. Paper and cardboard
account for 18%; kitchen waste is a similar figure. The materials that have
been the historical favourites for recyclers make up a surprisingly small
proportion – glass accounts for 7% and tin cans only 3%.
More than 1m tonnes of discarded electrical equipment is likely to be thrown
out by households this year. And the government expects that to increase by
60% within a decade.
Last week’s government paper focused on household waste. But in terms of the
total waste generated by the UK as a whole, domestic rubbish accounts for
less than 10%. Commerce produces slightly more (11%) and industry produces
14% of the national total.
By sheer weight, more than 60% of waste comes from mining, quarrying,
demolition and construction. So why not worry about these really big waste
producers? Last week’s paper points out that construction and demolition
produce more waste – and more hazardous waste – than any other sector. A new
strategy to tackle that issue will be outlined later this year.
