Brexit is happening: how can the waste industry realise the opportunities?
By Richard Howard, Head of Environment and Energy at Policy Exchange
In recent months I have heard many people in the waste industry portray Brexit as a huge risk to their businesses. Granted there is much uncertainty at present about the details of Brexit. But I think the industry needs to realise that Brexit is happening, adapt to this reality, and realise that Brexit is as much an opportunity as a threat.
In a major new report published by the influential think tank Policy Exchange in March, I argued that Brexit offers a big opportunity for the waste industry. The report, Going Round in Circles, provides a critical review of European and UK policies concerning waste and recycling. Waste is one of a number of areas of environmental policy in which the UK has largely ceded control to the EU. European Directives define the overall framework for how we manage waste, set targets for recycling and landfill reduction, and regulate the operation of landfill sites and energy from waste facilities.
Successes and Failures
The combination of these policies has had a transformational impact on the way we manage waste and resources in the UK. Our total resource consumption has fallen by 20 percent since 2003, whilst the total amount of waste generated in the UK has fallen by 16 percent since 2004. Municipal recycling rates in England have increased from 12 percent in 2000 to 43 percent in 2014. Since 1990, there has been a 75 percent reduction in greenhouse gases emissions from waste management, whilst dioxin emissions from waste incinerators have fallen by 99 percent.
However, whilst there have been some notable successes, there are also some significant shortcomings in the EU’s approach towards waste:
- Objectives are unclear: The objectives of European waste policy have evolved over time, and are now rather muddled. This is particularly true of the Commission’s proposed “Circular Economy” package, which appears to be justified as an end in itself, rather than a means to achieving a particular set of economic, environmental or social outcomes.
- Fails to reflect UK context: it is clear that the EU has designed waste policies that are not in the interest of the UK. The European Commission’s own analysis shows that adopting the proposed “Circular Economy” package would create additional costs for UK businesses and households.
- Ignores the fundamentals: European waste policies fail to reflect the economic fundamentals: commodity prices have fallen sharply since the Great Recession, undermining the economics of recycling and leading to a number of notable company failures in the recycling sector in recent years.
- Poor data and definitions: Waste policy suffers from some serious issues regarding definitions, measurement, and data quality, making it difficult to develop effective policies.
Developing a New Approach to Waste Policy
Given these shortcomings, it is clear that following Brexit, the UK should not simply accept current and proposed European policies concerning waste. Instead, the Government has an opportunity to define an approach which better suits the UK.
This needs to be reframed around a much clearer set of objectives, underpinned by a coherent set of targets and policies. Rather than the nebulous language of the “circular economy”, waste policies should be framed around the concept of resource productivity - a concept which is likely to be more salient for businesses. There is a sizeable opportunity for UK businesses to improve their productivity and competitiveness by increasing their resource productivity. This is rightly recognised in the Government’s Industrial Strategy green paper, but further thinking is needed on how to realise this opportunity. The waste and resource management industry is a key player in this debate.
Beyond this high level reframing of waste policy, our report made a number of key recommendations on how waste policy could be changed for the better:
- Outcome-based targets: Government should provide more clarity on the environmental objectives we want to achieve through waste policy. High level targets should focus on outcomes (such as the carbon emissions saved through waste management practices) rather than means (such as the current system of recycling targets).
- Prevention and Reuse: Waste policy should focus far more on waste prevention and reuse, to reduce the amount of waste we generate in the first place. For example, Household Waste and Recycling Centres should be used as a collection point for reusable items, which can then be sold or redistributed to local charities. There are a number of examples of such schemes around the country, but they fall in a legal grey area under current rules.
- Standardisation: Local Authorities should use one of three standardised systems for collecting waste and recycling – simplifying the more than 400 systems which currently operate across England. The current system leads to confusion amongst householders about what can and cannot be recycled, and inefficiencies for the waste industry.
- Innovation: Government should encourage innovation in the recycling and reuse of materials, and help to develop markets for scrap materials.
- Energy generation: Government should also promote efficient forms of energy from waste - for example using black bag waste to create 'green gas' which can then be used for heating or as a transport fuel. Last year the UK spent £280 million exporting over 3 million tonnes of residual waste overseas (mainly to the Netherlands) where it was used to generate energy. We should be generating more energy from this waste in the UK.
The vote to leave the EU provides an opportunity for the UK Government to re-examine waste and other environmental policies for the first time in decades. The Government needs to grasp this opportunity, and develop a more coherent and effective set of policies which is smarter, greener, and cheaper. The waste industry needs to engage constructively in this debate, and help to realise a more resource efficient future for the UK, rather than clinging on to the European waste policies of the past.
Brexit could give the waste sector the coherent, long-term framework it desperately needs
With the appointment of a new Secretary of State, we now have an opportunity to determine the future success of the waste sector, writes Paul Taylor, CEO of FCC Environment.
As many within our sector will know, for a long time now UK waste policy has been largely ignored – in no small part because the majority of waste and recycling directives are borne out of Brussels. Historically, Defra has also been seen as one of the weakest departments in Government. However, the reality is that the department has a major role to play, both in the Brexit negotiations and in preparing for life outside of the EU.
Although the road ahead is no clearer than it was a year ago, what we do know is that Brexit gives us an opportunity to have a frank discussion about the direction of our domestic waste policy. More broadly, what is needed is a roots-and-branch review of how our industry operates.
A new report published by Policy Exchange has, for the first time, reveals the economic potential of the waste sector in the UK. 'Going Round in Circles' highlights a number of significant shortcomings in the EU's current approach to waste, including unclear and muddled objectives, a failure to reflect economic fundamentals (such as plummeting commodity prices), and a utilisation of poor data and definitions which is making it difficult to develop effective policies.
Most strikingly, the research reveals that continuing to implement EU waste policies post-Brexit would cost British businesses and households an additional £2 billion over the next two decades. Moreover, the UK's lack of investment in the Energy from Waste (EfW) sector has meant that a burgeoning market for companies exporting residual waste overseas, where it is burned to produce energy, has emerged. This has cost the UK over £900 million in gate fees since 2011 (including £280 million in 2016 alone), which is both counter-intuitive and unsustainable.
With investment, the UK can start to re-coup these losses, especially in a post-Brexit economic climate, where the UK has the ability and licence to develop its own home-grown solutions to resource inefficiency. In particular, increased investment in would be welcomed. It acts as a cost-effective, scientific and innovative treatment process which creates a utility of our waste, boosting resource productivity and overall economic performance.
There has been some recognition of the potential for resource productivity at a policy level, not least in the former Government’s burgeoning Industrial Strategy. However, in order to make this a reality, the UK needs to urgently prioritise investment in its own waste infrastructure.
Developing the UK’s capability in this regard would ensure we remain globally competitive, and help realise the Government’s goal of a truly ‘Global Britain’. We look forward to tacking these challenges with the new Secretary of State.
Going Around In Circles
Please see a link to download the full report here
FCC Chief Executive Officer Paul Taylor considers the outlook for the waste and resource sector post-election
With the UK set to go to the polls on June 8th, and the official negotiations on Brexit commencing only a couple of weeks afterwards, the debate over the future of waste and resource policy is likely to come into full focus.
As we are all aware, the industry has historically been divided on the best approach to tackle key issues, but the prospect of a new government and subsequent UK-EU negotiations offer a chance to have an honest conversation about how we make UK policy fit for purpose. This means the industry must present a unified front, to ensure the government takes our sector seriously, and recognises its invaluable contribution to the UK economy.
As the UK seeks to navigate its future position outside the EU, it is clear to us that the government should not simply settle for the ‘one-size-fits-all’ approach previously adopted by EU environmental directives. Instead, we would like to see the development of a more coherent set of policies which better suit the country’s fiscal environment. A new government with new priorities and a strong mandate should be empowered to enact this change.
For a long time, waste and resources have been low on the UK government’s list of priorities, in part because waste policy has been heavily driven by EU law. This means that, historically, there have been limited opportunities for the UK to determine the direction of our domestic waste policy. Until now.
A new report published by Policy Exchange has for the first time revealed the economic potential of the UK waste and resource sector. ‘Going Round in Circles’ highlighted a number of significant shortcomings in the EU’s current approach to waste, including unclear and muddled objectives, a failure to reflect economic fundamentals (such as plummeting commodity prices), and a utilisation of poor data and definitions which is making it difficult to develop effective policies.
Most strikingly, Policy Exchange’s research reveals that continuing to implement EU waste policies post-Brexit would cost British businesses and households an additional £2 billion over the next two decades. Moreover, the UK’s lack of investment in the Energy from Waste (EfW) sector has meant that a burgeoning market for companies exporting residual waste overseas has emerged, where it is burned to produce energy. This has cost the UK over £900 million in gate fees since 2011 (including £280 million in 2016 alone).
These figures paint a stark picture. However, with the new opportunities posed by next week’s general election vote and by Brexit, FCC Environment hopes to play an invaluable role in providing the aforementioned innovative solutions to the Government’s Industrial Strategy. As one of the largest waste and resource management companies in the UK, we are well-placed to partner with local and national government to build the essential energy and waste infrastructure to boost economic productivity and resource efficiency. Brexit is a seminal moment for the UK, and we should have a waste and resource policy which reflects this.
I am confident that our industry will prosper – particularly longer term, post-Brexit. However, the UK needs to use the unprecedented chance we’ve been given to create a smarter approach to managing our domestic waste, and support a strategically important sector that continues to drive growth and productivity. It’s a bold opportunity that we would urge the next government to take advantage of.