Last week, the Dutch Government proposed a new tax with the aim of reducing carbon emissions: an RDF import tax of €30 per tonne, expected to be introduced in January 2020. The Netherlands is the largest off-taker of UK waste in mainland Europe and took in a total of 1.3 million tonnes of material from the UK in 2018 alone. The Dutch Government estimates that as much as 25% of the waste processed in the country’s EfW plants comes from outside the country.
After the announcement, Andusia Director, Steve Burton commented that incineration groups in both the Netherlands and across Europe were “lobbying hard” for this not to happen.
He explained the Dutch had proposed the move on environmental grounds because it has an incineration capacity of eight million tonnes a year but produces only six million tonnes of waste, and so does not need two million tonnes of capacity.
Steve added: “So they think that by setting a tax it will significantly curtail how much gets incinerated in the Netherlands and thus produce less CO2. All very sensible if you consider CO2 in isolation in your own country. However, the Dutch Government aren’t looking at the bigger picture…”
- No reduction in CO2
The waste will either be incinerated elsewhere so there will be no net reduction in CO2 in Europe or it will be landfilled, resulting in a large increase*in CO2 emissions. Logistics will also be partially affected but, as industry already uses backhaul to get the RDF to the Netherlands, these trucks will still run and will not save road miles. Therefore this tax will not reduce CO2 emissions overall.
- Capacity in the Netherlands
Dutch plants will not all be able to run at three-quarters capacity because it will be uneconomic, which will lead to at least one of the larger plants closing in the medium term. The Netherlands EfW sector attracts approximately €150m a year of inbound finance, mostly from the UK and Germany, which will all go.
- Power generation
Electricity generation from EfW will reduce by 25% and this will need to be made up from other forms of electricity generation as the world gets hungrier for electricity – remember all those electric cars that we are being told to buy and which are heavily subsidised in the Netherlands?
- Dutch EfW economics
Excess capacity at Dutch plants in the short term will need to be filled by local waste. Prices will reduce significantly in the local market as the dozen Dutch EfW plants chase what will be a scarce resource. Gate fees that are probably currently €80 per tonne will no doubt reduce to €40-€50 per tonne, and all plants will lose money and become unviable.
At this gate fee level, the plants will once again court UK/German RDF and will fill the capacity gap this way, but they have just lost 40-50% of their income, which will take four to five years to recover. The losses faced by the plants will be made up by local taxpayers in most instances because a number of Dutch plants are local authority-owned.
This is what the Dutch market looked like back in 2011/12 when the RDF export market took off and stabilised gate fees in the Netherlands. So the cycle will repeat itself and the tax will be borne by Dutch taxpayers.
Steve ended “Dutch Government need to listen to the industry and not do something that will cost its own taxpayers”.
*As per the 2015 Eunomia report entitled ‘RDF Export – analysis of the legal, economic and environmental rationales’ reasons a UK CHP or export CHP scenario results in a net carbon saving (avoiding emissions), opposed to an electricity only or landfill scenario resulting in a net carbon impact (additional emissions)