Next year a new CO2 tax on energy recovery is set to be introduced in Germany. The levy, which will be imposed on emissions from incinerators, will eventually be rolled out across Europe, but in the short-term we expect waste flow dynamics to change as the market responds to this new development.
Early indications suggest the tax will be priced at €18.98 per tonne for refuse-derived fuel (RDF) type feedstocks. While the full CO2 tax will be €40 per tonne overall, it will vary depending on certain factors such as calorific value and the amount of biogenic content in the waste.
So, what does this mean for our customers? As the tax beds down, we expect to see some adjustment in the market – this could mean more waste is initially diverted to regions outside of Germany. Given that RDF is traded at a European level, any tax one country imposes will take time to filter through to market prices so we don’t anticipate any immediate hike in costs.
At some point we should see these waste flow movements stabilise however, as supply and demand balances out. Longer term we may see some uplift in market prices, especially as other countries look to adopt the tax, but we would hope these are sensibly costed and phased in appropriately.
It’s important to note that the CO2 tax reflects a wider trend in both the European and UK markets, notably a tightening of regulation. The new market situation will require a push to find cost-effective solutions that not only divert waste from landfill, but cut carbon too.
Rest assured at Andusia, we are already working with our customers to manage the implementation of the tax to avoid disruption as much as possible.