With 2023 coming to a close, we offer our predictions for 2024. we expect more changes to regulations, CO2 becoming more relevant and the market evolving across Europe.
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The waste industry is bracing itself for a number of policy interventions over the 12 next months. These include a greater focus on waste crime with the waste carriers, brokers and dealers (CBD) regulations set to tighten in England, making it harder for unscrupulous operators to engage in illegal activities such as fly-tipping and landfill tax fraud.
If the CBD reforms work as they should, this could prevent up to three million tonnes of waste from being disposed of illegally, saving hundreds of millions of pounds in tax fraud. We hope these regulations will also close existing loopholes to help tackle illegal waste shipments of waste. Given that any UK movement of waste to ports for overseas shipping will likely be captured by the CBD reforms, it makes sense to extend the regulation when it comes to the export process too.
For the energy-from-waste (EfW) sector, decarbonisation is now front-of-mind and this is set to intensify with Germany’s new CO2 tax on energy recovery. The levy, which will be imposed on emissions from incinerators, will eventually be rolled out across Europe as part of the Emissions Trading Scheme (ETS), but in the short-term we expect RDF waste flow dynamics to change as the market responds to this new development.
We anticipate more waste will be initially diverted to regions outside of Germany, but at some point supply and demand will balance out as the tax is introduced across more European regions and eventually the UK. With this new focus on CO2 emissions, there will be a renewed impetus to find cost-effective solutions that not only divert waste from landfill, but cut carbon too. Expect more clarity on the finer details of the ETS policy, particularly for the UK, as the year unfolds.
The impact of CO2 taxes, along with lower offtake revenue due to falling wholesale electricity prices, will inevitably push up gate fees at EfW plants across both the UK and Europe. These price rises may take time to filter through to the market, but it will be a European-wide effect. We would hope any price rise is sensibly costed and phased in appropriately and we are already working with our customers to manage these impacts to avoid disruption as much as possible.
Lack of infrastructure in the UK remains a key issue and this could heighten given ongoing operational challenges with gasification plants in terms of availability for residual waste treatment. Ultimately, we may see one or two gasification sites close over the coming 12 months. Meanwhile, the development of new EfW projects is slowing with only two facilities achieving financial close in 2023. We expect this trend to continue with maybe only five or six more plants reaching financial close by 2025 as high interest rates and security concerns around feedstock supply continue to bite.
In fact, the UK may be heading into its last phase of EfW development for the foreseeable future. Competition for waste feedstock is growing, particularly as demand for sustainable aviation fuel (SAF) takes off, with government funding earmarked for various SAF development projects. However greater scrutiny needs to be applied on what types of waste are most suitable for SAF, and also the cost benefits of these.
We would argue that residual waste already has a great home to go to in the form of RDF to supply highly efficient EfW plants that can generate both heat and power, serving real community need. Both the economics and sustainability stack up for RDF and because of this, we expect the RDF market – which finished strong at the end of 2023 – will continue to expand further, with even larger volumes exported from the UK into Europe in the coming months. Certainly at Andusia, we are already on track for an even better and more successful 2024.