I want to concentrate on the regulatory landscape around waste disposal in the UK. What’s your opinion about the implications of national policies on the system?

It’s more difficult to talk about on a global level, although there’s a direct correlation with the waste which is produced and if there’s opportunities to do something smarter with waste by exporting it then, if it makes economic and environmental sense then why wouldn’t you do that.

But if you look at it on a national level, the reason why landfill is still prevalent in the UK waste market and will continue to be prevalent in some form or another for the next 15-20 years, is because landfill tax has done what it needs to do. It’s encouraged the diversion of waste away from landfill and putting it into other treatment technologies. It’s changed the behaviors of commercial and municipal customers in terms of segregating waste which is recyclable. What makes the capacity gap more difficult to fill is that it’s very difficult to obtain planning permission for an energy-from-waste facility.

There are some obvious cases around, there is a planning application for an energy-from-waste facility in Waterbeach in Cambridgeshire. I was involved with that application. When it went to planning it had officer recommendation for approval, but when it was put in front of members of the planning committee it was rejected on the grounds of impact on local heritage and visual impact in the local area.

Putting that aside, there are arguments for and against the facility in that particular location, but it was already identified in the local waste plan as a potential site, it sits alongside a mechanical/biological treatment site and also a landfill site. It would make a logical place to put it, but local councilors rejected that proposal. It’s now in appeal and going through judicial review and been called up for the secretary of state for the environment to make a final decision on. Which coupled with the fact that there’s a General Election, who will be the secretary of state for the environment for the new year, who knows?

So, the process itself is very difficult to secure these facilities and if you want to build a facility of any particular scale (for example 500,000 tons and beyond), you’re then applying directly into central government, bypassing the local authority planning process. Because it’s a significant infrastructure project the time it takes to get that planning approval is delayed further. From concept to taking a development site where you go through the initial designs, work through technology, look at the processes you have to go through for planning, that can be anything between 3-5 years just to obtain planning for the site. Before you start to build and get it towards the construction work that you have to go through. The time it takes to build these facilities from planning to service commencement is significant and that’s a real challenge. Some of the capacity gap we face is because I don’t think the planning process in the UK lends itself to trying to develop these facilities without huge amounts of bureaucratic process to go through.

So, the landfill tax has done its job and diverted waste away from landfills to encourage investment into recycling facilities and energy-from-waste facilities but the planning permission hasn’t kept pace with that change in the market?

I think the planning process is the same, I don’t think it’s changed, but it’s just that nobody wants one of these facilities in their back garden. Fundamentally, they have to go somewhere and unfortunately to make them economically viable they need to be built in locations which are not requiring huge amounts of transport to take waste from where it’s produced to where it’s processed. I think the challenge is more about the clumsiness of the planning process rather than it being anything that’s obstructive. I think it's a process that’s very bureaucratic and it’s a process that can take a long time and come across numbers of delays. Veolia have had this challenge in Hertfordshire, they’ve had two planning applications turned down for two different sites and Hertfordshire are now faced with the challenge of having no long-term arrangements in place for processing their waste. It’s been very much a consequence of the planning process.

What’s your view on the implications of the Chinese purity rules on UK exported waste?

I think that a lot of waste was being exported from the UK in the guise of recycling, it was being exported but it was heavily contaminated. I think we have a moral duty to make sure that any waste that we do export for processing overseas is prescribed correctly and is of a level of purity so that the reprocessing can be undertaken cost effectively and efficiently without huge amounts of contamination.

I think it’s unfortunate that China has to impose some of those rules but it could have been any country that was accepting waste for reprocessing. The issue here is about having the markets available to reprocess recyclable waste. Whether that comes down to legislation making sure you’ve got a minimum amount of recycled material in every form of packaging (e.g. 25%, 30%, or 40%). There’s a need to create internal markets, a Deposit Return Scheme would be a good way to try and get funding back into developing these markets for recycling and reprocessing. I think there should be extended producer responsibility, one issue is that we buy goods in packaging that can’t be recycled, but at the moment there is little or no consequence on the producer for that. But actually, if the producer can be responsible about the types of packaging which users buy with extended producer responsibility, then that would make some sense.

The issues of the purity rules with China are much wider than it being an export issue. The reason that waste is having to go offshore is simply because we don’t have the internal markets driving demand for recycled products. That’s got to be legislation that drives that change.

You’re suggesting that we should start with the producer of the material, so the consumer-packaged goods companies that don’t use a very high percentage of recycled waste in the packaging?

I think that has to be the starting point, but in reality, what it comes down to is the fact that we need internal markets in the UK and we need legislation that requires producers to have a percentage of recycled or recovered product material within their packaging material of choice. So, if it’s cardboard based packaging it could have 50-60% of recycled content. The same for plastics. Metal, to a lesser extent because it’s easier to recycle metal. Likewise, with glass, rather than trying to reprocess glass, maybe we revert back to some of the processes we saw years ago such as returnable milk bottles and drinks containers which are sterilized and re-used. I think that legislation has to drive that change and drive the markets.

Biffa was recently fined for exporting contaminated waste to China which didn’t meet the new impurity guidelines. Can you outline the challenges the waste management companies have in balancing the recycling margin and meeting the regulations required?

I think Biffa were unfortunate in that situation because that level of contamination in the waste was argued by Biffa to be a one-off. But you could argue that any waste operator or exporter could have found themselves in a similar position. What has happened over the years is you’ve seen the quality of materials that were acceptable at one point has changed and as a consequence of that, there is a misunderstanding around what exactly the level of purity required is. It comes down to having standards and some guidelines around what is a ‘pure’ recyclable material, what does it look like, in terms of whether plastic, metal, fiber based, what is the level of purity and does everybody have that same level of understanding?

The purity issue with China means the price that you receive for recovered materials has dropped significantly, some of that material is probably going to landfill or thermal treatment because there aren’t any external markets for it. The other challenge is that when you start to think about the markets that could be created for it, what does that purity need to look like? There is a total lack of understanding around what that purity looks like.

As soon as that material is exported to other countries who may accept it, are you just moving the problem? That’s my concern. Fundamentally what you have to do is create internal markets or create a demand for this material at the right level of purity. If it’s there and in the UK and avoids all of that hassle of transferring to your shipments, transport and additional logistics cost. If you’ve got something UK-based where the processing takes place onshore, then it’s probably better to get some clarity around what that material looks like but it’s very much dependent on the market.

So there needs to be guidelines from the policymakers in terms of what purity means, or guidelines on those materials and what percentage of recycled material is expected?

I think some of that clarity is out there, people generally know when material is contaminated and what’s acceptable and what’s not. But I guess the one thing that we still lack is having markets which demand some recovered content to be blended or used with virgin materials, in order to come up with packaging or alternatives to the types of goods and packaging we buy at this moment in time. That’s got to be driven by legislation which requires a certain percentage of recovered material to be included. But it also has to incentivize either the producer or the end user to want to have that type of material. That comes through having these internal markets and you have to create those internal markets.

Has the UK got the recycling facilities or technological expertise to meet stricter purity guidelines?

I think so, and if we don’t have it, we can create it. There are some good examples where we haven’t necessarily had the capability to do something, but we’ve developed it on the basis of bringing in the expertise to be able to deliver the outcome. We’re quite innovative and entrepreneurial so I don’t see that as being a blocker. I think the reality is that if there’s a sound economic and environmental case to do something or to reprocess a particular material and it makes sense financially and commercially then the chances are that the technology or capability will be found.

The reason that a lot of plastics and paper has been exported to China is because the markets were paying what was deemed as competitive rates for that material once it was exported. But what they were doing with it was no different to what we could have done in the UK. Reprocessing paper, we have paper mills that are capable of doing that in the UK. It doesn’t have to go to China for that, but it was for economic reasons and for other factors such as packaging for goods which were being manufactured in China and exported back to either the US or Europe. We can create the capability but it’s more about the markets needing to be created.

What pressure do you find the waste operators under in terms of driving profitability of recycling and disposing the waste efficiently?

If you enter into a term contract with markets that are with off takers for recycled material that can’t give you back to back arrangements, you’re going to take some risk. That risk is often price driven, where you think you would receive a certain amount of income but then you don’t get that income because either the off taker has ceased trading. Quite often it is the operator who has taken the risk. When we were speaking earlier about the municipal business in Biffa, seeming to have dropped in revenue, having some really challenging times. They will have within that portfolio of business, contracts for undertaking recycling collections where they take the risk of giving the client a guaranteed revenue for the material which is being collected. If it wasn’t Biffa who had taken it on it would have been Veolia or SUEZ or one of the other operators.

What that means is that the local authority has a contract with a provider and it’s enforced. If there’s a contractual commitment, regardless of what the end markets are paying for those materials, the commitment which has been made by Biffa or the operator is such that they’ll have to honor that. I think that’s seeing a number of the operators shying away from taking a risk in some of those markets, that’s making recycling and recovering material more difficult because nobody is prepared to take the risk on it. If you’ve got a contract which is for 7 or 10 years for example, and you’ve got longevity in some of that risk, you can have some significant losses simply because of the instability within the offtake market.

There’s not a simple answer to the question but there are a number of factors which are fundamentally changing the way in which people look at and consider dealing with recycling.

There needs to be a willing risk taker to take on this job of collecting and recycling the waste. And over the last 20-30 years we’ve seen the privatization of the sector and it’s swung back and forth with some municipals taking business back. How can the government or the public and private markets work together to enable the system to work?

I think there has to be an understanding, you’ve mentioned that many local authorities are taking these services back in house. I think that will be a cyclical move because some of them will see first-hand some of the financial challenges that are associated with operating in this space, simply because of the volatility of the markets, in particular the offtake markets. The way in which the government are approaching the current waste and resources strategy is to try and create those markets. If there is the introduction of the deposit return scheme it’s likely that, as a consequence of the deposit, there is an opportunity to use that funding to develop these markets and develop infrastructure.

It’s been seen in other parts of Europe, where 60% of recycling is achieved because there are incentives for residents to want to recycle more. Because those incentives are there, it also drives off takers and end users to want to create some of those markets, so there is that use of ‘re-use’.

I think that’s the real challenge, it comes down to the fact that the markets aren’t there, it’s cheaper to use or produce packaging or goods with virgin materials than it is with recycled or recovered materials. The sustainability card is very difficult to play because its price driven. I don’t think that challenge has gone away and quite rightly it will be a taskforce between both industry and the government to come up with solutions that actually deliver that infrastructure.

It’s all about economically making it right. If you look at some of the incentives the government introduced with landfill tax and some of the subsidies for thermal treatment of waste, that in itself got people interested. I think there are a number of measures that need to be considered to really make it attractive for people to want to continue to invest and develop in this space but also to get a long-term strategy around how we manage some of these challenges.

Can you explain how the Deposit Return Scheme works and your view on the implications for the system?

Deposit return schemes already exist in places like Germany and many European countries. Effectively every single-use container that you buy, or piece of packaging that you buy as a consequence of going to a shop or a supermarket has a levy on it which is a tax for it to be reprocessed or recycled. In the instance of the single use containers that’s very simple, the resident takes that back to a participating operator of a deposit return scheme and if the deposit is 10-20 pence, they will get that back on the return of that evidence.

It’s slightly more difficult around paper and other products because that would have to be charged by the producer and then it’s effectively a levy that would need recovered and put back into the infrastructure or put back into the sector so that money can be claimed on the basis of demonstrating evidence for reprocessing that material as a recovered or recycled material. I think the extent of what would be adopted in the UK is yet to be established but there are some schools of thought which are about on-the-go containers, so single use containers of a certain size. There are other commentators who are looking at whether it should be a fully encompassing system where everything that is produced as a single use container or piece of packaging should have a returnable deposit on it.

It’s still in its evolution stages but in places like Germany where they’ve had this type of system in place for 20+ years, there is a discipline that people will return and take their packaging back to the supermarkets.

I think that’s the type of scheme that we’ll see but the evolution of that is a fairly complex model to introduce and see it being rolled out on a national basis. For it to be effective it will take a number of years to establish and there may be some steppingstones to getting there.

What is the requirement for producers to participate in these schemes?

It depends whether it’s the producer or the distributor that recovers the deposit. Going back to the extended producer responsibility, the producer is responsible for making sure that there is an appropriate content of recycled or recovered material in the packaging in the first instance. That’s where it sits with the producer. Then there’s the distributor/retailer who would have to recover the deposit and then the deposit would pass back to the citizen when they provide evidence. So, if it’s ten pence for a plastic bottle, that ten pence is included at point of sale, but to recover that ten pence from the retailer the evidence has to be provided by the deposit return scheme operator. Which could in many instances be the supermarkets who manage the schemes.

It’s a fairly complex process that needs to be thought through about how it will work and where it sits, how do you recover the money, how do you produce the evidence, is it a barcode that’s read on every particular item, is there a counting mechanism? There are a number of ways of doing it. It works in different countries and different geographies to different extents. There are models out there that work and it’s about encouraging people to participate, the financial reward of getting the money back that you’ve paid in deposit is more likely to incentivize to return something.

If you’ve got a dozen beer bottles and a couple of bottles of wine for example and they have 10-15 pence per bottle or per container, the chances are you won’t just throw it in your recycling bin which is for the local authority to collect, you’ll take that back to the supermarket the next time you go shopping. There will be some form of reverse vending or a system that you have to participate in to take the deposit back from that container. There are a number of trialed schemes which are popping up around the country and some of the retailers are the first to market when looking at this. That’s very much on the back of the discussion which is happening in the waste and resources strategy.

It still goes back to the fact that you need a higher percentage of recycled content in the product in the first place to reduce the total waste in the system.

Of course. Also moving away from unnecessary packaging, pre-packed fresh fruit and vegetables for instance, is there a need for it to be pre-packed? If you go into a supermarket or greengrocers, you buy the product that you want. We’ve seen a shift in behaviors with what has happened in supermarkets when they charge 5-10 pence for a carrier bag. As soon as you start charging for items like a carrier bag, which is essential for you to be able to go and do your shopping in the supermarket, people’s behaviors change. You see people using reusable carrier bags and different ways of containing shopping.

That’s something which has happened over the last 3-4 years and it’s purely about changing people’s behaviors. The change of that behavior is: rather than supermarkets giving away free carrier bags, they’ve introduced a scheme where they charge for it. The money they recover from that goes back into charitable donations, but fundamentally as users of supermarkets, rather spending 50-60 pence every time you go shopping on buying new carrier bags, you just re-use them.

There is evidence out there to suggest people’s behaviors will change, once they start to see the benefits of the system that hits them in the pocket. What that’s seeing is rather than there being a higher recycled content in carrier bags, there’s just less carrier bags produced which then lowers the amount that get thrown away as being single use. It’s changed behaviors and changed the way the process works. I think it’s a good example of what can be achieved with the right legislation change and also with the right education and behavioral changes as well.

How do you look at the responsibility of waste managers in balancing shareholder value requirements with environmental safety?

The waste operators will invest and participate in working alongside schemes which make sense from both a commercial and environmental point of view. They won’t invest in projects and initiatives that carry a lot of risk and potential for significant financial losses. It’s one of those situations whereby most private sector organizations have shareholders to answer to and shareholders not only want companies to be successful and sustainable but equally they have to be profitable.

There’s a balance between investing and being early adopters and not getting caught with an investment that’s not going to be supported. It comes back down to whether there’s a legislation that pushes a particular topic or discipline in a certain direction, then that’s likely to bring more investment. If you look around at the moment at the electric vehicle market, I think there is much more of an awareness around the capability of electric vehicles and how you can get the benefits of a low emission vehicle. There problem is that there aren’t enough charging points in the network. So, you’re restricted on whether you make the punch in quite a significant investment or do you just carry on with something that you know is going to be functional for the short to medium term. There’s been some early adopters of electric vehicles, but fundamentally the blocker in EV’s is the fact that there isn’t the network of charging points at the moment. Until that comes, then a wider adoption of that type of alternative fuel vehicle is restricted.

I think it’s the same in the waste sector, there are people who are prepared and want to recycle more and have more sustainable solutions in their everyday life, but the problem is that currently the markets aren’t there or haven’t been created to try and encourage it from a commercial point of view. It’s a bit of push/pull and it creates a tension because private sector operators don’t want to invest in something where there’s no guarantees around what their return will look like.

You mentioned the Deposit Return Scheme. Is there anything else you would look to create as a policymaker?

I think you have to look at the entire waste chain. There is always going to be a need for some form of disposal other than recycling and whether that comes from more segregation of waste so you can decide what you’re doing with it. There’s obviously materials you segregate which can be reused or recycled, there’s organic fraction which can be processed to produce biogas, there are waste fractions which currently can’t be recycled so the only sensible way to treat and deal with that is to turn it into some form of refuse-derived fuel and use it for combined energy and heat production. I think from a policy point of view it needs to be a suite of measures that is reflective of the different challenges that we are faced with.

If you look back over the last ten years, people have seen the introduction of alternate-week collection for residual waste. 20 years ago, that was unheard of, nobody would have even would have even dreamt of having their residual waste bin emptied once a fortnight, there would have been public outcry. It happens now because you have far more containment of the waste that you produce but you have to separate it, rather than being restricted to one bin you get multiple bins of different sizes to encourage more segregation of recyclable material and restrict the amount of residual waste you can you can present. People have adopted it; I think it’s been a success. There’s an acceptance that residual waste is only ever collected once a fortnight, you get a weekly collection of waste, but one week might be recyclable materials and organics and the next it’s the remaining residual waste and organics.

There is evidence to support behavioral change in the way in which we interact with the waste collections that we’re provided. I think to encourage more of that you have to see legislation driving a larger suite of solutions rather than just being a one size fits all. In cities with multiple occupancy living, it’s far more difficult to try and get recyclables sorted and stored within a living accommodation because people don’t have the space to store it. You have to think about different types of solutions in those areas. The solution to some of that could be a deposit return scheme in urbanized areas, you might see less waste being presented for the local authority to collect because people are actually taking it back to the supermarket or producer whereby they get the deposit returned. I think a combination of those changes will start to see a step-change in how our recycling performance continues to improve.

What do you think is the biggest barrier to these changes?

I think the biggest barrier is legislation. Unless legislation drives the need to recycle or recover more, then it’s unlikely to shift from where it is today. I think that’s not a point about people giving up, but people have come from effectively recycling nothing 15-20 years ago, to where we recycle about 42% at the moment.

There has got to be some shift in legislation to try and change the next phase of recycling. The other thing is that there have to be the right incentives, both incentives for operators of infrastructure, but equally incentives for citizens, residents and waste producers to want to participate. I guess if you’re a commercial or business, it can be in some form of tax that isn’t levied if you’re a good clean corporate operator with good recycling and recovery rates. Or simply paying a lower rate of tax than somebody who is a polluter, effectively going back to the polluter-to-pay type of principles.

Likewise, with residents, if you can incentivize them to want to participate because it makes financial sense as well as sustainable and environmental sense then I think that will drive the change.

You seem to concentrate a lot on the polluter, but also the consumer and the role the consumer has to play in a sustainable system.

If you’re a resident living at a property and you get a weekly collection service, one-week recycling, the second week is residual waste and probably some form of organic waste on a weekly basis. If you can’t be bothered to participate and just put everything in your residual waste bin and just leave it to be collected once a fortnight it’s very difficult to be able to change that behavior if somebody doesn’t want to participate because they don’t see the benefit of it. Often the incentive has been to provide residents with larger containers for recyclable materials and smaller containers for residual waste so by inference you’re forcing them to participate.

Once people get used to the system, they will typically follow it. Going from virtually zero recycling 20 years ago to where we are today, there has been a significant shift. That’s been about behaviors, and a number of actions which have been taken by the government in terms of legislation and local authorities about how they’ve interacted with and interpreted that legislation and delivering it on the ground. Collection authorities working with disposal authorities effectively to deliver these solutions and also the benefits that it’s brought to the commercial market. A lot of commercial operators have seen the benefit of having the green credentials of recycling and recovering materials.

Supermarkets are a great example, they produce hundreds of thousands of tons of packaging material, that’s separated, it’s not collected as waste from the store by a waste operator it’s returned back to the distribution centers on the delivery vehicles. It then it goes through some form of grading or baling back at their distribution center where they have a partnership with a waste management company who work alongside them. Because they can realize revenue and value from recovering that material, they’ve changed the way in which they’re transacting. It’s the same with films and plastic from packaging, that will continue. I think we’ll continue to see more and more of that, but the incentives are there and it’s changed the way in which people transact and how they behave.

Building a Sustainable UK Recycling System

Explore recent regulatory changes to landfill tax and the impact on recycled plastic

The role of consumers in segregating plastic at the start of the plastic chain

How governments can incentivize consumers to recycle through deposit return schemes

Understand the dynamic between the recycling and CPG companies to meet higher recycled plastic targets

Building a Sustainable UK Recycling System

Former Operations Director at Veolia

inpractise.com/articles/uk-recycling-system-reg

Why is this interview interesting?

Executive Bio

Robert Edmondson

Former Operations Director at Veolia

Interview Transcript

Audio

Building a Sustainable UK Recycling System(November 18, 2019)

PARTNER

Speak to Executive