Annual Waste Review 2016

The future of the UK waste sector

In the last two decades, the waste sector has undergone a transformation. Transitioning into a technical infrastructure-dominated business, where customer service is of greater importance; and both legislation and regulation have become stricter.

Adaptability, will be key with the still uncertain impact of Brexit and the ongoing financial pressures faced by local authorities.

Resource efficient business models

The recent report from Aldersgate Group, ‘Amplifying action on resource efficiency’, highlights up to £77 billion in gross added value (GVA) could be added to the UK economy by 2030 if resource-efficient business models are adopted. From the perspective of the waste industry, a lot of UK waste policy and regulation has been driven by EU legislation, such as the successive Waste Framework Directives and the Landfill Directive. Such regulations have been pivotal in increasing municipal recycling rates and diversion of waste from landfill. If the UK Government integrated circular economy principles into the emerging industrial strategy for the UK, it has the potential to revolutionise the way we manage resources in our economy.

Global competition

The trends in recyclate prices for 2016 paint a better picture than for 2015, with many of the key materials showing an increase in value over the last 12 months. However, as economic growth is forecast to slow in the UK over the coming months, it is difficult to predict what impact this might have on material values as the recyclates market is a global commodity market. This is likely to increase the reliance on export markets, putting continued pressure on collectors and processors to produce high-quality products that can compete on the global stage.

Waste deals

2016 has been a strong year for deals with 48 waste deals completing, up 26% compared to the same period last year. This figure reverses the downward trend we saw in 2015, and equals the previous best performing year in 2011. There is growing interest in the UK and European waste management market by Chinese investors. This trend is likely to continue into 2017 and beyond as investors are attracted by the high-growth energy from the waste market in Europe as well as expertise in waste treatment technologies.

It will be vital for waste companies to continue to innovate in service delivery, manage the value in the supply chain more effectively and explore alternative markets - whether that be into energy production or different geographical markets.