Does energy from waste cannibalise recycling?

In waste policy circles, anti-incinerator campaigners sometimes claim that building new energy from waste facilities will cannibalise future recycling efforts. The principal argument being that, once constructed, such facilities need to be fed material which would otherwise be recycled by local authorities for their full (contractual) lifetime.

The UK still landfills over 40 million tonnes of material each year. A decent proportion of this will be recyclable, but certainly not all, which will require the development of new alternative treatment capacity. It is a fact that not all waste can be recycled economically and effectively so we will need solutions for that which can not.

So, would the development of a new energy from waste facility bind an authority into a situation where it was unable to raise its recycling rate because it must instead feed its waste plant?

The short answer is no. Mandated separate collections transform the economics of recycling by moving a significant proportion of recycling's costs into a fixed sunk element and leaving recycling with low marginal costs. Once material has been collected for recycling, the potential revenues (even at low commodity prices) will make recycling the more attractive option relative to paying the gate fee at an efw plant. We can see that this is the case by comparing the lower gate fees at MRFs (median of £9/t in 2012, ranging from -£66 to £73) with those at efw (median of £64-£82/t in 2012, ranging from £32 to £101).

The economics therefore make it extremely unlikely that an operator would divert material from recycling towards efw. But do their contracts mandate them to do so?

Again, I think we find that the answer is no. Every authority has a recycling contract (whether with a private contractor or an in-house entity). These contracts are deliberately structured so as to incentivise higher recycling performance. It is only the residual waste left over which is then covered by the (usually) separate contract for residual waste treatment.

Up until 2009 (I think) residual waste contracts were indeed structured so that the authority provided a 'guaranteed minimum tonnage' on a 'put or pay' basis. I.e. the authority would guarantee to pay the gate fee for its minimum capacity even under circumstances where it could not provide that level of material. We can therefore see that there was the possibility of efw cannibalising recycling under circumstances where MRF gate fees were positive. In this case, material below the minimum tonnage sent for recycling could incur a double gate fee at both the efw and at the MRF.  For much of the recent boom in recyclate revenues, however, as well as currently at some facilities, we have had negative gate fees at MRFs which shows that this scenario is by no means certain.

Since then however, newer residual waste contracts no longer contain guaranteed tonnages but instead merely provide the contractor with exclusivity over an authority's residual waste. The contractor must then make up any shortfall using third party waste.

So, in reality we find that new energy from waste facilities will not tend to cannibalise local authorities' recycling efforts, either in theory or in practice. But this message doesn't seem to hit home with the campaigners who continue to peddle mistruths.