We need investment to process more of our own waste at home

8 November 2019

It wasn’t so long ago that investing in renewable energy from sources such as wind, solar or biomass was considered highly speculative. Today they are nailed-on successes delivering affordable energy to UK plc (over one-fifth of it, in fact).

In June, we saw a remarkable 18 days (and six hours) without the use of coal-generated power and at the end of September one of our seven remaining coal-powered stations, Cottam in Nottinghamshire, was switched off. The other six are due to go by 2025.

Much of this is down to an ambitious strategic policy landscape to end our centuries- old dependence on coal. All of it is down to investors being prepared to invest in the alternatives. If I had a pound for every time I’ve heard a business representative say ‘all I want is certainty’ then, well, I’d be a lot richer! In recent years, most of these comments have related to Brexit, but the maxim also applies squarely in the world of sustainability, resources and waste.

Historically, it has often been tough to attract investment – and particularly private investment - into recycling and reprocessing of our waste. Funding for energy-from- waste (EfW) infrastructure and anaerobic digestion plants aside, it’s been difficult to make cast-iron cases for investment, especially when exporting recycled materials to overseas markets carries less risk. Uncertainty may be the sentiment expressed but the underlying causes have been various: weak or absent markets in the UK, global economics, insufficient data, poor quality material feedstock and, until very recently, lack of long-term policy direction.

But things are definitely changing and that was one of the aspects I relished most at a recent investment summit that WRAP organised with the British Plastics Federation and Osborne Clarke. It was an opportunity to talk to the investment community about how the landscape in relation to the recycling of plastics will undergo some major changes in the next few years. Extended producer responsibility, deposit return schemes and the plastics tax are on everyone’s lips.

I was pleased to hear Theresa Villiers, Defra’s Secretary of State, say recently that the ‘polluter pays’ principle will be a key pillar at the heart of the Environment Bill. It was also useful at the summit to talk more generally about the economics of, markets for, and innovation in, plastics. While the debate over the impact of plastics in the environment rages, we must never lose sight of the fact that plastic plays a critical role in modern society – it is low cost, highly durable, functional, light weight and essential for swathes of modern packaging.

Attempts to recycle the growing tonnages here at home have often been stymied by insufficient demand, infrastructure or investment. They were sent off to China, where the economics stacks up more readily. But in the past five years, China has largely turned off that particular tap and alternative foreign markets are limited.

So, in WRAP, we take the view that to demonise plastics will result in unintended consequences: replacing plastics with other materials may result in greater climate change impacts, for example. Instead we must focus on reducing unnecessary plastic waste and being much smarter with products and materials at their end of life stage. Increasingly that means ensuring solutions are framed within the UK. The UK Plastics Pact – which WRAP is proud to lead – was established 18 months ago to address these challenges.

I have been delighted with the progress of the Pact – an update on which is in the pipeline. However, greater investment and end markets in the UK is an area that requires more attention. Just for plastics packaging, to meet the 2025 recycled content targets of the Pact, we will need about 700,000 tonnes of new recycling and reprocessing capacity.

In WRAP, we are delivering grants on behalf of UK governments to support innovative plastics recycling technologies. And I’m very hopeful that the Smart Sustainable Plastic Packaging initiative from UK Research and Innovation will give the sector some more firepower. Clearly, the sector needs the full suite of financial mechanisms, from early research right through to commercial debt and equity investment.

There will be challenges along the way. For example, the cost of recycled plastic has been rising recently – even above the cost of virgin. To me, this shows that the demand for recycled plastic is getting stronger, and that now is the time to invest in extra reprocessing capacity, rather than switch back to virgin material. And I’m glad to see that Viridor and Veolia seem to agree with me.

My final thoughts from the event? I think this was just the start. After the talks, there were many questions from attendees, trying to find out more about the recycled plastics markets, and crucially, the future policy landscape. I was able to direct them to WRAP’s recently published Plastics Market Situation Report, which includes information on prices, volumes, trade flows and much more. But there’s much more still to do. I am hoping that, with our partners, we can build on this event and attract investors and investment to the resources sector. I cannot give absolute certainty, but I can guarantee that there are some large, interesting opportunities here.