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Underpinned by the large number of EU waste
directives, and in particular the Landfill Directive, the UK
controlled waste management market has shown significant growth
since the turn of the Millennium. Annual Business Inquiry data shows
that between 2003 and 2006, the market for waste collection,
treatment and disposal services for waste other than sewage
increased from £4.3bn to over £6.1bn. We estimate that the market
has increased by a similar rate to around £6.8bn in 2007 and will
continue to grow, albeit at a reduced annual rate.
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However, the market growth rates of recent years may slow
down over the next few years, underpinned mainly by the impact of the
global “credit crunch” and escalating oil and energy prices on both
central and local government funding and also on investment by the waste
management industry and private equity investors.
There is
also a possibility that the planned rate of infrastructure development may
be hampered by delays arising from drawn out planning processes, as has
been the case with a large number of incineration and commercial
composting facilities. Among the main reasons for delays in many schemes
coming on-stream has been vigorous opposition from local groups.
Historically, around 90% of municipal/household waste has been landfilled,
but in recent years the proportion of waste being landfilled has been
decreasing while recovery and recycling rates have accelerated over the
last 3 –4 years. To achieve this, increasing levels of investment have
been required to fund recycling collections – in particular kerbside
collection systems – and also the construction of facilities required to
sort and treat dry and biodegradable municipal waste fractions.
Largely
driven by the requirement of the Landfill Directive to divert municipal
biodegradable waste from landfill, DEFRA and the Waste Resources Action
Programme (WRAP) have implemented various programmes aimed at developing
new technologies for treating biodegradable waste and at expanding the
infrastructure for sorting ‘dry’ recyclables. This has contributed towards
the expansion in the number of material recycling facilities (MRFs) and
commercial composting sites. Over the next 15 years, the UK’s waste
management infrastructure is scheduled to expand significantly. Key to
this has been the implementation of the Waste Infrastructure Development
Programme (WIDP) which is channelling at least £10bn of public funding
into the expansion of MRF capacity and also advanced waste treatment
facilities in particular: mechanical biological treatment (MBT) plants,
in-vessel composting (IVC) units, anaerobic digesters (AD) and energy
recovery facilities including; energy from waste (EfW) incinerators,
gasification and pyrolysis plants.
A key
route for procuring these facilities is PFI/PPP, whereby consortia enter
into long-term partnerships with local authorities, particularly on
high-cost multi-facility developments, often referred to as Resource
Recovery Parks (RRPs). there has been a considerable level of mergers and
acquisition activity in recent years, particularly with the larger groups
seeking to enhance their recycling capacity and broaden their networks of
facilities. Key targets have typically included recyclers/pre-processors
specialising in paper or metals, local authority waste disposal companies
(LAWDCs) and regional private contractors. Many LAWDCs have been acquired
as part of long-term PFI/PPP contracts between waste disposal authorities
(WDAs) and private waste management companies. Veolia Environmental
Services (ES), SITA UK, Viridor and Waste Recycling Group can all
attribute substantial growth in recent years to acquisitions.
It has
been through acquisition that leading European waste management groups
have been able to so successfully penetrate and come to dominate the UK
waste management industry. The presence of foreign owned contractors has
been enhanced with the rapid emergence of Greenstar UK, part of the Irish
NTR Group. Within just five years, Greenstar UK has grown through a series
of acquisitions to become the 7th largest player within the UK market and
the largest recycling led contractor.
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