UK to miss EU landfill targets

London - The UK is unlikely to meet the EU landfill targets for 2013, but is on course to meet the equivalent 2020 targets, according to a survey by Norton Rose LLP. The law firm, which first conducted a waste PFI (Private Finance study in 2006, has now benchmarked its initial findings with a survey of 60 senior figures involved in the sector, including banks, sponsors, local authorities and consultancies.

When Norton Rose's first survey was conducted, the market appeared to be on the cusp of the mainstream. Three years on the findings highlight how the perception of waste PFI has changed and what the drivers and barriers are for the future of the sector, the firm said.

The EU Landfill Directive brought in tough new requirements to reduce the amount of biodegradable municipal waste being landfilled and local councils have turned to PFI's for a solution. With the first EU deadline just a few months away in 2010, the issue is very topical. If the UK does not meet the requirements, the country will face an intial fine thought to be around £180m. If the second and third targets are not met - 2013 and 2020 - then the estimated fine could rise to £500m.

Mark Berry, Partner, Norton Rose LLP, said: "There are real opportunities being missed to maximise the amount of heat and electricity recovered from biomass waste. The Government's recent UK Renewable Energy Strategy acknowledges the problem that waste biomass is an under-used resource. Unfortunately, the Government has concluded that there is no overall consensus about measures to encourage use of waste biomass.

When Norton Rose first undertook a survey on the waste PFI market in 2006, 73% of respondents thought that the UK would meet EU landfill targets. Three years on, the market is more optimistic, with over half (55.5%) of the respondents expecting the 2010 target to be met and over three quarters (76.6%) expecting the 2020 target to be met. This optimisim is consistent with the findings in DEFRA¹s own Waste Strategy Annual report of 2007/2008.

The message, however, is that much more still needs to be done. More than two thirds (69%) of respondents feel the interim 2013 target will be missed. If these views turn out to be correct the financial penalties for the UK will not be trivial. Many see private merchant waste schemes as being part of the solution.

Planning remains the perceived most significant barrier to the timely delivery of waste projects. Sadly, an unchanged factor since 2006.. Indeed while 25% of respondents cited planning as the main block in 2006, more than 70% cited planning as the main barrier now.

Although often viewed a complicated process, the difficulties of planning are exacerbated by the very nature of waste and it is clearly an issue the waste sector needs to address. Meanwhile, 97% of respondents said that the private sector has an important role to play in enabling the UK to meet EU landfill targets compared with 75% in 2006

It would seem that the private sector has emerged as a crucial component for driving forward waste projects during the last three years. The general view is that without the continued involvement of private companies, the EU targets will not be met. In 2006 the responses were more hedged.

The consensus from industry leaders seems to be that the private sectors influence will increase further as the sector develops. There has been a historic lack of over arching involvement from central Government, which has delegated much of the waste management issues to local Government. Getting the balance between solving a national problem on a regional level has been cited as a factor in delaying waste deals.

While the PFI model has been deployed for municipal solid waste in terms of landfill requirements, questions have been asked about the market for waste by-products. Suggestions have covered the market for recyclables as well as ideas such as refuse-derived fuel (RDF) or solid recovered fuel (SRF).

The topic met with mixed reaction from respondents. The majority (54%) said that there is not a viable long-term market for such waste by-products with 46% saying there is a decent case. Such results demonstrate a lack of conviction over the long-term viability of such schemes.