New lock-down brings challenges to the European waste industry

«The third wave» of COVID washes over the European waste industry, introducing new and serious challenges. – The start of 2021 brings warning of a tough year ahead, argues COO Ralf Schöpwinkel at Geminor.

Text by COO at Geminor, Ralf Schöpwinkel.

COVID turned 2020 into a year we will never forget. But even though the pandemic was a considerable shock to the system, the waste industry across Europe showed the ability to adapt and solved most of the challenges introduced by COVID. In fact, many industry players – Geminor included – experienced growth in 2020 despite a turbulent waste market. And by the end of the year – with new vaccines being introduced at a record-breaking speed – most of us hoped for better days and a relatively quick normalization.

Two months into the new year, and we can conclude that this will not be the case. An increase in the spreading of Corona all over Europe – mainly triggered by a Christmas break and several mutated variants of COVID – has led to the most serious European lock-down so far.

This means that the spring of 2020 repeats itself: Low economic activity results in less Commercial & industrial waste (C&I) for energy recovery – if not to mention a reduction of material for recycling across Europe. In January alone, waste fuels delivered by Geminor was 20 percent below expected volumes, and the trend continues into February. Waste exporting countries such as the UK, Germany, and Norway are not only producing less residual waste for incineration, but they are also utilizing more of their own volumes, making the surplus available for export reduced to a minimum. Not only residual waste, but also the streams of paper and waste wood are affected.

Commercial and Industrial waste (C&I) is now reduced considerably, but just as important is the fall in Construction & Demolition waste (C&D), which is an important part of the waste volumes exported within Europe every year. COVID has stopped construction workers from moving freely across borders, partially resulting in a stop within the industry.

The volumes of Municipal Solid Waste (MSW) are fairly consistent, but cannot compensate for the loss of C&I and C&D.

A cold winter makes the difference

Hence, the waste industry challenges are similar to those experienced in March last year. Simultaneously there are important differences that make the new lock-down more severe. Firstly, the timing: The lock-down commenced at the beginning of the heating season – and not towards the end as in 2020 – in a period with the highest need for waste fuel volumes in the Nordics. Secondly, this winter has so far been the coldest for decades, making the need for heat and energy even bigger than normal.

In addition to these challenges, both Brexit, COVID, and current global shipping issues have affected the availability of bulk transport in Europe. This is particularly a challenge for bulk ship transport in northern Europe, making it both more expensive and less secure due to the reduction of ship capacity.

Dynamics of BREXIT and taxation

Another issue that affects the current market situation, is the ongoing and varying CO2- and incineration taxation across Europe. Different taxation in different markets leads to turbulence and change of long-lasting waste streams. The current lack of waste fuels in the market impacts the gate fees, which in turn is a challenge for off-takers with increasing taxation and operational costs.

The best example of this market issue is the present UK situation. The increased national incineration capacity, combined with a reduction of waste volumes, is changing the game. When the gate fee for export to Europe is close to 95-100 £ per tonne, the national market has a gate fee of only 75 to 90 £. Waste is a price-sensitive commodity, and both the economic interests and the understanding of the market situation differ greatly from one end of the value chain to the other.

COVID, BREXIT, or other ongoing market-changing factors: The start of 2021 more than ever proves the importance of diversity both within available waste markets and logistics solutions. If one market struggles to deliver, another must be ready to supply. At present, countries such as Poland, Italy, and France are beginning to increase their market share in waste volumes for export, making up for some of the lost volumes. And finally, good medicine for a turbulent market would also be more aligned tax regulations among EU and EEA countries, allowing for more predictability within the industry. Together, these factors are important in handling challenges of “epidemic scale”.

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