Resource Association calls for increased costs to waste producers

I see the Resource Association has published a report looking at the costs to its Members of cleaning up contamination in recyclate under a range of different scenarios. To me this doesn't really tell us anything Earth shattering. Removing contamination incurs costs. The question is who should bear these costs and who is in the best position to do so.

I don't think their analysis supports the conclusion that pushing these costs from their Members to waste producers (which is in effect what they are suggesting) would lead to increased net benefits to the UK economy. On the contrary, the additional costs (in terms of both time and money) faced by waste producers means that other productive parts of the economy are less able to invest and create jobs (or alternatively it means that householders are less able to invest in leisure activities). This effect may be larger or smaller than the gross investment of Resource Association Members, meaning the net impact could be positive or negative.

Unfortunately this is the sort of ambiguous message which doesn't sit well with policy makers. Also, given that the impacts on waste producers are likely to be diffused across the wider economy, whilst the impacts on Resource Association Members are more concentrated, policy makers are more likely to be persuaded by the louder arguments put forward in reports like these.

Overcapacity concerns for AD?

I see via @ediewaste that there have been a few concerns about the state of the AD market voiced at the recent ADBA conference.

Basically this looks to me like an incumbent saying: look guys, this is a lot more difficult than you think; be careful as we don't want a situation where there are too many plants chasing too little feedstock (i.e. overcapacity). Overcapacity is of course an issue which tends to be associated in the trade press with efw (the recent Eunomia report being a key element stoking these concerns).

I suspect we're more likely to end up with overcapacity for a technology like AD where the plants are relatively smaller and less capital intensive to deliver than a large-scale residual waste plant. They are therefore less reliant on long-term debt funding which means operators may have greater flexibility to take a punt on a project without being constrained by having to satisfy risk-averse lenders.

AD is a technology which has explicit government backing and which enjoys some of the largest amounts of support under the Renewables Obligation. If operators can't get it to work under these circumstances then there really is something wrong.

Talking bout a revolution

I see that a new 'resource revolution' has started whilst my attentions have been turned elsewhere.

To me, it looks like the same old story around material scarcity and how this might drive an increasingly circular economy (which has certainly now taken hold as the concept du jour). Regular readers will know I don't find this story particularly compelling as the relative prices of resources remain low in historic terms. Stuff continues to become cheaper relative to people, a long term trend which I cannot see reversing.

Instead, I think that higher regulatory demands will continue to drive higher levels of material recovery and push increasing amounts of recyclate back towards the productive economy. On the demand side, the increasing repatriation of reprocessing and manufacturing is more likely to be driven by global factor price equalisation than anything else.

Having said that, there does seem to be a lot of interesting stuff (led by the Ellen MacArthur Foundation) going on around designing new products for a circular economy. I suspect that this could prove to be effective in the long term if waste disposal costs are driven sufficiently high (by government and regulator intervention) thereby driving extremely high material recycling rates.

One thing is for sure though, intervention which leads us increasingly towards a circular economy will involve higher costs to consumers and waste producers. For me it is questionable whether this is necessary. As I have said before, if material scarcity really is a major concern, then the simple market dynamics of demand and supply will address this issue without the need for government intervention.