Total UK waste arisings reached 255.3 million tonnes at the end of 2014, representing a marginal annual decline of 200,000 tonnes, from 255.5 million tonnes in 2013. The majority of waste arisings were accounted for by the construction and demolition (C&D) sector, which was responsible for just under 38% in 2014, or 96.7 million tonnes. C&D, alongside mining and quarrying, has maintained its proportion of total waste arisings over the last five years as waste reduction policies are hard to implement in these sectors without damaging industry growth.

Figure 1: Waste Arisings in the UK, by Source, 2010-2014, (% of Total)

Source: MBD analysis of Defra, EA, SEPA, WAG and NIEA and MBD estimates

The amount of household waste collected in England increased by 1.7% in 2013/14, representing the first rise for five years. Household recycling tonnage increased by 6.2% over the same period, while regular collection tonnage fell by more than a million tonnes, or 9.8%. The two collection types accounted for 88% of all collected household waste combined in England over 2013/14. The increase in recycling was most likely due to the general consensus on keeping waste away from landfill sites and increasing public knowledge on which items and materials can be recycled by their local authority.

Figure 2: Household Waste in England, by Collection Method, 2009/10 and 2013/14, (000 Tonnes)

Source: MBD analysis of Defra data

Landfill capacity for waste treatment in England and Wales declined year-on-year between 2009 and 2012 as government policies, such as the continuing rise of the landfill tax, impacted investment levels and reduced the need to find more capacity. However, landfill capacity rose by 4.1 million cubic metres in 2013, partly due to renewed consumer confidence in sustaining the economic recovery. Capacity was also still more than 109 million cubic metres less than the 650.7 million cubic metres recorded in 2008.

Figure 3: Landfill Capacity in England and Wales, 2009-2013, (Million Cubic Metres)

Source: MBD analysis of Environment Agency and Natural Resources Wales data

In 2013, recycling rates in England increased marginally to 43.5%, from 43.2% in 2012. However, fairly large disparities were recorded by region. London (33.9%), the North East (37.9%) and the West Midlands (42.2%) all had lower recycling rates than the national average, while six other regions, including the South East and South West, managed to exceed the national average.

In early 2015, the newly-elected European Commission, in power from November 2014, confirmed the removal of its waste directives and associated waste reduction and recycling targets, which had been in place since 2012. These directives and targets had driven recent waste management policy in the UK and contributed to a sharp fall in landfill use, via the landfill tax and other regulations, and a rise in recycling rates. Before the European election, there were strong indications that recycling targets would be ambitiously increased to 70% of all municipal waste by 2020 in each member state. The Commission is expected to announce its new waste targets in 2015, but until these are finalised, any investment or policy direction will be restrained.

Although there are no current EU targets, the sustainability of the environment and resource preservation have driven efforts to divert waste away from landfill and derive as much use, or energy, from waste material as possible. Energy from waste stations are becoming more commonplace, despite overcapacity concerns, and the incineration of residual waste has helped generate extra electrical power. The recycling, re-using and composting of waste has saved approximately seven million tonnes of CO2 equivalent emissions, and the push towards ‘greener’ forms of waste disposal continues with climate change remaining a serious problem. In September 2014, the EA announced that biogas producers will no longer need to pay for permits or waste handling contracts to use fruit and vegetable by-products in the anaerobic digestion process, which will lead to further reductions in carbon emissions.

The onset of the recession, and the consequent impact it had on households, industry and the commercial sector, led to a temporary decline in overall waste arisings. This reflected both the implementation of waste reduction policies, and a decline in general production and consumption. However, the main contributors of waste, such as the construction and demolition sector, have started to increase activity again as the UK economy continues its recovery. This has partly negated the effects of current waste reduction policies.

Defra changed its 2013 overcapacity forecast of 54%-56% to 65%-67% in October 2014, but the development of the UK waste scrap export market will continue to be subject to global variations in commodity prices. This will be most notable in ferrous and non-ferrous metals, where prices are particularly volatile in periods of economic instability, and which account for 84% of all UK export activity. Supply of scrap and waste material is expected to continue to outstrip demand in the UK, with the trade surplus widening over the next five years. This will make the value of UK recycling increasingly dependant on the export market and demand from Europe and the developing world, particularly as Chinese demand is expected to sharply decline following its Green Fence policy.

Despite the top five companies increasing their market share strongly in recent years, the concentration in the UK waste management market is believed to have remained below other European countries. The UK market is becoming more segmented as new specialist players enter, attracted by long-term contracts and the ability to deploy new technology like Energy-from-Waste (EfW).

Veolia, SUEZ and Viridor plan to build 26 new EfW plants combined over the next six years, and there is a clear industry emphasis on infrastructure and finding ways to dispose of residual waste in the most cost effective ways.

Consolidation has slowed in the last 12 months with only Viridor of the five largest UK companies acquiring a number of regional businesses, such as Pulp Friction for £9 million and JWT Holdings for £7.6 million. However, consolidation may quicken now that at least 37 local recycling authority contracts are up for renewal over the next 18 months.

The UK remains attractive to overseas companies with 30% of the top 20 waste management companies under foreign ownership.

The largest operators in the UK are Veolia Environmental Services UK, Biffa Group, Viridor, SUEZ, FCC UK and Cory Environmental.

The ongoing economic recovery, and current lack of future waste reduction targets, will see UK waste arisings decline at a marginal rate over the next five years

UK waste arisings are expected to continue the recent downward trend over the next five years. However, the lack of strict waste reduction regulations and the limited use of the most efficient technology in the C&D and M&Q sectors means that the consequences of economic growth are likely to outstrip the impact of waste reduction policies in other waste sectors, such as households and commercial environments. Waste levels are expected to fall by between 0.1% and 0.3% from 2015 and 2019 to 253 million tonnes, though the potential change in UK government and the next EU waste framework may affect this decline.

Figure 5: UK Waste Arisings Forecast, 2015-2019, (Million Tonnes)

Source: MBD forecasts

The tonnage of household waste arisings has declined over the last five years due to a surge in information on alternate waste disposal methods and how to re-use items, as well as the provision of tools, green bins and food waste bins. Producers are also coming under increasing pressure to use recyclable material in packaging, which could distort household waste generation figures as recyclable materials tend to be lighter than non-recyclable materials. The number of goods bought by households is also likely to increase over the coming year at least as consumer confidence currently matches the nine-year high set in June 2014. As the IMF predicts that UK economic growth will slow in 2016, MBD believes that the amount of household goods will fall, leading to a ‘real’ decline in household waste generation. The updated EU waste framework is also expected to lead to tighter controls on household waste, which will help drive stronger declines in the latter years of the forecast period.

Figure 6: UK Household Waste Arisings Forecast, 2015-2019, (Million Tonnes)

Source: MBD forecasts

The waste management industry responded well to the first wave of EU directives implemented from 2012, but with stagnating recycling rates and the improving economic climate, the industry will have to do even more to tackle the factors that drive waste generation. The expected announcement by the European Commission detailing its plans for waste management in late 2015 will give the UK government a definitive direction to follow over the forthcoming years. However, significant changes also depend on the government’s own policy direction, such as whether to ban food waste from landfill. The potential overcapacity problem at waste treatment sites will have a knock-on effect across the industry so it is important that companies continue to diversify and find the most efficient ways of managing waste materials without incurring the greatest financial and environmental costs.