In recent years, the volume of waste handled by waste treatment and disposal companies has steadily declined, driven by government policies designed to minimise waste and encourage recycling. These government policies have triggered significant changes within the industry. There has been a large shift from the traditional, disposal of waste to focus on the treatment of waste. The treatment of waste generates much higher revenue than disposal. In the current year, revenue is projected to rise by 3% to reach £3.3 billion.
Businesses are investing heavily into waste treatment plants to allow them to convert waste into energy and other useful products, such as compost. The energy produced comes predominantly in the form of electricity, but waste can also be used to produce heat and biofuels. Over the next five years, the share of waste sent to treatment facilities is anticipated to grow, but the amount sent to landfill is likely to fall further. The production of renewable electricity from such plants is set to increase. It is forecast that industry revenue will reach £3.9 billion in 2019-20.
There are a number of key external drivers that have an effect on the industry:
- Total non-recycled household waste
The total volume of non-recycled waste produced in the United Kingdom dictates the quantity of waste that is handled by the Non-Hazardous Waste Treatment and Disposal industry. This driver has been falling annually for a number of years owing to rising recycling rates. A further drop in non-recycled waste volumes is expected in 2015.
The total volume of waste generated is affected by population growth. Whilst waste volumes are declining per capita, population growth increases the amount of waste generated and requiring disposal. The UK population is forecast to continue increasing slowly in 2015.
- Public concern over environmental issues
Concern over the level of waste sent to landfill has meant increased regulation around the disposal of waste. The rising cost of the disposal of waste has supported revenue growth in the industry. Concern regarding greenhouse gas emissions also supports the production of renewable energy from waste. However, public concern regarding the environmental effects of waste production and disposal can result in waste prevention measures; this could lower the volume of waste produced and limit demand for disposal services in 2015-16.
- Industrial production
The largest market for waste treatment and disposal services is the commercial and industrial (C&I) sector. The volume of C&I waste produced is positively affected by rising industrial production and economic activity. The industrial production index is forecast to rise in 2014-15, providing an opportunity for growth in the industry.
Current Industry Performance
The total volume of waste handled by the industry is declining and, at the same time, the share going to landfill is shrinking. However, demand for waste treatment is increasing rapidly. As a result, the industry is investing in large-scale and technically complex methods of treating waste. The sale of renewable energy has supported revenue growth in spite of lower waste volumes.
In the five years through 2014-15, industry revenue is expected to reach £3.3 billion. The industry earns the majority of its revenue from treating and disposing of commercial and industrial (C&I) waste. This means that the industry’s performance is influenced by levels of industrial production and economic activity.
Continuing Reduction of Waste
In the five years through 2019-20, households are anticipated to further reduce the volume of non-recyclable waste they produce. However, forecast population growth and rising levels of disposable income will work against this trend.
As required by the EU Waste Framework Directive, the UK government set out a waste prevention programme in 2013. The programme sets out to reduce waste volumes from businesses and households by advising on how to use resources more efficiently, while also offering waste prevention guidance to households. Proposals from the European Commission, announced in July 2014, will require 70% of household waste to be recycled by 2030. This will require significant work considering that only 43.2% of household waste was recycled in 2012-13, according to figures released by Defra.
The Non-Hazardous Waste Treatment and Disposal industry is expected to evolve further over the five years through 2019-20. More treatment plants will come into operation and disposal methods for commercial waste will come under the spotlight. Industry revenue is projected to grow over the five years through 2019-20 to total £3.9 billion. Although the volume of waste handled by the industry is expected to decline gradually, rising gate fees will continue to support revenue. Revenue is forecast to increase by 3.7% in 2015-16. Increased recycling at locations other than treatment or disposal centres may limit the industry’s prospects, but only to a small extent.
The treatment of waste and its potential to produce sustainable energy is one of the main focus points at this year’s RWM show that is to be held at the Birmingham NEC on 15-17 September. GGR will be attending the show and exhibiting our zero emissions machines. You can find us on stand 5X20. Come along to see us and find out how our market-leading kit can help in this sector.
This article has been written and produced with Ibis World Ltd reports as its main source of data.