ANNEX__________________________________________________________________________________

An Assessment of Enterprise Opportunities in

Environmental Goods and Services

A Report to Forfás and InterTrade Ireland

(Extract of sections on waste and water)

__________________________________________________________________________________

August 2008

1.1. Waste Management

Products, systems and services for the minimisation, collection, treatment, segregation, recovery, recycling and disposal of waste that may include paper, organics, metals, glass, plastics, demolition and construction wastes, electrical and white goods.

1.1.1. Introduction

The approach to waste management on the island is based on the internationally adopted hierarchy of options that has been embraced by the EU since 1989 as the cornerstone of its waste management policy. The most preferred option is prevention and minimization, followed by re-use and recycling, energy recovery and, least favoured of all, disposal.

Waste management policy is set at EU level and a significant body of legislation has been

developed since the adoption of the first Waste Framework Directive in 1977. 1

Ireland and Northern Ireland have adopted the proximity principle, which says that waste

should be treated as close as possible to the source of generation. 2 Within Ireland, inter-regional movement of waste has been allowed to avoid the implementation of the Regional Waste Management Plans excessively restricting the establishment of economies of scale for infrastructure and markets. However, large quantities of waste continue to be exported primarily because of infrastructure deficits in relation to facilities and indigenous market size.

1.1.2. The Waste Management Sector

It is estimated that there are some 250 companies involved in the waste management sector

in Ireland and approximately 75 in Northern Ireland. 3 4 In addition, local authorities are

1 A full list of EU waste legislation can be found on

http://ec.europa.eu/environment/waste/legislation/index.htm2 The proximity principle is set out in EU Framework Directive 91/156/EEC. Member states must establish an integrated and adequate network of disposal installations so that waste can be disposed of in one of the nearest appropriate installations, by means of the most appropriate methods and technologies to ensure a high level of protection for the environment.3 Proxied from UK data - Department of Trade and Industry. Emerging Markets In the Environmental Industries Sector, November 2006. 4 The KOMPASS Business Directory lists 100 companies involved in waste collection (excluding local authorities) and 104 engaged in recycling. In addition, 25 companies are listed as being providers of waste

active players in this sector. The recycling sector (NACE 37) comprised 41 companies (2006),

employing 530 with a turnover of €139m,5 demonstrating their SME nature with an average employment of 13 persons and turnover of €3.4 million. Some 561 IPPC and waste licenses have been issued by the Environmental Protection Agency (EPA).

On the basis of feedback from the sector, it is estimated that the value of the waste management market in Ireland is in the range €1.2bn to €1.6bn, and the corresponding figure for Northern Ireland is estimated at £250 to £300m.

These estimates contrast sharply with those contained in the Ernst & Young report on the size of the European EGS sector, which valued Ireland’s total EGS sector at €1.21 billion

(2004), with just €215m being allocated to solid waste and recycling. 6 The total UK market for waste management was estimated to be £8.1 billion in 2005, which extrapolates to a

Northern Ireland market of £211m. 7

The market in Ireland is fragmented with the top five companies accounting for just 25% of the total market. Quite a number of companies (Greenstar, One51 (TechRec), Panda Waste, Oxigen, Bord Na Mona (AES), Thorntons Recycling, Mr Binman, Indaver Ireland, Enva and Veolia) are of a sufficient scale to use their skills and know how to take advantage of the growth in this sector in the medium term and to expand their businesses in export markets. Levels of profitability vary widely in the sector. Greenstar, for example, probably the largest private player in the industry, made a profit of €27.4m on a turnover of €134.5m (2006). While the local authorities operate the majority of Ireland’s municipal landfills, the private sector is the predominant service provider for commercial, industrial and hazardous waste management, 67% of the municipal waste collection capacity and nearly 50% of the direct

kerbside household waste collection 8.

It is widely expected that there will be further consolidation within the sector and this should be welcomed as it will help create waste companies capable of competing internationally in the provision of services. The key players in the sector believe it is critical to reach scale and many expect that two or three dominant companies will emerge. Certainly the area of waste management shows the largest number of mergers and acquisitions in 2007. This reflects the continuation of a process commenced over the past

equipment and machinery. 5

2006 Census of Industrial Production, CSO, December 2007. 6 European Commission - DG Environment, Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU. Ernst & Young. September 2006. 7

Department of Trade and Industry (UK) study Emerging Markets in the Environmental Industries Sector, November 2006. 8

Private communication, Irish Waste Management Association, 2008.

number of year where the larger, well-funded waste management companies have acquired smaller regional operators or specialist waste contractors. Once deregulation commenced with domestic and commercial waste and the requirement for additional separation of waste streams, a plethora of companies were established up in this area. There has been a steady move towards consolidation as the ability of the small regional operators to compete with the infrastructure of the large waste management companies becomes less and less. For example, Greenstar has undertaken 14 acquisitions since 1999. There is a concern among some companies in Northern Ireland that a similar consolidation could arise, with the remaining smaller operators being ‘squeezed out’ by dominant players, or that if central procurement is adopted there will be no scope for smaller business. A contrary view is that such as larger grouping would provide opportunities for a higher level of expertise with a longer planning time horizon.

While all operators feel frustrated at the absence of a clear regulatory framework, feedback from the sector is generally positive about growth prospects and new business opportunities. Greenstar has been especially proactive in seeking to stimulate debate and to

inform waste policy decisions on a variety of issues confronting Ireland. 9

1.1.3. The Regulatory Framework - Ireland

Legislation: Ireland has transposed the waste management provisions of the relevant EU Directives by means of primary legislation.

Overall: Policy has been guided by key statements, e.g. “Delivering Change” (2002), “Taking Stock and Moving Forward” (2006), various waste related Plans, e.g. Regional Waste management Plans, Plans for specific streams, e.g. hazardous waste, biodegradable waste, etc. Producer Responsibility Initiatives have been introduced, e.g. packaging, waste electrical and electronic equipment, end of life vehicles and a major public awareness campaign i.e. Race Against Waste has been implemented. The primary aim of the National Waste Prevention Programme (2004-2008) was to reverse trends in waste production, decouple waste generation from economic growth and minimize the environmental impact of waste. In August 2006, the Minister for the Environment, Heritage and Local Government published a consultation paper on options for future regulation of the waste sector. Submissions were invited on whether there is a need for a regulator for the sector, if so on what model of regulator might be most appropriate and on what powers any such regulator should be given, the role of local authorities as regulators and/or direct service providers, waivers, universal service obligation, recycling and other obligations on private collectors, etc. The government’s response to the more than fifty, many very detailed, submissions is eagerly

9 Waste Policy, Planning and Regulation in Ireland, Final Report for Greenstar by Eunomia Research and

Consulting Ltd., in association with TOBIN Consulting Engineers, April 2007.

awaited by the industry.

Hazardous Waste: A proposed National Hazardous Waste Management Plan published by the EPA set out a framework for a revitalized approach to hazardous waste prevention, collection and management.

Biodegradable Waste: The publication of the National Strategy on Biodegradable Waste has set further recycling priorities.

Public Capital Expenditure: Some €753m in public funding has been approved under the NDP, with investment in the ’legacy’ issues of old landfill sites the priority. However, there are no details provided as to project priorities and the timescale for delivery of the proposed measures.

International Review: A Request for Tenders for a consultancy study to carry out an international review of waste management policy has been published (February 2008). The terms of reference suggest that the review will identify possible policy changes and, in addition, examine institutional and organizational arrangements which could assist in achieving Ireland’s policy goals. Of critical importance, given divergent views within the industry, the study will evaluate the scope for the extension of the use of proven technologies for the mechanical, biological, chemical or thermal processing of waste (or

combinations thereof). 10 In addition, the OECD will conclude a case study on waste management in Ireland and this too will be completed before the end of 2008.

Future Policy Change: In the longer term for both jurisdictions, the proposed revision of the Waste Framework Directive and the introduction of a Sustainable Consumption and Production Policy may shift the emphasis to the prevention of waste and may generate new opportunities, either in providing consultancy services or in cleaner technologies that produce less waste. The proposed Directive would merge legislation on waste and hazardous waste and simplify it, reflecting technological progress and also bring its provisions up to date. It would introduce the life-cycle approach into waste policy to focus on key environmental impacts and on improving the way we use resources. A revised definition of recovery is set out which confirms that the basis for this definition is the substitution of resources. The definition of waste is unchanged in the proposal, but it does allow for future clarification of when certain wastes cease being wastes by specifying criteria for those waste streams that meet certain specified tests. The Directive would introduce minimum standards or a procedure to establish minimum standards for a number of waste management operations and would improve the recycling market by setting environmental

10 Final Report for Greenstar by Eunomia Research and Consulting Ltd., in association with TOBIN Consulting Engineers, February 2008. The report argued that MBT is the only internationally proven technology solution that can play a major role in helping Ireland meet its EU waste targets. AEA Technology, in a report for the European Commission has evaluated technology options.

standards that specify the conditions under which certain recycled wastes are no longer considered waste but high-quality secondary materials instead. There is also an aim that by 2010 a product eco-design policy would be formulated to address both the generation of waste and the presence of hazardous substances in waste, with a view to promoting technologies focusing on durable, re-usable and recyclable products.

1.1.4. The Regulatory Framework – Northern Ireland

Legislation: Northern Ireland has transposed the waste management provisions of the relevant EU Directives by means of primary legislation. The key legislation is the Waste and Contaminated Land (NI) Order. The most recent updating regulations amended the Order to bring agricultural wastes and mine and quarrying wastes into the controlled waste system. 11

Overall: Towards Resource Management, the Northern Ireland Waste Management

Strategy 2006 – 2020, was published in 2006.12 The primary aim of the Waste Management Strategy is to manage waste and resources effectively. This means using material resources in a way that reduces the quantities of waste produced and, where waste is generated, to manage it in a way that minimises its impact on the environment and public health and contributes positively to economic and social development.

Hazardous Waste: The Northern Ireland Hazardous Waste Forum consists of key stakeholders and has been established to advise on a way forward for hazardous waste reduction, recovery and management. The Forum published its first Action Plan in June

2004,13 with objectives and actions focused in four areas, namely the regulatory system; communications and awareness raising; reduction, reuse and recycling; and, provision of facilities.

Biodegradable Municipal Waste: The Strategy sets out the Department’s policies with respect to the diversion of Biodegradable Municipal Waste from landfill to meet EU Landfill Directive targets. Key to this is the development of significant new waste management infrastructure with considerable cost implications. A Waste Infrastructure Task Force was established to make recommendations on the type of infrastructure required, likely costs, funding mechanisms and planning and delivery, and the report of the Task Force was

published in December 2006. 14

11 The Waste Management Regulations (Northern Ireland) 2006.12 Towards Resource Management, The Northern Ireland Waste Management Strategy, 2006.13 Hazardous Waste in Northern Ireland – An Action Plan for its Environmentally Sound Management, June 2004.14 Report of the Waste Infrastructure Task Force, December 2006.

Public Capital Expenditure: The Strategic Investment Board has identified a capital investment requirement of up to £285 million. Northern Ireland’s Investment Strategy 2008-2018 predicts a total investment of £436m over this period, with £256m being spent in 2008-2011 and the balance of £180m in the remainder of the period.

Strategic Review: A Strategic Waste Board has been established and Waste Infrastructure has been designated a supported programme by the Strategic Investment Board for Northern Ireland.

Future Policy Change: The EU has adopted thematic strategies on the sustainable use of natural resources and on the prevention and recycling of waste. The strategy on prevention and recycling of waste includes the introduction of life cycle thinking into waste policy and this could potentially lead to profound changes to policies and practises as the greenhouse gas emissions or Carbon Footprint associated with waste and resource management systems and technologies becomes a key issue.

1.1.5. Trends

The nature of waste management continues to change at a rapid pace. For example, there is an increased emphasis on promoting the idea of waste as a potential resource. While good progress is being made in relation to recycling, significant problems remain on the waste disposal front with the top priority to divert waste from landfill. Other important trends in

waste generation and management, as follows, have been identified: 15

The quantity of waste being recycled continues to grow at a significant pace; with the quantity of municipal waste recycled up 18% year-on-year (2005/2006). Some 36% of municipal waste is now recycled; exceeding the national (2013) target of 35%.

Continuing strong increases in recycling and recovery remain overshadowed by increased waste generation and landfill; volumes to landfill were up 8% year-on-year (2005/2006). There are doubts if it will be possible to achieve the national target of 50% diversion of household waste from landfill by 2013.

While the quantity of packaging waste is also increasing, the 60% recycling target for packaging and packaging waste (2011) should be met.

Household WEEE collection (at 7.4kg) is nearly twice the requirement set out in the WEEE Directive.

Waste recycling infrastructure (as opposed to export) is improving, with a 40% year-on-year increase (2005/2006).

15 National Waste Report (2006), Environmental Protection Agency, 2007.

It is unlikely that the 2010 target to reduce biodegradable municipal waste by 450,000 tonnes will be met due to the lack of the full implementation of the National Strategy for Biodegradable Waste.

Many of Ireland’s 29 landfills that are licensed to accept municipal waste are new and have significant capacity. However, this capacity cannot cope with the growing volume of municipal waste. Two proposed incinerators have been licensed but construction has not begun. Mechanical treatment of residual waste is on the increase. The subsequent biological treatment stage is not yet in use. Ireland’s non-compliance with the EU’s Landfill Directive and the absence of a clear national strategy on landfill options is inhibiting investment decisions.

Construction and demolition waste is at a record high level (17m tones) but reported

recycling rates are down, particularly in relation to the non-soil and stone fraction. 16

Hazardous waste generation has decreased slightly. The potential allocation of waste to the proposed incinerator in Dublin will divert very

large volumes from materials recovery or landfill, though this issue is still subject to argument.

The latest estimate waste arisings in Ireland (excluding agricultural waste) are as follows:

Table 4.8: Waste Arisings – Ireland, 2006Waste Category Tonnes %

Construction and demolition waste 16,819,904 54.8 Mining and quarrying waste 4,782,614 15.6

Manufacturing waste 3,818,711 12.4

Municipal waste 3,384,606 11.0 End-of-life vehicles and scrap metal 744,136 2.4

Contaminated soil 406,904 1.3

Energy, gas and water supply waste 333,341 1.1

Hazardous waste 314,072 1.0

Urban wastewater sludges 59,827 0.2 Drinking water sludges (wet weight) 30,047 0.1 Drinking water sludges (dry solids) 9,987 0.0 Dredge spoils5 0 0.0 Total 30,704,149 100.0

Source: EPA, National Waste Report 2006, EPA 2007

The following is the corresponding data for Northern Ireland:

16 Ibid, National Waste Report (2006), Environmental Protection Agency, 2007.

Table 4.9: Waste Arisings - Northern Ireland, 2006Waste Category Tonnes %

Construction, demolition and excavation waste 2.5-3.75 MT (3.125)

64

Mining and quarrying waste N/A

Commercial and Industrial Waste 635,000 13.1

Municipal waste 1,052,234 21.7

End-of-life vehicles 56,900

Hazardous waste 47,400

Agricultural waste (non-organic) 41,000 1

Packaging 4 – 500,000

Tyres 16,100

Total (C&D&E, C&I, MSW, AG) 4,853,234Source: Towards Resource Management. Volume 2: Waste Stream Summaries

Municipal waste is collected with possible prior segregation or subject to post-collection segregation. In principle, there are three broad fates for collected municipal waste: landfill, incineration with or without heat recovery, or material recovery (recycling). The majority of municipal waste in Ireland is landfilled, with improving recovery rates and no incineration at present. Materials separated for recycling are largely exported for processing, with the demise of local steel, paper and glass processing capacity. There is a policy objective to develop markets for recycled material, but with notable exceptions (e.g. Wellman, Shabra, TechRec), this is absent.

In Northern Ireland, there is a perceived division between larger multi-national operators with a traditional approach to waste management and indigenous SMEs that are more focused on resource recovery with innovative approaches and technologies.

1.1.6. Drivers

Government waste policy and compliance with EU Directives have been the key drivers to date; specifically, the Landfill, WEEE and Packaging Directives. Initially, restrictions on landfill capacity, the requirement to upgrade landfills and obligations to recycle packaging prompted a major rise in the cost of waste disposal and the formation of private service providers. Investment in landfill capacity has reduced this driver somewhat, though cost remains a concern and is now the critical driver, after legislation. There is a view among some of the waste management providers that the full cost of waste has still not been identified by waste producers and that this inhibits the adoption of less traditional waste management practices and technologies. The scheduled escalation of the landfill tax in Northern Ireland will increase the costs of disposal relative to other management and reprocessing options.

The application of the Landfill Directive will require the diversion of biodegradable

municipal waste from landfill. 17 Using the 1995 quantity of biodegradeable waste as a basis, the targets for Ireland for the quantity to be landfilled as a proportion of the 1995 figure are:

Table 4.10: Targets for landfillingYear TargetJuly 2010 (with derogation) 75%July 2013 (with derogation) 50%July 2016 (without derogation?) 35%

These targets translate into the following estimates; 18

Table 4.11: Treatment TargetsYear Managed organic

BMWBiological treatment target (tonnes)

Residual treatment target(tonnes)

Total treatment(tonnes)

2004 746,532 49,5782005 744,685 47,802 2006 819,919 64,7252010 966,003 338,129 308,904 647,033 2013 964,060 414,546 438,190 852,736 2016 921,104 442,129 499,762 941,891

Achieving these targets will require significant investment.

A future driver will be the need to reduce the level of GHG emissions from landfills which is currently 3% of the national total. This will provide a further incentive to segregate collected waste, whether at source or subsequent to collection, prompting demands for additional outlets. While the existing practices in response to current requirements may be relatively “mature”, management of biodegradeable waste will represent a step change in demands and one that will not be easily accommodated by export. Local solutions will be required. In addition, compliance with Ireland’s stricter climate change/RES targets post-2012 may encourage a greater use of energy from waste solutions. In relation to Northern Ireland, the carbon agenda (UK Climate Change Bill) is also starting to impact on waste and resource management decision-making in the UK, and this influence will continue to increase. However, there is a lack of awareness of these forthcoming impacts in Northern Ireland.

Full compliance by Ireland with the EU’s Packaging and Packaging Waste Directive (94/62/EC) by 31 December 2011 will increase the pressure on packaging collection and

17 Directive 1999/31/EC.18 Hitting the Targets for Biodegradeable Municipal Waste, Ten Options for Change, EPA, January 2008.

recycling. In addition to better recycling, EPA have suggested that a targeted approach be undertaken to reduce the quantity placed on the market in an attempt to take an alternative approach to increasing the percentage achieved.

The desire to segregate waste and to apply the “pay by use/weight” approach has led to the development of improved waste handling and accounting systems. This expertise may be provided as a service to other markets, e.g. Eastern Europe.

Specific legislation, e.g. the WEEE Directive and subsequent national legislation has provided stimulus for particular waste streams.

Finally, increasing waste costs that impact on company competitiveness is a concern which has been articulated on many occasions by the National Competiveness Council.

1.1.7. Weaknesses

In the course of interviews with companies in the sector, the main concerns expressed were uncertainty in policy and the time required to bring projects to fruition. Thermal treatment with energy recovery is the expressed preferred option for dealing with residual waste after achieving ambitious targets in respect of waste prevention, recycling and recovery and is reflected in the regional waste management plans, for which the local authorities have statutory responsibility. These waste-to-energy plants will be provided as entirely private sector developments or by way of public private partnership. At present, there are a number of proposals, led by Indaver, for thermal treatment (waste to energy) plants, but none of these have entered even the construction phase. Mechanical Biological Treatment (MBT) has been introduced in a number of localities and has received some positive comment. A review of national waste policy with reference to international best practice has been announced, with the possibility that current policy will be changed.

Private operators have also expressed concern about the apparent ability of local authorities to control the waste market through their adjustment of the prices charged by their own landfills and the potential to direct the fate of the waste (“flow control”).

Waste is largely exported for recycling, due in large part to the absence of an indigenous reprocessing infrastructure. Economies of scale are most often suggested as the reason for this deficiency, since there is free movement of waste for recovery and the Irish market is small in European terms. In Northern Ireland, collection and disposal (to landfill) is dominated by the local authorities.

Inertia, familiarity with existing practice and lack of knowledge of innovative and emerging technologies among local authorities has been expressed as weaknesses in Northern Ireland.

A risk-averse procurement process and a sense of needing to take rapid and certain steps to prepare for the Landfill Directive favours maintaining the status quo of technology. The existing waste management planning structure is under review and the potential to consolidate the existing three planning groups into a single entity has led to uncertainty in relation to future policy.

1.1.8. Case Studies

Forfás has published a baseline assessment of the waste management sector. 19 This benchmarking analysis confirmed that Ireland performs poorly relative to a selection of competitor countries in meeting the waste management needs of enterprise. The Forfás Report also addressed waste treatment options with reference to international benchmarks.

TECHREC IRELAND

Techrec Ireland Ltd is engaged in the recycling and materials recovery of waste electronic and electrical equipment (WEEE) in its state-of-the-art plant in Parkwest, Dublin. The driver for its establishment was the planned implementation of the WEEE Directive in Ireland. TechRec Ireland Ltd is a subsidiary of One51 Ltd. - the majority shareholder. Immark AG of Switzerland (which is now majority owned by One51 Ltd.) provided the technology know how for the operation. One51 is a diversified group with a focus on waste, sustainable energy and associated support services. Immark AG is the dominant service provider of WEEE recycling facilities in Switzerland and also operates a number of large WEEE processing facilities in other European countries. In addition to having an EPA Waste Licence and a Waste Permit from Dublin City Council, TechRec has ISO certification for its environmental, quality and occupational health and safety management systems. TechRec Ireland has invested in facilities to disassemble and recover components and materials from WEEE. Collected waste products are segregated for mechanical or manual processing. Those subject to mechanical processing are mechanically broken with the residue separated before further size reduction and separation. Materials e.g. plastics, glass and metals are then exported for specialised recovery or directly for reuse. Hazardous components are segregated before they could be mixed in the breaking stage. In addition to providing the service of disassembly, destruction and materials recovery, TechRec provide an advisory service to business that wishes to establish a self-compliance scheme. Furthermore, they have developed software to track the path of received products, facilitating the reporting of waste treatment and fate and confirming destruction where required. TechRec (NI) Ltd., is the sister company of TechRec Ireland Ltd., and is the first fully licensed refrigeration recycling plant on the island of Ireland. Together they provide an example of an all-island solution to the difficulty of economies of scale. The WEEE collection service in Ireland is

19 Forfas, Waste Management Benchmarking Study, June 2006. An earlier report (July 2003) made very similar points.

dominated by two compliance schemes: WEEE Ireland and the European Recycling Platform. Together they have been successful is surpassing the required recycling collection target for WEEE. However, a high proportion of the remaining WEEE is exported to non-EU countries where there could be concerns about the quality of waste management. Since the refrigerator recycling is conducted in Northern Ireland, movement of such material requires conformity with the Trans Frontier Shipment regulations which impose an additional administrative burden and cost.

LESSONS: The business opportunity arising from the up-coming implementation of the WEEE

legislation was the primary driver for the investment. The investment made was from internal company resources; there was limited involvement

by Enterprise Ireland. The lead time from initial business plan to plant commissioning was 4 years. Technical expertise has been provided from continental Europe. The technical service (materials recovery) is complemented by management services

(compliance advice and waste tracking). The company is subject to regulatory (EPA, Dublin City Council) and voluntary (ISO)

oversight (“certification” / “verification”), as well as customer examination. An all-island solution has provided an economy of scale, but is inhibited by frontier-crossing

requirements. If restrictions were imposed on the un-controlled export of WEEE outside the EU, TechRec

and other similar plants could expand their export business.

BRYSON HOUSE

Bryson House has grown from a small charity providing environmental advice to the largest provider of kerbside collection systems in Northern Ireland (approximately 60% of the market). Bryson Recycling is a joint venture trading company equally owned by the Bryson Charitable Group, Northern Ireland’s largest community-based charity and ECT, the UK’s largest community recycling provider. Bryson is a social enterprise and has recently extended its operations into Ireland. The company started with the Cash for Cans programme which was established in 1993 and provided the opportunity to become involved in the Kerbside programme which was launched in April 2001 and coincided with the opening of the Bryson House Recycling Materials Recovery Facility in Castlereagh. While the vast majority of its income is from local authority recycling contracts, Bryson has recently moved into commercial collection and recycling, The company currently employs 200 people, with an annual turnover £8m, projecting to £9m in 2008/2009. The focus of the business is on resource recovery rather than landfill.

LESSONS This, originally small, operator was active in the market and identified a need for a new

service – collection and processing of recyclables on a large scale for local authorities. It has partnered with a larger, UK-based, entity delivering a similar service and with a

similar management mission (social economy). The landfill tax increases disposal costs and favours recovery.

Legislation has imposed recycling targets on local authorities. A buoyant market for recycled materials is an important income stream and benefits the

cost effectiveness of recycling.

Waste Management (www.wm.com)

This US company deals with the waste of its 22 million customers and produces more renewable energy each year than the entire North American solar industry. It strategic goals to 2020 include: increase waste-based energy production; increase in the volume of recyclable materials; investment in clean technologies; and preserving and restoring more wildlife habitat. It operates 33 landfills and hopes to increase this number to 100 by 2020. To increase the volume of recyclable materials, the company uses a profitable single stream recycling technology. New areas of business include ewaste, and construction and demolition recycling. In partnership with Sony, Waste Management has developed an eCycling Programme aimed at providing a drop off within 20 minutes of 90% of population centres. The company is investing in the next generation of landfill technologies that could produce electricity, create more space in landfills, and make diesel from landfill gases. Waste Management’s consulting subsidiary works with customer companies to reduce their waste streams. According to the CEO of Waste Management ‘…..where most see waste, we see opportunity.’

LESSONS: Scale is important in the waste business. Waste companies have the potential to offer environmental advisory services to their

clients. Waste companies should be exploring the feasibility of investing in waste-to-energy plants. A waste company that is allowed to operate collection points increases its load.

One example of an environmental technology supported by the WRAP programme relates to the process of separating brominated flame retardants (BFRs) from waste electrical and

electronic equipment (WEEE) polymers.20 The work indicates that the Creasolv process for extraction of brominated flame retardants from WEEE polymers has potential to be commercially viable in the UK context at a throughput of 10,000 tonne/year. The Creasolv process was originally developed by Fraunhofer IVV in Germany and has been modified further in the course of this project. The Creasolv process will remove most BFR types from styrenic WEEE polymers. Work done for this project has shown that styrenic polymers constitute over half of collectable WEEE polymers and that they contain the great majority of the BFRs found in WEEE thermoplastics. It is has not been tested with the newer BFR types such as brominated epoxy oligomers because these are not yet found in significant quantities in real WEEE. A second process called Centrevap has also been developed in the

20 www.wrap.org.uk WRAP works to encourage and enable businesses and the consumers to be more efficient in their use of materials and recycle more things more often. It has a budget of £79m (2008).

course of this project and tested at technical scale. Tests have shown that it cannot achieve significant reductions in BFR content. However it does offer good potential as a robust, flexible and relatively cost-effective process for removal of insoluble impurities down to submicron size from a wide range of polymer types. Both processes should be able to compete with landfill disposal or incineration (£35/te gate fee) as treatment methods for segregated polymer streams, Creasolv for BFR removal, and Centrevap for removal of other insoluble impurities. They will compete with export of the BFR-containing polymer outside the EU (current sales value of around STG£100/te) if the finished high grade compounded recyclate can be sold at about 80% of virgin compound price. Environmental impact comparisons conducted during the project indicated that both of the recommended processes have a net environmental gain across all environmental impact categories and that the proposed treatment routes are a substantially better environmental option than landfill and incineration with energy recovery.

1.1.9. Barriers

A key concern expressed by companies in the waste management sector is the issue of unfair competition due to the dominant position held by local authorities: they are waste management service and facility providers, regulators and planners. The Irish Waste Management Association (IWMA) has stated that this situation has created inefficient and uneconomic waste management services and delays in the delivery of necessary waste management infrastructure. The IWMA also pointed out that the sector is controlled by 15 regulators: the EPA, An Board Pleanala, the Competition Authority, the new National TFS Office, the Health & Safety Authority and ten regional waste authorities, which impose a significant regulatory burden on business. The Dublin local authorities challenged these assumptions by commissioning a report which argues that from a competition policy

perspective household waste collection constitutes a separate product market. 21 In addition, this report argues that the household waste collection market is a natural (local) monopoly. Both of these conclusions are consistent with the national (e.g. Competition Authority) and international (e.g. UK Office of Fair Trading and Organisation for Economic Cooperation and Development) literatures though the IWMA does not accept this.

With regard to the appropriate public policy response to the existence of a natural (local) monopoly, this report considers and rejects as unnecessarily inefficient the competition-in-the-market option. As such, this report argues that local authorities should be permitted (indeed encouraged) to enforce exclusive rights with respect to household waste collection in a pro-competitive manner. This conclusion is also consistent with the relevant national and international literatures. Finally, it is argued that the actual identity of this single provider (i.e. public or private) is of secondary importance compared to the institutional

21 Dr. Francis O’Toole, Household Waste Collection: An economics of Competition Policy Perspective. Trinity College Dublin.

environment within which the actual provider subsequently operates. However, this issue remains a major concern of the private waste management sector in Ireland who feel the lack of clarity and resolution of the dual role of local authorities (regulator and operator) in waste management is a significant impediment to their strategic decision making.

The local authorities have additional competitive advantages in that unlike private operators they do not charge VAT (at 13%), and are in receipt of funding from the Environment Fund and Public Capital and current expenditure.

The IWMA has also stated that ‘the waste sector is characterized by a raft of unconnected national regional waste plans dreamt up in isolation by various regulatory bodies and state

agencies.’ 22

To date, despite calls from the IWMA there has been no serious attempt to explore and develop opportunities for an all-island waste management market.

The planning process, notwithstanding the enactment of the Strategic Infrastructure Act 2006, continues to delay the implementation of critical infrastructure projects.

The motor industry has argued that the way the End of Life Vehicle (ELV) Directive has been implemented - by requiring registration in each local authority area – is cost ineffective and

will not encourage any significant investment in ELV technologies and processes. 23

1.1.10. Opportunities

Ireland has the highest level of municipal waste generation per capita in the benchmark countries assessed in the Forfás Report. While this could be viewed as a problem, in reality it is a business opportunity. To date, policy-makers have not looked at the crisis in waste management in Ireland as a business opportunity.

The vast majority of Ireland’s recyclable materials are exported for further treatment; some

1.6m tonnes were exported in 2006.24 The cost of transporting these materials abroad adds to the above-average cost of waste in Ireland. This suggests that feasibility studies should be completed on the setting up of all-island recycling, materials recovery and treatment facilities for all waste streams. One such study (on paper) has been completed but not yet implemented. In April 2007 the Government launched the Market Development Programme

22 Press Statement, Irish Waste Management Association, June 2006.23

www.simi.ie24 National Waste Report (2006), Environmental Protection Agency, Table 6, 2007.

for Waste Resources 2007 – 2011. This aims to promote more recycling in Ireland of recovered waste resources, focusing on organics, paper and plastics in particular, e.g. Sharma Plastics. The €13m Programme is to be sourced from the Environment Fund (€11m) and the private sector (€2m). A tender for the implementation of the programme was issued by the D/EHLG in February 2008. Re-processing of selected streams on the island is a potential opportunity. Where recycled materials continue to be exported, analysis of segregated streams to confirm that the recyclate is of higher quality and therefore higher value may provide an opening for laboratory services.

The implementation of improved segregation of biodegradeable waste will create a new resource stream, one that will require local processing. Equipment that will effectively achieve this segregation or will subsequently process the waste will be required. Decentralised solutions will include contained composting processes (“in-vessel composters”) that would be applicable to large individual waste producers e.g. food processers, or closely located groups of smaller producers, e.g. an industrial estate. Anaerobic digestion of the waste to produce combustible gas will have the dual economic benefit of avoiding methane emissions and producing energy from, in some instances, a source that may be classified as renewable. Alternative technologies that generate energy from waste via pyrolysis or produce a secondary energy carrier, e.g. gasification, are also emerging to a demonstrated level. As the key driver in the waste management business is EU legislation, all member states and not just Ireland are facing the same challenges in seeking to comply with waste treatment, disposal and recycling targets. Many of the new member states are addressing a significant infrastructure requirement with the assistance of EU cohesion and structural fund co-financing. The spending plans of these countries in relation to waste management should be assessed by Enterprise Ireland with a view to identifying specific new business opportunities and this market intelligence should be made available to the entire waste sector on the

island. 25 Waste management expertise has been locally developed and is exportable, though in competition with other Member States with more advanced waste management systems.

Green procurement is part of the published Market Development Programme for Waste Resources but has not been implemented. National guidance on green procurement should be introduced as this will promote the use of new technologies and services.

The following would appear to be areas with future growth potential:

MBT development and operation

25 http://ec.europa.eu/regional_policy/newsroom/pdf/scoreboard17012008.pdf

Engineered in-vessel composters Analysis of segregated fractions from MRF or MBT, and compost quality assurance (though

overall a small market) Niche re-processing of recyclable materials Outputs from producer responsibility initiatives: for example waste tyres; there is some scope for

vehicle dismantling before compaction and export; but battery processing is unlikely Small or large scale anaerobic digestion of biodegradeable materials (in conjunction with water

sector study) Export of waste management expertise: planning, development of infrastructure, tracking

software (pay-by-use, hazardous waste streams) Development of packaging design expertise that reduces the packaging quantity or facilitates

reuse or material recycling.

The UK’s market for waste management was £8.1bn in 2005 and is forecast to grow to £15.9bn by 2015. WRAP put the figure higher at up to £30bn by 2020.

1.1.11. Conclusions

The key messages arising from this research are:

The problems inhibiting the growth of the waste management sector in Ireland are well documented.

Lack of a clear government policy and robust implementation of waste regulations are barriers. In particular, the dual role of local authorities in the area of waste management needs to be settled.

The waste industry has expanded rapidly with little recourse to State financial supports. The waste management sector is well-organised as a network in Ireland, but less so in

Northern Ireland. Infrastructure requirements identified in the National Hazardous Waste Management

Plan, the National Strategy on Biodegradable Waste, and Regional Waste Management Plans have not been implemented.

An all-island waste management strategy has the potential to provide economies of scale in relation to some waste streams.

The waste sector has great potential in terms of exporting services to other member states who, like Ireland, are struggling to comply with ever stricter EU regulations and targets.

Industry sources forecast that the Irish waste management market could double in size within five years.

The waste management sector has been the subject of many studies and assessments. Despite the depth of analysis, key policy recommendations that could generate new

business opportunities have yet to be adopted. There a large consensus among the companies operating in the sector - a view that has persisted for many years - that there is an urgent need for a national waste regulator with a remit to centralise decision-making in relation to waste management policy and waste infrastructure investments. The view of the sector is that, at the very least, a co-ordination of existing separate structures/institutions to encourage regulatory and market certainty and ensure implementation that meets national policy objectives would be welcome.

As scale is critical in the waste management business, the State Agencies should actively partner and support companies who acquire capacity by way of mergers and acquisitions.

WRAP advises waste companies in Northern Ireland and does so very successfully.26 There is a need for a similar organisation in Ireland.

The sector does not appear to need direct financial assistance from State agencies in its operation of the waste management system, per se, but financial support for R&D, market development and commercialisation, along the lines of that provided by WRAP, is desirable. At the stakeholder consultation meeting, a strong demand for information and advice about compliance with waste legislation and enhanced awareness raising was articulated.

If key investment decisions were implemented - and the Strategic Infrastructure Act, 2006 will certainly assist in this regard – this will unlock private sector investment and expertise.

Once the problems of the island’s waste market are resolved, problems which occupy much of the attention of companies in this sector, then the significant know how of these companies can be deployed to search for export opportunities.

If some local authorities were not so dependent on the revenues they receive from waste charges it is probable that the entire waste collection business would be outsourced.

The findings of the international review on waste policy are likely to have a significant influence on government waste policy, on the choice of technology and on the optimum organisational structures required. Assuming that the findings of this review are acted on promptly, then Ireland should have a clear waste management strategy from 2009. A robust regulatory framework will unlock significant potential investment if the market believes the right strategic choices are made.

If an all-island approach to growing this sector is to be taken, it will be essential that waste management is seen more as a business opportunity than a sector that should be strictly regulated.

26 Further information at WRAP is available at www.wrap.org.uk