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Defying Gravity In RDF Exports?

October 2018

Another month where the data shows further decline in year-on-year tonnages - currently a 6% fall in the overall RDF export volumes. The underlying momentum indicates that it is set to fall further, likely to exceed -10%. The forces and factors have been identified - there’s an exchange-rate impact, a weather wobble, political uncertainty, high fuel costs for transport, etc. But, the positives are also known - growth in some countries and new markets, SRF doing well relative to RDF. Nonetheless, can the positives challenge the negatives? Can the emerging uplifts counter the heavy gravity of the Netherlands and Germany? The "Countries" bubble chart below below presents some possible insight. The bubble size is governed by the total annual tonnage of RDF (including SRF) sent to the countries identified. The apparent truth is that, although the size of the positive green bubble is not insignificant, the red bubble is a weighty drag on the market. Further, the amber countries (Denmark, Norway, Poland and Spain) are undecided as to whether they will go red or green.

Such analysis may simply confirm what is already known, but the relative size of the positive and negative forces does, at least, offer a sense of scale and allow some interpretation of the future of RDF exports.

The export of Secondary Recovered Fuels (SRF), for instance, is known to be doing rather well. The latest figures show that SRF exports are up by 21% year-on-year. Can SRF save the day? The "Fuel Type" chart below would suggest that it is not realistic to expect SRF to reverse the broader slowdown. SRF only represents 10% of the overall export of EWC 19 12 10, so it does not yet have the clout to reverse the trend; it is, nonetheless, a good-news story.

Looking regionally (see "Regions" chart below), the decline of exports to the Netherlands and Germany is apparent in the red bubble. These two countries represent 62% of all RDF (inc SRF) exports, and so they are weighing the sector down. "Further Afield" refers largely to previous exports to Morocco and India and, more recently, the United States. Broadly, notwithstanding some inconsistency in the appetite of Norway and Denmark, the Scandinavian market still demonstrates growth potential, as does Southern Europe, though this is more SRF-related.

Finally, we can apply the same analysis to particular countries (for Consignees or Notifiers). It could even be shown for export ports from England; each chart giving a slightly different glimpse on the same data.

Below, we have the analysis for the Netherlands consignees. Netherlands, receiving 43% of English RDF exports, has been the strongest downforce in recent months, causing a decline in overall volumes. One might expect, therefore, to see all Consignees in the red bubble when looking at Netherlands data, but this is not the case. Certainly, there is a large red bubble, but it is not gloom across all consignees. AZN and EEW Delfzijl show consistent growth, and ARN may yet turn green. Attero has been receiving less volume in recent months (its August '18 receipts were half of what it accepted in August '17) and may find itself adding to the red bubble in the near future.

Until more of the consignees in the Netherlands migrate from the red quadrant to the green quadrant, the impact will continue to be a brake on the overall English RDF export market.

The headwinds remain, but there are still 3 million tonnes of RDF (inc SRF) being sent from England, still countries receiving more, still energy facilities relying on the feedstock, still new contracts being explored. And still, ultimately, insufficient capacity to utilise this residual waste for energy recovery in the UK. Opportunities remain for those who seek to defy gravity.

Please contact Andrew Gadd at [email protected] for details