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It's Not All About The Weather

September 2018

As the year-on-year % growth of Refuse-Derived Fuel (RDF) exports from England to overseas destinations slips further to -4%, the automatic reaction, by me at least, was to blame it on the hot summer leading to reduced RDF demand.  As was shown last month, Sweden’s RDF appetite behaves as you might expect - warmer weather = lower RDF usage. Perversely, the July chart revealed that, while the temperature did indeed rise relative to previous years, the RDF demand also grew. Make of that what you will, beyond my own conclusion that RDF forecasting and usage is a little more complicated than a simple correlation with how sunny it is.

This caused me to look a little wider as to why RDF exports have shifted from a ‘plateau phase’ to a ‘decline phase’.  If the finger of blame cannot be pointed at God because of weather, what else can we attribute it to?

The key reason is the slowdown in tonnage heading to the Netherlands. The chart ‘Year-On-Year Tonnage Growth By Destination Country’ demonstrates that exports to the Netherlands has dropped by over 200,000 tonnes in the past year, and Germany’s receipts are also down by over 50,000 tonnes. This fall is countered to some extent by ongoing growth in other countries, but the growth is no longer offsetting the decline (which it had been doing earlier in the year).

No doubt, the slide in the demand for RDF in the Netherlands is, in part, down to the warmer weather, although the charts for the Netherlands never show that correlation as neatly as the Swedish chart (usually) does. But there are presumably other factors at play; after all, it has been uncharacteristically warm in Sweden also, though while RDF exports to Sweden are perhaps a little muted, there is still overall year-on-year growth.

Drilling into the data, the company with the single largest drop in RDF exports to the Netherlands is FCC, down by 38,000 tonnes. There is no strong evidence of a strategy to divert RDF from the Netherlands to another country (though there is a little bit of switching to Germany and Sweden), so it may be presumed that they have secured a domestic UK outlet. Their website states “FCC Environment is committed to reusing, recycling and recovering energy from as much unrecyclable material as possible within the UK and continues to invest in a wide range of waste and resource treatment infrastructure.” Moreover, their EnviRecover Mercia site opened in mid-2017, with a capacity of 200,000 tonnes.

The geographical convenience of the Netherlands made it the ideal choice for bulk exports from major players such as Biffa, Suez, FCC, Veolia and Renewi (Shanks) who now account for nearly 65% of the exports to the Netherlands. Plausibly, this dominance encouraged other independent companies to explore alternative options (for instance, Seneca reducing exports to the Netherlands and increasing volumes to Poland, or Andusia switching material to Germany). This reliance potentially leaves the Netherlands exposed to the risk of the major players switching off the tap as they build additional domestic UK capacity (which is their unassailable right).

Finally, the Netherlands was also the destination of choice for exports from Greenway Waste Recycling, which was liquidated in 2017, and New Earth Solutions, who, under the ownership of Panda, are now exporting half of what they were in 2016. Between these two alone, a further 50,000 tonnes has disappeared from exports to the Netherlands in the past year.

It just goes to prove that it’s not all about the weather!

The "Year-On-Year Tonnage Growth By Destination Country" chart is available also in the following variants:

  • Year-On-Year Tonnage Growth By Notifier
  • Year-On-Year Tonnage Growth By Consignee
  • Year-On-Year Tonnage Growth By Fuel Type (RDF / SRF)
  • Year-On-Year Tonnage Growth By Destination Region (i.e. Northern Europe, Southern Europe, Eastern Europe, Scandinavia, etc)

Please contact Andrew Gadd at [email protected] for details