Turbulent times ahead: Outlook for anaerobic digestion in 2016

Written by: Philip Simpson | Published:
Philip Simpson, commercial director at ReFood

Following further legislative ambiguity from the Autumn Spending Review and weaker than expected targets outlined in the government's revised Circular Economy Package, mutual agreement from across the waste industry is a feeling of ongoing uncertainty coming into 2016. Philip Simpson, commercial director at ReFood – the UK-based food waste recycler – comments on the industry’s fading confidence and discusses his foresight for the next 12 months.

In 2015, anaerobic digestion (AD) continued to thrive in the UK. In fact, with 411 facilities now operational nationwide, it seems that food waste is becoming an ever-more influential part of our renewable energy mix.

The next 12 months, however, pose a number of possible hurdles for the industry – standing in the way of AD reaching its full potential as both a waste solution and energy source. In fact, following the announcement in December of weakened 2030 recycling targets agreed as part of the Circular Economy Package, it seems that we are still struggling for the necessary levels of support and guidance needed from those in power.

Lack of clarity

This follows on aptly from November’s long-awaited Autumn Spending Review, which saw further lack of clarity and failed to address the ongoing uncertainty surrounding renewable subsides. Indeed, Osborne’s speech signalled yet more change with the renewable heat incentive (RHI) and its national application – a hugely disappointing result when the sector expected greater clarity, not further ambiguity.

But more importantly, the points raised seemed to bypass a wider pressing issue – the ongoing struggle of identifying and securing a sustainable energy supply. This isn’t simply a problem faced independently by the UK, but a global concern that must be addressed worldwide. With the 2020 target for renewable heat looming ever closer, something must be done – and soon.

Unfortunately, we are still falling way behind targets. In fact, according to Amber Rudd, 20TWh more capacity is required over the next four years alone, simply to meet targets which were previously considered ‘easily achievable’.

It could be argued that the real challenge we face is the government’s short-term approach, which fails to commit to a comprehensive and considered strategy. Businesses looking to invest in state-of-the-art recycling facilities need this safeguarding, which includes both subsidy commitment and feedstock security. Without which, it fails to make commercial sense.

Bumpy ride

The next 12 months, therefore, are set to be a rocky time for the industry. With subsidy budgets constrained and further degressions in RHI expected, businesses will be put under additional pressure to keep things moving, as we wait for the government to catch up with market readiness.

Despite these hurdles, at ReFood we remain committed to providing a sustainable solution for the UK’s food waste. This year, we will begin construction of a brand new AD plant in Dagenham – adding to the 20 MWh of renewable energy already generated at our two sites in Widnes and Doncaster. This, however, hasn’t been a straightforward task. In fact, altering subsidy levels and strategy amends have required us to, at times, go back and re-calculate investment and return on investment levels to ensure that there is going to be a commercial return – not only frustrating, but also hugely time consuming.

Across the industry, the struggles are shared. Projects are being delayed – or pulled entirely – due to a struggle for sourcing project finance, which is linked almost entirely to subsidy and legislation ambiguity.

So, far from the calm outlook the industry was hoping for, 2016 will potentially be another challenging period. What we desperately need is government support to help the industry prosper – without which, investment into the UK, and the benefits this brings in terms of corporation taxes, jobs, R&D and being a leading light on the world stage for sustainability, will disappear.

This material is protected by MA Business Ltd copyright.
See Terms and Conditions.


Please view our Terms and Conditions before leaving a comment.