The UK government must act urgently to reduce the risk to investors in waste infrastructure if the country is to source the billions needed to revitalise the sector, according to parliamentary advisors.
In a report published this week, the Associate Parliamentary Sustainable Resource Group (APSRG) warns that Britain could be facing a real crisis in its ability to deal with its waste and meet EU landfill diversion targets, if the government doesn’t do more to support private sector investment.
According to the report, “Rubbish to resource: financing new waste infrastructure”, £8 billion is needed to build the 8.8 million tonnes of residual waste treatment capacity necessary to meet 2020 targets.
Public sector spending cuts mean that at least 70% of funding will have to come from private businesses, but the fall in lending from banks, the inherent risk in waste infrastructure projects and regulatory uncertainty are hindering investment, says the APSRG.
To overcome these barriers, the government must work to ensure policy and investor certainty and mitigate the risk of funding such projects, argues the report. It recommends the creation of a cross-departmental committee, with representation from agencies and public bodies in the sector, to better coordinate government waste policies.
The APSRG also believes the planned Green Investment Bank (GIB) must play a key role in reducing the risks associated with investing in new projects, and advises that it takes on debts and invests in shares that will be the slowest to payback.
“New and innovative ways of providing a framework of certainty and new sources of finance is an imperative to achieving society's ambition of managing our waste in an increasingly sustainable manner,” said Dr Alan Whitehead MP, chair of the APSRG research inquiry and regular environmentalist columnist.
Waste industry body, the Environmental Services Association (ESA) welcomed the report saying government should pay “careful attention” to its recommendations.
“The hangover from the credit crunch coupled with the inherent complexity of many waste infrastructure projects means that the capital markets are unlikely to come up with the investment that is needed unaided,” said ESA director of policy Matthew Farrow.
“This report has some important ideas for how the GIB could help unlock private investment, for example through underwriting the risk attached to commercial and industrial waste inputs.”
The report also calls on the government to better clarify definitions of waste and recyclate processing to help encourage the exploration of potential new business opportunities within the sector.
“A more comprehensive approach to waste management would provide an opportunity to be more resourceful with the waste we produce and benefit a range of parties from local communities to the renewable energy sector,” argues the report.
“Rubbish is a resource we can't afford to squander by burying in the ground,” agreed Jamie Reed MP, shadow minister for environment, food and rural affairs, welcoming the report.
“More infrastructure is needed to deal with our waste, not only so we can use this valuable source of energy and materials, but also, so that we avoid paying millions of pounds in landfill tax and EU fines.”
