In 2010 EFW construction in the UK was booming. However, a new (coalition) government was elected, and the age of austerity began. PFI came under criticism for incurring substantial long-term costs for taxpayers due to fixed payment structures and financial commitments. That same year the Government announced the end of PFI support to local authorities for waste management infrastructure. There was a number in the pipeline that carried on, but in October 2010, the Government cancelled seven waste-related projects.

Over the ensuing years, the number of new local authority disposal contracts slowly diminished. There was so much momentum in the pipeline that at first it did not show, but the change in government policy and the fact that  PPP and PFI had enabled over 80% of the local authorities in England to have access to an EfW plant for disposal of their waste, made it almost inevitable that public procurement of waste infrastructure would change. As austerity began to bite, even authorities that had no access to EfW became reluctant to enter into long-term contracts that involved the high capital spend that EfW entails. Whilst the big industry players wanted more of the same, it was not to be.

But as one door closed, another one opened. In 2011 the Waste (England and Wales) Regulations were published, requiring businesses as well as local authorities to separate recyclables from the waste stream. This was followed in 2013 by the Zero Waste Scotland Strategy, which introduced a circular economy approach. These legislations, coupled with increasing landfill tax - £72 in 2013 and rising every year - changed attention from local authority waste to that from the private sector and triggered the emergence of a breed of “entrepreneurial” EfW developers.

Whilst PFI and PPP had facilitated a massive growth in the development of EfW projects, few of the facilities catered for commercial and industrial (C&I) waste, collected and disposed of by the private sector. Whilst some facilities would accept waste from private collectors, the quantity was small, and it did not address the needs of the sector. In seeking to avoid having to pay the rising cost of landfill, waste management companies began to think of ways around it.

The concept of Refuse Derived Fuel (RDF) had been around for years, but in 2010 it started to take on a new life. The Transfrontier Shipment of Waste Regulations 2007 placed restrictions on the export of untreated residual waste for disposal but permitted recyclables and fuels to be shipped. The drying and shredding of waste came to be considered seriously during the rise of mechanical & biological treatment (MBT) - the original idea being to remove the biodegradation that creates methane by aerobically treating the waste ahead of landfilling it. MBT became popular in Germany and several projects were supported in the UK by DEFRA under PFI. MBT is very dependent on the biological properties of the waste, making it difficult to achieve a consistent inert product, and if landfilled, leaves the disposer still exposed to the tax.

In preparing waste for MBT, the waste has to be shredded and so the concept emerged of producing a fuel from shredded waste regardless of whether it had been subject to MBT or not. This meant that many of those trading in waste could produce RDF and it could be exported to countries with EfW that had the capacity to take it. And so a new industry emerged exporting RDF to Europe and beyond. In 2010, a mere 20,000 tonnes of RDF was exported from the UK. By 2015, it exceeded 2.4 million tonnes.

Whilst exporting of waste grew rapidly, it was not always easy. It requires significant paperwork and is dependent on the overseas client accepting the material – quality often being a reason for rejection. As a result, homegrown EfW was a more preferable outlet for many, and with stagnating growth in recycling, there was still more than enough waste to make EfW a good investment.

There was another necessity to be turned into a virtue. For combustion EfW to get ROCs it had to export heat. The alternative was to use gasification. For gasification to work, it was necessary to shred the waste, and so RDF became the fuel of choice for a plethora of gasification projects seeking ROCs. In the event, most of these projects were never realised, and by the time ROCs were replaced by CfDs the stream of gasification projects had reduced to a trickle. What it did do, however, was to give birth to a new group of developers that were not one of the large 5 or 6 corporates that had dominated the PFI/PPP period but were independents ready to risk their own time and money in developing plants. Some were not so small, however, and SSE with Wheelabrator developed the first plant designed specifically to accept “multifuel”, with RDF very much in its focus.

By 2014 the mould had been broken. Whilst the PFI/PPP legacy was still working its way through, almost every planning application for an EfW in England from then on was by a private developer with no public sector participation. Whilst Cory and Veolia had led the way back in the 1990s, by the noughties the use of project finance to raise the investment to build facilities in the absence of local authority backing had all but disappeared. It re-emerged, based on the contract structures and funding principles that had been established under PFI promoted by this new breed of developers.

At first, they were almost exclusively entrepreneurs, some with little or no experience in waste management and the intricacies it involves. Developing EfW is fraught with difficulties - technical, financial and political. Despite the benefits it offers (and lack of practical alternatives), EfW has never been easy to develop. Without the self-interest of a local council, most projects take much longer to come to fruition than initially anticipated and as a result, many of these private developers and their developments fell by the wayside. The rate of EfW development slowed, so much so, that by 2024 only two EfW projects reached financial close during the whole year.

As time progressed, another trend happened across the industry – the growth of private equity.  In 2012 the UK Government established the UK Green Investment Bank (GIB) to support green energy projects and attract private sector investment into environmentally sustainable projects. Funds such as Equitix, Foresight, Copenhagen Infrastructure Partners and Bioenergy Infrastructure Group (BIG) came forward to invest in the sector. In 2017 the Australian private equity company, Macquarie acquired GIB, forming the Green Investment Group. Eventually, as the portfolios of plants started to build, interest turned to what became known as “pureplay EfW platforms that own and operate EfW assets, but do not become involved in other aspects of waste management such as collection, materials sorting or trading. In 2020 Viridor became part of KKR and started to dispose of most of its non-EfW assets. A year later the UK arm of Wheelabrator with its associate, Multifuel Energy, was acquired by First Sentier and renamed Enfinium; and Covanta Europe became Encyclis, following acquisition by EQT.

According to the 2024 market analysis report by Tolvik, in 2023 there were 60 operational plants in the UK. Since then, a further 5 have gone into operation or are close to it, and there are at least a further 15 in development or construction.  The sector has come a long way since those old incinerators were made to close in the mid-1990s. It has evolved to become professional and expert in its field. EfW is today well established as the preferred means to dispose of residual waste, but despite all of this, the need for it is still questioned. Yet despite it being criticised and accused of being the dirtiest way to produce energy, no one has found an alternative that works.

Having demonstrated by its very presence that the predictions of adverse health impacts and blight it would cause to society were unfounded, the pressure now is on the greenhouse gases that it emits. Despite being required by legislation to oxidise to CO2 at least 97% of the carbon in the waste, it is criticised as a major GHG emitter and in 2028 will be subject to the UK Emissions Trading Scheme.

The UK ETS was established in 2021 as a replacement for the European Union's equivalent scheme following Brexit. Its primary goal is to cap greenhouse gas emissions from various sectors, incentivising industries to adopt cleaner technologies.  In 2023, the Government announced its intention to include waste incineration facilities in the scheme starting in 2028, with a two-year “practice run”, starting in 2026.  The consultation process has (predictably) revealed several challenges, such as how to account for non-fossil CO2 emissions from organic materials. As a result, with just a year to go before the trial starts, the rules of engagement remain to be published.

Notably, one of the reasons the waste industry was left out of the UK ETS until now was because it is not a significant emitter compared to some industries. Its inclusion in UK ETS stands to be as much about political optics as environmental urgency. For sure, EfW is about to become more expensive, and whilst this may push local authorities and businesses to explore alternatives, are those alternatives truly available? Carbon capture is being offered as an answer by some that are in a position to do so, but that technology is still young and the unforeseen consequences of mass storing of CO2 are unknown.

The inclusion of EfW in UK ETS  may be a pivotal step in the UK's environmental policy and open up a new role for the sector within a net zero circular economy. Let’s hope so - but only time will tell.

Author’s note: This three-part series has been a very concise history of events over the last 30 years in a sector that has been dynamic and exciting to work in. Many more things have happened than I have been able to relate, and I apologise to anyone that has been left out.

If you haven't read Part 1 yet, find it here. And part 2 here