As Landfill Tax can represent as much as 60% of the cost of a general/mixed waste collection service and landfill alternatives obviously do not incur Landfill Tax, it should follow that waste collections ought to be getting cheaper. Arguably, however, this is not happening and it is smaller businesses that are feeling the impact of rising costs.
Perhaps the main reason why prices for general waste collections are not falling is due to lack of capacity in the industry. Lack of capacity in the UK waste management industry means lack of competitive pressures between landfill alternatives. As such, operators of landfill diversion sites have been able to raise their prices in line with Landfill Tax, without losing customers. Landfill diversion capacity is increasing, but there are a number of reasons why the UK has lagged behind the rest of Europe.
Many waste management companies have resisted the shift from landfill to landfill-diversion because, in many cases, they own or manage landfill sites. Understandably, then, such companies have sought every last bit of value possible from their investments before focusing on future ones. This is increasingly less the case, but this delay in making the shift away from landfill by the major players in the industry has hindered the UK's landfill diversion efforts. As a result, a growing market has emerged for the export of mixed waste to continental Europe, where much greater capacity already exists. The significant amounts involved in this market demonstrate just how far the UK has to progress before it catches up.
The public perception of waste management activities has also delayed the development of waste processing capacity in many cases. The application for permission to construct facilities to manage waste typically leads to furious opposition by a wide range of groups, regardless of the technology or process involved. The reality is, however, that modern waste management sites are subjected to a variety of controls and regulations that ensure public health and safety. Indeed, complying with emission limits from EfW sites, for example, is one factor that adds a great deal of costs on to such developments, costs which have to be recouped. This is also the effect of the long and expensive planning process, which raises the break-even point for developers. Everyone might well be in favour of landfill diversion, but apparently no one is in favour of it actually happening in their 'back yard'!
As well as Landfill Tax, many other costs incurred by the waste management industry have also seen dramatic increases recently. Fuel is possibly the most obvious, rising over 26% in the year prior to February 2012. Higher oil prices also increase the costs involved in shipping recyclable waste to reprocessing plants in Asia, reducing the value of recyclables as a result. This harms MRF operators, who depend on the recovery and sale of projected tonnages of valuable materials. The effects of these increases in costs mean that waste collection companies find it necessary to increase prices, even if the company has been able to divert waste from landfill.
Ultimately, current trends suggest that waste management is becoming a much more competitive and efficient industry in the UK. Despite the difficulties discussed, support is growing for the increased development of landfill diversion facilities. Such facilities require massive throughput for maximum efficiency and will eventually soak up present excess capacity and beyond. Moreover, the total amount of mixed waste is generally falling, due to increased recycling in the domestic sector. As this continues, competition will drive down prices and general/mixed waste collections in the commercial and industrial sectors should become cheaper, or at least stop rising in price. Indeed, we may find ourselves in the same position as continental Europe and the USA by 2015, where waste management companies end up chasing desperately-needed tonnages and prices become extremely cheap.
In these difficult economic times, an end to increases in any costs will surely benefit small businesses and waste management will undoubtedly play its part. Whether or not this development will benefit the environment, however, remains open for debate.
