Waste is not the most glamorous of technologies but the underlying economics in the UK are hugely compelling for investors. Waste is a valuable commodity because of the sustainable energy that can be generated from it.

The volume of waste generated in the UK is growing by up to 3% pa but the UK Government intends to close half its landfill sites by 2030 and have zero avoidable waste to landfill by 2050.

It plans to double the number of energy from waste [EFW] plants over the next decade. This must be done irrespective of pandemics or recession or it will face a waste disposal crisis.

Throughout continental Europe waste is viewed as a valuable commodity. In future there will be increasing competition for what people put in their bins.

With the drive for more circular economies, governments are looking for ways to squeeze every useful resource out of what we throw away. One key resource available from our rubbish is energy.

As governments pursue their commitments to slowing global warming, they are turning to non-fossil fuel sources of energy generation such as energy from waste.

3 tonnes of waste produces the same amount of energy as 1 tonne of fossil fuel.

In the UK, there are currently 46 EFW plants with the capacity to manage a total 11 million tonnes of waste annually; every year, up to 18 tonnes goes to landfill or is exported; landfill taxes are at an all-time high and rise every year. Currently, it costs £94.15 in tax per tonne of waste delivered to landfill.

Energy from waste is a sustainable, safe and affordable waste treatment solution as well as a power generation methodology and has been in existence for 100 years.

EFW plants take non-hazardous waste designed for landfill and combusts it in specially designed boilers, recovering heat and power. The form of waste used is Refuse Derived Fuel [RDF], which is black-bin waste, after recyclable or compostable material has been removed. 

EFW plants have two consistent and predictable income streams. They get paid a gate fee of about £70 per tonne to process the waste and they are paid for the electricity generated by the combustion of the waste and exported to the national grid.

This unique revenue model with two reliable income streams makes EFW plants a particularly attractive investment opportunity. Experts predict that as the EFW sector expands and matures, it will become a more prominent feature of the UK’s energy mix.

EFW plants are attractive assets for pension schemes seeking green assets providing long term fixed returns. EFW plants provide a stable investment in uncertain times. Unlike funds or equities, EFW plants are unlikely to be impacted by negative performance in the rest of the economy. The Covid-19 pandemic has shown us how critical waste management is to the proper functioning of society.

The amount of waste produced is not correlated to equity funds or property prices. Following the global recession of 2008, we continued to produce waste that still had to be processed.