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Anyone got a compass? Is the UK waste and resource sector lost in the post EU referendum muddle?

Matt Luntley
Sep 07, 2016

Britain has been part of the European Union (EU) for 43 years, so it’s no surprise to discover how much of an effect European legislation has had on the UK’s recycling industry. In fact, a majority of the UK’s environmental legislation came from EU Directives, which is why the result of the EU referendum has generated so much uncertainty around what the future holds.

Waste management and control requirements flow from the EU’s Waste Framework Directive, which in turn has required member states to put in place legislation and policies. This requirement has helped to develop the UK into one of the world’s most forward thinking countries with regard to waste and recycling, as it has moved from being one of the lowest performing EU countries to being at the fore front of change in this area.

Whether or not the UK continues to be bound by EU Directives and Regulations in the long run will depend on political negotiations, in particular on trade agreement talks. At present, any UK law transposed from EU law would need to be amended or repealed in order for the situation to change.

In any event, the UK Government and devolved administrations may choose to implement their own environmental laws to achieve a similar or greater impact, but that remains to be seen.

What are the immediate impacts?

In terms of legal, regulatory and licensing requirements it’s important to note that nothing will change with regard to the day to day movement and handling of waste. All Duty of Care Regulations still apply, as do Environmental Permitting Regulations. Plus the environment agencies in England, Scotland, Wales and Northern Ireland are still the enforcement bodies.

However, there have been some short term market and financial changes which were mainly caused by changes in exchange rates post referendum. As the value of Sterling has dropped, exports may now be more attractive to foreign buyers. It may also mean that domestic reprocessors need to fight harder to retain supply.

For exporters this change has been largely positive, as the weakening pound has meant that the exchange rate on the US dollar has seen a rise in material sale values, particularly for cardboard. Therefore, cardboard producers should have noticed a significant increase in rebates since the result was announced. However, this is unlikely to be sustainable in the long run, and we have already started to see prices fall back.

For some materials, such as batteries, which require treatment outside of the UK, the fall in the exchange rate now means that the process is more expensive for exporters.

What does the long term future hold?

Industry commentators are split with some wondering how big an impact leaving the union will actually have. There is the possibility of easier dealings with countries that are not part of the EU, as well as an opportunity for the UK Government to create new laws more quickly, which could help the industry to develop and get rid of some less appropriate EU regulations.

In February, The Department for Environment, Food and Rural Affairs (Defra) released a five year plan on priorities. This was heavily criticised by the industry, as waste and resources barely got a mention (This also indicates that not much will change for a while). Let’s hope that the 25 year environment plan, which is due to be released later this year, raises the profile of the sector.

The situation in the UK is even more complex these days, as devolved administrations are pressing along with their own agendas on waste and resources regulations. We could see more disparity in the future, making things more complicated for businesses that operate throughout the UK.

If and when the UK finally leaves the EU, it appears that there will be a lengthy period of uncertainty for the waste and recycling industry. However, companies will still be required to meet regulatory requirements and will want to trade internationally. For now companies should continue to focus on things that are under their control, such as governance and quality of materials, while keeping an eye on political developments and the markets so that they are prepared for change.

Quarterly Recycling Prices Update Webinar

If you would like to find out more about the main material markets for cardboard, plastics and metals, we are hosting a webinar on 14 June 2017. We will discuss the main drivers behind each market to provide a better understanding of what factors determine material pricing and where prices may go in the near future. You can book a place here.

Disclaimer: The opinions expressed in this weblog represent those of the individual authors and not those of Valpak Limited or any other organisation.