27 February 2025
Mark Barnfield, our Commercial Director, takes a look forward to the prospect of a transformational year in our sector as we gear up to handle increased food waste volumes driven out by the new ‘Simpler Recycling’ reforms starting from March 2025.
Government policy updates
The recent Simpler Recycling government policy update reaffirms that household food waste must be collected separately from general waste (from March 2026), with the option/exemption to mix with garden waste if practical. Whilst this exemption offers flexibility to Authorities wanting to continue mixed organic waste collections, the limited In Vessel Composting (IVC) capacity in England restricts this option for those that may wish to introduce it.
From a treatment perspective, anaerobic digestion (AD) has clear benefits over IVC, such as renewable energy generation, methane capture, and lower disposal costs. Additionally, a dedicated food waste collection system is proven to have a higher food waste capture rate compared to mixed organic, which should contribute to better overall system costs.
Business waste collection
The Simpler Recycling reforms require businesses with 10 or more full-time employees to separate food waste from other waste streams by March 2025, with smaller businesses following by 2027. While this is a positive step for waste segregation, uncertainty remains in forecasting the volume of business waste that will be collected, partly due to a lack of clarity around how the obligation will be enforced.
Whilst Local Authorities in England will ultimately be responsible for enforcement, with the resource and cost pressures they face, this will undoubtedly require a large amount of self-policing. Consequentially, this adds a layer of challenge for AD operators in planning and capacity management.
Food waste treatment and capacity
Broadly, there will be an increase of somewhere between 1-2 million tonnes per annum of further segregated food waste coming to market. Counter to that, we suspect there aren’t enough new food waste AD facilities being constructed to meet this demand, with only one new food waste AD plant being built in the last four years whilst several remain in planning. Expanding our national AD infrastructure is crucial to providing Local Authorities and businesses with the necessary capacity to meet their future obligations.
Feedstock gate fees
In recent years, there has been a decline in food waste feedstock gate fees due to regional treatment over-capacity and energy price spikes between 2022 and 2023. Customer choice has shifted to being almost fully cost-based, which has undermined the sustainability of the AD sector, leading to market consolidation and the loss of some operators.
Moving forward, the additional tonnage coming to market is expected to reverse this trend, resulting in increased gate fees, benefitting early adopters in securing capacity.
Longer-term sector viability
The future viability of food waste AD in the UK hinges on the ability to adapt to regulatory changes, manage capacity effectively, and maintain financial sustainability.
The government’s net-zero ambitions can only be achieved through continued use of biomethane within the country’s energy mix, highlighting the importance of the AD sector in achieving the UK’s sustainability targets. Severn Trent Green Power will continue to invest in new process technologies to maximise energy extraction, carbon offset, and maintain high levels of process resilience. We are also confident in ensuring commercial resilience whilst contributing to the UK’s sustainability goals.
By being strategic and adaptive, reacting to market changes over the next few years, the AD market should successfully and confidently navigate the challenges ahead.