We reflect on the impact that both COVID and Brexit have had on the market and discusses some of the opportunities for businesses looking to escalate their use of waste derived fuels.
The cement industry has pioneered the co-processing of waste derived fuels, with European manufacturers currently offsetting around 48% of their traditional fossil fuel use. Whilst there is some way to go to achieve the broadly recognised target of carbon neutrality by 2050, the fact that some 50 million tonnes of waste (material that could be used as alternative fuels), is still being landfilled should give us confidence that fuel supply and co-processing levels can be increased at pace. Totus Environmental works with many of Europe’s cement manufacturers to deliver high-quality Solid Recovered Fuels (SRF) and hazardous fuels from the UK and European waste and recycling markets.
Fluctuations in the SRF market
Over the course of 2020, the market remained fairly stable despite marginal reductions in the amount of SRF exported from the UK. Since the start of this year, we have seen a slightly more marked downturn. This is down to a combination of factors, including a slowdown in construction in some countries. The closure of the hospitality and retail sectors has also caused a reduction in the volumes of commercial and industrial waste (a feedstock for SRF production) being produced.
In the UK, demand for fuels dipped early in the pandemic when the cement industry was impacted by the closure of the construction industry for a period of time. Since coming back online however, demand for fuels has been high and quickly recovered to pre-lockdown levels.
Whilst we have all learned that it’s dangerous to predict the future, the Bank of England has forecast a significant period of rapid growth for the UK economy post-pandemic. We remain cautiously optimistic that SRF export tonnages will continue to steadily increase in the second half of this year and into 2022. Increased demand for biomass, which is a key renewable fuel source for the decarbonisation of energy intensive industries, is also expected to drive SRF utilisation.
The low margin associated with SRF supply means that export markets are largely driven by logistics costs and availability of capacity, which can dwarf the associated gate fees. However, container route capacities have been especially impacted by the global downturn in trade as a result of the pandemic and costs have risen sharply.
Case Study: Providing expertise to support Ellgia achieve zero waste to landfill
Ellgia Ltd, an award-winning waste and recycling company has a mission to provide zero waste to landfill solutions for its commercial and municipal customers. It is also dedicated to moving material up the Waste Hierarchy through the extraction of valuable recyclable resources and by processing residual waste into solid recovered fuels for co-processing in the cement sector.
Ellgia has partnered with Totus for a number of years to support the development of waste derived fuels and harness Totus’ experience to identify a bespoke and sustainable export solution due to insufficient capacity in the UK. What Totus successfully delivered met with both Ellgia’s recycling ethos and the cement producers’ requirements to reduce reliance on fossil fuels and CO2 emissions.
With recent changes to the TFS process (post Brexit), Ellgia were able to rely on the expertise of Totus‘ compliance and logistics specialists to take care of the relevant paperwork and new customs procedures, leaving them with time to focus-on preparing and manufacturing a high-quality fuel, having recently invested heavily in a new SRF production line.
Opportunities for hazardous fuels
More and more cement plants across Europe are realising the benefits of utilising hazardous fuels, with higher gate fees, to increase their alternative fuel substitution rate. The cost of managing hazardous waste is far higher than SRF (often up to 10 times so), meaning that transport costs are proportionally much smaller. These materials are therefore less constrained by geography and can be easier to deliver into new markets. The flip side of this is that their transport and use does require more technical expertise, so often working with a partner such as Totus makes sense to ensure a safe and compliant solution.
Overall, we estimate the total tonnage of hazardous waste supplied as fuels in 2020 dropped by around 20%. Interestingly, the majority of this reduction was in the UK market where solvents are more commonly supplied. This could well be as a result of material shortage due to industrial sectors such as automotive being in lockdown, and not necessarily associated with a fall in demand. The export market in comparison, which is mainly based around solid fuels due to their high UK gate fee, actually grew slightly in 2020.
We expect to see continued steady growth in demand for solvents and sludges from paints or oils, as well as customers who want a supply of both biomass and solvents, which they can blend to the required specification. New customs clearance requirements as a result of Brexit, have presented some real challenges for hazardous waste exporters, although many have found working with an experienced partner such as Totus has enabled them to maintain critical international offtake.
Case Study: Developing a ‘win-win’ solution for BIP
BIP specialise in recovering solvents for reuse back into the market, reducing the UK’s reliance on crude sourced material. As a result of BIP’s distillation processes, the company inevitably ends up with high CV sludges which require safe and sustainable disposal. Finding a disposal solution that could further reduce the planets reliance on fossil fuels was high on the company’s agenda.
There is currently insufficient capacity in the UK for all the high CV wastes produced by UK industry. Totus’ knowledge of cement kilns and kiln fuel preparation facilities in Europe gave BIP the opportunity to achieve their goal. Operating under the BIP Environmental arm, all sludges are now sent for processing into fuels used to replace fossil fuels in the production of cement, making this very much a ‘win win’ .
Naturally, there have been challenges for BIP along the way. The TFS system is relatively inflexible in terms of the type of materials that can be exported, not necessarily mirroring the acceptance capabilities of the receiving outlet. Brexit has also caused some delays on certain routes along with changes in taxation and logistics availability. Totus has, however, always been able to provide detailed information regarding the progress of individual applications and insight into the political and economic landscape being navigated, which is particularly useful when planning the scheduling of certain recovery campaigns.”
Faster Moving Markets
One thing that we are seeing in both SRF and hazardous fuels is that the days of long-term contracts look to be behind us. The modern-day alternative fuels market is now far more akin to those of commodities, with trade based on almost immediate demands for a certain material or specification. As a facilitator in the market, Totus is able to offer a wide range of alternative fuels from a broad base of waste management companies and waste producers and as such, can be highly responsive to the changing demands of customers.
A Partnership Approach
Another noticeable change in the alternative fuels market is the shift away from a ‘one size fits all approach’. It is, without doubt, becoming increasingly important for suppliers of alternative fuels to have an in-depth knowledge of their customers’ operations, a problem-solving mindset and the ability to deliver fuels to a precise - and sometimes changeable - specification. The ability to provide a range and blend of fuel types is what enables kilns to operate efficiently and remain within stringent emission limits.
Challenges with export
Navigating the minefield of TFS production and other administrative requirements is increasingly difficult, especially when coupled with pressure on transport capacity and the associated resources. Maintaining and developing export routes for customers has therefore been a primary area of focus over the last 12 months.
When the UK ended its transition period with the EU in January 2021, material which had previously been able to move freely across EU borders required customs clearance at both the point of exit and entry. Additional paperwork is now also required for material transiting through another country en route to its final destination. Increased levels of administration have resulted in a material increase in costs for every load shipped, particularly in relation to accompanied loads. To illustrate the scale of the challenge, it is estimated that UK exporters will have to complete some 260 million more customs forms a year, many of which will require the help of intermediaries.
Benefits of working with a partner
Working with an alternative fuels solutions provider can be a highly effective way for both cement and waste management companies to navigate what can be a technological, political and logistical minefield. These benefits can be realised on a number of levels: for example, at Totus our import/export and intra EU logistics experience has resulted in a detailed understanding of all our customers’ processes and kiln requirements. This, in turn, enables us to accurately manage and supply waste derived fuels from a range of sources ensuring continuity of supply and avoiding variations in specification which can lead to non-compliance. Access to this expertise and global network reduces pressure on our customers’ limited resources and allows them to focus on their core business. It can also provide much needed confidence and further de-risk the increased use of waste derived fuels in co-processing operations.
You can keep up to date on the latest developments in alternative fuels news by visiting our website www.totusenvironmental.com or contact us to discuss any element of your fuel supply solution.
This article was first published in World Cement,