Assessing The Impact of Changing Regulations In the Anaerobic Digestion Industry

Through a placement with WRM, Leeds University student William Grant has been researching the potential impacts of changing regulations on the Anaerobic Digestion (AD) industry. The research has focused around the issue of plastic contamination within digestate, which has become a growing concern over recent years. The Environment Agency has been concerned on  the levels of plastic contamination currently found in digestate, hence they are undertaking a consultation on the quality protocols (QPs) and standard rules permits for AD sites in order to reduce contamination levels. These changes may have numerous impacts for the sector so it is therefore important to understand what the potential implications will be under these new regulations.

William has interviewed representatives from across the anaerobic digestion supply chain including waste collectors, local authorities, AD operators, digestate contractors and regulators, and his findings are based on collation of a wide range of views.

• Fairness – There are concerns about how the impacts will be distributed across the sector. Larger and more established operators (both those who operate large sites and those who operate multiple sites) are often better placed financially to adapt to changes. Smaller plants face an increased financial burden and therefore may struggle to make the required changes under new regulations. This may reduce the financial viability of smaller operators, potentially leading to market consolidation.
• Drivers for Change – The Environment Agency cite the driver for the changes is a lack of market confidence caused by plastic contamination, however this opinion was found not to echo within the industry. This information asymmetry is a concern as operators have little incentive to make the required changes, making it onerous for the industry and risking a shutdown of the end market. It seems that the Environment Agency perspective is at odds with that of industry and it is therefore important to find a common ground to create workable solutions.
• Timing – The Environment Bill may send a signal to the industry to build new plants. Given the current overcapacity issues within the industry, building more plants will likely challenge the viability and profitability of operations. This is further complicated by whether digestate will continue to meet “end of waste” criteria as described in the QPs, and may make it a challenge for local authorities to hit recycling targets and undermining confidence in recycling. These changes are also running in parallel to changes in spreading and storage regulations, further increasing the regulatory burden. In an industry where margins remains an issue, there is a real concern that the timing of these changes could pose a serious economic challenge for operators.
• Opportunities –The main opportunity under the regulation changes will be a reduction in plastics spread to land. There is agreement across the industry that this should always be a priority, however it must be ensured that this benefit is not achieved at the expense of the industry itself. QP revisions could also open new digestate markets such as horticulture, helping to alleviate some of the financial burden, as well as reducing the issues associated with storage and spreading. This could be aided through amendments that allow digestate to be processed e.g. de-watering.

William’s research has found that there is clear concern across the industry about the potential impacts of the incoming regulation changes, but not without the potential for opportunities. He will be discussing his findings in detail through an online presentation on August 26th at 12:30. The presentation will be followed by a Q&A session with William and members of the WRM team.

To register for the presentation, or to find out more about the research, please email mark.richmond@wrm-ltd.co.uk.