| Of all the clichés in business journalism, describing a sector as “set for growth” is probably the most overused. But if the description can be applied to any part of the UK sector, then it can surely be applied to recycling. As the nation generally becomes more environmentally aware, both companies and individuals are looking to minimise the amount of waste they produce – a trend intensified by pressure from the European Union. Mike Walker, policy director at the Environmental Services Association (ESA), which represents the UK’s waste management industry, says that the recycling sector is now worth around £8bn – an increase of £3bn, or 60%, since 2001. The effects of legislation He adds: “The main driver has been the landfill directive, which has meant that local authorities can no longer send all their biodegradable waste to landfill. “There are three target years and each year they have to reduce their biodegradable waste as a proportion of total waste sent to landfill. By 2010, this has to be reduced to 25% below the 1995 level. By 2013, it’s by 35% and then by 50% by 2020. That has been the principal driver for changes in municipal waste management.” Such regulations put the conditions in place for growth in the industry in general, but other rules emanating from Brussels have led to rapid increases in demand for certain types of recycling services from some of the biggest companies in the world. And, as Walker says, “all of this is increasing the value of the industry”. The Waste Electronic and Electrical Equipment (WEEE) directive, in particular, sets strict targets for the recycling and recovery of redundant electrical equipment. It came into force in 2003 and requires producers of such equipment to pay and take responsibility for recyling it. And most importantly, it now has to be separated out from other municipal waste. Walker says this part of recycling is changing from being a case of “mass transport and dump” to a far more sophisticated, technically demanding sector whose main task is to sort and recover materials. Further growth areas Composting, he says, is another major growth area. “It used to be something people did in their gardens; now it’s an industry producing half a million tonnes of high quality compost every year. Most of that is separated from municipal waste.” Although there are four or five big companies in the “waste management” sector – such as Virador, Biffa, Shanks and Theolia – the sector is dominated by SMEs, although the huge amount of consolidation over the last 10 years is set to continue. Of the 150 companies belonging to ESA, 140 are SMEs. Walker adds: “Some of them are haulage, some are skip companies taking industrial and commercial sites, some operate compost sites, some are very specialist, dealing with batteries or waste electrical products.” Michael Green is managing director of one such company. West Midlands-based G&P Batteries also happens to be the UK’s largest collector of waste batteries of all types, which Green says is because there are no others offering a nationwide service. The company was founded in 1979 and initially made a living out of trading waste lead batteries, which then had significant value. By the mid 1990s, however, they had become virtually worthless and the company was forced to seek a different way to make a living, a change that coincided with Green’s appointment as MD. “We decided to provide a service for what had become a dangerous waste, particularly as a lot more regulation had come in. We saw the opportunity to broaden the scope of what the company did, so we decided to collect and deal with every type of battery.” The company now employs 65 people and customers include local authorities, big multinationals, manufacturers, British Telecom, and so on “right down to the small garages under the arches. He adds: “Just about every office and business is generating waste batteries of some sort.” The EU’s new battery directive is going to generate even more business for his company. “It sets targets for the collection and recycling of all types of batteries. The UK collects and recycles more than 90% of lead batteries, so we don’t have a problem there. “But when you look at every other type, from AA to Nickel Cadmium, the UK’s record is poor – less than 2% when the target is 25%. It’s clear that there is a lot of work to do, and we have been banging the drum for several years.” Costly The main difficulty for the business is that it has a number of fixed costs – most significantly, the price of putting a truck on the road – while the value of the material it collects “goes up and down like a yo-yo. “Lead, for example, goes up and down, the price we get from smelters changes very quickly. We have to square that circle – that’s the trick of making our business work.” This is achieved by making a fixed charge for the services it provides, while providing a rebate on the basis of any recovered materials. Clearly, this varies with commodity prices. Green is optimistic about the future – unsurprising, given the political trends. “I think it’s pretty rosy. We’re in the middle of an extremely busy period. “Since I came into this, the one thing that has been constant throughout my time in charge here has been the constant increase in legislation. That all has an effect on our business. “We live with that constantly changing environment, but that’s our life, and we set ourselves up as professionals in waste batteries. I can’t see the need for that going away.” This conclusion could also be applied to any branch of recycling, from electrical goods to composting. As a result, the area is proving fertile ground for start-ups. Increasingly, entrepreneurs and venture capitalists are regarding the sector as a serious business opportunity, so if you want to get involved it might be a good idea to do so before the field becomes too crowded. | 
