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November 2006

Landfill legislation and limited capacity promote waste-to-energy

London— Waste-to-energy markets are experiencing enhanced political and environmental attention in Europe. An important component of integrated waste management strategies, waste-to-energy assists in waste incineration to relieve pressure on landfill and dispose waste that cannot be recycled. The add-on benefit of waste-to-energy plants is that energy generated is fed either back into the plant itself or to the local community.

Frost & Sullivan finds that the European Waste to Energy Plants Markets earned revenues of $1.8 billion in 2005 and estimates this to reach $2.7 billion in 2010.

“Amongst other factors, landfill legislation and increasing waste volumes are urging countries to revisit waste management strategies and develop more cost-effective, sustainable solutions,” notes Frost & Sullivan’s Energy and Environment Practice director John Raspin. “The EU Landfill Directive, which sets targets for the reduction of land-filling of biodegradable municipal waste (BMW) offers tremendous growth potential. This Directive, coupled with the short supply of new landfill void space in Europe, is driving alternative waste disposal strategies including waste-to-energy.”

If BMW production continues to grow, increasing quantities will need to be diverted from landfill and consequently, waste-to-energy will be employed. In addition, increased production of refuse derived fuel (RDF) in countries such as Germany and shortfall in the capacity for disposing such pre-treated waste will create greater need for new waste-to-energy plants.

Currently, over 400 waste-to-energy plants in Europe process about 50 million tons of municipal solid waste per annum. However, as a result of the Landfill Directive, this number is likely to increase and over 100 plants or lines are expected to be installed by 2012.

Despite the benefits of the waste-to-energy technology, it has met with public opposition from environmental groups and local communities over the safety of waste incineration. This has hindered the implementation of new projects.

“The effects of emission on public health, increase in traffic and pollution associated with transporting waste for incineration are key concerns likely to hamper market expansion,” states Mr. Raspin. “While the markets offer opportunities through high-value capital-intensive contracts and operational revenues, risks of project cancellation pose a significant challenge.”

In view of long waiting periods involved in project planning and the risks of project cancellation, waste-to-energy suppliers will need to work closely with local communities and municipalities to promote projects.

Moreover, with the rise in competition, the markets are witnessing an increasing number of mergers and acquisitions and competition is set to intensify.

Significant opportunities exist for companies that can target and explore specific areas of growth. Strengthening product and financial positioning through consolidation, enhancing brand name and customer services, as well as meeting environmental demands of legislations and customers are some of the key factors that will influence market success.

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