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Waste Management Investment Post-COVID: Uncorking the Bottle

As we move into the second half of 2021, the COVID-19 pandemic continues to cause a number of serious difficulties and challenges for the waste management industry. In 2020, patterns of waste generation were suddenly and severely affected, as normal economic and social activity was curtailed around the globe on an unprecedented scale. Waste operators had this to deal with, as well as the challenge of providing acceptably normal services in an environment of reduced staffing and strictly enforced social distancing. Work on expansion and development of new plants became far more challenging, as contractors faced shortages of staff, equipment and building supplies, and necessary regulatory permissions were delayed as government departments ceased to function properly.

Amid the ongoing gloom, however, there is plenty of good news. People haven’t stopped generating waste, even if the mix and nature of that waste has been altered. In some ways, the pandemic has merely accelerated longer term changes. To give one example, home working has been an increasingly viable and attractive option for many people for some time now, but the pandemic made it an urgent necessity. While a lot of businesses are reopening, home working is likely to remain at far higher levels than pre-pandemic. For the waste industry, that means more ‘residential’ waste collection, and less from city centres and businesses.

Where effects have been negative, they are likely to be short-term. Recycling activities were hit in 2020, either because they became more difficult to do, and/or they became commercially unviable. This is surely a short term phenomenon; surely, regulatory and environmental pressures will quickly reassert themselves in the longer term. Larger projects, such as in the WTE sector, have been beset with delays, but the initial pressure for them to be completed remains.

At AcuComm, we see this in the real world. Interest in new waste investment across the world remains strong. The graph below shows the number of new projects and investments announced each month between January 2018 and June 2021. It’s hard to see any COVID effect at all here.

ANDY Uncorking the Bottle

Source: AcuComm database, July 2021

How can we best interpret this graph, in the light of what we know? There is clearly an ongoing need, and willingness, to invest in better and expanded waste facilities around the world. But of course, just because a project is announced, does not mean it is up and running, or that it will be operational according to the original schedule. So it looks like we currently have a logjam… the past 18 months has seen a growing backlog of investments which have yet to become operational. As the world recovers, confidence will return and the cork will come out of the bottle, allowing activity – rather than announcement of activity – will return. That will create its own logistical challenges of course (as any logger will tell you), but for the industry it will perhaps be a welcome problem to have after more than a year of uncertainty.

Of course, recovery won’t be at the same pace everywhere, and different sectors of the market will face differing challenges (see the October 2020 AcuComm paper, ‘Waste Investment Trends 2020+ Assessing global performance in the shadow of COVID-19’ for more detail on the varying reginal and sectoral effects). There’s an opportunity here for the waste industry to ‘build back better’, to coin a phrase, by making greater use of smaller, more efficient facilities with more modern technology. Smart companies and investors will already be planning ahead in order to thrive in a world where much has changed, but much really has not.