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Our take on Brexit

Our take on Brexit

Rabbit Skips, and the Rabbit Group in general, are in the fortunate position of not being impacted by the uncertainty and potential challenges posed by Brexit. We understand that waste, as a broader industrial sector, is affected by the political changes underway. While reassuring our customers that we can continue trading without impact, we wanted to give an overview of what might happen in the waste sector in general.

At the ports

England exports approximately 3.2 million tonnes of waste per year. Much of this waste goes to Europe in the form of Refuse Derived Fuel (RDF). This means that any delays at the ports could cause problems for such traders in this sector.

However, with restricted trade with Europe, the UK could be put in a position to become more self-sufficient. Therefore, the home energy market could turn to UK waste, offering greater investment. This is a potential bonus to problems of import and export delays and restrictions. However, the lead time for benefits of such changes impacting of UK economics is significant.

Rabbit already has an Energy from Waste plant generating 5Mwh from 75000 tonnes of waster per year. This site is based in Lancing, West Sussex and is part of our Materials Recovery Facility (MRF). Ultimately, this means there is no onward transportation of waste; therefore, there is no concern over delays due to Brexit.

Cost pressures

Currently, vehicles that would otherwise return to Europe filled with RDF, could end up travelling back empty. Restrictions on trade could mean that any logistics costs could increase significantly. Even if the lorries could return full, it is possible that the whole EU, or individual countries, could set levies or taxes on exported RDF. This may make this an ineffective means of dealing with waste and therefore challenge the economic viability of some countries.

Another potential cost pressure is the fluctuation of the pound in relation to the Euro. Disposal is paid for in Euros. Therefore, for those in the UK sector who trade across borders, the change in value of the pound can have significant impact on how much they end up receiving. Uncertainty in political circumstances often causes a drop in the value of the UK currency. Therefore, more critical than making the “right” decision is making some sort of decision full stop.

Potential long-term benefits

Although many of the effects of Brexit in the short term seem full of threat and weakness, the long-term picture could be full of strength and opportunity. If, as a result of a lack of cost-effectiveness of waste export, there is an increase in UK energy from waste, this could help to address a potential electricity shortage. The UK could use this as a means of meeting renewable energy targets.

Here at Rabbit

We feel fortunate to sit outside the impacts of the Brexit debate. The level of uncertainty is the biggest factor impacting the sector. There may be great benefits; there may also be great consequences. However, the only certainty we have is that uncertainty is a major challenge for all those involved.