The Waste Framework Directive sets out targets to which all member states must adhere. If these targets are not met, the UK Government and local authorities will be fined. For example the Waste Framework Directive requires that 50% of all household waste is recycled.
In order to achieve this target the UK needs to build and operate large-scale recycling units. But the government cannot afford to pay for these facilities up front, so it must look at alternative methods of financing such procurement. Given the government's acknowledgement that private sector investment will be required, the best way to achieve this is through Public-private partnership (PPP), which may be Private Finance Initiative (PFI) or another form of Public-private partnership.
The fact that waste projects have revenue streams makes the sector a possible candidate for an alternative form of PPP to PFI, called the regulated asset based model (RAB). The RAB model has mainly been used in the UK in the regulated utilities sector, with successful projects well established in airports, energy and social housing.
A key challenge facing many waste PFI projects is not the government or even lack of funding, but obtaining planning permission. Local residents need to be told about the positives and they need to understand the financial link between non compliance with the EU Directives and higher taxes – local and national - to pay the fines.
All of the evidence suggests that rather than believe the scare stories in the press that PPP projects are wasteful and inefficient, the government is showing encouraging signs of pragmatism when it comes to infrastructure funding. Let’s hope local residents follow suit.