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Investing in greener waste management

The UK food and drink sector produces 10 million tonnes of food waste each year¹, and the majority of this goes to landfill. The reality is that the UK is running out of space in landfill. Therefore, any way that the country can reduce waste and try to use it in a renewable way will be beneficial to everyone.

Food producers and retailers, as some of the biggest generators of food waste, have started to take advantage of anaerobic digester (AD) plants to process their food waste, in a bid to become more sustainable. In the north east of England, companies such as the supermarket chain Asda are working with AD and de-packaging plants, to reduce the amount of waste going to landfill. This waste is used to feed the AD plants and create renewable energy in the form of gas, electricity or heat.

The challenge of managing waste

Waste management should be viewed as a cyclical system. It offers opportunities for fresh produce growers, not only to dispose of their waste in a more environmentally friendly way but to make use of the end products from the process.

As British government support for AD has moved from Feed in Tariffs (FiT) to Renewable Heat Incentives (RHI), many AD plants are moving towards bio-methane injection into the grid. From the process of upgrading the gas to pure biomethane, there’s a large amount of carbon dioxide (CO²) that’s left over. Some companies are investigating ways of using this CO² in greenhouses to increase photosynthesis.

At Prestige Funds we are one of the most active lenders to AD plants across the UK. Our clean energy finance allows new AD projects to get up and running and helps established plants to expand and feed more energy into the grid. It is part of our mission to help the UK’s rural communities to expand their use of clean energy.

In the first three quarters of 2019 we lent more than GBP 100 million to clean energy projects across the UK.

As 20% of the UK’s CO² emissions are created by the food and drink industry², cleverer ways of using the gas in farming have created huge environmental benefits. It can reduce emissions by making use of the biogas that would otherwise be released into the atmosphere, plus utilising the bi-product of biomethane production.

Savings from switching to AD plants

Although the environmental benefits are important, there are savings to be made by switching from landfill to AD plants. The current UK landfill tax is GBP 84/t, but AD plants can charge a gate fee of approximately GBP 10 to GBP 30/t depending on location, meaning a substantial saving could be made. For any company that produces food waste, diverting to AD means improving the bottom line and raising green credentials, which is something that is becoming more important not only to retailers but consumers.

Private debt lets investors access the revenue derived from operational AD plants and gives the fund manager a high level of oversight and operational control over the plants. We take an active role in our lending and due diligence, working closely in a consultative role with AD plants to ensure they remain profitable and continue to provide green energy to their customers.