(GUF) THE ECONOMY OF SCALE IN WASTE

The direction of travel - usually said with a straight face and the unspoken assumption that everyone can afford the ride. In waste management, scale is no longer a competitive advantage, it’s becoming a survival requirement.

Regulation isn’t free (despite how it’s announced), every new piece of legislation arrives wrapped in worthy language, transparency, accountability, decarbonisation, digitalisation. All laudable stuff but none of its free.

Each change brings costs that don’t show up neatly on a policy paper: new software platforms (and the consultants to implement them), training for staff who were already fully booked doing actual work, office process changes to satisfy audit trails, portals, uploads, dashboards, vehicle upgrades, telematics, emissions reporting, route optimisation, compliance teams growing faster than operations teams.

For large national and international operators, these costs are irritating but absorbable. Spread across thousands of customers, hundreds of vehicles and multinational balance sheets, they’re diluted into the background noise of business but for small and medium operators, that's just not possible.

The scale trap - smaller companies don’t lack competence; they don’t lack care; they lack the ability to dilute. When compliance costs rise, small operators have two options: absorb the cost, which quietly erodes already tight profit margins or pass it on, which makes them look expensive next to the national players who can undercut while still complying; neither is sustainable.

This is how regulation doesn’t ban small companies, it simply prices them out; not through incompetence; not through wrong doing but through arithmetic.

Fast forward to 2028 and the inclusion of waste incineration within the UK Emissions Trading Scheme (ETS) when carbon becomes a traded commodity sitting/imposing directly on gate fees. Incineration costs will no longer be just about tonnage and calorific value, they’ll be shaped by volume, internal carbon strategies, who owns the plant versus who feeds it, and who trades, who hedges and who gets squeezed.

This is where tit-for-tat pricing starts to matter. Operators with their own Energy-from-Waste facilities will inevitably be able to structure fees in ways that favour their own supply chains. Independent hauliers and smaller brokers will be left paying whatever the market decides that week with no leverage and no insulation. At that point, any small operator still standing will need one of two things; a huge broker client base to spread risk and cost or a buyer; there won’t be a third option.

This won’t be framed as a problem, it will be called market maturity, efficiency, professionalisation, improved compliance outcomes and whilst some of that will be true, regulation is increasingly being written in ways that favour scale, reward capital and quietly discourage independence. The result will be fewer operators, bigger players and less genuine competition.

The irony of all this change is that many small waste companies are better at recycling, closer to their customers and more honest about what can and can’t be done. They know their waste streams because they see them. They fix problems by picking up the phone and owning the issue, but honesty doesn’t amortise software licences.

I'm certainly not calling to halt regulation, just acknowledge the consequences. If we continue down this path, the future waste industry won’t be shaped by who understands waste best but by who can afford to comply longest and once scale becomes mandatory, choice quietly disappears. More like this (ETS) - link - more like this (waste) - link