Turning waste into watts
The world generates upwards of 4 billion tonnes of waste each year, according to estimates by the Organisation for Economic Co-operation and Development (OECD), although the exact amount is impossible to determine. What is certain is that the figure is rising steadily alongside economic development and population growth, and is already several times higher than what it was a generation ago.
A plethora of issues surround waste production and its collection, transport, processing or disposal, and management. These primarily relate not only to the significant environmental impact that toxic and non-toxic waste have on local and global eco-systems, but also to the social and economic costs of waste management.
As a result, efforts have increased to promote better and more sustainable forms of waste management, which help to protect the environment and local resources, reduce greenhouse gas emissions, and limit fossil fuel dependencies. Many of these are being supported by local and national governments through landfill taxes, green electricity certifications, carbon credits and initiatives.
In Europe, the EU Landfill Directive requires that all nations reduce their input to landfill to 35% of 1995 levels by 2020, by increasing the recycling of materials such as glass, food scraps, paper and cardboard, plastic bottles and metal. Some nations have gone further in their ambitions, such as the Netherlands, which has announced measures to increase recycling levels to 83% by 2015. In the UK, the government has reconfirmed its renewable obligations certificates approach to anaerobic digestion processes for organic waste streams.
Sustainability expertise and technology
At the forefront of these efforts are companies like Shanks Group plc, a leading international sustainable waste management business serving both the public and private sectors and handling some 7.8 million tonnes of waste each year.
A listed company with its headquarters near London, Shanks operates in Belgium, Canada, the Netherlands and the UK.
It’s taken time for people to realise that sustainability can also be good for business, but at ING, we have been active in sustainable waste management for a long time and support a number of clients in the sector.
“Anaerobic digestion technology is a convergence of ideas that finds something better to do with waste, such as generating green power,” explains Bob Cartwright, Group Treasurer at Shanks. “The Netherlands is not only a major part of our business, but is also the source of deep seated skills and expertise that we want to export overseas -it has one of the most advanced waste management sectors in the world.”
A true financing partner
As a key player in the Benelux, ING is also well positioned to support Shanks in the region and abroad. “Due to ING’s extensive knowledge and experience in the waste sector in the Benelux, we are able to understand their unique requirements, support them in their strategy, and offer attractive terms on our financing products,” says Alexander Alting von Geusau, head of the Utilities Sector at ING. “At the same time, as a global bank, we can follow them into other countries where they have ambitions to grow.”
ING’s relationship with Shanks began in April 2009 when it participated in a €360 million refinancing of an existing syndicated credit facility, at very short notice. The relationship subsequently deepened with offerings in PCM services; leasing; working capital; financial markets; and M&A advisory. “Because of circumstances in 2009, we approached ING late in our project process, but they delivered an outstanding performance because they were able to get approvals so quickly,” says Cartwright. “They went from zero to a €60 million debt in a matter of weeks, which we view as a tremendous endorsement of our business.”
"We approached ING late in our project process, but they delivered an outstanding performance because they were able to get approvals so quickly, they went from zero to a €60 million debt in a matter of weeks, which we view as a tremendous endorsement of our business."
More recently, in 2012, ING acted as sole lead arranger for a GBP 57.5 million issue of guarantee for the financing of two projects to build and operate a waste management plants using Mechanical Biological Treatment, Autoclave and Anaerobic Digestion technologies in Yorkshire, UK. These facilities will supply remaining waste as fuel to an existing power plant, as part of a 25 year operating contract.
The deal required close collaboration between ING’s Lending, Trade Finance Services, Financial Markets, Risk, Account Management and Corporate Clients departments, as well as innovative thinking and close communication with the client. “They required letters of credit to support their ambitions and it was a two stage process,” explains Emiel Enneman, relationship manager at ING. “Shanks is a reputable and credit worthy business that is not only based in the Netherlands, but is also a highly sustainable business. Ours is a relationship-driven commitment based on a deep understanding of Shanks’ business and the best solutions to support them.”
The deal has allowed ING to continue broadening its product offering to the company, while demonstrating its determination to support clients in sustainability projects with in-house expertise. “Trade finance services are one of the pillars of our day-to-day cooperation with Shanks, and this has given us an excellent foundation for working with them on new business opportunities in the future,” says Jean Bonnet of Trade Finance Services ING in Amsterdam.
Looking ahead, Cartwright fully expects ING to remain an integral part of its banking group and provide it with further solutions. “As the global economy recovers, we are not going to stand still. The landscape in the Benelux is changing and we are also interested in other areas in Europe. At the same time, we are going to continue investing heavily to establish a large number of sophisticated waste plants in Canada and the US,” he says.