Interview: Ian McAulay, chief executive, Viridor

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Viridor chief is moving the waste firm away from landfill and into recycling

The adage dates back to the 1860s when, writing in the introduction to Popular Tales Of The West Highlands, gamekeeper Hector Urquhart first observed that “one man’s rubbish may be another’s treasure”. More than 150 years later, fellow Scot Ian McAulay is definitive on the value to be found in trash, though he prefers to talk in terms of “waste” and “resources”.

It’s been little more than two years since McAulay took the helm at Viridor, one of Britain’s biggest landfill operators, with 18 sites across the UK. During that time he has continued the work of former chief executive Colin Drummond, who set out in earnest a decade ago to steer Viridor away from dumping grounds and into the era of recycling and renewable energy.

About 5 per cent of Viridor’s business is currently generated from landfill, a number that has fallen dramatically in recent years as the company has shifted into recycling and burning waste to produce energy. By 2020, just three of the group’s UK sites will be dedicated to dumping rubbish.

It’s been a strategy dictated by necessity. Earlier this month, the European Union issued its “Circular Economy Action Plan”, further strengthening recycling requirements on member states and adding to growing layers of regulation as governments at all levels push towards the ultimate goal of zero waste.

While there was no real alternative to Viridor’s change in tack, it has largely been a successful strategy for the company. In November, it revealed that earnings more than doubled during the first half of the financial year, driven by its growing portfolio of energy-from-waste facilities such as the £177 million energy recovery plant currently under construction in Dunbar.

It’s all well and good when the financial arguments stack up, McAulay says, but declining commodity prices, local authority budget cuts and a lack of joined-up policy have combined to stagnate progress towards Scotland’s ambitious environmental targets.

“We can’t recycle for the sake of recycling,” he says. “You have got to take account of the market realities. For example, looking at input prices, the crash in oil prices has made it cheaper to ­produce plastic from virgin sources than from recycled materials. Without some inducement or a requirement for a minimum percentage of recycled content, manufacturers are not going to choose the more expensive option.”

Similar commodity downturns have affected other recycling sub-sectors such as glass, which became a money-sucking enterprise in the years after the banking crisis. The situation has improved somewhat, but other factors are increasingly weighing on the financial equation.

Much of the challenge stems from pollution in the recycling stream, making it harder and more expensive to sort different materials, jeopardising the economics of the entire system.

Viridor’s £25m glass facility at Newhouse in North Lanarkshire – billed as the most advanced facility of its type in the UK – has a network of optics and X-rays to improve the sorting process.

In full operation for the past eight months, it can achieve up to 99 per cent product purity. This is significant in determining whether the end result is “remelt quality” – that which can be used in new bottles and jars – or is less valuable “aggregate quality” used in road surfacing and fibreglass insulation.

McAulay says the condition of the materials going in at Newhouse varies “literally from week to week”. An abundance of labels, metal tops and other contamination means the processing system must slow down. At its peak, the plant can handle 150 per cent of Scotland’s glass recycling requirements, but so far it has been running at an average of two-thirds of its capacity.

“It doesn’t operate at the optimum range because we don’t yet have a linear model,” he says.

McAulay is referring to the fact that Newhouse takes glass from 17 Scottish local authorities, many of which have different requirements for collecting at the kerbside. Some bottles may already be washed and sorted by colour, while others arrive in a huge mix of residual fodder.

The problem of contamination extends to pretty much every area of recycling, and is exacerbated by disparate rules for collection. Looking at all local authorities across the UK, Viridor has counted 142 different systems for rounding up household recycling.

“That is lunacy,” McAulay says. “If we want to make the next step up, we are going to have to make that more linear.”

Nearly 43 per cent of waste north of the Border is currently recycled, but the Scottish Government is targeting a recycling rate of 70 per cent by 2025. ­However, McAulay says that austerity measures are proving a “huge drain” on local authorities, hampering their ability to improve collection methods and stalling what has so far been good progress towards the 70 per cent target.

While Scotland’s local authorities are increasingly working across borders, McAulay says even more aggregation is required. Looking to the Greater Manchester partnership, which serves 2.2 million people across a million households, he says Scotland should have no more than six regions for “resource management”, which would make recycling more viable.

“Great challenges are always overcome by effective connectivity,” he says. “Yes, you can achieve 70 per cent if you are not concerned about losing money on it, but that is not the way markets work. We and others in the private sector have capital to invest, but we expect a reasonable return on that.”

30 SECOND CV

Born: Govan, 1965

Raised: Rutherglen

Education: Stonelaw High School; University of Strathclyde; Harvard ­Business School

First job: A shelf-stacker in Presto supermarket

Ambition at school: It was really just to do something that makes a difference.

Can’t live without: My kids.

Kindle or book: A book – you can’t smell Kindles, and I just love the smell of a book.

Favourite city: Barcelona

Preferred mode of transport: Train. I like the comfort of being able to move around and do some work.

What car do you drive: A Mercedes Shooting Brake

What makes you angry: I am incredibly intolerant of ignorant intolerance.

What inspires you: ­Ordinary people who do extraordinary things.

Best thing about your job: Doing something that makes a difference every single day.