APPENDIX 20
Memorandum from LondonWaste
INTRODUCTION
LondonWaste is one of the UK's largest single
generators of renewable energy. LondonWaste is a unique public/private
sector partnership jointly owned by the North London Waste Authority
(NLWA) and SITA (GB) Ltd. The company's network of disposal points
receives waste from the Authority's seven boroughs once direct
borough recycling has taken place. In addition, the company accepts
clinical waste and a proportion of non-borough waste (up to its
handling capacity).
The area of the NLWA, comprising the London
Boroughs of Barnet, Camden, Enfield, Hackney, Haringey, Islington
and Waltham Forest currently generates some 2.6 million tonnes
of waste per annum. Under its contract with NLWA, LondonWaste
provides a waste disposal and recovery facility for those London
Boroughs. After facilitating the collection and recovery of recyclable
material LondonWaste receives approximately 1.1 million tonnes
per annum. Further recycling and recovery is carried out prior
to the waste being processed through the energy from waste plant
in Edmonton or sent to landfill. Presently energy can be recovered
from only 530,000 tonnes generating a maximum of approximately
40 MW of renewable energy- the rest is sent to landfill sites
in Bedfordshire and Cambridgeshire. The Company has submitted
an application for Consent under Section 36 of the Electricity
Act for an extension to the Plant. Under a NFFO 4 Contract there
would be a further generation of 18MW renewable energy and 36
MW of heat for use in a community heating scheme. This is equivalent
to the electricity needs of 12,000 homes and the heating requirements
of 7,500 homes.
BACKGROUND
The Committee has invited comments on "the
prospects for achievement of the Government's targets for electricity
generation from renewable sources"—in particular "on
levels of achievement so far and the current rate of progress"
and "on whether the Government's renewables targets are properly
formulated and are achievable".
LondonWaste welcomes the Government initiative
to promote renewable generation and support the basic mechanism
of its renewable policy—the proposed Renewables Obligation
(RO). LondonWaste was, however, both surprised and extremely disappointed
at the failure of the Government to include energy from waste
(EfW) in the proposed definition of renewable energy under the
RO. This omission is illogical and appears to be based on a series
of misconceptions about the way in which the market operates.
LondonWaste is concerned that unless the Government reverses its
proposed intention of excluding EfW from the definition (thereby
excluding EfW from the accompanying support) the UK will experience
serious difficult in achieving its renewable targets.
THE CONTRIBUTION
EFW CAN
PLAY IN
MEETING THE
GOVERNMENT'S
RENEWABLE TARGETS
EfW represents an environmentally preferable
means of both generating electricity and disposing of waste. Last
year, EfW contributed a significant proportion of the total renewables
output in the UK. EfW has the potential to contribute at least
25 per cent towards the 10 per cent target. Excluding EfW from
the definition will make it extremely difficult for the Government
to achieve its target of generating 10 per cent of its electricity
supply from renewables by 2010. In addition, it will impose burdens
on industry since more power will have to be generated from costlier,
less commercially viable renewable technologies such as wind power.
Moreover, by including landfill in the definition,
Government policy will perversely encourage the disposal of waste
by landfill—the least favoured option in the Government's
Waste Strategy 2000. Encouraging landfill also runs counter
to the new European Landfill Directive, and is not a sustainable
means of generating electricity, even in the medium term, as there
is a paucity of suitable sites left for future development.
THE GOVERNMENT'S
RENEWABLE POLICY
LondonWaste supports the Government initiative
to promote renewable generation and agrees with the basic concept
of:
— An obligation on the suppliers to
purchase a targeted quantity of electricity from renewable sources.
— The method of recycling buyout receipts.
— The Government's acceptance that
EfW can make a valuable contribution to the renewable targets.
INCONSISTENCY IN
GOVERNMENT POLICY
LondonWaste welcomed the Government's recognition
in its Waste Strategy 2000 of the increasingly important
role that (EfW) has to play both:
— in the development of sustainable
integrated waste management practices; and
— in the production of renewable energy.
The inconsistency, therefore, in Government
policy between the Waste Strategy 2000 which recognises
the role for EfW in delivering sustainable energy, and the proposed
exclusion of EfW from the renewables obligation, is illogical.
Omitting EfW from the proposed definition seems
irrational since the RO, as proposed, provides the incentive for
suppliers to purchase renewable electricity from all sources that
will "help the UK achieve its aims in terms of sustainability
of energy supplies"—all sources except EfW.
In Section 1.2, of the Government's consultation
paper on the proposed RO, it states that "Government targets
for renewable energy can include energy generated from: biofuels
(eg all types of biomass, including energy from waste, landfill
gas,. . . etc)". It is non-sensical that all the sources
in this list including landfill have been included in the RO,
apart from EfW.
We can see no coherent reason for the exclusion
of EfW as the effect will be to effectively prevent further expansion
of the EfW market, thereby preventing the UK from meeting its
renewable energy targets.
LONDONWASTE—AN
ENVIRONMENTALLY RESPONSIBLE
GENERATOR
The Government should support all forms of combustion
providing they meet stringent emission standards and incorporate
recycling schemes. LondonWaste's operations comply with these
criteria. LondonWaste takes its environmental responsibilities
seriously and is involved in a number of schemes and upgrades
to maximise the environmental sustainability of its operation.
Moreover, the company supports the emphasis the Government and
the European Union have placed on increasing recycling and recovery
as an environmentally preferable alternative to landfill, and
includes recycling as an integral part of its operation.
THE ECONOMICS
OF EFW—"LEVELS
OF ACHIEVEMENT
SO FAR
AND THE
CURRENT RATE
OF PROGRESS"
Prior to 1990, very few EfW plants were built
in the UK, despite the fact that other major European countries
had already recognised the benefits of creating energy from a
source that was both renewable and non-fossil. There were four
main reasons for this:
1. Electricity prices were insufficient to
provide an economic return.
2. Funding was difficult to raise without
a long-term energy contract.
3. EfW was economically at a disadvantage
to landfill in the UK because of the strength of the landfill
market.
4. Planning permission and consents were
and continue to be difficult to obtain in the UK due to nimbyism.
Since 1990, a small number of EfW plants have
been built because of the support provided through the NFFO mechanism.
The NFFO mechanism provided both support for the electricity price
and confidence to the funding banks that income was secure. No
new plants have been built outside the NFFO mechanism.
It is acknowledged that the price support provided
through the NFFO contracts had been reducing over successive NFFO
orders. However the falling electricity market price has reduced
the electricity price that can be expected for new plants by at
least 30 per cent from that obtained by recently completed EfW
plants. It is expected that NETA will further reduce the market
price rendering new EfW plants uneconomical.
Many existing EfW plants, including our own,
no longer receive NFFO support but are able to obtain a slightly
enhanced electricity price due to purchasers willingness to pay
a "green" premium for their electricity.
Under the proposed RO, all consumers will pay
a "green" premium but not to EfW plants. It is, therefore,
unlikely that they will want to pay a second "green"
premium so our electricity price will fall by a further 30 per
cent. This would have a significant impact on the economics of
our existing Plant and a similar effect would be likely at all
other existing plants that are no longer supported.
The existing plants provide a considerable proportion
of the current renewable energy generation. If exclusion from
the RO results in the closure of any of the existing plants, the
impact on the achievement of the Government's targets could be
significant. This would also create a negative impact in terms
of achieving the Government's targets under the Waste Strategy
and Landfill Directive.
GOVERNMENT POLICY
We believe that the Government's objective is
to achieve the UK's renewable targets at the lowest cost to the
consumer. The most economical method of achieving this must be
to secure and develop the technologies that require the lowest
support. These are also the most well proven and so reduce the
chance of the Government backing "losers".
The most secure base-load technologies for the
next 20 years will be landfill gas and EfW, (both of which are
energy from waste). We would propose that the Government set an
additional lower buyout price for both EfW technologies. This
would provide security for both EfW technologies at a price that
would provide an increased level of support for less well-proven
technologies so that they could be developed to meet future requirements.
SUMMARY
In our opinion some level of economic support
is essential to maintain and grow the EfW contribution, which
is a necessary part of the Government's renewables target.
We recommend that the Government should give
support through the RO in one or more of the following ways:
1. Include EfW as an eligible source.
2. Provide a second, lower level, buyout
price that would apply to EfW and other well-established sources.
This would allow the higher-level buyout price to be targeted
more effectively.
3. Change the definition of Eligible Renewables
to include only the biodegradable fraction of EfW to agree with
the EC definition.
January 2001
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