Select Committee on Environmental Audit Memoranda


Memorandum from LondonWaste


  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.


  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.


  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.


  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 buyout price.

    —  The method of recycling buyout receipts.

    —  The Government's acceptance that EfW can make a valuable contribution to the renewable targets.


  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.


  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.


  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.


  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.


  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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