Select Committee on Environmental Audit Appendices to the Minutes of Evidence


Memorandum from the Environmental Services Association


  1.  ESA welcomes the opportunity to contribute to this inquiry as the sectoral trade association representing the UK's waste and secondary resource management industry, a sector contributing £5.0 billion to the UK economy (about 0.5 per cent GDP). Our Members provide integrated solutions to waste across the full spectrum of biological, mechanical, physico-chemical and thermal treatment and processing options, and are consistently achieving more sustainable waste management practices.

  2.  It may be helpful in the context of this inquiry, which is linked to the Environmental Audit Committee's previous inquiry and of the responses made to that earlier inquiry by both the Energy from Waste Association (EWA) and ESA, to note that EWA merged its activities with those of ESA on 3 September 2001.


  3.  We welcome the Environmental Audit Committee's inquiry on a sustainable energy strategy and appreciate the Committee's continuation of the work initiated in early 2001. Further to our earlier submissions, we are pleased to be able to comment on issues raised in this inquiry.


  4.  The PIU's Resource Productivity Report[15] stated that waste policy is the second biggest environmental challenge facing the UK after climate change. The PIU noted that despite improvements made both nationally and abroad, major concerns about the unsustainable impact of continuing to emit greenhouse gases at current global levels remain and that the impacts of climate change caused by greenhouse emissions are likely to have "far-reaching effects on all aspects of the world's environment, economy and society". Reduction of such emissions has been identified by the OECD as one of its "red light" environmental issues, requiring urgent action and step changes in the way resources are used and pollution is created.

  5.  The Government's commitment to the Kyoto Protocol legally binds the UK to reduce emissions of greenhouse gases to 12.5 per cent below 1990 levels by 2008-12. In addition, the UK has a domestic goal of reducing carbon dioxide emissions to 20 per cent below 1990 levels by 2010. The Government's focus on climate change marks a significant change in its priorities over the last 12 months. The Government's ambitious goals towards achieving a sustainable energy strategy will rely primarily on the development of substantial sources of new renewable capacity and success can only be achieved if UK policy and legislation support this development.

  6.  The Government's exclusion of the incineration of mixed wastes from support under the RO prejudices achievement by the UK of both its renewable and landfill diversion targets. Assuming a three per cent annual growth rate in waste generation and provided the recycling targets are met, an additional 455 MW from incineration facilities would have to be deployed by 2010 over and above the existing 200 MW in order to meet the targets set out in Waste Strategy 2000. Under the current policy proposals, less than half of this will be deployed.

  7.  DTI figures show that incineration of mixed wastes with energy recovery generates 364g/KWh of carbon dioxide from non-biogenic sources, while the UK average generation mix produces 987g/KWh of carbon dioxide. Each KWh of generation from incineration therefore saves 623g/KWh of carbon dioxide. If incineration was able to meet its full potential by 2015 in terms of the targets expressed in Waste Strategy 2000 and assuming a growth in waste generation of 3 per cent per annum, a saving of nearly six million tonnes of carbon dioxide per annum would be realised, which equates to approximately 4 per cent of the 1995 carbon dioxide emissions.

  8.  The Government's support under the RO for co-firing biomass in fossil fuel fired power stations, while disqualifying biomass from eligibility for ROCs if co-fired with mixed waste, is beyond comprehension. The latter process is a cleaner and more stringently regulated process contributing to climate change abatement. Government support for coal, a non-renewable commodity, rather than waste, a renewable by-product will render many biomass projects unviable, since feasibility is often dependent on the ability to derive revenue from acceptance of mixed waste. The biomass industry is thought to have accounted for 50 per cent of new renewable capacity in 2001 under NFFO, but the Government's current RO proposal will make this level of development unlikely in the future. By limiting the maximum potential generating capacity for renewable energy while incentivising a more polluting industry, the Government's policy will result in unsustainable generation of greenhouse gas emissions and weaken the UK's security of energy supply.

  9.  ESA welcomed the Government's introduction in March 2001 of the New Electricity Trading Arrangements (NETA), which aim to promote competitive wholesale markets. We endorsed the principles of NETA, whereby all generators should be rewarded for value delivered but penalised for costs imposed on the system. We are concerned, however, that since the introduction of NETA, smaller generators have experienced reductions of 25 per cent in electricity prices and figures of up to 40 per cent have been quoted for incineration plants operating outside of the NFFO regime. This is largely as a result of inherent flaws in NETA, which we believe will reduce the deployment of renewables. We have advised the DTI, in our response to its consultation entitled "Government Response to Ofgem's Report to the DTI on the Review of the Initial Impact of NETA on Smaller Generators", as to how NETA needs to be modified to become a more cost reflective and efficient market mechanism, recognising the environmental benefits delivered to the system by all renewables.

  10.  ESA welcomed the NFFO Locational Flexibility Order, which came into force on 30 December 2001. Our Members are, however, experiencing difficulties with the Order in its current form and the rigid manner in which Ofgem is applying the rules. We realise that Ofgem's role is to regulate rather than to promote the development of renewables. However, we are concerned over the potential negative impacts of this Order on the commissioning of new renewable capacity. Our Members have experienced difficulty in transferring large NFFOs to smaller sites, changing within technology bands and aggregating more than one NFFO contract onto a single site.


  11.  ESA believes that the RO will struggle to achieve the UK's 2003 renewable energy target and sees no prospect of the 2010 target being met. Other technologies such as onshore wind and landfill gas have a valuable role to play but these technologies have only limited scope to provide new capacity and the Landfill Directive will further reduce the future availability of landfill gas. The Government is providing little support for emerging technologies through an inadequate buyout price and insufficient capital grants. Although some support has been made available for Research and Development, this will make little difference to the ability of the renewables industry to achieve the 2010 targets, although it will be beneficial in terms of accelerating the development of emerging technologies in order to meet future targets.

  12.  Emerging thermal technologies, such as gasification and pyrolysis, may seem more attractive than mass burn plants from a public perspective (due to their considerably smaller volume throughput) but they have yet to be demonstrated at a commercial scale for mixed waste streams and therefore some uncertainty surrounds their environmental performance, reliability and cost. The fact that these technologies operate at a much smaller input is likely to mean that considerably more plants will be needed to cope with likely waste arisings, which will require the approval of a greater number of planning applications. The financial outlay on such plants is also substantially higher, demanding higher gate fees. Although these processes may in the longer term, offer an alternative to conventional thermal technologies for some waste streams, the appropriate proven performance references are not yet available. ESA believes that the coming decade is a period for these technologies to prove themselves capable post 2010 of making a worthwhile contribution to the UK's future renewable capacity.

  13.  In addition to incineration, there are other sustainable energy processes, such as CHP, coalmine methane recovery and carbon sequestration, that do not benefit from support under the RO. ESA strongly recommends that, in order to capitalise on the maximum possible capacity these technologies have the potential to deliver, the Government develops a support mechanism such as enhanced capital allowances to encourage their ongoing development.

  14.  ESA recognised that the Government may, after 2004, wish to increase the landfill tax by about an additional £20 per tonne achieved over a relatively short time period, to help to close the gap between the cost of landfill and other forms of waste and secondary resource management. This would align the UK more closely with comparable EU Member States.

  15.  ESA believes that a tax on incineration should be discouraged. In a context where the over-riding initial priority is to achieve landfill diversion targets, there is logic in reliance on the Landfill Tax as a fiscal driver. In any case, exclusion of incineration of mixed wastes from the RO is effectively a stealth incineration tax equivalent to £9 per tonne of waste. This and the introduction of NETA compound difficulties the energy from waste sector already faces and is not obviously consistent with the commitment to energy from waste in Waste Strategy 2000.


  16.  ESA has seen little evidence of joined-up working between parties. We are disappointed that whilst DTI appears to understand commercial and environmental logic, DEFRA has been heavily influenced by the anti-incineration lobby.

  17.  Ofgem is in a different position, having primary responsibility as economic regulator for the electricity industry. As such, it is required to act directly on Government decisions and deviation from the rules or promotion of innovation is not permitted. It is, however, important to ensure that Ofgem's objectives are not in conflict with renewable energy development and wider environmental objectives.


  18.  The development of a robust sustainable energy strategy for the UK required the PIU Review on Energy Policy to urge Government Departments to convey clear signals on their long-term commitment to renewable energy policy and security of supply. Instead, the Energy Review is somewhat unambitious and its conclusions rather vague. For example, the PIU have ignored the recommendation of the Royal Commission on Environmental Pollution, for a 60 per cent cut in emissions by 2050 to avoid irreversible Climate Change. It has not predicted where the UK should be in 2050 in terms of energy and emissions targets and fails to set out how these should be achieved.

  19.  On the other hand, ESA feels it is wise that the PIU have set a target for 2020 at no higher than 20 per cent renewable energy. It is important that targets are realistic. While we doubt, for the reasons stated above, that the target of 10 per cent renewable energy by 2010 will be reached, momentum may quicken beyond 2010 as emerging technologies develop and the planning process improves.

  20.  ESA hoped that the PIU Review would recommend the introduction of a support mechanism for the sustainable energy processes ineligible for support under the RO, including the incineration of mixed wastes, CHP, coal mine methane and carbon sequestration. This was not mentioned in the Review.

  21.  Importantly, regardless of conclusions and recommendations, the Energy Review opens up the debate on the security and supply of energy, paving the way for consultation and a White Paper on energy for the future.

March 2002

15   RCEP report: Energy - The Changing Climate, June 2000. Back

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