Select Committee on Environmental Audit Written Evidence

Memorandum submitted by Shanks Group plc


  Shanks welcomes the Committee's inquiry and is grateful for the opportunity to submit evidence.

  Shanks is one of Europe's largest independent waste and resource management companies and offers a wide and often innovative range of waste management solutions within its various collection, transport, recycling, treatment and disposal services. The company is involved with a number of integrated waste management contracts to supply waste management services to local authorities.

  Shanks has developed a solution which, through investment in new recycling and recovery infrastructure, can achieve a significant contribution to renewable energy targets and CO2 reduction, while still meeting the primary imperatives for local waste management authorities ie the protection of public health and protection of the environment.

  This solution is based on the use of a Mechanical Biological Treatment process (MBT) which along with kerbside collection, civic amenity site management, and composting forms part of the wider Shanks offering.

  MBT is the generic term applied to a number of different technologies that involve the mechanical-biological treatment of municipal solid waste (MSW). Shanks uses a form of MBT that uses the biodegradable fraction of MSW—essentially anything that rots through natural bacterial action, as a source of heat. Elevated temperatures within the mass of waste and sustained airflow across and through it stabilises and sanitises the waste over a period of 10-14 days as well as reducing the overall mass by around 25%. The resultant, dried, "stabilate" material can then be further processed to recover stones, glass and metals etc to produce Solid Recovered Fuel (SRF) which has an intrinsic economic value - thereby converting waste into an energy resource.

  SRF is easy to store and transport and with a calorific value approximately two-thirds that of coal, can be used to replace fossil fuels in power generation It has been calculated that power generation from SRF has the capability to provide as much as 17% of the UK's electricity requirements. 372



2.   What are the main investment options for electricity generating capacity?

  A recent Oakdene Hollins study[369] for the Institute of Civil Engineers and the Renewable Power Association concluded that municipal and commercial and industrial waste streams in the UK have the potential to produce up to 17% of the Country's electricity by 2020. The creation of an SRF from the residual fraction of this waste could be burned as a replacement for fossil fuels to create electricity and/or a source of heat in the case of a CHP facility.

What would be the likely costs and timescales of different generating technologies?

    —  What are the likely construction and on-going operating costs of different large-scale technologies (eg nuclear new build, CCGT, clean coal, on-shore wind, off-shore wind, wave and tidal) in terms of the total investment required and in terms of the likely costs of generation (p/kWh)?

  Cost/benefit comparisons between large scale generation technologies on a "like for like" basis is inherently difficult for a number of reasons, not least the complexity of the energy markets and the effect of market mechanisms and subsidies such as carbon emissions targets under the EUETS and ROCs respectively.

  In recognising these difficulties in making meaningful conclusions and recommendations over the most beneficial mix of energy generation capacity for the UK, the Royal Academy of Engineering (RAE) commissioned a detailed study[370] that was published in 2004 and which provides much useful and relevant information in comparing the true "costs" of various technologies, including renewables such as nuclear fission, on and offshore wind, generation from biomass, and wave and marine technologies. The findings take into consideration the actual costs of building, maintaining and running facilities, using a common financing model.

  Whilst this report shows that non-renewable generation including coal fired PF, coal fired CFB, gas fired CCGT and the like provide the most cost effective option currently, when the effects of carbon dioxide emission costs (at estimated £30/t) are taken into account the differential between conventional combustion techniques and the range of renewable options is significantly reduced.

  Unfortunately, the report does not provide detail relating to advanced thermal treatment technologies such as gasification/pyrolysis nor dedicated facilities for the combustion of SRF as a fuel feedstock, nor interestingly, does it extend its scope to the consideration of the relative merits of various fuel types which provide a positive value for the generator rather than contribute to the operating costs of the operation.

  Shanks recommend that as an outcome of this consultation further work is commissioned to extend the work on generation from renewable sources, to a detailed appraisal of generation from SRF and other waste derived fuels which may contribute a positive revenue stream in terms of gate fee for the generator.

  From its own work with developers of dedicated facilities for the utilisation of SRF, Shanks estimate that the indicative cost of electricity generation through such a plant may be in the region of 4-6 ppkWh. This excludes benefit from gate fees for supply of the fuel feedstock; this may effectively reduce the cost of generation by 1-2 ppkWh.

  These figures compare favourably to the costs of the majority of other "renewable" technologies including on and offshore wind generation and generation from biomass.

  For reference, typical costs identified in the RAE report for various types of renewable and conventional generation are as shown below.

Source: The Cost of Generating Electricity, The Royal Academy of Engineering-March 2004.

Over what timescale could they become operational?

  In Shanks' experience planning and permitting of MBT plants should be achievable within approximately 18 months, with construction requiring a further 24-36 months.

  In terms of dedicated generation capacity to realise the energy potential from the SRF from MBT facilities, such timescales have yet to be defined as the first MBT facilities are only now under construction in the UK. However, the difficulties in overcoming the legacy of the UK's historic negative approach to "Energy from Waste" plants in the planning arena are well documented. The effect on timescales for development remains to be seen but should not be too far removed from the timeline for the establishment of the MBT facilities themselves.

  Although SRF is essentially a renewable fuel, associations with the material as a "waste" rather than a resource continue to be made. Delineations between the use of a manufactured fuel to create renewable energy and waste incineration need to be made.

Is there the technical and physical capacity for renewables to deliver the scale of generation required?

  MBT technology is relatively new to the UK, but has been used successfully in Europe (particularly in Italy and Germany), for over a decade. Utilisation of the resultant fuel is also well established on the continent to the extent that that there are restrictions in place upon the disposal by landfilling of material with such significant potential for energy recovery.

  The physical capacity for this type of renewable energy, in the context of self-sufficiency for the UK, will be capped by the amount of suitable waste produced (currently in the order of 27 million tonnes). As previously stated, the UK's waste production should be sufficient to generate 17% of the UK's electricity requirements in 2020.

If there is the capacity, are any policy changes required to enable it to do so?

  Shanks believe that there are two fundamental policy barriers to developing the necessary capacity.

    —  Fuel Classification

  Whilst the biomass fraction within SRF is classified as a "renewable" source of energy there is a perception that SRF itself is a "second class citizen" in terms of its continued treatment as a "waste" product for the purposes of Waste Incineration Directive. Further, only where energy is recovered from SRF in an advanced thermal treatment process does the resultant electricity attract economic support under the Renewables Obligation.

  We acknowledge that the current RO review process is supportive of a move towards a "waste neutral" position for generation facilities using pure biomass, whereby any waste inputs do not invalidate the accreditation of the whole facility in terms of ROC eligibility. However this does not address the issue of necessary compliance with WID which presents itself once SRF type material is accepted as a feedstock.

    —  Financial

  Shanks firmly believe that SRF provides cost advantage to power producers in the medium to long term although this is currently insufficient incentive for power generators to invest in this technology for a number of reasons, not least the comparative surety of subsidies of other, albeit more costly forms of renewable energy.

  A mechanism to facilitate incentive for change needs to be found if the potential for waste derived fuels is to be realised, whether this be through a system allied to the RO or another such similar mechanism.

3.   What is the attitude of financial institutions to investment in different forms of generation?

  From Shanks' exposure to the markets, it would appear that there is willingness to invest in renewable technology, however there is uncertainty due to lack of clarity and consistency in the Government's renewables policies.

21 September 2005

369   Quantification of the Potential Energy from Residuals in the UK: Back

370   The Cost of Electricity Generation, The Royal Academy of Engineering, March 2004. Back

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