Memorandum submitted by A Lhoist Group
Company (Waste 77)
WHAT IS HINDERING THE LIME-MANUFACTURING
INDUSTRY FROM USING GREEN TECHNOLOGIES?
A BRIEFING FOR PARLIAMENTARIANS
RECYCLED USED
WASTE OILS
Toxic waste oils pose a considerable risk to
the environment and public health if they are not disposed of
properly. At present, over half of all the UK's discarded waste
oils are either sent to landfill or illegally fly-tipped rather
than collected and disposed of safely.
However, waste oils, including toxic and hazardous
oils, can undergo a recovery process to turn these waste materials
into safe and environmentally friendly fuel products called Recovered
Fuel Oil (RFO). RFO is versatile and can be used to generate heat,
power and/or electricity. It is a greener alternative to using
fossil fuels, especially since all stages of the manufacturing
process must undergo stringent testing to ensure compliance with
all aspects of environmental protection legislation under the
Waste Incineration Directive (WID). In addition, it must also
abide by Defra and EA standards on emissions control and air quality.
Lhoist is the only UK lime manufacturing plant that has obtained
permission to burn RFO as a fuel on an industrial scale. Lhoist
UK is part of the Lhoist Group, a specialist supplier of lime
products, operating in 24 countries. Lhoist has become increasingly
concerned by the inconsistency between tax regulation and environmental
policy in the UK.
A PERVERSE INCENTIVE
TO USE
VIRGIN FOSSIL
FUELS RATHER
THAN RECYCLED
FUELS
RFO is recycled waste and therefore does not
exhaust the ever shrinking supply of natural resources. However,
despite RFO being more environmentally friendly than fossil fuels
like gas, it is currently much costlier to use than virgin fossil
fuels due to the UK's bizarre tax regulation.
A new UK taxation regime came into force in
November 2008 raising the level of taxation on RFO when used
in the lime industry to 10 pence per litre. This equates
to €120 per ton in excise duty, which stands in stark
contrast to the EU requirement of a minimum rate of duty of €15 per
ton. The excessive level of duty levied on RFO makes it exponentially
more costly to burn than fossil fuels like natural gas: RFO costs
60p/therm (half of which is tax) whilst gas costs 30p/therm (1p
of which is tax). UK industry therefore has a perverse incentive
to use fossil fuels rather than more sustainable renewable energy
sources.
THE BENEFITS
OF USING
RFO IN LIME
PRODUCTION
Lime is used to make products for a wide range
of markets, ranging from water purification to steel manufacturing
and in applications as diverse as fire protection, agriculture
and as a biocide for disinfection. What all lime products have
in common are their environmentally friendly characteristics and
benefits. For example, by using a mix of hemp fibres and lime,
a sustainable product is now available that provides such high
insulation and carbon capture properties that cost-effective zero-carbon
housing is now realistically achievable.
Lime is a key tool in reducing carbon emissions
and thereby combating global climate change while offering practical
flexibility to users throughout the construction process. However,
manufacturing these lime products requires substantial energy
supplies. Lhoist would like to use RFO as a recycled energy source
in a WID facility that meets stringent emissions controls and
complies with all relevant regulations. Utilising a recycled fuel
in this way ensures tighter controls than when burning a natural
gas and thereby provides the most suitable solution for RFO from
an environmental perspective whilst also reducing fossil fuels
consumption. Indeed, if not utilised in WID compliant facilities
as used by Lhoist, this fuel could be used in less tightly controlled
facilities, or worst of all illegally dumped.
DETRIMENT TO
UK INDUSTRY
Since the UK duty on RFO is 10 times higher
than the minimum EU level, the current situation directly favours
competitors in other European member states, where some have exempt
RFO. In fact, the use of energy products in mineralogical processes
(which includes lime manufacturing) lies outside the scope of
the Energy Products Directive (EPD), meaning it is a matter of
national policy whether or not to impose a tax and to what level.
Despite this, the UK government has put in place an excessive
level of duty to the detriment of the UK industry.
This has removed all commercial incentive for
UK businesses to develop greener manufacturing processes and invest
in burning greener fuel oil alternatives. Current UK regulations
therefore render it pointless to invest in green technologies
which meet the environmental performance criteria of EU emissions
legislation, thereby discouraging environmental innovation and
industrial commitment to controlling emissions.
Further, the UK lime manufacturing industry
is put at a competitive disadvantage to other manufacturing sectors
in the UK due to the inconsistent interpretation of EU legislation.
The UK honours the exemption of RFO in the steel industry, meaning
that no tax is applied to this sector, despite lime manufacturing
industry falling under the same section of the EPD, which states
that both these processes lie outside its scope. Additionally,
the UK electricity industry can use RFO without having to comply
with the stringent controls of the WID as well as receiving a
duty rebate to avoid potential "double taxation".
THE ENVIRONMENTAL
RISKS OF
THE CURRENT
SITUATION
The problem is aggravated as the UK not only
provides a disincentive to using recycled fuels; it also hinders
UK industries from utilising waste oils. This has resulted in
hazardous waste oils not being collected and instead being left
to pollute land, water and air in the UK. This has been acknowledged
and documented in numerous ways and most notably by a European
Commission report.[199]
The only other use of these hazardous oils is
regeneration. This means the oil is recycled and reused again
as eg engine oil rather than being burned as a fuel. The government
has stated that a waste hierarchy dictates that regeneration of
waste oils should be prioritised above recovering energy and that
a high level of taxation will force a switch from recycling energy
from waste to the regeneration of waste. However, this crucially
omits the fact that not all waste oils can be regenerated, especially
the type of toxic oils which are recovered into usable RFO. More
importantly, the UK still has a very limited capacity for oil
regeneration and considering the current economic situation, it
is very unlikely that investment will build that capacity in the
short to medium term.
A Freedom of Information request undertaken
by Lhoist UK in October 2009 with regards to illegal dumping
in the UK revealed that there were 2,735 litres of waste
oils illegally dumped to both land and water in 2008, whereas
since April 2009, 55,177 litres of waste oils have been illegally
dumped! The overall trend quite clearly indicates a significant
increase, some 2000%, in the volume of illegal dumping since the
introduction of a duty on the use of RFO, especially considering
that there is still effectively six months left of the 2009-10 period.
Further, there has been a 10% increase in the authorisation of
Small Waste Oil Burners (SWOBs) from 2008 to 2009 so
far. Under the WID the maximum SO2 emission limit is <
50mg/m³, whereas when burnt in the non-WID compliant SWOBS
SO2 emissions can be well in excess of 400 mg/m³!
It would therefore seem that the direct consequence of the duty
upon this type of plant is to encourage illegal disposal/dumping
and non-WID compliant combustion.
CONCLUSION
As a socially responsible company Lhoist agrees
with the principle of the polluter pays. Yet, the UK's current
policy ensures that the polluter does not pay since it encourages
illegal dumping of waste oils, as opposed to recycling it as a
fuel. The UK is already in danger of missing its heroic targets
for generating energy from sources other than fossil fuels: 15%
by 2020. The lime manufacturing sector can play a considerable
part in contributing to this target, yet at present there is no
commercial argument for doing so. It is clear that the current
regulation is a result of the lack of joined up thinking between
Defra, DECC and the Treasury. In order to promote UK industry
and recycled energy the government must:
1. drastically reduce the tax levy on RFO used
in rigorously controlled WID compliant facilities or
2. introduce an exemption for WID-compliant facilities.
Annex
FOI—ILLEGAL DISPOSAL OF WASTE OILS
CONTEXT OF
FOI
In November 2008, the UK introduced a tax on
the heating of Recovered Fuel Oil (RFO). It is our belief that
this tax has had the direct consequence of increasing illegal
disposal of waste oils. Therefore, in October 2009, Lhoist UK
made some freedom of information requests to Defra, the EA, HMRC
and all the local authorities in England and Wales (294 responded,
with answers from 40 awaiting). Below are the facts and figures
that are of concern.
LOCAL AUTHORITIES
IN ENGLAND
AND WALES
(1) How many instances of illegal dumping,
or any other disposal to land or water, of waste oils (whether
contained within containers or otherwise) are you aware of having
taken place within your local authority area in: (i) 2007, (ii)
2008 and (iii) 2009?
Answer:
| (i) | 2007
| = 14,765 litres |
| (ii) | 2008 | = 2,735 litres
|
| (iii) | 2009 | = 54,642 litres
|
| |
|
Many of the Councils record their data according to the financial
year (April-April), and as such there is effectively six months
left of the 2009-10 period for many Councils. Overall, the
trend clearly indicates an increase in the volume of illegal dumping.
(2) How many small waste oil burners (SWOBs) did
you authorise for use in: (i) 2007, (ii) 2008 and (iii) 2009?
Answer:
| (i) | 2007 | = 622
|
| (ii) | 2008 | = 653
|
| (iii) | 2009 | = 673
|
| |
|
This clearly shows an increase in the number of SWOBs being
authorised, which would indicate an alternative disposal route
by those who do not wish to pay for their waste oils to be dealt
with.
ENVIRONMENT AGENCY
(1) How many instances of illegal dumping of waste
oils (whether contained within containers or otherwise) is the
EA aware of having taken place in 2007, 2008 and 2009 respectively?
(2) On how many instances has the EA referred for
prosecution individuals and/or companies in connection with the
illegal dumping of waste oils (whether contained within containers
or otherwise) in 2007, 2008 and 2009 respectively?
The number of instances of people being referred for prosecution
for illegal disposal of waste oils were as follows:
Answer:
| (i) | 2007 | = 2
|
| (ii) | 2008 | = 6
|
| (iii) | 2009 | = 5
|
| |
|
(4) What was the total volume of waste oils consigned
as waste for processing within the UK in 2007, 2008 and 2009 respectively?
To which UK facilities and/or companies were these waste oils
consigned?
The total volumes of waste oils consigned as waste within
the UK in each of the years was as follows (in tonnes):
Answer:
| (i) | 2007 | = 918,173.26
|
| (ii) | 2008 | = 832,637.88
|
| (iii) | 2009 | = 415,298.05
|
| |
|
There appears to be a significant decrease in the volume
of waste oils being consigned as waste for recovery of disposal
in 2009, which may suggest an increase in illegal disposal, or
a decrease of the volume of waste oils arising, or both.
(7) Please provide me with a list of all of the
Waste Incineration Directive (WID) compliant plants in the UK,
and their respective operators.
Answer:
The EA has provided a spreadsheet showing 128 installations
which are permitted to operate in compliance with the WID. The
purpose of asking this question was to show how few WID-compliant
outlets for RFO are available in the UK. Of these installations,
a recent Parliamentary Question revealed that only six accept
RFO as a fuel type.
HMRC
(1) How much revenue has been collected by HMRC
on sales of RFO since the introduction of duty in November 2008?
Answer:
| (i) | November 2008 to March 2009
| = £3 million |
| (ii) | April 2009 to October 2009
| = £8.8 million |
| |
|
At first, HMRC declined to release the information on the
basis that "disaggregated monthly data" would enable
identification of individual businesses. However, they eventually
agreed to release these aggregated figures, which clearly indicate
that the tax does not generate any significant revenue.
199
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