UK: The Energy From Waste Explosion

Article by Michelle Thomas, partner and Peter McCormack, associate in the Renewable & Clean Energy team at international law firm Eversheds

The energy from waste market across Europe is set to explode. The limit on the amount of waste to landfill, as directed by the Landfill Directive, alone was sufficient to drive up waste to energy projects and lead to interest in this sector from outside Europe, particularly the US.

However, the agreement by European Union leaders at the 2007 Spring European Council in Brussels to cut the EU’s greenhouse gas emissions by 20 per cent by 2020 (should other developed nations agree to reduce their greenhouse gas emissions, this target may increase to 30 per cent) and the condition that 20 per cent of the EU’s energy requirements be generated from renewable sources by 2020 has only served to intensify growth prospects.

The announcement by Gordon Brown in the March 2007 Budget that the standard rate of landfill tax will be increased from its current rate of £21 per tonne to £24 per tonne with effect from 1 April 2007, and a further increase to £32 per tonne as well as an increase from £2 to £2.50 for landfill tax applying to inert or inactive waste with effect from 1 April 2008, will only accelerate the process.

The food sector is facing some of its biggest challenges, yet it is also primed to be the big success story as a result of the changes to our waste industry.

Defra, in its May 2006 Food Industry Sustainability Strategy¹, estimate that around 10 per cent of the UK’s industrial and commercial waste stream originates from the food industry and that the food industry accounts for around 7 million tonnes of carbon emissions per year. It is clear therefore that by diverting some of this waste from landfill and using this as a source of renewable energy, the food industry can make a significant contribution to EU and UK efforts to address the issue of climate change, save a substantial increase in landfill tax and generate additional income or save on heating and electricity costs.

A number of different technological solutions by which energy can be generated from waste exist. The right solution for any specific situation depends upon a variety of mainly technical factors, in particular the type and quantity of waste which is being disposed of. Options might include either burning the food waste directly in an incinerator or processing the food waste so as to produce a fuel which is capable of being used in a separate energy from waste facility.

Any surplus electricity over and above that required to operate the facility may be sold to the national grid. If the facility has sufficient capacity to accept waste from third parties, the operator may well be in the enviable position to make a profit both on the gate fee charged to third parties for access to the facility and upon the resulting energy sales.

In addition, there are options for food processors to form joint ventures to pool their waste resources which bring about increased generating capacity.

As with any development, land acquisition and planning issues may arise. Planning issues are perhaps exacerbated by the general public opinion in relation to incinerators, and a number of local authority waste disposal PFI projects have suffered as a result of planning delay or failure in relation to key facilities.

The legislative framework applying to the regulation of waste disposal facilities can be quite daunting at first. A wide range of relevant legislation exists, such as the Pollution Prevention and Control Act 1999, the Pollution Prevention and Control Regulations 2000, the Waste Incineration Regulations 2002, the Waste Management Licensing Regulations 1994 and the Animal By-Products Regulations 2005. Much of this legislation implements EU directives and its application is too detailed to summarise here. Suffice to say that depending upon the type and size of the relevant facility an appropriate licence or permit will be needed from the Environment Agency or the relevant local authority under the applicable legislation. This licence or permit will impose conditions upon the operation of the facility, such as the quantity of waste which can be processed and the hours during which the facility can be operated.

Challenges clearly exist for the food sector but by engaging in renewable energy generation the food sector can turn these into profitable and sustainable benefits for itself and the environment generally.