WASTE MANAGEMENT PANEL
TUESDAY 4 MARCH 2008 at 2.00 P.M. / Agenda Item
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WASTE PROCUREMENT PROGRAMME
FEASIBILITY STUDY NOVEMBER 2007 - FEBRUARY 2008
Executive Member - Derrick Ashley, Planning, External Affairs and Waste
Report of the Director of Environment
Author:Richard Brown, Assistant Director,
Environmental Management Group - 01992 555250
1.Purpose of Report
To inform the Panel of the conclusions from the Feasibility Study and the recommended next steps.
2.Summary
2.1The management of household waste is subject to increasing pressure from European Directives and National Legislation. There is the prospect of financial penalties arising from not diverting sufficient biodegradable waste under the Landfill Allowance Trading Scheme (LATS), increasing costs of disposal arising from the Landfill Tax that will double by 2010 and a decreasing supply in the amount of available landfill. There are increasing pressures to reduce the environmental impact of landfill and the associated production of methane as part of proposals to mitigate climate change.
2.2These drivers have been fully recognised in the Hertfordshire Waste Management Strategy 2007 endorsed by all 11 Authorities in November 2007. A cornerstone of the Strategy is achieving 50% recycling by 2012.
2.3The County Council as Waste Disposal Authority (WDA) initiated a Feasibility Study to identify likely long term waste arisings, appropriate processing technologies to deal with it, a locational strategy that integrates the collection and disposal arrangements, the identification of appropriate sites for processing facilities and/or supporting infrastructure such as transfer stations and appropriate funding mechanisms.
2.4The Feasibility Study is coming to a close and the main conclusions are:
- Estimated likely future waste volumes to 2040, rising at 1.75% p.a., suggests the need to manage 980,000 tonnes of municipal waste
- From an assessment of available processing technologies the top 3 are Energy from Waste (EfW), Mechanical Biological Treatment (MBT) and Advanced Thermal Treatment (ATT) plus a requirement for Landfill for the unavoidable residues
- A financial assessment of these options shows that EfW is best value for money followed by MBT although it has to be noted that scale is important
- After considering a number of alternative sites and potential service delivery options New Barnfield may provide an opportunity but further work is needed on finalising the benefits of a single or multi-site approach
3.Recommendations
The Panel is asked to note the analysis of the Feasibility Study which suggests that the County Council:-
1.Develops a procurement strategy based on EfW as the preferred technology but with consideration given to MBT and ATT singly or in different combinations.
2.Lodges with Defra by 31 March 2008 an Expression of Interest (EoI) for PFI Credits of up to £100 million as a foundation for the production of an Outline Business Case (OBC) by 31 October 2008.
3.Works with planning authorities to secure appropriate permissions for waste treatment facilities on a site or a number of sites.
4.Works with neighbouring WDAs to investigate complimentary solutions.
4.Background
4.1Waste management is subject to increasing direction from European and National directives and legislation. With the amount of available Landfill declining there is increasing pressure to ensure that it is only used as a last resort.
- The Landfill Allowances + Trading Scheme (LATS) is intended to lead to a national reduction in landfilling of biodegradable municipal waste to 35% of 1995 levels by 2020. The County Council, like all other WDAs, has been allocated a fixed number of allowances for the landfilling of biodegradable waste for each year between 2005/06 and 2019/20 with allocations decreasing each year. For each tonne of biodegradable waste landfilled without an allowance the Government will levy a fine of £150 per tonne.
- The Landfill Tax, levied on every tonne of waste sent to landfill, is currently £24 per tonne will rise by £8 tonne p.a. until at least 2010/11.
- Revised Recycling Targets have been set by the national Waste Strategy 2007 and include:
i.Re-use, recycling and composting of household waste - at least 40% by 2010, 45% by 2015 and 50% by 2020.
ii.Recovery of municipal waste - 53% by 2010, 67% by 2015 and 75% by 2020.
4.2.The Hertfordshire Waste Partnership (HWP) has agreed to work to a target of 50% recycling rate by 2012 and this figure sets the context for the disposal of residual waste up to 2020. Residual waste is the waste collected by the waste collection authorities apart from the material that is collected separately to be recycled or to be composted.
4.3In preparing the Hertfordshire Waste Strategy 2007, the HWP undertook a consultation exercise "Your Waste. Your future. Your Say" between
8 January and 30 March 2007. The consultation was delivered to around 450,000 homes with targeted consultation with key stakeholders. Around 11,000 people registered their views. The key results from the consultation included:
- More than 80% strongly agreed that is important that we reduce the waste we produce
- Over 70% agreed that we should aim for a recycling target of 50% by 2012 with nearly 90% of those saying that it should be higher`
- A number of questions were asked about the important issues to be considered when planning new waste facilities:
- Over 85% agreed that it was important to minimise transport to
the facility.
- 90% that it should be cost effective and affordable.
- 95% that consideration should be given to its environmental impact.
- Nearly 95% felt that turning waste into energy was important or essential when considering new waste facilities.
The results from the consultation are reflected in the Strategy that outlines the operational waste collection and disposal arrangements for the period up to 2020. The intention is that the Strategy will be further reviewed during 2010 to reflect any emerging changes.
5.The Feasibility Study
5.1 The Study has been conducted over a 4 month period from November 2007 to February 2008. The Study:-
- Built on the Waste Strategy priorities e.g. waste minimisation, 50% recycling and the avoidance of LATS penalties
- Undertooka technical appraisal of Hertfordshire's long term residual waste treatment needs
- Identified a range of suitable processing technologies
- Mapped out procurement and financing options
- Investigated a range of potential sites that could meet the WDA's long term needs including a site in the County Council's ownership at New Barnfield, Hatfield
5.2At the outset the scope of the work in the longer term was comprehensively defined in the form of a mission and objectives:-
- Our mission is to "secure for Hertfordshire enduring, economically and environmentally sound integrated waste management through the procurement of appropriate facilities and processes as part of the collective implementation of the Waste Management Strategy. Our objectives will be achieved by continuous improvement of services and in partnership with the public and private sector".
- There are 8 Strategic and 10 Site Based Objectives for the Project
Strategic Objectives:
1.Providing strong leadership
2.Acting as a responsible body
3.Taking difficult and long term decisions
4.Achieving a cost effective solution
5.Supporting and implementing the adopted HWP strategy
6Ensuring full engagement with the local communities
7.Ensuring that the chosen technology is proven
8.Ensuring that the chosen technology is future proof
Site Based Objectives:
1.Making a positive contribution to the local economy
2.Contribute to the aspirations of the LSP and Community Strategy
3.Chosen technology should be comprehensive and able to meet the long term requirements of WDA
4.Existing environmental features should be safeguarded
5.New habitats should be created
6.The design of the building should make a positive contribution to the landscape
7.The design of the building should be iconic
8.The construction work should ensure maximum reuse of materials
9.The operation of the plant should be carbon efficient
10.The development should be innovative
5.3Technical Assessment. The technical assessment has been undertaken by consultants WSP. This has been a complicated piece of work and is based on the assumption that recycling will remain constant at 50% and that the WDA wishes to deal with all of its household waste rather than what remains after LATS allowances are removed. The key findings are:
- Assessment of future waste arisings. That the predicted level of the growth in municipal waste could be in the region of 1.75% p.a. This figure is based on the expected growth in the number of households and population etc. As with any long term prediction there is a need to be cautious as growth rates may be reduced through waste minimisation programmes and/or increases in recycling rates. At this stage in the process officers have accepted this growth rate as basis for future planning but it will be subject to further scrutiny.
Based on 1.75% p.a. there are the following consequences
i.Total municipal waste rises to around 980,000 tonnes/annum by 2039/40 (the household waste component 920,000)
ii.The WDA potentially incurs LATS penalties that could be manageable in 2012/13 through a more cost effective approach to the handling of Trade Waste or slight fall in waste growth but become significantly greater by 2015/16 when processing capacity will need to be fully operational.
iii.A working figure of 400,000 tonnes/annum of residual waste by 2040 is being used for modelling future requirements.
- Assessment of Processing Technologies. A long list of 10 processing technologies including Landfill was assessed against a range of environmental, social, technical and economic factors. The result is a short list of 3 preferred technologies - Energy from Waste (EfW), Mechanical Biological Treatment (MBT) and Advanced Thermal Treatment (ATT) plus Landfill that will be required for the residual waste from the treatment process that cannot be recycled or re-used.
- Assessment of Procurement options. A key part of any future procurement strategy will be identification of suitable sites. The initial work indicates that the WDA could meet its procurement needs in a number of ways:
i.Either through a single site with supporting infrastructure such as transfer stations or through a number of sites i.e. up to 3.
ii.The construction of one major plant with a capacity to meet the WDA’s long term needs by 2015 or the gradual increase in processing capacity through a modular approach to meet waste stream growth.
Both options have strengths and weaknesses and further work will be needed before a decision can be made.
In addition the consultants recommend that the County Council works with adjoining WDAs to identify opportunities such as joint ventures for the disposal of Solid Recovered Fuels (SRF) or the use of available capacity.
5.4Financial Assessment. A financial assessment was undertaken that looked at a range of different combinations based on the 3 preferred technologies, with different capacity levels, either operating singly or in combination set against a baseline set by Landfill. The results show that:-
i.EfW is the most cost effective followed by MBT to meet predicted long term needs
ii.Cost effectiveness increases with sizeof the plant as there are significant benefits from economies of scale
iii.With PFI credits of 50% applied to the processing technologies, Landfill is the least cost effective solution
iv.PFI Credits seem to offer a cost effective solution but there is need to consider other options such as Prudential Borrowing in more detail.
Further work is needed to refine the financial assessmentincluding managing any LATS liabilities and identifying the opportunities for income from the generation of electricity and the potential use of heat, the markets that would be available for Solid Recovered Fuel (SRF) from the MBT process as well as income that could be achieved through the use of "spare" capacity by a third party.
5.5Site Options. A fundamental issue for a future procurement strategy will be the identification and securing of appropriate sites.
From the outset the advice has been that the WDA will need to secure a site, which will act as a Reference Site for the procurement process. This site would be large enough to be able to deliver a range of different processing capacities, it may have a planning permission for a selected technology and should be under the control of the WDA.
By securing a site, the WDA provides a key element of certainty to the Waste Management market, which will deliver the waste processing capacity and undertake the operation of a plant for up to 25 years. This position was reinforced by a Market Sounding Exercise. A selection of key waste management providers indicated their preference for an identified site prior to contract negotiations as this reduces their exposure to risk. With so many other WDAs faced with the same LATS timetable, there are concerns that the waste management industry may not be able to respond. Therefore having an identified site is one of the key attractions that the WDA can offer.
Securing an appropriate site is a requirement of the Defra PFI Credits process.
As part of the Feasibility Study, consideration has been given to a reference site at New Barnfield, Hatfield, owned by the County Council. The site has been considered for a waste management use as it is identifiedwithin the Hertfordshire Minerals and Waste Development Framework - Waste Site Allocations Preferred Options (January 2008) that is currently subject to a consultation exercise that ends on 10 March 2008.
Initial assessment work on New Barnfield indicates that:-
- The total site area would be able to accommodate a major waste processing facility but that further detailed work is needed through:
i.a detailed Environmental Impact Assessment (EIA), Traffic Impact Assessments and a Flood Risk Assessment
ii.A further assessment of the Town Planning situation to establish a clear need for the site in light of Green Belt policy.
Until alternative sites are identified and secured, the County Council will need to treat New Barnfield as its Reference Site. However, at the same time, it will be working with the waste management industry to secure alternative interim facilities that can be delivered by 2015 to avoid significant financial penalties.
5.6Supporting work. As part of the Feasibility Study, a Communications Strategy and Risk Register have been developed.
- Communications Strategy - Has been developed by consultants PPS and provides the context for development of project and identifies an action plan and the engagement of appropriate stakeholders
- Risk Register - This is an evolving document with approximately 60 risks used to identify the immediate project management priorities. The key risks have been identified.
Both these pieces of work will be further developed during the OBC stage of the Procurement Programme.
6.Next steps and future work
6.1 Analysis of the work done to date leads to four main recommendations for action, each of which is explained further, below.
6.1.1 Procurement strategy
The procurement strategy must include short, medium and long term actions. In the period to 2015, arrangements will be made to avoid exposure to LATS liabilities. These will include:-
- consolidating existing recycling and composting capacity to achieve the target of at least 50% by 2012;
- securing treatment capacity for the interim;
- ensuring sufficient landfill capacity within LATS allowances.
The Feasibility Study provides the foundation for a long term procurement strategy – a clear definition of the type and size of technology to be secured, locations and funding routes. It is proposed that this strategy is based upon Energy from Waste as the preferred technology but with consideration given to Mechanical Biological Treatment and Advanced Thermal Treatment, singly or in combination.
6.1.2 Expression of Interest and Outline Business Case
It is a requirement of the Department of Environment, Food + Rural Affairs (Defra) that an Expression on Interest (EoI) is lodged with them for a local authority to be considered for PFI Credits. Submitting an EoI does not commit applicants, rather, it signals on intent to develop an Outline Business Case (OBC) aimed at obtaining financial assistance (of up to 50% of the capital cost of eligible treatment infrastructure). It is suggested that an EoI is prepared and sent to Defra by the deadline of 31st March 2008 and that an OBC is produced, by October, which sets out full details of technology, location/s and financing of future waste treatment. The OBC would be considered by the Cabinet.
6.1.3 Planning permission/s
In parallel with the production of the OBC, work will need to be done to secure planning permission on an appropriate site/s. Detailed proposals would be developed in collaboration with local planning authorities.
6.1.4 Complimentary solutions
Many WDAs are in a similar position to HCC and are seeking long term solutions for residual waste treatment and disposal. It is proposed that potential joint solutions with neighbouring authorities such as Essex, Bedfordshire and the North London Waste Authority continue to be explored.
6.1.5 Bringing these elements together would result in the following outline timetable:-
Feasibility StudyOctober 2007 – March 2008
Submission of EoI31March 2008
Development of OBCApril – October 2008
Procurement of facilities2009 – 2012
Construction2012 – 2014
Plant/s operational2015 onwards
6.2It will be necessary to continue to maintain clear and strong governance and support for future work. Attached as an Appendix is a framework for the next stage of the project, including the officer groups involved. The paper raises the issue of oversight by elected Members (para 2.2) and the Panel may have views on the best way of taking this forward.
7.Financial implications
7.1The Feasibility Study has been funded by staff and cash resources within the approved budget of the Environment service for 2007/8.
7.2The next stage of work – development of an OBC and preparation of any appropriate planning permissions – will require additional resources, chiefly to pay for external advice in a range of subject areas e.g. technical, legal, financial. It is proposed to earmark the revenue element of Defra’s 2008/9 Waste Performance + Efficiency Grant (£673k)that has now been transferred to the base budget for procurement, together with £200k provided for in the draft Environment service budget for 2008/9.
7.3Development of the OBC will include a detailed assessment of future financial requirements for waste treatment infrastructure, including the relative merits of different funding routes. Selection of the PFI option in particular will require significant “up-front” financing to ensure thorough preparation. Reports will therefore be made to Panel once costs are better understood.
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