What lies ahead for waste PFI?

The UK is unlikely to meet its EU target to reduce municipal waste to landfill to 50% of its 1995 level by 2013, according to senior figures from the waste industry. Over two-thirds of respondents to Norton Rose’s Future of waste PFI survey – comprising local authorities, banks and consultancies – thought that the UK would fail to meet its 2013 target.

While 69% of respondents thought that the UK would not meet the 2013 target, 56% and 77% thought that the UK would meet its 2010 and 2020 EU landfill targets respectively. According to the survey, one of the barriers to meeting the 2013 target will be whether enough residual waste treatment facilities can be approved and built in time.

Planning was highlighted as the biggest single barrier to implementing a PFI waste scheme. Some 73% of respondents highlighted this as the top issue compared with just 25% in a similar report that the legal firm Norton Rose conducted three years ago. In this latest survey, technology (19.6%) came in as the second biggest barrier while back in 2006, more factors were cited such as market capacity and available value of PFI credits.

Norton Rose’s head of planning, Nigel Hewitson, was surprised that most concern centred on the planning process. “I do think this is a perception issue, rather than a reality,” he maintains, pointing out that none of the projects he has been involved in have had planning problems. He adds: “You can try to minimise any planning issues – talk to the planning authority before you put the application in so there is less for them to be concerned about.”

The survey also found that tried and tested technologies were the most viable, while emerging technologies could pose risks and uncertainty. Across incineration, mechanical-biological treatment (MBT), pyrolysis and various separation processes, incineration was pegged as one of the simplest and better-established technologies. However, the fact that it isn’t carbon-neutral and politically sensitive was also highlighted.

Outlook remains cloudy

According to the report, this “technological uncertainty has meant the outlook and evolution of the waste market is cloudy”. Interestingly, 71% of respondents thought that energy-from-waste (EfW) does not need to be an essential part of every waste project, while a further 72% said that such projects should be developed separately.

While some put forward MBT as preferable to incineration, others argue that this will be overtaken by EfW technologies. Respondents also felt that pyrolysis was still widely regarded as unproven, and the high costs involved in separation technology were preventing it from being taken forward.

When it comes to waste by-products, 54% of respondents did not think that there was a viable, long-term and sustained market for this. The Government has also yet to establish a legislative framework to encourage investment in refuse-derived fuel (RDF) and solid recovered fuel (SRF). Some respondents predicted that it would take more than ten years before local authorities could view waste by-products as viable within a PFI contract.

However, Amar Qureshi – who heads up Defra’s commercial team and contracts waste infrastructure delivery programme – believes that “considerable interest” in SRF use is being shown by the industry. “Cement plants are currently taking 250-300K tonnes of SRF per annum and plan to increase its use while there remains great scope for public sector entities like prisons, schools and hospitals with existing heat networks to generate heat from SRF in part substitution for fossil fuels.”

He adds: “By the middle of the next decade we estimate SRF supply to be up to 5M tonnes per annum with matching demand as energy-intensive users reduce their reliance on fossil fuels.”

Emerging technologies find more favour

While newer technologies can find it more difficult to attract funding, they may have advantages at the planning stage. According to Oliver Breidt, finance director and founder of Biossence, public opposition against newer technology “is much less”. He says objections to his company’s advanced thermal technology proposals have been minimal compared with more traditional incineration schemes.

The survey also found that there is an even stronger belief that private sector investment is needed for the viability of waste projects. In 2006, 76.3% of respondents shared this view – a figure that has now jumped to 82.5%. The cost of building new waste infrastructure over the next three years is estimated at around £6B.

Meanwhile, standardisation has yet to be applied across all projects but the report states it is “moving in the right direction and we would expect the Waste Infrastructure Development Programme draft consultation documentation to help progress this issue on forthcoming projects”.

So, while there is concern the UK will not meet its 2013 target, there is also a degree of optimism. Bank of Ireland director David Shepherdson is excited about the future of PFI in waste – commenting on the 2013 target he says: “With a fair wind we have got a chance. We won’t be too far away.”

Katie Coyne is a freelance journalist