The OFT will be supported by Ofwat, the economic regulator of water and sewerage companies.

The study will examine whether there are appropriate incentives in place for the efficient use of technologies, such as AD, for producing energy from waste.

The study will specifically look at: whether price regulation of sewage-sludge treatment, recycling and disposal services is appropriate; whether there are any barriers specific to efficient investment in and use of ‘co-treatment’ where waste from a variety of different sources is treated at a single facility; and what might be done to encourage efficient investment in advanced treatment techniques across the economy more widely.

OFT senior director of infrastructure, Heather Clayton, said: “Advanced organic waste treatment techniques like anaerobic digestion offer tremendous opportunities to produce clean energy and reduce unnecessary waste.

“We need to make sure that the conditions are right to maximize the potential for these technologies to benefit the UK.”

ADBA, the trade association for Anaerobic Digestion welcomed the study.

ADBA chief executive, Charlotte Morton, said: “This is an important study and ADBA welcomes its wide remit – especially the broad focus on incentives and encouraging investment in Anaerobic Digestion, both inside and outside the water industry.

“We need to make the most of organic waste, to reduce waste to landfill, counter climate change, generate renewable energy and preserve resources. As WRAP’s independent study has already shown, AD is the technology which makes the most of these organic arisings.

ADBA hopes this study will contribute to a strategy for the industry which would ensure that incentives and investment are in place to contribute towards the government’s climate change, renewable energy and resource preservation targets.

The study is expected to be ready in July 2011 in time to feed into Ofwat’s wider review of economic regulation in the water and sewerage sector.

Alison Brown

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie