Organic waste has huge potential to produce sustainable energy for the UK's household and transport needs. But despite its climate credentials - and government support - Britain is in danger of missing out on the full benefit of biogas for a generation. David Strahan reports

When David and Ruth of The Archers decided to set up an anaerobic digester to make biogas from farm waste, they quickly ran into trouble. Intended to produce electricity for the national grid and heat for their poly-tunnels, the project was defeated by boardroom bust-ups and Nimby protests led by local battle-axe Linda Snell.

But the would-be energy entrepreneurs of Ambridge don’t know the half of it. The reallife obstacles to anaerobic digestion (AD) are massively greater, the unintended consequence of perverse British subsidies, EU deadlines and local authorities scrambling to sign long-term PFI waste contracts. As a result, the potential of hundreds of thousands of tonnes of organic waste to produce sustainable energy and mitigate climate change could be squandered for up to 25 years.

“This could be a huge missed opportunity that will cost our children dear” says Oliver Harwood, of the Country Land and Business Association, whose farmer members could provide much of the feedstock for AD. “It really is the last minute of the last hour in a major crisis.”

Unlike most biofuels, the climate credentials of biogas are uncontestable. The AD process involves feeding organic wastes into a digestion plant that excludes oxygen, where microbes break it down to produce methanerich biogas for energy, and a nutrient-laden ‘digestate’ that can be used to make fertilizer or compost. Because AD displaces fossil fuels and carbon-intensive fertilizer, and because it exploits methane that might otherwise be released to the atmosphere, biogas is reckoned to deliver negative greenhouse gas emissions of as much as 200% in some circumstances.

The energy potential of biogas is also huge. National Grid estimates that biogas could supply half our household gas consumption, or one fifth of total UK gas demand, while Environmental Protection calculates biogas could replace 16% of our transport energy – three times more than needed to run the entire public transport system.

Yet Britain may not reap the full benefit of biogas for a generation. One problem is that around a third of the 16-18 million tonnes of food waste we jettison annually is controlled by local authorities, and they are in a bind. Under the EU Landfill Directive, councils face strict deadlines in 2010 and 2013 to divert organic waste from landfill to more sustainable means of disposal. And these looming EU targets are creating “a degree of crisis management”, says Steve Burdis, vice-chairman of the National Association of Waste Development Officers.

Yet current British targets, subsidies, and procurement rules are driving councils and their private sector waste contractors towards a range of far less energy efficient options such as incineration, and some that recover no energy at all, such as composting. The Government, which is a recent convert to biogas, plans to introduce new incentives in 2011, but by then it may be too late. To avoid swingeing fines under the EU directive, councils are rushing to seal PFI deals with waste disposal contractors that could effectively lock in their choices for a quarter of a century.

According to Johnny Johnston, sustainable gas manager for National Grid, “there is a concern that valuable waste streams for generating biogas may be lost”.

AD has been used in the British water industry for over a century to treat sewage sludge because the process kills pathogens, with fertilizer and biogas seen as useful byproducts.

But the energy content of the biogas is still largely wasted. Some is simply flared off, but most is used to produce electricity in combined heat and power (CHP) engines at the sewage works. These units are inefficient because they are small, and because there is usually no local need for most of the heat they produce; there is not much call for district heating systems, for instance, because nobody wants to live next door to a sludge farm. That makes the process only about 30% efficient overall, meaning two thirds of the energy in the sewage effectively goes up the chimney.

That level of inefficiency offends John Baldwin of CNG Services to the core. As an energy consultant, he argues passionately that the best thing to do with biogas is inject it into the local gas mains, where it could be consumed in domestic boilers that are up to 90% efficient, or use it as transport fuel, particularly for lorries and buses, where good low-carbon alternatives are in short supply. “It’s a scandal to use biogas to make electricity when we can get around three times as much energy from the same volume of gas by putting it into the gas grid,” says Baldwin. “There are lots of other ways to generate green electricity, but very few for making renewable heat and transport fuel, so that’s how we should use it.”

Injecting biogas into the gas grid (BtG) already happens routinely in Germany, Austria, the Netherlands, Sweden, and Switzerland, but has never been done in Britain – until now. In June the water company United Utilities and National Grid won £4.3M from Defra to fund a pilot roject at the Davyhulme sewage works in Manchester using gas from an existing AD plant. Raw biogas, which is 65% methane, will be upgraded into biomethane, which is 97% methane, the same concentration as natural gas in the mains.

Some will be used to fuel 24 converted sludge lorries, and the rest injected into the gas mains to supply about 500 homes.

If all the country’s organic waste resources were used for BtG, National Grid calculates it could supply about half the gas currently consumed in British homes. Combined with a major improvement in home insulation, it could be even more significant, says Johnny Johnstone, the national Grid manager responsible for the Davyhulme pilot. “Biogas combined with increased energy efficiency has the potential to completely eliminate emissions from heating in the UK.”

But the playing field is tilted steeply against BtG by the subsidy regime. At the moment there is no subsidy for renewable heat, whereas renewable electricity attracts hefty subsidies in the form of Renewable Obligation Certificates (ROCs). Electricity generation from biogas gets two ROCs per megawatt hour, currently worth about £100 in total, roughly double the market price of the electricity itself. This gives a perverse but powerful incentive to process waste in ways that squander two-thirds of the potentially recoverable energy, and which reduce greenhouse gas emissions by far less.

An even bigger threat to the development of biogas in Britain is the continued construction of large numbers of energy from waste (EFW) plants – otherwise known as incinerators.

These burn rubbish to produce electricity, but have major drawbacks. They are usually only 25% efficient, partly because there is seldom any use for the waste heat; nobody wants to live next door to an incinerator any more than a sewage plant. Because incinerators are inefficient, and because much of the waste they burn is plastic, their fossil CO2 emissions are a third higher than those from a gas-fired power station, according to a report produced by Eunomia for Friends of the Earth.

Worse, because incinerators require a steady diet of hundreds of thousands of tonnes of waste a year, they tend to discourage councils from collecting food and garden waste separately – the recommended policy of WRAP, the Government’s waste watchdog – and that prevents further increases in recycling and means less feedstock available for AD.

In Sheffield, around 70% of municipal waste is incinerated and less than 30% recycled, and there are is no separate collection of food waste. Nor is it likely in future, because the city is producing less waste than originally forecast, and this shortfall means the contractor now wants to truck waste in from neighbouring districts to keep the incinerator going.

In East Sussex, where the county council has just won final planning approval for a controversial 240,000 tonnes a year incinerator at Newhaven, government funding is conditional on the county achieving 50% recycling rate, but there are no plans for separate collection of food waste, which will end up in the incinerator by default. “Once you go for incineration, you close the door on the production of biomethane,” says Michael Chesshire, technology director of BiogenGreenfinch, which runs an AD plant for Shropshire County Council, one of only three based on food waste in the country. “It’s a big risk.”

Yet incinerators are still being considered in major PFI waste deals across the country. In total there are 28 PFI deals in the pipeline, of which 16 include incinerators as their ‘reference case’ – the template against which private sector bids are assessed. If all these incinerators were built, they would require 3.4M tonnes of waste a year. On average about one fifth would be food waste, which John Baldwin of CNG Services estimates could produce enough biogas to supply 43,000 homes with renewable heat, or transport fuel equivalent to over 50M litres of diesel, worth about £55M at the pump.

AD cannot process plastics and other nonorganic residual waste, but there is a range of technologies that can, without the major drawbacks of incineration, and which can be used in combination with AD – as demonstrated by a deal struck in April by Greater Manchester with Viridor Laing to manage 1.2M tonnes of waste annually. Most of the waste will go through a mechanical biological treatment (MBT) plant, which shreds, sorts and recycles much of the waste before turning the residue into fuel pellets for a chemicals plant and processing the organic fraction in four AD plants. The biogas will be used to generate electricity, and some of the heat will dry the digestate to make more fuel pellets.

Yet most local authorities continue to favour incinerators over solutions such as MBT and AD that are better for the climate and the energy supply. According to Dominic Hogg, director of waste consultancy Eunomia, it is the result of policy blunders and two structural problems in particular.

First, although councils overwhelmingly claim to be ‘technology neutral’, and their job is simply to pick the most competitive bid, the entire PFI procurement process favours incineration.

The technological conservatism and financial interests of all the players – waste companies, legal and technical advisors, banks, Defra – pushes councils towards big energyfrom- waste plants, says Hogg. As a result, councils are anything but neutral: “They might as well start out by saying ‘build us an incinerator, boys, what’s the best price?’.”

Second, the division of responsibilities between county and district councils discourages joined-up thinking, and that discourages AD. District councils are responsible for collecting household waste, and county councils for disposing of it. That means the counties worry about disposal costs, and that makes AD look expensive relative to composting.

Once the cost of collecting the food and garden waste – borne by the district councils – has been taken into account, there is “scarcely any difference” between the overall costs of AD and composting, according to a study by Eunomia. The report concludes: “This is an important observation as traditionally local authorities have tended to view AD as an expensive alternative to composting options.”

And still do, apparently. As part of Greater Manchester’s deal with Viridor Laing, almost 180,000 tonnes of food and garden waste a year will be collected separately. But the separated waste will be processed through in-vessel composting rather than AD, despite the construction of four MBT-AD plants for the residual black bag waste.

David Taylor, director of contract services for Greater Manchester Waste Disposal Authority, explains: “All of the garden/food waste destined for IVC is suitable for AD treatment. If this was mixed back with residual waste to go through MBT-AD it would not count towards recycling under Defra definitions. This separately-collected stream would need a dedicated facility to produce a compost-like product.”

If the waste that Manchester plans to put into in-vessel composting – producing no energy – were diverted into an AD plant, John Baldwin of CNG Services estimates it would produce over 22M cubic meters of biogas a year, enough to supply 12,000 homes, or produce transport fuel equivalent to 13M litres of diesel – worth £14M at the pump.

It is difficult to avoid the conclusion that policy on biogas is a farce, but it wouldn’t be hard to put right. Dominic Hogg favours a simple rule restricting the capacity of incinerators to just 25% of an authority’s residual waste. That would force councils to develop more recycling, anaerobic digestion and flexible MBT to deal with the rest. “Flanders already recycles 70% of its waste”, says Hogg, “so we must be able to recycle 75% by 2020.”

In the waste industry, contractors would be grateful even for an early indication of the level of support the Renewable Heat Incentive (RHI) will deliver for biogas from April 2011, but the Government will only launch a consultation this summer. Tony Lewis, of Aecom Design Build, which provides incinerators and AD plants, says the uncertainty is damaging.

The company is bidding five projects at the moment, and Lewis says if he knew what the value of the RHI was going to be, they would be offering very different solutions. “In three years’ time when all the waste PFIs have been let, and tied up for 25 years, we’ve missed the opportunity to push digestion because at the time everybody was bidding it didn’t make commercial sense to do it,” he says.

That would be a disaster not only for the climate and the energy supply, but also for council tax payers, according to Peter Jones, former director with waste company Biffa, and now waste advisor to Boris Johnson. As glacial as the development of UK waste policy may be, the direction of travel is clear, says Jones, and organic waste is going to become a valuable commodity that local authorities will be able to sell, not pay to be taken away. Any council signing an incinerator contract today that ties it into rising fees for 25 years would be “crazy”. The problem is, that may be exactly what many are about to do.

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