Taking the MBT route to remove risk of LATS

As LATS targets bear down on local authorities, there is now an urgent need for diversion infrastructure. Adam Read looks at the financial benefits of using MBT

It has been five years since the implementation of LATS in England, and waste disposal authorities have been actively procuring the infrastructure required to achieve their targets for the diversion of biodegradable municipal waste (BMW).

The first target diversion year of 2010 – where English WDAs may landfill up to 11.2M tonnes of BMW – is nearly upon us and the 2013 target, which limits the BMW allowance to 7.5M tonnes, is only a stone’s throw away in terms of planning, design and build for the types of infrastructure necessary to meet these targets.

Time is tight
Clearly, this is a critical time for local authorities and their service providers as significant reductions in the level of BMW that is landfilled needs to occur between these target years. As most authorities have already rolled out extensive source segregation schemes for recyclables, WDAs now need to procure and implement residual waste treatment facilities within a very short timescale.

The facilities procured need to minimise risk to the WDA, particularly in terms of its financial predictability, its proven technical performance to achieve LATS compliance and its acceptance by local residents – three critical issue that many WDAs are grappling with today.

Most WDAs have considered two primary options for treating residual waste – incineration/energy recovery and mechanical biological treatment. Given the risk of potential delays in planning permission resulting from public opposition to incineration, many WDAs have opted for the more palatable MBT solution.

Currently, more than 20 WDAs favour MBT as their preferred residual treatment route and more than 30 systems are planned or already in operation in England. The escalation of the landfill tax and the promotion of energy from waste have had a pronounced impact on the MBT systems being procured.

Virtually all are based on an energy-from-waste concept, producing a solid recovered fuel (SRF) as the main output from plastics, and the high calorific value combustible BMW elements. About a half of these systems also include anaerobic digestion of the putrescible fraction as a further energy production route.

These designs result in substantial amounts of the residual waste being recovered, and a relatively small reject fraction requiring ultimate landfill disposal. This strategy has surety in minimising landfill costs and landfill tax costs, and any potential fines associated with LATS non-compliance.

Only a handful of WDAs – notably Cambridgeshire County Council – are focused on the alternative MBT route of using bio-stabilisation of their residual waste as their primary means of meeting LATS targets.

In this approach, residual waste is composted for an extended period of several weeks, which substantially improves the level of decomposition of the biodegradable waste. As such, the BMW content of the landfilled MBT output should have been substantially reduced compared with the MBT material input.

Landfill tonnages can be reduced by further mechanical sorting to recover recyclables such as plastics and metals from the composted waste. But there may still be a significant tonnage of waste landfilled through this approach attracting large landfill tax costs.

Case for reduced tax
While these outputs are still classified as active waste and attract the higher rate of tax, there has been some debate in the waste management community that a reduced landfill tax should be applied to bio-stabilised MBT outputs as they have a lower methane producing potential. But consensus appears to be that a change to the taxation class is unlikely.

Clearly, bio-stabilisation has not been the preferred route to date in the UK, but the balance may be changing. The current economic crisis may have had a pronounced impact on the risks involved in adopting the preferred energy recovery type MBT solution.

If reliance is placed on securing a third-party energy user to combust the SRF outputs, energy-from-waste or CHP-type facilities may be put on hold if associated infrastructure developments are also postponed, while bank lending may put a further brake on this outlet. Competition for existing combustion facilities may, therefore, become intense.

This, coupled with cement kilns appearing less keen to accept the SRF, and with more financially attractive pure biomass fuels becoming more available and attracting higher ROCs, we could be entering a turbulent time for SRF-type MBT facilities. Therefore, the risk with a third-party SRF utilisation approach is the potential for the loss of the outlet, which at least in the short-term may have to be landfilled causing an authority’s LATS allowances to be exceeded and incurring the risk of significant fines.

Those WDAs adopting an SRF-type MBT system are having to consider procuring facilities that include their own SRF utilisation processes, or they are having to completely review their preferred approach. In 2013, if a hypothetical WDA is anticipating sending its residual waste to an MBT facility, which produces an SRF material that is sent for combustion and a residue to landfill, it should comfortably meet the LATS allowance it has been allocated in that year.

But, if the SRF outlet is not available for some reason, the implications for the WDA are significant – potential LATS fines for exceeding its LATS allowance (about £150 per tonne), increased landfill costs (about £80 per tonne, including landfill tax) and potentially additional costs to remedy the situation through alternative processing. With the bio-stabilisation route, a relatively high reduction in BMW occurs and the landfill waste volumes are known and consistent – well below the allowance threshold.

Offsetting the cost
The increased landfill costs associated with this bio-stabilisation route may be partly offset by any value in the traded LATS. At present, the LATS trading value is relatively low. But if the lack of SRF treatment facilities becomes a reality then the value of traded LATS will, in our opinion, increase.

A bio-stabilisation-only MBT system may prove to be a more comfortable position for a WDA to adopt compared with the ongoing concerns surrounding a delay in establishing and securing an appropriate outlet for SRF.

The marketplace is changing, and we at AEA are being constantly asked to consider a number of alternative MBT solutions and assess their risk under different economic conditions. The ability of a bio-stabilisation solution to remove LATS risk and allow authorities to be master of their financial destiny is a powerful message.

The jury is out, but bio-stabilisation is back on the agenda and merits further consideration by all WDAs considering going to market for their residual waste treatment solution at this time of economic recession.

Dr Adam Read is knowledge leader at AEA

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