Background

The UK Department for Environment, Food and Rural Affairs (Defra) has recently released the long-awaited waste policy review and accompanying action plan.  Whilst the content of the review has received a mixed reaction from stakeholders, the details should be properly considered as they outline the Government’s intentions in the waste sector.  Progress on the implementation of the stated priorities is to be assessed in March 2012.   The review brought forth three key objectives for the Government in relation to the waste industry:

Community acceptance of waste infrastructure

In the review, the Government set out a range of measures that it argues will promote community acceptance of waste infrastructure, including through local communities benefiting from hosting waste infrastructure.  It remains to be seen whether these measures will prove successful, or whether the successful completion of waste infrastructure projects will be hampered by a lack of centralised control.

Reduction of government intervention

The Government is looking to reduce direct intervention in the waste sector (including through a declining use of PFI credits), but wishes to encourage investment by reducing the commercial barriers to the sector.  To fill part of the funding gap that results from this policy, it is enlisting the Green Bank and “green” infrastructure funds.  However, a large shortfall remains that will see local authorities forced to rely on prudential borrowing to complete projects – projects that must be completed to meet the challenging (and unchanged) EU targets for reducing landfill use. 

Greater investment in “new” technology

One of the central themes identified by the review will not be a new concept – the reference to greater investment in “new” technology and the need to encourage more third party investment in it.  The Government proposes that new recovery technologies (such as anaerobic digestion (AD)) should be given distinct incentivisation schemes, but it has not identified what form these schemes will take. 

In this law now, we have focussed on the impact of the review on infrastructure and planning.  The waste policy review also details the Government’s plans in the following key areas: sustainable use of materials; waste prevention, re-use and recycling; regulation and enforcement; householders and local authorities working together; business and waste collection; energy from waste and landfill. 

Infrastructure and Planning

The Government’s intention is to leave the provision of waste infrastructure to market mechanisms and local authorities contracting and procuring such infrastructure; the only exception to this being through the reducing provision of PFI credits.  However, the Government aims to support local authorities in this role by ensuring that there are no unnecessary barriers to the market delivering the necessary infrastructure, whether such barriers arise due to wider Government policy or through market failures. 

This support will take effect by:

  • Providing advice and support to local authorities on science and technology
  • Working with the Environment Agency, local authorities and industry to draw together and publish data on likely waste arising and treatment capacity in future years
  • Supporting efforts by local authorities through effective contract management to generate further efficiencies in the waste collection, reprocessing and treatment
  • Seeking to expand capacity to treat commercial and industrial (C&I) and construction and demolition (C&D) waste through improved information and developing supply chains for recyclates and solid recovered fuel
  • Working to reduce commercial barriers through effective financing structures

The appropriate use of technologies

One of the Government’s ambitions is to ensure that there is appropriate waste reprocessing and treatment infrastructure constructed and operated effectively at all levels of the waste hierarchy (running from prevention through to disposal), which is responsive to changing waste streams and makes the best use of innovations in science and technology.  The Government acknowledges that these technologies will take time to develop, and so short and medium term solutions will be replaced with longer term solutions as technologies develop.

Availability of information

The Government names a lack of information (especially in relation to understanding different technologies and data) as a barrier to delivering the right waste infrastructure.  Whilst work has begun to educate and communicate technology developments – through Defra’s New Technologies Infrastructure Programme, and the advice and support provided by Defra’s Waste Infrastructure Delivery Programme (WIDP) – the Government aims to build on this. 

Effective financing structures

The Government is concerned that it may be difficult for the market to attract finance for new technologies.  Whilst PFI has historically funded the waste infrastructure market, the Government is seeking to encourage local authorities to enter into long-term waste management contracts with private contractors, as this can maximise the use of debt (which is seen to be a cheaper option than equity) and so keep gate fees at an affordable level. 

Whilst the market is currently tied up in long term local authority contracts, the Government suggests that opportunities do exist for smaller waste management companies.  To aid such investment, it will:

  • Seek to increase capacity for C&I and C&D waste (by improved information and developing supply chains for recyclates and solid recovered fuel)
  • Work with all parties to reduce barriers to the effective financing for infrastructure, and in particular will seek to ensure that the waste sector is a priority of the Green Investment Bank (which will have £3bn of funding).

The role of the planning system

The Government stresses the crucial importance of the planning system in delivering waste infrastructure.  The current planning system, it argues, does not provide members of the public with sufficient influence over the decisions made and power is exercised by people who are not directly affected by the decisions they are making.  The review states that this leads to an adversarial system, remote from communities, and not a collaborative approach.

Part of the Government’s desire to provide the public with greater influence over the planning system has led it to abolish the Infrastructure Planning Commission (the IPC).  Pursuant to the Localism Bill, the IPC – which began operating in October 2009 as the decision making body for proposed Nationally Significant Infrastructure Projects (NSIPs) – is to be abolished, and its decision making powers transferred to the relevant Secretary of State.  If the Localism Bill is enacted into law, it is proposed that the acceptance and examination of proposed NSIPs will be dealt with, from April 2012, by the Major Infrastructure Planning Unit in the Planning Inspectorate.  Whilst it will continue to fast track major projects, like large energy from waste facilities, it will be Ministers, subject to political pressure, which will be responsible for taking the ultimate decision. 

Local authorities, the waste management industry and local communities – the Government argues in the review – should challenge the current adversarial planning system and change their behaviours. 

Waste management industry

The Government’s view is that the waste management industry should strive the understand the communities’ needs, make a link between the communities’ waste and the solutions on offer, set out evidence, ensure that real options are available, and be transparent.  The method of achieving this mission statement is missing from the content of the review. 

Local authorities

The local authorities are to remain responsible for developing local authority waste plans (as part of their wider strategic planning responsibilities and in support of the National Waste Management Plan) and for letting contracts to achieve collection and technology outcomes most suitable to the local communities.  Part of this will involve collaborating with neighbouring local authorities (a duty under the Localism Bill) – there is no requirement for local authorities to be self sufficient in terms of waste infrastructure, and trans-boundary opportunities should not be missed. 

Communities

Communities, the Government argues, do not see the benefit from hosting waste infrastructure, but are required to bear the environmental cost of doing so.  The wind generation industry has, for example, addressed this issue by providing community benefit funds in relation to wind farm developments; the introduction of an equivalent scheme is to be considered by the Government in the context of the waste industry.  The Government has also raised the possibility of delivering incentives through the business rates system, which is being considered in the Local Government Resource Review. 

It remains to be seen whether this proposed approach will prove successful, or whether the successful completion of waste infrastructure projects will be hampered by a lack of centralised control.  It is worth noting that the 50MW threshold for energy from waste projects, which sees planning applications being determined through the IPC, will not be lowered. 

Impact of the review

The review provides the industry with an indication of the Government’s key priorities for this Parliament.  A more detailed explanation of the Government’s policy in relation to waste infrastructure and planning is due to be set out in a revised National Infrastructure Plan, to be published in autumn 2011.  The Government’s national waste strategy is also found in the National Waste Management Plan. In terms of waste infrastructure and planning, the waste policy review is being viewed as a pre-cursor to the waste strategy that is due to be published in the revised National Infrastructure Plan. To those involved in the industry, one of the central themes identified by the review will not be a new concept: the reference to greater investment in “new” technology and the need to encourage more third party investment has been a long running aim of central government and the private sector.  However, it is refreshing to read that the Government is starting to bolster this key objective by explicitly stating that technologies such as AD should be given distinct incentivisation schemes.

To this extent, the fruits of the Government’s recent policy can be seen in the relative proliferation of small scale AD farms, but it remains to be seen if the proposed incentives assist in creating larger scale schemes over the next few years.  The review does also mention peripheral technologies such as gasification, pyrolysis, autoclave and plasma arc.  These technologies are not prevalent in the UK but continue to be adopted throughout the rest of Europe.  However, in common with AD (and indeed “standard” waste infrastructure in the UK to a certain extent), the conflict between securing funding and obtaining comfort in terms of the reliability, robustness and track record of such technologies is not fully addressed by the review.  The review refers to giving support to those looking to develop such alternative technologies but at this stage has not identified what form of support will be provided (i.e. by way of financial guarantees or otherwise).

In terms of third party investment, the review recognises that to a certain extent a vacuum will be left by the absence of PFI funding and associated project financing.  The proposal to enlist the assistance of the Green Bank and “green” infrastructure funds should be met with a warm welcome from those seeking cost effective finance for waste infrastructure.  However, the absence of PFI funding leaves a large financial shortfall for local authorities – where energy from waste projects remain an absolute priority because these authorities, particularly in the south of England, face stiff penalties for failing to meet EU targets for reducing landfill use by 2013.  Local authorities will be forced to rely on prudential borrowing to be able to complete these projects and so meet the challenging targets that have been set – how the Government anticipates that local authorities will fund this borrowing remains to be seen. 

The review also reiterates the current policy in relation to waste in the UK whereby waste should be seen as a resource and/or commodity as opposed to an output which is costly or difficult to deal with.  This is certainly a positive point and the review’s description of the energy from waste market is accurate in terms of stating that feedstock and demand exists to produce green energy on a larger scale than currently adopted.  The specific reference to using waste infrastructure to provide heat and power to local communities seems to be killing two birds with one stone by appeasing local dissent and producing revenue.  It is also an idea which has been mooted by certain operators for some time, to differing receptions.  It is assumed that the recent changes to the regulatory regime are designed to effect this, which may be evidenced by the Environment Agency’s recent updates in relation to waste permitting regulations.

The issue of planning has been a long running saga in the waste sector and has been cited as the single biggest barrier to the expansion of waste infrastructure in the UK.  Planning decisions remain with an independent body, but such body is ironically within the same local government as the procuring authority.  Those involved in the industry would argue that local communities already exert sufficient influence over local government planning committees to the extent that the benefits of local waste strategies and infrastructure plans are not extolled to their full potential.  The review suggests that local communities are isolated from those involved in the development of waste infrastructure to the point where the industry’s positive messages do not shine through.  To some extent, the Localism Bill is being heralded by the review as the potential saviour of the often distant relationship between the waste industry, planners and local communities.  Time will tell if the Localism Bill has a positive effect or if it hands more power to those who often are opposed to waste infrastructure.  However, it seems clear that those calling for a centralisation of decision making in relation to waste infrastructure should not expect a shift in the Government’s localism agenda, at least in this Parliament.

Please click here for the full text of the waste policy review