the Renewables Obligation (RO); and
• Including EfW among the eligible technologies for the new Renewable Heat Incentive (RHI) when it is introduced in April 2011.
These are welcome forms of support. In addition, a number of initiatives have been developed to try to facilitate the roll out of CHP in various parts of the UK. Perhaps the most significant of these is the ambitious London Thames Gateway Heat Network that is being promoted by the Mayor of London through the London Development Agency. At the heart of this project is an attempt to develop an extensive district heating network to serve a range of potential customers including residential, industrial and commercial users. Given the uniquely dense nature of development in the east of London where the project is located and the strong mix of different types of potential business customers for heat, this project may well work. But it is not a model that can be replicated easily in many other parts of the UK. There are several significant barriers that would operate elsewhere, including: • Strong zonal planning which means that residential and industrial uses increasingly are separated
• Lack of in-built piping networks because of historic patterns of development and the very high infrastructure costs of retrofitting such networks
• The variability of, in particular, domestic demand for heat.
The result is that a better model for the UK, for wider deployment of CHP from thermal treatment of residual wastes, is to look to exploit the increasing requirement for important industrial users to access long-term power contracts that give good guarantees of stable supply and (as far as possible) protection from the very significant increases in energy prices that are forecast for the future. This is especially true for process industries where very intensive energy use can often be the most significant cost factor relative to the value of products. We have already seen a number of energy intensive industries start the search for alternative fuel sources, including wastes.
From an energy customer perspective the beauty of contracting with an EfW supplier is that often security of supply can be largely underpinned by the availability to the EfW operator of fuel supplies through relatively long-term contracts. (For example, typical Local Authority residual waste disposal contracts these days are of 25 or 30 years’ duration).
Local economic development Over the last few years, Covanta has specifically targeted projects that have this potential for industrial synergies. Sites that we have identified for the development of strategic EfW facilities have been chosen largely because they have this potential for development of long-term
energy partnerships, supplying new and existing industry. Two very good examples are our projects at Ince Marshes in Cheshire (through a joint venture with the Peel Group) and at Merthyr Tydfil in South Wales.
At Ince Park, the EfW facility will be the centre piece of a wider Resource Park that will become home to a range of other businesses in the resource and environmental sectors, including research and development operations, recyclers and reprocessors. This kind of wider development has the potential to put the EfW facility at the very heart of an economic development project with the potential to create thousands of jobs. At a time when the government is embarked upon a major restructuring of the economy, seeking to move jobs from the public sector into the private sector as part of its strategy to address the country’s public finances deficit, this kind of development could play a significant part in the new economic strategy. But the UK is not alone in pursuing these objectives and the next few years will see intense global competition for the investment needed to create new sustainable jobs. The fact that secure low-carbon energy can be put at the heart of the kind of development that will be needed could become a significant factor in companies’ decision-making about future location.
Another aspect that will impact on location selection is planning. With government data suggesting that EfW could contribute as much as 10% of the UK’s future electricity requirement, it is important that planning does not become a barrier to infrastructure development or investment.
Carbon tax The UK has long struggled to get financial support mechanisms for renewable energy right but the coalition government’s announcement that it is to introduce a carbon tax should have a positive influence. In the 1990s the Non Fossil Fuel Obligation saw renewable energy generation climb to just 2.5% over a ten year period. Since its replacement by the Renewables Obligation in 2002 this figure had risen to about 6.5% in 2009. Taking into account that the UK’s target is to reach at least 30% renewable electricity generation by 2020, there is still a long way to go. The Electricity Market Reform package detailed proposals to create a ‘carbon price floor’ based on the existing EU Emissions Trading Scheme. There is still a good deal of work to be done to get the design and implementation details right but this is an historic step in the right direction.
As the government considers the policy framework that is needed to achieve the economic restructuring that it wants to see over the next few years, it must consider how it can facilitate more projects like this that embody the original sense of the term sustainable development – economic growth that does not add to the environmental burden of future generations.
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