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					HERTFORDSHIRE COUNTY COUNCIL                                       Agenda Item

WASTE MANAGEMENT PANEL
TUESDAY 4 MARCH 2008 at 2.00 P.M.
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WASTE PROCUREMENT PROGRAMME
FEASIBILITY STUDY NOVEMBER 2007 - FEBRUARY 2008

Executive Member - Derrick Ashley, Planning, External Affairs and Waste

Report of the Director of Environment

Author:       Richard Brown, Assistant Director,
              Environmental Management Group - 01992 555250

1.   Purpose of Report

     To inform the Panel of the conclusions from the Feasibility Study and the
     recommended next steps.

2.   Summary

2.1 The management of household waste is subject to increasing pressure
    from European Directives and National Legislation. There is the
    prospect of financial penalties arising from not diverting sufficient
    biodegradable waste under the Landfill Allowance Trading Scheme
    (LATS), increasing costs of disposal arising from the Landfill Tax that will
    double by 2010 and a decreasing supply in the amount of available
    landfill. There are increasing pressures to reduce the environmental
    impact of landfill and the associated production of methane as part of
    proposals to mitigate climate change.

2.2 These drivers have been fully recognised in the Hertfordshire Waste
    Management Strategy 2007 endorsed by all 11 Authorities in November
    2007. A cornerstone of the Strategy is achieving 50% recycling by 2012.

2.3 The County Council as Waste Disposal Authority (WDA) initiated a
    Feasibility Study to identify likely long term waste arisings, appropriate
    processing technologies to deal with it, a locational strategy that
    integrates the collection and disposal arrangements, the identification of
    appropriate sites for processing facilities and/or supporting infrastructure
    such as transfer stations and appropriate funding mechanisms.

2.4 The Feasibility Study is coming to a close and the main conclusions are:

         Estimated likely future waste volumes to 2040, rising at 1.75% p.a.,
          suggests the need to manage 980,000 tonnes of municipal waste
         From an assessment of available processing technologies the top 3
          are Energy from Waste (EfW), Mechanical Biological Treatment


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            (MBT) and Advanced Thermal Treatment (ATT) plus a requirement
            for Landfill for the unavoidable residues
           A financial assessment of these options shows that EfW is best
            value for money followed by MBT although it has to be noted that
            scale is important
           After considering a number of alternative sites and potential service
            delivery options New Barnfield may provide an opportunity but
            further work is needed on finalising the benefits of a single or multi-
            site approach

3.   Recommendations

     The Panel is asked to note the analysis of the Feasibility Study which
     suggests that the County Council:-

     1.     Develops a procurement strategy based on EfW as the preferred
            technology but with consideration given to MBT and ATT singly or
            in different combinations.

     2.     Lodges with Defra by 31 March 2008 an Expression of Interest
            (EoI) for PFI Credits of up to £100 million as a foundation for the
            production of an Outline Business Case (OBC) by 31 October
            2008.

     3.     Works with planning authorities to secure appropriate permissions
            for waste treatment facilities on a site or a number of sites.

     4.     Works with neighbouring WDAs to investigate complimentary
            solutions.

4.   Background

4.1 Waste management is subject to increasing direction from European and
    National directives and legislation. With the amount of available Landfill
    declining there is increasing pressure to ensure that it is only used as a
    last resort.

         The Landfill Allowances + Trading Scheme (LATS) is intended to lead
          to a national reduction in landfilling of biodegradable municipal waste
          to 35% of 1995 levels by 2020. The County Council, like all other
          WDAs, has been allocated a fixed number of allowances for the
          landfilling of biodegradable waste for each year between 2005/06 and
          2019/20 with allocations decreasing each year. For each tonne of
          biodegradable waste landfilled without an allowance the Government
          will levy a fine of £150 per tonne.

         The Landfill Tax, levied on every tonne of waste sent to landfill, is
          currently £24 per tonne will rise by £8 tonne p.a. until at least
          2010/11.



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                Revised Recycling Targets have been set by the national Waste
                 Strategy 2007 and include:

                 i.     Re-use, recycling and composting of household waste - at
                        least 40% by 2010, 45% by 2015 and 50% by 2020.
                 ii.    Recovery of municipal waste - 53% by 2010, 67% by 2015 and
                        75% by 2020.

4.2. The Hertfordshire Waste Partnership (HWP) has agreed to work to a
     target of 50% recycling rate by 2012 and this figure sets the context for
     the disposal of residual waste up to 2020. Residual waste is the waste
     collected by the waste collection authorities apart from the material that
     is collected separately to be recycled or to be composted.

4.3 In preparing the Hertfordshire Waste Strategy 2007, the HWP undertook
    a consultation exercise "Your Waste. Your future. Your Say" between
    8 January and 30 March 2007. The consultation was delivered to around
    450,000 homes with targeted consultation with key stakeholders.
    Around 11,000 people registered their views. The key results from the
    consultation included:

            More than 80% strongly agreed that is important that we reduce the
             waste we produce
            Over 70% agreed that we should aim for a recycling target of 50% by
             2012 with nearly 90% of those saying that it should be higher`
            A number of questions were asked about the important issues to be
             considered when planning new waste facilities:

             o         Over 85% agreed that it was important to minimise transport to
                       the facility.
             o         90% that it should be cost effective and affordable.
             o         95% that consideration should be given to its environmental
                       impact.
             o         Nearly 95% felt that turning waste into energy was important or
                       essential when considering new waste facilities.

     The results from the consultation are reflected in the Strategy that outlines
     the operational waste collection and disposal arrangements for the period
     up to 2020. The intention is that the Strategy will be further reviewed
     during 2010 to reflect any emerging changes.

5.       The Feasibility Study

5.1 The Study has been conducted over a 4 month period from November
    2007 to February 2008. The Study:-

                Built on the Waste Strategy priorities e.g. waste minimisation, 50%
                 recycling and the avoidance of LATS penalties
                Undertook a technical appraisal of Hertfordshire's long term residual
                 waste treatment needs


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         Identified a range of suitable processing technologies
         Mapped out procurement and financing options
         Investigated a range of potential sites that could meet the WDA's
          long term needs including a site in the County Council's ownership
          at New Barnfield, Hatfield

5.2 At the outset the scope of the work in the longer term was
    comprehensively defined in the form of a mission and objectives:-

        Our mission is to "secure for Hertfordshire enduring, economically
         and environmentally sound integrated waste management through
         the procurement of appropriate facilities and processes as part of the
         collective implementation of the Waste Management Strategy. Our
         objectives will be achieved by continuous improvement of services
         and in partnership with the public and private sector".

        There are 8 Strategic and 10 Site Based Objectives for the Project

    Strategic Objectives:

    1.    Providing strong leadership
    2.    Acting as a responsible body
    3.    Taking difficult and long term decisions
    4.    Achieving a cost effective solution
    5.    Supporting and implementing the adopted HWP strategy
    6     Ensuring full engagement with the local communities
    7.    Ensuring that the chosen technology is proven
    8.    Ensuring that the chosen technology is future proof

    Site Based Objectives:

    1.  Making a positive contribution to the local economy
    2.  Contribute to the aspirations of the LSP and Community Strategy
    3.  Chosen technology should be comprehensive and able to meet the
        long term requirements of WDA
    4. Existing environmental features should be safeguarded
    5. New habitats should be created
    6. The design of the building should make a positive contribution to
        the landscape
    7. The design of the building should be iconic
    8. The construction work should ensure maximum reuse of materials
    9. The operation of the plant should be carbon efficient
    10. The development should be innovative

5.3 Technical Assessment. The technical assessment has been
    undertaken by consultants WSP. This has been a complicated piece of
    work and is based on the assumption that recycling will remain constant
    at 50% and that the WDA wishes to deal with all of its household waste
    rather than what remains after LATS allowances are removed. The key
    findings are:


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   Assessment of future waste arisings. That the predicted level of
    the growth in municipal waste could be in the region of 1.75% p.a.
    This figure is based on the expected growth in the number of
    households and population etc. As with any long term prediction
    there is a need to be cautious as growth rates may be reduced
    through waste minimisation programmes and/or increases in
    recycling rates. At this stage in the process officers have accepted
    this growth rate as basis for future planning but it will be subject to
    further scrutiny.

    Based on 1.75% p.a. there are the following consequences

    i.     Total municipal waste rises to around 980,000 tonnes/annum
           by 2039/40 (the household waste component 920,000)
    ii.    The WDA potentially incurs LATS penalties that could be
           manageable in 2012/13 through a more cost effective
           approach to the handling of Trade Waste or slight fall in waste
           growth but become significantly greater by 2015/16 when
           processing capacity will need to be fully operational.
    iii.   A working figure of 400,000 tonnes/annum of residual waste
           by 2040 is being used for modelling future requirements.

   Assessment of Processing Technologies. A long list of 10
    processing technologies including Landfill was assessed against a
    range of environmental, social, technical and economic factors.
    The result is a short list of 3 preferred technologies - Energy from
    Waste (EfW), Mechanical Biological Treatment (MBT) and
    Advanced Thermal Treatment (ATT) plus Landfill that will be
    required for the residual waste from the treatment process that
    cannot be recycled or re-used.

   Assessment of Procurement options. A key part of any future
    procurement strategy will be identification of suitable sites. The
    initial work indicates that the WDA could meet its procurement
    needs in a number of ways:

    i.     Either through a single site with supporting infrastructure such
           as transfer stations or through a number of sites i.e. up to 3.

    ii.    The construction of one major plant with a capacity to meet the
           WDA’s long term needs by 2015 or the gradual increase in
           processing capacity through a modular approach to meet
           waste stream growth.

    Both options have strengths and weaknesses and further work will
    be needed before a decision can be made.

    In addition the consultants recommend that the County Council
    works with adjoining WDAs to identify opportunities such as joint


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            ventures for the disposal of Solid Recovered Fuels (SRF) or the use
            of available capacity.

5.4 Financial Assessment. A financial assessment was undertaken that
    looked at a range of different combinations based on the 3 preferred
    technologies, with different capacity levels, either operating singly or in
    combination set against a baseline set by Landfill. The results show
    that:-

     i.     EfW is the most cost effective followed by MBT to meet predicted
            long term needs
     ii.    Cost effectiveness increases with size of the plant as there are
            significant benefits from economies of scale
     iii.   With PFI credits of 50% applied to the processing technologies,
            Landfill is the least cost effective solution
     iv.    PFI Credits seem to offer a cost effective solution but there is need
            to consider other options such as Prudential Borrowing in more
            detail.

     Further work is needed to refine the financial assessment including
     managing any LATS liabilities and identifying the opportunities for
     income from the generation of electricity and the potential use of heat,
     the markets that would be available for Solid Recovered Fuel (SRF) from
     the MBT process as well as income that could be achieved through the
     use of "spare" capacity by a third party.

5.5 Site Options. A fundamental issue for a future procurement strategy will
    be the identification and securing of appropriate sites.

     From the outset the advice has been that the WDA will need to secure a
     site, which will act as a Reference Site for the procurement process.
     This site would be large enough to be able to deliver a range of different
     processing capacities, it may have a planning permission for a selected
     technology and should be under the control of the WDA.

     By securing a site, the WDA provides a key element of certainty to the
     Waste Management market, which will deliver the waste processing
     capacity and undertake the operation of a plant for up to 25 years. This
     position was reinforced by a Market Sounding Exercise. A selection of
     key waste management providers indicated their preference for an
     identified site prior to contract negotiations as this reduces their exposure
     to risk. With so many other WDAs faced with the same LATS timetable,
     there are concerns that the waste management industry may not be able
     to respond. Therefore having an identified site is one of the key
     attractions that the WDA can offer.

     Securing an appropriate site is a requirement of the Defra PFI Credits
     process.




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     As part of the Feasibility Study, consideration has been given to a
     reference site at New Barnfield, Hatfield, owned by the County Council.
     The site has been considered for a waste management use as it is
     identified within the Hertfordshire Minerals and Waste Development
     Framework - Waste Site Allocations Preferred Options (January 2008)
     that is currently subject to a consultation exercise that ends on 10 March
     2008.

     Initial assessment work on New Barnfield indicates that:-

         The total site area would be able to accommodate a major waste
          processing facility but that further detailed work is needed through:

          i.    a detailed Environmental Impact Assessment (EIA), Traffic
                Impact Assessments and a Flood Risk Assessment

          ii.   A further assessment of the Town Planning situation to
                establish a clear need for the site in light of Green Belt policy.

     Until alternative sites are identified and secured, the County Council will
     need to treat New Barnfield as its Reference Site. However, at the same
     time, it will be working with the waste management industry to secure
     alternative interim facilities that can be delivered by 2015 to avoid
     significant financial penalties.

5.6 Supporting work. As part of the Feasibility Study, a Communications
    Strategy and Risk Register have been developed.

         Communications Strategy - Has been developed by consultants
          PPS and provides the context for development of project and
          identifies an action plan and the engagement of appropriate
          stakeholders

         Risk Register - This is an evolving document with approximately 60
          risks used to identify the immediate project management priorities.
          The key risks have been identified.

          Both these pieces of work will be further developed during the OBC
          stage of the Procurement Programme.

6.   Next steps and future work

6.1 Analysis of the work done to date leads to four main recommendations
    for action, each of which is explained further, below.

6.1.1 Procurement strategy
     The procurement strategy must include short, medium and long term
     actions. In the period to 2015, arrangements will be made to avoid
     exposure to LATS liabilities. These will include:-



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       consolidating existing recycling and composting capacity to achieve the
        target of at least 50% by 2012;
       securing treatment capacity for the interim;
       ensuring sufficient landfill capacity within LATS allowances.

       The Feasibility Study provides the foundation for a long term
       procurement strategy – a clear definition of the type and size of
       technology to be secured, locations and funding routes. It is proposed
       that this strategy is based upon Energy from Waste as the preferred
       technology but with consideration given to Mechanical Biological
       Treatment and Advanced Thermal Treatment, singly or in combination.

6.1.2 Expression of Interest and Outline Business Case
     It is a requirement of the Department of Environment, Food + Rural
     Affairs (Defra) that an Expression on Interest (EoI) is lodged with them
     for a local authority to be considered for PFI Credits. Submitting an EoI
     does not commit applicants, rather, it signals on intent to develop an
     Outline Business Case (OBC) aimed at obtaining financial assistance (of
     up to 50% of the capital cost of eligible treatment infrastructure). It is
     suggested that an EoI is prepared and sent to Defra by the deadline of
     31st March 2008 and that an OBC is produced, by October, which sets
     out full details of technology, location/s and financing of future waste
     treatment. The OBC would be considered by the Cabinet.

6.1.3 Planning permission/s
     In parallel with the production of the OBC, work will need to be done to
     secure planning permission on an appropriate site/s. Detailed proposals
     would be developed in collaboration with local planning authorities.

6.1.4 Complimentary solutions
     Many WDAs are in a similar position to HCC and are seeking long term
     solutions for residual waste treatment and disposal. It is proposed that
     potential joint solutions with neighbouring authorities such as Essex,
     Bedfordshire and the North London Waste Authority continue to be
     explored.

6.1.5 Bringing these elements together would result in the following outline
     timetable:-
     Feasibility Study           October 2007 – March 2008
     Submission of EoI           31 March 2008
     Development of OBC          April – October 2008
     Procurement of facilities   2009 – 2012
     Construction                2012 – 2014
     Plant/s operational         2015 onwards

6.2 It will be necessary to continue to maintain clear and strong governance
    and support for future work. Attached as an Appendix is a framework for
    the next stage of the project, including the officer groups involved. The
    paper raises the issue of oversight by elected Members (para 2.2) and
    the Panel may have views on the best way of taking this forward.


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7.   Financial implications

7.1 The Feasibility Study has been funded by staff and cash resources within
    the approved budget of the Environment service for 2007/8.

7.2 The next stage of work – development of an OBC and preparation of any
    appropriate planning permissions – will require additional resources,
    chiefly to pay for external advice in a range of subject areas e.g.
    technical, legal, financial. It is proposed to earmark the revenue element
    of Defra’s 2008/9 Waste Performance + Efficiency Grant (£673k) that
    has now been transferred to the base budget for procurement, together
    with £200k provided for in the draft Environment service budget for
    2008/9.

7.3 Development of the OBC will include a detailed assessment of future
    financial requirements for waste treatment infrastructure, including the
    relative merits of different funding routes. Selection of the PFI option in
    particular will require significant “up-front” financing to ensure thorough
    preparation. Reports will therefore be made to Panel once costs are
    better understood.




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