July 13th, 2012
For all its many environmental benefits, the growth in recycling poses a problem: space. At its peak, landfilling required 500 major burial pits, occupying around 8,000 hectares. If we landfilled no waste at all, it is estimated that up to 3,000 waste facilities of 5-10 hectares would be required, occupying around 25,000 hectares – three times the area. The twin challenges of navigating the planning system and attracting investment make developing this infrastructure one of the waste sector’s biggest problems. Although approaching 50 food waste anaerobic digestion and 200 materials recovery plants are already in place, more are needed.
Annual landfill inputs are falling fast – from 100 million tonnes in 1995 to 24 million tonnes today. Waste is now processed by a plethora of new plants, located wherever planning and investment considerations allowed. Their geographical dispersion adds substantially to the logistical costs of waste management: say what you want about landfill, it is hard to beat on tonne – kilometres. Many of the new recycling, composting and energy conversion operations are sub-optimally sized, often because larger facilities meet with more objections and are bedevilled by costly planning delays. They are often disconnected from end market demand and developed in an uncoordinated, inefficient network. The last Waste Strategy review was entirely silent on this strategic weakness which will result in stranded assets within a decade for the least efficient.
Integration and innovation
Lessons abound from the way that producers and retailers revolutionised supply chain logistics between 1970 and 1990. Thousands of producers in every part of the economy from confectionery to electricals outsourced to logistics companies operating from vast, 20+ hectare warehouses. The result was improved stock control for retailers from “just in time” delivery, reduced congestion and lower transport costs.
The Advantage West Midlands Waste Infrastructure Planning Tool shows the potential for savings. It was used to create the West Midlands Landfill Diversion Strategy that won the Royal Town Planning InstituteAward for Spatial Strategies for 2010. The tool is now under the supervision of WRAP, having been developed by the former Regional Development Agency in collaboration with waste, energy and logistics companies, Friends of the Earth and local Government in theWest Midlands. The tool shows the advantages of locating waste reprocessing adjacent to end markets for outputs – not necessarily where the feedstock arises.
Large integrated resource recovery parks could yield big benefits – but where will we find the land? Major sewerage facilities could be eminently sensible places to look. There is a huge contrast between our ad hoc solid waste management infrastructure and our heavily regulated, well established water treatment system. Water is dominated by eight large suppliers, with thousands of established sites all over the country. These include around 100-120 large scale sewerage sites identified as having the potential for anaerobic digestion, gas to electricity or gas to grid.
These sites invariably possess good road links and connections to the gas and electricity grids. They have trained staff including qualified engineers, and guaranteed flows of sewerage and sludge which, whilst of insufficient calorific value for effective energy exploitation, offer a base load for co-digestion. By definition, they lend themselves to additional facilities for recycling. OFWAT, the water regulator, consulted last year on widening the use of these assets but their approach was predicated around no change of ownership – and therein lies the problem.
In my view, the big opportunity would have come from deregulating and selling off these large sites through an open auction. Water companies would bid against waste, electricity, gas and other infrastructure companies keen to expand their geographic range, share of renewables generation or presence in the resource recovery arena. If the existing water utility owner succeeded in winning the bid then at least the market rate value of the site would be properly recognised in its balance sheet – which is not the case at present. If a waste company, for example, was to win, the water company would receive a profit on the asset sale, which could be subject to a Treasury-pleasing windfall tax.
The successful bidder would take responsibility under the Water Act for sewage treatment on its site at a regulated price, but the auction would transform in how such sites are valued and perceived. Better still, why not remove sewerage from the Regulated water sector and move it to waste? Instead of specialist neutralisation centres dealing with a problem they would be gateways to lucrative markets in materials and energy, vehicles for partnerships between waste, energy, recycling and industrial gas companies. They would come with substantially reduced planning risk for new waste developments compared with almost any alternative site, offering the opportunity for rapid investment and substantial “green collar” job creation. The current piecemeal approach, dictated by risk aversion led planning constraint, would give way to a planned network of integrated resource parks, delivering low cost reverse logistics.
Sadly, Government remains organised around tasks rather than outcomes, and this is stymieing innovation. Since the 1950s large businesses have transformed their internal baronies of production, transport, research, warehousing and so forth, making each subservient to market-led strategies centred on expansion, integration and competitive market share. Defra’s Waste Strategy Review last June showed how Departmental responsibilities limit the options that can be considered. Truly “strategic” ideas –as opposed to managerial tweaking – formed less than 10% of the initiatives listed. The burgeoning resource end of life sector by definition cuts across water, energy, local government, business and finance, but Defra appeared wary of treading on toes. The Government’s mantras of deregulation, localism and the removal of hard targets further undermine the drive for greater efficiencies in waste management. The recent draft water bill again ignores these opportunities for radical reform and instead sticks to minor tweaking around small mergers and limited supply joint ventures in clean water.
Failure to establish integrated resource recovery parks will show we have not learned the lesson from 50 years of business thinking. But shifting the goal posts as I have suggested above would deliver a more resilient, efficient, profitable and service-centred resource and renewable energy feedstock supply chain at lower cost than anything currently on offer from hidebound, chimney style thinking embedded in the patterns imposed by the past, and I am willing to be proved wrong. So will anyone out there take up the challenge?