Download State Aid - London Councils

Outline Priorities Plan
Board Presentation
11th December 2008
Peter Calliafas – Chair
Policy Committee
Agenda
• A Brief history of the LWaRB.
• Our approach to the challenge.
• London’s Financial and Environmental Balance Sheet.
• London’s lost opportunity.
• Indicative priority resource materials, interventions and some case studies.
• Indicative funding profile and emphasis.
• Funding and support principles.
• Tangible outcomes and measurement.
• Milestones, next steps and deliverables.
• Summary and benefits.
3
LWaRB - A Brief History
• London Waste and Recycling Board Order 2008 came into force on
24th July 2008.
•
£60m available from Central Government (Covers the period 2008
– 2011) plus a further £24m from the LDA.
•
Board priorities in respect of financial assistance include:-
1. The provision of facilities for or in connection with the collection,
treatment or disposal of waste produced in Greater London, or
2. Conducting research into new technologies or techniques for the
collection, treatment or disposal of waste, or
3. Securing, or assisting in securing, the performance of any function
of a London Borough Council or the Common Council relating to
waste.
4
OUR APPROACH TO THE CHALLENGE
5
A Resource not a Waste
Resource Mining
6
Pictures courtesy of Google Images
A Commercial Approach
• Developed in line with the Board’s away day themes.
• How to maximise the business and investment opportunities arising
from our ‘wasted’ resources?
• ‘Mine’ the resource to produce a quality product for an end market
that crowds out raw materials, or;
• Use the embedded calorific value to displace fossil carbon.
• Focus on market and demand led ‘pull’ solutions.
• Payback and/or profit share for participating stakeholders.
7
LONDON’S CURRENT FINANCIAL AND
ENVIRONMENTAL BALANCE SHEET
8
London PLC
LIABILITIES
ASSETS
“Stock Out”: 20 m tonnes p.a.
Stock In: 70m tonnes p.a. raw
obsolete stock disposed of.
materials purchased
Cost:
Cost:
Obsolete stock write off cost of £550
million p.a.
Ongoing purchases of raw material.
Energy consumption:
Energy production:
Fossil fuel energy footprint amounts to
154,519 GWhr p.a. plus exposure to
energy markets.
?
Climate Change Impact:
Climate Change Mitigation:
Embodied CO2 45m tonnes p.a
?
9
London PLC – Notes to the accounts
RESOURCE
SECTORS
TONNES PER
ANNUM (M’S)
(Pre treatment /
disposal)
DISPOSAL
COSTS
(Landfill and
ERF)
Construction,
Demolition and
Excavation
(estimated)
9.8
£37 million
Commercial and
Industrial
(estimated)
6.6
Municipal solid
waste
4.2
£350 million
Total
20
£550 million
10
£163 million
• London’s population is 7.5 million
due to rise to 8.5m by 2031 potentially
producing more waste.
• 398,430 businesses in London
across a broad range of sectors. 25%
of the tonnage is produced from big
businesses and 25% from SME’s.
• 767,000 commuters travel into
London and 321,000 out. 26 million
overnight tourists to London and 132
million day visitors per year.
• The common denominator is people.
London PLC – Resource Materials
sludge
0%
rubber
0%
soil
1%
textiles
1%
wood
4%
• The total resource arisings for
London are in the region of 20
million tonnes per year. 18
million identified in the London
Plan plus 2 million not
identified from the construction
and demolition sector
plastic
5%
paper & board
15%
aggregates
45%
mixed
3%
• Significant quantities of food,
plastic and wood waste,
textiles and paper and board
are disposed of to landfill or
used for energy recovery.
mineral waste
2%
Metallic
4%
Glass
4%
discarded equip
Chemicals
0%
3%
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ceramic
0%
• While aggregates waste are
the biggest material stream over 85 % recycled or used in
land recovery.
animal and plant
13%
Source: EA, Capita Symonds, BRE,
Turner and Townsend
London PLC – Residual Capacity Gap
Total Existing
Capacity (Million
tonnes per year)
6.7
New and planned
Capacity (Million
tonnes per year)
3.2
Total (million tonnes
per year)
9.9*
* (14
million inc CDEW assumed
to be managed in London)
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• London produces an estimated
20 million tonnes per year.
• It has capacity to manage 10
million tonnes per year.
• 90 per cent of CDEW waste is
either recycled or put to beneficial
use. Some (about 2 million tonnes)
of this happens in sites that are
exempt from waste licenses, while
another 1.6 million tonnes is
exported to the surrounding
regions. This implies that 6.2
million tonnes is managed within
London
LONDON’S LOST OPPORTUNITY?
13
London PLC – Resource Costs
TONNES PER
ANNUM (M’S)
% DISPOSED TO
LANDFILL (EST)
COST £M’S
(EST)
Food / Garden
2.7
40%
£57
Wood
0.9
Circa 60%
£29
Plastic
1.1
55%
£32
Textiles
0.2
60%
£6
Paper and board *
3.0
45%
£72
KEY MATERIAL STREAMS
Totals
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* New capacity being built.
7.9mtpa
£196m
Case Example – UK Demolition Timber
Tonnes saved
2%
LIABILITIES
Tonnes unreusable
37%
Tonnes destroyed
but reusable
61%
Tonnes
2007
ASSETS
Landfilled
527,840
Energy
Recovery
Facility
19,000
Burned on
demolition
sites
48,000
Turned into
MDF
48,000
Burned
offsite
19,000
Composted
288,000
TOTALS
594,840
12% of the above figures = London
60% wasted opportunity
15
BigREc surveys 1998 and 2007
Tonnes
355,000
INDICATIVE PRIORITY RESOURCE MATERIALS
AND INTERVENTIONS
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Indicative Priority Resource Materials
EARLY ANALYSIS OF LONDON PLC
‘PIE CHART’
• Organic
• Wood
• Plastic
• Paper and Board
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KEY PRIORITY DETERMINANTS
• Tonnage.
• Disposal Cost.
• Embedded Output Energy Value.
• C02 avoidance and climate change mitigation.
Interventions - The ‘Mechanic’s toolbox’
Minimisation
Market and
demand led ‘pull
solutions’
Reuse, then
Recycle
Infrastructure and
capacity building
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Effectiveness of these Interventions
Minimisation Reuse
Food waste

Plastics
Textiles
Paper and Board
Wood




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



Recycling / Energy
Composting










KEY PRIORITY DETERMINANTS
• Tonnage.
• Disposal Cost.
• Embedded Output Energy Value.
• C02 avoidance and climate change mitigation.
SOME CASE STUDIES
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Novera Energy / Shanks / Ford
The Sustainable Energy Facility
• Novera Energy was granted planning permission
in September 2006, for a new Sustainable Energy
Facility near the Fairview Industrial Estate,
Rainham.
Shanks – Frog Island
Novera Energy – Sustainable Energy
Facility
21
Dagenham Engine Plant
• The facility will be supplied with 13 tonnes of
biomass fuel per hour from neighboring Shanks
waste fuel facility and will be capable of generating
around 10MW of energy (64% of which is classed as
renewable), enough to power 10,000 homes
• The facility will provide a source of renewable
energy for the Ford Motor Company Limited’s
operation in Dagenham.
Pictures courtesy of Lets Recycle
Indesit / Axion / WRAP
Recycled WEEE
• Indesit has become the first company to successfully
incorporate recycled content derived from the UK waste stream
within white goods on a large scale.
• The Italian company, in collaboration with WRAP and Axion
Recycling, spent many months investigating the potential to
extract plastic materials from Waste Electrical and Electronic
Equipment (WEEE), and recycle them for use in the manufacture
of new products.
• The project delivers substantial savings in raw materials and
costs.
• The plant uses 100 per cent recycled content, sourced from UK
WEEE, representing a step change in UK manufacturing.
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Story and photo’s courtesy of MRW and Lets Recycle
Ealing BC / Cawleys / Biogen
Food into wattage
• Ealing Council has been collecting residents’ food
leftovers since 2006 as part of the weekly recycling
collection.
• In 2007 it began a six-month trial in partnership with
waste management company Cawleys and BIOGEN.
• Cawleys handle the bulk collection and deliver it to
BIOGEN’s Bedfordshire based AD plant.
• Recycling rates have increased across the borough
over recent months.
23
Photo’s courtesy of WRAP and Biogen. Information
from Ealing website.
Common ‘Case Study’ Threads…
Market Demand
• Energy ‘sinks’
• Manufacturer / Producer
Technology
Provider
Collaboration
Vehicle
Site Provider
• Private landowner
• Boroughs
• LDA
Collaboration
benefits
• Economies and
efficiencies of scale.
• Saves money.
• Common sense of
purpose.
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• Common share of risk.
Raw Material
Provider
• Business
• Boroughs
• Waste Companies
INDICATIVE FUNDING PROFILE AND
EMPHASIS
25
Indicative Funding Profile
Intervention
Target
Market
Potential Actions
Impact
on
Tonnage
Impact on
Energy /
Climate
Change
Total
Impact
Minimisation
• Consumers and
waste
producers
• Campaigns
• Advice
• Producer Responsibility &
Smart production
Low
High due to
avoided energy
impact
Low
Reuse
• Consumers
• Business
• Campaigns
• Infrastructure and capacity
building
• Building confidence
• Reuse standard
• Government procurement
Low to
Medium
difficult to
measure
High due to
avoided energy
impact
Medium
Recycling
• Product and
Commodity
users
• Campaigns (£1.5m R for L)
• Breaking down market
barriers
• Market development &
demand
• Infrastructure and capacity
building
• Government procurement
Medium to
High
Medium
High
£££
Energy
• Energy
producers
and users
• Energy supply risk
mitigation
• Decentralised energy
• Technology evolution
• Infrastructure and capacity
High
Material and
Technology specific
–Medium to High
High
£££
26
Indicative
Funding
Priorities
£
££
FUNDING AND SUPPORT PRINCIPLES
27
Our Funding Principles
• Quick wins and legacies, not quick fixes.
• Will not fund projects which will happen anyway.
• Must have a compelling business and investment case that deliver
tangible outputs and/or outcomes.
• Evidence of collaborative working across boundaries.
• Solutions predicated on positive environmental impacts.
• Must provide excellent value for money
• Range of potentially flexible funding solutions, to include a) equity, b)
debt, c) guarantee support and d) grants.
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And going the extra mile too.
• Build relationships with our ‘customers’.
• A proactive partner seeking to add value.
• Potential help and assistance in building supply chains.
• Facilitating collaboration partnerships.
• Potential help and assistance with putting projects together.
• Potential help and assistance in overcoming procurement barriers.
• Programme management.
• Breaking down market barriers.
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TANGIBLE OUTCOMES AND MEASUREMENT
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Tangible Outcomes and Measurement
• Tonnage diverted.
• Increased reuse and recycling levels.
• Climate change mitigation.
• Exemplar projects (Energy and Product).
• Technology evolution.
• Economic value (Disposal savings) or economic uplift (Jobs,
regeneration) or both.
• Private sector leverage in of capital assets.
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MILESTONES, NEXT STEPS AND
DELIVERABLES
32
Milestones to date
• July
Order came into force.
• Sept
Inaugural Board Meeting.
• Oct
Board Awayday.
• Nov
Policy Committee first meets.
• Dec
Presentation of ‘Outline Priorities Plan’.
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Next steps to February Board Meeting
December 2008
• Finalise priority resource materials analysis.
• Determine intervention actions and effectiveness for each priority resource material.
• Develop options for fund distribution.
• Engage with stakeholders to build a pipeline of projects and to identify “quick wins”;
possibly a call for ‘expressions of interest’.
• Selectively procure in external expertise to provide detailed material stream analysis.
Jan 2009
• Identify legal barriers and solutions – state aid, procurement regulations.
• Finalise fund profiling options and priority interventions.
• Develop investment selection criteria.
• With Chief Operating officer identify project support and administration options.
• Identify key risks (i.e. planning and/or permitting) and how to mitigate.
Feb 2009
• Board Sign off of Priorities Plan.
March 2009
34
• Implementation
and bids sought.
Priorities Plan – February Deliverable
The Priorities Plan will set out:
• London and its resource materials background.
• The funding priority areas together with the proportion of funding allocated to each priority
area and a re-profiling of the fund as applicable.
• The types of intervention actions and which infrastructure will be eligible for funding.
• Project investment selection criteria.
• The process by which the Board will distribute the fund.
• Planning and other risk issues.
• Deliverables, other desired outcomes and measurement.
• Administration structure to support the development of projects
35
SUMMARY AND BENEFITS
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Summary
• Clear strategic fit with the London Plan and the LWaRB order.
• Commercially focused Board.
• Addresses wide stakeholder concerns and issues.
• Targeting quick wins and legacies, not quick fixes.
• A focus on end markets, the priority residual resource material streams
and reverse supply chains.
• Financial assistance provided on solid business and/or investment
cases that generate tangible outcomes.
• Leverage in private sector capital assets and collaborate
with key partners.
37
Benefits to Boroughs
• Long term legacy benefits as opposed to short term support.
• Diversified and credible outlet choices.
• Lower financial costs (direct and indirect) through avoided landfill tax and gate fees.
• Resilience to future market shocks and market prices.
• Active participation in projects plus financial upside through public/private sector
involvement.
• Assists with regulatory compliance (e.g. LATS, LAA’s) and potential to increase
recycling rates.
• Reduction in carbon footprint (NI 85 & 86).
• Creating positive public perception in response to public demand.
• Local economic development and new jobs.
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Benefits to Business Community
• Market stability for price, supply and costs leading to lower financial costs leading to
potential uplift in bottom line.
• Shared Risk exposure.
• Business planning certainty creating an investment opportunity.
• Energy security.
• Simplified logistics leading to less administration.
• Closed loop supply chains providing security.
• Mitigates regulatory impacts (i.e. landfill tax , CRC, packaging).
• Opportunity for social enterprises.
• Enhanced corporate social responsibility.
39
Benefits to Londoners
•Value uplift in London’s environmental economy.
• Job creation.
• Greater resource transparency, understanding and environmental ‘feel good’ factor.
• Market led convenience to increase re-use and recycling.
•Local heat and power plants providing cheap energy.
• Shared participation and benefits.
• Increased confidence in local authorities and community leadership.
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Key messages to take away….
• London leadership and vision setting.
• Resource recovery not resource destruction.
• Market and enterprise led approach by the Board.
• Creating a solvent and sustainable environmental balance sheet.
• London Resource Recovery Board.
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