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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% 11 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) 12 • 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 14 * 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 16 Indicative Priority Resource Materials EARLY ANALYSIS OF LONDON PLC ‘PIE CHART’ • Organic • Wood • Plastic • Paper and Board 17 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 18 Effectiveness of these Interventions Minimisation Reuse Food waste Plastics Textiles Paper and Board Wood 19 Recycling / Energy Composting KEY PRIORITY DETERMINANTS • Tonnage. • Disposal Cost. • Embedded Output Energy Value. • C02 avoidance and climate change mitigation. SOME CASE STUDIES 20 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. 22 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. 24 • 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. 28 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. 29 TANGIBLE OUTCOMES AND MEASUREMENT 30 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. 31 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’. 33 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 36 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. 38 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. 40 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. 41