Legislation
WID
Plants which incinerate or co-incinerate waste are subject to the Waste Incineration Directive (WID). The definition of a co-incineration plant includes those whose main purpose is the generation of energy and which use waste as a regular or additional fuel. Therefore gasification plants are subject to WID. Having demonstrated to the Environment Agency that its gasification plants satisfy the requirements of WID ITI has been granted permits under both the Pollution Prevention Control (England and Wales) Regulations 2000 and the Environmental Permitting (England and Wales) Regulations 2007 which superseded them.
ROCs and FITs (Feed in Tariffs)
The UK Government's main measure for promoting the generation of renewable electricity is the Renewables Obligation (RO) system, introduced in 2002 and currently being reformed to encourage new technologies. The Energy Bill is to come into force in April 2009 and will introduce ROC banding to provide more financial support to new and underdeveloped renewable energy technologies and less support to commercially established technologies.
| Band | Technologies | Level of support (ROCs per MWh) |
|---|---|---|
| Established | Sewage gas; landfill gas; co-firing of non-energy crop (regular) biomass | |
| Reference | Onshore wind; hydro-electric; co-firing of energy crops; Energy from Waste with combined heat and power; other not specified | 1.0 |
| Post demonstration | Offshore wind; dedicated regular biomass | 1.5 |
| Emerging technologies | Wave; tidal stream; advanced conversion technologies (anaerobic digestion, gasification and pyrolysis); dedicated biomass burning energy crops (with or without CHP), dedicated regular biomass with CHP; solar photovoltaics; geothermal | 2.0 |
Existing renewables projects and those that submit planning applications before the new system is introduced will keep their existing ROC bandings under a "grandfathering" system until at least 2027.
After future reviews of the ROC bandings, technologies that have become more established could see their ROC subsidies reduced, but the grandfathering rules will mean existing installations will keep whichever ROC banding they had when they were built.
The Department for Business Enterprise and Regulatory Reform (BERR) is also considering proposals to introduce Feed-in Tariffs (FITs) to incentivise small scale and micro generation projects. Under the proposals electricity companies would be obliged to buy renewable electricity from sources such as solar photovoltaics, wind power, and geothermal power at above market rates. BERR recognises the Renewables Obligation as the incentive mechanism for large scale generation and is keen to ensure that operators should not receive the double incentive of both ROCs and FITs.
Preliminary Accreditation by Ofgem for the award of Renewable Obligation Certificates (ROCs)
Energy companies are required to generate a proportion of their electricity output from renewable sources. ROCs are currently awarded on the basis of 2 ROCs per Megawatt hour exported to the grid The new banding system has been introduced and renewable electricity from approved gasification now attracts 2 ROCs per Megawatt hour). If companies fail to produce the required amount of green energy they must buy ROCs on the open market to make up the shortfall. Where suppliers do not have sufficient ROCs to meet their obligations they must pay an equivalent amount into a fund, the proceeds of which are paid back on a pro-rated basis to those suppliers that have presented ROCs. The UK Government intends that suppliers will be subject to a renewables obligation until 2027.
A proportion of the fuel consumed in ITI's gasification plants is from renewable sources, e.g. wood, paper and biomass, therefore a proportion of the electrical output is eligible for ROCs. ROCs, electricity sales and the gate fee for accepting BFF onto site form the main revenue streams from ITI's plants.
In June 2008 ITI became the first company to receive preliminary accreditation from Ofgem for the award of ROCs in respect of electricity produced from a gasification process after it was able to demonstrate how the renewable proportion of the electrical output would be measured.
Full accreditation will be granted when the plant is built and operational and ITI is able to provide a commissioning date and the serial numbers of the electricity meters.
LATs and associated fines
The Landfill Allowance Trading Scheme (LATS) was introduced with the intention of enabling England to meet its targets for reducing the amount of biodegradable municipal waste (BMW) sent to landfill under Article 5(2) of the EC Landfill Directive. The targets set by the 1999 Landfill Directive are to reduce the amount of BMW going to landfill:
- By 2010 to 75% of that produced in 1995
- By 2013 to 50% of that produced in 1995
- By 2020 to 35% of that produced in 1995
Allowances have been allocated to each Waste Disposal Authority (WDA). The scheme allows WDAs to trade allowances, bank allowances for future use, borrow allowances from a future year's provision or borrow from other WDAs to meet their obligations under the scheme in the most cost effective way. A fixed penalty of £150/tonne will be incurred if a WDA fails to hold sufficient allowances for the amount of biodegradable waste it sends to landfill in a scheme year.
LATS provides WDAs with an opportunity to raise revenue by trading allowances and an incentive to explore the alternatives to landfill. ITI actively seeks out non-recyclable waste streams that would otherwise go to landfill as the raw material to be processed into fuel for its gasification plants.
Landfill tax and gate fees
Landfill tax is paid in addition to normal landfill fees by businesses and local authorities that want to dispose of waste using a landfill site. It is designed to encourage businesses to produce less waste and to use alternative forms of waste management. There are two rates of tax:
- the lower rate - £2.50 per tonne for inactive waste such as rocks and soil
- the standard rate - £32 per tonne in the 2008-09 tax year and increasing by £8 per tonne each year from April 2009 until at least 2010-11
In its 2008 publication 'Comparing the cost of alternative waste treatment options' the Waste & Resources Action Programme (WRAP) reported landfill gate fees, excluding landfill tax, ranging from £11 - £40 per tonne with a median value of £21. The report described how gate fees were affected by spot and contract prices, the age of the facility, the number of shifts worked and competition from both other landfill sites and alternative disposal options. An additional cost associated with landfill is haulage, it is not uncommon for waste to be transported 40 - 60 miles to a landfill site with vehicles returning empty to the Waste Transfer Station.
Increasing landfill costs serve to provide ever greater rewards to the waste industry for investing in equipment to process and briquette the material destined for landfill into fuel for ITI's gasification plants, delivering the fuel and paying ITI a gate fee to receive it.
Renewable energy targets
In 2000 the UK Government set a target of 10% of electricity being generated from renewable energy by 2010 and in 2006 announced its aspiration to achieve 20% by 2020. Figures from The Department for Business Enterprise and Regulatory Reform (BERR) (Electricity supply and consumption (DUKES 5.2)) show that in 2007 the UK electricity demand was in the region of 400,000 Gigawatt hours (GWh). Each ITI gasifier will produce approximately 13GWh towards the 40,000GWh renewable target whilst also significantly reducing the amount of material sent to landfill.
Good quality Combined Heat and Power (CHP)
The UK Government has set a target to achieve at least 10,000 MWe of installed Good Quality Combined Heat and Power (CHP) capacity by 2010. The CHPQA Standard, Issue 1, prepared by the Department of the Environment, Transport and the Regions (DETR) et al reported that the generation and supply of electricity from power stations is typically at an efficiency within the range 25 - 50% based on the Gross Calorific Value of the fuel and including transport and distribution losses. Of the remaining 50 - 75% of the energy content of the fuel some is lost due to the conversion efficiency of the power generation process with the remainder being given off as waste heat. According to DETR CHP schemes will typically achieve overall energy efficiencies of 60 - 80%. Captured heat will displace heat that would otherwise have had to be produced by burning additional fuel and therefore leads directly to reductions in emissions. The CHPQA Standard defines how the Quality Index (QI) of a CHP scheme is to be calculated in order to determine whether it qualifies as being 'Good Quality'. Potential fiscal benefits for Good Quality CHP include business rates exemption and enhanced capital allowances.
Heat may be harvested at ITI's gasification plants from the engine water jackets and the exhaust stacks. Subject to there being a suitable end user heat may be exported from site as hot water or steam and used for district heating as part of a Combined Heat and Power (CHP) scheme, for industrial processes or to enable further power generation from an Organic Rankine Cycle process to achieve overall conversion efficiencies of up to 85%. Under these circumstances a CHP scheme powered by ITI gasification system could qualify as being 'Good Quality'.
Carbon Savings
Claims of carbon savings for one fuel over another are notoriously difficult to substantiate or compare. Where the boundary line between included and excluded carbon contribution activities is drawn will determine whether exploration, extraction, processing and transportation of the fuel, the construction, operation and maintenance of the power plant, the contribution by workers commuting to and from the plant etc. are factored into the calculation.
Considering the material used to produce the briquettes consumed by the ITI gasifier to produce syngas and then electricity; it is made up of non-recyclable biomass and fossil fuel derived elements, i.e. plastics. Were this material not to be gasified it would be landfilled. Gasification provides an alternative use of carbon already 'in the system' to produce electricity that may well otherwise have to be produced by extracting further fossil fuels from the earth and burning them. Gasification offers the opportunity to keep fixed carbon fixed.