UK Based Waste Resource – Case Studies

Michael Grimes, Partner Eversheds LLP

20 March 2012

Eversheds

• An International full service Law Firm

• 46 offices across Europe, Africa, Middle East and Asia

• An office in Copenhagen – Senior Partner: Nikolaj Juhl Hansen

• 250 + public private partnerships

• Over 70 waste projects of all types for contractors, municipalities, governments and funders

• Collection, transport, recycling, composting, land filling, energy recovery, gasification, incineration, combined heat and power and anaerobic digestion

Case Studies

• London Borough of Southwark – a unitary council which collects and disposes of waste

• Greater Manchester Waste Disposal Authority – a statutory body which has only one function to dispose of municipal waste

• Context: Landfill Directive, Landfill Allowances, Landfill Tax > £80 per tonne, Source Separated Collections, waste as a commodity be it recyclate or fuel

Southwark Integrated Waste Management Solution

• Southwark is a borough in Central London

• A gateway to London and the United Kingdom for immigrants

• Very diverse population

• Over 100 languages spoken

• Largest municipal landlord – very dense housing

• Very little spare land

• Low recycling

• Very poor waste infrastructure

Southwark Solution

• Integrate collection, composting, recycling, transport and disposal

• Contractor to drive waste minimisation initiatives and community engagement

• Southwark ran a competitive procurement

• 25 year contract, £93 million capital expenditure

• Project Net Present Value £665 million

• Contract with Veolia

• The only integrated contract in the United Kingdom

Southwark Key Outputs

• 50% recycling by 2021

• 84,500 tonnes per year Mechanical Biological Treatment plant

• 85,000 tonnes per year Material Recycling Facility

• A new household waste reuse and recycling centre

• A waste transfer station

• A new district heating scheme linking the local energy from waste plant to five housing estates

Southwark Key Challenges

• Scarce land for a plant

• Transient population

• Community engagement

• High rise dense housing – little source separation

• Challenge of kerbside collections – universal service

• Population growth from 245,000 to 272,000 by 2021

Greater Manchester Waste Disposal Authority

• A separate single purpose authority – one of 6 in England

• Serves 9 of the 10 Manchester waste collection authorities

• England’s biggest waste disposal authority; 5% of England’s municipal waste

• 1.1 million tonnes of waste per year

9 Collection Authorities 2.2m population

973k households 1.1m tonnes p.a.

of municipal waste

Greater Manchester Waste Disposal

Authority

Providing a world class solution for Greater

Manchester’s municipal waste.

Greater Manchester – Key Aims

• Zero waste

• A world class waste solution

• Reduce; reuse; recycle/compost; recover value and energy use

• Value for money

• Equality of access

• Climate change agenda

• Prevent waste by community engagement and campaigns

• Cooperation across the 10 authorities

Greater Manchester Procurement (1)

• Outline business case - October 2004

• Approved affordability of £4.4 billion over 25 years - January 2005

• Advertise contract notice - February 2005

• Prequalify 5 bidders and receive outline proposals - July 2005

• 4 bidders submit detailed proposals

Greater Manchester Procurement (2)

• Short list 2 bidders - May 2006

• Best and final offers - November 2006

• Preferred bidder – January 2007

• Financial close – April 2009

Completion in the Credit Crunch

• Major delay caused by funding crises led to innovative funding

Source of Funding %

Commercial Banks 31

European Investment Bank 23

Equity Investment - Sponsors 19

UK Government Treasury Infrastructure Finance Unit 15

Capital Contribution 8

Greater Manchester Waste Disposal Authority Senior

Debt

4

TOTAL 100

What does Greater Manchester get for the money

• A 25 year service

• Alignment of the Councils to collect 4 streams

– paper, card, cardboard cartons

– commingled plastic, glass and cans

– garden waste and food waste

– residential waste

• 50 % recycling rate by 2020

• 75% diversion from landfill by 2020

• £631 million capital investment in new plants

The New Infrastructure

Completion – January 2012

Total capital cost of new construction: £631 million

Capacity for 1.4 million tonnes per annum

4 Education Centres

25

Household Waste

Recycling Centres

7 Transfer Loading

Station

5 Mechanical Biological

Treatment Plants (4

with Anaerobic

Digestion)

1 + 2 Material Recovery

Facility

/Green Waste

Facilities

4 In-Vessel Composting

Plants

1 Thermal Recovery

Facility

1 Thermal Power

Station

Green Benefits

• Ineos Chlor

– Ineos Chlor operate a major chemical plant at Runcorn

– Produce chlorine and PVC

– Huge energy user

– Greater Manchester’s 275,000 tonnes per year solid recovered fuel to be burnt in a combined heat and power plant

– produces 500,000 tonnes of steam and electricity equivalent to 1 million homes (20% of their need)

• Anaerobic Digestion

– Biogas construction

– 4 megawatts of electricity to the grid

UK Based Waste Resource – Case Studies

Michael Grimes

Partner

Eversheds LLP

Direct +44(0) 845 498 4796

Mobile +44(0) 7831 531 755

michaelgrimes@eversheds.com

© EVERSHEDS LLP 2012. Eversheds LLP is a limited liability partnership.