The Scottish Low Carbon Investment Conference

Q: What is energy from waste?

A: What it is NOT is the incineration of harmful waste with careless disregard for human health and the environment. That is all too often the public perception. However, even ‘mere’ incineration of waste is now strictly controlled pursuant to the EU Waste Incineration Directive 2000, but that is NOT what energy from waste is about. There is much more to it than that. It covers a very wide spectrum, but generally it involves taking a waste and doing something intelligent with it. At the less sophisticated level, many operators process the waste, combust it under controlled conditions and derive energy from it. The really clever stuff is where you transform the waste so that it is not waste any more. The ‘fuel’ produced is just that – a fuel, not a waste. The processing is so good, that the material ceases to be waste. It has left the waste chain.

Q: What is the significance of it leaving the waste chain?

A: It secures an environmental result at more than one level. Firstly, by transforming waste into fuel which is no longer legally classified as waste, operators in that field (by legal definition) remove the harm from the material that would have characterised it as waste - they manufacture a ‘virgin-equivalent’ fuel product, but the bonus is that they make it from waste sources that would otherwise have continued to present an environmental problem. Thus, and secondly, they therefore displace and conserve natural or ‘virgin’ fuel (usually fossil fuel) resources. This is the high end of energy from waste where the energy is being derived from a waste-derived product. That is a huge difference legally, environmentally, and commercially.

Q: How significant is Europe in governing development in this area?

A: There are lots of policy papers (and some legislation) at national level, but everything is driven by and enforced by the EU, both through the European Commission at policy level and the European Court at ‘hard law’ judicial level. It is a very "definitional" area - the definition of a waste, the different types of waste, when is a waste not a waste, when does a waste cease to be a waste etc – all these are governed by EU law.

Q: How did Semple Fraser get involved in this area?

A: This is a highly developed EU law sub-specialism of environmental law. In the early part of the last decade, we developed very strong academic and publishing credentials in the field of waste and contamination law. This further developed exponentially in the mid-decade when we were appointed by the European Commission to assess the laws of several member states against EU waste and industrial emissions laws, and so we delved deeper into the legal and regulatory aspects of EU waste law. Just after that, we also led the UK legal team in one of the most important landmark court rulings ever in the field of industrial law.

Q: What was the case about?

Nothing less than the future of the entire ‘waste to fuel’ industry in the UK (and potentially across Europe). We represented the UK’s largest oil recycling company, the OSS Group. The powerful combined force of the English Environment Agency and UK Government contended that there was an insurmountable legal barrier under EU law to the transformation of any waste into a fuel product. We argued that if you take a waste and process it to the point where it has analogous characteristics to a commercial or ‘virgin’ fuel, then you have made it into something very different, made it into a product. The EA and the UK Government had a previous High Court ruling in their favour, and we lost the case in the High Court in London. However, the Court of Appeal unanimously accepted our interpretation of EU law .

Q: What was the impact?

When the Court of Appeal said that you can turn waste into a fuel before combustion, the commercial opportunities were enormous. In all but the most sophisticated incinerators and power stations, it is legally impossible to burn a fuel that is still classed as a waste. This affects most boilers and burners in premises such as hospitals, prisons, schools and other public buildings, as well as the majority of industrial boilers. The ruling reversed this, and opened up the waste to energy industry at this higher level. In our own practice alone, we have assisted clients exploit and develop the practical commercialisation of across several sectors. For example, processing cooking oil to a point where it can be a substitute for diesel and generate electricity, or substituting processed offshore drilling wastes for fossil fuels in industrial boilers. With our key clients, we are driving an agenda where more and more operators are able to invest in and use these ‘fully recovered’ fuels in a manner which is environmentally acceptable because they are not classed as a waste any more.

Q: How has this changed the definition and image of energy from waste?

A: There is no legal definition of energy from waste. It is just a description of what sometimes happens when you combust materials that are either (a) waste or (b) derived from (but are no longer) waste. This latter distinction generally is lost on most ‘anti’ campaigners. In a sense, you can’t blame them given that it took a major court ruling to get the Government itself to recognise the distinction legally. I am not sure it has done much to change the popular image of energy from waste. This of course is unfair. At the higher level of ‘End of Waste’, this type of process is sustainable on a number of levels – it is the acceptable way of dealing with waste, diverting it from both landfill and incineration (of waste) and in a way that recovers heat and electricity and displaces (and thus conserves) fossil fuel resources. Many in industry also say that its carbon footprint is dwarfed by the use of such natural fossil fuels.

Q: How are businesses taking control of the commercial opportunities?

A: Some are re-branding themselves as resource and energy companies, not waste companies. In many cases, it's a genuine description of where their focus is. They manufacture fuel, so they see themselves as energy businesses. Indeed, in many cases (where biomass types of waste are concerned) they are in the renewable energy business – so the ‘virtuous circle’ is complete. On the ground, it's all about practical, technical expertise. People are developing intelligent equipment that can take out or reduce to acceptable levels the pollutants in waste. Such kit is usually very expensive but can also deliver enormous commercial advantages.

Q: How is legislation and regulation helping to drive the agenda?

A: It is now much more difficult to landfill and burn. Landfill tax is so high and the legal hurdles so prohibitive. Even with state-of-the-art, legal, landfill it's hard to get an operating permit, never mind planning permission. On the recycling and recovery side, it is (comparatively) easier to get where you want to be. On the other hand, the planning and environmental permitting regimes are expensive, time-consuming and their application and enforcement variable and inconsistent.

Q: Where does energy from waste fit in with the renewables agenda?

A: It fits into a small category of legally defined ‘renewable energy sources’ (per the 2009 Renewable Energy Directive), but we feel in certain respects that not enough has been done to explore the potential for waste-derived fuel energy products to contribute to renewables targets. Waste is a problem - if you can take that problem and turn it into a solution, by taking a waste that would be burned or landfilled and make a new energy product from it, that's renewable energy as far as I am concerned. However, the legal definition of ‘renewable’ is tighter than that, and tends to be restricted to biomass type wastes. I think we are missing a trick if we don't maximise the incentivisation of the recovery of fuel sources from our many waste streams.

Q: What hurdles remain for EfW?

A: The ‘image’ problem combined with the planning system continue to be a drag. There is also market uncertainty in relation to electricity market reform and how much of a share of the renewables cake EfW can expect to get. There is no doubt there will continue to be market incentives to create renewable energy, but who is getting what? There are fears that certain biomass industries will not get a piece of the cake. The long-term agenda from government must be clearer. There is still a lack of legal understanding about when a waste becomes a fuel or energy product. This is not surprising because the law is complex, but it is an issue, for legal and commercial reasons. Waste is a liability and although people can do clever things with it, unless you achieve its de-classification as a waste, it tends to be treated as a liability, and this brings a commercial negative. If the fuel is a legal product, it's a totally different commercial conversation. There is still a lack of understanding of the legal boundaries.

Finally, because securing product status is legally and technical demanding, many candidates fall short because their technical process does not quite measure up.

Q: Do you have examples of intelligent projects to create energy from waste?

A: I mentioned above the examples of the used cooking oil used to generate renewable power, and the offshore drilling wastes converted into an industrial fuel product. We must not forget the pioneers, in the onshore waste oils recovery industry – this was the sector involved at the heart of the game-changing court case already referred to. Our clients, the OSS Group, the UK’s largest oil recycling company, have invested millions in developing an industry leading fuel product from used lubricating and fuel oils recovered from garages and other sources in the automotive sector, and wrote their name in legal history in the Court of Appeal. This is all the more spectacular an example since the used lubricating and fuel oils are ‘hazardous wastes’. In recent years, we have assisted clients in the transformation of the legal status of wastes such as sludges produced by the water and sewage industry, and are currently working in a range of other sectors (municipal, highways, utilities, agricultural) to expand the boundaries of this new legal and technical field.

Vincent Brown is a partner with Semple Fraser LLP, Visiting Professor in Environmental Law at University of Strathclyde Law School, and is a leading specialist in EU waste and pollution law. www.semplefraser.co.uk