Sustainability

Eunomia says rewards of ACT investment may outweigh risks

A new report released by Eunomia Research & Consulting yesterday (30 November) has detailed several reasons why investors should remain cautiously positive about advanced conversion technologies (ACTs), despite their mixed track record.

The report suggests that ACTs that treat residual waste treatment using gasification or pyrolysis can hold their own against different treatment technologies in the growing residual waste market.

Eunomia says rewards of ACT investment may outweigh risks
Air Products's abandoned TV1 development

ACTs are essentially thermal processes that use very high temperatures (430°C in pyrolysis and more than 700°C in gasification) to break down organic or fossil-fuel based materials to liberate energy. These processes use little to no oxygen and produce ‘syngas’, a mix of hydrogen and carbon monoxide, which can be used to produce energy through steam turbines or be used as a biofuel, though this is comparatively rare.

In theory, ACTs hold several advantages over incineration in that they wield a higher efficiency, release lower emissions, are able to deal with some heavy metals, and can operate through a modular system which allows more flexibility than a mass-burn incinerator.

However, a number of developments using such technologies have failed this year and a number of ACT companies have entered administration, including high-profile cases like Air Products’s Tees Valley 1 and 2 facilities, which were abandoned at a cost of around £700 million to the company, and problems at Viridor’s Glasgow Recycling and Renewable Energy Centre, which led to energy-from-waste specialist Energos entering administration.   

Government support ‘critical’ to securing advantage

Eunomia suggests that the eligibility of ACTs for the government’s Contracts for Difference (CfDs) renewable energy support scheme is critical to securing their competitive advantage, with ACT facilities operating with CfD support having the potential to operate profitably with lower gate fees than other facilities.

Support can be gained if UK facilities meet the criteria for good quality combined heat and power (GQCHP), although only three ACT facilities have currently secured CfD funding, with only one under construction.

And while the Department for Business, Energy and Industrial Strategy (BEIS) recently confirmed that ACT projects can apply for support at the April 2017 auction, the government is currently consulting on whether CfDs are a suitable way to support ACTs, the result of which could have significant consequences for state support for ACTs.

Furthermore, while residual waste is not an ideal feedstock for ACTs, which are well-established in other industries – to treat coal and peat, for instance – the fact that high gate fees can be charged for the reception of this waste makes it an attractive option, according to Eunomia. The UK currently has two operational ACT facilities in Oldbury and Avonmouth, while another 10 are under construction. Together, these will have a treatment capacity of 1.8 million tonnes per annum (tpa) with an electrical output of 200 megawatt electric (MWe).

A further 5.5 million tpa of ACT capacity, equivalent to 600 MWe of additional power, has planning consent, the progress of which may depend on the success of existing facilities and those under construction.

Eunomia says rewards of ACT investment may outweigh risks
Operational and Under Construction ACT Facilities in the UK

Although investors may be put off by concerns over the ability to guarantee sufficient feedstock for ACT facilities, an issue that Eunomia has raised in the past, Eunomia’s report suggests that Brexit could increase the amount of available residual waste for ACT facilities if the UK chooses not to commit to higher recycling rates stipulated in the EU’s Circular Economy Package or if the export of residual waste becomes less attractive due to a weakened pound.

“ACTs will be competitive”

Launching the report, Mike Brown, Managing Director of Eunomia, explained: “Despite current uncertainties, investors need to make a quick decision about whether to get involved in the ACT market. ACTs will be competitive in the April 2017 CfD auction, which could make for a good business case for development.

“In future rounds, support for ACTs may be refocused on higher value applications of syngas, such as industrial heat, transport fuel or the manufacture of chemicals.”

Mark Sommerfeld, Policy Analyst at the Renewable Energy Association, added, in response to the report’s publication: “The UK has world-leading ACT expertise and the government should act to ensure that a full suite of ACT renewable products are developed for domestic use and, eventually, for international export. ACT can produce green chemicals and renewable transport fuels, including valuable aviation fuel.

“ACT is a cutting-edge means of turning wastes into renewable gas and products, and should be supported. We hope that this report will be taken on board by government and used to inform the future Industrial Strategy. The beauty of this technology is that its byproducts include expanding our waste management capacity and reducing the amount of trash heading to landfill.”

Words of caution

Any optimism surrounding the potential benefits for investors in ACTs must be approached with caution.

The implementation of the technologies as a treatment method for residual waste in the UK, was first pushed by the then-Labour government’s New Technology Demonstrator Programme. Launched in 2003, the programme sought to overcome the perceived risks associated with the technologies, has seen more cause for pessimism than hope.

Since 2003, there has been a litany of cautionary tales largely regarding gasification and pyrolysis projects, with companies investing in ACT projects such as New Earth Technologies, Scotgen and Air Products going into administration, losing its environmental permit, and withdrawing from the energy-from-waste business respectively, after failed ACT projects.

A briefing released in November by the UK Without Incineration Network (UKWIN) warned investors of the risks of gasification projects, following Air Products’s withdrawal from the energy-from-waste business after abandoning the gasification facilities in the Tees Valley.

Shlomo Dowen, National Coordinator of UKWIN, commented: “Promoters of gasification and pyrolysis schemes often cite existing and past projects to bolster support for their new proposals, but don’t like to mention that those other projects were actually embarrassing failures.

“Gasification and pyrolysis is an expensive misstep when it comes to waste management, because even if someone ever manages to get the ill-fated technology to work it would still have all of the problems of more conventional waste incineration.

“As with all forms of incineration, these technologies would result in shocking levels of CO2 being released and would rely upon destroying valuable material that should be recycled, composted or reused.”

Eunomia’s Investment in Advanced Conversion Technologies report can be downloaded from the company’s website. More information about the prospects of gasification and pyrolysis in the UK waste sector, including commentary from Eunomia’s Head of Energy Adam Baddely, can be found in an in-depth article in the current issue of Resource magazine.

Related Articles