Resource Use

Defra withdraws PFI funding from Norfolk incinerator

Architect's impression of the Saddlebow incinerator.

The Department for Environment, Food and Rural Affairs (Defra) has announced that it has withdrawn £91 million (or £169 million over 25 years) of Private Finance Initiative funding (PFI) from Norfolk County Council’s (NCC) waste incinerator project.

The contract for a 250,000 tonne capacity energy-from-waste (EfW) facility at Saddlebow, Kings Lynn was awarded to the Cory Wheelabrator consortium last year. Planning permission for the £500 million Willows Power & Recycling Centre was granted last June, and once completed, the project was expected to process up to 250,000 tonnes of waste a year and power over 36,000 homes.

King’s Lynn becomes the latest project affected by Defra’s reversal in stance, after it revoked a total of £217.1 million of funding from three waste PFI projects in February, finding that the 29 projects that already had funding were ‘sufficient’ to meet the EU’s 2020 landfill diversion targets. It is for this same reason that the Saddlebow incinerator is having its funding withdrawn.

North Yorkshire County Council’s Allerton Waste Recovery Park project and waste management plans for Bradford and Calerdale Councils and Merseyside were affected by the previous withdrawal, and have now submitted an application to the High Court asking for a judicial review into the decision.

Revocation ‘appropriate and necessary’

Former Resources Minister, Lord de Mauley, wrote to NCC last Friday (18 October), to outline that following a review into a breach of planning permissions, the department had come to the conclusion to revoke project’s Waste Infrastructure Credits (WICs) as it ‘considered it sufficiently likely that the EU Landfill Directive targets will be met without a contribution from the NCC project'.

de Mauley continues: ‘In short, we do not consider that the award of WICs to the project is necessary to increase the estimated likelihood that the 2020 Landfill Directive target will be met, and therefore the principal purpose underlying the award of WICs no longer applies.

‘In addition, we considered the potential impact on the environment, but have concluded that, in the current financial circumstances, the decision to withdraw the WIC letter is justified.’

He concluded: ‘I appreciate this is a decision that will be extremely disappointing to the authority. It has not been taken lightly, but is considered appropriate and necessary in the circumstances. NCC will clearly need to consider its implications, which as we have already acknowledged, will be significant and wide ranging.’

Indeed, Norfolk County Council Leader George Nobbs has expressed his ‘disappointment’ at the news today (18 October), saying: “Today’s announcement clearly adds a new dimension to the debate about waste disposal in Norfolk.

“I have instructed officers to report back in time for the Full Council meeting [expected to be held on 28 October], which I am glad is taking place, so that we have an informed debate around all the issues. I have always recognised that people on all sides of this debate have sincerely held views that need to be aired as part of this process.

“Nonetheless, the council is still bound by the contract entered into by the previous administration.

“Make no mistake, which ever way you choose to look at it, this is more bad news from this Government for Norfolk taxpayers.”

As well as discussing the financial consequences of the PFI withdrawal, the council will also discuss:

  • contingency arrangements;
  • implications for the County Council’s budget position; and
  • whether to accept or reject the ‘Revised Project Plan’ for the Energy from Waste contract and to recommend to Cabinet that they accept and act on the decision so made.

The Council’s Cabinet will meet the next day (29 October) at 9am to consider any issues arising from the previous day’s debate.

Paul Green from Cory Wheelabrator said: “We are disappointed that the Waste Infrastructure Credits have been withdrawn from the Norfolk project. The consortium will submit a revised project plan to Norfolk County Council in line with its contract.”

'End of the incineration project'

Speaking to Resource, Shlomo Dowen, National Co-ordinator for the UK Without Incineration (UKWIN), suggested that the withdrawal may now mark the end of the Norfolk incineration project: “The Saddlebow incinerator was one of three identified by the National Audit Office as being a focus for closer scrutiny in relation to value for money, and there was a study written by academic economist Chris Edwards that specifically stated that were PFI funding to be withdrawn, the remaining PFI would not offer value for money – so there’s a real hope that this marks the end of the King’s Lynn incinerator project.

“Whether of not the contract ever offered value for money is no longer the question, the question now is, would it be able to offer value for money even without the PFI credits? The evidence would suggest it does not.”

Dowen added that government has now withdrawn funding for around 10 waste PFIs, it would be "prudent for any local authority with a waste PFI contract to review whether or not it offers value for money.”

Contention

The construction of the Willows Power and Recycling plant in Saddlebow has been a source of much contention within the county, with the borough of King’s Lynn and West Norfolk so opposed to it that it took the decision to withdraw from the county council’s waste strategy and withhold black bin waste from them in order to process their recycling themselves (read more in Resource 72).

Instead, the borough council entered into a 16-year conditional contract with Material Works which will see the waste management company construct a 35,000 tonnes per annum residual waste treatment facility in the area, combining anaerobic digestion and a ‘new’ polymerisation technique.

Further, the incinerator has been the subject of a public inquiry, after 65,000 people voted against the incinerator in a poll organised by the Borough Council of King’s Lynn & West Norfolk (which would host the proposed site), which then wrote to the Secretary of State for Communities and Local Government, Eric Pickles, urging him to take control of the planning application.

Public opposition ranged from concerns over the incinerator’s impact on human health, concerns over Cory Wheelabrator’s ‘errors in emissions modelling’ (and thus Norfolk County Council's admission they submitted ‘incorrect information’), doubts over whether the consortium had adequately assessed flood risk, and Wheelabrator’s previous pollution and monitoring violations in the USA. Cory Wheelabrator has refuted these allegations.

The amount of incinerators in the UK has come under scrutiny recently, with a recent report from Eunomia Research & Consulting suggesting that the UK could see overcapacity in residual waste treatment plants by 2015, if the current rate of construction is not curbed. The report suggests that due to increased emphasis on recycling, reusing and recovering material, residual waste rates are falling, leaving incinerators without the required levels of waste needed to produce efficient and cost-effective processes.

Read more about the Saddlebow incinerator.