State Aid

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Outline Priorities Plan

• Board Presentation
• 11th December 2008

Peter Calliafas Chair Policy Committee
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Agenda

• A Brief history of the LWaRB.
• Our approach to the challenge.
• Londons Financial and Environmental Balance
  Sheet.
• Londons lost opportunity.
• Indicative priority resource materials,
  interventions and some case studies.
• Indicative funding profile and emphasis.
• Funding and support principles.
• Tangible outcomes and measurement.
• Milestones, next steps and deliverables.
• Summary and benefits.

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LWaRB - A Brief History

• London Waste and Recycling Board Order 2008 came
  into force on 24th July 2008.
• 60m available from Central Government (Covers
  the period 2008 2011) plus a further 24m from
  the LDA.
• Board priorities in respect of financial
  assistance include-
• The provision of facilities for or in connection
  with the collection, treatment or disposal of
  waste produced in Greater London, or
• Conducting research into new technologies or
  techniques for the collection, treatment or
  disposal of waste, or
• Securing, or assisting in securing, the
  performance of any function of a London Borough
  Council or the Common Council relating to waste.

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OUR APPROACH TO THE CHALLENGE
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A Resource not a Waste
Resource Mining
Pictures courtesy of Google Images
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A Commercial Approach

• Developed in line with the Boards away day
  themes.
• How to maximise the business and investment
  opportunities arising from our wasted
  resources?
• Mine the resource to produce a quality product
  for an end market that crowds out
  raw materials, or
• Use the embedded calorific value to displace
  fossil carbon.
• Focus on market and demand led pull solutions.
• Payback and/or profit share for participating
  stakeholders.

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LONDONS CURRENT FINANCIAL AND ENVIRONMENTAL
BALANCE SHEET
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London PLC
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London PLC Notes to the accounts

• Londons population is 7.5 million due to rise
  to 8.5m by 2031 potentially producing more waste.
• 398,430 businesses in London across a broad
  range of sectors. 25 of the tonnage is produced
  from big businesses and 25 from SMEs.
• 767,000 commuters travel into London and 321,000
  out. 26 million overnight tourists to London and
  132 million day visitors per year.
• The common denominator is people.

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London PLC Resource Materials

• The total resource arisings for London are in
  the region of 20 million tonnes per year. 18
  million identified in the London Plan plus 2
  million not identified from the construction and
  demolition sector
• While aggregates waste are the biggest material
  stream - over 85 recycled or used in land
  recovery.
• Significant quantities of food, plastic and wood
  waste, textiles and paper and board are disposed
  of to landfill or used for energy recovery.

Source EA, Capita Symonds, BRE, Turner and
Townsend
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London PLC Residual Capacity Gap

• London produces an estimated 20 million tonnes
  per year.
• It has capacity to manage 10 million tonnes per
  year.
• 90 per cent of CDEW waste is either recycled or
  put to beneficial use. Some (about 2 million
  tonnes) of this happens in sites that are exempt
  from waste licenses, while another 1.6 million
  tonnes is exported to the surrounding regions.
  This implies that 6.2 million tonnes is managed
  within London

(14 million inc CDEW assumed to be managed in
London)
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LONDONS LOST OPPORTUNITY?
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London PLC Resource Costs
New capacity being built.
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Case Example UK Demolition Timber
Tonnes saved
2
Tonnes unreusable
37
Tonnes destroyed
but reusable
61
12 of the above figures London 60 wasted
opportunity
BigREc surveys 1998 and 2007
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INDICATIVE PRIORITY RESOURCE MATERIALS AND
INTERVENTIONS
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Indicative Priority Resource Materials

• EARLY ANALYSIS OF LONDON PLC PIE CHART
• Organic
• Wood
• Plastic
• Paper and Board

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Interventions - The Mechanics toolbox
Minimisation
Market and demand led pull solutions
Reuse, then Recycle
Infrastructure and capacity building
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Effectiveness of these Interventions
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SOME CASE STUDIES
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Novera Energy / Shanks / Ford

• The Sustainable Energy Facility
• Novera Energy was granted planning permission
  in September 2006, for a new Sustainable Energy
  Facility near the Fairview Industrial Estate,
  Rainham.
• The facility will be supplied with 13 tonnes of
  biomass fuel per hour from neighboring Shanks
  waste fuel facility and will be capable of
  generating around 10MW of energy (64 of which is
  classed as renewable), enough to power 10,000
  homes
• The facility will provide a source of renewable
  energy for the Ford Motor Company Limiteds
  operation in Dagenham.

Shanks Frog Island
Novera Energy Sustainable Energy Facility
Dagenham Engine Plant
Pictures courtesy of Lets Recycle
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Indesit / Axion / WRAP

• Recycled WEEE
• Indesit has become the first company to
  successfully incorporate recycled content derived
  from the UK waste stream within white goods on a
  large scale.
• The Italian company, in collaboration with WRAP
  and Axion Recycling, spent many months
  investigating the potential to extract plastic
  materials from Waste Electrical and Electronic
  Equipment (WEEE), and recycle them for use in the
  manufacture of new products.
• The project delivers substantial savings in raw
  materials and costs.
• The plant uses 100 per cent recycled content,
  sourced from UK WEEE, representing a step change
  in UK manufacturing.

Story and photos courtesy of MRW and Lets Recycle
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Ealing BC / Cawleys / Biogen

• Food into wattage
• Ealing Council has been collecting residents
  food leftovers since 2006 as part of the weekly
  recycling collection.
• In 2007 it began a six-month trial in
  partnership with waste management company Cawleys
  and BIOGEN.
• Cawleys handle the bulk collection and deliver
  it to BIOGENs Bedfordshire based AD plant.
• Recycling rates have increased across the
  borough over recent months.

Photos courtesy of WRAP and Biogen. Information
from Ealing website.
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Common Case Study Threads

• Market Demand
• Energy sinks
• Manufacturer / Producer

Technology Provider

• Site Provider
• Private landowner
• Boroughs
• LDA

Collaboration Vehicle

• Collaboration benefits
• Economies and efficiencies of scale.
• Saves money.
• Common sense of purpose.
• Common share of risk.

• Raw Material Provider
• Business
• Boroughs
• Waste Companies

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INDICATIVE FUNDING PROFILE AND EMPHASIS
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Indicative Funding Profile
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FUNDING AND SUPPORT PRINCIPLES
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Our Funding Principles

• Quick wins and legacies, not quick fixes.
• Will not fund projects which will happen anyway.
• Must have a compelling business and investment
  case that deliver tangible outputs and/or
  outcomes.
• Evidence of collaborative working across
  boundaries.
• Solutions predicated on positive environmental
  impacts.
• Must provide excellent value for money
• Range of potentially flexible funding solutions,
  to include a) equity, b) debt, c) guarantee
  support and d) grants.

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And going the extra mile too.

• Build relationships with our customers.
• A proactive partner seeking to add value.
• Potential help and assistance in building supply
  chains.
• Facilitating collaboration partnerships.
• Potential help and assistance with putting
  projects together.
• Potential help and assistance in overcoming
  procurement barriers.
• Programme management.
• Breaking down market barriers.

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TANGIBLE OUTCOMES AND MEASUREMENT
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Tangible Outcomes and Measurement

• Tonnage diverted.
• Increased reuse and recycling levels.
• Climate change mitigation.
• Exemplar projects (Energy and Product).
• Technology evolution.
• Economic value (Disposal savings) or economic
  uplift (Jobs,
• regeneration) or both.
• Private sector leverage in of capital assets.

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MILESTONES, NEXT STEPS AND DELIVERABLES
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Milestones to date

• July Order came into force.
• Sept Inaugural Board Meeting.
• Oct Board Awayday.
• Nov Policy Committee first meets.
• Dec Presentation of Outline Priorities
  Plan.

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Next steps to February Board Meeting

• December 2008
• Finalise priority resource materials analysis.
• Determine intervention actions and effectiveness
  for each priority resource material.
• Develop options for fund distribution.
• Engage with stakeholders to build a pipeline of
  projects and to identify quick wins
• possibly a call for expressions of interest.
• Selectively procure in external expertise to
  provide detailed material stream analysis.
• Jan 2009
• Identify legal barriers and solutions state
  aid, procurement regulations.
• Finalise fund profiling options and priority
  interventions.
• Develop investment selection criteria.
• With Chief Operating officer identify project
  support and administration options.
• Identify key risks (i.e. planning and/or
  permitting) and how to mitigate.
• Feb 2009
• Board Sign off of Priorities Plan.
• March 2009

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Priorities Plan February Deliverable

• The Priorities Plan will set out
• London and its resource materials background.
• The funding priority areas together with the
  proportion of funding allocated to each priority
  
• area and a re-profiling of the fund as
  applicable.
• The types of intervention actions and which
  infrastructure will be eligible for funding.
• Project investment selection criteria.
• The process by which the Board will distribute
  the fund.
• Planning and other risk issues.
• Deliverables, other desired outcomes and
  measurement.
• Administration structure to support the
  development of projects

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SUMMARY AND BENEFITS
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Summary

• Clear strategic fit with the London Plan and the
  LWaRB order.
• Commercially focused Board.
• Addresses wide stakeholder concerns and issues.
• Targeting quick wins and legacies, not quick
  fixes.
• A focus on end markets, the priority residual
  resource material streams
• and reverse supply chains.
• Financial assistance provided on solid business
  and/or investment
• cases that generate tangible outcomes.
• Leverage in private sector capital assets and
  collaborate
• with key partners.

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Benefits to Boroughs

• Long term legacy benefits as opposed to short
  term support.
• Diversified and credible outlet choices.
• Lower financial costs (direct and indirect)
  through avoided landfill tax and gate fees.
• Resilience to future market shocks and market
  prices.
• Active participation in projects plus financial
  upside through public/private sector
• involvement.
• Assists with regulatory compliance (e.g. LATS,
  LAAs) and potential to increase
• recycling rates.
• Reduction in carbon footprint (NI 85 86).
• Creating positive public perception in response
  to public demand.

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Benefits to Business Community

• Market stability for price, supply and costs
  leading to lower financial costs leading to
• potential uplift in bottom line.
• Shared Risk exposure.
• Business planning certainty creating an
  investment opportunity.
• Energy security.
• Simplified logistics leading to less
  administration.
• Closed loop supply chains providing security.
• Mitigates regulatory impacts (i.e. landfill tax
  , CRC, packaging).
• Opportunity for social enterprises.
• Enhanced corporate social responsibility.

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Benefits to Londoners

• Value uplift in Londons environmental economy.
• Job creation.
• Greater resource transparency, understanding and
  environmental feel good factor.
• Market led convenience to increase re-use and
  recycling.
• Local heat and power plants providing cheap
  energy.
• Shared participation and benefits.
• Increased confidence in local authorities and
  community leadership.

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Key messages to take away.

• London leadership and vision setting.
• Resource recovery not resource destruction.
• Market and enterprise led approach by the Board.
• Creating a solvent and sustainable environmental
  balance sheet.
• London Resource Recovery Board.

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