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AD steps out of the shadows

The coalition Government has brought with it new priorities, one of which is that the parties “will introduce measures to promote a huge increase in energy from waste through anaerobic digestion (AD)”. The importance of this to the waste industry is that, in the pecking order of technologies, AD is now centre stage rather than being seen as a technology always on the verge of becoming viable.

What will this mean for those working in the waste environment? Lord Redesdale, chairman of the Anaerobic Digestion and Biogas Association (ADBA), the trade body representing the industry in the UK, recently said: “The emphasis on AD is the only way the Government will meet its waste directive targets. Without AD it is almost certain that renewable energy and climate change targets will not be met.” Pressure from the EU could well see organic waste being directed away from combustion towards AD because of the potential value of digestate.

Why is an industry that was for so many years seen as being on the cusp of financial viability now seen as the lynchpin of Government policy? The answer is that AD has one unique selling point and that is the production of biogas, a low-carbon fuel that can be fed directly into the gas grid, used to generate electricity or converted into a transport fuel. At present councils dealing with organic waste have to pay gate fees to dispose of it. But in the future it will be seen as a valuable feedstock. Indeed, the concept of discarded organic matter being called ‘waste’ is challenged by ADBA because of the potential value of this fuel supply. It is also likely that the economic model for AD will change.

Although the industry will receive subsidies for the production of biomethane or electricity, it is quite possible that gate fees will sharply decrease or even become a cost. This could be seen as the Achilles heel of the industry. But in the same way that gate fees may well be reduced, the value of digestate as a nitrofertiliser is almost certain to increase in line with any increase in oil prices because nitro-fertiliser is heavily oil-dependent in production costs.

The real value of the AD process, however, is in its ability to decarbonise the gas grid. ADBA has calculated that 20% of domestic gas could come from biogas produced through AD. If this figure causes scepticism, National Grid calculated that 40% of national gas could come from AD and professional services company Ernst & Young suggested a rather optimistic 50%. Sticking with the 20% figure, that would equate to around £2bn-worth of gas a year at today’s prices. The billed cost for the estimated 1,000 plants that will be needed, 75% of which in the agricultural sector, is between £2bn and £5bn. On these figures, it is not difficult to see that there is going to be heavy competition for feedstock.

It is estimated that there are 100 million tonnes of organic material produced in the UK each year, of which 70 million tonnes is probably usable. This includes roughly seven million tonnes of food waste, mostly from the food production process. Biogas is important to the UK because, by 2015, it is projected that we will be importing more than 80% of our gas. It is therefore vital for the UK’s energy security that we replace as much imported gas as possible. Any future rises in the price of gas will increase demand for biogas in any event.

The technological difficulties have already been solved in Germany, where more than 53 plants are already injecting into the grid. The regulatory problems in the UK will also soon be resolved, and ADBA is working closely with DECC, Defra and the Health & Safety Executive to help overcome these. But the economic value of the biogas is of paramount importance. A likely future development is a tradeable market in biogas which, as a low-carbon fuel, will lend itself to be included in a number of initiatives to reduce carbon usage in the building stock. The value of biogas is likely to achieve a premium that, in the future, could be far more valuable than Government subsidies.

Many renewable energies have their moment in the sun; 2010/11 will be the year of green gas and see huge growth in AD. Many waste managers may not yet have had AD as a main component in their plans. But the direction of Government and European policy means that ignoring AD could be an expensive mistake.

MAKE THE MOST OF YOUR WASTE

The AD industry is set for exponential growth. The UK now has to commission around two AD plants every week for the next 10 years to meet its renewable energy targets, which makes for a huge marketplace. With these wide-scale opportunities in mind, the Anaerobic Digestion and Biogas Association (ADBA) is hosting UK AD & Biogas 2010, the first trade show in the UK to focus exclusively on AD and biogas.

The show will open its doors on 7-8 July at Hall 10 of the NEC Birmingham, and is set to provide a platform for everyone interested in learning more about AD and biogas, from professionals involved in the waste, renewable energy, water and farming industries to local authorities, planners and civil servants working for the key Government agencies helping to build the industry.

This two-day trade show offers an exciting programme of free seminars, workshops and case studies, plus a high-profile conference, The Future of the AD Industry in the UK. This will include leading industry experts presenting and debating the future of the industry, including what is being done and has to be done to pave the way for decarbonised gas grids in the UK.

Issues ranging from feedstocks, collection and use of municipal waste, co-digestion, grid injection, biofuels, finance and many more will be discussed by expert speakers ranging from government ministers, Lord Oxburgh, Sita, Defra’s waste strategy team, the Environment Agency, WRAP, British Gas, Severn Trent Water, Ofgem, Lloyds Banking Group, The Cooperative Bank and many more.
Visit www.adbiogas.co.uk

 

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