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Defra reveals methodology behind PFI cuts

Estimated municipal solid waste (MSW) arisings of 55.4 and 59.3mt, which exceed predicted 2020 landfill directive targets by between five and ten percent for household waste, were a key determinant in Defra’s decision to withdraw funding credits for seven waste PFI projects.

The announcement, which was delivered in Defra’s portion of the comprehensive spending review, explained that seven projects had lost funding because of projected overcapacity in waste treatment infrastructure ahead of the 2020 landfill directive targets.

Speaking at the time, Lord Henley told MRW: “We are satisfied that we’re already doing pretty well in terms of meeting our landfill targets, and we’re perfectly happy we’re going to meet the 2020 targets by keeping the 11 projects and losing the seven.”

According to the supporting analysis for the decision, Defra estimated total municipal solid waste arisings using a combination of factors. These included household and commercial and industrial (C&I) waste levels, projected recycling rates of 50% for household (the Waste Framework Directive target for that year) and 60% for C&I waste (derived from a survey of C&I arisings in the North West) and a biodegradable content of 68% for all municipal waste. These factors generated four possible scenarios for MSW arisings by 2020:

  • Scenario 1: 51.5mt - Assumptions based directly on forecasts from the ARIMA and ADAS economic models.
  • Scenario 2: 55.4mt - Arisings in 2020 exceed scenario 1 by 5% for household waste and 10% for C&I municipal waste
  • Scenario 3: 59.3mt - Arisings in 2020 exceed scenario 1 by 10% for household waste and 20% for C&I municipal waste
  • Scenario 4: 62.4mt - Arisings in 2020 exceed scenario 1 by 12% for household waste and 30% for C&I municipal waste.

In addition to the arisings, the four scenarios identified the level of infrastructure required to process waste above the maximum 10.2mt allowed to be landfilled, with estimates of relevant under and overcapacity for each scenario.

Amount of avoided landfill over and above the targets for scenarios incl. between 2 and 3

Waste Scenario
No of funded projects122.332.534
mtpamtpamtpamtpamtpamtpa
00.84-0.3-0.68-0.87-1.44-2.37
51.160.02-0.55-0.36-1.12-2.05
111.540.40.02-0.17-0.74-1.67
141.730.590.210.02-0.55-1.47
181.990.850.470.28-0.29-1.22
            

The analysis stated: “We have concluded that the best balance between being precautionary and minimising cost is to plan on the assumption that the MSW arising in 2020 lies somewhere between 55.4mt (Scenario 2) and 59.3mt (Scenario 3).

“Going beyond this to select the exact tonnage to determine the number of projects required can only ever be based on judgement on what is reasonable in the circumstances.”

Following this decision, the 18 waste PFI projects were then ranked according to their priority. The body responsible for the investment in large scale infrastructure - Waste Infrastructure Delivery Programme (WIDP) agreed on three key criteria in order to rank the projects.

  • The deliverability of the project (and hence the benefits); and
  • The benefit delivered by the project relative to the funding provided by Defra
  • The timing of the benefits

The criteria were then weighted 50%, 40% and 10% respectively, in order to produce a final ranking for the projects, which identified Barnsley, Doncaster and Rotherham at number one, and South West Devon Waste Partnership (consisting of Devon, Plymouth and Torbay) in last place.

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