Policy Recommendation by Feasta, the Foundation for the Economics of Sustainability to the Department of Environment

Emer O’Siochru & Dara McHugh

Smart Taxes

9.4.10

Contents

• Recommendation on establishing farmers’ rights to waste for anaerobic digestion
• Proposed Amendment to Waste Management Bill to support anaerobic digestion for maintenance of rural eco-systems

Recommendation on establishing farmers’ rights to waste for anaerobic digestion

Subject

The Case for Establishing Farmers Right or Quota to the Final Processing of Urban Food Waste in Anaerobic Digestors in Rural Areas and Compensation for the Maintenance Thereby of Healthy Eco-system Services.

Summary

The maintenance of environmental services and of agricultural sustainability (and thus food security) is not possible without returning as much as possible of the produce of the land back to the land following human use; long term social sustainability requires that the economic benefits to the community of doing so is shared fairly with the farmers who both maintain the environmental services and produce the food.

Rural Benefits

On-farm and community-based digestors fueld by agricultural and a quota of urban food waste will

• produce reliable, dispatchable, flexible  energy from renewable sources
• provide AD soil amendment co-product that replace imported fossil fertilisers
• reduce nitrate pollution of groundwaters from farming activities
• reduce methane emisisons from stored slurry
• provide biowaste management services to communities
• create construction jobs in rural communities
• create sustainable AD management, maintenance and supply jobs in rural communities
• retain money in rural communities to boos the local economy thus creating further jobs.

Wider Benefits

On-farm and community-based digestors fed by by agricultural and  a quota of urban food waste will help Ireland

• meet our CO2 reduction targets and avoid the need to purchase carbon credits
• meet our Wastewater Directive targets and avoid EU fines
• improve Ireland’s balance of payments by reducing imported energy and fertilizers bills
• build resilience to fossil energy/fertilizer supply shocks
• improve traceability and control of biowastes in the food chain
• reinforce Ireland’s Green Food Island branding
• develop exportable expertise in AD construction, methane to electricity and fuel processing and nutrient cycle maanagement

The Goal:

Rural anaerobic digestors (ADs) can deliver reliable renewable energy for electricity, transport and heat at a scale where all the energy can be utilised without needing significant new infrastructure while helping to solve the nitrates problem by spreading digestate instead of slurry. By digesting slurry, the methane emissions from stored slurry is avoided, the organic nitrogen is mineralised so that is absorbed quickly by the soil and converts to nitrate as plants require it for growth.  This process reduces the need for artificial fertilizers and the risk of leaching and nitrous oxide emissions from the soil.  The construction of many on-farm and community-service ADs that would be needed, could replace many of the lost jobs in construction in the short term. In the long term there would be significant numbers of jobs in AD maintenance, management and supply chains and in utilising the products of AD   The resultant input cost reductions and augmented farmer income would also increase agricultural competitiveness.

The Problem:

Renewable energy generation by farm-scale and rural community-scale anaerobic digestors (AD) using agricultural wastes alone are not economic under the currently available feed-in tariff incentives of 12c per kwh.  For our purposes a farm-scale AD unit is assumed to serve circa 260 LSU, and a community-scale AD unit serves approximately 600 LSU.  Electricity feed-in tariff of up to 28c are available in EU Member States such as Italy, France, and Hungary and as a result, AD construction in those States is set to boom. Increasing the Irish feed-in tariff would increase the cost of electricity for consumers, and would not increase the revenue significantly for manure based AD because manure has a low gas production compared to some wastes. Increasing the focus on electricity production would not encourage ADs to maximise the agricultural, environmental and social benefits that can be achieved.

Meeting the Animals By-Product Regulations (ABP) requirements is a costly business if any material is imported from outside the farm that has not been pasteurised before importation. The value of the returns from the typical farm- or community AD, processing only manure is insufficient to justify the return on capital investment and risk involved. In addition  the cost to the community-scale AD of accessing a three phase grid connection to export electricity is uncertain and when known, often prohibitively expensive.  In this respect, Irish farmers are at a considerable disadvantage to their mainland Europe counterparts whose higher population and more widespread grid infrastructure ensure simple and affordable connection.

The Potential Opportunity:

Cities and towns generate considerable food, sewage and other biological wastes that can no longer be land-filled under new EU Directives.  The ‘gate fees’ (fees charged to process this biodegradable waste) will be substantial for some years to come circa €60-100 per ton.  Many large urban based ADs are in the planning pipeline to avail of the super profits possible.  Their scale and profitability permits a high level of managements and monitoring to meet Health and Safety and the Animal By Products Regulation standards. Their focus will be on the gate fee revenue and to a lessor extent electricity generation and not on producing useful fertiliser.

Anaerobic digestion of energy dense food waste as a sole feedstock can be problematic in terms of maintaining the process. The digestate material is often not fully digested (stabilised) as maximising throughput is the focus. As these ADs tend to be very large, they generate high levels of local traffic movements damaging residential amenity; and also generate high long distance traffic movements to dispose of the digestate in rural areas.  While their scale and profitability allows for high levels of monitoring, it also means that a monitoring or process failure that results in contamination of the very large area of landspread has very heavy consequences. Finally, the heat produced usually cannot be utilised nearby and so is wasted.

The Solution:

The initial processing municipal food waste, removing physical contaminants and pasteurising, is a process that requires expensive technology  if it is to be done thoroughly and therefore requires a minimum throughput. The co-digestion of food waste with manure produces a much more stable AD process than when food waste is processed as a sole feedstock. Heavy metals sometimes present in sewage sludge can be substantially diluted by these other bio wastes to levels that that soil eco-system can comfortably process.  It is more efficient for reducing the costs and Co2 impact of transportation, to take the smaller volumes of food waste that has been cleaned and pasteurised to be processed with the large volumes of manure in an AD close to the final destination of the digestate and fibre.

The solution is to clean and pasteurise municipal food waste in an appropriately zoned area, close to its source and away from animals, and to digest this waste with manure in on-farm or in rural community based AD

If regulations (or obligation similar to the UK ROCs) were to require that food waste (600,000tpa which has to be diverted from landfill by 2016) is to be co-digested with manure, it would help to finance the cost of digesting manure and thereby help to achieve the environmental measures required from agriculture (reduction of GHG emissions and improvement of water quality). It would also help to improve rural economies and ensure the digestate was a useful fertiliser and not remain a waste. This measure would cost the exchequer nothing beyond the cost of implementation.

If the farmer or community-service AD received a gate fee of €40 per ton of processed (cleaned and pasteurised) food waste and this waste formed about 20% of the total feedstock (the rest being manure) only a small capital grant (20-30%) would be required to make small scale AD viable. This capital grant provided by the government represents a fraction of the value of the environmental eco-system services that would accrue over time but could be paid from savings in avoided fines and the obviated need or carbon credits by 2012.  This grant aid should be administered by the DoEHLG and DAFF (possibly through Leader Co.s) as the appropriate authorities and de-linked from electricity production to reflect the versatility and multi-benefits of of bio-energy from AD.

The minimum grant aid required without food waste gate fee income would be at least 40-50%.  If grant aid is not available for budgetary reasons, a soft loan or investment (no interest repayable over or at the end of an extended period) may suffice.  A third more complex and less attractive option, is to make accelerated capital allowances (100% of investment less land element) available to investors at the highest tax rate but capped to ensure widespread investment by middle income earners rather than the super rich.  CA may be necessary in addition to grant aid until the banks show themselves willing to lend to this emerging green business sector which is not the case at present.

Proposed Amendments to Waste Management Bill to support anaerobic digestion for maintenance of rural eco-systems

Context

The Waste Management Bill, currently in consultation, seeks to penalise incineration and landfill while creating a market for more environmentally sustainable methods of waste disposal and recovery. However, the bill as phrased could enable the market for biodegradable waste recovery via Anaerobic Digestion to be captured by larger waste corporations which would not necessarily share the value of the process with agriculture. This would make it more difficult for small and medium-sized ADs to enter the market and would prevent the full social, environmental and economic benefits of Anaerobic Digestion to be realised.

These amendments aim to support the development of small and medium-size ADs in rural areas for the benefit of farmers and rural ecosystems.

Amendments to Section 73A. – Power to impose waste facility levy

Amend (1) (d) the carrying on of a specified class or classes of waste recovery activity (being an activity referred to in paragraph 9 of the Fourth Schedule (amended by the Act of 2003)),

To read:

(d)   the carrying on of a specified class or classes of waste recovery activity (being an activity referred to in paragraph 9 of the Fourth Schedule (amended by the Act of 2003)), that does not also involve a waste recovery activity referred to in paragraph 10 of the Fourth Schedule (amended by the Act of 2003))

Amend (1) (e) the submission for recovery by means of a waste recovery activity referred to in paragraph 9 of the Fourth Schedule (amended by the Act of 2003), or a specified class or classes of such activity, of a specified class or classes of waste,

To read:

(e)   the submission for recovery by means of a waste recovery activity referred to in paragraph 9 of the Fourth Schedule (amended by the Act of 2003), or a specified class or classes of such activity, of a specified class or classes of waste, that does not also involve a waste recovery activity referred to in paragraph 10 of the Fourth Schedule (amended by the Act of 2003), or a specified class or classes of such activity.

Add to: (4)

(c) the increase of sustainable materials management including the closing of the soil/food nutrient cycle.

(d) the valorisation of generated waste for social benefit.

Amendments to Fourth Schedule – Waste Recovery Activities

Amend 9. Use of waste principally as a fuel or to generate electricity.

To read:

9.  Use of waste as a fuel or to generate electricity.

Amend 10. The treatment of any waste on land with a consequential benefit for an agricultural activity or ecological system.

To read:

10. Use of waste principally for spreading on or in land with a consequential benefit for an agricultural activity or ecological system.