Raising Concerns about the Green Investment Bank’s Waste Projects

23rd March 2015

The Green Investment Bank’s (GIB) interventions in the UK waste sector are likely to prove far from green, and risk hindering the country’s efforts to increase recycling and decarbonise energy.

These are the conclusions drawn by Dr Dominic Hogg in the Isonomia blog on Friday. A review of the projects funded by the bank since it was created in 2012 has revealed that out of a total waste sector investment of £269.7m, over 90% is in projects that are mostly or wholly Energy from Waste (EfW) residual waste treatment facilities. Of the ten projects that it has funded, whether directly or through its fund managers, seven are wholly or mainly EfW. The remaining three are anaerobic digestion (AD) plants.

These ten projects yield a total of 1,935k tpa of treatment capacity. Of this, 3% is for recycling, 12% for AD and 85% thermal energy from waste (EfW). In his article, Dr Hogg explained that the GIB was taking investment decisions that were out of step with Government guidance. When the GIB appraises the environmental impact of an incinerator, a key factor is how much CO2 would have been emitted by the source of electricity that the incinerator replaces. This is known as the “marginal” CO2 emission factor.

While the GIB assumes that every unit of electricity produced by an incinerator leads to the avoidance of generation as intense as CCGT, government guidance says this is far too favourable. The reality is that the benefit of electricity from incinerators drops rapidly over its lifetime. Defra research lends support to the view that over its lifetime an incinerator can be no better than a landfill. By 2035, the marginal generation factor is 0.075kg, only a tenth of what an incinerator will produce. By that comparison, investing in EfW today will look far from green in the future.

The GIB has continued to announce investment decisions in EfW despite energy recovery being the second least favourable approach to waste management according to the legally binding waste hierarchy. In November 2014 the Commons Environmental Audit Committee recognised concerns about the nature of the projects the GIB is funding and called on the Government to ensure that the bank finances innovative technologies to support a circular economy.

Dr Hogg said:

If there’s one thing you’d expect a group of bankers to be able to do right, it’s their sums. Had they got the interest rate wrong on their investments, heads would roll. But there doesn’t seem to be the same concern over a serious flaw in their investment appraisal approach.

No-one will thank the GIB when the only obstacle to having decarbonised the electricity grid is the incinerators they built under the guise of being green. In 20 years’ time these facilities will still be producing energy – and by that time, the carbon intensity will be almost ten times the grid average.