Issues and options in waste management: A social cost–benefit analysis of waste-to-energy in the UK

Abstract

The growing stream of municipal solid waste (MSW) requires a sustainable waste management strategy. At the same time, addressing climate change and security of energy supply concerns requires increased use of low-carbon and domestic sources of energy. This paper assesses the economic and environmental aspects of waste management options focusing on waste-to-energy (WtE) as a renewable resource. We discuss how WtE and recycling are compatible as waste treatment options. The paper then presents a social cost–benefit analysis of selected waste management scenarios for the UK focusing on specific waste management targets and carbon prices and compares them with coal-fired electricity. The results indicate that meeting the waste management targets of the EU Directive are socially more cost-effective than the current practice. The cost-effectiveness improves substantially with higher carbon prices. The findings show that WtE can be an important part of both waste management strategy and renewable energy policy although achieving the full potential of WtE requires development of heat delivery networks.

Introduction

Reducing dependence on coal-fired power generation and abating the impact of climate change by mitigating carbon emissions are topics of great concern to policy makers. Increased risks of climate change, supply vulnerabilities and a willingness to expand the domestic renewable energy base have driven the need for sustainable energy and environmental strategies across a number of countries including the United Kingdom (UK). As such, waste-to-energy (WtE) remains a viable waste treatment option capable of delivering clean energy in comparison to a coal-fired power plant. A sustainable waste management strategy is needed to extract the full energy and environmental value from municipal solid waste (MSW). In 2005/06 the UK produced almost 29 million tonnes of MSW,² of which only 2.6 million tonnes were incinerated for energy generation. (DEFRA, 2007). Thus, the majority of waste was disposed through landfilling and recycling using energy as an input. In contrast, WtE technology can use MSW in order to generate electricity and heat.

Energy from waste in the UK is estimated to increase from the current level of 9% to around 25% of total MSW by the end of 2020 (DEFRA, 2006). This is essential given the need for a diverse portfolio of energy sources, as stated in the European Union (EU) Green paper on Energy (2007a) and the UK Energy Review (2007b). Also, around 34% of the UK's electricity was generated from coal in 2006. Promoting WtE facilities can thus complement the electricity generation from coal with net carbon benefits. Furthermore the EU Directive 1999/31/EF requires minimization of the MSW sent to landfill. The UK has favoured landfill for waste disposal in the past due to its naturally impermeable ground conditions. In April 2004, the Landfill Tax rate for active waste was increased by 1 to £15 per tonne and reached £32 per tonne in 2008/09. The tax is eventually scheduled to rise to £48 per tonne bringing the UK in line with other EU countries such as Sweden and Denmark.

The UK has a target of sourcing 10 and 15% of its overall energy consumption from renewables by 2010 and 2020, respectively (DEFRA, 2006). In 2004, electricity generated from renewable sources amounted to 14,171 GWh – i.e. 3.6% of total electricity generation (DEFRA, 2006). Landfill gas and WtE from biodegradable MSW accounted for 23 and 10% of total renewable electricity, respectively (DEFRA, 2006). Thus, WtE can serve as an effective waste management option by diverting waste from landfill while having energy and environmental benefits. This paper analyses energy recovering waste management options as an energy source using a social cost–benefit analysis. As coal power is carbon intensive and hence more likely to be affected by carbon pricing and replaced by other energy sources; we use the costs and benefits of coal power as a reference.

This paper presents an economic assessment of the energy and environmental aspects of WtE as an alternative waste management option that is compatible with recycling. We also examine whether WtE can be regarded only as an alternative waste management option or if it can also be a renewable energy source capable of increasing the UK's security of supply and mitigating climate change. Section 2 introduces the concept of the waste hierarchy in the UK and provides a brief review of current waste management policies. Section 3 develops a social cost–benefit analysis (CBA) framework and WtE scenarios. Section 4 presents the results of the CBA of the UK's waste treatment options. Section 5 provides a summary of the scenario analysed in terms of energy recovery from WtE facilities and CO₂ displacement from a coal-fired plant. Finally, Section 6 concludes the paper.