The risk here is for the project sponsor, it is very important that any project developed understands the implications
Andy Holdcroft, chief operating officer, LWaRB
The strong note of caution came this week from Andrew Holdcroft, the Board's chief operating officer. At the same time, Mr Holdcroft hit back at criticisms over the amount of time it is taking to start distributing its £84 million in funding to help develop waste treatment and recycling infrastructure in the capital.
Speaking at letsrecycle.com‘s annual London Conference on December 1 2009, Mr Holdcroft highlighted that there had been concerns raised about the issue of State Aid in the distribution of funding by the London Waste and Recycling Board (LWaRB).
Without specific approval, European Commission State Aid regulations prevent public money – such as the £84 million available to the Board – being used to give a company or an organisation a competitive or financial advantage in the commercial sector.
Mr Holdcroft said that projects to successfully receive funding would be subject to a ten-year call-in period on the issue of State Aid and, if found to be in contravention, would be forced to return any monies received from the Board plus accumulated interest.
He said: “The request for funding must be State Aid compliant. The risk here is for the project sponsor, it is very important that any project developed understands the implications. It is very important that we are State Aid compliant.”
Mr Holdcroft said that this situation could lead to the “collapse” of projects and a potentially embarrassing situation for the Board.
He indicated that the Board was looking to use a range of funding mechanisms, such as grants, loans, guarantees and equity sharing, in order to meet the State Aid regulations.
Later, one expert involved in the bidding process told letsrecycle.com that he had “serious reservations over whether LWaRB has really got to grips with the State Aid challenge. This could slow the whole process down for years and companies may be better just getting with their own projects.”
And, he added: “We have seen this all before with grants from the Waste & Resources Action Programme and LWaRB could have learnt from them.”
Funding
He said: “To date we have received 184 expressions of interest, which equates to £1.5 billion worth of capital costs and there is a real spread of project types, with a definite weighting towards anaerobic digestion. But we now we understand the State Aid issue, there have been withdrawals.”
Mr Holdcroft said that, in total, 33 proposals had been rejected, 16 withdrawn by project sponsors, and 73 had progressed to receive further scrutiny. Five proposals had been worked up to a business case stage, with one being rejected due to issues around value-for-money.
One business case is set to be discussed at the next Board meeting in December, with another being ear-marked for March 2010.
At the event, Mr Holdcroft, who has held the position of chief operating officer since the end of August, took the opportunity to counter criticisms levelled at the Board about the time it had taken to deliver the funding.
“Two years isn't an unreasonable time to develop a project,” he said. “These things can need time to develop and it is not just going to happen overnight because the Board has been given more money.”
GLA
Also, speaking at the event, Andrew Richmond, policy and programmes manager for waste at the Greater London Authority (GLA), explained the current state of waste management in London and where the city is heading in the near future.
Mr Richmond pointed to the fact that, in 2008, 57% of all waste produced in London was recycled and he praised this effort but highlighted that San Francisco recycled 75% of all its waste in the same period and said “that is where we all want to be moving”.
In addition, Mr Richmond gave an overview of the forthcoming Mayoral Municipal Waste Management Strategy, which includes targets for recycling 50% of waste by 2020 and 60% by 2031 (see letsrecycle.com story).
Strategy
He said: “The Strategy will be in three parts, it will have an overarching vision for the waste in London. The second part will be municipal waste and then a business waste strategy will follow it.
“We are very keen on doing further work on the opportunity for revenue sharing and equity sharing agreements, as we see this as a real opportunity for local authorities to share some of the benefits from waste management.”
The Strategy is set to be issued as an internal consultation document before the end of Christmas before going for full consultation in summer 2010.
Mr Richmond also highlighted that the GLA would be looking into the number of facilities needed in the capital, which is set to be around 100 but he stressed it would be “large sites, not necessarily large facilities”.
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