Brothers see potential of waste

By Chris Tighe
Published: September 7 2008 20:33

Baking a large cake out of household rubbish sounds disgusting, but brothers Michael and William Thompson are convinced that this proposition has environmental and commercial allure.
The era when waste was seen just as rubbish to be got rid of as cheaply as possible is ending. UK and European government policies, reinforced by rising taxation and penalties, are forcing the public and private sectors to reconsider how they can cut their waste, reduce the amount going to landfill and, ideally, exploit its potential.
“Waste hasn’t been seen as a resource – that’s changing,” says Michael Thompson, chief executive of Graphite Resources.
The Newcastle-based company is developing what it says will be the world’s biggest steam autoclave recycling plant when it opens in autumn 2009 on the banks of the Tyne in Gateshead.
Mr Thompson and his brother launched Graphite after leaving their family’s business, Thompsons, a long-established north-east demolition, quarrying and waste-management company, in 2002.
Their £50m project, which has substantial backing from Lehman Brothers Private Equity, takes a big step forward on September 22 when steel erection starts after months of earthmoving on the five-acre Blaydon site.
Greater emphasis on prevention and re-use
Managing waste sustainably, limiting its production and maximising recycling and re-use form a core part of government policy to protect the environment, writes Chris Tighe.
Each year England generates about 100m tonnes of waste from households, commerce and industry. The government wants to decouple waste growth from economic growth, putting more emphasis on waste prevention and re-use.
Its 2007 Waste Strategy targets that in 2010 no more than 75 per cent of biodegradable waste which went to landfill in 1995 should still go there, dropping to 50 per cent in 2013 and 35 per cent in 2020.
By 2010 it also expects a 20 per cent fall in landfilled commercial and industrial waste from 2004 levels.
These targets are derived from the EU Landfill Directive and enforced by a system of quotas, fines of £150 per tonne for local authorities exceeding their quota, credits and taxation.
The government says landfill tax was introduced in 1996 to encourage waste producers to cut waste, recover more value from it and use more environmentally friendly disposal methods.
In 1996, the tax was £7 per tonne of active waste; by 2008, it had reached £32.
The government’s landfill tax escalator means the tax will rise to £40 next April and £48 in 2010. The lower rate, for inert waste, stood at £2 from 1996 until 2008 when it rose to £2.50.
In addition, the cost of using landfill sites has increased. HM Revenue and Customs data show that UK tonnage going to landfill has fallen steadily from a 2001 peak of 85m tonnes to 67m tonnes in 2007. But landfill tax payments have risen every year, from £340m in 1998 to £871m in 2007.
The government says the Landfill Tax Escalator and the Landfill Allowance Trading Scheme, the quota mechanism, have created sharp incentives to divert waste from landfill, but England’s performance still lags behind many European countries.
The waste strategy aims to encourage energy recovery technologies, including anaerobic digestion.
The government wants to see a net reduction in global greenhouse gas emissions, by waste management including diversion from landfill, of at least 9.3m tonnes of CO2 equivalent per year.
Private investors include the former Conservative environment secretary, Lord Kenneth Baker, who is non-executive chairman, and the management team. About half the £50m comes via debt funding from Allied Irish Bank and Alliance & Leicester Commercial Bank.
Graphite Resources’ plant will sterilise and stabilise household waste – called municipal solid waste – and commercial and industrial wastes in large pressurised rotating vessels. Each autoclave, as they are called, can hold up to 30 tonnes of waste per cycle. Steam will be introduced at up to 1600 C for about an hour.
The combination of steam, pressure and agitation separates and breaks down the organic waste into fibre flakes, which Graphite Resources calls CellMatt. Other materials, such as aluminium and plastics, emerge separately, permitting their recycling.
Graphite Resources estimates its plant will divert 80 per cent of the waste it handles from landfill without releasing the carbon emissions.
The release of emissions has led to criticism of other forms of disposal, such as incineration. CellMatt also offers potential as biofuel or construction materials.
“It’s the conversion of organic waste into energy,” says Mr Thompson. “Bio-energy from waste is good carbon.”
Graphite Resources is negotiating with potential customers and is considering a second plant, in Teesside, that might also be able to remanufacture recovered plastics.
Until now, autoclaving has mostly been used in hospitals and dental surgeries but several schemes for household waste are progressing.
While Gateshead is set to be the UK’s first big operational autoclave plant, other projects include Glasgow council’s plan to spend £135m on the technology, a scheme by Waddington Recycling in Bradford and proposals by VT Group for Wakefield and Hereford.
Steve Eminton, editor of online news service letsrecycle.com, says that there is strong UK interest in autoclaving as a possible solution to the large volumes of household waste.
“Local authorities and the waste industry will be very interested in how the Gateshead plant performs,” he says.
Graphite Resources’ plant is designed to treat 320,000 tonnes of municipal solid waste a year, while a further 60,000 tonnes of light waste – kerbside, commercial and industrial, and 20,000 tonnes of green and skip waste, will be separately handled at the Derwenthaugh Ecopark, where the autoclaving plant will be located.
Autoclaving has not been used on the Gateshead scale before but Mr Thompson insists this is tried and tested technology.
“Steam fuelled the industrial revolution; the raising of steam and the discharging of it into a confined space isn’t new.”
His confidence is shared by another autoclave entrepreneur, Mark Waddington, managing director of Waddington Recycling, a subsidiary of long-established, Bradford-based P. Waddington. His company has used autoclaving to render animal by-products and waste for 50 years.
Waddington last year clinched a five-year deal with Bradford Council to treat its household waste by autoclaving in a £20m plant for which the company is negotiating funding.
The biggest problem, says Mr Waddington, has been negotiating the wording of the payments contract to express the complex payment mechanism. However, he is convinced that autoclaving offers good prospects.
“There’s an opportunity in the market place for people like us,” he says. “It looks like a long-term business plan.”
Copyright The Financial Times Limited 2008