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Energy waste disposal requires a more comprehensive approach to its regulation

16/ 06/ 2021
  On June 16, the VRU Committee on Environmental Policy and Nature Management will consider draft law №5611 on energy waste disposal. Thus, the document provides for the legalization and stimulation of existing facilities for the production of renewable fuel from waste (SRF, RDF) and the creation of certain privileges for these activities. At the same time, waste management activities, including high-temperature incineration at industrial facilities, are not regulated by the draft law. Solid waste management (SWM) in the EU is based on integrated processing which includes separate collection, sorting, mechanical and biological treatment, composting/anaerobic digestion of biodegradable SWM fractions, and production of RDF / SRF from the remaining SWM fractions. The use of fuel from waste (RDF, SRF), namely, in the cement industry, has a number of advantages: reduces the amount of waste to be disposed of in landfills; prevents methane emissions; prevents the release of toxic metals into the environment, such as lead, mercury, dioxins, furans into the air, water, and soil, as a result of the incineration of solid waste which then stays as the fly ash; helps reduce CO2 emissions by replacing fossil fuel combustion. Given the course on European integration and the low-carbon economy, the issue of energy waste disposal in the industry becomes particularly relevant. The European Business Association has consistently advocated the development of the market for alternative fuels, in particular, using SRF, RDF. However, the proposed version of draft Law №5611 does not reflect a comprehensive approach to the development of waste management, in particular, in terms of attracting investment in construction projects and launching waste processing lines, creating new jobs, simplifying the regulatory field, and more. It should also be noted that the draft law should include provisions for the development of an appropriate standard for RDF, harmonized with the European one, as well as the creation in the Ukrainian Classification of Foreign Economic Activity (UKTZED) a code for RDF, which corresponds to the European code 19.12.10. This should be done for SRF, respectively. Besides, the document contains other provisions that may lead to distortions of competition in the energy services market, in particular: establishing priority access to networks and building a straight line for waste electricity producers (SRF, RDF), regardless of the capacity and the mechanism of special responsibilities. Thus, business interest in energy waste disposal cannot be put in a higher priority than services of general public interest, namely, ensuring the energy stability of the country. providing an increase in the share of renewable waste fuel (SRF, RDF) in electricity generation will lead to the introduction of new types of special responsibilities, which will be entrusted to transmission system operators (TSOs), universal supplier service (USS), and Guaranteed Buyer. This situation carries the risk of deterioration of the already poor financial position of the Guaranteed Buyer and the TSOs. In addition, such a mechanism will lead to an increase in the transit tariff as the cost component will need to be considered additionally. obliging the Guaranteed Buyer to purchase electricity generated from waste (SRF, RDF) that has not been sold on the market and under bilateral agreements at the weighted average auction price of the previous year for the electricity generated from biomass/biogas (with surcharge). In this case, if the sale of such electricity on the market and under bilateral agreements took place at a price below the weighted average, the Guaranteed Buyer compensates the difference between the sale and the auction price of the previous year of for the electricity generated from biomass/biogas. Therefore, there is a risk of increasing the number of unloading commands, which will result in increased imbalances in the system. obliging economic entities of communal ownership, as well as budgetary institutions and organizations to enter into direct contracts for the supply of heat and electricity for 10 or more years with waste producers (SRF, RDF), as well as other priority assistance to them. This introduces additional non-market incentive privileges, which contradict, among other things, the current laws on public procurement and state aid to economic entities. setting the priority for waste-to-energy producers (SRF, RDF) in the dispatch of TSOs equates electricity from SRF, RDF to renewable energy sources (RES). First, energy from waste cannot be considered as RES. Second, RES is characterized by the ability to regenerate naturally in a short period of time and have a minimal environmental footprint. Energy from waste (SRF, RDF), on the other hand, aims to constantly increase the production of waste, which will serve as raw material for such energy sources. This, in turn, contradicts the European waste management hierarchy, which is led by the principle of preventing waste generation. Therefore, the European Business Association does not support the current draft law and calls for it to be revised.   For reference: Refuse Derived Fuel, RDF is a fuel obtained by removing secondary raw materials and non-combustible materials from solid waste. Solid Recovered Fuel, SRF is a solid fuel produced from hazardous waste, including solid household, industrial and commercial waste, including paper, cardboard, wood, textiles, and plastics, that can be used to recover energy in incineration or co-incineration plants.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

On June 16, the VRU Committee on Environmental Policy and Nature Management will consider draft law №5611 on energy waste disposal.

Thus, the document provides for the legalization and stimulation of existing facilities for the production of renewable fuel from waste (SRF, RDF) and the creation of certain privileges for these activities. At the same time, waste management activities, including high-temperature incineration at industrial facilities, are not regulated by the draft law.

Solid waste management (SWM) in the EU is based on integrated processing which includes separate collection, sorting, mechanical and biological treatment, composting/anaerobic digestion of biodegradable SWM fractions, and production of RDF / SRF from the remaining SWM fractions.

The use of fuel from waste (RDF, SRF), namely, in the cement industry, has a number of advantages:

  • reduces the amount of waste to be disposed of in landfills;
  • prevents methane emissions;
  • prevents the release of toxic metals into the environment, such as lead, mercury, dioxins, furans into the air, water, and soil, as a result of the incineration of solid waste which then stays as the fly ash;
  • helps reduce CO2 emissions by replacing fossil fuel combustion.

Given the course on European integration and the low-carbon economy, the issue of energy waste disposal in the industry becomes particularly relevant. The European Business Association has consistently advocated the development of the market for alternative fuels, in particular, using SRF, RDF.

However, the proposed version of draft Law №5611 does not reflect a comprehensive approach to the development of waste management, in particular, in terms of attracting investment in construction projects and launching waste processing lines, creating new jobs, simplifying the regulatory field, and more.

It should also be noted that the draft law should include provisions for the development of an appropriate standard for RDF, harmonized with the European one, as well as the creation in the Ukrainian Classification of Foreign Economic Activity (UKTZED) a code for RDF, which corresponds to the European code 19.12.10. This should be done for SRF, respectively.

Besides, the document contains other provisions that may lead to distortions of competition in the energy services market, in particular:

  1. establishing priority access to networks and building a “straight line” for waste electricity producers (SRF, RDF), regardless of the capacity and the mechanism of special responsibilities. Thus, business interest in energy waste disposal cannot be put in a higher priority than services of general public interest, namely, ensuring the energy stability of the country.
  2. providing an increase in the share of renewable waste fuel (SRF, RDF) in electricity generation will lead to the introduction of new types of special responsibilities, which will be entrusted to transmission system operators (TSOs), universal supplier service (USS), and Guaranteed Buyer. This situation carries the risk of deterioration of the already poor financial position of the Guaranteed Buyer and the TSOs. In addition, such a mechanism will lead to an increase in the transit tariff as the cost component will need to be considered additionally.
  3. obliging the Guaranteed Buyer to purchase electricity generated from waste (SRF, RDF) that has not been sold on the market and under bilateral agreements at the weighted average auction price of the previous year for the electricity generated from biomass/biogas (with surcharge). In this case, if the sale of such electricity on the market and under bilateral agreements took place at a price below the weighted average, the Guaranteed Buyer compensates the difference between the sale and the auction price of the previous year of for the electricity generated from biomass/biogas. Therefore, there is a risk of increasing the number of unloading commands, which will result in increased imbalances in the system.
  4. obliging economic entities of communal ownership, as well as budgetary institutions and organizations to enter into direct contracts for the supply of heat and electricity for 10 or more years with waste producers (SRF, RDF), as well as other priority assistance to them. This introduces additional non-market incentive privileges, which contradict, among other things, the current laws on public procurement and state aid to economic entities.
  5. setting the priority for waste-to-energy producers (SRF, RDF) in the dispatch of TSOs equates electricity from SRF, RDF to renewable energy sources (RES). First, energy from waste cannot be considered as RES. Second, RES is characterized by the ability to regenerate naturally in a short period of time and have a minimal environmental footprint. Energy from waste (SRF, RDF), on the other hand, aims to constantly increase the production of waste, which will serve as raw material for such energy sources. This, in turn, contradicts the European waste management hierarchy, which is led by the principle of “preventing” waste generation.

Therefore, the European Business Association does not support the current draft law and calls for it to be revised.

 

For reference:

Refuse Derived Fuel, RDF is a fuel obtained by removing secondary raw materials and non-combustible materials from solid waste.

Solid Recovered Fuel, SRF is a solid fuel produced from hazardous waste, including solid household, industrial and commercial waste, including paper, cardboard, wood, textiles, and plastics, that can be used to recover energy in incineration or co-incineration plants.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

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