Don’t Waste the Opportunity: The Victorian Government Seeks Submissions on Waste to Energy

The Victorian Government has released its “Turning Waste to Energy” discussion paper for public comment, closing 24 December 2017. Public submissions will inform the Victorian Government’s formal position on waste to energy which is due to be released next year.

The waste landscape – It is getting bigger!

Victoria’s population continues to rise. Melbourne’s population is forecast to double by the early 2050’s to 8 million, and it is set to exceed Sydney’s population by as early as 2031. Unsurprisingly, the State’s waste is also projected to almost double from 12.7 million tonnes per year to over 20 million tonnes by 2046. This presents unique challenges and opportunities. Victoria needs to plan now to meet the coming waste challenge, and waste to energy is a critical component in a strategy also built around avoiding, reuse and recycling waste.

Waste to energy essentially does what it says on the tin. It’s the process of generating energy—such as electricity, heat or fuels—from waste. A range of technologies are used, many based on thermal or biological approaches. Certain technologies are better suited to different waste streams.

The state of waste to energy in Australia and Victoria

The waste to energy sector, while advanced overseas, is still at the fledgling stage in Australia. Project proponents have previously struggled at the project feasibility stage due to less conducive policy settings. However, increasingly supportive policies in a number of States including Victoria, and rising landfill levies, provide renewed momentum for the development of waste to energy projects. Indeed, governments at all levels – especially local councils – around Australia are keen to see the sector develop.

In the meantime, this momentum in the industry continues to build. Recently, five grants were announced under the Victorian Government’s $2.38 million Waste to Energy Infrastructure Fund, and Yarra Valley Water has received a prestigious Banksia Sustainability Award for its anaerobic digestion waste to energy facility.

Interactions with Victorian and Commonwealth energy policies

Over the next decade, Australia’s energy mix will change as we transition to accommodate new technologies such as solar, wind and waste to energy systems.

In Victoria, investment in renewable energy will be underpinned by a renewable energy target of 25 per cent by 2020, and 40 per cent by 2025.

The recently announced National Energy Guarantee (NEG), if implemented in 2018, has the potential to further enhance the positive policy context for waste to energy projects. Under the NEG, retailers will be required to ensure that they contract for energy in a way that meets an ‘emissions guarantee’ and a ‘reliability guarantee’. In order to meet the emissions guarantee, retailers may consider contracting with energy generators that deploy low emissions technology. The reliability guarantee is about ensuring that a minimum level of energy is sourced from ‘dispatchable’ sources which are energy sources that can be switched on or off, or its output adjusted, according to market needs. Waste to energy facilities are able to produce reliable, dispatchable baseload electricity. They are also capable of meeting sustainability objectives depending on the technology deployed.

Opportunities for policy reform

The Victorian Government’s discussion paper presents an important opportunity to seek policy and regulatory clarity on a number of issues. These include:

• The need for regulatory clarity in respect of the environmental and planning assessment processes that will apply to waste to energy proposals. In particular, it should be clarified that such facilities will not trigger the need for an Environmental Effects Statement and associated assessment process.

• To the extent that social, environmental and economic goals are being achieved, additional government support for waste to energy proposals is justifiable and desirable. For example, rebates, tax incentives, and/or grants have been provided for various waste to energy projects overseas.

• The landfill levy is crucial to the feasibility of waste to energy projects and in Victoria is currently set relatively low compared to other states and territories that have a landfill levy.

• The importance of long term regulatory certainty to underpin both equity and debt investments in projects over the 20+ year time horizons the projects require.

Corrs has extensive experience working closely with stakeholders, statutory authorities and government in the development of environmental, and waste and resource recovery policy.

Submissions on the Victorian Government’s discussion paper close on 24 December 2017.