Dáil Éireann debate -
Wednesday, 5 Mar 1997

Vol. 475 No. 8

Adjournment Debate. - Waste Contract Allocation.

Mr. Leonard

For the second time, the Department of Transport, Energy and Communications has ignored the legitimate claims of my constituency to secure a contract to generate electricity from farm waste under the AER waste to energy competition. What this means to the local economy is a restriction on the primary production of poultry and mushrooms. It also creates a serious problem for the local authority.

In 1993, Monaghan secured £100,000 from INTERREG to carry out a waste management study. The study found that in 1971, 83 per cent of Monaghan's river channel length surveyed was unpolluted which was comparable to the national average. By 1990, the unpolluted river channel length had declined to 29.5 per cent in Monaghan while the national average was 77.5 per cent. Poultry and mushroom production account for 47 per cent and 12 per cent respectively of the county's gross agricultural output compared with 4 per cent and 2 per cent of national GAO. The farming pattern in the Blackwater and Finn catchments is even more skewed in favour of poultry and mushroom production. It is projected that poultry and mushroom production will grow at 2.5 per cent and 5 per cent respectively each year over the next decade.

Monaghan's failure to secure this waste contract means it will be difficult to maintain current targets not to mention meeting the projected ones. The Minister will talk about independent assessments but it is time that the jobs and the development of the economy were considered. We need a co-ordinated examination of projects such as this by the various Departments involved — the Departments of the Environment; Agriculture, Food and Forestry and Transport, Energy and Communications. They have responsibility to ensure the environment is clean and that we get an opportunity to meet our agricultural commitments.

The contract was awarded to Foster Wheeler Power Systems Incorporated and ESB Power Generation at a cost of £113 million for a 30 megawatt project. The Monaghan proposal would cost £50 million for a 20 megawatt project. This requires an explanation. The Dublin based project will not meet the 1999 deadline. There is serious opposition to it and there are nightly meetings to ensure it will not be built, while we are clamouring to have it built in Monaghan. The Monaghan project is in order and the proposal is suitable for the disposal of large quantities of meat and bonemeal.

Following the issuing of an EU directive in 1993 requiring member states to provide alternative energy sources, in the summer of 1994, I arranged for a deputation from Monaghan County Council to meet the then Minister of State at the Department of Transport, Energy and Communications, Deputy Treacy, to discuss the proposed alternative energy requirement competition.

The Minister explained that he proposed to target 75 megawatts for alternative energy source with 10 megawatts for biomass waste. Following discussions, he agreed to increase the biomass waste to 15 megawatts as 10 megawatts would not allow any extra capacity. Concern had also been expressed by the British company, Monopower, that the 40 per cent corporation tax was too high. Following representations to the Department of Finance, I received a letter saying that generation of electricity would be regarded as coming within the definition of manufacturing and would be subject to a 10 per cent tax rate. A site was subsequently obtained at the IDA industrial estate in Knockaconny, County Monaghan.

However, with the change of Government in 1994, Minister of State, Deputy Stagg succeeded Deputy Treacy and, on 7 March, he announced the results of the competition which did not include the 15 megawatts for biomass waste. He promised another competition, which was launched last Friday, for 30 megawatts at a cost of £7.5 million under the Economic Infrastructure Operational Programme. This was meant to be done in October last year but was held over until now.

We did our homework. I travelled to England and saw a similar plant in operation. A subsidiary company of Fibrowatt in England called Monopower has been set up in Monaghan. When we recommended the benefits of such a plant to the Minister, he travelled to England to see it. He and his officials admitted it was a good venture. It is not surprising that the people of Monaghan are frustrated. Development in that area is at a standstill. We have been told there will be no more AER. The current project will not meet the 1999 deadline as there are objections to it. When Dublin people start objecting one can be sure the project will never become a reality. Will the Minister site the project in Monaghan?

Minister of State at the Department of Transport, Energy and Communications (Mr. Stagg)

I thank Deputy Leonard for raising this matter. The first Alternative Energy Requirement, AER 1, competition resulted in power purchase agreements being offered by the ESB power procurer for a 111 megawatts of renewable generated electricity. This included six projects totalling 12 megawatts in the landfill, gas and waste category.

Following on the success of AER 1, I launched AER 11 on 21 December 1995 with the aim of securing an electricity generating plant of between 10 and 30 megawatts using biomass or waste as a fuel. In order to ensure the fairness, impartiality and objectivity of the competition process, I decided to appoint independent consultants to run the competition, assess the technical and commercial bids and recommend a winner. My Department invited tenders for an independent assessor and subsequently appointed the UK consultancy firm, ETSU.

ETSU received ten project proposals, two of which subsequently withdrew from the competition. ETSU has advised me that the remaining eight projects involved a range of fuels including municipal solid waste. Following its assessment of the technical and commercial bids, ETSU recommended the proposal from Foster Wheeler Power Systems Incorporated and ESB Power Generation as the winner of the competition.

I stress that neither I nor my Department had any hand, act or part in the selection of the winning bid. My role in the process, having accepted the recommendation of the independent assessor, is to announce the winner and instruct ESB power procurement to offer a power purchase agreement to the winning consortium.

The proposal from Foster Wheeler and ESB is to build, own and operate a £113 million, 30 megawatt waste-to-energy electricity generating plant. The facility will be located at an existing ESB-owned site, contiguous to its central distribution depot at Goddamendy, Ballycoolin, County Dublin. It is now a matter for the developers to proceed with the project and to obtain the necessary permissions and licences. The project will be required to comply with the relevant planning and environmental licensing requirements.

I am aware some concern has been expressed by residents in the area about the possible adverse effect of the new electricity generating station. This appears to have been fuelled by a certain amount of misinformation or lack of understanding about the development.

Foster Wheeler is one of the world's leading experts in the field of waste to energy technology. The company operates similar facilities in New Jersey and Chicago and is currently constructing one in Lisbon. The Dublin plant will be constructed to the highest technological and environmental standards. It will incorporate a boiler system to recover energy from combustion gases and sophisticated emissions abatement systems. It will, as I have already indicated, have to get planning permission and comply with the very demanding requirements of the Environmental Protection Agency. There will be no storage of waste on site. Covered sealed lorries will drive into the building and deliver the waste directly to the fires. No hazardous waste will be used.

This development is an integral part of the Government's renewable energy strategy which is designed to increase the share of renewable energy generated by independent producers to 6 per cent of the country's installed electricity generating capacity by the year 2000. The price cap in the AER 11 competition was 3.6p per kilowatt hour of electricity. The winning bid price is 3.2p per kilowatt hour. That was the determining factor in who won the competition. It was the lowest bid and had much technical competence. This is 11 per cent below the price ceiling and shows that renewables are becoming more competitive when compared with traditional fossil fuels. Renewable energy is an indigenous, environmentally friendly and sustainable source of clean energy. Combined with my other renewable energy initiatives this project will reduce our imported oil bill by £25 million per annum and, as a consequence, will reduce the level of CO 2 emissions.

It will have a number of positive effects on the environment. As well as reducing the emissions associated with electricity generation from fossil fuels, it will reduce the need for landfill dumps. About 50 per cent of Dublin's non-hazardous municipal waste will be transformed to energy by this new facility. The electricity generated will supply the electricity needs of approximately 200,000 people.

Waste is a resource and we must recognise it as such while seeking to minimise it. It makes no economic or environmental sense to bury it when we can use it constructively and reduce imports.

The development will also bring economic benefits to the locality. Total project investment will come to £113 million and that will be funded by the project's proposers. During the construction phase, the project will create up to 1,500 construction jobs. Once operational, 75 permanent jobs will be created locally.

Subject to the approval of the European Commission, a European regional development fund grant of up to 9.3 MECUs, or £6.9 million, is available for the project.

I appreciate Deputy Leonard's disappointment that the power station will not be located in his area where there is fuel available from the chicken and mushroom industries to supply the station. This is in sharp contrast to his colleague, Deputy Ray Burke, who has mounted an outrageous campaign of misinformation against the project in an attempt to create hysteria based on that misinformation. His actions are irresponsible in the extreme.

Deputy Leonard should be aware this is not the end of such projects. This competition showed the demand for this type of project. I will as a matter of urgency look to see how the problems outlined by Deputy Leonard can be addressed in this context.