Excellent analysis as usual Richard. Have you been feeling ok the last week?

Why are the good externatilies not mentioned in this reprot, particularly economic externatilies. For example the saving of resources, export/import, human resources, etc. If this is an ‘economic analysis’ why does it only consider environmental externalities. Why does it not discuss the financial savings of producing compost from not having to import expensive chemical fertilisers.

As for market power, the report proposes to give full market power to the local authorities who can then direct the waste to monopoly disposal outlets that have long term contracts (25 years). How is this consistent with the statement below

”The most obvious one is that in sectors with long-lived assets, choices made today will determine and restrict options for years to come. If long-lived assets are subject to an uncertain rate of technical progress, selecting a standard today can have the effect of foreclosing future choices.16 If this is so, a higher social discount rate should be applied to such choices than if the technology were static. In effect, the decision maker should take into account the potential value of waiting to see how quickly the technology improves”.

DCC are trying to determine the future of the waste market for the next 25 years. I can see a situation arise whereby the incinerator will have a competitive advantage becuase of the generous contract will DCC. They can then charge DCCs competitors a reduced rate thereby reducing the quantities of waste that DCC supply them. DCC end up paying for waste that they don’t have further reducing there ability to compete. The incinerator then gets revenue for 300 kpa from DCC and a further revenue for another say 500kpa from DCCs competitors. They will be able to ourcompete MBT and other technologies because DCC are covering the SUNK capital. The government will then be forced to change the law to facilitate DCC, and the ERSI/DCC will get what they want, monopoly on disposal for local authorities. This will be fixed for 25-40 years even though we do not know what technologies might emerge in the mean time.

The latest ESRI financial accounts are for 2008, so obviously they do not cover the period during which this report was prepared.

In any case, they do not provide the level of detail (e.g., salaries for individual staff grades) that would be necessary to begin to answer the questions that I posed.

It should be a simple matter for you, or for one of your colleagues, to provide a breakdown of the time input involved in producing this report?

Of course no matter what the ESRI do the government will no more welcome conclusions they don’t agree than they would a planned mustard gas emissions plant in Ringsend.

Night all.

Let me ask you a straightforward, yes or no, question if I may:

Yay or nay, do you and the esri stand over the institute’s waste report in its current form even though you have acknowledged errors and Gorecki said it will need to be ‘re-published’?

I have no agenda here, but if the answer is no to the above then how does the report ’stand’? Surely you and esri are merely playing with words here!

Instead why not say the ESRI’s report’s conclusions are completely opposed by the government. That’s the reality in this case.

I do not see the business case for vertical integration. There are benefits from coordinating waste separation at source and disposal, but not from collection and disposal.

My comment about the relative costs of incineration is based on its widespread use in the rest of Europe.

This is, as I have repeatedly stated, not about the ESRI. This is all political.
Just look at it:

Two experts have given opinions. Both identifed mistakes in the other’s reports. One is happy to accept mistakes identified and is correcting them as swiftly as they can. The other is entirely ignoring the mistakes in his own report and is doing his best to identify as many errors as he can in the other’s. This isn’t a policy debate to find the cheapest solution. It’s a PR war for political purposes.

The government should be honest. They should end the spin war and come clean and make a political decision.

Could you provide us with a study which shows that incineration is “relatively cheap”? Is it cheap for Covanta, cheap for DCC, cheap for the citizens and businesses of Dublin or cheap for Irish society?

To our knowledge the cost of the Dublin incinerator has not been studied since the 1997 Waste Strategy by MC O’Sullivan et al. At last Wednesday’s meeting of the Oireachtas Committee on the Environment Mr P J Rudden (of MCOS now RPS) confirmed that this study has not been revisited since 1997.

That study was based on a cost of €146m to build the incinerator.

At their recent Open Day in Ringsend Dublin City Council confirmed a cost of € 275m to build it.

Covanta on the other hand have been stating until 3Q 2008 in their quarterly SEC filings that construction would cost € 300m (using project financing). However Covanta upped the cost of construction to € 350m in 1Q 2009 (using debt financing). We do not know why they increased the cost by € 50m at a time when construction costs are dropping but we suspect it has something to do with the high cost of debt financing.

The rationale for choosing incineration over MBT and other forms of disposal was based on an analysis which omitted the costs of disposing of bottom ash and fly ash. The model also excluded the cost of CO2 and used an incorrect cost for money.

DCC refused to release the model and have not engaged in any open debate on the real costs of incineration.

The basic source of remuneration for the project must be the gate fee plus the sale of energy mostly electricity.

In this case we understand that DCC has contracted 320,000 tonnes pa at a fixed gate fee which we estimate at € 80 (excluding VAT, transport and levies).

So Covanta can expect an income of € 25.6m pa from DCC for 25 years.
Would an annuity guaranteed by the municipality of 25.6m be enough to pay for this incinerator?

If it would, than Covanta are free to sell the remaining capacity into the market at whatever marginal price they can get. Suppose they sold at a gate fee of € 15 per tonne it is easy to see how this would distort the market.

What now is the meaning of “incineration is… relatively cheap”?

Most of this blog has focussed on the proposed levies and the various externalities but has neglected the cost of construction or the guaranteed gate fee to be paid by DCC.

We would like to see an open and public debate on the full costs of this project.

J&V

“Signing up to that clause and then citing it as a reason for forcing others to deliver waste to the facility (or as is now proposed in the ESRI report, eliminating competition for waste collection services at the level of the consumer) was the equivalent of the sheriff threatening to shoot himself in Blazing Saddles.”

Nice way of putting it. Again, I always appreciate the input of someone who manages to see the system view of things. I see your point about regulator and competitor in the same market. I acknowledge that Mr. Tol, obviously pointed it out elsewhere in the thread above, which I have not studied in detail.

“BTW - I think charges of “gombeenism” are inappropriate on all sides. I would edit them out of my above post if there were an edit function.”

Sensible thinking, good on you. BOH.

I think it is quite unfair on Minister Gormley to suggest that he is only opposing the incinerator because it is in his constituency.

The Green Party, so far as I can recall, has always opposed incineration as being an all encompassing solution to waste disposal irrespective of where the incinerator is located. That has been their position ever since the incineration PR offensive started a number of years ago.

BTW, I didn’t mean to suggest that DCC acted ultra vires in signing the deal to provide a guaranteed amount of waste to the incinerator. I meant that it was outside their power to ensure that such an amount of waste would be delivered and therefore they were always in danger of having to pay the operator the penalty of €x per tonne of waste not delivered to the facility.

Signing up to that clause and then citing it as a reason for forcing others to deliver waste to the facility (or as is now proposed in the ESRI report, eliminating competition for waste collection services at the level of the consumer) was the equivalent of the sheriff threatening to shoot himself in Blazing Saddles.

As Richard Tol has pointed out, there is a problem with a Local Authority being both a regulator of the market and a competitor within that market. The current position where Local Authorities regulate waste collection and recycling activities makes it very difficult for waste services providers to stand up to Local Authorities.

BTW - I think charges of “gombeenism” are inappropriate on all sides. I would edit them out of my above post if there were an edit function.

http://www.pbs.org/wgbh/americanexperience/donner/introduction

We are at the point in our journey now in Ireland, of committing beyond the point of no return. We are just at that stage, where we get stuck in the emigrants valley for one month instead of a week, and spend 5 no. days crossing the salt lake flats, whilst losing our oxen. By the time, the snow comes in winter, we may have to turn to cannibalism.

BOH.

http://designcomment.blogspot.com/2010/02/shoe-box-king.html

Has Richard Tol, the Green Party, the ESRI, Dublin City Council or DDDA got any idea of how much this %******* is costing the Irish economy - in time we don’t have?

BOH.

I noticed this discussion still active, so I might as well chip in with something.

From this thread:

http://www.irisheconomy.ie/index.php/2010/02/05/property-scheme-tax-incentives/#comment-34902

““The builder(s) will sometimes maintain, it was planners in their local area who insisted the follow densification guidelines etc. The planners in turn will maintain, they followed national planning guidelines. We can’t lump it all on builders.”

You could go even further. You could say the national planning guidelines were driven by politics rather than good procedure (which they were). You could say that politics is in turn driven by consultant reports, commissioned by the Construction Industry Federation and so forth. I mean, it all goes around in a circle, until eventually every shred of responsibility has been dissipated, and no one at all is responsible.”

Is anyone here actually interested in seeing the ’system dynamic’ which we in this country seem to be held captive of? Does the Green party see it? Does Minister John Gormley see it? I refer here to the work of people like Peter M. Singe, in his book The Fifth Discipline. Has anyoone here ever read the book?

BOH.

Press release issued Sunday:

The Irish Waste Management Association has today called for the complete cessation of works on the Poolbeg incinerator project to allow for a thorough examination of all aspects of the project including the terms of the contract, the size of the facility, and the extraordinary level of monies that have been spent so far.

This follows the acknowledgement from the ESRI that significant errors were made in their report – An Economic Approach to Municipal Waste Management in Ireland.

Brendan Keane, Spokesperson for the IWMA, commented: “When the ESRI report was published on Wednesday we highlighted a number of serious errors in the document. The IWMA believes that the report is fundamentally flawed, and that the ESRI has serious questions to answer about the data used in this report.

· The incinerator is twice the size it should be – if we build this grossly oversized incinerator it will harm recycling rates in the Dublin Region and lead to significant job losses
· The taxpayer is exposed to heavy penalties if Dublin City Council fails to provide a high level of waste to the incinerator. The Minister for the Environment has estimated that these penalties could cost the taxpayer up to €450 million over the life of the Poolbeg incinerator.
· Dublin City Council has spent €120 million on the project so far – this is more than 20 times what a private operator would have spent getting a similar project to the same stage as the Poolbeg incinerator.

But speaking from experience, if the state or local government is involved we’re paying too much, it’s only a question by how much.

And if you were to ask me who pays the most, it has to be central government, they reward incompetence, and when it comes to the Greens they actually protect corrupt regulators.

Just ask Ego Ryan about the CER.

Speaking as a former Green voter don’t believe the Greens on anything, they have more faces than Worrzell Gummage.

The loony fringe in the not-so-Anonymous Green_P PR Department …… the party of transparency ………. jc, Holbrook Fields, toby ……….. for polluting the blog with puerile political spinning ……… Ryano, in contrast, appears to have some inkling of the science ……… but c’mon ……. has the GP become so toxic due to its inability to address the big decisons that all its members have resigned themselves to becoming anonymous …. as the party itself is at the mo on Dublin City Councils. Maybe the Green Party might (re)consider the public interest and just GO. Then let the people decide ………….

Now can we get back to the ’science’ ……….. there appear to be a few ‘errors of fact’ around ….. in BOTH relevant reports ….. makes a change from all those ‘errors of judg(e)ment’ ………….

http://www.rte.ie/news/2010/0207/waste.html

In political parlance, an “expert” is an individual who supports one’s view.

It would be surprising if a politician dubbed a critic an “expert.”

The default response is to query a critic’s motivation and soundbite morsels are fed to supporters and the media to create a donnybrook rather than addressing directly the issues raised.

If it transpires that the evolution of national waste management policy is based on local political considerations, the cost will be substantial.

There is little transparency on Irish public spending and we cannot know how much has been spent already since July 2007 in trying to slant an existing policy which the DCC says it’s implementing.

It would be naive indeed to believe the Dept has only spent €236,000 on it.

That is of course chump change compared with the €13 million the minister spent on a climate change awareness advertising campaign.

It is of course much easier to spend others’ money than produce a credible policy.

If I were the ESRI I would say: “We stand unreservedly behind the fundamental conclusions of our report. We are, as always, happy to correct any factual errors identified that were made in good faith. They in no way undermine our report’s fundamental conclusions. We hope that those who compiled the review - at substantially greater cost - will now correct the factual errors they made in good faith”.

On second thoughts you should omit the bit about substantially greater cost. No need to lower yourselves to the level of the Karl Roves.