Incineration (N+2)

The Competition Authority has rejected complaints that the contract between Dublin City Council and Covanta/Dong is in breach of competition law. See Examiner, Indo, Times and RTE. The last two articles give substantial space to the IWMA’s view that is not really what the Competition Authority said, but it did. The Poolbeg incinerator affects the market for waste disposal directly and the market for waste collection indirectly, but not in an illegal or unfair way. The Competition Authority ruled correctly.

RTE also reports that Minister Gormley wants a word with the Competition Authority, which is peculiar as the CA does not answer to DEHLG.

The IWMA is now pursuing a complaint with the EU that the take-or-pay contract between DCC and C/D constitutes an unfair state subsidy. The evidence is again against the IWMA. Long-term contracts are perfectly legal. The IWMA will have to show that the DCC overpaid, and deliberately so.

The press also report estimates of the cost of abandoning the Poolbeg incinerator at this stage: Hundreds of millions of euro. See Indo and Herald. That number corresponds to my own back of the envelope calculations for the total of landfill fines, money already spent on Poolbeg, contract buy-out, and the extra cost of the alternative disposal methods.

Commentators are increasingly worked up. See, for example, Hogan, Indo, and today’s Sunday Times.

UPDATE: More in the Irish Times of today. Minister Gormley reiterates the misconceptions that the Poolbeg incinerator will only burn waste that is collected by public operators; and that the proposed landfill levy will guarantee that the landfill target will be me (Curtis et al. disagree). Minister Gormley also seems to say that Ireland would not face EU fines if it does not meet its landfill targets — which would be untrue — but perhaps he thinks that there are alternative ways to meet the target — which is unlikely: A double-dip depression and accelerated emigration might do it.

18 thoughts on “Incineration (N+2)”

  1. The Minister, and consequently the state, may have to answer charges of constructive obstruction in a Irish or higher court.
    Paul Daniels politics indeed…

  2. “UPDATE: More in the Irish Times of today. Minister Gormley reiterates the misconceptions that the Poolbeg incinerator will only burn waste that is collected by public operators; and that the proposed landfill levy will guarantee that the landfill target will be me (Curtis et al. disagree). Minister Gormley also seems to say that Ireland would not face EU fines if it does not meet its landfill targets — which would be untrue — but perhaps he thinks that there are alternative ways to meet the target — which is unlikely: A double-dip depression and accelerated emigration might do it.”

    Impressively, almost none of the statements in your summary were made by Gormley in the piece you linked to.

    Nowhere does he say that the incinerator will only burn waste that is collected by public operators – he simply says that the Dublin local authorities are committed to providing 320,000 tonnes per annum, which is true.

    Neither does he say that the landfill levy will guarantee that the landfill target will be met – rather he says that the need to meet the target makes a levy necessary, which is not the same thing.

    Neither does he say that Ireland won’t face fines if we don’t meet out landfill targets. He says there is scaremongering that we’re going to face fine, i.e. that we are going to fail to meet our landfill targets.

    As for Curtis et al, if I interpret them correctly they say that landfill levies on their own don’t have much effect on the presentation of mixed waste by householders, which makes sense. However they do acknowledge that they “may well have a significant role to play in changing the economics of post-collection processing of waste.”

  3. @Ryano
    ‘[Gormley] said: “They cannot feed the beast at the moment. It’s just too big. They know that. The only way they can do that is by controlling the waste.”‘ I take this as saying that uncontrolled waste will not be incinerated.

    “We have to have a landfill levy because we have to abide by the landfill directive.” The landfill directive puts a cap on landfill. It is silent about levies.

    As to your third point, please read what I wrote. Furthermore, the current government has not put a policy in place to provide alternatives to landfill or reduce waste. If the 2010 targets are met, it would because of the economic depression.

    As to your fourth point, I am glad we agree.

  4. Richard, please note that the Comp Auth did not ‘reject’ the complaints made by the IWMA. The press release indicted that they would be meeting the authority to discuss the matter further and I suspect that the matter has further to run. I think we should wait and see what might come out of that meeting.

    Whether Minister Gormley wants to discuss the matter with the Authority or not is an issue for the Minister, as opposed to your comment that they don’t ‘answer’ to his office.

    The IWMA lodged a complaint with the EU Comp Authority at the time of the initial Irish CA complaint, so no this is not a new matter, it just hasn’t been replied to yet. And certainly long-term contracts are legal, BUT is this one?

    On the fines issue;
    DCC have spent possibly €120m to date (Indaver spent €6.5m getting out of the ground in Meath). Waste of Money 1
    DCC authorities PLAN to loose €60m on commercial waste services in 2010 (having lost €59m in 2009!). Waste of Money 2
    If DCC can only deliver 200kt (as indicted by independent sources) instead of the put and pay 320kt at €85 / t this would cost €10m a year for 25 years. Waste of Money 3

    On the Landfill Directive there are at least two reports in circulation that indicate that Ireland will not get fined under this Directive. I agree that we have to make sure that we keep pace with this situation, but it is lot cheaper and easier to build more MBT capacity then deal with the investment and fall out of an oversized incinerator. As for the cost of a pull-out at this stage, lets just wait for the independent inspector’s report instead of speculating about a number that DCC have to date chosen not to publish (despite being the people who must know it).

    On the other side of the argument – I think you should factor in the negative cost on Ireland of building a 600,000t unit which would suck waste from all over the country and decimate recycling rates in Dublin as the old ways of hump-and-dump return with the additional possible loss of 1000 – 2000 jobs, (while only creating 60!). The cost of the continued purchase of coal for Irish Cement kilns as top quality replacement fuel (RDF) is burned in the incinerator. And finally the EU fines that may become attributable for not being able to meet the requirements of the waste hierarchy.

    My hope is that someone please sees some sense, ‘mine’ the waste we have for its resources – build a 300,000 t incinerator and lets move on….There are lots more issues in Ireland that require allot more complex thought to resolve.

  5. @Richard

    Thanks for explaining the reasoning behind the inferences you drew. Of course it doesn’t mean that he actually made any of the statements you attributed to him in your summary. Perhaps you should have been more clear that you weren’t actually reporting what he said.

    On Curtis et al, do we agree that they said that landfill levies, if passed on to consumers as volumetric charges, can influence the volumes of household waste presented? And that they can play a significant role in changing the economics of post-collection processing of waste, i.e. incentivising investment in non-landfill options?

  6. As a statistical game can anyone work out how many people will burn their rubbish at home when charges increase.

    I was at a friends house recently and his stove door burst open with rubbish waiting to be burnt.

    If charge increases by X results in Y consumers burning Z amount of waste at home, then at a certain points one can deduce points of influence.

    People burning their own waste results in harmful gases escaping untreated.
    But it is an Irish solution to an Irish problem..

  7. @Ryano
    I’m not a reporter. I’m an academic. I interpret.

    Curtis et al. argue that landfill levies alone would have a minimal impact; and that landfill levies plus separation at source would have a noticeable effect but the landfill target would still be missed.

  8. @Richard
    So Curtis et al support what John Gormley actually said and don’t support what you think he said? Thanks.

  9. “The last two articles give substantial space to the IWMA’s view that is not really what the Competition Authority said, but it did. “

    What’s your source for that (“it did”) by the way?

  10. @Richard
    If it helps, I’ve just had confirmation that the Competition Authority didn’t release any statement on the case.

    Perhaps what you saw was Dublin City Council’s statement?

  11. @Richard Tol

    Any chance you can share the information you have from the Competition Authority as they have not published any statement? You appear to have access to information not in the public domain and are commenting on it without the benefit of others having sight of it, so readers are relying on your word.

  12. @Richard

    The journal ‘Competition’ has covered this issue and indeed published the letters issued by the Competition Authority to DCC and to the IWMA – the only documentation released by the Authority in this case. They show that DCC’s claim of victory over the IWMA was exaggerated and that the IWMA’s press release was more factually accurate. This is due to the fact that the Authority issued a more detailed letter to the IWMA, whereas DCC received a shorter letter which they proceeded to hype up:

    “The much shorter text, sent to DCC, in this case caused some mischief because the recipients not only wanted to publicise the message that the Competition Authority apparently was going to take almost no action about the IWMA complaint, at present, but the council worked their letter over with a very blunt instrument, seriously exaggerating by rhetorical reiterations (which were not in the Authority’s text) the intention of the Authority”

    You say that your source is the Competition Authority. Is it at all possible that you meant to say your source was Dublin City Council?

  13. there is nothing he can do, the next day he says he can.”Is that suoppsed to be the lie referred to in your title? What he’s saying seems pretty clear and consistent to me: he’s acknowledging that he doesn’t have any power to intervene directly but that he hopes his review of waste policy will make the incinerator redundant. Where’s the lie?Or are you saying that he does have a legal power to intervene, to force the City Council to break their contract or to invalidate the planning permission? Surely that could be established pretty easily with reference to the law.In the case of Mayo etc. there is a specific section of the planning acts that enables him to intervene. What is the corresponding law you think applies in this case?”He’s lying when he says the Minister for Local Government (for it is he) has no power of local government.”Aren’t you a Councillor? I could understand a layperson believing the above, but surely you should know better. Do you really believe that the Minister can force a local authority to break a contract at a whim?

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