The Council has agreed to supply a minimum of 108,000 tonnes of waste per year at £146 per tonne. But beyond this point the gate fee drops to just £15 per tonne, undercutting all other waste disposal methods, including recycling.
Activists in Gloucestershire are battling to block the creation of an incinerator that they see as costly, polluting and wasteful.
The fight entered a new phase in March after a tribunal forced Gloucestershire County Council (GCC) to reveal details of the contract it had signed.
Actor Jeremy Irons, whose 2012 documentary Trashed cast a critical eye over incineration, spoke at the launch of the activists' report on 31st March:
"I remember urging locals two years ago to 'regird their loins and embarrass people over this deeply unpopular project', and it seems today that they have done so."
The Tribunal's verdict, handed down in early March, was the culmination of a series of offensives and counter-offensives that had gone on for nearly a decade.
The Council bought the site in Javelin Park near the M5 in Stroud District for a new waste facility in 2008, and began laying plans for funding via a private finance initiative (PFI).
It launched a procurement process in 2009, and received bids based on both energy from waste (EfW), including incinerators, and mechanical biological treatment (MBT), an option preferred by many environmental groups for its lower greenhouse gas emissions.
In 2012, GCC awarded the contract to Urbaser Balfour Beatty's (UBB) EfW proposal. But the next year UBB's application for planning permission was denied by GCC's own planning committee.
This was partly because of the impact of the enormous buiulding (see montage, above right) on a nearby area of outstanding natural beauty, and partly because of the relative merits of MBT. UBB appealed to the government. In 2015, secretary of state Eric Pickles reversed the decision and allowed the project to go ahead.
Incredulity over £100 million cancellation costs
The incinerator was nearly blocked again by the GCC when an emergency motion was submitted in 2015, after pressure from local residents. But the Council narrowly voted to go ahead, in large part on the basis of an estimated £100 million of cancellation costs, a figure cited by one councillor during the debate on the motion.
It wasn't obvious where he got this figure from, but the GCC refused to reveal contractual details, citing 'commercial confidentiality', so scrutiny was near impossible.
After a freedom of information request, the Council released a heavily redacted version of the contract. Activists, now united under the banner of 'Community R4C' (CR4C), took the matter to the tribunal. That effort finally forced near-full disclosure on 10th March this year.
In his verdict, Judge Shanks expressed "some incredulity" that cancellation costs could be as high as £100 million on a contract worth £500 million over 25 years, when construction had not even started.
At the same time, he noted the contract spans some 1,750 pages, and its provisions verge on the labyrinthine, so drawing conclusions without detailed study is difficult. In the end, the tribunal went line by line through the redactions and forced the council to reveal most - but not all - details of the contract.
Lifting the veil
CR4C moved quickly after the ruling, recruiting an independent analyst, a waste consulting firm, and lawyers to scrutinise the contract. At the 31st March meeting, they published their results.
The planned incinerator serves the dual purpose of disposing of 'black bag' waste and generating electricity. It has many advantages over landfill, offering a lower cost per tonne of waste, avoiding the methane emissions caused by large piles of decomposing rubbish, and generating enough electricity to power 25,000 homes, with the energy sold to the Council at competitive rates.
Furthermore, with EU laws requiring landfill to be phased out, councils do need to come up with fresh options.
However, CR4C's scrutiny of the report throws up some major concerns. The contract is structured such that the Council agrees to supply a minimum of 108,000 tonnes of waste per year at a relatively high 'gate fee' of £146 per tonne. But beyond this point the gate fee drops to just £15 per tonne, undercutting all other waste disposal methods, including recycling.
The concern is that the incinerator will suck in waste from far and wide, and discourage efforts to promote recycling. At the same time, if Gloucestershire produces less waste in the future, the Council could be left with a costly and under-used facility.
The report also challenges the council's £100m cancellation cost figure, setting out its own estimate of £36m, which it says could be covered by capital already invested in the project, avoiding an immediate impact on the Council's budget.
Furthermore, CR4C argues the Council compared the incinerator only to landfill when building its value for money case - ignoring both nearby capacity that already exists at lower cost; and CR4C's own preferred option, a form of MBT, which has even lower costs.
The Council defended its plans in a statement. Nigel Riglar, director for communities and infrastructure, said: "The Council has been as open as we can. The recent court ruling confirmed we were right to withhold some important commercially sensitive information.
"We have always been very clear that savings are over the life of the contract. As we also made clear the costs for cancelling the contract once planning permission was granted would be £100 million, including financing costs, extra waste disposal costs, and re-procurement costs. The Council has acted appropriately and legally.
"The new facility will save taxpayers £100 million, make enough clean electricity to power 25,000 homes and reduce carbon emissions by 40,000 tonnes. UBB has made good progress on construction and the facility will be operational in 2019."
A better option?
As Riglar says, diggers have already moved in on the site for the incinerator, leaving CR4C with a particularly steep climb ahead.
The group has proposed its own alternative waste facility, a mechanical, biological and thermal (MBT) treatment plant. Such plants combine mechanical sorting with forms of composting, heat treatment and washing to recover the maximum possible resources from black bag waste.
Some of the waste is recycled, some composted, and some is made into pellets that can then be burnt to generate electricity. Only a very small amount of waste is left over at the end of the process.
As Riglar notes, however: "We invited any company with any solution to bid for the contract. R4C did not." The group set out its plans after the procurement process ended. On the other hand, the Council was presented with other MBT options among the 11 tenders it considered: the two firms it invited to submit final bids both offered proposals for EfW plants.
CR4C's estimates suggest the average MBT plant would be lower cost in the long run than an incinerator, but it is not clear what costings the Council had to choose between.
The fight continues. CR4C has lodged a complaint with the Competition and Markets Authority on the grounds the incinerator contract's pricing structure and "punitive termination terms" prevent competition and stifle innovation. At the same time, work is proceeding on the incinerator and the council's 2019 launch date remains viable.
With the local community determined to pursue its battle against the unwanted and secretive project, there will be many further hard battles ahead.
Dan Hinge is a financial journalist based in London. He backed CR4C's crowdfunded campaign for an alternative waste facility.