EfW Net spotlight on... Owen Michaelson

In this new series, we spoke to Owen Michaelson, Encyclis’ CEO and Chair of Resource Recovery UK (RRUK), about his background in the sector, Encyclis’ efforts to develop the UK’s first energy recovery facility with carbon capture, and where the sector should focus to decarbonise society efficiently.
EfW Net spotlight on... Owen Michaelson

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In the first of a new spotlight series on the Energy from Waste Network, we spoke to Owen Michaelson, Encyclis’ CEO and Chair of the new alliance Resource Recovery UK (RRUK), about his background in the sector, Encyclis’ efforts to develop the UK’s first energy recovery facility with carbon capture, and where the sector should focus to decarbonise society efficiently.

Michaelson entered the waste industry in 1990 as assistant to the waste and minerals manager of Manchester Ship Canal Company, landlords at the time of several landfill sites. This is where, he says, “I got my first taste of, let’s say, the business end of the waste industry.”

Almost three decades later, including 20 years working on low carbon development projects away from waste, Michaelson returned to the industry as non-executive director of US-listed Covanta, which at the time operated 42 plants across the US handling 21 million tonnes of waste each year. He says (modestly) his “single qualification was that he had an English accent!”

Michaelson returned his focus to European soil as CEO of Covanta’s European arm, where he has now overseen the separation of the US and European company, leading to the birth of Encyclis.

And what does he make of the waste sector, 30 years later? “It has changed beyond recognition,” he remarks. “Certainly back in the ’80s it was the Wild West… and then in 2018, looking at the sector again, you realise that it has massively grown across all European countries. In that 20-year gap it has become much more professionalised.”

For Michaelson, this is predominantly due to a functional waste hierarchy, in which recycling is always the priority. Encyclis’ annual Sustainability Review states that there is a “significant misconception that EfW conflicts with recycling”, which Michaelson challenges on two levels:

I don’t think Energy from Waste is properly recognised for the role it plays: it is thermal recycling… by generating power, by generating heat, we’re offsetting the use of virgin fossil fuels. It is a simple carbon equation, and that gets forgotten.”

Secondly, Michaelson highlights that EfW’s role runs parallel to effective recycling: “There’s always the low-hanging fruit on recycling,” he says, “and then there’s the more difficult fruit… materials that just can’t be easily recycled. In theory, anything can be recycled, however we reach the point when it is not economically practical to chase marginal net gains. Remember, we’re a public hygiene service first. To be frank, who wants to sort through dirty nappies?”

Michaelson reiterates this sentiment when discussing his recent appointment as Chair of the new Resource Recovery UK alliance: “We were set up as an advocacy group, a phrase we use carefully. We are proud to be an advocacy group, because we want to reposition the EfW sector as part of the solution... EfW should be seen as a part of the social infrastructure of any region, rather than being demonised by special interest groups.”

In keeping with this public hygiene focus, Michaelson highlights the importance of keeping EfW facilities close to where the waste is generated, in spite of the geographical challenges faced in implementing carbon capture and storage. He underlines the need to facilitate transportation of carbon to suitable storage points, rather than only locating plants near the sea: “You occasionally hear claims that ‘we’ll build plants in the North East and all the waste will travel.’ Why will all the waste travel up there? Just think of the logistics. It is far easier to transport gas by pipeline than by hauling waste up and down the country on our congested roads and railways. Also, why should the North East be the dumping ground for waste from the South? All regions should be responsible for the treatment of their own waste.”

He therefore welcomes the recent National Infrastructure Commission’s second report, which called for “new networks… to be up and running by 2035 for the storage and transmission of hydrogen and carbon, to…ensure heavy industry has the means to decarbonise and remain competitive in global markets.”

“That’s fantastic,” responds Michaelson, “because they’ve finally recognised that if they want carbon capture to be a reality, the government has got to deliver a national grid for CO2 and it can’t be done by the private sector alone. You need government at all levels to intervene on this to make it happen – it’s got to go in first for it to be economic, it won’t be economic until people sign up.”

In March 2023, it was announced that Encyclis’ Protos Energy Recovery Facility would be included in Track 1 of the Government’s CCS cluster programme, as part of the HyNet North West Cluster.

Aerial image from summer 2023 of the Protos ERF construction project

Encyclis is aiming to deliver the UK’s first energy recovery facility with full scale carbon capture, enabling the delivery of an essential public hygiene service that recovers energy and other resources without emitting carbon dioxide.

“We’re working as hard as we can to meet the government timetable and have met every single deadline put to us in terms of receipt of information, but all stakeholders accept that the timetable is very ambitious."

"We’re investing millions of pounds into feed studies and multiple permit applications. Many

government agencies are going to have to fast track to keep up with the government’s own timetable and we need to be realistic about the time these projects will take. We can only reach financial close when we receive all of the necessary permits.”

CGI of Protos' carbon capture facility to be developed upon completion of the ERF

In spite of these efforts, Michaelson suggests governmental initiatives should focus not just on the “big bang of carbon capture”, but also on the removal of plastics from the waste stream, as well as increasing the focus on delivery of district heating.

Encyclis has a stated aim of achieving 100% circularity in its operations by 2030, which means every possible resource being recovered from deliveries of waste. But there is also a strong will to ensure energy-from-waste facilities can support wider decarbonisation in the communities they serve.

“If we deliver district heating, we might not be decarbonising ourselves under Scope 1 and 2,” he acknowledges, “but we are decarbonising society and our host communities. We could decarbonise society faster by delivering district heating. So, in my mind, you do both, but really focus on district heating first and allow carbon capture to catch up, because it will take time to put the CO2 national grid in place.”

Less than 3% of homes in the UK are currently supplied with heat via district heating, while most still rely on gas, which for Michaelson is “a completely wasted opportunity”. So, what measures need to be implemented to improve the current situation? “I want there to be a genuine partnership between the private sector, local and national government, because the public sector needs to lead the delivery of the heat networks. The private sector does not have the automatic right to dig up roads or to provide the underpinning planning framework. How do we think we got all the North Sea gas into our homes? The Government delivered the grid infrastructure and passed the primary legislation!”

Michaelson has seen the challenges involved from both sides, previously as master developer of new housing estates at former collieries. “One of the fundamentals of energy in this country is that it’s not cold enough for long enough, so there’s a very intermittent use of heat, which makes the business model quite challenging. But now that power costs are increasing, the economic equation has shifted. Another is that householders always want a choice – there is an obsession with price comparison sites. No-one wants to be locked into a single heat source. So that’s inconsistent with district heating because you need everyone in the district to sign up to make the model work. The challenge is to show consumers that they are still getting a fair deal from a single heat source.”

He believes now could be the right time for consumers, with the changing economics and increased public support for decarbonisation initiatives.

The problem is there is still a gap, which causes inertia,” he says. “We’ve got a heat source. We’re trying to work with all stakeholders to bring district heating forward on all our facilities, but you need government intervention to put the primary heat networks in… People aren’t going to sign up thinking it might be years until they build it, and this is where local government has to fill that gap.”

This is supported by the Energy Act 2023, passed into law at the end of October, which sees essential legislation put in place to formalise and regulate district heat networks. For Michaelson, this is a “step towards” the joined-up approach required between the public and private sectors, “but continued government support will be crucial”.

To conclude our conversation, we turned to the not-so-small topic of the expansion of the UK’s Emissions Trading Scheme (ETS) to include EfW. Michaelson acknowledges this as the biggest change to the sector since landfill tax was introduced. He says: “It’s coming, we’re going to have to react to it – it will have a profound effect on our sector and I don’t see it any differently to the way landfill tax was introduced in the ’90s. It needs careful consideration to avoid unintended consequences.”

He says that alignment with associated policies such as packaging and recycling reforms, as well as careful measures to prevent carbon leakage or landfill becoming the financially preferable option, are crucial to the success of the expansion.

Lastly, Michaelson highlights the importance of fair measurements: he believes the EU is “taking a much more simplistic view”, which would work better in the short term.

“Calculations in the EU are based on an assumption that around 40% of residual waste is fossil-based carbon, and that is the proportion where ETS costs will apply. This allows countries in the EU to implement the scheme and normalise the new costs of disposal across local governments and industry in the early years of implementation. It also leaves scope for more detailed measurement of fossil content in the future, when more accurate measurement systems have been developed. As we move forward, this approach will allow organisations to quantify the impact of investment and make the investment needed to decarbonise the source waste.”

Although all society faces these challenges over the next 5–10 years, Michaelson harbours no doubts about the future of EFW and the role it continues the play in supporting the waste hierarchy: “Is everyone going to stop throwing their rubbish into bins?” he asks. “If EfW could just be acknowledged as part of the social infrastructure in all regions, which exists to deal with residual  waste only, we will all make better progress on the road to net zero.”

You can hear more insights from Owen Michaelson at the Energy from Waste Conference 2024 where he will be speaking on waste to energy capacity and plant developments. The conference will also feature several sessions on the ETS and CCS technologies and infrastructure. Access an exclusive discount for EfW Net members here.

By Victoria Hart

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