Price regulation of sewage sludge digestion and disposal by the water sector are key issues being studied in a review of the organic waste market by the Office of Fair Trading (OFT).
The study, proposed by water regulator Ofwat, will look at the effectiveness of the current market and whether opening up sludge treatment to competition from the waste industry would help lower water prices for consumers.
The OFT will focus on sewage sludge, domestic food wastes, and wastes from the food and farming industries, which are increasingly being treated by anaerobic digestion to produce methane biogas and a digestate which can be used as a fertiliser. Ofwat will contribute knowledge on the water sector.
One opportunity for the waste sector would be the co-treatment of sewage sludge with other wastes, particularly domestic and industrial food wastes, and farm wastes. Any change would end the water industry’s virtual monopoly on wastewater sludge digestion and the biogas resource that it generates.
In 2009/10, the industry generated 665 gigawatt hours of electricity – mainly from sewage sludge biogas – and produced 1.7 million tonnes of dry sewage sludge, much of which will have been digested.
Cathryn Ross, Ofwat’s director of markets and economics, said: “Twenty years ago sludge was a major environmental problem. Now it gives [water] companies the opportunity to engage in new markets. But these opportunities bring challenges in ensuring fairness for water customers and competition across the organic waste sector.”
The Anaerobic Digestion and Biogas Association (ADBA), representing waste digesters, was positive. Chief executive Charlotte Morton said: “This is an important study and ADBA welcomes its wide remit, especially the broad focus on incentives and encouraging investment in anaerobic digestion, both inside and outside the water industry.
“We need to make the most of organic waste, to reduce waste to landfill, counter climate change, generate renewable energy and preserve resources. As WRAP’s independent study has already shown, AD is the technology which makes the most of these organic arisings.”
However, water industry association Water UK had little to say about the inquiry.
The study comes as the government has committed to a “huge increase” in anaerobic digestion and new schemes are pressing ahead. The environment department (DEFRA) is set to produce a framework document this year to encourage firms to invest in schemes (ENDS Report, December 2010).