The website Resource reports on XR Zero Waste’s criticism of the finance arrangements for the Edmonton incinerator.
Anti-incineration campaigners XR Zero Waste have criticised the prospective use of finance from the UK Municipal Bonds Agency (UK MBA) to underpin the development of a new Energy-from-Waste (EfW) facility in North London.
Citing recent analysis published in Environmental Finance by Prashant Vaze, Chief Economist at Consumer Focus, and Dominic Hogg, Director of Equanimator, XR Zero Waste argue that the EfW project is not a ‘low-carbon project’ and is inconsistent with UK MBA’s supporting criteria for issuing ‘Green Bonds’.
UK MBA’s green bond, the first of its kind, was initially announced earlier this year, aiming to direct funding towards a range of ‘green eligible projects’. To accompany the announcement of its Green Bond, the UK MBA also published a Sustainable Finance Framework – a guide ‘under which it can issue all forms of green, social and sustainable finance’, including ‘public bonds, private placements, commercial paper, and other debt instruments’.
‘Renewable energy’, ‘clean transportation’, and ‘pollution prevention and control’ were listed as eligible project categories. ‘Pollution prevention and control’ included EfW facilities as eligible for UK MBA funding, citing the Climate Bonds Initiative’s (CBI) environmental performance metrics as met criteria.
The article by Vaze and Hogg contends that the UK MBA’s Sustainable Finance Framework aims to align with the United Nations’ COP21 Paris Agreement objectives and that ‘EfW incineration is, after coal, the most carbon intense form of electricity generation’.
As a result, they question UK MBA’s intention ‘to raise £250 million to £400 million to build an expanded energy-from-waste (EfW) incineration facility at Edmonton in Enfield’. Notably, EfW is not part of the EU’s sustainable finance taxonomy and the Climate Bonds Initiative excludes this type of technology for certification in EU countries.
However, the North London Waste Authority (NLWA) has paused immediate plans to seek the UK MBA’s green bond to fund its £1.2 billion EfW facility. In February, the waste authority instead borrowed £250 million through the Public Works Loan Board, following market turbulence.
Earlier this month, a spokesperson for UK MBA told Public Finance: “The planned NLWA bond issuance by the UK Municipal Bond Agency has not been recalled, but has been paused to assess how the market progresses.
“The NLWA took £280m from the PWLB in December, and we were expecting it to take £250m from the PWLB in February as a prudent measure to reduce its interest rate risk in light of market conditions.
“The markets are not conducive to a bond issue at the moment due to volatility, which causes the new issue premium and spreads not to be where they need to be, which is why corporates are avoiding issuing at the moment as well.”
The agency also said it was working with NLWA on an “innovative solution that will significantly reduce interest risk and provide value for money for the NLWA’s project on a going forward basis”.