Covanta Energy withdraws its £400 million 'Brig y Cwm' national infrastructure application

In a letter to the IPC dated 24 October 2011, Covanta said it was withdrawing its application for a Development Consent Order (DCO) for its proposed Brig y Cwm facility with immediate effect, citing "commercial circumstances relating to the local authority procurement situation in Wales".

Covanta's proposed energy from waste facility was the first Nationally Significant Infrastructure Project (NSIP) in Wales to proceed to the IPC, the body charged with responsibility for making planning decisions on national infrastructure projects that meet the qualifying threshold for NSIPs under the Planning Act 2008.

The withdrawal letter to the IPC commented that "Covanta Brig y Cwm Limited has decided not to proceed at this time with the current scope of development...we were looking to provide a national solution for much of the waste in Wales which is currently going to landfill. This [the Brig y Cwm facility] would have provided a low disposal cost, low carbon and highly effective solution", the letter said.

Covanta intimated that following its decision to place the multi-million pound investment in Wales, the local authorities adopted a "fragmented approach" to procurement for residual waste, in divergence from the national approach, which made the "current proposal for the site unviable".

“It is clear that many issues need to come together for successful IPC applications and particularly for energy from waste facilities.  Ultimately, the deliverability of the project will depend on the viability of a long term supply of waste from within the region," said Paul Rice, an energy law expert with Pinsent Masons, the law firm behind Out-Law.com. 

"The availability of sizeable fractions of commercial and industrial waste in the future will be hugely important for such merchant projects.  It remains to be seen whether these fractions will in the future come to be regulated in the same way as household waste,” Rice said.

In May this year, it was revealed by the IPC that the Brig y Cwm proposals received in excess of 10,000 objections.  In addition, Covanta were faced with a procedural conundrum when the IPC rejected Covanta's proposed amendments to its submitted application.  The effect of the proposed amendments would have raised the height of the facility by approximately three metres.

Whilst Covanta argued that the amendments were not material, the IPC decided that they "substantially" altered the proposals, which effectively gave Covanta the choice of continuing with the application unamended or to withdraw the application and start again. 

"The IPC's ruling of July this year puts Promoters on notice that the IPC in its current form will take a strict approach in applying the legal principles on changes to applications.  The motto is get it right first time," said Richard Griffiths a planning and infrastructure law expert with Pinsent Masons.

"Of course this is not easy when dealing with major infrastructure projects.  It may be that once the IPC is replaced by the MIPU (Major Infrastructure Planning Unit) in April 2012, we see a slightly softer approach being applied, affording applicants greater scope and flexibility in their approach to amendments," Griffiths said.

The announcement by Covanta means that of the six applications that have been submitted to the IPC since 1 March 2010, only one has a decision to grant a DCO (Covanta's Rookery South scheme), two have been withdrawn and three remain in the system.