Defra announces £10m loan fund for anaerobic digestion

Defra minister Lord Henley has announced a £10m anaerobic digestion loan fund (ADLF) for new anaerobic digestion (AD) plants.

The ADLF, which will be administered by the Waste Resources Action Programme, will lend amounts ranging from £50,000 to £1m to support the development of new AD capacity in England, in conjunction with investment from the private sector. It aims to support 300,000 tonnes of annual capacity to divert food waste from landfill by 2015.

According to a statement, lending will be asset based and can include industrial units, plant and machinery, and groundwork. The projects will be selected through a competitive process in four phases, the first of which will run from July to October 2011.

Responding to the announcement, Charlotte Morton, chief executive at the Anaerobic Digestion and Biogas Association (ADBA), said: ‘This fund is welcome news for the industry, and will support projects that will make a real difference in starting to build up the UK’s anaerobic digestion capacity.

‘However, it represents only a small part of the investment which is needed to take AD to the point where it is really delivering for the UK’s strategic objectives — and raising finance remains the biggest barrier for projects.

‘Meeting the UK’s 2020 commitments on landfill diversion and renewable energy require high investment in new capacity over the next few years. That simply isn’t happening while investors are being put off by mixed messages from government, and while they remain unwilling to direct local authorities to take a course they have already said realises the most benefit.

‘The government needs to build on this announcement by grasping the nettle to encourage wider private finance into the market. This doesn’t require more money from the taxpayer — simply clear statements that organic waste feedstock should be source segregated and prioritised for AD.’