Why did West Coast plans for a waste-to-energy plant fail?

Friday, 12 April 2019

Renew Energy Ltd representatives Hugh Grey and David McGregor, with Buller mayor Garry Howard in China with China Tianying Inc representatives in the grounds of its Haian Energy from Waste facility, after signing a controversial document.

A radical plan to create hundreds of new jobs for West Coasters has collapsed and Buller mayor Garry Howard has lost the confidence of his councillors. JOANNE CARROLL looks at what went wrong.

A grand plan emerged in 2015 after Holcim announced it was closing its cement plant in Westport to convert the plant into a new industry able to create hundreds of jobs for West Coasters.

Renew Energy founder Gerard Gallagher pictured when he was Ashburton Enterprise Agency general manager.

Plants already existed in a number of countries, including Australia, to generate electricity by burning waste at extremely high temperatures. Why not bring this idea to the West Coast?

A company was set up, Renew Energy, and backing sought from other West Coast councils and government bodies. A publicly-funded feasibility plan was drawn up despite rumblings of concern over the project's economic viability and potential environmental impact.

West Coast economic development manager Kevin Stratful says his directorship of Renew Energy is not a conflict of interest.

In 2018 project hit a road bump when the Government withdrew a promised $350,000 grant after it emerged Renew Energy's then chief executive, Gerard Gallagher, was under investigation by the Serious Fraud Office. Gallagher resigned his position and sold his shares.

While public funding for the plant was still being sought, Renew Energy directors struck out on a new tack; to secure Chinese funding.

Renew Energy Ltd chief executive David McGregor says the project will go ahead in another region.

Buller District Mayor Garry Howard will not stand for re-election.

* Waste-to-energy plant plans dumped after Buller mayor 'overstepped mark'

* Proposed West Coast waste to energy plant finds $300m investor in China

* Government grant stalled over links to businessman under Serious Fraud Office probe

* Westport's mayor off to England to investigate waste to energy plant**

It appeared to go smoothly and in May 2018 China Tianying Inc (CNTY) pledged an impressive $300 million for a waste-to-energy plant.

A week later Renew Energy chief executive David McGregor announced the new Chinese deal would bring 350 jobs to Buller.

But less than a year later Howard's ambitious dreams have turned to dust. There will be no West Coast plant and Howard has said he will not seek re-election. On Thursday, a vote of no confidence in the mayor was supported by an overwhelming majority of his Buller district councillors.

Renew Energy has said it will press ahead with plans to build a new plant, but it won't be on the West Coast.

AMBITIOUS PLAN FAILS

Clues to how this project unravelled so spectacularly have been made public in an email dump released to Stuff under the Local Government Official Information and Meetings Act (LGOIMA).

The $300m deal between Renew Energy and the Chinese partners, was signed by Howard in secret without approval of his council. The emails show that Renew Energy directors urged Howard to keep information from the public.

They also reveal the extent of his involvement.

Howard helped lobby Government ministers Shane Jones, Damien O'Connor and Eugenie Sage to support the project. He was also involved in detailed discussions on where the company would build the plant, store its waste and how it would release information to the public. This is despite having no formal mandate from the council or public to support the proposal.

The secret deal was signed by Howard while visiting China with Renew Energy representatives in May 2018.

The document said the council would supply water, build a road to the plant, own the land and lease it back to the company and included costs and fees, which have been redacted. It also said the council would supply a landfill for the fly ash (toxic waste) which the plant would produce. None of these details were ever considered by the full council.

Howard wrote to the president of CNTY Debiao Cao in January this year on council letterhead saying 'we are looking forward to fruition of the waste to energy plant'.

NO CONFLICT OF INTEREST

One of Renew Energy's directors is Kevin Stratful. He is also West Coast regional economic manager and works for Development West Coast. Stratful told Stuff he had declared any potential conflict of interest when he was contracted to the West Coast Regional Council and Development West Coast to promote economic development on the West Coast.

Stratful used his Development West Coast and regional council email address to write emails promoting and helping the company's proposal.

In an email to all Coast leaders in October 2018, marked 'In total confidence not for public release' Stratful said Renew Energy had secured 250,000 tonnes of rubbish annually from an independent waste contractor from Christchurch and would be building a baling station in Rolleston in February 2019. The baling station has been installed in Sockburn, and the company says it will still be used for the plant they hope to build.

GOVERNMENT GRANT PUT ON HOLD

The company was previously embroiled in controversy when a $350,000 Government grant was put on ice after Economic Development Minister Shane Jones found out its former director, Gerard Gallagher, was under investigation by the Serious Fraud Office. The company had been given $50,000 by the previous National Government for a feasibility study.

In 2017, the State Services Commission found Gallagher had engaged in serious misconduct by trying to earn fees for property sales and other services while working for the Canterbury Earthquake Recovery Authority. The SFO investigation into Gallagher is ongoing.

In May 2018, Renew's chief executive David McGregor told Stuff Gallagher was no longer involved, but has since clarified that while he was no longer a director or shareholder he was being used as an independent contractor on the project.

MEDIA THREATS

In December 2017, when he was Renew Energy chief executive Gallagher, emailed Howard and Stratful saying they needed to legally threaten a reporter who was covering the story to get her 'sorted out once and for all'.

He also said they needed to 'shut up' a council staffer who was speaking to the media about the proposal.

Some names were redacted in the released emails.

THE FALL-OUT

Councillor Jamie Cleine, who will be running for mayor, called for Howard's resignation. He said the mayor had 'completely overstepped the mark' in signing the document in China and being heavily involved with the project's directors without keeping the public or council informed.

He was shocked that the mayor had signed a document which was so detailed it included how much council would charge for the company to dump its fly ash. The mayor was also involved in negotiations around land outside Westport being used as a landfill for the stored rubbish if the plant did not go ahead.

At the moment, Buller does not have a landfill, it sends all its waste to Nelson.

Westland District Council mayor Bruce Smith said he was disappointed the plant would be built in another region. 'It would have made us self-sufficient in electricity,' he said.

Councillor Dave Hawes, who lives in Reefton and had always been opposed to the project, said he was relieved the company was pulling the plug on its Buller proposal.

'The whole of Reefton will be partying. Waste-to-energy plants have no place in New Zealand. They don't stack up economically or environmentally,' he said.

Renew Energy strongly refutes this. They say the technology is used safely around the world, with low emissions and had spent countless hours getting its economic model right.

McGregor said Renew was pulling out of the Buller district because it did not have the support of the residents.

He said it would be more financially viable to build the plant closer to the source of the 300,000 tonnes of rubbish needed every year. Its directors Leonard Grey, of Nelson, Mark McIntyre of Westport, and Paul Taylor of Ashburton, had spent $5m on the project so far.

He said the company could have communicated its plans better to the public when it first earmarked Westport as a potential site. However, he said the councillors were given a comprehensive briefing on the project in November 2018.

He said the plant would have created 50 direct and 400 indirect jobs and used 'proven technology commonly used around the world as a replacement to landfills'.

He said it would have supported new industry in Buller at a time when its economy was under stress and had fallen well behind that of both Grey and Westland districts.

'If any place needs jobs it is Buller,' he said.

Howard said he would not resign.

'It is understandable that some people may be wondering exactly who I have been working for. I thought that the waste-to-energy venture could be a catalyst for new industry, as the opportunity of having power available without high transmission charges would certainly bring further industry,' he said.

He had wanted to facilitate the 'exciting project' and was 'truly sorry' it would not be going ahead.

'I am also sorry that my actions exceeded my brief and powers as mayor. At all times, I made it clear to both REL and their Chinese business partners that I could not make any commitments on behalf of Buller District Council.

'Even so, I can now see in hindsight that much of my communication may have been a lot more enthusiastic than might have been the case had it been considered by the full council,' he said.

TIMELINE

June 2015 - Buller district council economic development manager John Hill suggests the closing Holcim Cement Plant be converted into a waste-to-energy plant.

2015 - Buller District Council discusses idea with French company, Veolia, which operates similar plants overseas but these did not progress.

June 2016 -: Renew Energy Ltd is registered as an official company, formerly known as Waste Energy Ltd, and before that N2ENZ.

July 2016 - NZTE agrees a $50,000 fund for a feasibility study. A matching sum was contributed by Development West Coast.

August 2016 - Feasibility study begins. Mayor Garry Howard and Renew Energy directors visit waste-to-energy plants in England.

January 2017 - Feasibility study is complete.

July 2017 - West Coast Economic Development Action Plan published but has no mention of a waste-to-energy plant.

August 2017 - Gallagher retires from his role as a director of REL but remains a shareholder and chief executive.

March 2018 - Following an emergency board meeting Gallagher resigns as chief executive of REL, promises to sell his shares and to resign as director of related company Waste Energy Ltd, which was to be deregistered. David McGregor appointed new chief executive of REL and Kevin Stratful appointed independent director.

March 2018 - West Coast mayors write to MBIE expressing support for the waste-to-energy project.

May 2018 - Howard and Renew visit China and secure $300m backing from China Tianying Inc.

January 2019 - Renew lodges a resource consent to stockpile 132,000 tonnes of rubbish in Reefton, but later withdraws the application because of public opposition.

March 2019 - Howard's involvement and signature on an agreement with China Tianying becomes public and Renew Energy say they will not build the plant in Westport due to lack of public support.

April 2019 - Howard faces a vote of no confidence from his councillors for not keeping them informed.