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From: Devine, Paul (DARD-SAB

)
Sent: 19 February 2014 08:50
To: Bowers, Siobhan; Carson, Alistair (DARD)
Subject: FW: Perm Sec's Meeting with Moy Park 24th February - Q&A -
Briefing
Attachments: Perm Sec s Meeting with Moy Park 24th February - Q&A -
Briefing.tr5;
Speaking note - Secretary's meeting with Moy Park 24 Feb 2013_ V3; Perm
Sec s Meeting with Moy Park 24th February - Q&A - Briefing.DOCX

Siobhan/Alistair,

See below for information.

Kind regards,

Paul

Dr Paul Devine
Science Advisory Branch
Science, Evidence and Innovation Policy Division
DARD
Room 364, Dundonald House
Upper Newtownards Road
Belfast
BT4 3SB
T 028 9052 0821
M 075 8149 4633

From: Hamilton, Margaret On Behalf Of Warde Hunter, Louise
Sent: 18 February 2014 16:45
To: Lavery, Noel (DARD)
Cc: Warde Hunter, Louise; Devine, Paul (DARD-SAB); Ervine, Brian
Subject: FW: Perm Sec's Meeting with Moy Park 24th February - Q&A -
Briefing

Noel
Please find attached both a speaking note and a draft Q and A which may
require some further
refinement. The Q and As were awaiting my clearance.
A further note from Eoin McFadden will follow under separate cover.
Louise
QUESTIONS AND ANSWERS for PERM SECS MEETING WITH MOY
PARK 24th FEBRUARY 2014

SUPL LOAN SCHEME
Q1. How much money will be made available for the loan scheme?
• Subject to the various approvals which are required to set up
such a fund, it is envisaged that Government could fund up to
40% of the finance at commercial rates which is required to
fund the construction of demonstrator plant(s).

Q2. How long will it take?

• The proposed SUPL loan scheme is still in development. We
are not able at this point to commit to firm timescales, but we
will be happy to meet with you again in the near future to
update you on progress.

• Time will be required to enable solutions providers to enter into
contracts with the poultry sector (you) for supply of poultry
litter, and to secure sufficient match funding (equity or bank
loan) to construct plants of sufficient scale to fully test the
technology and commercial viability of solutions.

Q3. What do you mean by ‘enter into contracts with the poultry
sector for supply of litter’ ?
• Similar to the Agri-Loan scheme, there will be an onus on
those seeking money to have solid financial projections as
well as a robust technical proposal. We think it is an important
pre-requisite that applicants would have a poultry litter
contract guaranteeing surety of feedstock supply.
• Although, potential applicants would not necessarily need to
secure litter supply agreements with Moy Park, given your
market share, we envisage the majority will approach you.

Q4. How long will the loan period be/what will the interest rate be?
• The Departments are working up the details of the loan
scheme using the key personnel who were instrumental in
putting together the details of funding for the poultry houses.
• The scheme would be limited to the funding of no more that 2
demonstrator plants. We will be happy to meet with you again
in the near future to update you on progress.

Q5. A £15m grant was going to be made available for the Rose
Energy Scheme; you appear to be suggesting now that this is
only available as a repayable loan?

• We understand that a large chunk of that (Rose Energy)
money was going to be injected as equity.
• What is proposed is substantially different. As with the agri
loans fund, Government is carrying the risk in being sub-
ordinate to commercial banks – DFP may well take the view
that the loan is a type of equity.
OUTCOMES OF SBRI PHASE1

Q6. What has the SBRI process achieved? Can we see the Final
Reports?

• We have seen indications that significant technical hurdles have
been overcome in processing poultry litter using various
technologies, including anaerobic digestion and gasification.
Further evidence of the technical viability of in-vessel composting
has also been produced.
• We are encouraged by progress made- we think the investment in
this proof of concept type research has been worthwhile. We do
recognize, however, that further development is required.
• We cannot enter into discussions on individual Contractor’s findings;
we would encourage you to meet up with the SBRI Contractors to
discuss their outcomes.
• Short summaries of the outcomes of Phase 1 from each Contractor
will shortly be available.

Q7. What are the Department’s preferred technologies?
• The Departments have no particular technology preference. The
shared goal is to see the most sustainable solution from
technical, environmental and commercial perspectives.

Q8. In your view, how many of the SBRI Phase 1 companies have
technically and commercially viable proposals?
• SBRI projects focused mainly on proof of concept and technical
viability rather than the commercial viability, though some have
produced commercial projections.

• Three technologies appear to have reached the stage where
demonstration of consistent operation with Northern Ireland poultry
litter at full, or near to full, scale appears to be the next significant
development, (namely :anaerobic digestion, gasification and in-
vessel composting).

• To secure SUPL Loan funding, any interested party will need to
have solid financial projections as well as a robust technical
proposal.

Q9. Government were supposed to find a solution for the poultry
sector. You are just handing the problem back to us.

• The poultry sector (you and your growers) have always made
determinations on how poultry litter is used and we see that
remaining the case.

• The Departments see our role as assisting you in meeting the
challenges of managing litter more sustainably.

• SBRI has helped to prime the market with technologies which have
demonstrated promise, and innovative companies who are
prepared to deliver them.

• The SUPL loan scheme, together with NIROCs, offer significant
financial support to aid the delivery of these more sustainable
solutions.

WHY A LOAN SCHEME AND NOT SBRI PHASE 2

Q10. Why is an SBRI Phase 2 not going ahead?
• SBRI is a vehicle for pre-commercial procurement and is best
suited to R&D rather than near to market process or
commercial development.

• There is, therefore, a risk that a SBRI Phase 2 which
incentivised R&D would have lengthened rather than
shortened the pathway to establishment of demonstrator
scale poultry litter processing plants.

• At the end of SBRI Phase 1 it became clear that some of the
technology options were sufficiently well developed to
consider non-R&D funding mechanisms such as a loan
scheme.

Q11. How have the Departments reached this decision?
• The SBRI Project Team kept regular contact with Contractors
during the Contract period and arrived at this decision after a
detailed review of the end of Phase 1 reports.

Q12. Why does Government not just go out and procure the
construction and operation of two demonstrator plants?
• There are multiple considerations which would preclude
government departments from doing this, in particular, State
Aid rules.
• Our market sounding has indicated that significant interest in
the investment community in developing processing solutions
for poultry litter.

• A loans scheme which could fund up to 40% of capital costs,
as well as NIROCs for those generating electricity, is an
indication that Government is highly supportive of sustainable
solutions for poultry litter

Q13. Is there not a precedent for 100% government funding for
strategically important assets such as the Challenger tank?
• The Challenger tank was procured by the MoD which is not
bound by EU procurement rules around State Aid.

NIEA /DOE RESPONSE TO PLANNING APPLICATIONS FOR NEW
HOUSES

Q14. If Government is behind the sector expanding in NI, why are
NIEA putting obstacles in the way?

• Government welcomes expansion, but it must take place in a
sustainable and environmentally responsible way.

• NIEA will, we trust, respond directly to any queries you may
have in relation to ongoing Planning Applications.
• As a regulator, NIEA has responsibilities to ensure that water
quality is protected. It is understandable that it is keen to
receive assurances on poultry litter use in light of the current
phosphorus surplus.

NAP – discussion with the EU commission

Q15. How are NAP negotiations with the Commission developing?

• Feedback to date on the SBRI project has been positive but
cautious. Commission officials have indicated that they wish
to see clear evidence and timescales of how the SBRI project
would deliver a ‘significant’ increase in the quantities of litter
being utilised in a sustainable way.

• The Commission have stressed the need for action to address
the current surplus and expressed concerns over the potential
environmental impact of the expansion plans in the ‘Going for
Growth’ strategy.

• There is no certainty in how the Commission may respond to
progress on SBRI, and whether it may seek further controls in
the next NAP for 2015-2018.

• If we cannot convince the Commission in Nitrates Action
Programme negotiations that the sector is capable of solving
the poultry litter issue then there will be difficulties.