Navigant Research Blog

Waste-to-Energy Needs New Regulations

— September 18, 2014

A recent study published by the Earth Engineering Center (EEC) of Columbia University estimates that if the total volume of municipal solid waste (MSW) produced in the United States were incinerated in waste-to-energy (WTE) power plants, 12% of the country’s total electricity demand could be met.  This is more than 5 points higher than the current share of U.S. energy demand met by renewable sources today (7%), with WTE representing just a small fraction of the total energy mix.

Just 86 WTE plants are in operation in the United States today.  No new plants have been built since 1995.  Meanwhile, Waste Management recently divested its Wheelabrator Technologies subsidiary, which operates 17 plants around the country.

With so much upside, why does this market continue to stagnate?

Waste Pyramid

The United States currently produces 250 million tons of trash annually across the country.  This represents 15% to 20% of the global total.  Despite an abundance of feedstock, three primary barriers limit market growth: lack of regulatory support, lack of public support, and low electricity rates.

Among these, lack of regulatory support is often cited as the primary barrier to realizing the market’s full potential.  Across the United States, for example, landfilling continues to be the de facto solution for disposing of MSW, with relatively few exceptions.  On average, about 11% of the MSW is diverted to WTE and around 35% is recycled or composted.  The remainder (54%) is landfilled.  This reflects a waste management regulatory regime in the United States that falls well short of more aggressive policies set forth by European policymakers.

European principles articulated under a waste management hierarchy pyramid framework provide strong support for WTE and energy recovery.  A combination of land constraints, higher electricity prices, and a perilous dependence on Russian natural gas has provided European policymakers the motivation needed to enact strong support for WTE and other energy conversion technologies.  Combined with higher tipping fees – the cost of disposing of waste – these policies help reduce dependence on landfills.

Plenty of Fuel

By contrast, waste management in the United States is not coordinated at the federal level.  Instead, policy implementation is left to state discretion.  Individual states – Connecticut, Maine, Massachusetts, Minnesota, and New Hampshire among the leaders – have been far more aggressive in investing in infrastructure to boost recycling and energy recovery from MSW, but these policies have not yet found broad support across the rest of the country.

Recent market developments in the United States, however, signal a likely pendulum shift in favor of WTE and other waste conversion technologies.

In anticipation of tightening restrictions around coal-based generation from the U.S. Environmental Protection Agency (EPA), utilities and state policymakers are actively seeking alternative sources of energy that provide the coveted baseload capabilities of centralized fossil plants.  Among baseload renewables, WTE is among the few options logistically feasible across the country, with MSW generated in abundance and continuously in areas of high population density.

Meanwhile, according to findings in Navigant Research’s Smart Waste report, the traditional waste management market is facing a disruption similar to that faced by electric utilities at the hands of distributed generation.  Although these solutions seek to turn a liability (trash) into a strategic resource, WTE and other energy conversion technologies will benefit from greater emphasis placed on the value of waste as an input for renewable energy generation.

We expect energy recovery solutions to generate 70% of the revenue attributable to next-generation waste management technologies in North America.  While this represents a healthy growth opportunity, it’s just the tip of the iceberg, as the EEC study demonstrates.


Garbage Looks For Its Green Moment

— March 14, 2013

Cheap, abundant, and replenishable – so long as societies continue to consume – garbage (or, as the industry refers to it, municipal solid waste, or MSW), is a rising star in the fast-emerging advanced biofuels landscape.  The MSW we toss into landfills by the hundreds of millions of tons each year is laced with carbon well-suited for conversion to power, heat, and fuels.

While generating power from trash is well-established in the European Union, in the United States and, increasingly, emerging markets like China and Brazil, conversion to liquid fuels is currently at the cusp of early commercialization.  Projects in development today aim to produce the spectrum of alternative fuels, but among them renewable jet fuel remains the biggest prize.  All told, Pike Research estimates the theoretical potential for biofuels production from global waste to be around 35 billion gallons per year today.  This would more than double current production of biofuels worldwide while extracting untapped value from nearly 1.5 billion tons of waste.

Despite this potential, just 12 named projects are in the pipeline today, worth an estimated 200 million gallons of new production capacity.  While high upfront capital costs and structural market barriers are partly to blame, the staggering complexity inherent in MSW-to-biofuel project development described by presenters at the Orlando conference was a revelation.

Anatomy of a Deal

Solena Fuels, a company developing the GreenSky London project with British Airways to turn trash into sustainable aviation fuel at Heathrow Airport in London, provides an illustrative example.  As the company’s President and CEO, Robert Do, outlined in his presentation at the MSW-to-Biofuels conference in Orlando the mash-up of diverse strategic interests on the deal meant creating an entirely new contract that amassed nearly $1 million in legal fees and took 1.5 years to finalize.

To reduce feedstock risk, Solena negotiated separate supply contracts with three waste processors, allowing it to hedge against price and supply continuity risk.  While Solena brings its proprietary plasma gasification platform to the 550,000 ton per year facility, it has partnered with three technology partners to provide everything from controls and instrumentation to expertise and equipment for Fischer-Tropsch synthesis of the syngas produced in Solena’s reactors.  On the back end, GE will provide equipment to produce 20 MW of power to run the plant while exporting an additional 20 MW to the U.K. grid.  Meanwhile, the project includes off-take contracts for 16 million gallons of jet fuel and diesel to British Airways as well as naphtha, composed of a mixture of hydrocarbons similar to high-octane gasoline.

Backed by three financing partners – principally British Airways and Barclays Capital – the project is expected to come online in 2015.  More than 10 separate companies are directly involved in the project.

If successful, the GreenSky London project could be a watershed moment for advanced biorefinery project development, providing a blueprint for galvanizing strategic interests and managing risk in order to capitalize on abundant waste feedstock opportunities worldwide.


Accelerating Urban Metabolism with Waste 2.0

— May 31, 2012

The world’s biggest cities are sometimes described as having an “urban metabolism,” akin to living entities that consume energy, food, water, and other raw materials and expel waste.  Via a well-planned web of municipal infrastructure, a streamlined urban digestive system enables economic advancement, growth in development, and population expansion by improving public health and the surrounding urban environment.

But even efficient digestive systems have their limits.  Over the last several hundred years, one of the defining measures of how far a city has advanced has been its ability to distance its inhabitants from trash, excrement, and emissions.  With more than half of the world’s population living in cities today, and megacities – defined by the UN as metropolitan areas with populations exceeding 10 million – on the rise, this out-of-sight, out-of-mind “Waste 1.0” paradigm is facing significant limits.  As urban entities gorge themselves on resources, the sheer volume of trash, limited geographies, and sustainability efforts are causing the urban digestive system to back up.

For cities faced with this predicament, treating waste as a strategic resource, a strategy I call Waste 2.0, is quickly becoming an enabler of urban growth.  Last year 3.7 billion urban dwellers produced an estimated 2 billion tons of municipal solid waste (MSW) and 375 billion gallons of wastewater, both lucrative potential sources of energy-rich biomass.  When this unprocessed waste is shipped to far away landfills in developed economies or dumped in open pits throughout much of the developing world, the energy potential contained in waste is vastly underutilized.

MSW, a primary urban biomass resource, satisfies one of the key requirements for bioenergy deployment: aggregation of biomass in sufficient quantities to allow for projects to be deployed at scale.  Accordingly, a slew of companies are advancing projects that convert waste to useable energy in the form of power, heat, and fuels for onsite consumption.  At Heathrow, in the United Kingdom, for example, Solena Group is partnering with British Airways to convert trash generated by London’s residents into biojet for use in commercial flights.  Plasco Energy Group is also targeting MSW, but aims to produce electricity for onsite generation.  Fleets of buses throughout Sweden, meanwhile, run on renewable natural gas produced in anaerobic digesters processing organic waste.

For projects targeting MSW, however, securing a consistent steam of garbage is only half the battle.  In some cases, MSW must be separated from inorganic components in order for conversion to be viable.  Although waste can be source-separated at the point of conversion, this can add significant cost.  Accordingly, Waste 2.0 is also about crowdsourcing separation of waste components at the upstream source in order to decrease the cost of technology deployment.  From dedicated waste bins for separate streams (e.g. recycling, compost, landfill) to pneumatic waste collection systems, Waste 2.0 is as much a cultural challenge and a behavioral shift as it is a technological chore.

The European Union has shown that viable Waste 2.0 projects will require a combination of political will fueled by a strong waste management policy framework, economic will fueled by high electricity or fuel prices, and grassroots will fueled by streamlined waste collection infrastructure to facilitate technology deployment around waste.

The last leg of the stool, requiring a cultural shift from the Waste 1.0 paradigm, is perhaps the greatest challenge to increased waste utilization in urban centers.  In regions like Asia Pacific, for example, where opportunities to capitalize on waste streams show the greatest opportunity, the ability of local governments to win over their public by branding or selling the idea of utilizing MSW will have a significant impact on the rate of technology deployment.  In order for urban dwellers to get a little closer to their trash, Waste 2.0 will require herculean efforts to educate the public, but will maximize sustainable growth throughout fast-growing advanced and developing cities.


Rise of Megacities Brings Waste-to-Energy Opportunities

— March 1, 2012

In a recent article in the Guardian profiling the rapid rise in the number of cities home to more than 10 million people, Paul Webster and Jason Burke explain that the scale and speed of urbanization worldwide have reached unprecedented levels.  Estimates to be published in Pike Research’s forthcoming waste-to-energy (WTE) report indicate that the global population living in urban areas will reach 4.5 billion in 2022 – nearly one billion more than in 2011. 

According to some experts, the number of such “megacities” will double over the next 10 to 20 years.  Less well-known cities, particularly in south and east Asia, will see the biggest growth.

China is in the midst of a well-documented urbanization stampede.  Visiting Beijing five straight years in the early 2000s, I observed the scale of construction and expansion firsthand.  Highways were laid down in weeks and a forest of construction cranes dominated the skyline.  During that time, Beijing’s famous ring roads (now numbering 7) rippled outward, swallowing up the surrounding areas and transforming hastily-built residential settlements into massive steel, glass, and concrete multi-use high-rises. 

Last month, Chinese authorities announced that for the first time more than half of the country’s population lives in cities.  Current estimates put the total urban population at 691 million, more than double the entire U.S. population.  This number is projected to reach at least 800 million by 2022, according to Pike Research estimates, or enough people to populate 80 megacities.  In 2011, there were just 27 megacities worldwide. 

An inevitable byproduct of urbanization, and the corresponding consumerism that accompanies it, solid waste generation is projected to increase in lockstep with megacity growth over the next decade.  Again, China leads the way.  Pike Research analysis shows that municipal solid waste (MSW) in China will reach 472 million tons annually by 2022, or 17% of global estimates. 

As in most of the world, most of this waste ends up in landfills.  Globally, some 73% of all MSW is either landfilled or dumped in open pits.  Without landfill gas capture, these sites are notorious producers of methane gas (CH4), a greenhouse gas nearly 64 times more potent than carbon dioxide (CO2).

Waste-to-Energy (WTE) technology, which can extract the valuable energy contained in waste streams for the production of electricity and heat, offers an attractive alternative.  WTE facilities, the bulk of which are combustion plants, currently treat an estimated 205 million tons of MSW a year in urban areas worldwide.  This represents just 11% of the MSW treated around the world in 2011.  Nearly 40% of global WTE capacity is currently concentrated in the EU, which has been the outright leader in waste management and landfill diversion.

The growth of megacities in China and elsewhere presents an important opportunity for the bioenergy industry, which, as I discussed in an earlier post, is on the hunt for low-cost feedstocks for renewable power and oils.  As a number of advanced thermal early stage companies have recognized – Plasco Energy and Greenlight Energy Solutions on the power side; Enerkem, Fulcrum Bioenergy, and Solena Group for fuels – MSW is a vastly underutilized resource and low-hanging fruit option in the advanced feedstock pool.  Available at negative cost – companies get paid to process the waste – MSW can address many of the challenging obstacles associated with bioenergy feedstocks, including high cost, aggregation, and proximity to end markets. 

Facing an avalanche of garbage, China is on the march to expand installed WTE capacity, and could be followed by Brazil, India, and other developing countries if sufficient political and economic will materializes.  Already proving to be particularly adept at large-scale infrastructure build-outs, China is projected to increase its existing capacity base by at least 250% over the next decade.  The country already accounts for 14% of global WTE capacity today.  That number could grow significantly over the coming decade.


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