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?
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.