Energy from Waste (EfW): The solution to the Australian war on waste? – Environment

Following the Council of Australian Governments (COAG) Waste
Strategy Response announced in 2020, Energy from Waste (EfW)
technologies have emerged as potentially viable methods of managing
waste in Australia, supporting the Australian government’s aim
to become a completely circular economy over the coming
decades.

This emerging sector undoubtedly brings significant political,
economic and regulatory challenges, but also opportunity for
investors, industrialists and even the National Electricity Market
with a new source of clean baseline energy production (where the
input is Australia’s waste).

Below, we explore the EfW opportunity and discuss what needs to
happen on a policy and regulatory level for broader commercial
uptake and investment into the sector.

What is Energy from Waste?

While EfW incorporates any technology or process that converts
‘waste’, defined as any kind of waste that would otherwise
go to landfill or be exported, into energy or energy carrying
products, for current purposes we are primarily focused on thermal
processes (combustion, gasification and pyrolysis).

Combustion and gasification differ. Combustion burns the waste
with the resulting heat converting water into steam and then
electricity; while gasification uses oxygen or steam reactions that
cause the waste to convert into a gaseous mixture. This mixture has
applications beyond electricity and can also be converted into
products such as diesel fuel, hydrogen fuel or ethanol.

Large scale EfW facilities commonly use combustion for the
thermal treatment of mixed waste streams (such as municipal solid
waste). Gasification requires more homogenous waste streams or
pre-treatment before the waste enters the gasification
chambers.

Pyrolysis is the heating of organic material, such as biomass,
in the absence of oxygen. The process produces three products:
biochar, bio-oil and bio-gas, each with a range of potentially
useful applications. Pyrolysis can be used for the treatment of
organic wastes, including plastics, and may be deployed on a
smaller scale and in a broader range of locations than large scale
combustion and gasification processes.

Is Energy from Waste a commonly accepted
technology?

The EfW sector has struggled to gain traction in Australia for a
number of reasons:

1. Australia’s abundance of land in close proximity to major
   cities and waste producers is perfectly suited to cheap landfill
   operations. Coupled with an inconsistent approach to waste levies,
   there is little to no incentive to consider alternatives to
   landfill such as EfW which are more capital intensive.




2. EfW plants have traditionally been regarded as smelly,
   undesirable projects that no one wanted in their backyard. This has
   led to strong opposition from communities situated near proposed
   projects, despite new technologies being developed for emission
   capture and smell mitigation.




3. EfW projects have struggled to explain their importance to the
   circular economy, in that EfW plants allow for the recovery of
   energy from residual or non-recyclable waste that would otherwise
   be sent to landfill.




4. There has been a lack of coordinated policy and regulation.
   Nationally consistent policy and regulation which embed the waste
   management hierarchy reflect the latest EfW technologies and
   emission limits, and support offtake markets that would facilitate
   project development by investors on a national basis.

Whilst Australia has faced a general lack of any substantial
investment into EfW projects, the sector in other parts of the
world, such as Europe, Japan and the United States, has proven to
be highly successful both from a commercial and waste management
perspective. In particular, case studies in Europe have shown that
when a country has adopted EfW technology its recycling rates have
also improved, provided the correct regulatory environment and
incentives are put in place.¹

Confederation of European Waste-to-Energy Plants,
Latest Eurostat Figures: Municipal Waste Treatment 2017 -
Municipal waste treatment in 2017.

Why did Europe adopt Energy from Waste?

There are several key factors behind Europe’s adoption of
EfW technology. The first is necessity. With limited land available
and strong population growth leading to increased waste, an
alternative to landfill had to be found. The second is
environmental concerns. Individuals in Europe, in particular the
relatively wealthier Western European nations, were early movers in
voicing their concern over climate change and the importance of
mitigating future damage. As a result political support followed
for technologies such as EfW.

Despite the inductive conditions for EfW in Europe, at its early
stages the adoption of EfW technology still required a supportive
and consistent policy and regulatory approach between the various
levels of government in each country to support the development of
the sector at a broader European Union level.

At an individual country level, the countries who have found the
most success with EfW, such as the Netherlands, were early adopters
of a uniform country-wide waste levy. This helped standalone EfW
projects become more economical for private investors. With a
pricing incentive in place, countries then developed regulatory and
technical standards, which continue to be updated to account for
evolving EfW technologies (albeit at an European Union level). For
example, in December 2019, the European Union released the Best
Available Techniques (BAT) Conclusions for Waste
Incineration under Article 13(6) of the Industrial Emission
Directive (IED). The document contains 37 BAT
conclusions which seek to reduce emissions from waste incineration
and to better improve EfW’s position in the circular economy
and waste management hierarchy.²

The European Union regulatory framework, which regulates over
400 EfW plants currently in operation in Europe, consists of:

• the EU Landfill Directive;




• renewable heat incentives;




• landfill levies/taxes;




• feed-in tariffs; and




• legal requirements under the IED.

What else is required for Energy from Waste to be
successful?

Europe’s experience with EfW shows that critical to the
economics of each proposed project is a stable and long-term supply
of waste. Local councils often coordinate and combine their waste
quantities to support the development of large scale EfW projects.
To minimise transportation of waste, projects are often located
close to the major sources of waste, for example cities for their
municipal waste or large industrial emitters of waste. However, and
as mentioned, this creates a tension with the local community.

The community opposition could be avoided by locating EfW plants
in regional locations and away from residential homes, but this has
two disadvantages:

• first, the additional cost of transporting waste out of cities
  will make EfW less competitive compared to landfill and would
  require a greater waste levy to redress the balance; and




• second, projects require a ready and easily accessible market
  for their electricity and other end products.

With respect to other end products, while in northern hemisphere
countries the heat generated by a EfW plant can be used for
district heating, in Australia it is more likely that heat will be
used by industry for manufacturing processes, utilised in
greenhouses for agriculture purposes or could be turned into
cooling systems for residential or commercial use.

Other by-products, such as syngas, char and oils, can also be
sold as additional sources of revenue rather than sent to landfill
as an additional cost.

Separately, while historically the process of converting waste
to energy produced substantial carbon emissions as a by-product,
modern technologies have largely removed this negative consequence.
For example:

• Under a nationalised approach, the Netherlands’ EfW plants
  are equipped with extensive flue gas cleaning to reduce dioxins and
  acid emissions.




• Advancements in EfW technology mean that a portion of the
  electricity produced from EfW plants in Europe is deemed to be
  renewable energy.




• EfW plants can supply greenhouses with CO₂ to
  promote plant growth. Dutch EfW company, AVR, has implemented this
  strategy in an effort to reduce its emissions from
  incineration.³

What does Australia’s Energy from Waste sector currently
look like?

Australia does not yet have any large scale operational EfW
plants. However, a strong pipeline of EfW projects is emerging with
two plants currently under construction in Western Australia and a
number of others around the country in the process of obtaining
finance and regulatory approvals. Announced projects include the
following.

• Avertas Energy (Kwinana, WA): The Avertas
  Energy Plant, currently under construction, is on track to be
  Australia’s first thermal EfW plant with operational status
  expected to be achieved this year. The circa $698 million plant was
  co-developed by Macquarie Capital and Phoenix Energy, with
  investment from DIF Capital Partners and funding from the
  Australian Renewable Energy Agency. Acciona has been appointed to
  design and construct the facility and a 25-year operations and
  maintenance service agreement has been signed with Veolia. When
  completed, the plant will be capable of converting up to 400,000
  tonnes of household, commercial and industrial waste (a quarter of
  Perth’s annual post recycling waste), which would otherwise be
  headed for landfill, into electricity and construction
  materials.




• East Rockingham (Perth, WA): The circa $511
  million East Rockingham Resource Recovery Facility is the second
  EfW project to reach financial close in WA. The project was
  co-developed by Hitachi Zosen Inova (HZI), New Energy Corporation
  and Tribe Infrastructure with additional investment from Masdar (a
  subsidiary of Mubadala Investment Company) and John Laing, and
  funding from the Clean Energy Finance Corporation and the
  Australian Renewable Energy Agency. The contract to design, build
  and commission the plant was awarded to an EPC consortium of
  Acciona and HZI, and long term operation and maintenance has been
  awarded to SUEZ. On current estimates, the plant could divert up to
  300,000 tonnes of waste from the Cockburn, Belmont, Kalamunda,
  Mundaring and Swan landfills each year.⁴




• Maryvale EfW Plant (Latrobe Valley, VIC): Opal
  Australian Paper is developing a circa $600 million EfW plant with
  SUEZ at the Latrobe Valley mill. Late last year the project secured
  additional equity partners in Masdar and Tribe and selected Acciona
  as its construction partner. SUEZ has committed to supply the plant
  with a significant portion of its waste requirements.⁵
  The consortium has also announced a Memorandum of Understanding
  with Citywide to source and supply waste via the rail link between
  Melbourne and the mill.




• Melbourne Waste and Resource Recovery Group Advanced
  Waste Processing Project (Melbourne, VIC): In early 2020,
  the Metropolitan Waste and Resource Recovery Group commenced the
  largest tender for new waste management infrastructure ever
  undertaken for Melbourne councils to provide an alternative to
  landfill for 16 councils in Melbourne’s south east. Three
  tenderers were shortlisted and are now working towards the final
  tender stage with a 20-25 year contract expected to be awarded in
  2022. Construction is targeted to commence in
  2023.⁶




• Western Sydney Energy and Resource Recovery Centre
  (Sydney, NSW): Cleanaway has recently completed the public
  exhibition phase of the planning process for its proposed $500
  million EfW plant in Western Sydney. The project is being developed
  by Cleanaway and Macquarie Capital and will be the first of its
  kind in New South Wales, designed to process up to 500,000 tonnes
  of waste materials and generate up to 55MW of electricity. The
  project would contribute to the achievement of the NSW Environment
  Protection Authority’s target of diverting 75% of waste away
  from landfill.⁷




• Mt Piper Energy Recovery Project (Lithgow,
  NSW): Energy Australia, in collaboration with Re.Group, is
  developing a $170 million EfW plant that will connect to the Mt
  Piper Power Station near Lithgow to create additional energy from
  ‘refuse derived fuel’ (RDF) made from non-recyclable
  household and commercial waste.⁸ The project would
  divert 200,000 tonnes of waste away from landfill and make the Mt
  Piper Power Station the first hybrid coal/RDF power station in
  Australia.⁹




• Remondis Waste to Energy Facility (Ipswich,
  Qld): Remondis is in the process of obtaining
  environmental and regulatory approvals for its circa $400 million
  EfW plant in Swanbank, west of Brisbane. The plant will process up
  to 500,000 tonnes of waste per year and generate up to 50MW of
  electricity. Construction is targeted to commence in
  2024.¹⁰




• Renergi Biorefinery (Collie, WA): Renergi, a
  spin-off from Perth’s Curtin University, has received ARENA
  funding to design, build and operate a commercial demonstration
  pyrolysis plant in Western Australia. The plant will convert
  municipal, forestry and agricultural wastes into biochar and
  bio-oil. The oil produced through the demonstration will be sold as
  a liquid fuel for local industrial applications, with the biochar
  to be sold as a soil additive.¹¹

With a clear pipeline of Energy from Waste projects, how will
more prospective projects become feasible?

Taking lead from other jurisdictions around the world,
implementing the following could encourage new EfW projects in
Australia:

1. A nationally coordinated increase in landfill levies. This is a
   proven method of facilitating investment into EfW projects as
   increases in landfill costs incentivise EfW installations.




2. Political support. The sector can only develop with a
   supportive regulatory and political environment which provides
   investors with a clear understanding of the long term policy and
   regulation for the sector. Progress is occurring at varying paces
   amongst the various states and territories and at a national level,
   the Australian government announced a $1 billion waste and recycling plan in 2020.
   The key components of this plan are:

• contingent on co-funding from the states and territories, $190
  million for a new Recycling Modernisation Fund to leverage
  private sector investment of up to $600 million;




• $35 million to implement the government’s commitments under
  Australia’s National Waste Policy Action Plan;




• $24.6 million to improve national waste data so it can measure
  recycling outcomes and track progress against national waste
  targets; and




• a commitment to introduce legislation to formally enact the
  government’s waste export ban and encourage greater product
  stewardship by the private sector.[12]

3. The support of the community. The process for obtaining this
   support will require public discussion at both a state and local
   level so that public concerns can be addressed consistently and
   openly. Despite community concerns, evidence from EfW around the
   world supports the fact that modern EfW plants lower greenhouse
   emissions (relative to landfill), encourage increased rates of
   recycling and create long term jobs.




4. Partnerships with local councils (which for the most part
   manage Australia’s municipal waste) and industrial users. In
   particular, with advancements in technology there are bespoke
   opportunities for industrial players to work in partnership with
   waste management companies to generate energy from their waste as
   well as profit from any excess electricity that may be supplied to
   the broader market. The Opal Australian Paper EfW plant is a prime
   example of this emerging opportunity.

Globally, EfW projects are expanding as jurisdictions implement
the necessary regulatory framework and contractual mechanisms
needed to facilitate growth in EfW technologies. In Australia,
renewed political commitment to developing and investing in
circular economy waste infrastructure and technology is a strong
indication of the political support for the further development of
the EfW sector. EfW, if used appropriately within the waste
management hierarchy, can become a key part in the circular economy
as it does not detract from recycling, diverts waste from landfill,
reduces environmental and social impact, and provides additional,
low emission, baseload electricity from waste which would otherwise
end up in landfill.

Footnotes

¹Confederation of European Waste-to-Energy
Plants, Latest Eurostat Figures: Municipal Waste Treatment 2017
– Municipal waste treatment in 2017.

² Best Available Techniques (BAT) Reference Document for
Waste Incineration: Industrial Emissions Directive 2010/75/EU
(Integrated Pollution Prevention and Control),

³ AVR, Waste-to-energy company tackles CO2 emissions
with large-scale CO2 capture installation (29 May 2018).

⁴ ‘Government of Western Australia, Media Statement,
Nations second waste-to energy plant to be built in WA (24
December 2019).

⁵ Renew Economy, Maryvale Energy from Waste project
moving forward (20 October 2020).

⁶ Smarter Solution, Shortlisted companies announced
in the search for alternatives to landfill (7 October
2020).

⁷ Cleanaway, Why energy from waste for Western
Sydney? (10 July 2020).

⁸ EnergyAustralia, Study shows potential energy
recovery project a boost for Lithgow (17 January 2020).

⁹ Re.Group, Mt Piper Energy Recovery
Project.

¹⁰ Remondis, Swanbank Clean Energy and Resource
Recovery Precinct.

¹¹ Renergi, Biorefinery.

¹² Australian Government, $1 billion waste and
recycling plan to transform waste industry (6 July
2020).

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