Municipal Strategic Waste (MSW) has traditionally been seen by local governments as a liability to be managed, not a resource to be maximised.
It is now a resource to be maximised. Within the next decade it is highly likely that all organic waste in Victoria will be being converted into energy in one form or another.
What has for many years been a slow-moving vacuum is rapidly becoming a space where substantial sums will (and are) being spent by governments and the private sector to convert organic waste into gas and electricity.
The question is not will it happen, but who will benefit?
I am committed that it is local governments, and through them local communities.
After decades collecting and diverting waste and managing landfills when no-one else wanted to, waste is suddenly much more valuable than most Council officers realise.
How do I know this?
Firstly, because so many people suddenly want to buy the rights to your waste streams and secondly, because we’ve costed it for Hepburn Shire under a collaborative Council-controlled model and the numbers are nothing short of spectacular.
A number of private sector interests are very keen on ‘taking the waste off your hands’, often by effectively covering the gate fee Council would otherwise have to pay (sometimes with the transport cost thrown in).
From a cost minimisation perspective, this is a very good deal!
From a resource maximisation perspective, in an era where whoever controls the waste stream controls the model under which it will be utilised, this is a very poor deal for Councils.
I believe that local governments who currently control these waste streams should develop their own business and governance models, models that are aimed at maximising the policy outcomes that are important to them and their communities. We are way beyond simply offsetting an operational cost, the opportunity is simply too substantial.
Policy outcomes a properly calibrated business model could encompass include:
- Direct financial return to Council
- Long-terms economic development in the municipality
- Waste diversion requirements
- Greenhouse Gas Emissions abatement (that is directly related to Council initiative, and not third-party offsets)
Now these waste streams are valuable the push is on to transfer these public rights into private hands quickly and cheaply before local governments realise the value of the resource they control.
A third-party business model is unlikely to maximise benefit in these four areas to the extent that is possible. For that to occur, it must be the Council (probably with the support of their greenhouse alliance is they want to aggregated multiple waste streams across municipal boundaries) which must develop and own the model. In most cases it is likely that, at least initially, this would include direct ownership of the infrastructure also.
If you sell the opportunity to others because it’s easier, you really can’t complain if you only get the crumbs-off-the-table at the end!
The Hepburn Shire Model is one example of what councils can accomplish. Developing a model that maximises all four policy outcomes is not a theoretical undertaking.
Hepburn Shire Council, with the coordination support of the Central Victorian Greenhouse Alliance, is well advanced on this path to the point where:
- the technology mix has been determined
- the methane gas quality has been tested (and found more-then-sufficient) and,
- the market is currently being tested for construction of the first pilot power-plant (the first of up to 70 x 35 – 70kw plants across six municipalities)
The CVGA is in the process of finalising a collaborative business and governance model that responds to Sustainability Victoria’s request for a full funding application for $900,000 on the back of the recent successful Expression of Interest process.
The benefits of the shared-services model being coordinated by the CVGA are impressive. Fully implemented, this approach could divert all 43,000 tonnes of MSW in the 6 participating shires and convert it into the equivalent of:
- 5.4 MW micro power-station network that also produces
- 6 MW of heat
- 10,000m3 of class A water
- 3000 tonnes of nutrient rich ‘soil conditioner’ and;
- cut GHG emissions for these Councils by 80,000 tonnes p.a.
The economics promise to be just as good with an ROI hovering around 20% and a simple payback of under 5 years. The $33 million Capital Expenditure for full implementation could return an absolute ‘profit’ to the participating Councils somewhere in the vicinity of $9 million per year by the fifth year!
The moral of the story
As simple and attractive as it may sound, selling Council’s rights to MSW for the cost of the gate fee will probably never compare favourably with the full range of benefits that could be available if Councils developed and manage their own infrastructure in this space.
Whoever controls the waste stream controls the business model.
As Councils currently control substantial rights to waste streams, they should determine the most appropriate mechanism that maximises the collective and public benefit from what is a public right.
Municipalities and the communities they serve should be in the drivers-seat when determining the appropriate mix of benefits that accrue from converting waste into energy.
The Hepburn Shire model is one example. It is well-advanced and replicable, but it will certainly not be the only model available.
The key is that councils recognise the value of their MSW because other sections of the market-place have already made the transition.
There is some time pressure because state and federal governments will remain interested in funding energy-from-waste projects while they are innovative and exciting, then that interest will wane.
Councils have a window of opportunity of one or two election cycles in which to maximise the benefit of the MSW streams they have been so assiduously managing for so long. My advice…. Get cracking!