FEASIBILITY ANALYSIS ON DIVERTING REGIONAL WASTE TO LOCAL BUSINESS FOR WASTE TO ENERGY PROJECT by Pamela Graf THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION THE UNIVERSITY OF NORTHERN BRITISH COLUMBIA April2010 © Pamela Graf, 2010 UNIVERSITY of NORTHERN BRITISH COLUMBIA LmRARY Prince George, B.C. 1 Table of Contents Abstract Acknowledgements Chapter 1 Introduction Chapter 2 Literature Review 2.1. Woodmere Nursery 2.1 .1 Background 2.1.2 Solution: A change in crops (SWOT) 2.1.3 Woodmere's Project Proposal 2.1.4 TOPS (Thermal Oxidization Processing System) 2.2. Regional District ofBulkley-Nechako 2.2.1 RDBN Waste Management System 2.2.2 Knockholt Landfill 2.3.3 Other Stakeholders 2.3.1 The Municipality of Smithers 2.3.2 The Municipality ofTelkwa 2.3.3 The Municipality of Houston 2.3.4 B.C. Climate Action Charter 2.3.5 The Environment 2.3 .6 Pacific Carbon Trust 2.4. Other Similar Projects 2.4.1 Cedar Road Landfill Project, Nanaimo, BC 2.4.2 MVR Waste to Energy Plant in Hamburg, Germany Chapter 3 Methods Chapter 4 Analysis 4.1 Quantifying Smithers/Telkwa waste disposal at the Knockholt landfill 4.2 Analysis ofRDBN costs and to operate the Knockholt landfill 4.3 Impact of recycling on the Knockholt landfill 4.4 Comparative oftwo scenarios 4.5 Estimated Savings from Extension of the Landfill 4.6 Analysis of the proposed gasification project at Woodmere Nursery Chapter 5 Results Chapter 6 Conclusion Bibliography List of Tables Appendices Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 2 ABSTRACT A commercial greenhouse fueled by community waste is a business model that could mitigate growing economic pressures on northern communities facing rising costs. A business initiative proposed by Woodmere Nursery (Woodmere) in Telkwa, BC, is to convert community waste into biomass for fuel to heat their greenhouses year round. Woodmere presented their proposal to the Regional District of Bulkley-Nechako (RDBN), who is currently transporting their municipal solid waste (MSW) to two landfills within the region. The aim of this project is to do a feasibility analysis of the RDBN diverting MSW to Woodmere for their proposed waste to energy project, a thermal oxidization processing system. A few key sources were used to complete the analysis. An existing RDBN True Cost Accounting Study done on the RDBN waste management process in April 2006, the RDBN five year budget, and literature from EnEco Industries Ltd, which is the supplier of the waste conversion equipment were reviewed. The analysis showed a cost benefit to the RDBN and a significant benefit to extending the life of the Knockholt landfill. Although not the focus of this analysis, this study also suggests the Woodmere project has merit. There are possibly other benefits from this project, such as reduced greenhouse gas (GHG) emissions, and possible revenue streams from the trading of carbon offsets, from the sale of MSW, and from the sale of excess energy. These are however, beyond the scope of this paper and are possible subjects for further research. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 3 ACKNOWLEDGEMENTS I would like to thank Dr. David Connell for accepting the responsibility and risks that go with supervision. Dr. Connell provided invaluable advice and guidance that helped me throughout my project. As well, I thank Dr. Balbinder Deo, who provided me with excellent input and feedback about my project. A special thank you goes to Phill Clough who was a part of my journey from the very beginning and who has always been positive, encouraging and supportive. I would like to thank my employer, Harvey Tremblay who encouraged and supported me in achieving my educational goals. Thank you to my entire family, my father for being a man of goodwill and a forward thinker, my mother who is a great listener and helpful in so many ways I can't possibly count them all, to my three beautiful daughters, who inspire me, and who have always been my greatest fans, and to my granddaughters, Brooke, and Mariah who have been patiently waiting to have their grandma time back. Finally, I want to thank all my friends who encouraged me and shared this journey with me. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf I 4 CHAPTER 1 INTRODUCTION The world is facing a global energy crisis. Peter Tertzakian suggests that this cns1s will force individuals, corporations, and governments to "make choices that minimize the economic damage that can result from the pressure buildup in society's vital energy supply chains" (Tertzakian, 2006, 181 ). The growing global dependency on carbon-based energy sources can no longer be sustained by current sources of oil. This has been coined 'peak oil' based on Dr. M. King Hubbert's theory that oil production will reach a peak and then begin to decline. The timing of this 'peak' has been debated at length, but many believe it has already been reached. "More than any other single precept of economics, the theory of the upwardsloping supply curve is the major reason why economists as a profession have been so dismissive of any notion of resource depletion ... [p]hysical supply, relative to the scale of potential human consumption, is treated as if it were infinite ... [i]f we are not staring at a production peak in world oil, we are at a minimum entering a period of unprecedented scarcity" (Rubin, 2009, 37). Fossil fuels, particularly oil, have become harder and harder to access and supply cannot keep up with the growing demand (Tertzakian, 2006). Global demand for oil has been pushed far beyond supply by the new, fast growing middle classes of countries such as China, India, Brazil and Indonesia. Their thirst for oil has placed huge demands on global reserves. This demand on the earth's fossil fuels is directly related to the global economy. The world economy is fueled by energy. The economic pressures of rising energy costs due to the scarcity of oil will force people to conserve more and to find more efficient methods of doing things. It will force new technologies and innovative solutions to emerge at a more rapid pace to fill the world's demand for energy. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 5 As the price of oil increases those fuel costs will be passed on to the consumer and a larger percentage of the consumer's net income will be spent on food. Such a break point will present new challenges and opportunities to the people living around the world. "Your food in particular is going to cost a lot more - in fact, it is already getting more expensive all the time" (Rubin, 2009, 21). There is a sophisticated supply chain for most food consumed in Northern BC. It is often grown more than 1200 miles away in California or Mexico, may be shipped another 7500 miles by transoceanic freightliners to factories in China where it is processed and packaged into cans, and shipped back to North America. A can of green beans may travel more than 17,000 miles before reaching the pantries of northern British Columbians. The cost of food could become such a burden it could threaten the sustainability of northern economies (The Vancouver Sun, 2007). The communities of northern British Columbia (BC) face a similar break point, smce these communities rely heavily on the importation of practically everything, especially food. Much of the food consumed in northern BC travels from distant places, like California, Mexico and beyond. Due to the short growing season and winter daylight hours the north is not an agricultural hub like the Fraser Valley or the Okanagan in the more southern regions of BC. An alternative solution to importing food into the north is a commercial greenhouse initiative which could supply fresh produce locally. A local tree nursery in Telkwa, BC, which has been affected by the downturn in the logging industry, is looking at an innovative commercial greenhouse project that would use energy from community waste to heat their greenhouses in the winter months. Woodmere, a local tree nursery, plans to convert an acre of their greenhouses currently being used for tree Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 6 seedling production into year-round vegetable production to supply the local market. Their project is based on using biomass from local community waste for heat. A key to success depends on buy-in from the RDBN to supply them with community waste. The RDBN currently transports MSW from the Smithers/Telkwa Transfer Station past Woodmere, to the Knockholt landfill, and deposits the MSW there. Woodmere has asked to have the MSW dumped at their nursery where it will be used as a feedstock that will be converted into biomass using a Thermal Oxidation Processing System (TOPS), which is an innovative technology for converting waste material into bio-energy that can be used to heat the vegetable greenhouses year round. Woodmere is willing to pay a small fee for the waste which would otherwise be transported to the Knockholt landfill. Under this arrangement Woodmere could become a possible revenue stream for the RDBN and could save considerable dollars in transportation costs and tipping fees. An analysis of the current MSW management system as well as two possible scenarios to compare the costs and benefits of the current disposition of MSW at Knockholt landfill with the possible diversion of MSW to Woodmere would be informative for the RDBN about the possible risks or benefits of moving forward (or not) with diversion of MSW to Woodmere. This project is a feasibility study on the potential costs and benefits of the RDBN diverting MSW from the Smithers/Telkwa Transfer Station to Woodmere. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 7 CHAPTER 2 THE WOODMERE WASTE TO ENERGY PROJECT: OVERVIEW 2.1 Woodmere Nursery 2.1.1. Background Woodmere Nursery Ltd (Woodmere) is a private corporation that produces containerized tree seedlings for sale to the forestry industry. The owners, Mr. Joe Wong and the VanderGaag family, started a tree seedling production in 1985. It has facilities in two locations, Telkwa, BC and Fairview, Alberta. The facility in Telkwa, BC is the nursery of interest for this paper and any references made to Woodmere are in reference to the Telkwa facility. They have four full-time employees and 20 part-time employees. During their busy season they employ up to 65 people for six months of the year. They have seven acres of greenhouses at the Telkwa location producing more than 12.5 million seedlings annually for the Sub-Boreal Spruce biogeoclimatic zone (see map, Appendix 1). The BC Ministry ofForests is their largest client. The BC forest industry has faced a number of challenges over several years including the softwood lumber dispute ongoing since 1982 with the United States, infestations of Mountain Pine beetles and now a global economic crisis. The Working Roundtable on Forestry describes this crisis as one of the worst: "[t]he world has been impacted by a global economic crisis that has affected the British Columbia forest industry - today it is facing the most severe downturn in its history. All British Columbians rely directly or indirectly on the jobs, economic activity and revenue that the forest industry creates, and all are affected by this downturn" (B.C. Ministry of Forests, 2009, 6). Woodmere has been negatively affected by the downturn in the forestry industry because of a reduction in the demand for tree seedlings. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 8 2.1.2. Solution: A change in crops As a result of the downturn and in response to the decline in demand for tree seedlings in the forest industry, Woodmere plans to switch an acre of their greenhouse seedling production to vegetable crops. Vegetables and ornamental horticultural plants are alternative crops that would allow Woodmere to continue to utilize their greenhouses while producing a fresh , local food supply for the region. However, while tree seedlings can be kept dormant during winter months in temperatures ranging from -2 Celsius to 2 Celsius (B.C. Ministry of Forests 1999), in northern BC vegetable crops must be grown in heated greenhouses especially during the cold season. 2.1.3. Woodmere's Project Proposal Woodmere is giving serious consideration to the purchase of a Thermal Gasification Equipment System (TOPS) for use in converting waste into energy to heat its greenhouses. This equipment can recover resources from biomass that can then be used for energy for heating (and cooling). The Woodmere project will require a steady supply of biomass for conversion to heat. To attain this supply, they approached the Regional District of Bulkley-Nechako (RDBN) and the municipalities of Smithers and Telkwa, with a request to have more than 80 percent of the MSW diverted to Woodmere, to be used as a feedstock for conversion to energy in the TOPS equipment. The RDBN was not interested in the proposal at the time, but may reconsider the option after a new cost accounting study is completed in 2010. The RDBN has the final approval of such an initiative and Woodmere will have to reach an agreement with them before their project can go forward. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 9 2.1.4. TOPS (Thermal Oxidation Processing System) The TOPS is a gasification plant that can utilize MSW, commercial and medical waste, wood waste, tires, railway ties, waste oil, and sewage sludge. It can convert biomass to a clean, super hot energy feed for a boiler, either steam or electric power. This innovative equipment requires no pre-sorting or handling, is very easy to use, and for a small site, requires only a part-time operator as outlined in a proposal submitted to Woodmere by EnEco Industries Ltd (EnEco 2007). The manufacturer, EnEco Industries Ltd, describes the TOPS Gasification Plant Model-M3-3LC system in their proposal (EnEco 2007). The model M3-3LC is rated as a 67 cubic meter per day solid waste system. The primary chamber is a converted 20 foot shipping container lined with brick refractory with a steel framework that can withstand internal pressures and can support the weight of all the oxidizers, doors, breaching, burners etc. without binding or warping. The waste is loaded into the first batch chamber and is completely sealed for 18 hours, eliminating particulate into the air during the process. Air is supplied by a high pressure blower capable of supplying combustion air to the chamber and is connected by breaching passages to the secondary chamber which is lined with 1535 degree Celsius fire clay cast refractory held in place by metal anchors. The combustible gases created in the primary chamber pass through the breaching to the secondary chamber where it is constantly mixed with air to sustain combustion. The secondary chamber is equipped with a 1.2 million BTU burner capable of processing waste oil and can produce a flame to heat and maintain the chamber up to its operating temperature of 1000 degrees Celsius. Complete oxidation occurs within two seconds in the secondary oxidation chamber. Air is then exhausted from the secondary Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 10 oxidation chamber from an exhaust stack. The processes and temperatures are all controlled centrally by a programmable logic control devise. The waste that goes into the primary chamber is reduced as much as 95 per cent leaving virtually carbon free ash which is easily removed with a rake system. The primary oxidation chamber is then heated to temperatures in excess of 550 degrees Celsius with a diesel burner, and the heat is retained by radiating from refractory lined walls which sustains the gasification process. According to EnEco's proposal, TOPS can produce 8.4 million BTUs per hour and can be routed to a steam boiler where it can be used to power a radiant heat system. All that is remaining after gasification is a dry ash, which is carbon free (an ideal concrete/asphalt additive), entrained glass and metal in its complete form (not stagged or alloyed). The metal and glass can be recycled. Any outputs to the atmosphere are minimal and all organic gas compounds are completely destroyed. An additional benefit of the TOPS system described in the EnEco proposal is that it generates greenhouse grade C0 2 for enhancement of crops, making it ideally compatible with the Woodmere greenhouse project. Lastly, the low grade heat exhaust will support an algae growing operation which can also produce bio-fuel from the extracted oil. In addition this easy to grow algae can ingest C0 2 and produces oxygen which is and another way to reduce carbon emissions. Although the equipment is expensive ($1,677,708 completely installed\ the equipment's estimated life is 15 to 20 years with proper maintenance per manufacturers specifications. 1 This price is based on the proposal prepared in 2007 and is subject to revision. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 11 Average heating costs for a commercial greenhouse operation can range from 18 to 40 percent of total cost of operations depending on the location of the greenhouse (EnEco Industries Ltd, 2007, 3). Since Woodmere is located in a northern climate it is reasonable to expect that their heating costs would be high, perhaps close to the 40 per cent range. The proposed gasification system for Woodmere can generate an expected 8.4 million BTUs per hour. By routing the heat energy to a boiler steam system it would be sufficient to power a radiant heat system for a commercial greenhouse. Woodmere is looking at long-term reduction in gas heating costs which they hope will justify the cost of the equipment purchase. 2.2. Regional District of Bulkley-Nechako The RDBN is located in central BC, covering an area of about 73,440 square kilometers (refer to map, Appendix 2). There are eight municipalities in the region: Smithers, Telkwa, Granisle, Houston, Bums Lake, Fraser Lake, Fort St. James, and Vanderhoof. As well, there are seven rural districts. The total population of the region in 2006 was 38,243 people (Statistics Canada 2006). In September 1996 RBDN created a comprehensive Regional Solid Waste Management Plan (RBDN 1996), which closed inactive landfills and replaced them with transfer stations that served both local municipalities and residents. Two primary sub-regional landfills were established which met the operational standards of the Provincial government. With their infrastructure goals met, the RDBN now focuses on waste reduction strategies (e.g., through recycling) and the development of innovative solutions to the challenges of solid waste management. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 12 2.2.1. RDBN Waste Management System The RDBN waste management system is a user-pay system which uses tipping fees based on volume or weight for those landfills that have weight scales. The tipping fees cover the costs of operating the landfills and waste transfer. The RDBN oversees the waste management for the entire region. There are two main waste disposal sites serving the region, Clearview and Knockholt. In addition, Manson Creek is a small site which services an area of just over fifty people (Appendix 3). The Regional District of Fraser Fort George receives waste from the tiny Berman Lake Transfer Station which services the residents of Cluculz Lake. This study looks primarily at the Knockholt landfill site and the municipalities it serves. 2.2.2 Knockholt Landfill The Knockholt landfill site is situated approximately 12 krn east of Houston, BC. It is a seven phase landfill in the second phase of its life. Landfills are designed in phases. When a phase reaches its volumetric capacity of waste and cover material, it moves into the next phase. Should the intake of waste decrease during a phase, the life span of that phase could be extended and any associated costs would be reduced because they are stretched over a longer period of time (Earth Tech Canada Inc. 2006). The following is the expected life span of each phase of the Knockholt landfill (note that Knockholt is currently in Phase two): Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 13 Table 1 - Knockholt Landfill Phases Life Span - Knockholt Landfill Phase Year End Phase Two 2012 Phase Three 2023 Phase Four 2033 Phase Five 2043 Phase Six 2053 Phase Seven 2063 Source: adapted from Earth Tech Canada Inc. 2006, Column land 2 The Knockholt landfill receives waste for final disposal from the transfer stations m Southside, Burns Lake, Smithers/Telkwa, Granisle, and Knockholt. Table 2 - Knockholt Waste Flows Southside Transfer I Station I --t I Burns Lake Transfer 1------. I Station I SmithersfTelkwa Transfer Station I Granisle Transfer Station I --t --t I Knockholt Landfill l I --t Knockholt (selfhauled) --t Source: adapted from Earth Tech Canada Inc. Knockholt Waste Flows. 2006. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 14 The types of material disposed at the Knockholt landfill are food wastes, yard wastes, wood, newsprint, cardboard, mixed paper, beverage containers, recyclable plastics, milk jugs, miscellaneous glass, metal food cans, other metal, and textiles. The landfill cannot take the following waste items: used oil products and filters (these must be disposed at a special facility - the BC Used Oil Management Association), tires (which are returned to the place of purchase) pesticides and herbicides and hazardous wastes. As organic waste decomposes in the landfill, methane gas is emitted. Methane gas is a natural greenhouse gas which contributes to the problem of global warming. It can absorb 21 times more heat per molecule than carbon dioxide can (West, 2010). 2.3. Other Stakeholders 2.3.1. The Municipality of Smithers Smithers, a small community with a population of over 6000 (Statistics Canada 2006) is located in northern BC on the Trans Canada Yellowhead Highway 16 about half way between the cities of Prince George and Prince Rupert, in the heart of the Bulkley Valley. Logging is a major economic resource in the region (Home 2009) which has been declining due to a number of economic factors including: the Canadian/US softwood lumber dispute, a growing Pine Beetle epidemic, ongoing land claim issues, the inability of the lumber/pulp industry to remain competitive in global markets, growing environmental issues, the rising Canadian dollar and the crash in the US housing market (Tulloch, 2007). Despite the hardships the community has a large public sector base, and a rapidly developing mining industry (Home 2009). Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 15 Smithers has a recycling depot which accepts metals, glass, and paper, but the majority of the community's waste is transported to the Smithers/Telkwa Transfer Station, about 10 kilometers on the southeast side of town which includes a Reuse Shed (colloquially called the 'Telkwa Mall') for free materials which can be salvaged or reused. The waste is sorted, compacted and then transported for final disposal at the Knockholt landfill 67 kilometers southeast of Houston, BC. The waste is transported by truck to Knockholt, passing by Woodmere which is only six kilometers away, on the southeast side of Telkwa. The Smithers/Telkwa Transfer Station transported more than 5487 tonnes of waste to the Knockholt landfill annually according to a study done in 2005 (EarthTech, 2006). 2.3.2. The Municipality of Telkwa The Village of Telkwa is located 15 km southeast of Smithers on the Trans Canada Yellowhead Highway 16. Forestry has also been a major economic driver for the small community of 1,295 people (Statistics Canada 2006) along with agriculture and tourism. The village transports its waste for disposal five kilometers to the Smithers/Telkwa Transfer Station just west of the community, where it is compacted and then carried back through Telkwa, past the Woodmere Nursery to the Knockholt landfill site another 67 kilometers away. 2.3.3. The Municipality of Houston The Municipality of Houston has a population of 3,163 and is situated on the Trans Canada Yellowhead highway 16 (Statistics Canada 2006). The town is located 50 kilometers southeast of Telkwa, BC and only lies 12 kilometers from the Knockholt landfill. The community is almost completely dependent on the forest industry, with the Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 16 largest employer being Houston Forest Products Ltd. Due to the proximity of Houston to the Knockholt landfill and because the Woodmere Nursery could use only 80 per cent of the solid waste from the Smithers and Telkwa communities, Houston will not be included in this analysis. 2.3.4. BC Climate Action Charter On September 26, 2007, the Province of BC signed the BC Climate Action Charter pledging a commitment by the province to be carbon neutral by 2010. More than 175 local governments have now signed the Charter making the commitment to become carbon neutral by 2012 (Province ofB.C. 2007). "Becoming carbon neutral is a process by which you determine what carbon emissions you contribute and work towards reducing these to zero" (HeskethBoies, 2007, 2). Communities can either reduce their greenhouse gas (GHG) emiSSions or purchase carbon offsets (from Pacific Carbon Trust) to compensate for them. Further, by discovering innovative ways to become carbon neutral, a community could potentially earn carbon credits, which could become a revenue stream for the community as well. In September 2008, the Campbell government created a Climate Action Revenue Incentive program offering all municipalities who sign the Charter a grant from the provincial government equal to the local government's carbon tax paid. Premier Campbell said, "If communities do that, and publicly report on their plan and progress in meeting that goal, they will be eligible to receive a grant equal to 100 per cent of their carbon tax costs" (Government ofBC, 2008, 1). Municipalities are required to report annually as to the steps they have taken to achieve carbon neutrality and the progress they have made in reaching that goal. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 17 The Green Communities Committee (GCC) was established under the Charter in 2007 to assist Municipalities with achieving their goals. The GCC consists of two partners, the Province of BC's Ministry of Community and Rural Development and the Union of BC Municipalities (UBCM). From this committee three workgroups were formed: 1. Carbon Neutrality 2. Small Communities Strategies and Actions 3. Urban Strategies and Actions The goal of each workgroup was to develop strategies to reduce GHG emissions and to help identify opportunities or possible barriers (Province of BC, 201 0). 2.3.5. The Environment In November of 2007, an Intergovernmental Panel on Climate Change (IPCC) made up of over 2500 of the world's leading scientists and experts in the world released a report which made three conclusions: the global climate was changing, humans are causing the change, and if steps are not taken, conditions will worsen (Pacific Carbon Trust-About Climate Change, 2010, 1). The IPCC reported, "[g]lobal warming is now unequivocal and is "now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level" (Pacific Carbon Trust-About Climate Change, 2010, 1). In BC, mountain pine beetles, which in the past have been controlled by the sustained -40° F temperatures of our northern winters, have flourished in the warmer winters of the last two decades. The spread of these insects has had devastating effects in BC destroying over 13 million hectares of pine forests (Pacific Carbon Trust, 2010). This Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 18 epidemic has had devastating effects on the economy of BC. British Columbia has lost 50 per cent of its snow pack in the last century and has experienced water shortages, droughts, higher than normal precipitation, rising sea levels and erratic weather patterns. (Pacific Carbon Trust 2010) Finding innovative green solutions that will help mitigate this warming pattern and the effects of GHG emissions in northern BC would seem imperative for many reasons, not just economic. 2.3.6. Pacific Carbon Trust Pacific Carbon Trust (PCT) is a Crown corporation of the Government of BC. Although, not a true stakeholder in this feasibility analysis, they are included here because they trade in carbon offsets. Their goal is to promote a low-carbon economy, creating greenhouse gas offsets to help clients reduce their carbon footprints. . A carbon offset is, "[m]easured as one metric tonne of carbon dioxide or equivalent (C0 2 e) reduced or removed from the atmosphere as a result of emission-reducing (offset) activities" (Pacific Carbon Trust). Carbon offsets are earned when carbon savings have been verified by objective third parties as to whether a true benefit exists (Pacific Carbon Trust). Carbon offsets can be sold or traded and are a possible revenue stream for the RDBN and the municipalities of Smithers and Telkwa if there can be a clear and significant carbon savings demonstrated as a result of gasifying MSW and reducing the amount of MSW going into the landfill. 2.4. Other Similar Projects Waste-to-energy projects are gammg momentum m the world as the early adopters of these systems emerge and demonstrate real savings for communities and Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 19 cities in the management of their waste and landfills. Substantial benefits are also being realized in the form of savings from transport and management costs of waste, reductions in GHG emissions from landfills as well additional side benefits from recoverables such as a high quality cement additives like gypsum, slag and fly ash, pure clean hydrochloric acid, scrap iron, non-ferrous metals such as aluminum, copper and brass, electricity, steam and oil (Green Conversion Systems, LLC, 2005). Some systems produce a C02 gas which is favorable for greenhouses and some support the production of algae which can be used to produce a bio fuel such as the system Woodmere Nursery proposes to use. Many different types of waste-to-energy systems are available, some are designed to capture methane gas from landfills and convert to energy. One such system is in use at the Cedar Road Landfill Project on Vancouver Island. 2.4.1Cedar Road Landfill Project, Nanaimo, BC The Cedar Road Landfill Project (CRLP) demonstrated leadership in building one of the first waste-to-energy landfill projects in BC. The 50 year old landfill has been reengineered to become a high technology facility that can generate gas from waste which can power electricity producing generators. The Regional District of Nanaimo (RDN) has been working in partnership with the CRLP to capture and utilize the methane gas produced at the landfill to power electrical generators which produces electricity that is sold to BC Hydro (Albemi Valley Times, 2010). The feedstock for the landfill is waste from the City of Nanaimo, BC and area which clearly demonstrates that waste is becoming a new resource as an energy commodity (Liddy, 2010). It is a sustainable system which is shifting to a smaller landfill, produces a revenue stream and reduces GHG emissions (Albemi Valley Times, Jan 2010). Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 20 2.4.2. MVR Waste to Energy Plant in Hamburg, Germany Hamburg, Germany is home to 3.5 million people producing over 320,000 tons of garbage annually. They are using a waste-to-energy incineration plant. As a cogeneration plant it is both a waste disposal facility as well as a recoverables facility. The facility known as MVR (Mtillverwertung Rugenberger) uses one of the most advanced thermal recycling technologies in the world (M.R.S.I., 2005). Their average cost for thermal treatment of waste is 50 per cent below the average in Germany. They use highly developed analytical equipment and follow stringent standards. Their GHG emissions are well below standard values and almost undetectable. Fewer dioxins leave the facility than what goes in. Their incineration process transforms waste to bottom ash and flue gas and at 850° Celsius, dangerous toxins and furans are destroyed. The MVR plant recovers hydrochloric acid, gypsum, slag, fly ash, scrap iron, aluminum, copper, brass, electricity and steam, all revenue streams (Green Conversion Systems LLC, 2010). Each four person household in Hamburg produces about 120 liters of garbage bi-monthly and costs them about 250 Euros a year for disposal - about 50 per cent less than the country average (Green Conversion Systems LLC, 2010). There are about 350 waste-toenergy plants across Europe. The BC Ministry of Environment outlined in their 2007 BC Energy Plan that by 2016 existing thermal generation power plants will produce zero net GHG emissions (B.C. Ministry ofEnvironrnent, 2007). Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 21 CHAPTER 3 METHODS The subject of this study is a section of highway 16, within the RDBN, which begins at Smithers and ends at the Knockholt landfill (Table 3). The municipalities of Smithers and Telkwa transport their own waste to the Smithers/Telkwa Transfer Station. There it is sorted for recycling and reuse. The RDBN is responsible for picking up the MSW from the transfer station and transporting it along highway 16, past Houston, to the Knockholt landfill where it is finally disposed. The total tonnage of MSW from Smithers and Telkwa for 2009 deposited at the Smithers/Telkwa Transfer Station was calculated and the costs of transporting that waste from there to the Knockholt landfill were estimated. A comparative scenario was then performed, comparing the current RDBN MSW management system with one that would drop 80 percent of the Smithers/Telkwa MSW at the Woodmere Nursery, just east of Telkwa, for use as feedstock in their proposed gasification system and transporting the remaining 20 percent to the Knockholt landfill. The purpose of the analysis was to determine the costs and any possible benefits to the RDBN diverting 80% of the MSW from Smithers and Telkwa going into the Knockholt landfill. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 22 Table 3 -Operational Route for Transporting MSW from Smithers and Telkwa to Knockholt Landftll. The approach of the cost benefit analysis was from the RDBN perspective. Although Woodmere nursery was looked at in this study, it was not the primary focus of the analysis. The primary source for data used in the analysis was a True Cost Accounting study done for the RDBN in January of2006 by Earth Tech Canada Inc. This study provided valuable information about tonnages and waste flows of MSW to the Knockholt landfill as well as types of materials disposed, capital and operating costs of those materials and the impact of recycling in the RDBN. In particular it provided enough information to calculate the 2009 volumes and costs of handling the MSW being generated by the Smithers and Telkwa communities. The secondary sources of data came from the RDBN January 5, 2010 budget and from various provincial websites, in particular the Recycling Council of British Columbia. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 23 A reason for looking at the costs of transporting MSW was to determine if there would be a significant savings if the total MSW coming from Smithers and Telkwa was to be diverted en-route to Knockholt and reduced by 80 percent. The percentage of MSW being disposed at the Knockholt landfill by each of the communities in the RDBN was calculated first in order to quantify the amount of MSW being disposed by the Smithers and Telkwa municipalities. This percentage was then used to determine what portion of costs were applicable to just Smithers and Telkwa. This information was also used to determine the impact of the communities MSW on the lifecycle of phase two of the Knockholt landfill, potential savings from extending the life of phase two, and any costs associated with ending phase two and starting phase three. Next a review of the RDBN January 5, 2010 budget was done to understand the projection of costs relating to environmental services, in particular those related to solid waste management. Identifying those costs which were fixed and those which were variable was necessary because the fixed costs would not be affected by the quantity of waste disposed at the landfill. Using the percentages determined above, the costs relating to just the Knockholt landfill and those costs associated with the solid waste management of just Smithers and Telkwa were determined. These data were then used to prepare two scenarios comparing the status quo waste handling costs with one which would divert 80 percent of the two townships MSW to Woodmere for feedstock for their gasification project. Finally an assessment of any potential risk for the RDBN associated with the possible diversion of some of the District's MSW to Woodmere for feedstock was evaluated. A rough calculation of NPV and IRR was done on Woodmere waste to energy Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 24 project. An estimate of capital costs and operating costs and potential savings that might impact the project was made. These data were then used to evaluate potential risks or benefits to the RDBN. Five key assumptions made in the analysis: 1. It is assumed that the amount of waste that would be diverted to Woodmere from the Smithers/Telkwa transfer station is 80 percent because that was the amount formally requested by Woodmere in their business plan which was presented to the RDBN in 2008. 2. An inflation rate of 2.27 per cent was used (the calculated average of inflation rates from 2001 to 2008). The 2009 rate of inflation was not included in the calculated average due to the unusually low rate as a result of the 2009 recession (Table 4). Table 4 - Inflation Rates Canadian Annual Inflation Rates 2001 2002 2003 2004 2005 2006 2007 2008 2009 Average 2001 -2008 = 2.5251% 2.2585% 2.7585% 1.8569% 2.2139% 2.0023% 2.1381 % 2.3706% 0.2989% 2.27% 3. It was assumed that the population growth in the Smithers and Telkwa communities was 2.55 per cent (Table 5). This estimate of population growth was made by calculating the difference in the population of Smithers and Telkwa, BC taken from the 2006 Statistics Canada consensus (BC Stats, 2007, 2) to its estimated growth in 2009. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 25 Table 5 - Population Growth of Knockholt Landfill Communities 2001 2006 2007 2008 2009 200 12009 % Change Burns Lake/Southside 1960 2107 2,164 2,149 2,114 8% 0.33% Gran isle 355 364 377 390 396 12% 9.00% KnockhoiUHouston 4766 4222 3,062 3,007 2,958 -38% -0.30% Smithers/Telkwa 6951 6512 6,538 6,647 6,678 -4% 2.55% Totals 14032 15211 12,146 -6% 2.89% RDBN Knockholt Communities Population Growth Census years Population Estimates 12,141 12,193 20062009 % Chanqe 4. It was assumed that the growth of MSW would be generated at 2.55 percent equal to estimated growth in population. 5. Finally to assess any risk to the RDBN, it was necessary to estimate interest rates to calculate the NPV and IRR of the Woodmere project. Three possible scenarios were compared using three different interest rates. In the first scenario the Feb 1, 2010 Royal Bank of Canada prime lending rate of 2.25 percent was used. Since this rate is historically low due to the current recession and because interest rates are expected to start to rise as soon as the summer of 2010 two other scenarios were tested using two additional assumed interest rates. To make these projections, the average interest rate from the past decade, 5.4 percent, and the higher rate from the period from 2006 and 2007, 8 percent, were used (Table 6). Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 26 Table 6 - Interest Rates Historical Prime Interest Rates %Rate Years 9.5 5 4.5 4 5 8.1 8.1 5 2.5 2.25 Average I 5.4 (MoneyCafe.com, 201 0, 1) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CHAPTER 4 ANALYSIS 4.1 Quantifying Smithers/Telkwa waste disposal at the Knockholt landfill Data taken from the True Cost Accounting Study prepared by EarthTech Canada Inc. for the RDBN in April of 2006 provided the only record of total tonnage of MSW being generated by each community that flowed to Knockholt.in 2005 (Table 7a). Data for the years 2006, 2007, and 2009 could not be found. From the 2005 data it was determined that Smithers and Telkwa were responsible for 58 percent of the total Knockholt MSW (Table 7b ). Table 7a- 2005 MSW Flows to Knockholt Landfill Tonnes 2005 Bums Lake 2287 Granisle 182 Knockholt Houston 1789 Smithers Southside Telkwa 6254 284 Total Tonnes 10796 Waste Flows within the RDBN to the Knockholt landfill in 2005 (Modified from Figure 4.1, EarthTech Canada Inc, 2006, 4) Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 27 Table 7b- 2005 Percentage of MSW Going to Knockholt Landfill Percentage of Municipal Waste at Knockholt Landfill Smithers/Telkwa 58% Knockholt/ Houston 16% 2% 21% 3% (This chart was produced from the 2005 waste flow tonnage records above) The populations of the Knockholt communities grew disproportionately according to the 2001 and 2006 Census. Therefore the percentage of waste from the 2005 study was not used to estimate future tonnages of MSW per community. Instead a later report by Golder and Associates Ltd 2007 was used. It reported that a total of 13000 tonnes of MSW was disposed at the Knockholt landfill by the RDBN (Golder Associates Ltd, 2008, 20). Using the population growth chart in Table 5, it was estimated that the 2007 population for Smithers and Telkwa accounted for 54 per cent of the population of the communities using the Knockholt landfill. Calculating 54 per cent of 13000 tonnes is equal to 7020 tonnes of MSW from Smithers and Telkwa in 2007. Factoring in the assumption that the MSW would grow by 2.55 per cent equal with the population growth, 2009 is an estimated 7383 tonnes. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 28 Using the amount of MSW per capita gomg to the Knockholt landfill from Smithers and Telkwa along with the 2009 estimates of populations from Table 5 above the following formula was calculated: Per Capita Disposed= MSW Disposed I Municipal Population By dividing 7383 tonnes ofMSW by 6678 peoples in 2009 gives a quotient of 1.1 tonnes per capita of waste disposed by the Smithers and Telkwa municipalities. Transfer stations and landfills must make estimates of solid waste which they anticipate receiving in the coming years, in tonnes. It's important however, to also know the volume of waste in order to receive, hold and transport waste. Therefore tonnage is converted to cubic meters. A conversion factor of 150 kg/m3 can be used if local density information is not available on standard, uncompacted municipal refuse (Government of British Columbia, 2005, 3.1). Compaction of material is one of the main factors affecting the density of MSW. Compacted material can be as much as four times denser than un-compacted material (Government of British Columbia, 2005, 3.1). Compacting minimizes the volume of waste and extends the life of the landfill as well as reduces the costs of operations. A waste audit commissioned by the RDBN in 2001, gives a breakdown of the types of materials disposed at the Knockholt landfill site at that time. A breakdown of these materials and their composition by un-compacted density and by compacted density is shown in Table 8 on the following page. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 29 Table 8- Un-compacted and Compacted Densities of Smithers/Telkwa MSW 2009 Un-Compacted and Compacted Densities of Waste for Smithers and Telkwa Component 2009 Waste Component Food Waste Yard Waste Wood Newsprint Cardboard Mixed Paper Beverage Cont. Recyclable Plastics Milk Jugs Un-compacted Smithers/Telkwa Compacted Smithers/Telkwa Density Kg/m3 336 159 248 55% Density Kg/m3 1030 445 404 55% 100 77 35 39 39 39 354 Misc. Glass Metal Food Cans Other Metal Textiles Reusable Special Waste Garbage 532 Total MSW 2415 55 332 71 - 185 88 136 55 43 19 21 21 21 195 30 182 39 - - 293 1328 723 246 636 359 220 220 217 1053 352 1583 662 1106 1092 10349 567 245 222 398 135 350 198 121 121 120 579 193 871 364 608 601 5692 (This table was modified from the Regional District of Bulkley-Nechako True Cost Accounting Study of January 25, 2006 to show percentage of Smithers/Telkwa waste (55 per cent) and factors an estimated growth of2.55% ofwaste to 2009.). 4.2 Analysis of RDBN costs to operate the Knockholt landfill Different materials occupy more or less space in a landfill. For example, a tonne of metal would require much less space in a landfill than a tonne of Styrofoam. The cost of creating the space for various types of material is a significant cost of land filling. The Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 30 following table (Table 9) shows the breakdown of the types of material disposed at Knockholt by Smithers and Telkwa and the associated costs per tonne of disposal. Table 9- Total Cost per Tonne Disposed by Smithers/Telkwa Material Type Food Waste Yard Waste Wood Newsprint Cardboard Mixed Paper Plastics Cont. Plastics Milk Jugs Misc. Glass Metal Cans Other Metal Textiles Reusable Special Waste Other TOTAL Tonnes Disposed Volume Disposed (ml) Capital Cost of Disposal Operating Cost of Disposal Total Cost of Disposal Total Cost Per Tonne Disposed 1,138 864 $6,658 $25,871 $32,529 $29 403 58 75 156 718 115 81 504 $5,533 $886 $625 $3,881 $21,502 $3,443 $2,428 $15,082 $27,035 $4,330 $3,052 $18,964 $67 $74 $41 $121 563 701 $5,404 $20,999 $26,403 $47 136 369 20 296 1,327 72 $2,280 $10,219 $560 $8,862 $39,709 $2,175 $11,143 $49,927 $2,734 $82 $135 $136 155 116 $894 $3,474 $4,368 $28 113 254 $1,959 $7,613 $9,573 $85 109 212 203 54 254 261 $417 $1 ,956 $2,011 $1,621 $7,602 $7,815 $2,038 $9,559 $9,826 $19 $45 $49 787 6,407 $8 $6,063 $49,355 $31 $23,562 $191,791 $39 $29,625 $241,144 $32 $27 $50 1,099 4.~ 12 (This table was modified from the EarthTech True Cost Accounting Study of January 25, 2006 to show a 2.55 per cent annual increase of MSW to 2009 and to show 55 per cent oftotal capital and operating costs relating to just Smithers/Telkwa in 2009). 4.3 Impact of recycling on the Knockholt landftll The Recycling Council of BC did a tracking report of municipal solid waste in 200112002. What they found was that compared to 1990 there was a 30.4 percent reduction in the per capita amount of waste requiring disposal in BC (Recycling Council Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 31 of British Columbia, Jan 26, 2010, 5). However, the report also revealed that the disposal rate stayed relatively stable from1996 to 200112002 when the report was prepared. Curbside recycling programs which were implemented much earlier probably accounted for the reduction from 1990 to 1997 when the tonnes per capita disposed provincially began to level out. This trend can be seen in Table 10. "Any new programs introduced by BC municipalities since 1998 have not been able to create a significant decrease in disposal of MSW. This suggests that new approaches will be necessary for municipalities to achieve significant reductions in the amount requiring disposal" (Recycling Council of British Columbia, Jan 26, 2010, 8). Table 10- Provincial Tonnes per Capita Disposed 1990- 2002 Tonnes Per Capita Disposed 1.00 0.90 0.80 0.70 0.60 "'cQl c 0.50 0 1- 0.40 0.30 0.20 0.10 0.00 Year 1990 Year 1997 Year 1998 Year 1999 Year 2000 Year 2001 Year 2002 Years This trend is echoed in the True Cost Accounting Study prepared for the RDBN by Earth Tech Canada. The purpose of that study was to determine the impact of recycling on the landfills within the regional district, to determine any savings in the cost of disposal as a result of increased recycling and to estimate landfill timeframes in relation to recycling (True Cost Accounting Study, 2006, 1). The results of that study, in Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 32 summary, showed recycling costs outweighed the savings and that the cost per tonne of a type of material disposed does not equal the saving per tonne of the same material recycled, and that increased landfill lifespan is possible through recycling. That study predicted the lifespan of Phase 2 of the Knockholt Landfill could be extended from 2012 to 2014 from recycling of 60 percent of MSW, a very ambitious recycling goal (True Cost Accounting Study, 2006, 15-18). 4.4 Comparative of two scenarios The current status quo of MSW from Smithers and Telkwa being transported to and disposed at Knockholt was compared with a projected scenario of 80 percent of MSW being deposited at Woodmere. According to the True Cost Accounting Study done in 2006 for RDBN and the RDBN five year budget from 2010 to 2014 landfill disposal contracts are fixed. These costs would not change regardless of the tonnage intake. The RDBN contracts out the hauling of regional MSW. Although the hauling contracts are paid on a per tonne basis all of the Smithers/Telkwa MSW would still need to be picked up from the Smithers and Telkwa Transfer station and dropped off en-route to Knockholt landfill. The only savings therefore would result from reduced fuel costs which would be a savings to the contractors. The fuel cost for a fully loaded semi-truck would range between 51 - 61 km/L depending on the make of the truck (Nylund, NilsOlof, 2005, 18). Calculating the annual cost based on weekly delivery of waste 67 km from Telkwa to Knockholt using the current price for a liter of gas at the pump today (BCGasPrices.com, 2010) there would be an approximate savings of $3794. This estimation is beyond the scope of this paper because it is inaccurate based on possible changes in the hauling schedules, variability of fuel prices, the difference between a fully Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 33 loaded trailer and one hauling 80 percent less waste, and whether any savings would be passed on to the RDBN by the contractors. It does suggest however, that the possibility for fuel savings exist if the amount of waste being hauled was reduced. As well it is unknown whether the contractors would charge more for their contracts to make up for lost economies of scale should the size of their contracts change (True Cost Accounting Study, 2006, 12). Finally, a reduction in fuel costs might be lost to a significant rise in fuel prices in the future. Therefore the total operating costs of disposal were left unchanged in the comparative (Table 11 ). Table 11 - Comparative 2009 of Two Scenarios Comparative 2009 Status Quo After Diverting 80 per cent MSW 4,812 962 1,328 266 5,692 1,138 $49,355 $9,871 Total Operating Costs of Disposal $191,791 $191,791 Total Cost of Disposal $241,144 $201,662 Smithers/Telkwa Total Tonnes of Waste Going to Knockholt Un-Compacted Smithers/Telkwa Waste Compacted Smithers/Telkwa Waste Total Capital Costs of Disposal The difference between total tonnages disposed in each scenano and the differences between the un-compacted and compacted densities is also compared. The analysis shows a 16 percent reduction of capital costs. In addition there is a significant drop in MSW being deposited at the landfill and a significant change in un-compacted and compacted densities. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 34 4.5 Estimated Savings from Extension of the Landfill In the RDBN's 2010 budget, projected costs for their five year financial plan for the Knockholt landfill operations to 2014 gives a potential cost savings for the extension of life of the landfill (Table 12). The projected average savings of the five year period is $174,528 annually. These savings could be projected for every year the landfill life is extended. As well, the RDBN has included in their budget a $150,000 capital expense for 2010 for the development of Phase 2C of Knockholt. As well $30,000 is allocated annually to a reserve for landfill phase development and post landfill closure for the Knockholt landfill. The amounts of these annual allocations to the reserves could also potentially be reduced by the extension of the landfill. Table 12 - Estimated Savings from Extending the Life of the Knockholt Landfill Regional District of Bulkley-Nechako Environmental Services Five Year Financial Plan Estimated Savings From Extending the Life of the Landfill Costs of Landfill Operations 2010 2011 Site Maintenance 5,000 Access Road Main. & Turning Pad Const. 15,000 Knockholt Landfill Line Flushing 2012 2013 2014 5,000 5,000 5,000 5,000 5,000 15,000 5,000 15,000 5,000 Contract Operations 372,000 372,000 372,000 372,000 372,000 Environmental Monitoring Wood Waste Management Total Annual Budget for Landfill Operations 10,000 10,000 10,000 10,000 10,000 5,000 5,000 5,000 5,000 5,000 412,000 407,000 397,000 397,000 407,000 Smithersffelkwa Portion $ 222,480 $ 214,380 $ 219,780 $ 214,380 $ 219,780 Costs After 80% Diversion ofMSW $ 44,496 $ 42,876 $ 43 956 $ 42,876 $ 43,956 Savings After 80"/o Diversion of MSW $ 177984 17S 824 $ 171 S04 s 171504 s s 17S 824 4.6 Analysis of possible risk to the RDBN because of the proposed gasification project at Woodmere Nursery Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 35 In order to assess possible risk to the RDBN from the proposed Woodmere project an analysis was done on the TOPS equipment purchase using the analytical tools NPV and IRR (Tables 13a and 13b). The payback method was tested in the analysis but was considered unreliable because it ignores the time value of money weighting the future values with those of the current values and ignores future cash flows after the payback period (Lasher 2009, 435). The capital and operating costs for the new project were projected which included the cost of the new gasification equipment, start-up and infrastructure costs, and the hiring of a full-time boilermaker. The original estimate on the cost of the TOPS gasification equipment made in October of 2007 by EnEco was $1,677, 708. Inflation at 2.27 percent was factored in (see key assumption 1, Table 4) bringing the cost of the equipment in 2010 to an estimated $1,793,520. As well, Mr. Wong estimated the necessary infrastructure for the project would cost $1.5M. Mr. Wong claimed that the current heating cost for tree seedlings is approximately $200,000 heating 120 days per year. Roughly calculated it was estimated that the heating of the greenhouses for ten months a year would cost $500,000 per year. It was estimated that the TOPS equipment would save the $500,000 in heating costs by using the waste feedstock provided by the RDBN to produce the required energy. A fulltime boilermaker would need to be hired at a salary estimated to be $96,000 per year (International Brotherhood of Boilermakers Canada, 2010, 1). Subtracting the cost of the boilermaker salary from the $500,000 savings in heating costs from using the gasification equipment, leaves $404,000. This was the amount used for the cash flow values in the NPV and IRR formulas. Three scenarios using three different interest rates were Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 36 performed because interest rates are likely to begin rising by the next Bank of Canada prime rate announcement in June of 2010. The current Royal Bank of Canada lending rate of 2.25 percent was used in Scenario One, 5.4 percent (the average rate over the past decade- see Table 6) was used in Scenario Two and 8 percent (the higher rate from 2006 and 2007 - see Table 6) was used for Scenario Three. The gasification equipment is guaranteed for 15 to 20 years, therefore 15 years was used for the time factor in the calculation of the NPV and IRR of the proj ect in each Scenario. Table 13a - NPV & IRR on Woodmere Waste to Energy Project NPV & IRR for Woodmere Nursery Waste to Energy ProJect Scenario One Scenario Two Scenario Three RBC Interest Rate 2.25% as of Feb 1, 2010 Average Interest Rate from 200 12008 5.4% Interest Rate 8% Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Sum ofCF Benefits TOPS Project (3,293,520) 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 6,060,000 NPV = IRR= $1,801,795 9% (3,293,520) 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 6060,000 2,766,480 Excess of CF over Investment TOPS Project = IRR= $788,748 9% (3,293,520) 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 404,000 6,060,000 2,766,480 NPV TOPS Project 2,766,480 NPV = IRR= $164,509 Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 9% 37 Table 13b - Total Equipment and Start-up Costs Cost of TOPS equip. Adjusted for inflation at 2.25% 2007 2008 2009 2010 Start-up costs (infrastructure) Total Equipment & Start-up Costs 500,000 -96,000 404 ,000 $1 ,677,708 $1 ,715,456 $1 ,754,054 $1,793,520 1,500,000 3,293,520 Savings in heating costs Annual Wages for a Boilermaker 96,000 (Calc'd @ $50.00/hr) CHAPTER 5 RESULTS The analysis showed that 55 percent of all waste going to the Knockholt landfill comes from the Smithers and Telkwa Transfer Station. A total of 7383 tonnes or 1.1 tonnes of MSW per capita, is disposed in Knockholt by the residents of Smithers and Telkwa. Compacting of MSW is important to reducing the density in a landfill and to extending its life. A total of 5692 kg/m3 compacted waste is contributed by Smithers and Telkwa. Different types of materials have different compacted densities, therefore some materials use up more landfill space than others. Creating the space for compacted materials is a significant cost of landfilling. The total capital and operating costs for landfilling the MSW contributed by Smithers and Telkwa was approximately $241,144 or $52 per tonne ofMSW disposed in Knockholt landfill. Early recycling initiatives around 1990 had the biggest impact on reducing compacted MSW with a dramatic 30.4 percent drop in the provincial tonnes per capita rates until around 1997 when tonnes per capita leveled off and have been relatively level smce. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 38 A scenario was used to compare the current status quo of MSW that goes from the Smithers and Telkwa Transfer station to Knockholt landfill to a scenario where 80 percent of MSW is deposited at Woodmere, en-route to Knockholt to be gasified in a thermal oxidizing processing unit and used for energy. This part of the analysis showed that fixed operating costs would not change whether there was a drop in tonnage into the landfill or not. It was found that hauling of the MSW was contracted out and therefore any fuel costs or savings were not the districts. A 16 percent savings in capital costs could be realized by diverting the waste. More importantly, the analysis indicated that at the current rate of disposal, Phase Two at the Knockholt landfill is expected to reach its capacity in 2012 with the current status quo disposal rates ofMSW at Knockholt landfill. However the analysis also indicated that with the diversion of 80 percent MSW to be gasified at Woodmere, the life of Phase Two of the landfill could be extended by 45 years (Table 14 on the following page). The estimated annual savings of extending the life of Knockholt as a result of reduced landfill operational costs for 45 years would be as much as $7.8 million dollars. As well, the annual allocations to the reserve account would also be diminished. The extension of Phase 2 of the Knockholt landfill by 45 years is the most significant result of this analysis. The True Cost Accounting Study of 2006 looked at the impact of recycling on the landfill and recycling was found to be minimal in extending the life of the landfill. Thermal Oxidization Processing Systems is an approach that can achieve significant reductions in the amount of MSW requiring disposal thus substantially reducing the life of landfills. Reduction of landfills and extending the life of Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 39 existing landfills is very beneficial to the natural environment and conserves natural resources for future generations. For the purpose of assessing risk to RDBN a rough analysis of the Woodmere project was also performed using the analytical tools NPV and IRR. It was reasonable to expect there would be potential benefits to Woodmere. Scenario one results look very good showing an NPV of $1,801,795 dollars, an IRR of nine percent, and an excess of cash flow over the initial project investment of$2,766,480. Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 40 Table 14- Extending the Life of Phase 2 at Knockholt Landfill Current Rate of Disposa l 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 Tonnes of MSW going to the Knockholt Landfill Annually 8,536 8,754 8,977 9,206 9,441 9,681 9,928 End of Phase 2 Rate of Di sposal with 80 % reduction of MSW from Smithers & Telkwa 2009 2010 2011 2012 2013 2014 Tonnes of MSW going to the Knockholt Landfill Annually 4,899 4,963 5,027 5,093 5,159 5,226 5,294 10,181 10,441 2015 2016 2017 10,707 2018 5,363 5,432 5,503 10,980 2019 5,574 11,260 11,547 11,842 12,144 12,453 2020 2021 5,647 5,720 5,795 5,870 5,946 12,771 13,097 13,431 13,773 14,124 14,484 14,854 15,233 15,621 16,019 16,428 16,847 17,276 17,717 18,169 18,632 19,107 19,594 20,094 20,606 21,132 21,671 22,223 2048 2049 2050 2051 2052 22,790 2053 2054 25,848 23,371 23,967 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 6,024 6,102 6,181 6,262 6,343 6,425 6,509 6,594 6,679 6,766 6,854 6,943 7,034 7,125 7,218 7,311 7,406 7,503 7,600 7,699 7,799 7,901 8,003 8,107 8,213 8,319 2051 2052 8,428 8,648 26,507 2053 2054 2055 27,183 2055 8,874 2056 27,876 2056 8,990 2057 28,587 2057 9,107 24,578 25,205 8,537 8,761 End of Phase 2 Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 41 This would seem to be a very good return on investment in the TOPS project; however the reader is reminded that this is also calculated at today's historically low interest rates. Scenario Two results using a higher interest rate of 5.4 percent resulted in a lower NPV of $788,748 than Scenario One and the same IRR of nine percent and the same excess cash flow over initial project investment as Scenario One. Scenario Three results using an interest rate of 8 percent produced the lowest NPV of $164,509 also with a nine percent IRR and same excess cash flow over initial project investment as in Scenario One and Two. The benefits would appear to be there for Woodmere but become increasingly smaller as interest rates continue to rise. The risk to the RDBN would be entering into a contract with Woodmere and having them back out of it should the project prove to be unprofitable for them. If the RDBN based its MSW management planning on an extended life of the landfill and if a failure by Woodmere to meet its obligations to take 80 per cent of the Smithers/Telkwa waste, it could require additional planning and possibly new zoning and bylaw issues to expand the landfill to receive the MSW that was previously destined for Woodmere. Additionally, the matter of tipping fees could become an issue. IfWoodmere decided to charge the RDBN tipping fees for taking the feedstock this could be an added cost to the RDBN and an additional revenue stream for Woodmere. However the corollary of that would be Woodmere paying the RDBN for MSW for feedstock which could provide an additional revenue stream to the RDBN but would be a cost that could make the Woodmere project less profitable. Another possible risk would be if the hauling contractor charges more per tonne to make up for lost economies of scale should the volume of MSW be largely reduced. Finally, there are implications that when the long-term hauling contract expires, there could be Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 42 serious cost increases as a result of rising oil prices. One possibility for consideration by the RDBN would be to purchase thermal oxidization processing equipment themselves. This option would be a subject for an additional study to analyze whether the cost of the equipment would justify the future benefits. A possible benefit to the environment which is worth mentioning but is not within the scope of this paper is the reduction of GHG emissions. Methane is a greenhouse gas which is 21 times more potent than carbon dioxide, and is produced by anaerobic decomposition of waste in landfills (U.S. Environmental Protection Agency, 2010, 1). By reducing the amount of waste going into the landfill, methane gases will also be reduced. As well an estimation of fuel costs suggested a possible savings if the amount ofMSW being hauled could be reduced. Other potential benefits would include potential revenue streams for the RDBN from trading carbon credits realized by any carbon offsetting, possible revenue streams from selling MSW, and the possibility of selling excess energy to BC Hydro, as the landfill in Nanaimo is doing, should the RDBN purchase its own TOPS equipment. These possible benefits are beyond the scope of this paper and could be a subject for further study. CHAPTER 6 CONCLUSION As the world economy emerges from the current recession, interest rates and energy prices may once again begin to rise. Along with a growing demand for the world's fossil fuels comes a growing volume of solid waste being generated on a global level. As landfills reach capacity and new landfills must be found to manage the growing Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 43 volume of waste, new and innovative ways of reducing waste, reducing the number of landfills, and extending the life of existing landfills becomes very important for conserving natural resources for future generations, and for protection of the natural environment. Finding new innovative green technologies that can reduce the amount of MSW going into landfills and new ways of managing MSW has a growing importance as the problems of global warming become more evident. One of many emerging new technologies that early adopters have already begun to use involves waste-to-energy systems. Whether they are capturing the methane gases in landfills or gasifying waste materials, they can reduce MSW and convert it into a useable energy source. The Regional District of Nanaimo is already successfully producing energy from their landfill which they are selling to BC Hydro. Several wasteto-energy systems already exist in Europe and their values are beginning to be realized in North America. In the earlier study done by the Recycling Council of British Columbia, it was shown that recycling initially impacted the reduction of MSW going into the landfills in British Columbia but leveled off and there has not been a significant reduction of MSW since 1997. That study suggested new approaches would have to be found if municipalities were to achieve significant reductions of MSW. The True Cost Accounting Study done for the RDBN was done with a focus on possible cost savings from recycling. That study found that recycling had a small impact of on the life of the landfill but that the costs of recycling outweighed the savings from recycling. 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"MVR- Mullverwertung Rugenberger Damm (A Vattenfall Company)." 2005. http://www.wrsi.info/Related%20Websites.html (accessed Feb 19, 2010) List of Tables: Table 1 Knockholt Landfill Phases Table 2 Knockholt Waste Flows Table 3 Operational Route for Transporting MSW from Smithers and Telkwa to Knockholt Landfill Table 4 Inflation Rates Table 5 Population Growth ofKnockholt Landfill Communities Table 6 Interest Rates Table 7a 2005 MSW Flows Knockholt Landfill Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 50 Table 7b 2005 Percentage ofMSW Going to Knockholt Landfill Table 8 Un-Compacted and Compacted Densities of Smithers and Telkwa MSW 2009 Table 9 Total Cost per Tonne Disposed Table 10 Provincial Tonnes per Capita Disposed 1990-2002 Table 11 Comparative 2009 of Two Scenarios Table 12 - Estimated Savings from Extending the Life of the Knockholt Landfill Table 13a NPV and IRR on Woodmere Waste to Energy Project Table 13a Total Equipment and Start-up Costs Table 14 Extending the Life ofPhase 2 at Knockholt Landfill Appendices: Appendix 1 - Sub-Boreal Zone Appendix l Sub-Boreal Zone Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 51 Appendix 2- Regional District of Bulkley-Nechako ~ ___ : RD Electoral Area Bdy Municipal Boundary As of January 1, 1996 Produced by RDBI Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf 52 Appendix 3 Solid Waste Management Facilities Locations ld.tl' OF AC11J1E SOLID JJC4STE FAClLIIT LOCATIONS ··. ·,, ~ ~.. . ~ I"A .... ..._ ' --. ·' ut!9Cl T ramlU' Statiom l - Smidu!rs/I'elkw.o 2-Gnnisle 3-Bumsl..ake 4- Southside 5 -Area "D" (Fnser Lue Kuru) 6- v andedwof 7- Fort St. JAmeS 8- Bermm Lake ~ R.egimW Distrid of Fraser Fort--George Loadlilb A - Knockbolt B Oo=view C-MmsanCR!Ok Feasibility Analysis on Diverting Regional Waste To Local Business for Waste to Energy Project Pamela Graf