Generating revenue from landfill

Given that landfills are one of the biggest potential emitters of greenhouse gases, SEMF*’s sustainability expert, Dr Gareth Forde, looks at how local government and landfill operators can reduce their emissions while at the same time generating revenue.

Landfills are not only a huge environmental liability but also a massive greenhouse gas liability.

A report by the independent environmental resources group, the Resource Recovery Collaboration, has shown that if action is not taken to stop the greenhouse emissions from landfills, up to 85% of Australia’s carbon budget in 2050 will be accounted for by fugitive emissions from landfills.

For landfill operators, methane is the key offender.

Because all organic waste sent to landfills is eventually converted into methane - which absorbs 21 times more heat per molecule than carbon dioxide - this makes it a much more dangerous greenhouse gas.

Landfill operators are now under growing pressure to manage their methane levels with the introduction of the National Greenhouse and Energy Reporting System (NGERS) and the proposed Carbon Pollution Reduction Scheme (CPRS), which is planned to start pricing carbon from 1 July 2011.

Under the NGERS legislation, by 31 October, landfill facilities emitting over 25 kilotonnes of CO₂ equivalent per annum (25 kt CO₂e pa) must report on emissions produced between 1 July 2008 - 30 June 2009. If they don’t they will be liable for fines ranging from $11,000 to $220,000 per day for non-compliance.

Greg Combet, Parliamentary Secretary for Climate Change, announced on 14 May that liability for landfill emissions under the CPRS will now only apply to emissions that come from waste that is deposited after the commencement of the scheme on 1 July 2011.

Those landfills in the top 5% of landfills by size (over 100 kilotonnes of waste per annum) could break through the emissions reporting and trading threshold (25 kt CO₂e pa) within the first six years of operation.

Things will be more difficult for landfills accepting municipal waste because this waste will result in much higher emission levels than other forms of waste as it is composed of material with the highest degradable organic content and could break through the NGERS reporting threshold much earlier.

When the proposed CPRS starts pricing carbon (from 1 July 2011 at $10 per tonne - with full trading starting on 1 July 2012) emitters will be under enormous financial duress to reduce their emissions.

Figure 1: Results of modelling based on NGERS Technical Guideline v1.1 developed by SEMF compares CO2 emissions for landfills accepting 55 and 100 kilotonnes of waste per annum for 10 years. The modelling shows that the 55-kilotonne landfill will break through the threshold in the 11th year while the 100 kilotonne facility will break through the threshold after only six years and will need to report on emissions (and hence carbon trade) for 20 years. That is, the 100-kilotonne facility could have financial obligations for 10 years after it is closed..

At $25 per tonne of carbon - which is quite possible from mid-2012 onwards - those receiving 55 kilotonnes per annum could have a carbon liability of over $626,000 after six years of receiving waste while for 100,000 tonne pa facilities, the carbon liability would be over $1.13 million after 10 years.

Reducing methane emissions

For those looking to comply with the proposed CPRS scheme, the most expensive option will be to purchase carbon credits as a means of offsetting emissions as this will mean putting aside millions in cash reserves.

However, there are several much more cost-effective options available to major emitters preferring to reduce methane emissions on site. These include:

• Capturing and flaring: Flaring is a genuine solution in that it reduces carbon risk by over 98% and also gets rid of odour. However, it is a cost centre and does not generate revenue because all of the energy from burning the methane is lost to the atmosphere.
• Capturing and selling the methane: A natural gas supplier may be willing to purchase your methane at market rates. However, you will need to scrub the methane and ensure that it meets the quality requirements of the natural gas supplier. This could be a bigger headache than it is worth.
• Making energy: Combust your methane in a boiler or install co-generation or tri-generation systems. These will make money from your methane, save you energy costs and give you a secure and on-site electricity supply while also helping the environment. The creation of Renewable Energy Credits (RECs) is an additional revenue stream for this option.

Generating revenue

A co-generation system is a bit like a mini power station which generates electricity but with the added advantage that instead of releasing waste heat into the atmosphere, this heat is used to produce steam or hot water. Tri-generation systems are basically ‘cogen’ systems except that they take the process another step further by also using the heat to generate cooling.

To give you an idea of just how much revenue can be generated via these systems, SEMF constructed an economic model for a landfill producing approximately 2.0 kilotonnes of methane per annum (the amount of methane generated from a 100,000-tonne waste per annum facility after 10 years of receiving waste).

If this methane was sold as natural gas, it would fetch a market value of about $470,000.

However, if the same amount of methane was used to fuel a co-generation facility, this would generate electricity (valued at $1.08 million) and heat ($203,000). The electricity could be used in house or sold into the national grid while excess heat could be sold to neighbouring businesses or used in other processes. For example, a facility producing excess heat has found that it generates more revenue by using excess heat to produce ice (via absorption chillers) compared to its core business.

In terms of payback, for a capital outlay of around $7.3 million for a completely installed co-generation system capable of burning 2.0 kilotonnes of methane, the simple payback would be around six years (discounted payback period of just over seven years).

However, if carbon emissions are priced at $25 per tonne (which is likely under the CPRS from mid-2012 onwards) the total revenue plus cost savings would result in a simple payback period of around four years.

For those opting to install a cogen or trigen system, you will need to:

1. Have your site’s carbon emissions calculated to ensure that the system is large enough to be economically viable.
2. Ensure you are fully informed about capital outlay, discounted payback periods, net present values and carbon implications for all of the options.
3. Have the facility designed, constructed, installed and operated correctly to maximise methane capture and energy generation.

* SEMF is a multi-disciplinary consulting engineering, scientific and management firm that offers a broad range of services throughout Australia.