Post on 26-Jul-2020
Andrew Clinton Supply Chain and Manufacturing Operations Specialist Leader
Deloitte Consulting LLP
Introduction
Roy Johnston Director
Corporate Venturing
Waste Management, Inc.
Waste to Energy in the Renewable and Alternative Energy Space
©2014 Waste Management
September 2014
Waste-to-Energy: Potential in the Renewable and Alternative Energy Space?
Presented to the Deloitte Alternative Energy Seminar
©2014 Waste Management
Context
©2014 Waste Management
0
50
100
150
200
250
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Tons (Millions)
MSW in the United States: Generation and Disposal, 1960-2010
Landfill Diversion WTE
Macro trends in the generation and disposition of waste …
1 2
3
16M tons (10%)
85 M
tons
(34%)
1 Diversion (recycling, composting, conversion) is up >400% since 1985, while landfill volumes are down 2%.
2 Landfill volume declined 4% between 2005-2010.
3 Total waste generation has plateaued for the first time since 1960.
Source: Environmental Protection Agency
©2014 Waste Management
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Per Capita MSW generation, lbs/person/day
… driven primarily by sustainability demands from customers and regulators and developing technologies
Sustainability / Efficiency 1
Technology 2
• Sort
• Recover
• Sell recyclables
• Dual stream
material
recovery
facilities
• Single stream
material
recovery
facilities
Generation 1 Generation 2
• Pre-sorted vs.
“no sort”
• Convert
• Sell new
product
• Enabling
technologies:
gasification,
pyrolysis etc.
At 4.43 lbs/person/day,
per capita MSW is
below 1990 levels
“Generation 2” technologies
often have alternative energy
potential
©2014 Waste Management
WM is North America’s leading environmental service provider
$13.9B REVENUE
$1.3B FREE CASH FLOW
TOP 10% OF S&P
DIVIDEND-PAYING
COMPANIES
$1.3B CAPITAL
EXPENDITURES
2013
Waste-to-Energy in the Renewable Energy Space
©2014 Waste Management
1 Energy Potential
Technolo
gy R
isk
Now 3-5 Years
GASIFICATION
SYNGAS/
BIOGAS
TO ETHANOL
ENGINEERED FUEL
COMPOST
>7 Years
PYROLYSIS
ANAEROBIC
DIGESTION
CELLULOSE
TO INDUSTRIAL
SUGARS
SYNGAS TO
CHEMICALS
SYNGAS TO DIESEL
2 Technologies
3 Obstacles and opportunities
Feedsto
ck
supplier
1
• Feedstock: right amount, time,
location; consistency of supply etc.
• Commercial supply agreements help
to underwrite project economics
Technical
partner
• Partner with deep technical expertise
• Technology: flexible, tolerable,
optionality
• Experience with similar systems
2
Off-
take
partner
3 • Partner with intimate knowledge of
product market (price drivers, optimal
quantity, processing, logistics,
• Commercial off-take arrangements to
remove some risk from project
Issues to consider …
• Questions
of
ownership
and
control
• Exclusivity
/
competiti
on
• Ownership
of
intellectu
al
property
• Preparatio
n for
future
financings
• Manageme
nt
decisions
©2014 Waste Management
Many different materials make up the waste (resource) stream …. 1
©2014 Waste Management
Material Tons (Thousands)
Energy
Content (Quadrillion BTU)
Paper 68,620 0.89
Glass 11,570 0.00
Metals 22,380 0.00
Plastics 31,750 0.82
Rubber &
Leather
7,530 0.17
Textiles 14,330 0.20
Wood 15,820 0.16
Food Waste 36,430 0.19
Yard
Trimmings
33,960 0.20
Misc.
Inorganic
3,900 0.00
Other 4,600 0.00
Total 250,890 2.64
0.89
0.82
0.17
0.2
0.16
0.19
0.2
0
0.5
1
1.5
2
2.5
3
Heat Content, by material type
YardTrimmings
Food Waste
Wood
Textiles
Rubber &Leather
Plastics
Paper &Paperboard
Quadrillion BTU 2.64
… each with a different energy potential and collectively equal to about 2.6 quadrillion BTUs or “quads”
1
©2014 Waste Management
Perspective: 1 BTU is about the energy on the tip of a match; 1 quad BTUs of energy is about 50 million tons of coal …
1
BTU = Energy Content*
1 BTU = 0.25 food calories, or about the
energy on the tip of a match
1,250 BTU = 1 x peanut butter and jelly sandwich
3,412 BTU = 1 KWH of electricity
125,000 BTU = one gallon of gasoline
20 million BTU = one short ton of coal (2,000 lbs)
1 quad BTU = 50 million tons of coal
• Approximately, of course
Source: Thank you to Peter J Wilcoxen, Associate Professor of Economics and Public Administration at Syracuse University for these handy comparisons: http://wilcoxen.maxwell.insightworks.com/pages/44.html
©2014 Waste Management
35.1
26.6
18.1
9.3
8.3
2.64
0
20
40
60
80
100
120
Consumption Waste Potential
US Energy Consumption, 2013
NuclearElectricPower
RenewableEnergy
Coal
NaturalGas
Petroleum
Sources: EPA, EIA, Waste Management
… so, the energy potential in waste is ~3% of total US energy consumption or ~25-30% of current renewable energy consumption
0.48
2.64
0
2
4
6
8
10
12
Consumption,2013
With WastePotential
US Renewable Energy Consumption, 2013
Waste
Bio-Fuels
Wood
Wind
Solar/PV
Geo-Thermal
9.3
1
Quadrillion BTU
Quadrillion BTU
©2014 Waste Management
©2014 Waste Management
Some of this energy potential is realized through ~700 bioenergy projects (primarily combustion, “FOG” processing, anaerobic digestion)
Source: Bloomberg New Energy Finance Database
2
Category
Technology
Physical
Engineered Feedstock / Fuel
Maceration and decontamination
Mechanical Biological Treatment (MBT)
Mechanical Heat Treatment (MHT)
Biological
Chemical
Composting
Anaerobic Digestion
Fermentation
Hydrolysis
Hydrotreating
Transesterification
Thermo-
chemical
Combustion
Gasification
Pyrolysis
Torrefaction
Smelting
(1) Sources: Bloomberg New Energy Finance, Waste Management, includes pilot & demo plants, as of end 2013
Estimated Projects– Waste
as Feedstock (US/Canada)1
10-20
10-20
5-10
5-10
3,500-4,500
>30
0
5-10
1-5
>25
>300
5-10
5-10
10-20
2-4
What technologies exist to extract this energy value? 2
©2014 Waste Management
Technolo
gy R
isk
Now 3-5 Years
GASIFICATION
SYNGAS/
BIOGAS
TO ETHANOL
ENGINEERED FUEL
COMPOST
>7 Years
PYROLYSIS
ANAEROBIC
DIGESTION
CELLULOSE
TO INDUSTRIAL
SUGARS
SYNGAS TO
CHEMICALS
SYNGAS TO
DIESEL
Technologies continue to develop … 2
©2014 Waste Management
Scale in
Proximity to waste streams
Technical scale up risks
Scale out
Variability - pricing
Variability - regulations
Technology risks - efficacy
Financial risks
Proximity to off-take customers
… but creating new supply chains and business models (rather than pure technical efficacy) are the main challenges
Feedstock
management &
preprocessing
Primary
conversion
technology
Intermediate
product cleanup
Conversion to
final product
New Supply Chain
Commodity risk
3
In our experience, technical efficacy has rarely been the main obstacle to MSW to biofuels
commercialization. Rather, supply chain complexity, scale imbalance, regulatory and
commodity risks are proving important issues.
©2014 Waste Management
Diesel
Waste stream Sorting /
processing Outputs
Primary
Conversion
Conversion to
products
Ethanol
Solid Fuel
Chemicals
Syngas
Homogenous
bioslurry
Pyrolysis
Gasification
Mechanical
separation
Biological
fermentation
FT Gas to liquids
Shred and
dry material
Methane capture
Sort out and
shred plastics Industrial Waste
Medical Waste
Hazardous Waste
Organics
Synthetic crude
MSW
Electricity
Compost and
fertilizers
Auger and
water infusion
Composting
Biogas Anaerobic
digestion
Technologies Technologies Technologies Technologies
Waste conversion pathways to value are complicated 3
©2014 Waste Management
Capital flows reflect these challenges …
$0
$2
$4
$6
$8
$10
$12
$14
$16
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
$B
Worldwide biofuels funding, disclosed
Source: Bloomberg New Energy Finance: Disclosed funding of worldwide biofuels projects, 2000-2013
After a surge in
activity, capital has
retrenched and
financing for longer
commercialization
horizons has become
more costly and
difficult to obtain.
3
©2014 Waste Management
©2014 Waste Management
Lessons learned from “steel in the ground”
3
©2014 Waste Management
Opportunity: good partners are those with important, long-term strategic interests in the project over and above investment return
Feedstock
supplier
1 • Feedstock: right amount, time, location;
consistency of supply etc.
• Commercial supply agreements help to
underwrite project economics
Technical partner • Partner with deep technical expertise
• Technology: flexible, tolerable, optionality
• Experience with similar systems
2
Off-take partner 3 • Partner with intimate knowledge of product
market (price drivers, optimal quantity,
processing, logistics,
• Commercial off-take arrangements to remove
some risk from project
Issues to consider …
• Questions of ownership
and control
• Exclusivity / competition
• Ownership of intellectual
property
• Preparation for future
financings
• Management decisions
3
©2014 Waste Management
• Sorting and recovery: Generation 1 technologies sort the waste stream
and recover components of value.
• Generation 1 widely deployed: ~650 MRFs in the US; older dual-stream
systems are being replaced by automated single-stream facilities with
higher yields.
• Organics are important in Generation 1: Cities are trending towards food
and yard waste bans, pushing organics out of landfills into composting and
anaerobic digestion. WM has 33 organics processing facilities.
• Conversion: Generation 2 technologies focus on the chemical conversion of
waste to other products (principally fuel).
• Development status: Generation 2 technologies are in development, but not
widely deployed yet (e.g., Enerkem, Fulcrum, Agilyx, etc.).
• Fracturing continues: Some Generation 2 technologies will continue the
trend of fracturing the waste stream and thus tend to require pre-sorting
(Generation 1 technology) for optimal use.
Generation 1
Technology
Generation 2
Technology
MSW to biofuel Gen 2 technologies: feedstock supply is important: pre-
sort, recover recyclables, or take unsorted MSW?
How prevalent will Generation 2 technologies become, particularly MSW to biofuels or other energy feedstock?
3
©2014 Waste Management
1 Energy Potential
Technolo
gy R
isk
Now 3-5 Years
GASIFICATION
SYNGAS/
BIOGAS
TO ETHANOL
ENGINEERED FUEL
COMPOST
>7 Years
PYROLYSIS
ANAEROBIC
DIGESTION
CELLULOSE
TO INDUSTRIAL
SUGARS
SYNGAS TO
CHEMICALS
SYNGAS TO DIESEL
2 Technologies
3 Obstacles and opportunities
• Organics
• E-waste
• Recycling/re
covery
• New =
Annual WM MSW landfill volumes have fallen 30.4M tons (-36%) since 2005. The EPA estimates total MSW generated fell 4M tons (-
0.2%) and landfilled MSW decreased 8M tons (-5.6%) during 2005-2011
Waste stream Value chain Business model Information
The composition and
volume of the waste
stream will continue to
change
Landfilling as the end
of the traditional
waste value chain is
under pressure
New business models
will begin to replace
the traditional collect
& dispose model
• Processing
• Manufacturin
g
• Conversion
• System
orchestratio
n / new
supply chain
• Non-
traditional
alliances
• Closed loop
• Value-added
Themes
Potential Trends
What we get… What we do… How we do it… What we know…
Knowledge and
communication will be
the key to success and
sustained advantage
• Data &
analytics
• Customer
needs/dema
nds
• Marketing
needs/dema
nds
Context
Summary