Despite Urban Migration, Scale Elusive for MSW-to-Fuels

By Mackinnon Lawrence

There are few topics that get the clean technology sector excited less than trash. Meanwhile, the news is littered with stories discussing municipal areas from Zimbabwe to Los Angeles and Mumbai to Moscow struggling to implement long-term strategies for dealing with municipal solid waste (MSW). Even as intellectual capital is thrown at innovative concepts like smart cities, waste falls near the bottom as a priority for dealing with the impact of urban migration over the coming century.

Urbanization is one of the defining characteristics of the modern era. Today, there are more than 400 cities with at least one million residents compared to just 12 in 1900. By 2050, it is estimated that 70 percent of the global population will be living in urban centers. By 2025, the UN projects that there will be 37 so-called megacities — defined as those cities with more than 10 million inhabitants.
One of the defining measures of how far a city has advanced is its ability to distance its residents from the trash they generate. A report published by the World Bank earlier this year, meanwhile, underscores the fact that MSW represents both a significant environmental and public health challenge when left unmanaged.

The challenges of MSW: aggregation to tipping fees

The challenge of MSW management is made more acute by the pace of urbanization currently taking place in much of the developing world. As cities are sometimes described as having an “urban metabolism”— akin to living entities that consume energy, food, water, and other raw materials while generating waste in the process ñ this digestive system can shut down if the development of waste collection and disposal infrastructure fails keep pace with population growth. Even if collected, in cases where the cost of disposal in remote landfills becomes prohibitively expensive, city managers must contend with the difficult challenge of finding alternative means for dealing with their trash.

As a feedstock source for producing biofuels, on paper, the MSW opportunity is enormous. Looking at global urbanization trends, per capita generation rates, and waste processing infrastructure, Pike Research estimates that nearly 2 billion tons of MSW were generated worldwide in 2012. This number is expected to increase 50 percent by 2022, reaching nearly 3 billion tons by 2022. Offering many advantages over agricultural and forest-based biomass feedstocks for biofuels production — aggregation near population centers, year-around generation, and perhaps most importantly, affordability — municipal areas have emerged in the last few years as the next biofuels frontier.

Although highly underutilized worldwide, significant barriers to the use of MSW as a biofuels feedstock remain. In mature waste recovery markets like the United States and Europe, a heavy reliance on landfilling has made it difficult for project developers outside the traditional waste management industry to penetrate the value chain. Low tipping fees throughout much of the United States also frustrate efforts to develop projects outside of the densely populated urban areas along the coasts.

Waste collection and removal systems throughout much of the developing world, meanwhile, remain wholly inadequate for the urban expansion taking place. Throughout Asia Pacific and Africa where such infrastructure is lacking, at least 90 percent of the waste generated is often dumped in open pits or burned. The absence of established waste collection systems undermines one of MSW’s key potential advantages: built-in aggregation.

Waste composition

Waste composition remains another key barrier to MSW utilization for biofuels. In high income economies, MSW is composed of a higher share of inorganics such as plastics and other processed consumer materials in the waste stream. In developing countries, waste is typically composed of a higher share of organics, which offers more lucrative opportunities for waste conversion. Either way, variation in composition means that no single conversion technology is applicable across all global regions, limiting the market potential for many emerging technologies.

These challenges aside, momentum has begun to coalesce around MSW as a feedstock source for biofuels with promising early success. To date, Europe has led the way in facilitating the use of MSW for advanced energy applications. With regulatory initiatives aimed at waste recovery and landfill avoidance, policy has played a central role in driving MSW combustion projects within the European Union. Although projects in the U.S. target power, ethanol production and aviation biofuels, without a more stringent regulatory overlay, waste management remains mostly stuck in a business-as-usual track with a heavy reliance on landfilling.

Ultimately, the MSW opportunity remains greatest in Asia Pacific and Africa, which together account for more than 70 percent of the world’s population. 24 of the 37 anticipated megacities will be scattered throughout these regions. Rising levels of affluence, meanwhile, will contribute significantly to growing levels of MSW generation in high fuel demand municipalities from Delhi, Shanghai, and Lagos. As with most clean technologies, China remains the biggest prize.

Modest growth

Even as projects like INEOS New Planet Energyís Vero Beach facility and Fulcrum BioEnergyís Sierra Biofuels Plant move forward, MSW-to-biofuels commercialization is likely to grow moderately over the next decade. Cost barriers and waste access challenges suggest that MSW’s share of biofuels production will be confined to 1-3 percent of overall global production by 2021. An expansion of waste management infrastructure throughout the developing world, however, could drive MSW’s share significantly higher.

Mackinnon Lawrence is a Senior Research Analyst at Pike Research, A Part of Navigant. He contributes to the firmís Smart Energy practice, with a focus on biofuels and emerging renewables.