Making Silk Purses from Sows Ears: Converting Waste Into Energy and Biofuels, Pt. II

by Tim Sklar
Special to The Digest

Part I of this story is available here.

Major Claims Made for Using FastOx Gasifier Technology

The following is a list of ten claims that are believed to be the most significant. These claims have either been directly expressed by Sierra Energy in materials used in this case study, or they have been implied.

1 FastOx gasifiers can be sized to match the waste streams now being collected by waste management authorities serving smaller communities. And the life of existing landfills could probably be extended if wastes are diverted to WTE and WTHVP plants using FastOx gasifiers. By implication, this offers the possibly of reducing or eliminating costs associated with landfill operations.

2 Based on what is being implied by Sierra as to capital costs of FastOx gasifiers, overall capital costs of WTE plants using FastOx gasifiers are expected to be lower than competing WTE systems.

3 FastOx gasifiers may be able to process mixed waste streams without pre-processing, and at the same or less cost as when using landfills.

4 WTV plants using FastOx gasifiers could probably be used to convert waste already in landfills thereby adding capacity and reducing the need and cost for additional landfill development.

5 Diverting wastes now being disposed of in landfills to WTV plants using FastOx gasifiers offers plant owners and by implication, waste management authorities, the potential for obtaining revenues for providing cheap power to the grid and/or from sale of high value products.

6 WTVplants using FastOx gasifiers produce biofuels cheaply, as feedstock costs are expected to be minimal, being derived for MSW and other combustible wastes.

7 The market prices for ethanol and other high value products a WTV plant can produce, appear to offer WTV plant owners unusually high margins.

8 Likewise power generated from syngas produced using FastOx gasifiers is expected to be competitive even if low feed-in-tariffs are obtained.

9 All by-products produced by WTV plants using FastOx gasifiers are marketable.

10 WTV plants using FastOx gasifiers are environmentally friendly, which will facilitate obtaining locations for them and little if any process waste is generated that has to be disposed of.

A Critical Analysis of Sierra Energy’s Claims

Re: Claim 1 on Sizing

Sierra Energy announced that a 250 tpd FastOx gasifier can readily be produced implying that this is the size that they plan to market to the hundreds of smaller communities that are unable to support larger WTV plants. Based on metrics for similar gasifiers a 250 tpd FastOxTM gasifier can would probably be able to process ~86,000 tons per year of MSW. Even though such a waste stream may be typical of the amount of waste that is now being collected by numerous waste management authorities serving smaller communities, there are other considerations that have to be taken into account. Sierra Energy needs to look at the realities of how waste is managed today and adapt what it is trying to do to what is current practice.

For example, the way MSW is waste collected today is primarily through waste management contractors or publicly owned waste collection authorities, using fleets of packer trucks These trucks have 7 ton payloads and must make short trips to unload and reload to be economically viable. This means that round trips of more than 35 miles are more than likely to be uneconomic.

Another reality is that although the number of landfills is declining, the ones that are being operated have more capacity and are designed to operate more efficiently and in a more environmentally compliant manner. As a consequence a network of transfer stations has been developed to serve these regional facilities. Transfer stations are now being used consolidate waste collected from packer trucks operating locally onto trucks that have three times the payload to serve regional landfills that require round trip distances of 35 miles or more.

According to EPA, handling and transport savings amounting to as much as $10 per ton are now being realized when a network of transfer stations is used to support larger waste management facilities such as landfills and incinerators. In rural area, rural transfer stations of simple design and low cost, are used to consolidate waste collection for movement to more distant facilities,

Even if WTV plants can be built to process 250 tpd of MSW and compete with efficiencies of WTHVP plants with twice that capacity, it may not be enough, if the savings offered by using transfer stations to consolidated loads to more distant larger facilities are factored in. If Sierra Energy ignores this, it will come to light when they offer to build 250 tpd WTHVP plants to service smaller communities and they may find they have no takers.

Re: Claim 2 on Capital Costs

Sierra Energy has implied that they believe the overall capital costs of WTE and HVP plants using FastOxTM gasifiers are expected to be lower than those from competing processes that use high-temperature gasifiers. Sierra Energy also point out that those competitors that use lower cost low-temperature gasifiers, “are limited in feedstock versatility and efficiency” and are not comparable. However, more substantiation will be needed.

Re: Claim 3 on Mixed Waste Streams

Sierra Energy would have a significant advantage over its competition if its FastOxTM gasifiers are able to process mixed waste streams, without pre-processing at the same or less cost as when using landfills. But how compelling an advantage this really is depends on a) how much pre-processing specific landfill operations are now performing and b) how much would be saved if pre-processing storage and handling operations no longer have to be performed.

Another consideration has to do with the amount of pre-processing that is done at the WTE & HVP plants that are expected to receive waste streams that are not pre-processed and are using Refuse Derived Fuel (“RDF”) technology and whether there are expected to be significant savings if pre-processing costs could be eliminated by converting to FastOxTM gasifiers.

Re: Claim 4 on Landfills

The claim that “FastOxTM gasifiers could probably be used to convert waste already in landfills is only partially correct. The claim that (widespread use of WTE & HVP plants using FastOxTM gasifiers} would add capacity and reduce the need and cost for additional landfill development is at best, unsupported. And this claim may not hold true in a majority of jurisdictions that operate landfills. Further, the implied claim that by sending mixed waste streams without pre-processing to WTE & HVP plants using FastOxTM gasifiers would eliminate the need for landfills is an over-reach.

As a point of fact, that in addition to collecting solid wastes (MSW), landfills also collect moisture laden materials and hard to dispose of wastes, some of which is non-combustible and some, non-recyclable. For the most part, these wastes still end up in landfills and would in all likelihood, have to be removed from the mixed waste streams that FastOxTM gasifiers use.

And adding capacity to existing landfills by recovering wastes from them and sending them to WTE & HVP plants using FastOxTM gasifiers instead, or diverting landfill waste streams to such facilities to avoid having to landfill capacity, are false choices.

In a recent fact sheet published by the EPA titled “Facts About America’s Landfills”, national landfill capacity in the US is expected to be adequate for the foreseeable future, even though the number and capacity of WTE & HVP plants remain unchanged. Here are some of the pertinent findings based on the following table:

	Landfill Statistics
	Source: EPA Fact Sheet			% Change
(MSW in millions of Tons)	1960	1980	2000	2005	2005:2000
MSW Generated	88.1	151.6	237.6	245.7	0.68%
MSW Recycled	5.6	14.5	29	52.7	16.34%
MSW Composted	neg.	neg.	16.5	20.6	4.97%
MSW Combusted	0	2.7	33.7	33.4	-0.18%
MSW to Landfills	82.5	134.4	134.8	133.3	-0.22%
MSW/#/Person	2.51	3.24	2.62	2.46	-1.22%
Population (mm)	180	227	281	296	1.07%

From 1960 to 2005, MSW generated in the US has increased nearly threefold but the annual rate of increase based on years 2005 and 2000 was lesss than 1%.

MSW discarded to landfills is following a similar pattern, with little change expected over the 133.3 million tons per year reported in 2005.

This can be attributed in part to the fact that the MSW that is being recycled and composted has increased significantly and is expected to increase in the future as well.

Excess capacity in landfills is also being caused by a decrease in the average amount of trash per person being generated to ~2.5 lbs, which has offset modest increases in population in the US.

It should be noted that MSW being combusted seems to have hit a plateau, as use of incinerators has declined due to environmental constraint. And the low growth in the number of WTV plants has not yet changed this pattern. Further the outlook for obtaining adequate feed-in-tariffs for WTV produced power is a pessimistic one, based predictions of abundant supplies of cheap natural gas that is expected to be used by power utilities in the future.

And according to EPA and others, the number of landfills has declined but the landfill capacity “has increased enormously”. This is due to such factors as landfill consolidation, increased recovery of materials being recycled, and through more widespread use advanced landfill technology and innovative practices, that have “increased tonnage to volume used by 33%” by “burying trash more tightly”. Another factor reported by EPA, is the increased amount of waste that is being shipped to China and other export markets, which could reduce the need for landfill capacity in the Us by as much as 4%.

Developers of WTV plants need to be aware of these realities and the fact that three giant waste management firms who collect more than half of the nations trash who own and/or operate most of the country’s large landfills. Developers and technology providers must also be prepared to win over these three giants, if they are planning on having them divert their landfill waste to a WTV plant that is to be developed.

The bottom line of all of this discussion on landfill capacity is that future needs for landfill capacity ought to be ascertained in discussions with representatives of these three companies, Waste Management, Allied Waste and Republic Services, before using the “added capacity” argument as a selling point for WTV plants.

Re: Claim 5 on Economic Advantages to WMA’s of the WTV option

There should be little disagreement with the claim that “FastOx gasifiers (when installed in WTV plants) have the potential to offer waste management authorities added sources of revenue, as tipping fees received by operators of landfills and incinerators are substantially offset by the costs incurred in operating landfills and incinerators.

There should be little disagreement that the “raison d’etre” for WTV plants is their potential for using wastes to generate power and/or produce high value liquid fuels and related products at a low cost.

But it is still an open question as to whether this added revenue that is expected to flow to the owners of WTE & HVP plants is high enough not only to attract investment, as it will have to be high enough to provide the project’s waste providers with incentives to change current practices.

Ways must be found for sharing WTV plant revenue with waste providers. The amounts to be shared must be high enough to cover their cost of diverting their wastes streams and curtailing operations at existing disposal facilities, as well as added costs incurred for preparation, storage, handling and transport of such wastes to specific WTE & HVP plants. And this revenue sharing must also cover the recovery of capital investments made in transfer stations, equipment and infrastructure that will be needed.

In other words, the economics of each proposed WTV plant and how it will impact its waste suppliers will determine whether specific WTV options are worth undertaking.

Re: Claim 6 on Economic Advantages of WTV Plants

There are strong arguments supporting Sierra Energy’s claim that WTV plants using FastOx gasifiers could produce biofuels cheaply. As with all WTV plant projects, it ought to be assumed that wastes to use as feedstock will primarily be MSW and other combustible wastes that are obtainable at a low cost.

Sierra Energy claims its FastOx gasifiers are efficient. The specifications reported for FastOx gasifiers indicate that they have a “Cold Gas Efficiency” of 66 to 79%; a “Parasitic Load” range of 16 to 20%; and the dry syngas produced has a high “Net Caloric Value” of ~8.56 MJ/kg. Sierra Energy claims that when its syngas is used in a gas turbine generator, each ton of waste processed will generate is 1,500 kWh of electric power. Sierra Energy also claims that when its syngas is used in a F-T module to produce ethanol, the waste-to-ethanol conversion rate is 100 gallons per ton. At this stage there is no reason to challenge these very favorable efficiency claims.

Re: Claim 7 on Waste-to-Ethanol Pathway
Claim 8 on the Waste-to-Energy Pathway and
Claim 9 on Marketability and Value of Byproducts

Electricity vs. Ethanol
To examine these claims, Sierra Energy’s metrics were used along with recent typical feed-in-tariff rates for electric power and rack prices ethanol. The following is what these analyses revealed and what was concluded.

It was assumed that syngas was produced using a FastOxTM gasifier with a rated waste processing capacity of in a 250 tons-per-day, and consumed 80,000 tons-per-year of waste.

If power is generated at a WTE plant at the estimated rate of 1,500 kWh/ton, then annual power generated would be 120 million kWh/yr. If power were sold to the grid at the feed-in-tariff rate $0.06/kWh, then $7,200,000 in revenue would be realized in the WTE. conversion.

On the other hand, if the syngas was converted into ethanol, 8 million gallons of ethanol could theoretically be produced in a year’s time, assuming Sierra’s estimated conversion rate of 100 gallons per ton. And if the price realized at the WTV plant rack were $2.60/gallon, the revenue realized would be $20.8 million. This is 2.8 times more revenue that would be realized by the WTV configuration.

Clearly, with such revenue potential for plants using FastOx gasifiers, it appears that making ethanol from waste is the preferred configuration, even though power generation using gas turbines is less complex and requires less capital investment and know-how.

Renewable Hydrogen
In The Biofuels Digest Magazine February 6th article, Sierra Energy revealed a longer term strategy of using syngas to produce renewable hydrogen that can be used in fuel cell vehicles. Sierra claims that the renewable hydrogen made from MSW would cost $0.50/KG, which is equivalent to $0.25/gallon gasoline based on range. Of course there is a “catch-22” in this strategy. Moderately priced fuel cell vehicles are still under development and fueling stations for fuel cell vehicles do not now exist. This in turn, will retard development of a market for such vehicles.

Sierra Energy envisions a way around this conundrum. They believe that the cost of manufacturing their smaller gasifiers can be reduced by to 1/3, if manufactured in large numbers. They then would be able to install gasifiers at existing waste transfer stations along with equipment to refill fuel cells. This strategy implies that renewable hydrogen produced at each transfer station will not have to be distributed to thousands of gas stations at great cost, and these gas stations would not have to install hydrogen storage tanks or “pumps”. Sierra Energy contends that in a state like California with its many transfer stations, it would only pose a modest inconvenience to owners of fuel cell vehicles. Unfortunately, such a strategy could work only if the many pieces, such as cheap gasifiers, affordable fuel cell vehicles, widespread investment in transfer station modifications, and driver acceptance, come together at roughly the same time.

Re: Claim 10 on Environmental Issues

Although Sierra Energy’s environmental and emissions claims appear to be plausible, further verification will be needed, especially if HVPs are to be produced and the waste stream to be processed contains higher than average mix of materials containing toxic substances.

Strategies for Accelerated Roll-Out of WTV Plants

It is contended that the critical analyses of Sierra Energy’s claims for its FastOx gasifier, highlight the obstacles and impediments that any purveyor of new biofuels technology may encounter in having that technology incorporated into WTV projects as these are same obstacles and impediments that face WTV project developers.

The strategies that are presented for accelerating the rollout of these types of projects fall into four major categories, namely, those that are designed: 1) To assure an adequate and ongoing stream of low cost wastes; 2) To find and secure a strategically located plant location; 3) To obtain a sufficient number of off-taker commitments; and, 4) To obtain project financing..

These strategies are presented below in the order in which they ought to be undertaken.

1. The project developer and technology providers must agree on what economy of scale is appropriate for the type of plant that will be needed and what amount of waste is required to support operations of the scale that is preferred.

2. If the strategy is to produce electric power using wastes, will there be a captive end user with a limited need. If not, should the sizing be done to produce power at the lowest possible cost, so the project can survive on pessimistic projections of feed in tariffs that can be expected or should sizing be determined on most likely estimates.

3. If the strategy is to produce a high value product, such as methanol, olefin intermediates or ethanol, sizing will have to take into account the added capital cost and operating cost of having this capability as well as the market outlook for the products to be produced.

4. Once sizing is agreed to, then a determination of how much waste is needed and how much could be obtained directly from waste providers who operate in the same general area.

5. Waste collection estimates made would have to include waste obtainable from collection firms and municipal waste authorities, wastes that can be diverted or reclaimed from landfill owners and operators, as well as wasted that could be obtained from timberland harvesters, from known sources of construction and demolition wastes and from industrial waste generators.

6. Discussions with a cross-section of potential waste providers will be needed in order to ascertain the amount that can be obtained on an ongoing basis in the same general area.

7. Estimates will then have to be made as to the tipping fee revenues that can be expected and the added costs that may have to be incurred in order to deliver the wastes to a plant strategically located in the same area. A preliminary search for plant sites that meet potential requirements will be needed and a prioritized list of sites developed.

8. An initial consensus must then be reached among the project developers, and other parties-in-interest as to the project’s sizing, the waste stream requirements, the plant location and the product slate to be offered. Parties-in-interest would include project sponsors and potential JV partners, technology providers, and government authorities.

9. Off-taker commitments will then need to be obtained. If the off-taker is a single entity, such as a military base as in the case of Sierra Energy, off-take agreements should be obtained containing tentative contractual commitments for power and HVPs, base period power rates and HVP prices and provisions for changing rates and prices over a fixed contractual period.

10. If the off-taker is a fuels blender, a bulk terminal reseller, a refiner, a petro-chemical plant, or a buyer of gasifier by-products, such as cement/clinker and asphalt plants, letters of interest or memoranda of understanding may be sufficient to obtain initial backing for the project. However, long-term off-take agreements will be needed in order to secure permanent project financing.

11. Once feasibility studies and business plans are completed, investment memoranda can be drafted in order to attract strategic partners and investors to the project. The project sponsor should try to target as strategic investors, waste management companies who collect waste in the selected area, as well as those firms who plan to be major off takers. This list could include crude oil refiners, bulk distributors and blenders of fuels, and petrochemical companies.

12. If the project is to provide power to the grid, the power utility could be asked for concessions in return for backstopping some of the debt. Likewise government waste authorities and/or the county or municipality to which they report could be asked to hold equity in return for their being able to provide low cost government backed bond financing.

The Bottom Line

Hopefully this article will prove useful to those trying to accelerate the roll-out a new biofuels technology as well as those who are involved in undertaking commercial-scale biofuels projects development and want to accelerate the process. It seems that there are no shortcuts and we have tried to show what needs to be done. As previously stated, our focus was on waste-to-energy and waste to high value products projects.

And one such company was used in the case study in order to illustrate what kind of strategic plan may be needed in order to better assure a widespread commercialization of their technology. It is hoped that this article will prove useful to some developers and technology providers and lead them to improving project development plans. At the very least this article will convince readers that more is needed in biofuels technology and biofuels project development than “better biofuels technology mousetraps”.

Tim Sklar is a longtime Digest contributor on biocoal and torrefection topics. He can be reached here.