DATE: July 10, 2018 REPORT NO. PW Chair and Members Committee of the Whole Operations and Administration

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1 DATE: July 10, 2018 REPORT NO. PW TO: FROM: Chair and Members Committee of the Whole Operations and Administration E. (Beth) Goodger, General Manager Public Works Commission 1.0 TYPE OF REPORT CONSENT ITEM [ ] ITEM FOR CONSIDERATION [ X ] 2.0 TOPIC: Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study (Financial Impact $10,000,000) (PW ) 3.0 RECOMMENDATION A. THAT Report No. PW titled Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study BE RECEIVED; and B. THAT the General Manager of Public Works BE DIRECTED to include funding for the detailed design, approvals and construction of an anaerobic food and organic waste digester and related Green Energy Initiative infrastructure in the Capital Forecast for Solid Waste for review and consideration during the 2019 Budget deliberations; and C. THAT the General Manager of Public Works BE DIRECTED to submit applications to Provincial and Federal Funding Programs in order to obtain funding related to the proposed construction of an anaerobic food and organic waste digester and to the development of a residential household organic waste diversion program and the General Manager of Public Works BE DESIGNATED as authorized representative to sign the related applications and funding agreements with the provincial and federal governments on behalf of the City; and D. THAT the Federal and Provincial Ministers of the Environment, local Member of Parliament and Provincial Member of Parliament BE PROVIDED with a copy of Report No. PW titled Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study. 4.0 PURPOSE

2 Date: July 10, 2018 Page 2 The purpose of the following report is to outline the results of the Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study. 5.0 BACKGROUND 5.1 Need for an Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study The Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study (Feasibility Study) was completed to examine the potential integration of a waste diversion system for household organics and possibly other sources of biodegradable organic materials with the development of Green Energy initiatives while supporting opportunities to address climate change issues such as the reduction greenhouse gas (GHG) emissions. The Feasibility Study was completed with the assistance of an engineering consultant from mid-september 2017 to June Waste Free Ontario Act and Proposed Food and Organic Waste Framework in Ontario Waste Free Ontario Act As outlined in Council Report No. PW titled Comments on Environmental Bill of Rights Registry Final Draft Strategy for a Waste Free Ontario: Building the Circular Economy a new legislative framework for managing waste in Ontario was proclaimed in the Fall of 2016 Ontario under Bill 151, Waste Free Ontario Act (WFOA). The legislation is comprised of two Acts, the Resource Recovery and Circular Economy Act (RRCEA), and the Waste Diversion Transition Act (WDTA). At that time the Minister of the Environment and Climate Change (MOECC) released a Final Draft Strategy for a Waste Free Ontario: Building the Circular Economy to support Ontario in achieving its goals. The Final Draft Strategy has two broad goals (i) a zero waste system in Ontario; and (ii) zero GHG emissions from the waste sector. As outlined in the report to Council at that time, of particular interest to municipal waste diversion programs was the potential disposal ban on certain targeted materials including household organics and potential for increased financing of diversion programs within the Province. The MOECC has yet to release the finalized Strategy for a Waste Free Ontario Finalized Food and Organic Waste Framework in Ontario As outlined in Council Report No titled Environmental Bill of Rights Registry Decision Posting Regarding Food and Organic Waste Framework in Ontario the MOECC, on April 30, 2018, posted the finalized Food and Organic Waste Framework (Framework) on the EBR (posting # ). The Framework consists of two complementary components an Action Plan which outlines strategic commitments to be undertaken by the province and a Waste Policy Statement, under the authority of the RRCEA, which mandates increased

3 Date: July 10, 2018 Page 3 diversion of food and organic wastes by municipalities, IC&I establishments and the waste management sector. Several of the Policy Statements will require significant changes to the City s current Solid Waste Management Programs and Services including the development and operation of a curbside collection program for single-family and multi-family dwellings to divert food and organic wastes from disposal. These programs will be required to be in place by 2025 and achieve a minimum diversion rate of 70 percent. To further enhance and support diversion activities, not only by municipalities but the IC&I sectors the Policy Statement includes a phased in ban on the landfilling of food and organic wastes commencing as early as In addition, official plans, zoning by-laws, plan of subdivision and site plan approvals must be updated to be consistent with the Waste Policy Statement requirements and objectives. Staff is currently reviewing the operational and financial impact of the finalized Waste Policy Statement to the City s current Solid Waste Management Programs and Services. A full recommendation and implementation report is planned to be submitted for review and consideration by Council in Future Solid Waste Service Contracts In 2012, the Solid Waste and Recyclable Materials Request for Tenders (RFT) included bids options for the Receiving, Transporting, Processing and Marketing of Household Organics. An unexpected result of the RFT process was that no bids were received for the processing and management of household organics. As a result, a curbside collection and diversion program for residential household organics could not be implemented at the commencement of the solid waste contracts on November 1, 2013 and these materials currently remain in the collection program for regular curbside garbage (i.e. landfilled). At the City Council meeting held on August 22, 2017, Council approved a two year extension to the existing Solid Waste Service contracts from October 31, 2018 until October 31, Extending the Solid Waste Service contracts was provided to allow time to examine a number of developments which are in progress over the next months that will have impact on the services provided under the existing contracts and/or to complete the following: Monitor developments regarding the new waste management legislation and in particular that related to the Food and Organic Waste Framework and determine potential operational and financial impacts to the City s Solid Waste Diversion Programs; Complete the detailed Feasibility Study for the development of an Anaerobic Digestion (AD) Facility and Green Energy Opportunities; Complete the four season Curbside Composition Waste Audit to provide information/data regarding characteristics of residential waste and recyclable materials being set out at curbside to use in the development of

4 Date: July 10, 2018 Page 4 future service contracts and/or negotiations with potential service providers under the new waste legislation; Complete improvements to the landfill gas collection system and provide additional non tax supported revenues to Solid Waste Operations Budget. 5.4 Importance of Landfill Site Asset - Mohawk Street Landfill Site Landfill sites are extremely difficult and expensive to replace. As a result, the Mohawk Street Landfill Site (MSLS) is one of the City s most valuable infrastructure assets. The MSLS, which opened in approximately 1965 is a key component of the City s integrated Solid Waste Management System and continues to provide essential waste disposal capacity for residents and businesses within the City of Brantford. Operation of the MSLS provides a number of key benefits to municipal operations and to residents and businesses within the City. The key benefits include but are not limited to the following: Direct control over long term waste disposal operations and costs Local destination to cost effectively dispose of waste materials collected through municipal service/programs or generated within the City Location to operate other municipal waste/diversion services (e.g. Household Hazardous Waste Event Days, centralized compost operations, public drop-off area, etc.) Source of revenue for City s Solid Waste Management Program from tipping fees charged for disposal waste materials The current approved capacity of the MSLS, as permitted by the MOECC, is 13,345,000 cubic metres. As of January 2018, approximately 38% or 5,112,000 cubic metres of the approved capacity has been utilized. Based on past experiences of other municipalities, extending capacity or obtaining approval to develop another waste disposal site can be a long, expensive and challenging process with no guarantees of being successful. As noted in the Landfill Master Plan completed in 2015, maximizing the operating life span of the MSLS should be a key principle in the City s future overall long term waste management strategy. A key element of this strategy is to maximize diversion of waste materials, including household organics from disposal. It is also worth noting that without the availability and use of the MSLS, the City would have likely had a much different solid waste management program and had a greater need and dependency on inter-municipal and/or private sector partnerships to manage the disposal of waste materials. Waste disposal operations at MSLS are expected to continue for many years in to the future. As a result, the City has the opportunity to fully examine, plan and develop cost effective service programs for all waste materials which it generates and/or is required to manage, including household organic waste materials.

5 Date: July 10, 2018 Page Renewable Energy Standard Offer Program and Infrastructure Ontario Agreements As outlined in Council Report PW titled Acquisition of Brantford Generation Inc. Assets and Operations by the City of Brantford the City, as part of the assumption process to acquire the landfill gas (LFG) Utilization Facility and collection system in May 2016 from Brantford Generation Inc., entered in to the following agreements: Renewable Energy Standard Offer Program Agreement (RESOP) twenty (20) year agreement with the Independent Electricity System Operator (IESO) for the generation of renewable electricity from landfill gas collected from the Mohawk Street Landfill. The termination date of the RESOP agreement is January 14, Financing and Revenue Sharing Agreement (FRS) a long term agreement with Ontario Infrastructure and Lands Corporation ( OILC ) for the purchase of the gas utilization facility and landfill gas collection system located at the Mohawk Street Landfill Site. 5.6 Provincial and Federal Funding Programs Organics Diversion Both Provincial and Federal Governments have recently announced new infrastructure funding programs aimed at supporting projects that reduce Greenhouse Gas (GHG) emissions. The funding programs available to municipalities include the following; Federal - Low Carbon Economy Challenge up to 40% funding to municipalities on project values between $1 Million and $50 Million. Target areas include: buildings, transportation, waste (methane capture and organics diversion). Submission deadline Expression of Interest (EOI) was May 14, Funding received must be spent by March 31, Provincial 2018 Municipal GHG Challenge Fund - up to $2 Million in funding for up to two (2) projects per municipality. Target areas include: buildings, energy supply, water, transportation and waste management. Submission deadline is July 13, Projects must commence by July 2019 and be complete by July If selected for funding, municipalities must demonstrate they have, or will have, completed community-wide (i) GHG emissions inventory, (ii) emissions reduction targets and (iii) plan to reduce GHG emissions approved by council before January Behind-the-Meter/Net Metering Program Opportunities Commencing in 2017, the Province moved towards Behind-the-Meter or Net Metering projects to support renewable electricity projects rather than RESOP agreements. Behind-the-Meter/Net Metering projects are essentially a billing arrangement with a Local Distribution Company (LDC) that allows a customer to offset the electricity they buy from their LDC with electricity generated by their own renewable energy systems. Net-metered customers also receive credits on their electricity bill for the electricity they send to the grid, reducing their total bill charges. These credits can be carried over for up to 12 months for application

6 Date: July 10, 2018 Page 6 on future bills. A net-metered customer is still able to draw power from the local distribution grid when needed. As part of the Green Energy investigations completed as part of the Feasibility Study project, the consultant has recommended that the City investigate the potential opportunities of a Behind-the-Meter/Net Metering project in order to reduce overall energy related expenditures at the Brantford Wastewater Treatment Plant (WWTP), MSLS and LFG Utilization Facility and provide an opportunity to utilize additional biogas sources at the LFG Utilization Facility. 6.0 CORPORATE POLICY CONTEXT Completing the Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study is in keeping with the Strategic Plan under the goal of Managed Growth & Environmental Leadership as it examined opportunities to increase the diversion of food and organic wastes going to disposal, examined the development of operating synergies between existing City facilities and reviewed the development of green energy opportunities. 7.0 INPUT FROM OTHER SOURCES Staff from the City s Wastewater Operations Division in the Environmental Services Department provided assistance in reviewing development and integration options of a new food and organic (co-digestion) anaerobic digester at the Wastewater Treatment Plant (WWTP). GHD Inc. was retained by the City to investigate and prepare the Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study report as outlined in Request for Proposal RFP The Study was completed as part of the 2017 Capital Budget. As part of the project Scope of Work, an AD Facility and Green Energy Objectives Workshop was conducted on October 4, 2017 with representatives from Brant County, Six Nations and Downtown Brantford Business Improvement Area invited. The workshop discussed project objectives, cost effective options for the management of household organic waste materials, development of possible future integrated plans, and potential partnerships. 8.0 ANALYSIS 8.1 Feasibility Study Results A key finding of the Feasibility Study is that the physical proximity of the WWTP, MSLS and LFG Utilization Facility along Mohawk Street provides a unique opportunity to develop an overall integrated system to process residential household organic wastes as well as creating opportunities to develop Green Energy Initiatives which will potentially reduce the overall energy related expenditures at these facilities (see Executive Summary in Appendix A ). The proposed benefits would be achieved through the construction of a new an

7 Date: July 10, 2018 Page 7 anaerobic food and organic waste digester at the WWTP, organics receiving facility located either at the WWTP or at the Landfill property close to the WWTP and related process infrastructure between the WWTP and LFG Utilization Facility. The Feasibility study considered a number of processes for food and organic wastes. Aerobic composting involves breaking down organic material by introducing air and example of this is backyard composting. Anaerobic digestion (AD) breaks down organic material in the absence of air. The WWTP uses an AD process for sewage sludge, making ideal conditions for an integrated system. This proposed integrated system would potentially provide the following long term operational, financial and environmental benefits; Development of in house capability (i.e. at the WWTP) to process and managed residential food and organic waste materials and possibly other sources of biodegradable materials in order to comply with the requirements of the finalized Food and Organic Framework, Establishment a local destination to drop off curbside residential household organics thereby reducing transportation costs and GHG emissions during the collection of these materials in future Solid Waste Service Contracts, Extending the overall operating lifespan of the MSLS through the diversion of food and organic waste materials, Development of additional biosolids processing capacity at the WWTP to improve operational flexibility during planned maintenance shut downs and/or emergency repair activities, Generation of additional beneficial Non-Agricultural Source Material (NASM) from the proposed digester for inclusion with existing WWTP NASM Management Program, Development of Green Energy Initiatives between the WWTP, MSLS and LFG Utilization Facility including the following opportunities; (i) Providing an additional source of biogas to LFG Utilization Facility from the proposed food and organic (co-digestion) anaerobic digester at the WWTP, (ii) Reducing annual energy requirements (i.e. natural gas) at the WWTP by supplying waste heat from engines at LFG Utilization Facility to heat the proposed and existing WWTP digesters, (iii) Developing a Net Metering Program with local power distribution company to reduce overall annual electrical expenditures at the WWTP, MSLS and the LFG Utilization Facility.

8 Date: July 10, 2018 Page 8 Reduction in overall amount of greenhouse gas (GHG) emissions by the City through diversion of household organics from disposal. Development of potential future additional sources of operating revenue (i.e. tipping fees) through disposal agreements with other municipalities, etc. for food and organics waste materials at the proposed new organic digester. It should be noted that further investigation and/or analysis is recommended to be completed during the pre-design phase to determine overall level of integration needed between facilities (See Section 9.1). 8.2 Mandatory Development and Implementation of Municipal Organics Diversion Programs/Ban of Food and Organics from Disposal As noted previously in Section 5.3 of this report, the last RFT process for the Solid Waste Contracts received no bids for the processing and management of household organics and a result these materials currently remain in the collection program for regular curbside garbage (i.e. landfilled). There continues to be a shortage of organic waste processing facilities in Ontario. The proposed new food and organic (co-digestion) anaerobic digester at the WWTP will provide the City with a viable option to ensure compliance with the requirements of the finalized Food and Organic Framework. 8.3 Future Potential Municipal Partnerships With the shortage of organic waste processing facilities in Ontario, there may be a future potential for municipal partnerships to utilize a City of Brantford organics facility if one is developed. All municipal representatives who participated in the AD Facility and Green Energy Objectives Workshop, as part the Feasibility Study, expressed an interest in utilizing a City owned organics processing facility/operation should one be developed. Such partnerships may provide opportunities for additional sources of operating revenue (i.e. tipping fees for organic waste materials). Staff will to continue to investigate these opportunities should direction be provided to continue with the development of the proposed food and organic (co-digestion) anaerobic digester at the WWTP.

9 Date: July 10, 2018 Page FINANCIAL IMPLICATIONS 9.1 Estimated Facility Capital Cost/Ten Year Capital Forecast Costing investigations completed as part of the Feasibility Study estimate the overall capital expenditures of the proposed anaerobic food and organic waste digester at the WWTP to be in the order of $20M (see Table 1). Table 1 Initial Capital Cost Estimate Proposed Food and Organic Waste Anaerobic Digester Project Component Pre Design, Design, Approvals & Permits, and Construction Management, Facility Commissioning Estimated Cost $2,500,000 Facility Construction $13,800,000 Green Energy Initiative Components $800,000 Contingency $2,340,000 Total Cost Estimate $19,440,000 Based on the initial costing estimates completed, staff recommends the Ten Year Capital Forecast for Solid Waste include the following items; predesign, detailed design, approvals and construction for review and consideration during the 2019 Budget deliberations. In particular the expenditure items will be included for the years indicated as follows: (i) Pre-design including completion Green Energy Opportunities Evaluation (2019) (ii) Detailed design, approvals, permits (2020) (iii) Facility construction and commissioning (2021) It should be noted that further refinement of the above noted capital estimates will be completed during the pre-design work in 2019 as well as a determination of the preferred project delivery model and future operating budget impacts. Inclusion of this project in the capital budget forecast will have a significant impact within a corporate context on the affordability and the timing of other projects. Approval of Report PW will enable applications to be made for current and future Provincial and Federal Funding opportunities, as outlined in Sections 9.3 of this report. Availability of funding will be a key factor in determining timing to move forward with the proposed facility and achieving compliance with the requirement to have an organic waste diversion program in place by 2025.

10 Date: July 10, 2018 Page Provincial and Federal Funding Opportunities Both Provincial and Federal governments are currently offering funding programs for organic waste diversion initiatives such as the proposed anaerobic food and organic waste digester and related Green Energy Initiative infrastructure. As outlined in Table 2 below, approximately 50% of the estimated $20M capital cost could be covered through these funding opportunities. It should be noted that other additional funding opportunities will be investigated if they become available for the proposed project. The impacts of the recent cancellation of the Ontario Cap and Trade program on funding programs is unknown at this time. Table 2 Potential Funding Sources Proposed Food and Organic Waste Anaerobic Digester Proposed Funding Source Funding Share Percentage Share of Project Cost Federal - Low Carbon Economy Challenge 1 $8M 40% Provincial 2018 Municipal GHG Challenge Fund 2 $2M 10% City $10M 50% Totals $20M 100% 1 - Up to 40% funding on municipal projects 2 - Up to $2 Million in funding for up to two (2) projects per municipality Staff therefore recommends formal applications be prepared and submitted to both funding programs for the proposed anaerobic digester project. It should be noted, the Federal funding program included a preselection process which required EOI s to be submitted by no later than May 14, Due to this requirement, staff submitted a project EOI on May 10, 2018 for the proposed digester project noting submission of a formal funding application would be subject to approval by City Council. Staff will continue to investigate other potential funding programs, if made available, to determine the availability and applicability of funding opportunities for the proposed digester project or related organic waste diversion program components. 9.3 Potential Impacts to Existing Electrical Revenue and Financing Agreements at the LFG Utilization Facility It should be noted that further review and consideration of the impact to the existing energy and financial agreements (i.e. RESOP and FRS Agreements) at the LFG Utilization facility will be necessary in order to gain a full understanding

11 Date: July 10, 2018 Page 11 of the financial implications to the construction and operation of the proposed anaerobic digester and implementation of the Green Energy Initiatives (i.e. Net Metering Program). These investigations will be completed as part of the pre design work for the proposed project and/or Green Energy project components. 9.4 Potential Cost Savings for WWTP Operations The 2018 Budget for electricity at the WWTP is approximately $1.3M. The proposed Green Energy Initiatives are projected to reduce this annual expenditure requirement. However, further investigations are needed to determine the full extent of these of reductions CONCLUSION One of the key finding of the Feasibility Study is that the physical proximity of the WWTP, MSLS and LFG Utilization Facility along Mohawk Street provides a unique opportunity to develop an overall integrated system to process residential household organic wastes, combine landfill gas with other onsite biogas sources to enhance current utilization operations and create Green Energy Initiatives which should reduce the overall combined energy related expenditures at these facilities. The proposed benefits would be achieved through the construction of an anaerobic food and organic waste digester at the WWTP and related process infrastructure between the WWTP and LFG Utilization Facility. This proposed integrated system would potentially provide a number of long term operational, financial and environmental benefits, such as the reduction of GHG emissions, compliance with Provincial requirements and extending the overall operating lifespan of the MSLS. The recently finalized Food and Organic Waste Framework will require the City to have a food and organic waste diversion in place by A City developed organic waste processing facility will ensure that there is local capacity in place. Investigations completed as part of the Feasibility Study estimate the overall capital cost of the proposed 10,000 tonnes per year anaerobic food and organic waste digester at the WWTP to be in the order of $20M, with the potential for 50% funding based on currently available funding programs and up to 90% funding. Staff recommends that the Ten Year Capital Forecast for Solid Waste include items for the pre-design, detailed design, approvals and construction for review and consideration during the 2019 Budget deliberations. Subject to approval of the report, staff will submit applications to Provincial and Federal Funding Programs.

12 Date: July 10, 2018 Page 12 S. Kongara, P.Eng., E. (Beth) Goodger Director, Environmental Services General Manager Public Works Commission D. Hodgins, P.Eng., Manager, Solid Waste Operations Appendix A Executive Summary - Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study In adopting this report, is a by-law or agreement required? If so, it should be referenced in the recommendation section. By-law required [ ] yes [ X ] no Agreement(s) or other documents to be signed by Mayor and/or City Clerk [ ] yes [ X ] no Is the necessary by-law or agreement being sent concurrently to Council? [ ] yes [ X ] no

13 Date: July 10, 2018 Page 13 Appendix A Executive Summary, Anaerobic Digestion Facility and Green Energy Opportunities Feasibility Study

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