Creating Energy from Waste How the RFS2 Helps Make it Happen

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1 Creating Energy from Waste How the RFS2 Helps Make it Happen Western Washington Clean Cities The Future of RNG as a Transportation Fuel in Washington RNG: The National Landscape and Successful Projects Chuck White Director Regulatory Affairs/West July 16, 2013

2 Leading provider of environmental solutions WM s 2012 Financial Stats $13.6B IN REVENUE $829M FREE CASH FLOW $658M RETURNED TO SHAREHOLDERS $1.5B CAPITAL EXPENDITURE WM Sustainability Facts Creates enough energy to power more than 1.1M homes every year Manages more than 10 million tons of recyclable commodities Dedicates 26,000 protected acres to wildlife habitats WM s 2012 Operational Stats +21 MILLION CUSTOMERS 310 TRANSFER FACILITIES 114 TRADITIONAL RECYCLING FACILITIES 42 ARE SINGLE STREAM 14 ARE C&D RECYCLING FACILITIES 390 COLLECTION OPERATIONS 5 INDEPENDENT POWER PRODUCTION PLANTS, 2 PRODUCE RENEWABLE ENERGY 14 CONSTRUCTION & DEMOLITION RECYCLING FACILITIES 1 ACTIVE HAZARDOUS WASTE UNDERGROUND INJECTION FACILITY 137 LANDFILL- GAS-TO- ENERGY PROJECTS 36 ORGANIC PROCESSING FACILITIES 17 WASTE- TO-ENERGY PLANTS 18 SECONDARY PROCESSING FACILITIES 264 ACTIVE SOLID WASTE LANDFILLS 5 ACTIVE HAZARDOUS WASTE LANDFILLS OVER 43,500 EMPLOYEES As of February 2013

Renewable Energy from Waste Our 17 Waste-to-energy plants produce enough renewable electricity

energy to power nearly 500,000 homes Our WM/Linde Altamont plant converts LFG to ultra

generate more renewable energy than the entire US solar industry WM energy projects create

3 Renewable Energy from Waste Our 17 Waste-to-energy plants produce enough renewable electricity to power 650,000 homes Our 137 landfill gas (LFG)-to-energy plants generate enough renewable energy to power nearly 500,000 homes Our WM/Linde Altamont plant converts LFG to ultra low-carbon liquefied natural gas and powers over 300 natural gas refuse trucks in CA We generate more renewable energy than the entire US solar industry WM energy projects create enough energy to power more than 1.2 million homes, displacing the need for 14 million barrels of oil each year

Creating Energy from Waste The energy in waste One Ton

equivalent to: 1 barrel of oil ½ ton of coal 11 MMBTUs

lbs of steam 400 to 600 KW Hrs of electricity 50 gallons

4 Creating Energy from Waste The energy in waste One Ton of Waste = 11 million BTUs of energy Holds the energy equivalent to: 1 barrel of oil ½ ton of coal 11 MMBTUs of Natural Gas (aka: Dekatherm) Waste can make: 5,500 lbs of steam 400 to 600 KW Hrs of electricity 50 gallons of ethanol Source: GBB SW Consultants 2012 Waste Management Page 4

5 WM s Strategy: Extract value from the materials we manage WM will optimize our business and implement enhanced recycling and new conversion technologies. WM will develop superior sorting, recycling, and conversion capabilities to capitalize on changes in the business environment.

A Little History: 2008 Fleet Decisions Changing diesel engine regulations created uncertainty Impact of new diesel truck regulations Heavier trucks = less payload = more trucks = increased emissions

6 A Little History: 2008 Fleet Decisions Changing diesel engine regulations created uncertainty Impact of new diesel truck regulations Heavier trucks = less payload = more trucks = increased emissions Uncertain maintenance costs associated with new diesel trucks City of Seattle contract required us to buy 106 new trucks Poor NGV service history in CA Excellent warranty by Cummins Westport in 2008 Conflicting Messages -- What to do?

We will build up to 25 natural gas fueling stations each year We are investing in public fueling

7 WM s Fleet Goal: Reduce emissions (GHG,NOx, CO) and increase fuel efficiency by 15% by 2020 WM will replace 80% of its new class 8 vehicles with natural gas trucks. We will build up to 25 natural gas fueling stations each year We are investing in public fueling stations at most sites Achieving our goal will save 350 million gallons of diesel fuel and will eliminate 3.5 million metric tons of carbon dioxide.

Benefits of Natural Gas & Biogas Natural Gas Trucks Emit Less than Diesel Trucks Smog-producing NOx emissions are reduced up to 50% compared to 2010 diesel engines and even more compared to the older

8 Benefits of Natural Gas & Biogas Natural Gas Trucks Emit Less than Diesel Trucks Smog-producing NOx emissions are reduced up to 50% compared to 2010 diesel engines and even more compared to the older diesel engines we are replacing; Greenhouse gas emissions (GHG) are reduced up to 25 percent over standard diesel engines; and GHG can be reduced by over 90% when using LNG derived from landfill gas versus standard pipeline gas. Month XX, 20XX 20XX Waste Management Page 8

9 The Link: Spanning the Spectrum Feedstock WM manages over 110 million tons of materials annually million tons of the material that we manage are organic in nature (excluding recycled paper, OCC, etc) for biogas generation Processing The organics we manage can be converted to biogas WM is investing in technologies to convert waste materials into electricity, fuel and green chemicals Off-Take WM s fleet of 32,000 vehicles includes 18,000 heavy duty vehicles, using an average of 8,000 gallons of diesel/year each Our facilities and drive cycles are well-suited for alternative fuels generation and use 2012 Waste Management Page 9

CNG Facility Deployment Year End 2012 Fast Facts 40 fueling stations will be on line in 22 states and 2 provinces 9 Bio/LNG Facilities 5 LCNG Facilities Purchasing 700-1,000 NGV each

10 CNG Facility Deployment Year End 2012 Fast Facts 40 fueling stations will be on line in 22 states and 2 provinces 9 Bio/LNG Facilities 5 LCNG Facilities Purchasing 700-1,000 NGV each year Building 25 stations per year and public fueling Over 2,000 trucks in our fleet by year end 2012 Altamont Bio-LNG Facility - 13,000 Gal/day of Bio-LNG 2012 Waste Management Page 10

Historical Case study: Landfill Gas Management WM evolved from focusing on environmental compliance toward innovative solutions to

ENVIRONMENTAL RISK ENERGY PRODUCTION INNOVATION #1 LNG PRODUCTION INNOVATION #2 FT DIESEL INSTALL METHANE CAPTURE SYSTEMS AT LANDFILLS

PARTNER WITH LINDE TO CONVERT LFG TO LNG Reduce WM fleet emissions, create Ultra Low-Carbon Fuel CONVERT LFG AT SMALL SCALE TO

significant economic and environmental benefits Now we are converting our entire fleet to CNG Additional Opportunities for LFG

11 Historical Case study: Landfill Gas Management WM evolved from focusing on environmental compliance toward innovative solutions to diversify and develop new and higher value revenue streams Evolution of methane capture and conversion at landfills: MITIGATING ENVIRONMENTAL RISK ENERGY PRODUCTION INNOVATION #1 LNG PRODUCTION INNOVATION #2 FT DIESEL INSTALL METHANE CAPTURE SYSTEMS AT LANDFILLS AND FLARE OFF GAS Reduces risks and complies with regulations CAPTURE METHANE WHEEL to GRID or PIPELINE TO GENERATE ELECTRICITY or FUEL PARTNER WITH LINDE TO CONVERT LFG TO LNG Reduce WM fleet emissions, create Ultra Low-Carbon Fuel CONVERT LFG AT SMALL SCALE TO SYNTHETIC DIESEL Leveraged gas collection and clean up expertise Impact of Innovation #1: Found that LNG and CNG trucks have significant economic and environmental benefits Now we are converting our entire fleet to CNG Additional Opportunities for LFG Transport ation Fuels Impact of Innovation #2: Found technology can work on stranded natural gas wells Commercializing a sizeable New Line of business 2012Waste Management Page 11

cellulosic RINs LFG to Diesel technology can produce advanced or cellulosic biofuels Commercial-scale facility 400-500 tpd

12 Alternative Transportation Fuel Technologies Recovery of Energy Products via Emerging Processes LFG converted to ultra-low carbon low-carbon fuel for CNG/LNG trucks LFG to electricity sent to grid from which fleets power electric vehicles can qualify for cellulosic RINs LFG to Diesel technology can produce advanced or cellulosic biofuels Commercial-scale facility tpd Gasification of biogenic MSW and biomass to ethanol MSW to ethanol via largescale plasma gasification Commercial-scale facility tpd

13 Other Biogas Efforts: Anaerobic Digestion Foodwaste Preparation Feedstock Waste Water Treatment Plants Anaerobic Processors Biogas End Products Anaerobic Digesters 7/17/2013 Page 13

14 grams / DGE Where is Biogas Generated? Biogas is generated at: Landfills Anaerobic digestion of animal, food, sewage, & crop waste Uses: Can be upgraded to hi-purity bio-methane (& other fuels) Benefits Low greenhouse gas emissions Can displace 10 billion GGE per year (DOE estimate) GHG emission reductions equal to taking 90 million light-duty vehicles off the road WTW GHG Emissions ULSD B20 B100 NA CNG NA LNG BG CNG BG LNG

15 Landfill Gas: The Low Hanging Fruit Anaerobic Decomposition of Organic Waste creates Biogenic Gas Gas is about half methane and half carbon dioxide. Quantities are 450 to 550 BTU per cubic foot of landfill gas It s a medium BTU gas Landfill Gas Collection System

16 Comparison of LCFS Fuel Carbon Intensities (gco2e/mj) Fuel Type Direct WTW Emissions Indirect Emissions 16 Total Emissions % of Diesel Gasoline (CARBOB) Diesel (ULSD) Ethanol (Midwest WetMill Coal) Ethanol (Dry Mill Proprietary) Ethanol (Brazillian Sugarcane) Biodiesel (Midwest Soybeans) Biodiesel (Waste Cooking Oils) Biodiesel (Waste Corn Oil) Renew-Diesel (Waste Tallow) CNG (NA Fossil, CA Compressed) Renewable CNG (Landfill) 11.26* * 13* Renewable LNG (Landfill) 15.56* * 16* MSW Anaerobic Digestion * * <0 * Assumes use of Grid Power, Not Site Power. Use of Onsite LFG Power should lower CI by additional ~10%

Carbon emissions are 95% lower than diesel.

17 Landfill Gas to Fuel A joint venture with Linde North America resulted in the world s largest plant to convert landfill gas to ultra low-carbon liquefied natural gas. Carbon emissions are 95% lower than diesel. The facility produces up to 13,000 gallons of LNG a day and powers over 300 WM natural gas trucks in California. $15.5 million capital investment and $2 million in government grant funding

18 Fossil Fuel Prices: Opportunity or Challenge? ~ Estimated Renewable NG From 2012 DOE/EIA AEO 2010 Dollars per diesel gallon equivalent Note: Estimates for approximate example only.

19 Comparison of Landfill LNG Fuel Value & RIN/LCFS Incentive Values Percent Fuel Value ~$0.30/LNG gal) % RIN Value (@ ~$1.30/RIN) % (as Advanced BioFuel + Cellulosic BioFuel) CA LCFS Value (@ ~$60/MT) % TOTAL 100%

Biomethane Vehicle Fuel: Barriers to Market Efficient Vehicle Fueling with RNG: High BTU gas and pipeline distribution RNG production and fleet fueling sites rarely colocated Barriers to RNG Vehicle

20 Biomethane Vehicle Fuel: Barriers to Market Efficient Vehicle Fueling with RNG: High BTU gas and pipeline distribution RNG production and fleet fueling sites rarely colocated Barriers to RNG Vehicle Fuel Use: Pipeline connection fees, tariffs & specifications discourage RNG pipeline injection (estimated costs: $1.8-$2.5 million) Market for vehicle fuel incentives (RFS2 & LCFS) are uncertain, illiquid and are not financeable

21 Biogas: Well to Wheels BioGas Resources are readily available Waste Derived Fuels have Lowest GHGs Renewable LNG/CNG is cheaper than diesel but more expensive than fossil NG RFS2 and Low Carbon Fuel Standards can provide supplemental revenue to bridge the gap

22 Any Questions?

23 Thank-you Chuck White Director of Regulatory Affairs Waste Management/West Phone

ASTSWMO Landfill Gas Issues October 29, 2009 Bethesda, Maryland

ASTSWMO Landfill Gas Issues October 29, 2009 Bethesda, Maryland Think Green. Think Waste Management. cleantech.jpg Chuck White Director of Regulatory Affairs/West Waste Management, Inc. ASTSWMO Landfill Gas Issues What is Landfill Gas? Anaerobic Decomposition of Organic