Waste Treatment & Disposal Services in the US

Transcription

1 Waste Treatment & Disposal Services in the US August Trash talk: Waste-to-energy projects and competition from recycling will shape the industry s future IBISWorld Industry Report Waste Treatment & Disposal Services in the US August 2013 Deonta Smith 2 About this Industry 2 Industry Definition 2 Main Activities 2 Similar Industries 3 Additional Resources 4 Industry at a Glance 5 Industry Performance 5 Executive Summary 5 Key External Drivers 7 Current Performance 8 Industry Outlook 11 Industry Life Cycle 13 Products & Markets 13 Supply Chain 13 Products & Services 15 Demand Determinants 16 Major Markets 17 International Trade 18 Business Locations 20 Competitive Landscape 20 Market Share Concentration 20 Key Success Factors 20 Cost Structure Benchmarks 22 Basis of Competition 23 Barriers to Entry 24 Industry Globalization 25 Major Companies 25 Waste Management Inc. 26 Republic Services Inc. 27 Covanta Holding Corporation 28 Clean Harbors, Inc. 30 Operating Conditions 30 Capital Intensity 31 Technology & Systems 32 Revenue Volatility 32 Regulation & Policy 33 Industry Assistance 35 Key Statistics 35 Industry Data 35 Annual Change 35 Key Ratios 36 Jargon & Glossary info@ibisworld.com

2 Waste Treatment & Disposal Services in the US August About this Industry Industry Definition Firms in this industry own and operate waste treatment or disposal facilities including waste combustors (waste-to-energy plants), solid waste landfills and compost dumps. Many firms in this industry also provide waste collection and hauling services and are also included in the Waste Collection industry (IBISWorld report 56211). This industry excludes sewer systems, sewage treatment facilities and local governments that directly provide waste disposal services. Main Activities The primary activities of this industry are Composting Treatment and disposal of hazardous waste material Operating incinerators or combustors for hazardous and non-hazardous waste Treatment and disposal of radioactive waste Disposal of sludge Operating solid waste landfills combined with local hauling of non-hazardous solid waste Operating landfills for trash, garbage and rubbish Operating waste-to-energy plants producing steam and electricity The major products and services in this industry are Hazardous waste treatment and disposal Non-hazardous waste incineration disposal Other non-hazardous waste treatment and disposal Solid waste landfill Waste-to-energy plants Similar Industries Sewage Treatment Facilities in the US Establishments in this industry collect, treat, and dispose waste through sewer systems or sewage treatment facilities Fertilizer Manufacturing in the US Companies in this industry manufacture compost Waste Collection Services in the US Operators in this industry collect waste and recyclable materials, and operate waste transfer stations Remediation & Environmental Cleanup Services in the US Businesses in this industry provide site and building remediation services Recycling Facilities in the US Enterprises in this industry provide processing and sorting of recyclable materials at recycling facilities.

3 Waste Treatment & Disposal Services in the US August About this Industry Additional Resources For additional information on this industry US Environmental Protection Agency Waste Waste Business Journal IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to

4 Waste Treatment & Disposal Services in the US August Industry at a Glance Waste Treatment & Disposal Services in 2013 Key Statistics Snapshot Revenue $16.4bn Profit $1.4bn Annual Growth % Wages $3.7bn Annual Growth % Businesses 2,019 Market Share Waste Management Inc. 24.6% Republic Services Inc. 20.0% Covanta Holding Corporation 10.6% Clean Harbors, Inc. 9.5% Key External Drivers Regulation for the Waste Treatment and Disposal Services sector Industrial production index Per capita disposable income Number of households p. 25 % change Revenue vs. employment growth Year Revenue Employment Products and services segmentation (2013) 13.2% Waste-to-energy plants 12.1% Non-hazardous waste incineration disposal 19 % change Industrial production index Year SOURCE: % Solid waste landfill p % Hazardous waste treatment and disposal 21.0% Other non-hazardous waste treatment and disposal SOURCE: SOURCE: Industry Structure Life Cycle Stage Mature Revenue Volatility Medium Capital Intensity High Industry Assistance Low Concentration Level Medium Regulation Level Technology Change Barriers to Entry Industry Globalization Competition Level Heavy Medium High Low Medium FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 35

5 Waste Treatment & Disposal Services in the US August Industry Performance Executive Summary Key External Drivers Current Performance Industry Outlook Life Cycle Stage Executive Summary Amid the economic recovery, consumers and businesses are increasing consumption across the board, boosting waste volumes after a slump in 2008 and Overall, operators in the Waste Treatment and Disposal Services industry have handled more waste in the past five years when compared to the years prior to With a substantial increase in solid waste, participants have become more efficient and innovative in their disposal activities, generating new revenue streams. The most significant investment is waste-to-energy (WTE) plants, a means in which operators create Waste-to-energy plants played a large part in revenue growth during the past five years energy from received waste and sell it to downstream customers. WTE plants have contributed to the industry s average annual revenue growth of 1.6% over the past five years to total $16.4 billion in Waste volumes fell during the recession for two primary reasons: the housing market bust and faltering industrial production. New construction creates high volumes of waste, increasing demand for industry services; as the housing market crashed, demand from the residential construction market virtually disappeared. Additionally, industrial plants typically produce the highest percentage of hazardous waste handled by the Waste Treatment and Disposal Services industry, and these customers are charged a higher rate for the disposal of this waste. As industrial production slowed in line with falling consumption, demand for disposal services fell. In 2010, however, the trend of declining industrial production reversed, and the economy showed signs of recovery. Hazardous waste is being collected at an increasing rate, leading to expected revenue growth of 2.3% in Over the next five years, the industry will grow in line with increased waste production. As the US economy improves, overall consumption and waste volumes will increase. Construction activity is forecast to pick up as housing values begin to rise and demand for commercial construction responds to rising consumer spending. As construction companies break ground on homes and offices, waste production will increase, spurring demand for waste treatment and disposal services. Industry players will also increasingly focus on WTE activities as government regulation on the industry s traditional landfill activities strengthens. As a result of these trends, industry revenue is anticipated to increase at an average rate of 3.0% annually and total $19.0 billion in the five years to Key External Drivers Regulation for the Waste Treatment and Disposal Services sector Government regulation of waste disposal has a major bearing on the costs and methods of disposal. Local and state governments are increasingly introducing regulation regarding waste prevention and recycling, raising costs for industry operators. Regulation for the waste treatment and disposal service sector is expected to increase during Industrial production index The level of industrial activity, measured by the industrial production index, directly influences the amount of industrial waste produced: more activity results in higher volumes of waste. Hazardous

6 Waste Treatment & Disposal Services in the US August Industry Performance Key External Drivers continued waste produced by industrial processes is more expensive to dispose; therefore firms in this industry make more revenue in this segment than in others. The industrial production index is expected to increase during 2013, presenting a potential opportunity for the industry. Per capita disposable income When per capita income rises, consumers purchase more products, and households generate more waste. Higher consumption levels translate into higher volumes of waste and industry revenue growth. Per capita disposable income is expected to increase slowly during Number of households An increase in the number of households leads to growth in the amount of consumer waste produced; home occupancy and new home construction are major sources of waste. The number of households is expected to increase slowly during If it increases too slowly, however, it can pose a potential threat to the industry. Industrial production index Per capita disposable income % change % change Year Year SOURCE:

7 Waste Treatment & Disposal Services in the US August Industry Performance Current Performance Despite declines in waste volumes during the recession, since 2010, the amount of waste entering landfills has increased because of a rise in business activity and consumption levels. In the wake of recovery, renewed consumer spending has spurred a revival in manufacturing activity, which yields more waste, requiring more industry services. The waste-to-energy (WTE) segment has particularly hastened the industry s return to growth, due to increased demand for alternative energy sources. Growth in this segment, combined with a higher volume of waste, offset declines that occurred during the recession. Industry revenue is expected to increase moderately at an average annual rate of 1.6% to $16.4 billion in the five years to Industry participants operate landfills and charge fees according to the volume and type of waste deposited. These service providers can charge a premium on hazardous waste because it is more difficult to handle, and its disposal methods receive heavy government oversight in addition to regulation for ordinary waste disposal. These laws % change Industry revenue Year increase industry-operating costs, causing operators to administer higher prices to customers. Over the past five years, recycling has posed a threat to the industry because operators handle less waste when consumers and businesses recycle. Recycled items are then reused to manufacture other products and do not ultimately reach landfills. Composting also leads to declines in industry revenue because this waste is reused rather than disposed of. 19 SOURCE: Resilient through the recession The recession caused a sharp drop in disposable income and consumer spending, resulting in less waste produced overall. Simultaneously, construction-related activity dropped as credit availability tightened and housing starts plummeted. Construction, both residential and nonresidential, produces a significant amount of the waste handled by the industry; therefore, anemic activity in this downstream market cut off a major source of demand for the Waste Treatment and Disposal Services industry, hurting revenue. In addition, profit declined over the past five years as less waste was taken to the industry s landfills. While profit is expected to increase as waste volumes grow in 2013, the increase will fail to counterbalance the recession s declines. Declines in industrial production were particularly damaging to the industry s profit margins, as these downstream customers are major producers of hazardous waste. This type of waste justifies higher rates because it is more dangerous to handle and requires significant government oversight. When demand for this higher-margin service weakened, industry profitability suffered. Nonetheless, the industry remained resilient as the economy turned sour. Although revenue fell in 2008 and 2009,

8 Waste Treatment & Disposal Services in the US August Industry Performance Resilient through the recession continued the industry s services remain necessary for all segments of the economy, which keeps revenue declines to a minimum. As the economy gained steam and every sector increased its output of waste in 2010, the industry turned the corner. Continued growth in waste volume is expected to boost revenue 2.3% in Energy on the horizon Over the past five years, heightened state and federal regulations on landfills have forced waste treatment and disposal services companies to seek out other ways to generate revenue. As such, major players in this industry have increasingly entered the WTE. Covanta, for example, expanded its WTE operations by eight facilities to total 61 WTE plants from 2009 to 2010, according to the latest data available. Instead of disposing waste at a landfill, operators are now using that waste to burn and create energy, which is then captured and sold as electricity to downstream customers. State and local governments that support renewable energy policies encourage WTE activity. Industry companies receive tax credits from the federal government to invest in WTE projects; in states that have established renewable energy policies, these firms encounter demand for energy from utilities meeting the Renewable Portfolio Standards. These utilities are required by state law to distribute electricity derived from renewable energy as a certain percentage of the total energy they provide to downstream customers. In light of these growth prospects, the number of industry firms has increased an average annual rate of 1.5% to total 2,019 companies in the five years to Industry Outlook The Waste Treatment and Disposal Services industry will grow in the five years to 2018 as consumers, businesses and industrial producers create more waste, increasing demand for treatment and disposal services. As industrial production continues to recover from the lows of the previous five years, firms will benefit from the resulting larger volumes of hazardous waste, which typically command a price premium. In addition, increased government regulation on landfill operations will drive more firms toward waste-to-energy (WTE) projects, creating future segments of growth. As a result, revenue is forecast to grow an average rate of 3.0% annually in the next five years, to reach $19.0 billion in Waste volume recovery Over the next five years, economic growth will increase consumer and business consumption, as well as encourage new commercial construction projects, resulting in higher volumes of waste. The previous five years were dismal for the industry due to construction firms, which typically produce a substantial amount of waste, pulling back on projects in response to As the economy recovers, consumers and businesses will generate more waste sluggish demand. However, the renewed demand for nonresidential construction will significantly raise demand for waste disposal services.

9 Waste Treatment & Disposal Services in the US August Industry Performance Waste volume recovery continued A revival in industrial activity will be particularly beneficial for the Waste Treatment and Disposal Services industry. Industrial companies will need to dispose of hazardous materials at a faster rate, and operators, in turn, will have more hazardous materials at their landfills and holding facilities. Since these types of materials require significant safety precautions and result in higher handling costs, operators are able to charge higher prices for disposal. Furthermore, regulations on handling hazardous materials are only going to increase, giving firms the opportunity to raise prices further, in order to compensate. Thus, as downstream demand returns full force, IBISWorld forecasts revenue to increase 3.8% in Waste-to-energy on the rise Increased state and federal waste regulation will continue to raise costs for firms that own and operate landfills. To combat the potential pressure on profit margins, firms will increasingly turn to WTE operations. Regulations that seek to protect the environment will likely persist through 2018, as businesses and consumers push for greater environmental awareness from all economic sectors. Particularly, operators will benefit from growing regulation that supports the use of renewable energy. By investing in WTE projects, firms can write off some initial costs since the federal government provides tax incentives for renewable energy investment. Also, WTE firms have consistent access to downstream buyers, thanks to state laws requiring utilities to buy energy from renewable sources. These regulations will likely drive investment into this segment throughout the next five years, especially as disposal service operators seek new ways to offset rising costs associated with operating a landfill. Rather than only managing Firms will turn to wasteto-energy operations to combat ever-growing landfill regulations spaces where waste can be stored, these projects burn or destroy waste to create energy. High growth prospects in this segment will likely encourage firms to expand these efforts, causing the number of industry establishments to rise at an annualized rate of 1.6% to 2,800 in the next five years. During the period, industry operators are expected to focus more on WTE activities and other environmentally friendly disposal activities, rather than traditional landfill operation. Increased interest in environmentally friendly practices will support this trend, as businesses and consumers shift demand toward services and products that incorporate environmentally safe inputs or sustainable business processes. Integrating recycling operations Recycling revenue belongs to the Recycling Facilities industry (IBISWorld report 56292), and growth in the recycling rate will likely deter demand for the Waste Treatment and Disposal Services industry. As more consumers and businesses recycle, less waste will flow to landfills or WTE projects. Recycling is expected to grow in the next five years as more sectors of the economy take a keen interest in the environment, supported by growth

10 Waste Treatment & Disposal Services in the US August Industry Performance Integrating recycling operations continued in prices for recycled commodities. Recycling facilities will respond by providing incentives to obtain more recyclables from consumers and businesses. However, most industry players have integrated recycling into their businesses in the anticipation of increased recycling. For example, major industry firm Waste Management has a recycling segment, Recycling America, which plans to increase the total volume of material recycled to more than 20.0 million tons by The industry s vertical integration of waste services supports this trend, as it has grown to include collection, disposal and treatment in the past five years. Vertical integration is projected to continue during the next five years, with a particular emphasis on integrating recycling and energy businesses. This will ultimately lead to higher profit margins for the industry, as firms benefit from economies of scale.

11 Waste Treatment & Disposal Services in the US August Industry Performance Life Cycle Stage The waste management industry is expanding and becoming increasingly capital intensive The industry s growth is expected to outpace GDP growth Waste disposal is being increasingly internalized % Growth in share of economy Maturity Company consolidation; level of economic importance stable Quality Growth High growth in economic importance; weaker companies close down; developed technology and markets Key Features of a Mature Industry Revenue grows at same pace as economy Company numbers stabilize; M&A stage Established technology & processes Total market acceptance of product & brand Rationalization of low margin products & brands 10 5 Quantity Growth Many new companies; minor growth in economic importance; substantial technology change 0 Construction Machinery Manufacturing Waste Treatment & Disposal Services Electric Power Transmission Waste Collection Services Sewage Treatment Facilities Fertilizer Manufacturing -5 Decline Shrinking economic importance % Growth in number of establishments SOURCE:

12 Waste Treatment & Disposal Services in the US August Industry Performance Industry Life Cycle This industry is Mature The Waste Treatment and Disposal Services industry s contribution to the economy, measured by industry value added (IVA), is projected to grow 2.6% annually on average in the 10 years to 2018, while US GDP is anticipated to increase at an annualized 2.1%. These coinciding rates indicate that the industry is in a mature phase of its life cycle. The industry s profit margins have come under increased pressure throughout the past two decades as environmental requirements continually raise the costs of disposal, forcing industry operators to become more efficient in their processes. Also, the total volume of waste generated has grown slowly since it dropped off significantly in However, certain growth segments will drive the industry s revenue higher in the future. Increasing environmental regulations have limited industry growth. Concerns about how landfills affect the environment have pushed state and federal governments to impose restrictions on how landfills are handled. As a result, many players have increased investments in recycling businesses (which are not included in this industry) or waste-toenergy (WTE) operations. These segments often benefit from other regulations that provide incentives for recycling or producing energy from waste. Such regulation includes government policies that encourage the production of renewable energy. Local and state governments are introducing initiatives to limit the amount of waste going to landfills, which will bolster growth in recycling and WTE businesses. Some private companies, such as Covanta, are becoming active in these areas.

13 Waste Treatment & Disposal Services in the US August Products & Markets Supply Chain Products & Services Demand Determinants Major Markets International Trade Business Locations Supply Chain KEY BUYING INDUSTRIES Electric Power Transmission in the US Waste-to-energy facilities sell electricity to utility companies Waste Collection Services in the US Waste collection contracts normally include arrangements for the disposal of the collected waste Recycling Facilities in the US Waste-to-energy plants may undertake sorting of material and separate out scrap metal prior to combustion. This may be passed on to recycled material wholesalers in the recycling facilities industry. KEY SELLING INDUSTRIES Construction Machinery Manufacturing in the US Heavy vehicles are used at landfill sites Waste Collection Services in the US Collection services supply waste to landfill and waste-to-energy plants Remediation & Environmental Cleanup Services in the US Closed landfill sites may require remediation or clean-up services. Products & Services Products and services segmentation (2013) 12.1% Non-hazardous waste incineration disposal 13.2% Waste-to-energy plants 36.0% Solid waste landfill Total $16.4bn 17.7% Hazardous waste treatment and disposal 21.0% Other non-hazardous waste treatment and disposal SOURCE: Solid-waste landfills Solid-waste landfills account for the largest service segment, with 36.0% of industry services. Solid-waste landfills are the primary method of solid-waste disposal. Industry operators generally charge a tipping fee, which is a fee to leave trash in a landfill. Customers are charged based on the type of trash and volume of trash that needs removal. There are landfills for municipal solid waste, landfills for construction and demolition debris, and bioreactors for organic waste material. Major players have integrated business operations that include operating landfills and collecting waste. There are, however, players that do not own landfills and pay third-party companies to tip waste in their landfills. While the number

14 Waste Treatment & Disposal Services in the US August Products & Markets Products & Services continued of landfill sites has decreased during the past five years, the size of remaining landfill sites have tended to increase because it is easier to get permits for existing landfills. The volume of waste disposed into landfills remained low during the past five years as every sector of the economy produced less waste during the recession. Hazardous-waste treatment and disposal Hazardous-waste treatment and disposal services are expected to account for 17.7% of revenue. Hazardous-waste sites are separate from solid waste landfills; these sites handle substances that are dangerous to public health and require significant oversight to run properly. In fact, no new hazardous-waste incinerators or hazardous-waste landfills have opened for operation in the United States in the past decade. This is in part because of the heavy reporting, regulatory and compliance costs, as well as permit difficulties. This segment of the industry is expected to benefit from the increased compliance costs associated with greater regulation governing the use of in-house and noncommercial incinerators. Greater regulation is expected to increase the level of outsourcing of hazardous waste disposal to operators. Nonetheless, operators received less waste from this segment as industrial production declined during the past five years and hazardous-waste treatment and disposal as a percentage of revenue has fallen. Waste-to-energy Waste-to-energy (WTE) is an umbrella name for technologies that are used to create energy out of waste. These processes can include burning certain types of waste to create electricity or creating energy acquired from gas captured from landfills. Although the volume of WTE products stayed relatively steady during the past five years, industry firms relied on this as a source of revenue during the downturn. Additionally, increased regulation favoring renewable energy added to this segment s importance as federal and state laws encouraged the consumption and production of renewable energy. WTE projects are anticipated to account for 13.2% of industry-specific revenue in Nonhazardous waste incineration Nonhazardous waste incineration is a waste treatment process that involves the combustion of substances contained in waste materials. Waste incineration systems are equipped with state-of-theart air pollution control devices to capture particulate and gaseous emission contaminates. The system uses high temperatures and controlled air to change the composition of waste materials, which converts it into flue gas, ash, and heat (used for energy conversion practices). Waste incineration practices are most popular on military vessels; additionally, military institutions are responsible for most of the incineration equipment upgrades. Nonhazardous waste incineration is expected to account for 12.1% of industry revenue in Other Other services amount to 21.0% of industry segmentation; a large portion of these services provided are derived from nonhazardous waste treatment services, excluding waste water. Materials are collected on a regular or flexible schedule and may be taken to a final disposal site or to an intermediate site such as a material recovery facility or transfer facility. Additional activities include final capping, closure, postclosure and environmental remedial obligations, at certain landfills.

15 Waste Treatment & Disposal Services in the US August Products & Markets Demand Determinants According to the Environmental Protection Agency (EPA), each person in the US produces about 4.4 pounds of waste per day. Waste production is dependent on almost every sector of the economy; as consumption increases so does waste. As such, growth in economic activity results in waste. Furthermore, demand for waste disposal services also arises from government regulation, dictating how to handle certain types of waste. The industry derives revenue from charging clients to store and dispose of waste depending on volume and type of waste received. Volume of waste The volume of waste generated is influenced by demographic factors such as the level of population growth and the type of household formations. Changes in the average size of households and dwelling types can influence waste generation. The more people living in a household, less trash per household occupant is produced. The level of activity in the economy also impacts the amount of waste generated. Increases in consumer spending and business activity increase the amount of municipal solid waste generated. The level of construction and demolition waste is influenced by building and construction activity. Additionally, the volume of hazardous and nonhazardous industrial waste is influenced by industry growth and structural changes in industry output (manufacturers produce more hazardous waste than the service industry). Waste prevention reduces the amount of waste generated. Waste prevention includes the design of products, making them reusable or able to last longer. It also includes the designs of business processes to reduce production of scrap, using packaging that reduces damage or spoilage, composting on-site or disposing through other alternative methods (e.g. leaving grass clippings on the lawn). Consumer attitudes and local and state requirements drive waste prevention. Disposal and diversion of waste The greater the level of waste diverted to recycling, the less that requires disposal. Factors that determine demand for recycling include: the level of waste disposal charges (low charges provide low incentives to dispose to recyclable collections); the relative prices of virgin raw materials and recyclable materials; the presence and type of municipal government recycling programs; the costs of transport and handling, which impact the incentive to collect; and the existence of reuse programs. Many municipalities are setting recycling targets and banning the type of waste that can be deposited in landfills. For many years, municipalities have privatized their residential waste disposal services, increasing the number of waste disposal facilities either owned or operated by private companies. Private operators have predominately undertaken commercial and industrial waste disposal services. In the absence of government regulatory requirements, the relative price of different waste disposal methods has determined the level of demand for that service. Traditionally, the lowest cost method of waste disposal is depositing waste to landfills.

16 Waste Treatment & Disposal Services in the US August Products & Markets Major Markets Major market segmentation (2013) 10% Other 5% Residential 34% Industry firms 25% Local government Total $16.4bn 26% Construction and industrial firms SOURCE: Industry firms The largest market for waste disposal services is the waste management industry itself. The major players in this industry operate waste collection and waste disposal services and have high rates of waste internalization. However, some firms incur high transport costs to a proprietary landfill or do not have landfills that they outright own, so they pay a fee to industry players that do own landfills so they are able to drop off collected waste at other player s sites. This segment has decreased in the past five years as waste management companies internalize waste disposal activities. Companies have become more vertically integrated in efforts to reduce costs and increase efficiencies. Construction and industrial firms The construction industry produces construction and demolition waste. Currently, a very small percentage of construction and demolition waste is recycled, and some states are examining ways to encourage greater recycling of this waste. Any such moves will reduce the size of this market for disposal services. The current slowdown in residential construction has reduced the volume of required waste disposal; therefore revenue from this sector has declined. The industrial sector transports their own waste to disposal and treatment facilities or uses waste storage facilities provided by the waste disposal company. The largest generators of hazardous waste are companies in the chemical, petrochemical, primary metals, paper, furniture, aerospace and pharmaceutical industries. This segment has decreased slightly during the past five years as industrial production has slowed. Government The collection and disposal of municipal solid waste may be undertaken by local municipal governments. Municipal governments that do not own or operate their own landfill or disposal facilities require the services of a private operator. It has recently been a trend for local governments to privatize waste collection services and waste disposal sites causing the market to decrease in the past five years. Local governments are increasingly looking at methods other than landfills for waste disposal, such as waste-to-energy. The construction and operation of waste-toenergy plants is complex and capital intensive; therefore, local governments

17 Waste Treatment & Disposal Services in the US August Products & Markets Major Markets continued are likely to outsource projects like this to private industry operators. Residential Households may individually dispose of their waste to disposal facilities if they do not have access to curbside collections arranged by municipal governments or if they have waste beyond what is normally collected. Fees are charged based on volume and the type of waste disposed. International Trade This industry is primarily oriented to the domestic market, with a low level of imports and exports. This is mainly due to the high costs involved in transporting bulky, low value and unprocessed items. Some hazardous waste is exported and imported for treatment and disposal. The transfer of hazardous waste occurs mainly with Mexico and Canada. The US has international agreements with these countries, regulating the movement of such waste.

18 Waste Treatment & Disposal Services in the US August Products & Markets Business Locations 2013 West AK 0.5 New England West CA 7.8 WA 1.7 MT 0.5 OR 1.5 NV 0.7 Rocky Mountains ID 0.5 UT 0.7 AZ 1.7 WY 0.4 CO 1.6 NM 0.9 ND Plains NE 0.8 MN WI SD 0.2 KS 1.1 Southwest TX 8.6 OK 2.0 IA OH IL IN VA WV KY 1.5 MO 2.1 Great Lakes 1.9 MI 3.4 PA 5.4 AR 1.0 MS 1.6 LA 2.0 TN 2.8 Southeast AL 2.6 Mid- Atlantic GA 3.3 NY NC 2.8 SC 2.0 FL ME West HI 0.5 Additional States (as marked on map) 1VT 2 NH 3MA 4 RI CT 6 NJ 7DE MD DC Establishments (%) Less than 3% 3% to less than 10% 10% to less than 20% 20% or more SOURCE:

19 Waste Treatment & Disposal Services in the US August Products & Markets Business Locations The distribution of waste disposal services across the United States is based on a combination of landscape and legislation. Historically, states with low population density and cheap, available space have become the sites for a significant number of large landfills constructed by the Waste Treatment and Disposal Services industry. While landfills are often located in areas away from densely populated areas and in regions with cheap land, waste-to-energy plants (WTE) tend to flourish where population densities are higher and landfill capacity is constrained. The amount of waste produced by different states is partly due to the volume of commercial and industrial waste, reflecting the state s mix of industry. The amount of waste generated per capita varies widely. Also, waste may be transported across state lines to different landfills. Government regulation at the state and local level also influences waste disposal methods. The Southeast and the Great Lakes have the greatest number of establishments, with 27.4% and 17.1%, respectively. Sparsely populated areas % Establishments vs. population West Great Lakes Establishments Population Mid-Atlantic New England Plains Rocky Mountains Southeast Southwest SOURCE: in that region contribute to the concentration of landfills. Furthermore, the proximity of these regions to heavy industries such as auto manufacturing has also underpinned this trend. Waste produced from manufacturing, which is often considered hazardous, is more expensive to dispose of than other types of waste.

20 Waste Treatment & Disposal Services in the US August Competitive Landscape Market Share Concentration Key Success Factors Cost Structure Benchmarks Basis of Competition Barriers to Entry Industry Globalization Market Share Concentration Level Concentration in this industry is Medium The Waste Treatment and Disposal Services industry has a moderate market share concentration. IBISWorld estimates that the four largest players account for 64.7% of industry revenue. This trend reflects the generally growing concentration occurring in the waste management industry. The Waste Treatment and Disposal Services industry is experiencing vertical integration as firms increasingly offer collection, transfer, disposal and recycling services. Firms in this industry are aiming to increase the internalization of waste disposal so they can deposit more waste in their own disposal facilities. This waste disposal internalization avoids giving tipping fees to third parties and increases the profitability of collection services. The merger between Republic and Allied Waste Industry is a clear example of this trend. Furthermore, market share concentration will continue to grow, due in part to the increased efficiency from the growing regulatory requirements and technical complexities of waste disposal adding to costs. Key Success Factors IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are: Ability to attract local support/patronage A large customer base close to disposal operations provides high and consistent waste volumes and lower transport costs. Must comply with government regulations Compliance with federal, state and municipal government legislation, regulations and license conditions is necessary for industry operator success. Having an extensive distribution/ collection network Firms that also have collection services can channel waste to their own treatment and disposal facilities to save costs by cutting out third party services. Ability to compete on tender Ownership or operation of landfills or waste-to-energy plants are often transferred by government via tender. Access to the latest available and most efficient technology and techniques Companies that have technology to create energy from waste are most likely to succeed. Favorable renewable energy regulation has bolstered the demand for energy from waste, and industry players that use this technology will have a competitive advantage. Cost Structure Benchmarks Profit Profit for the industry is moderate given the heavy regulation involved in operating landfills and other waste disposal sites. In 2013, profit is expected to account for 8.8% of industry revenue. Profit has declined during the five years to 2013 as operators experienced less waste entering landfills as every sector of the economy pulled back on consumption. The economic recovery, however, is set to reverse this trend as consumers and businesses alike increase consumption rates, and in turn, waste volume. Profit declines were mitigated by waste-toenergy (WTE) investments made by industry firms. Despite low waste volumes during the past five years, firms increasingly turned waste into usable energy and sold this energy to downstream customers.

21 Waste Treatment & Disposal Services in the US August Competitive Landscape Cost Structure Benchmarks continued Depreciation Depreciation costs are high in this industry, reflecting the equipment needed to handle large amounts of waste and the technology used to handle hazardous waste. Depreciation is estimated to make up 12.1% of industry revenue in Although hazardous waste sites do not make up the majority of industry establishments, they have the most government oversight and therefore require specialized equipment to handle this type of waste. These costs have increased as government regulations have grown during the past five years. Wages Representing 22.3% of industry revenue in 2013, industry wages are a significant cost. Although there is some automation in handling large amounts of waste, labor is still needed to handle certain types waste. Wages are particularly high for workers that handle hazardous waste because of the physical risk of handling these substances. Furthermore, these workers have to be trained to handle these substances and pose a liability to the company if something goes wrong. As such, firms must hire cautiously when they operate hazardous waste sites. Wage costs have stayed relatively stable during the past five years. Purchases Companies in the industry purchase commodities such as reagents, chemicals and fuel. These commodities experience price fluctuations that can have a significant impact on a company s profitability. Additionally, designing and constructing new projects or expansions requires purchases of equipment such as boilers, turbine generators and other components. Both WTE facilities and landfill sites are expensive to build. Sector vs. Industry Costs Average Costs of all Industries in sector (2013) Industry Costs (2013) Percentage of revenue P r o fi t Wages Purchases Depreciation Marketing Rent & Utilities Other 0 SOURCE:

22 Waste Treatment & Disposal Services in the US August Competitive Landscape Cost Structure Benchmarks continued Other The majority of the remaining costs for the industry include ground waste monitoring and leachate treatment and disposal. Landfill remediation costs are also a significant line item and include financial assurance that must be provided as part of the landfill permit and costs for interim landfill capping. The cost of final landfill capping and closure is also a significant operating cost. Private waste management firms also pay franchise fees to municipal governments for residential waste collection and disposal contracts. Additionally, operators must obtain permits from various levels of government. Basis of Competition Level & Trend Competition in this industry is Medium and the trend is Steady Waste treatment and disposal service providers compete mainly on the basis of the price, geographic location and quality of service offered. Tipping fees are charged to deposit waste at landfill and waste-to-energy (WTE) sites. Tipping fees are based on the volume, weight and type of waste deposited. Variations in tipping fees are usually related to the location of the disposal facility. In areas where population density is low and land is more available and cheaper, tipping fees tend to be lower. Disposal sites located in areas with more stringent regulatory requirements on waste disposal may also charge higher tipping fees. The distance waste must travel from transfer stations to disposal sites impacts price of the waste disposal service. Waste is normally transported via road or rail. Rail transport, though generally a cheaper means of transporting waste, is limited mainly to larger industry operators because of the initial costs to establish a rail transport system. Operators that have disposal sites located close to transfer stations or close to where the waste has originated have a competitive advantage. Some operators are increasing the number of transfer stations located next to railway lines. National operators appear to be in a better position to win business from commercial customers that have a large geographic spread (particularly due to a trend toward consolidating suppliers). Waste management firms are increasingly concentrating their services in certain local and regional areas, allowing them to deposit waste from their collection services into their own landfill sites. Waste Management Inc. deposits 63.0% of the waste it collects at sites it owns. Some industry players can hold a significant share of disposal capacity in some markets, which may tend to reduce price competition. The ability to provide a greater range of services may allow a single operator to manage the complete waste stream from collection to recycling, landfill, combustion and waste-to-energy. Many of the larger waste management companies are moving to increase their level of vertical integration, providing them with greater efficiencies. Waste-toenergy and landfill gas extraction have provided new and growing revenue streams for some players. The ability to provide these services can improve the environmental credentials of operators. Some of the large hazardous waste companies also provide site services, such as cleaning, vacuum services, site decontamination, remedial projects and demolition, which can assist in gaining disposal contracts. The industry faces competition from recycling. When consumers and businesses recycle, firms in the Waste Treatment and Disposal Services industry handle less waste. The recycled items are then used to

23 Waste Treatment & Disposal Services in the US August Competitive Landscape Basis of Competition continued manufacture other products and do not ultimately reach landfills. Additionally, composting causes declines in industry revenue because items that are composted are reused instead of thrown away. Barriers to Entry Level & Trend Barriers to Entry in this industry are High and Increasing Companies entering the Waste Treatment and Disposal Services industry must obtain a means of disposing of waste; this can be either through the construction of a new landfill site or waste-to-energy plant (WTE), or the purchase of an existing facility. Both options are quite costly and are under significant regulatory scrutiny. Without a strong prior history of regulatory compliance in this industry, new operators will find starting a business very difficult. While the number of existing landfill sites has dwindled, the size of existing operations has increased. Obtaining permission to build new landfill sites is an expensive and time-consuming task. Permission to construct new WTE plants involves similar difficulties; most of the current expansion in WTE capacity is through the expansion of existing plants. Existing facilities are expensive to purchase. Many states and local jurisdictions have laws that allow waste services contracts to be denied or revoked based on an applicant or permit holder s compliance history. In the hazardous waste segment, permits to develop and operate disposal facilities are difficult to obtain. No new hazardous waste incinerators or hazardous waste landfills have been started in the US in the past decade. Waste disposal facilities require a consistent stream of waste to support efficient operation and provide a steady cash flow. New entrants must secure a share of the existing waste stream to operate. Existing disposal contracts and increasing waste disposal Barriers to Entry checklist Competition Concentration Life Cycle Stage Capital Intensity Technology Change Regulation & Policy Industry Assistance Level Medium Medium Mature High Medium Heavy Low SOURCE: internalization by larger, vertically integrated operators currently existing in the industry can make it difficult for new operators to entry the industry. The area over which this waste can be sourced depends on the cost of transporting waste and the tipping fees charged. The industry is comprised of many operators with integrated collection and disposal services that have a large market shares for both services within a geographical area. New entrants to a geographical area must compete with existing operators who, through their waste collection services, already have a large share of waste locally directed to their own disposal facilities. Through economies of scale, these large vertically integrated operators can then charge lower tipping fees for waste disposal, thereby attracting even more waste. Additionally, waste-to-energy plants not owned by operators that also provide collection services, may have contracts with municipal governments for an agreed level of waste to be supplied throughout a certain number of years.

24 Waste Treatment & Disposal Services in the US August Competitive Landscape Industry Globalization Level & Trend Globalization in this industry is Low and the trend is Increasing This industry currently has a low level of globalization, with foreign-owned establishments accounting for less than 5.0% of domestic demand. However, there are companies with significant operations in the United States such as Veolia Environmental Services North America Corp. This company is a subsidiary of a global company founded in France. The value of investments in overseas waste markets by US-based companies is low, but on the rise. Covanta is an example of a local company that has extended its reach into global markets. In March 2007, Covanta Holding Corporation entered the waste-toenergy (WTE) industry in China. Covanta also entered into an agreement to develop a WTE project in Dublin, Ireland, which began construction in late Waste Management Inc. is also jumping on board; Wheelabrator (the WTE division of Waste Management Inc.) has recently announced a cooperative agreement to provide WTE solutions to local authorities in the United Kingdom.

25 Waste Treatment & Disposal Services in the US August Major Companies Waste Management Inc. Republic Services Inc. Covanta Holding Corporation Clean Harbors, Inc. Other Companies Major players (Market share) Clean Harbors, Inc. 9.5% Republic Services Inc. 20.0% 35.3% Other Covanta Holding Corporation 10.6% Waste Management Inc. 24.6% SOURCE: Player Performance Waste Management Inc. Market share: 24.6% Headquartered in Houston, Waste Management Inc. is the largest solidwaste management company in the United States. Waste Management operates in this industry through its landfills and its wholly-owned subsidiary Wheelabrator Technologies. Disposal operations include landfills and hazardous disposal sites, while Wheelabrator is a waste-to-energy (WTE) business that incinerates waste to create energy and sells the output to electricity wholesalers. Each segment makes up an average of about 28.0% of company revenue. The company s operations include 297 transfer stations, 269 landfills, 22 WTE plants, 114 materials recovery facilities and 12 secondary processing facilities. Waste Management operates 350 collection operations and about 26,000 collection and transfer vehicles, giving it the largest trucking fleet in the waste industry. Waste Management serves about 25 million residential customers and two million commercial customers. Waste Management s waste treatment and disposal business focuses on commercial, residential and industrial solid waste. In many areas, waste collection and disposal is integrated. As such, waste is directed to the group s own landfills (which is the largest network of landfills in the United States), with about 63.0% of collection and disposal internalized to its own sites. Waste Management focuses on commercial and industrial collection services, which generate higher profit margins compared to residential municipal business. The company s Wheelabrator subsidiary is the second-largest WTE business in the United States. The company has 17 WTE plants and five Waste Management Inc. (US treatment and disposal segment) financial performance* Year Revenue ($ million) (% change) Net Income ($ million) (% change) ,845.9 N/C N/C , , , , * 4, *Estimate SOURCE: ANNUAL REPORT AND IBISWORLD

26 Waste Treatment & Disposal Services in the US August Major Companies Player Performance continued independent power production facilities, which generate enough energy to power 900,000 homes. Wheelabrator generates about 7.0% of the company s revenue. Financial performance In the five years to 2013, industry-specific revenue is forecast to have grown at an annualized rate of 1.0%; this rate includes an estimated 1.7% climb to $4.0 billion in The company s stagnant five-year performance before 2013 can be traced to the recession, when lower consumption and industrial production decreased the amount of waste generated by most sectors of the economy. Additionally, high fuel prices during 2008 dissolved profit margins as the company tried to implement a fuel surcharge to offset the increases in transport fuel. The fuel surcharge will gain importance in the future, as upward-trending fuel prices become a concern for the company. Waste Management s recent acquisition of Oakleaf Global Holdings, however, will be a positive move for the company, likely resulting in revenue and profit gains during the next five years. Player Performance Republic Services Inc. Market share: 20.0% Republic Services is the second-largest provider of services in the Waste Treatment and Disposal Services industry. It provides solid-waste collection services for commercial, industrial, municipal and residential customers through 332 collection companies in 38 states and Puerto Rico. The company owns and operates 195 transfer stations, 191 active solid-waste landfills and 71 recycling facilities. The company operates in the industry through its transfer and disposal segment, which represents an average of about 37.0% of company revenue each year. The company is present in markets throughout the Sun Belt, including Florida, Georgia, Nevada, California, North Carolina, South Carolina and Texas, and in other domestic markets that have experienced higher-thanaverage population growth during the past several years. This has supported the company s internal growth strategy. Financial performance Republic has grown rapidly throughout the past five years. In November 2008, Republic Services and Allied Waste Industries merged, Republic Services Inc. (US treatment and disposal segment) financial performance* Year Revenue ($ million) (% change) Net Income ($ million) (% change) ,363.2 N/C 27.3 N/C , , , , * 3, *Estimate SOURCE: ANNUAL REPORT AND IBISWORLD

27 Waste Treatment & Disposal Services in the US August Major Companies Player Performance continued creating one of the largest waste services companies in the United States. In the five years to 2013, industry-specific revenue is on track to increase at an average of 19.2% per year, due largely to the merger. Revenue is estimated to increase 6.8% to reach $3.3 billion in The benefits of this merger include greater geographic coverage and new customers; however in 2013, rising energy costs, resulting in increased transportation charges, will likely hinder company performance. Player Performance Covanta Holding Corporation Market share: 10.6% Incorporated in 1992, Covanta Holding Corporation is a public company that operates waste-to-energy (WTE) plants in the United States, Europe and Asia. In September 2005, Covanta changed its name from Danielson Holding Corporation after it acquired Covanta ARC Holdings in June of that year. Prior to this acquisition, Covanta conducted nearly all of its operations in the insurance industry. In 2009, Covanta also acquired six WTE businesses from Veolia Environmental Services. Covanta is currently the largest WTE operator in the United States. Operating 44 of the 89 total US WTE facilities, the company produces almost 5.0% of all US non-hydro renewable energy. Covanta is also an owner or operator of 61 energy generation facilities, 46 of which are in the United States. Energy is generated using a variety of fuels, including municipal solid waste, biomass (wood waste), landfill gas, water (as hydroelectric power), natural gas, coal and heavy-fuel oil. The company also owns or operates a waste procurement business, three landfills and several waste-transfer stations. In the five years to 2013, the company has focused on expanding its presence in the United States and Canada. Financial performance Covanta s industry-specific revenue is expected to have increased an average of 4.4% per year to $1.7 billion in the five years to Increases in revenue have largely been due to acquisitions of WTE businesses. WTE facility revenue is made up of tipping fees and revenue from the sale of the energy produced. When a local municipality owns the WTE facility and Covanta operates the facility under contract, revenue comprises the fee received by the company for operating the facility, as well as a percentage of the revenue from the sale of energy (normally Covanta Holding Corporation financial performance Year Revenue ($ million) (% change) Net Income ($ million) (% change) ,401.0 N/C N/C , , , * 1, * 1, *Estimate SOURCE: ANNUAL REPORT AND IBISWORLD

28 Waste Treatment & Disposal Services in the US August Major Companies Player Performance continued about 10.0%). The municipal owner is responsible for the delivery of waste and the removal of ash. The company s profitability is dependent on the volume and price of the electricity sold, fees from waste handled and the sale of metals that are left after the waste is burned. Profit has risen during the past five years because of an increase in waste volume handled by Covanta and the divestiture of unprofitable WTE segments in Asia. Player Performance Clean Harbors, Inc. Market share: 9.5% Founded in 1980, Clean Harbors offers services in the transportation, treatment and disposal of industrial wastes. Headquartered in Norwell, MA, Clean Harbors has more than 200 locations and specializes in hazardous waste services in the United States. The company has about 50,000 customers across the United States, Canada, Mexico and Puerto Rico. It employs about 3,700 workers and operates 52 waste management facilities, including nine landfills, six incineration locations, seven wastewater treatment centers and two solvent recovery facilities. Clean Harbors has had a large amount of acquisition activity in the past five years. In 2008, Clean Harbors acquired two solvent recycling facilities in Chicago and Hebron, OH; this broadened the company s service portfolio and allowed the company to gain substantial presence in the market for solvent recycling. Additionally, in 2009, the company acquired Eveready, a Canadian-based company providing industrial maintenance and production, lodging and exploration services to the oil and gas, chemical, pulp and paper, manufacturing and power generation industries. Financial performance Clean Harbors primary segments include the following: technical services (63.0% of revenue), involving the transport and disposal of hazardous and nonhazardous wastes, and site services (19.0% of revenue), in which crews and equipment are dispatched to perform services. These services include tank cleaning, steam cleaning, vacuum services, site decontamination, remedial projects and demolition and oil products recycling. Clean Harbors Inc. (US treatment and disposal segment) financial performance* Year Revenue ($ million) (% change) Net Income ($ million) (% change) N/C 50.0 N/C , , , * 1, *Estimate SOURCE: ANNUAL REPORT AND IBISWORLD

29 Waste Treatment & Disposal Services in the US August Major Companies Player Performance continued Clean Harbors is expected to generate $1.6 billion in US industry-related revenue in In the five years through 2013, revenue has grown at an average annual rate of 11.7%, primarily due to the large number of company acquisitions. Other Companies Stericycle Inc. Estimated market share: 2.1% Stericycle, founded in 1989 and based in Lake Forest, IL, is the largest regulated medical waste management company in the United States, with significant operations overseas. The company s services include medical waste disposal, sharps disposal, hazardous waste disposal, integrated waste stream management and pharmaceutical waste disposal. Industry-related revenue for the company is anticipated to total $344.1 million in Veolia Environment Estimated market share: 1.9% Veolia Environment, a leading global waste-services company based in France, operates in the industry through Veolia Environmental Services North America Corp. This subsidiary is a public company that provides collection, incineration, landfill, recycling, transfer and hazardous-waste disposal services to commercial, industrial and residential customers. Veolia s businesses in North America include solid-waste management, providing services to 128,000 commercial and industrial firms and 1.2 million residences in 29 states, the Bahamas and Canada. The business operates 49 collection facilities and 26 solid-waste recovery sanitary-landfill facilities in the United States. Veolia also manages about 11 waste-to-energy facilities. The company is expected to generate $311.4 million in industry-related revenue during 2013.

30 Waste Treatment & Disposal Services in the US August Operating Conditions Capital Intensity Technology & Systems Revenue Volatility Regulation & Policy Industry Assistance Capital Intensity Level The level of capital intensity is High The capital requirements for this industry are high and have been increasing over the past five years. Waste-to-energy (WTE) facilities and landfill sites are expensive to build. The industry s capital intensity has increased during the past five years because industry operators have acquired WTE facilities, which are expensive to purchase. Expenditures include the cost of obtaining permits from the various levels of government, the purchase price and the possible expansion of the facility. As such, capital costs are high relative to the labor required to undertake the necessary work. Industry operators typically invest $0.54 of capital for every dollar of labor. Increased regulation of waste handling has underpinned increasing Capital intensity Capital units per labor unit Economy Administration, Business Support & Waste Treatment & Disposal Dotted line shows a high level of capital intensity SOURCE: capital intensity as industry operators spend more making sure their disposal sites meet codes. Even after a facility is Tools of the Trade: Growth Strategies for Success New Age Economy Recreation, Personal Services, Health and Education. Firms benefit from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation. Investment Economy Information, Communications, Mining, Finance and Real Estate. To increase revenue firms need superior debt management, a stable macroeconomic environment and a sound investment plan. Labor Intensive Traditional Service Economy Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore firms must use new technology or improve staff training to increase revenue growth. Waste Treatment & Disposal Services Construction Machinery Manufacturing Fertilizer Manufacturing Waste Collection Services Sewage Old Economy Treatment Facilities Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand firms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products. Capital Intensive Change in Share of the Economy SOURCE:

31 Waste Treatment & Disposal Services in the US August Operating Conditions Capital Intensity continued established, firms must bear the costs of closing the disposal site. Closure and postclosure landfill costs include the monitoring and maintenance of landfills for up to 30 years after closure. Companies may also be required to undertake site remediation. Government agencies usually require financial assurances to secure landfill closure and postclosure obligations. All of these activities are highly capital intensive. Technology & Systems Level The level of Technology Change is Medium Landfills There are a number of technologies currently used in landfill operation. These processes are designed to reduce waste volumes going to landfills, bring about rapid stabilization of waste within landfills, implement engineering safeguards that limit the possibility of water and air pollution and reduce the costs of closure and postclosure. Closure occurs when a landfill or a cell in a landfill is no longer receiving waste. Closure and postclosure usually involve capping and covering a landfill, methane gas control, leachate treatment and groundwater management. The monitoring and maintenance of closed landfills is often required for up to 30 years after closure. There are various types of landfills. In dry, entombed inert landfills, moisture is excluded from waste to minimize decomposition as much as possible (these landfills are limited to only a few materials). Entombed mixed-waste landfills are the most common type of landfill for municipal waste disposal and include a mixture of inert and putrescible materials. Entombed mixed-waste landfills are engineered to guard their contents. Bioreactor landfills intensify the landfill s own internal chemistry (e.g. recirculation of leachate) to achieve stability in a relatively short period and to exhaust gas production in less time. Waste-to-energy The technology to create energy from waste is not new. However, improvements have been made to the technology throughout the past ten years. Waste-to-energy (WTE) technology improvements now include better emission controls and better use of the ash waste produced by combustion. In 2000, the EPA introduced new emission standards for waste combustor (Maximum Achievable Control Technology) standards. The industry spent about $1.0 billion to fit WTE plants with modern air pollution control equipment. Incineration Innovations in the methods of waste incineration are coming courtesy of the Navy, which has been funding research into compact and efficient incinerators for use on its ships. This next generation of incinerators uses active combustion control and continuous emission monitoring to incinerate larger quantities of waste, using less fuel and generating fewer emissions than current commercial incineration processes. While the initial focus has been for use on ships, it is likely that the technology will be suited to a variety of commercial waste disposal uses.

32 Waste Treatment & Disposal Services in the US August Operating Conditions Revenue Volatility Level The level of Volatility is Medium The volume of waste requiring disposal, though subject to long-term trends, changes by only a small amount each year. In the five years to 2013, revenue has only increased 1.6%. This stability comes from disposal services being used by a range of markets across the country and laws enforcing the disposal of waste thereby regulating a certain level of demand. The volume of municipal solid waste requiring disposal is relatively steady. The hazardous waste market is relatively volatile, especially compared to the nonhazardous waste segment. The volume of commercial, construction and demolition waste produced varies with the level of economic activity. Tipping fees vary across regions, but display low volatility within regions. A large share of waste is collected and disposed of under multiple year contracts. Competition for waste disposal is predominately based on the level of tipping fees. A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment. When a firm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly. Revenue volatility* (%) Volatility vs Growth Hazardous Waste Treatment & Disposal Services 0.1 Stagnant Blue Chip Five year annualized revenue growth (%) Rollercoaster * Axis is in logarithmic scale SOURCE: Regulation & Policy Level & Trend The level of Regulation is Heavy and the trend is Increasing The disposal of waste is heavily regulated at the local, state and federal levels. The primary federal legislation governing the industry is the Resource Conservation and Recovery Act of 1976, (RCRA) which regulates handling, transportation and disposal of hazardous and nonhazardous waste. The act also delegates authority to states and development programs to ensure safe disposal of solid wastes. The Environmental Protection Agency (EPA) has applied the Clean Air Act of 1970 to landfills and incinerators. The 1990 Clean Air Act Amendments introduced industry-specific standards designed to reduce hazardous air pollutant emissions. Additionally, the Federal Water Pollution Control Act of 1972 established rules regulating the discharge of pollutants into streams and other waters of the United States from a variety of sources including solid waste disposal sites. The EPA issues permits to operate hazardous waste landfills under the authority of the RCRA; detailed specified information is required to be submitted to the EPA prior to the issue of a permit. In 1991, the EPA promulgated Solid Waste Disposal Facility Criteria for nonhazardous waste landfills under Subtitle D. Subtitle D includes location standards, facility design and operating criteria, closure and postclosure requirements, financial assurance