Combustion. October 27, 2010

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1 October 27, 2010 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission Suite 357, City Hall 101 N. Main St. Winston-Salem, NC Subject: Conversion Technologies Update Dear Ms. McHargue: R. W. Beck, Inc. An SAIC Company ( R. W. Beck ) has reviewed the Municipal Solid Waste Conversion Technologies Report dated May 2009 prepared by O Brien Environmental ( O Brien Report ). The primary purpose of the review was to determine whether there have been developments in the U.S. since May 2009 that would substantially change the O Brien Report conclusions. R. W. Beck s review was based upon information that we have obtained during our normal course of business. While the purpose of the review is not to fact check the O Brien Report, to the extent that we identified items in the report which are no longer accurate we have explained those issues. Combustion The report states, with regard to facilities that combust municipal solid waste ( MSW ), that Tipping fees for new facilities can be expected to be in the $100 to $150 per ton range. In a December 2008 report to the City of San Diego 1 the consultant states that tipping fees for conventional WTE facilities at a size of 500 ton per day (tpd) or larger, are typically in the range of $60 to $85 per ton. The Northeast Maryland Waste Management Authority is developing a 1,500 ton per day (tpd) mass burn waste to energy ( WTE ) plant in Frederick County, MD and has estimated the first year tip fee to be approximately $65 per ton. Thermal Conversion Technologies A June 21, 2009 report prepared by the University of California, Riverside titled Evaluation of Emissions from Thermal Conversion Technologies Processing Municipal Solid Waste and Biomass supports claims of lower air emissions by gasification technology vendors. The report includes the following statement: University of California researchers conducted a limited study in 2005 of three prototype thermochemical conversion technologies. Since then, significant efforts have been made to develop and analyze independent emissions data from thermochemical processes worldwide. These data are developed from independent source test reports, compliance reports from regulatory agencies, and peer-reviewed publications. Results from the analysis indicate that pyrolysis and gasification facilities currently operating throughout the world with waste feedstocks meet each of their respective air quality emission limits. With few exceptions, 1 Phase I, Long-Term Resource Management Options, Strategic Plan for the City of San Diego, December 2008 Client No Project No

2 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission October 27, 2010 Page 2 most meet all of the current emission limits mandated in California, the United States, the European Union, and Japan. In the case of toxic air contaminants (dioxins/furans and mercury), every process evaluated met the most stringent emission standards worldwide. Facilities with advanced environmental controls are very likely to meet regulatory requirements in California. The actual impacts of specific facilities will need to be evaluated on a case-by-case basis as part of a local permitting process. Anaerobic Digestion Although there are no commercially operating anaerobic digestion ( AD ) facilities in the United States, an AD facility digesting source separated organics has been commercially operating in Toronto, Canada for a number of years. The Toronto City Council has also authorized the expansion of its existing AD facility and the development of a second 90,000 ton per year AD facility. Further, the Province of Quebec and the Canadian government are providing funding to support three new commercial AD facilities one in Quebec City and two in Montreal. The Quebec City plant will process nearly 85,000 tons per year. Funding support will also be provided for three additional organic waste treatment programs in the province. Both the City of Los Angeles and Los Angeles County are seriously considering proposed AD facilities as part of the conversion technology procurements they are conducting. The City of Los Angeles is negotiating with a development team to build and operate a 150 tpd AD facility. LA County has selected four companies to develop conversion technology demonstration projects, one of them being a proposed AD facility. Gasification Conclusions regarding the technical viability of MSW gasification based upon recent procurements are listed in Table 10, on page 22 of the O Brien Report. Since the O Brien Report was submitted, the City of Taunton, MA selected International Waste Technologies to develop its project using the Thermoselect gasification technology. In the section on environmental impacts the statement is made that Gasification technologies melt and then cool ash residues to form a vitrified ash by-product, which immobilizes heavy metals. It should be noted that although most plasma arc gasification technologies vitrify the ash residues, other types of gasification systems do not vitrify the ash residues. Ash vitrification and waste gasification are not necessarily linked from a process perspective. Plasma Arc Gasification According to Plasco Energy s website: On June 25, 2008, Ottawa City Council unanimously agreed to issue a letter of intent to Plasco to build, own, and operate a 400 tonne-per-day waste conversion facility. Client No Project No

3 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission October 27, 2010 Page 3 MSW Composting Although the O Brien Report appears to focus on composting of mixed municipal solid waste, composting source separated organics has generated more interest in recent years. For example, early in 2010 a large composting facility opened in Delaware. According to its web site, the Peninsula Compost Group operates a commercial food and yard waste composting facility on 27 acres across from the Port of Wilmington, Delaware. The project was developed by over a three-year period at a cost of $20 million. Ground was broken in May 2009, and construction was complete in December The facility accepts 160,000 tons per year of source separated organic waste and turns it into a rich, fertile soil amendment known as compost. Recent MSW Conversion Technology Procurements The O Brien Report identifies ten MSW Conversion Technology Procurements, reports on their status (as of May 2009) and indicates the types of technologies being considered. In this section we provide a brief update on those procurements. Attachment A to this letter report provides a more detailed description of the process followed and lessons learned in four of these procurements. Los Angeles County, CA Los Angeles County has authorized the development of three conversion technology demonstration projects. The technology suppliers and the technology types to be implemented as part of the demonstration projects are: Arrow Ecology and Engineering Anaerobic Digestion International Environmental Solutions Pyrolysis NTech Environmental Low Temperature Gasification It is Los Angeles County s intent to sponsor the development of a larger commercial scale facility in the future should the demonstration projects justify such development. City of Los Angeles, CA The City will proceed with two projects, a 150 tpd project based upon an emerging technology and a larger project based upon proven technology. The City has selected California Renewable Technologies ( CART ) to build a 150 tpd facility based upon the ArrowBio AD technology provided and is negotiating a contract. They are still evaluating proposals for the second project. Client No Project No

4 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission October 27, 2010 Page 4 City and County of Santa Barbara, CA In December 2009 Santa Barbara issued a Request for Proposals (RFP) which resulted in a shortlist of the following companies by technology type: Anaerobic Digestion CA Renewable Technologies - CR&R/Arrow Ecocorp Mustang Renewable Power Ventures (BEKON) Urbaser (MBT - anaerobic digestion) Thermal Processing AdaptiveARC (Plasma Gasification) International Environmental Solutions (Pyrolysis) Interstate Waste Technologies (Gasification) NRG Energy (Plasma Gasification) Plasco Energy Group (Plasma Gasification) Tajiguas Partners - WTE/Entech (Gasification) Other Technology Herhof California (Biological Drying/Mechanical Separation/Off-Site Combustion) In the summer of 2010 Santa Barbara received proposals from the following four companies: International Environmental Solutions (Pyrolysis) Mustang Renewable Power Ventures (BEKON Anaerobic Digestion) NRG Energy (Plasma Gasification) Plasco Energy Group (Plasma Gasification) The proposal evaluation is in progress and interviews are scheduled. City of Sacramento, CA A number of years ago the City of Sacramento issued a Request for Qualifications (RFQ) for conversion technologies. A committee evaluated a number of submittals and staff recommended to the City Council that they negotiate the development of plasma arc gasification based project with one of the submitting companies. After approximately two years of effort, in January of 2009, Sacramento determined that the technology was not commercially proven and halted Client No Project No

5 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission October 27, 2010 Page 5 negotiations with the company. The City is not currently pursuing the development of a conversion technology project. Salinas Valley Solid Waste Authority, CA In April 2008, the Authority selected four vendors to receive an RFP. In August 2008, the Authority received proposals from: International Waste Systems (gasification) Plasco Energy (plasma arc gasification) Urbaser S.A.(MRF/anaerobic digestion/composting/wte/other) In November 2009 the Authority Board authorized negotiations with two vendors Plasco Energy and Urbaser S.A. Santa Cruz County, CA Having declined an offer by a developer to site a plasma arc gasification system at their landfill, the County is not actively pursuing the development of a conversion technology project at this time. Taunton, MA Taunton has completed its procurement process and is negotiating a contract with selected company. Although the initial target date for the facility to accept materials is in late 2013, that date may not be achieved as they have experienced difficulties getting the permits and financing in place. New York, NY The City is reviewing potentially suitable alternative waste conversion technology pilot project sites. St. Lucie County, FL According to a September 16, 2010 news release from Alter NRG, Corp.: Geoplasma - St. Lucie, LLC (the project developer that will use Alter NRG s Westinghouse Plasma technology) has a 20 year agreement with the County to process the waste into clean energy. The St. Lucie project is expected to process approximately 660 tons per day of feedstock consisting of primarily municipal solid waste from St. Lucie County, plus tires and other permitted feedstocks and convert this into steam and/or power. Client No Project No

6 Ms. Jan McHargue Winston-Salem/Forsyth County Utility Commission October 27, 2010 Page 6 On July 17, 2010 Geoplasma received its final Air Construction Permit from the Florida Department of Environmental Protection ( Florida DEP ) for the gross 24 megawatt plasma arc gasification waste to energy plant. St. Lucie County is supporting the project by proceeding with modifications to the existing permits for the landfill to accommodate the plasma gasification process. City of Edmonton, Alberta, Canada Following research into alternative thermal technologies and a procurement process, Edmonton selected Enerkem to develop a waste to ethanol project. In April 2009, Enerkem Alberta Biofuels was granted a permit to commence construction. Enerkem commenced construction of the facility in August of 2010 and initial operations are expected in This concludes our update of conversion technologies and the particular projects presented in the O Brien report. Please contact us if you have any questions about the content of this report. Sincerely, R. W. BECK, INC. Abby Goldsmith Senior Director Water, Environment & Transportation Energy, Environment & Infrastructure Solutions AG:ls Attachment Client No Project No

7 SUPPLEMENTAL REPORT ON THE STATUS OF SELECTED CONVERSION TECHNOLOGY PROCUREMENTS As part of its update on the status of solid waste conversion technology in the United States, R. W. Beck evaluated the procurement process and outcome to date of four specific conversion technology projects in North America. Together, R. W. Beck and the CCUC staff selected conversion technology projects that are being considered or developed in the following four communities to evaluate the project overview, and results to date: Taunton, Massachusetts Los Angeles County, California Pontotoc, Mississippi Edmonton, Alberta Taunton, Massachusetts Project Overview and Objectives The City of Taunton s ( Taunton ) regional landfill is projected to reach capacity between 2013 and As host to the regional landfill, Taunton receives free solid waste and sludge disposal, an estimated annual value of $2 million, and host payments, an estimated annual value of $1.2 million. Taunton s objectives in pursuing the development of an alternative conversion technology project included: Use of an environmentally sound means of solid waste management; and Continued economic benefits to Taunton as the host community. After conducting research into various alternative conversion technologies and conducting a formal procurement process, Taunton is currently in negotiations with Interstate Waste Technologies for the development of a high temperature gasification project using the Thermoselect process. Development Process In 2005, the City of Taunton began evaluating solid waste conversion technologies that could be used to replace the existing regional landfill when it closed. In June 2008, Taunton issued a Request for Proposals to finance, design, build and operate a regional solid waste management facility to be located in Taunton. Seventy participants attended the mandatory pre-proposal meeting. In September 2008, 16 vendors submitted expressions of interest. Table 1 below Client No Project No

8 presents a list of the companies who submitted an expression of interest and the technology proposed. Table 1 List of Vendors that Submitted an Expression of Interest Company Technology Key Product AdaptiveARC, Inc. Plasma Arc Gasification Electricity Arrow Ecology (ArrowBio) Anaerobic Digestion Electricity, Natural Gas, Compost Casella Waste Services Technology Not Identified Key Product Not Identified Ecocorp Anaerobic Digestion Natural Gas, Compost Enerkem High Temperature Gasification Ethanol Green Conversion System Advanced WTE Electricity Herhof MS/ Fuel Production Electricity International Environmental Solutions Pyrolysis Electricity, Hydrogen Interstate Waste Technologies High Temperature Gasification Electricity NRG Energy AlterNRG Plasma Arc Gasification Electricity Organic Waste Systems Anaerobic Digestion Electricity, Compost Plasco Energy Group, Inc. Plasma Arc Gasification Electricity ReEnergy Holdings LLC High Temperature Gasification, Pyrolysis Electricity TLA Pond View Pyrolysis Fuel Waste Management Plasma Arc Gasification Electricity, Fuel WeCare Organics LLC Technology Not Identified Key Product Not Identified In June 2009, the following six vendors submitted proposals: International Environmental Solutions Interstate Waste Technologies NRG Energy, Inc. Taylor Biomass Energy Waste Management WeCare Organics Taunton completed the evaluation of proposals in January of 2010, requesting Interstate Waste Technologies, NRG Energy, Inc., and WeCare Organics to submit best and final offers. In March 2010, the City of Taunton selected Interstate Waste Technologies for negotiations. Interstate Waste Technologies proposed to use the Themoselect gasification technology to generate synthesis gas and to produce ethanol from the synthesis gas. Technologies Evaluated Taunton evaluated both traditional and emerging technologies in an effort to address the future solid waste management needs of the community. Technologies evaluated included: Client No Project No Page 2

9 Composting; Co-composting; Thermal gasification; Aerobic digestion; Anaerobic digestion; Hydrolysis; and Mechanical means of waste separation into useful products. The City of Taunton excluded landfilling and traditional combustion based waste-to-energy from the technology evaluation process. One of the reasons that traditional combustion based wasteto-energy was excluded is that the Commonwealth of Massachusetts has a moratorium on the permitting of incinerators. During the course of the Taunton procurement process a determination was reached that gasification followed by the combustion of the gas to generate electricity fell within the moratorium. Results of Efforts to Date and Lessons Learned Taunton has completed its procurement process and is negotiating a contract with the selected company. Although the initial target date for the facility to accept materials was late 2013, that date may not be achieved as they have experienced difficulties getting the permits and financing in place. As part of the process, Taunton faced various challenges including: Obtaining consensus for the project concept; Gaining support for the project from elected officials; Developing relationship with federal and state environmental agencies to facilitate the development of the solid waste facility; Balancing environmental and host community benefits with current market conditions; and Securing a waste stream to support the solid waste facility. To address these challenges, Taunton included terms and provisions in the procurement documents to incorporate guarantees and financial assurances. In addition, Taunton participated in discussions with the federal and state environmental agencies to determine whether the State moratorium on incineration applies to thermal gasification technologies. In addition, Taunton allowed companies to propose a 10-year phased project development to alleviate concerns that there would not be enough waste available in the early years of the project to maintain the facility at full capacity. A 10-year phased project development would allow companies the opportunity to secure waste. Overview of Project Structure and Risk Allocation The Request for Proposals outlined the project structure and the risk allocation. Taunton requires the company to permit, finance, design, build, own and operate the solid waste management facility. Taunton purchased property for potential vendors to utilize as a site for the facility. Proposers were allowed to offer alternative sites as well. Client No Project No Page 3

10 According to the procurement documents the company will be responsible for: Determining the size of the facility and arranging for the supply of waste beyond the waste to be delivered by Taunton. Arranging for the sale of the energy and products. Accepting and disposing of Taunton s waste as of a date to be established in the contract. If the facility is not in operation by that date the company must transport and dispose of the waste at an alternative disposal site. Constructing a LEED certified facility that included a visitor/educational center on the site. Summary of Key Contract Principles Currently, Taunton and Interstate Waste Technologies are in negotiations. Some key contract terms that Taunton is seeking to be included in the contract are: Contract Term: 20 years with two 5-year renewals. End of Term: City has option to purchase the facility for $1 or require the company to remove the facility and restore the site to a useable condition. Solid Waste and Sludge Disposal Costs: The City shall receive free disposal, an estimated annual value of $2.5 million, at the solid waste management facility. Host Facility Fees: The City shall receive host fee payments for materials accepted from outside the City, an estimated annual value of $1.9 million. Site Lease Payment: The Contractor shall pay the City an amount equal to 100% the City debt service for lease of the site. Project Development Fund ($1.75 million): Reimbursement for the City s costs associated with the project development such as feasibility study costs, siting study costs, waste analysis, procurement costs, waste aggregation support, permitting support, financing support, product and energy marketing support, and engineering design review, construction monitoring and monitoring of facility start-up and acceptance testing. Environmental Fund ($1 million): To establish a fund for the improvement of environmental infrastructure or other related projects within Taunton. The City shall determine where and how the Environmental Fund shall be allocated. Contract Monitoring Payment ($115,000): Annual payment for engineer, financial, and legal services to monitor the project. Los Angeles County, California Project Overview and Objectives To address the pending closure of the local landfills, Los Angeles County began researching potential conversion technologies in The County s objectives in considering conversion technologies included: Client No Project No Page 4

11 Diversifying the County s solid waste management practices; Addressing the limited landfill capacity within the County; Creation of jobs; and Other environmental benefits. As part of the process, Los Angeles County analyzed conversion technologies and potential material recovery facilities (MRFs) and transfer stations that could host such conversion technology facilities. Los Angeles County has authorized the development of three conversion technology demonstration projects. The technology suppliers and the technology types to be implemented as part of the demonstration projects are: Arrow Ecology and Engineering Anaerobic Digestion International Environmental Solutions Pyrolysis NTech Environmental Low Temperature Gasification It is Los Angeles County s intent to sponsor the development of a larger commercial scale facility in the future should the demonstration projects justify such development. Development Process In 2004, the Los Angeles County Board of Supervisors created the Alternative Technology Advisory Committee. The Alternative Technology Advisory Committee undertook the following four phase approach to the development of conversion technology facilities: Phase I: Assessment of conversion technology companies and identification of potential host sites for demonstration facilities; Phase II: Identification of conversion technology companies and host sites for conversion technology demonstration facilities; Phase III: Development of demonstration facilities; and Phase IV: Siting of commercial facilities in Los Angeles County. In 2005, as part of Phase I, 72 conversion technology vendors were contacted and requested to complete a conversion technology questionnaire that was sent to them. A list of the 28 vendors that responded to the questionnaire is provided in Table 2. Table 2 Vendors Responding to the Conversion Technology Suppliers Questionnaire Amerivan Bio-Tech Arrow Ecology Ltd BRI Energy, Inc. Canada Composting Inc. (CCI) Changing World Technologies Conrad Industries Company Technology Sub-Technology Aerobic Composting Anaerobic Digestion Syngas-Ethanol Anaerobic Digestion Thermal Depolymerization Pyrolysis Client No Project No Page 5

12 Company Technology Sub-Technology Ebara Corporation/ Environmental Plants Division Gasification Fixed bed Geoplasma LLC (part of Jacoby Development. Inc.) Plasma Gasification Global Energy Solutions, Inc. Pyrolysis/gasification Fixed bed Global Renewables Anaerobic Digestion Graveson Energy Management Pyrolysis Green Energy Corp Gasification HotRot Exports Ltd, or Outspoken Industries Aerobic Composting International Bio Recovery Corporation (IBR) Aerobic Digestion International Environmental Solutions Pyrolysis Interstate Waste Technologies Pyrolysis/Gasification Fixed bed Molecular Waste Technologies, Inc. Other Thermal Microwave Omnifuel Technologies, Inc. Gasification Fixed bed Organic Waste Systems nv Anaerobic Digestion Pan American Resources, Inc. Pyrolysis Plasma Environmental Technologies, LLC Plasma Gasification Primenergy, LLC Gasification Fixed bed Rigel Resource Recovery and Conversion Company Plasma Gasification Taylor Recycling Facility. LLC Gasification Fluid bed Waste Recovery Systems, Inc. Anaerobic Digestion WasteGen (UK) Pyrolysis/gasification Whiiteen Group International Gasification Fixed bed Wright Environmental Management Inc. Aerobic Composting The conversion technology vendors who responded to the questionnaire were screened and eliminated if: The response to questionnaire was incomplete; Technology provides only a physical change in the material and such material would need to utilized elsewhere; Technology sole product is compost; Technology has no existing pilot or demonstration facility; Capital costs or processing cost exceed limits set by study; or Cost information was incomplete. The remaining 14 vendors were ranked based on the following criteria: environmental suitability, technical performance, and projected cost and revenues. Phase I culminated with the identification of the following six vendors to be considered during Phase II: Interstate Waste Technologies (Thermoselect gasification technology) Primenergy LLC (Gasification) Client No Project No Page 6

13 Ntech Environmental (Gasification) GEM America (Pyrolysis) Changing World Technologies (Thermal Depolymerization) BRI (Gasification) As part of Phase I, 52 MRFs and transfer stations were contacted to identify potential host facilities. The 13 facilities that expressed an interest in hosting a conversion technology were evaluated based on the following criteria: Ability and willingness to partner; Availability of adequate space; Residual quality; Residual suitability; Pretreatment capability; Flexibility in residue generation; Local environmental sensitivity; Utility availability; Transportation access; Site specific regulatory issues; Financial incentive; and Access to local market. After evaluating the potential host facilities, Los Angeles County identified the following six host facilities to be considered in Phase II: Del Norte Regional Recycling and Transfer (City of Oxnard, Ventura County); Community Recycling/Resource Recovery, Inc. in Sun Valley (City of Los Angeles, Los Angeles County); Central Los Angeles Recycling Center and Transfer Station (City of Los Angeles, Los Angeles County); Robert A. Nelson Transfer Station & MRF in Rubidoux (City of Aqua Mansa, Riverside County); Santa Clarita MRF/ TS (Los Angeles County); and Perris Transfer Station and MRF (City of Perris, Riverside County). In 2006, Los Angeles County commenced Phase II of the conversion technology facilities development program. In addition to the conversion technology vendors identified in Phase I, Los Angeles County invited the following three additional vendors to participate in Phase II: Arrow Ecology and Engineering; Ebara Corporation; and Client No Project No Page 7

14 International Environmental Solutions. The nine conversion technology vendors were asked to respond to a Request for Information (RFI). Four vendors declined to participate in the RFI process. Table 3 presents the final list of vendors and the projects considered as part of Phase II. Arrow Ecology and Engineering Table 3 Final List of Vendors Evaluated in Phase II Company Technology Proposed Capacity Major Products Anaerobic Digestion 300 tpd Biogas (Electricity Digestate (Compost) Recyclables Changing World Technologies Thermal Depolymerization 200 tpd Renewable Diesel Carbon Fuel Metals International Environmental Solutions Interstate Waste Technologies Pyrolysis Pyrolysis/ High Temperature Gasification tpd at 58.9% moisture 125 tpd at 20% moisture 312 tpd (1 unit) 624 tpd (2 units) 935 tpd (3 units) Syngas (Electricity) Syngas (Electricity) Mixed Metals Aggregate NTech Environmental Low Temperature Gasification 413 tpd Syngas (Electricity) In re-evaluated the host sites during Phase II, two of the host sites identified in Phase I no longer were willing and able to be considered and one additional site was added as a potential host facility. The host sites considered as part of Phase II included: Del Norte Regional Recycling and Transfer (City of Oxnard, Ventura County); Community Recycling/Resource Recovery, Inc. in Sun Valley (City of Los Angeles, Los Angeles County); Robert A. Nelson Transfer Station & MRF in Rubidoux (City of Aqua Mansa, Riverside County); Perris Transfer Station and MRF (City of Perris, Riverside County); and Rainbow Disposal Company, Inc. MRF (Huntington Beach, Orange County). The initial steps of Phase II included verification and evaluation of conversion technology vendor qualifications, technology capabilities, and host sites. In addition, Phase II included identification of project funding opportunities, financing approaches, financing requirements, and incentives required or helpful for facilitation of the demonstration projects. Upon conclusion of Phase II, Changing World Technologies and Interstate Waste Technologies were eliminated from further consideration. In 2008, Los Angeles County issued a Request for Proposals to develop the demonstration projects. Today, Los Angeles County is in the process of developing conversion technology demonstration facilities for the following technology providers: Arrow Ecology and Engineering Anaerobic Digestion International Environmental Solutions Pyrolysis NTech Environmental Low Temperature Gasification Client No Project No Page 8

15 Los Angeles County estimates the demonstration facilities will commence accepting materials in 2012 or 2013 depending on permitting and funding. The memoranda of understanding between Los Angeles County and the conversion technology vendors provide that the facilities will be operational for five years. Technologies Evaluated As part of the Phase I assessment of conversion technologies both thermal and bio-chemical conversion technologies were evaluated. The thermal technologies evaluated included: Pyrolysis; Pyrolisis/gasification; Pyrolysis/steam reforming; Conventional gasification; Plasma gasification; and Thermal deploymerization. The bio-chemical conversion technologies evaluated included: Anaerobic Digestion; Hydrolysis-Ethanol production; Syngas Ethanol; Catalytic cracking of plastics; and Aerobic Digestion. Results of Efforts to Date and Lessons Learned The conversion technology facilities are projected to accept materials in late 2012 or early After the demonstration projects have operated and been evaluated, Los Angeles County will commence development of commercial facilities within the County. According to Los Angeles County, the process has been successful due to the phased approach and transparency of the process. Los Angeles County has developed a website, which presents information regarding conversion technologies and the steps taken by the County. Overview of Project Structure and Risk Allocation Participants in the demonstration projects include Los Angeles County, the host facility, and the conversion technology vendor. The conversion technology demonstration facility is jointly owned by the host facility and the conversion technology vendor. The financial responsibility of Los Angeles County is limited to the following: Assisting the conversion technology vendors with obtaining grants and loans; Providing consulting services; Development of public education; and Client No Project No Page 9

16 Continue efforts at the State level to recognize conversion technologies and conversion technology facilities. Summary of Key Contract Principles Los Angeles County and the conversion technology vendors have executed a memorandum of understanding to govern the demonstration facilities. Key contract principles include: Design, Construction, and Operation Costs: Excluding grant funding, the conversion technology vendor shall be solely responsible for all costs associated with design, construction, and operation of the demonstration facility. Term of Agreement: The demonstration facility shall be operational for a period of five years unless the agreement is otherwise terminated. Residual Diversion Requirement: The demonstration facility shall be capable of diverting a minimum specified percentage (by weight) of the MRF residuals. The specified diversion percentage ranges from 82% to 94% depending on the conversion technology employed. Assistance with Grants and Loans: Los Angeles County shall assist the vendor to obtain grants and loans. Either party may terminate the agreement if Los Angeles County and the conversion technology vendor are unable to obtain the pre-defined amount in grants/loans, ranging from $700,000 to $7,500,000, within 16 months from the date of the memorandum of understanding. Pontotoc, Mississippi Project Overview and Objectives Three Rivers Solid Waste Management Authority of Mississippi ( Three Rivers ) has over 90 years of remaining capacity at the Authority s landfill in Pontotoc, Mississippi. Even though not faced with a shortage of landfill capacity, Three Rivers considered legitimate proposals for alternative technologies. Three Rivers and has executed a letter of intent (LOI) with Enerkem Under the proposed project, Enerkem s biofuel facility will reduce the volume of waste disposed at Three River s landfill by an estimated 70 percent. Development Process Three Rivers was approached by project developers seeking to locate alternative conversion technology facilities at the Authority s landfill. Enerkem, a Canadian company that develops facilities that gasify MSW, proposed to develop a waste to ethanol facility at the Three Rivers landfill. In evaluating Enerkem s proposal, Three Rivers representatives visited Enerkem s facility in Canada on several occasions. After visiting Enerkem s facility, Three Rivers worked with the local university and an independent engineer to evaluate the Enerkem gasification process. In 2009, Enerkem executed a memorandum of understanding with Three Rivers and announced plans to construct the biofuel facility in Mississippi. In 2010, Enerkem scaled down the project from a $250 million facility to $100 million facility. Client No Project No Page 10

17 Technologies Evaluated Three Rivers did not issue a formal procurement document; however, Three Rivers evaluated legitimate alternative solid waste management technologies proposed by third parties. Prior to this project with Enerkem, Three Rivers was evaluating a sterilization process proposed by another vendor. Overview of Project Structure and Risk Allocation Enerkem is solely responsible for the costs associated with the solid waste management facility. Currently, Enerkem has been awarded a $50 million grant from the U. S. Department of Energy and is in the process of arranging the additional financing. Three Rivers shall provide the site and may build and operate a materials recovery facility to supply residual waste to the Enerkem waste to ethanol facility. Summary of Key Contract Principles Three Rivers and Enerkem have signed an LOI regarding the development of the project and the supply of MSW to the project. The LOI and its terms have not been revealed to the public. A contract has not been finalized between the parties. Edmonton, Alberta Project Overview and Objectives The City of Edmonton ( Edmonton ) operates composting and recycling facilities that divert 60% of the Edmonton s residential waste from the landfill. Edmonton s objectives in evaluating thermal conversion technologies were to: Increase Edmonton s landfill diversion rate from 60% to 90%; and Reduce Edmonton s need for landfilling, without implementation of a mass-burn type wasteto-energy plant. The Edmonton Waste-to-Biofuel project is a collaborative effort among the City of Edmonton, the Government of Alberta, and Enerkem Alberta Biofuels ( EAB ). The project includes three facilities: Waste-to-Biofuels Production Facility; Advanced Energy Research Facility; and Municipal Waste Processing Facility. Development Process In 2004, Edmonton, via a grant from Federation of Canadian Municipalities, initiated a study of gasification and pyrolysis technologies around the world. The study screened over 150 technology providers. The following essential criteria were used to shortlist potential gasification and pyrolysis system providers: Client No Project No Page 11

18 Waste type/suitability capable of handling and processing compost rejects and refuse derived fuels; Status process is fully commercial based or currently operating as a commercial facility at a 50,000 TPY scale; Energy recovery/utilization net producer of energy or combustion of dirty syngas if it is a part of an integrated process; Environmental impact able to meet the most stringent European emission requirements, if applicable, and must not produce a hazardous residue which difficult to handle/dispose; Supplier credibility supplier is a credible organization; and Exclusion process is not a combustion process and doesn t use syngas to generate steam as a final product for sale to potential over-the fence customers. In addition, the following desirable criteria were considered to shortlist potential conversion technologies: Flexibility feedstock acceptability and amount of pre-processing required; Environmental impacts amounts and types of emissions to air, liquid effluents and solid residues; Economics capital and operating costs; and Reference plants available reference facilities to visit and assess. Ten companies were invited to submit proposals. Following an evaluation of the proposals Edmonton selected Enerkem as their technology partner for the project. To ensure the project was viable, Edmonton and Enerkem initiated a pilot program at Enerkem s Quebec facility in For the pilot program, Edmonton processed the solid waste and shipped the material to Enerkem s Quebec facility. The pilot program demonstrated the proposed project was viable. Technologies Evaluated Edmonton conducted a comprehensive study of over 150 pyrolysis and gasification technologies. The following ten companies passed the screening process and were requested to submit budget proposals. Brightstar; Ebara; Energos Enerkem; Lurgi; Nippon Steel; Thermoselect; Thide; Client No Project No Page 12

19 Toshiba; and WasteGen. Suppliers of fluid bed combustion systems were also asked to submit budget proposals for comparison to the gasification and pyrolysis proposals. The following five gasification and pyrolysis suppliers submitted proposals: Brightstar; Enerkem; Thermoselect; Thide; and WasteGen. Ebara and EPI submitted fluid bed combustion system proposals. Of the five gasification and pyrolysis proposals Enerkem was judged to have the lowest cost system and Thermoselect the highest cost system. Results of Efforts to Date and Lessons Learned The procurement resulted in a contract between Edmonton and EAB. In April 2009, EAB was granted a permit to commence construction. EAB began construction of the facility in August of 2010 and initial operations are expected in Edmonton has identified the following two lessons learned: Conduct due diligence; and Distinguish between gasification projects and other projects. Cities considering alternative technologies must examine facilities and verify claims prior to commencing a test program. Furthermore, cities interested in gasification must distinguish true gasification projects from combustion projects. Overview of Project Structure and Risk Allocation Edmonton shall process the materials prior to delivery to Enerkem s facility. The processing of the material will reduce the risk to Enerkem by providing a more homogenous material. The land for the biofuel facility shall be provided by Edmonton at no cost to Enerkem. The funding of the biofuel facility, an estimated $131 million, is partially funded by the Government of Alberta ($32.35 million) and Edmonton ($42 million). Summary of Key Contract Principles Edmonton identified the following key terms in the contract between Edmonton and EAB: Contract Term: The initial contact term shall be for 25 years. Required Material: Edmonton shall provide a minimum of 100,000 tons of municipal solid waste annually to the bio-fuel facility. The municipal solid waste to be utilized for this agreement will be from the waste stream not currently being composted or recycled. Client No Project No Page 13

20 Pre-processing of Municipal Solid Waste: Edmonton shall process the material to a size of 2 inches or less prior to delivery to Enerkem. Tipping/Processing Fee: Edmonton shall pay Enerkem a tipping/processing fee for acceptance of materials. Future Revenues: Edmonton and Enerkem shall share in future revenues including GHG credits and other revenues that may arise during the term of the agreement. Conclusion Each of these four communities undertook a rigorous approach to evaluating potential conversion technology projects. All but one initiated a conversion technology project by conducting a study of multiple technologies and evaluating their performance based on the community s pre-determined criteria or by issuing a request to potential vendors to propose a project. This is the path many communities take when they identify the need for or interest in alternatives to landfill disposal. Often, the community initiates an evaluation of conversion technologies due to a concern about future disposal capacity. On the other hand, one of the four communities pursued a project after evaluating an unsolicited proposal and determining the project was in the community s best interests. Client No Project No Page 14