Executive Summary EVALUATION OF NAMA OPPORTUNITIES IN COLOMBIA S SOLID WASTE SECTOR WRITTEN BY: Leo Larochelle Michael Turner Michael LaGiglia RESEARCH SUPPORT: CCAP CENTER FOR CLEAN AIR POLICY Hill Consulting (Bogotá) O C TOBER 2012 Dial ogue. I ns i ght. S o lu t io n s.
Acknowledgements This paper is a product of CCAP s Mitigation Action Implementation Network (MAIN) and was written by Leo Larochelle, Michael Turner, and Michael LaGiglia of CCAP. This project was undertaken with the financial support of the Government of Canada through the Federal Department of the Environment. Special thanks are due to the individuals and organizations in Colombia who offered their time and assistance, through phone interviews or in-person discussions to help inform this work. The support of the Ministerio de Ambiente y Desarrollo Sostenible was essential to the success of this report as well as help from the Steering Committee (made up of the Ministerio de Ambiente Vivienda Y Desarrollo Territorial, the Departamento Nacional de Planeación, the Ministerio de Ambiente y Desarrollo Sostenible, and the Superintendencia de Servicios Públicos Domiciliarios), representatives from Santiago de Cali (Empresa Pública de Gestión Integral de Residuos Sólidos de Cali, Departamento Administrativo para la Gestión del Medio Ambiente), Medellín (Area Metropolitana del Valle de Aburra Unidad Ambiental), Ibagué (Corporación Autónoma Regional del Tolima-Cortolima and Interaseo) and Sogamoso (Secretario de Desarrollo y Medio Ambiente and Coservicios). The views expressed in this paper represent those of CCAP and not necessarily those of any of the other institutions or individuals mentioned above. For further information, please contact Michael LaGiglia at (mlagiglia@ccap.org). 2
List of Acronyms CARs - Regional Autonomous Corporations (Regional Environmental Authorities) CCAP - Center for Clean Air Policy CDM - Clean Development Mechanism CEMPRE - Corporal Commitment on recycling - www.cempre.org.co CPC - Colombian Politic Constitution of 1991 CRA - Regulatory Commission for Water and Sanitation - www.cra.gov.co DANE - National Department of Statistics - www.dane.gov.co DNA - Designed National Authority EICE - Industrial and Commercial State s companies EPR - Extended Product Responsibility EU - European Union GHG - Greenhouse Gas HDPE - High Density Polyethylene ICA - Colombian Institute of Agriculture IDEAM - Colombian Institute of Hydrology, Meteorology and Environmental Studies - www.ideam.gov.co IPCC - Intergovernmental Panel on Climate Change ISWM - Integrated Solid Waste Management LFG - Landfill Gas LFGTE - Landfill Gas to Energy MADS - Ministry of Environment and Sustainable Development - www.minambiente.gov.co MBT - Mechanical Biological Treatment MDL - Clean Development Mechanism MRV - Measurable, Reportable and Verifiable MSW - Municipal Solid Waste NAMA - Nationally Appropriate Mitigation Action PGIRS - Integrated Solid Waste Management Plans RAS - Technical Regulation for drinking water and sanitation RDF - Refuse Derived Fuel RUPS - Public Services Providers Registry SINA - National Environmental System SSPD - Superintendence for Household Public Services - www.superservicios.gov.co SUI - Unique Information System of domiciliary public services providers - www.superservicios.gov.co SWM - Solid Waste Management UNFCCC - United Nations Framework Convention on Climate Change USEPA - United States Environmental Protection Agency USTDA - United States Trade and Development Agency WTE - Waste to Energy 3
Table of Contents Acknowledgements... 2 List of Acronyms... 3 Executive Summary... 5 Economic Model... 6 Analysis of Technologies... 8 Cost Prohibitive Technologies... 8 Potentially Viable Technologies... 8 Recommended Colombia Integrated Waste NAMA... 11 Assessment Conclusions... 12 Assessment Recommendations... 14 4
Evaluation of NAMA Opportunities in Colombia s Solid Waste Sector Executive Summary The intent of the Colombia Waste NAMA assessment is to analyze solid waste management (SWM) technologies and programs that could be implemented in Colombia to achieve greenhouse gas (GHG) reductions as well as other health, economic, and social co-benefits under the framework of a Nationally Appropriate Mitigation Action (NAMA). The assessment investigates baseline conditions and factors that influence the development of new SWM programs and facilities, and provides a scoping analysis to identify elements of SWM that could be implemented singly or as an integrated package. In undertaking the assessment, the Center for Clean Air Policy (CCAP) in association with Hill Consulting of Bogota, and on behalf of Environment Canada, made use of extensive available national information and data to determine the applicability of alternative SWM approaches that can achieve GHG emission reductions while also improving solid waste management conditions in an economically viable and sustainable manner. To accomplish this, CCAP also investigated specific conditions in four municipalities (Santiago de Cali (Cali), Medellín, Ibagué and Sogamoso) that were viewed to represent different demographic and institutional settings in Colombia. SWM is one of the major urban problems faced by municipalities throughout the world. In recent years, the focus for improving municipal SWM has been towards the development of Integrated Solid Waste Management (ISWM) programs where each facet of the sector (waste generation, collection, transfer, disposal, etc.) is analyzed in a holistic manner. Through this integrated approach, SWM in developing countries has increasingly been focusing on waste minimization, energy and resource recovery rather than solely viewing the sector as an environmental risk and public service issue. In developed countries, expensive disposal and public opposition to landfill siting has only increased this trend. MSW recovery potential is primarily the function of the physical characteristics of the solid waste to be managed and the manner by which recovery is achieved. Mature and proven processing technologies are commercially available for recovery and treatment purposes. However, worldwide experience has shown that the application of some conventional technologies must be carefully evaluated to determine that they are economically viable and sustainable within the specific settings for which they are intended. In recent years, municipalities in Colombia have made significant progress in improving their core SWM services and functions including collection, transport and disposal processes. (Current government estimates indicate that up to 92% of the municipal solid waste in Colombia is disposed of in sanitary landfills.) National policies have also evolved to promote ISWM approaches that seek to achieve a zero waste culture. By regulation, Colombian municipalities were required to develop solid waste management plans to define how they will further improve their local SWM programs to meet national 5
regulations. However, implementation of these plans has been slow as a result of a number of factors described in this report. Currently and in parallel to these evolving SWM situations in Colombia, increased concern about anthropogenic climate change effects has brought solid waste management into a new global focus as a potential source of climate change mitigation. By their nature, most SWM processes are a source of GHG emissions (i.e., methane emissions from landfills) but this report will outline ways that this can be remedied. For initial screening purposes, CCAP evaluated the applicability of a number of conventional solid waste management approaches in two scenarios and various technical configurations within each scenario including: Mixed Municipal Solid Waste Processing 1. Waste to Energy (WTE) - incineration for energy recovery 2. Mechanical Biological Treatment (MBT) facility - utilizing anaerobic digestion as the core biological process 3. Mechanical Biological Treatment (MBT) facility - utilizing windrowed compost as the core biological process 4. Mechanical Biological Treatment (MBT) facility - utilizing In-Vessel compost as the core biological process 5. Materials Recovery Facility (MRF) (With refuse derived fuel generation) - primarily for materials recovery including recyclables and/or the production of refuse derived fuel (RDF) for offsite utilization. Source Separation Source separation and independent collection of: 6. Organic waste - from residences (yard waste, food scraps, non-recyclable paper, etc.) or specific large-scale generators such as markets, restaurants, etc. 7. Recyclable materials - from specific high-volume commercial/industrial generators and from residential sources Landfill gas collection and treatment 8. Landfill gas collection and treatment - in closed and active landfills throughout Colombia Economic Model During the assessment process, CCAP developed an economic model to evaluate the cost and GHG impact for the different SWM technology/program options. The model used estimated revenues from potential tipping fees, and the generation and sale of electricity, recyclables, compost and refuse derived fuel for different technology/program options. The model also estimated costs for capital equipment, operations and maintenance, and financing for different technology/program options. In 6
order to run the model, CCAP used specific information on Cali s municipal solid waste (MSW) (e.g. amount of annual municipal solid waste and solid waste composition data, etc.). The model calculated the added cost per ton of MSW to treat the waste under each technology/program option. Table ES-1 shows the results of the economic model under best case, average and worst case assumptions. Alternatives Cost to Treat MSW (USD/ton) GHG Reduction (USD/ton CO2e ) GHG Reduction (ton CO2e/ton of processed waste) Best Avg. Worst Best Avg. Worst Best Avg. Worst Case Case Case Case Case Case Case Case Case 1. Waste To Energy -55-99 -143 53 96 138 1.04 1.04 1.04 2. MBT (Anaerobic Dig.) -42-70 -98 31 52 73 1.35 1.35 1.35 3. MBT (Windrowed Compost) -6-28 -51 4 21 38 1.35 1.35 1.35 4. MBT (In-Vessel Compost) -19-41 -64 14 30 48 1.35 1.35 1.35 5. MRF (With RDF Generation) -15-39 -63 10 27 43 1.46 1.46 1.46 6. Source Separation - Organics -3-21 -40 5 36 66 0.6 0.6 0.6 7. Source Separation - Recyclables -6-39 -73 6 39 73 0.33 0.33 0.33 8. Landfill Gas Recovery* n/a n/a n/a * Landfill gas recovery was not included in the model because its economics are very site specific. It should be noted that due to the complex nature of waste management technologies and the significant impact that location can have on costs and revenue, this economic analysis should be considered only as indicative to help explore initial economic viability. It should also be noted that the cost data presented in this report relates to an assessment of economic factors consistent with a waste stream in a city similar to Cali. This model can be utilized as a tool for other cities in Colombia if local factors and scale issues are taken into account. While all of the options analyzed result in increased costs for treatment as compared to disposal in sanitary landfills assuming current tipping fees, CCAP believes several of these options are still possible as elements of a waste NAMA given the factors described below. NAMA financing has the ability to help reduce the cost increases associated with new waste processing systems. 7
These factors could significantly affect or reverse the negative numbers shown in the above table: Reduced collection and transport costs. Although the model already factors in avoided disposal costs by considering the tipping fee as potential revenue, it does not include avoided collection and transportation costs. The collection and transport system is very site specific depending on where a processing facility would be located in relationship to the current landfill. There could be significant cost savings and an increase in collection efficiency in the collection and transport system (which in Cali is 78% of total SWM costs, or USD 42/ton). These savings could be passed on from municipalities to SWM service providers to incentivize diversion of waste going to landfills. Tariff reform. Further, incentives given by municipalities could be greatly enhanced by the upcoming tariff reform process. It is anticipated that, at a minimum, tariff reform will seek to allocate tariff funds to recovery projects based on the avoided costs for both disposal and collection/transport. If the government decided to include an incentive element to the tariff to support recovery projects and initiatives, this could also reduce the additional costs associated with recovery projects. Reduced need for future landfills. Deferred capital investments in landfill expansion due to decreased landfill airspace utilization may also result since design landfill airspace will be utilized at a slower rate through diversion of solid waste materials away from the landfill. More attractive financing terms. Especially for capital intensive facilities, the viability of each scenario is highly dependent on financing terms such as interest rates, loan term, and debt to equity ratios. CCAP has used conservative financing terms for our assessment. The Government of Colombia, either local or national, could also drive the diversion of waste away from landfills by providing concessional terms to SWM projects. Incentives for renewable energy could also boost the viability of those scenarios that produce electricity or use waste as direct fuel (RDF). Analysis of Technologies Cost Prohibitive Technologies Waste to Energy and Anaerobic Digestion. Conventional waste to energy technologies such as those utilized in the United States and European Union are, most likely, not viable in Colombia for both technical and economic reasons. The high organic (and resulting moisture) content of typical municipal solid waste in Colombia makes it very difficult for conventional incineration technologies to effectively combust the solid waste without significant preconditioning of the waste prior to direct combustion. In addition, the high capital and operating costs associated with these systems and typical air pollution control systems normally utilized would significantly increase in the cost of solid waste management. Similarly, the utilization of mixed solid waste Mechanical Biological Treatment (MBT) facilities that utilize anaerobic digestion as the core biological process would also be cost prohibitive. Potentially Viable Technologies The six remaining options could be economically feasible and therefore should be evaluated further as a potential Waste NAMA in Colombia. A number of these alternatives may be a technical component of a 8
composite mixed solid waste processing facility utilizing various treatment processes as will be defined in the proposed Waste NAMA model. MBT (Windrowed Compost). A mechanical biological treatment facility with a windrowed compost component as the primary biological element is an attractive alternative to pursue as part as an integrated waste NAMA because of its lower capital cost (25-60 million USD based on the scenario evaluated in the model) and low cost per ton of CO 2 e reduction ($4/ton in the best case scenario). A key sensitivity in the economic analysis of this technology is the value and marketability of compost produced in Cali. As compost markets in Colombia are highly fragmented and prices are volatile, a full market study is needed to ensure sufficient demand for the low-grade compost generated in this type of MBT facility when processing a mixed solid waste stream. MBT (In-Vessel Compost). A MBT facility with an in-vessel composting approach shares some of the same favorable aspects of the windrowed facility. While In-vessel systems are more capital intensive (35-70 million USD based on the scenario evaluated in the assessment) than windrowed composting, their advantage is that they require less space, have lower processing times (3-28 days) and better controlled odor and leachate issues. Again, compost values and sufficient demand will determine the economic feasibility of this technology. MRF (With RDF Generation). There is a positive economic case for the inclusion of Materials Recovery Facilities with Refused Derived Fuel (RDF) generation in the development of the Waste NAMA, especially when considering the potential demand for RDF in some Colombian communities where cement kilns are located. While these facilities are more expensive with capital costs between 32 to 67 million USD for the evaluated scenario, market conditions for RDF in cities such as Sogamoso offer an opportunity to offset high capital and operating & maintenance unit costs and achieve considerable GHG reduction impacts (1.46 ton CO 2 e/ton processed waste) through energy substitution. Cities or regions that have robust cement industries that rely on fossil fuels would be suited for RDF generation. Assessing market conditions for RDF in each site will be critical for assessing the economic feasibility of this technology in various local settings. Source Separation Organics. The economic feasibility of the source separation organics (SSO) alternative is highly dependent on the generation and sale of the high quality compost which can be produced through composting source separated organic material. It should be noted that collection costs are site specific and it is assumed that any SSO program will utilize the structure of the existing waste management collection system to the degree possible or, at a minimum, possibly decrease the scope of the conventional collection system for the sources where organic materials are independently collected. This alternative is also considered an important component of any Colombian waste NAMA because it is consistent with the existing waste management strategies and goals as represented in the municipalities ISWM (Integrated Solid Waste Management) or PGIRS plans. Source Separation Recyclables. Strong markets for recovered recyclables exist in Colombia which may provide a basis for developing a program that collects source separated recyclable 9
materials. However, this would directly compete with the existing informal sector recycling process (which collects about 10% of the total waste stream) which may make it difficult to formally collect available recyclable materials set out by generators for collection. Source separation set-outs could provide a greater opportunity for informal recyclers to simply take the material prior to the formal collection process thereby affecting the recovery rate that could be achieved through the formal process. Landfill Gas Collection and Treatment. In addition to the above, the possible installation of landfill gas to energy systems could lead to GHG mitigation benefits. A recent study funded by the United States Trade and Development Agency related to the CIS El Guacal landfill site in the greater Medellin region concluded that an enhancement of the existing landfill gas collection and treatment system at the landfill site to recover energy is economically feasible based on the continued receipt of the current amount of solid waste at the site throughout the life of the project. Similar situations at other landfills in Colombia would need to be evaluated on a case by case basis. With support of the above model results, CCAP has made the following observations: 1. Markets for recyclable materials recovered from the municipal solid waste stream are strong and sufficient for a significant increase in the amount of recyclable materials recovered through formal recovery processes. This is also the basis for the strength of the informal sector in their material recovery endeavors. 2. Markets for both high and low quality compost in Colombia need to be developed if composting is to be adopted as an option for treating solid waste organic content. 3. Potential opportunities exist in utilizing refuse derived fuel derived through mechanical processing for co-firing in the numerous cement kilns located throughout Colombia. 4. Some landfills in Colombia have already installed landfill gas collection and treatment systems under the CDM framework. Most of these, if not all, were developed as a means for achieving the revenue derived from the sale of Certified Emissions Reductions (CERs). Additional opportunities may exist for installing landfill gas treatment systems (particularly landfill gas to energy systems), especially considering the fledgling market for CERs worldwide. 5. For the most part, solid waste management plans prepared by the municipalities that were reviewed by CCAP emphasize the intent to develop source separation processes for organics and recyclables as a means for 1) reducing the amount of solid waste delivered to landfills and 2) complying with national solid waste management policies and strategies. 6. GHG mitigation benefits associated with the various technology alternatives are a function of both direct and indirect results. Any solid waste stream organic content diverted from landfill disposal will help to reduce the quantity of methane generated at the landfill by reducing the amount of material subject to the landfill s anaerobic decomposition process. This will result in a direct net increase in GHG emissions based on the manner by which organic content is diverted. In addition, there will be significant levels of indirect avoided GHG emissions that will result from some ISWM processes. For example, recovery of solid waste stream recyclable 10
components will help to avoid GHG emissions derived through producing new products from virgin materials now displaced by the use of recycled materials. Recommended Colombia Integrated Waste NAMA Based on its findings, and consistent with current SWM planning initiatives at the national and local levels, CCAP recommends that a Colombia Waste NAMA consist of an integrated approach model that involves: 1. MBT facilities that could generate refuse derived fuel, recyclables and compost 2. Integrating tariff reform into the Waste NAMA evaluation 3. Potentially implementing landfill gas to energy on active landfills that currently collect and flare landfill gas 4. Pursuing source separated waste for organics and recyclables. The viability of these elements is dependent on local conditions. Financial support will be needed on many options to help overcome the incremental costs of implementing facilities. NAMA financing coupled with appropriate tariff reform measures could make integrated waste management strategies economically viable. The principal driver will be the existence, viability and economic effect of market outlets for recovered commodities. These market conditions will define the nature, capacity and viability of technical elements (and resulting economic impact) of the model components as reflected in the schematic below. The principal output commodities will be recyclables, compost and refuse derived fuel derived through source separation and mixed waste processing activities. The mixed processing element will seek to derive all three of the output commodities depending on the characteristics of available market entities in the local areas. The model also recognizes that the informal sector may continue to play a role in recovering recyclable materials in the local areas. In applying the model to any local or regional area in Colombia, specific conditions will determine the definition, viability or design capacity of any individual technical element of the model. This may mean that some local areas or regions will not support the development all of the technical elements or that some elements may be more viable than others. 11
Figure ES-1 depicts the elements of the proposed integrated solid waste management NAMA model Informal Recyclers Formal Source Separation Municipal Solid Waste Mixed Waste Processing Element Source Separated Organics Manual/Partial Mechanical Separation High Moisture Organics Dry Organic and Other Materials L Recyclables H Compost Refuse Derived Fuel Landfill Disposal H L Denotes Potential for High and Low quality compost Landfill Gas Energy Recovery INTEGRATED SOLID WASTE MANAGEMENT MODEL SCHEMATIC Assessment Conclusions Based on its assessment of current conditions, CCAP derived the following general conclusions: 1. The general solid waste management situation in Colombia has progressed and evolved to a point where a good level of service is provided in core collection, transport and disposal processes in most municipalities. 2. Solid waste management improvements over the past decade have been supported by the modification and strengthening of Colombia's national institutional framework. This has led to the active participation of multiple service providers where private capital is playing a significant role in the development of upgraded services and facilities. As a result of this, disposal facilities throughout the country have been upgraded to a point where a significant proportion of the solid waste generators in Colombia is now disposed of in facilities that are classified as sanitary landfills. 3. Colombian solid waste management policy seeks to achieve a zero waste culture by promoting integrated solid waste management approaches that will recover the intrinsic value of solid waste components through a variety of means. This policy is reflected in the local solid waste management plans (PGIRS) prepared by municipalities throughout Colombia. 4. Colombia still has a significant way to go in terms of implementing integrated solid waste management processes. This is primarily due to the institutional and policy impediments that 12
currently exist. Important impediments to the development of ISWM processes relate to overall economic sustainability where the existing solid waste management tariff structure does not recognize recovery processes as a formula factor in defining tariff allocations. However, the government of Colombia recognizes this impediment and is currently working on revising its tariff framework to include waste recovery processes. Other legal requirements such as the limitation capping any costs associated with solid waste recovery processes to be passed on to generators to the offset cost of core collection and disposal services may also create an impediment to the development of recovery programs and facilities that may achieve important environmental benefits but at a higher cost than current core services. 5. Implementation of policy based programs such as Extended Producer Responsibility (EPR) initiatives or the diversion and recovery of construction and demolition waste can derive some GHG mitigation benefits. EPR elements that help to reduce the overall amount of municipal solid waste generated or that improve the prospects for marketing output materials from recovery projects will have a beneficial impact as will the recovery of construction and demolition waste components that will decrease the total amount of solid waste placed in landfills or displace the use of virgin materials through recovery. (An effective program to manage construction and demolition waste will have the major added benefit of helping to rectify one of the most solid waste management visible problems in Colombian municipalities.) 6. The regionalization of final disposal sites with the significant participation of the private sector has been accomplished in many locations in Colombia with the result that there is a strong basis for future regional applications of solid waste processing facilities and the availability of sufficient solid waste from multiple sources to take advantage of economies of scale that may affect the technical and economic viability of some ISWM processes and elements of the proposed Waste NAMA integrated model. 7. Recycling in Colombia is primarily accomplished through the informal sector which is viewed to be an important element for future solid waste management in the country. This includes the need to incorporate the informal sector into future processes as well as consider its impact on the viability of alternative formal programs and facilities with which the informal sector may compete. 8. Analysis of available outlets for recyclable materials in Colombia demonstrates that there are strong markets with significant demand for materials for use in manufacturing new products. Currently, supply has not kept up with demand to a point where recyclable materials are imported into Colombia for manufacturing purposes. Current available markets are expected to support significantly greater levels of recovery in Colombia in the future. 9. Source separation cost remains as one of the main obstacle for the implementation of some municipal waste recovery strategies. Increased incentives will be necessary to achieve an effective level of source separation of various materials. In addition, the strengthening of ongoing public education programs will be required to help assure the effective participation and cooperation of residential, commercial and industrial solid waste generators in new or expanded source separation initiatives. 13
10. New programs and facilities that can achieve greater material or energy recovery levels from the municipal solid waste stream are expected to increase the overall cost of solid waste management in Colombia. The ability to accept and accommodate these increased costs will be an important element in decision-making relative to the development of any new solid waste management process that may be included as a component of a Colombian Waste NAMA. However, all potential locale specific cost savings (such as those associated with the impact on the efficiency and cost of conventional collection and transport processes) must also be considered through the development and utilization of full cost accounting principles. Assessment Recommendations Based on this assessment, CCAP recommends the following: 1. A Waste NAMA in Colombia should be developed based on an integrated solid waste management approach where mechanical biological treatment facilities could generate refuse derived fuel, recyclables, and/or compost depending on the local market conditions for the recoverable elements. The next steps for developing such a NAMA would include: a. Conduct a feasibility study for an MBT facility in 1-2 municipalities which would include an evaluation of the market potential for RDF, recyclables and compost. b. Conduct a national scoping analysis to identify other municipalities in which favorable conditions exist for MBT facilities 2. The upcoming tariff reform presents a critical opportunity to align stakeholder incentives with integrated waste management goals. The current tariff should be analyzed as to how potential revisions could strengthen the feasibility of a waste NAMA. CCAP would be open to directly supporting the CRA (Comisión de Regulación de Agua Potable y Saneamiento Básico) in researching alternative tariff adjustment scenarios affecting the upcoming tariff reform process, dependent on the CRA s willingness for this collaboration. 3. There may be opportunities to implement electric generation projects on sites that are currently collecting and flaring landfill gas. A scoping analysis should be done to fully evaluate this potential. 4. Source separation for organics and recyclables can be an effective part of an integrated solid waste management program in the longer term. Because the economic feasibility of source separation is highly dependent on the generation and sale of compost and recyclables, additional analysis should be conducted on the market for compost and recyclables, and should specifically address the informal sector recycling process. 14
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