A perfect storm of factors has culminated in a tipping point for the waste to energy (WtE) sector in Australia giving it a chance to emerge as a key part of the country’s energy and waste management future.
These factors include the significant ongoing growth of the Australian population, the long-term absence of a cohesive Federal energy policy, the dramatic shift in the global recycling sector following China’s ‘ban’ on importing foreign recyclables, as well as the increased economic and social cost of landfill reliance in Australia.
As challenges associated with waste collection and landfill increase, including the economic and social costs given heightened community awareness of environmental impacts, State and Territory governments across the country are in various stages of developing policies which support the diversion of waste to landfill and the development of the WtE sector.
This, together with Federal energy policy remaining in flux, has seen corporate Australia increasingly take the reins in finding innovative and viable, long-term energy solutions.
Globally, the WtE market is forecasted to reach US$42.74 billion in value, with the market growing at a compound average rate of 6% per annum from 2018 to 2024. In Australia, the Clean Energy Finance Corporation identified an opportunity for up to AU$5 billion of new investment between 2015 and 2020 in the domestic bioenergy and WtE sector.
This dynamic environment presents an unprecedented opportunity for the WtE sector to emerge as an important component of an integrated solution to address the key issues of waste management and energy supply in Australia.
Paving the way
The development of the local WtE sector is well demonstrated by the Kwinana WtE plant which made history recently as the first large-scale facility of its kind in Australia to reach financial close and commence construction.
Co-developed by Macquarie Capital and Phoenix Australia and owned by a consortium including the Dutch Infrastructure Fund, the project has received a A$23 million grant from the Australian Renewable Energy Agency. When completed, the plant will be capable of converting up to 400,000 tonnes of household, commercial and industrial waste (a quarter of Perth’s annual post recycling trash), which would otherwise be headed for the landfill, into electricity and construction materials.
In Victoria, Australian Paper (advised by Corrs) is pursuing an ambitious WtE solution to its and the state’s energy challenges. Despite being Victoria’s largest generator of baseload renewable energy, Australian Paper is also the largest industrial user of natural gas in Victoria and uses significant quantities of mains supplied coal-fired electricity.
Its exposure to surges in energy prices and uncertainty of supply has led it to proactively seek a long-term energy solution and it is carrying out a comprehensive WtE feasibility study, with the support from the Federal and Victorian State Governments. If the facility proceeds, on current estimates it could divert up to 650,000 tonnes of waste from Gippsland and Melbourne landfills each year and will be the first large-scale WtE facility in Victoria.
Like all new propositions, implementing the WtE solution in Australia is not without its challenges. Key obstacles have included: a regulatory framework which has not matched the accelerated pace of development in the energy and waste space, and critically, public perception towards this seemingly new solution.
Next Generation Pty Ltd experienced these issues in its development application to build a new WtE facility in Eastern Creek, on the outskirts of Sydney in NSW. In spite of the NSW Environment Protection Authority’s NSW Energy from Waste Policy Statement released in 2015, which acknowledged the potential for WtE facilities to be part of an integrated waste management strategy to “deliver positive outcomes for the community and the environment”, in July 2018, following public consultation, Next Generation’s development application was refused on the basis that “the project is not in the public interest”.
This initial public reticence for the ‘new’ is not dissimilar to the situation nationally during the drought more than a decade ago which saw the roll-out of multiple desalination plants across eastern and southern states. These facilities now successfully integrate into our water security solution, with limited ongoing public attention, highlighting that there is always work to be done at a political, business and community level to bring the public along with the need for change.
In Australia, where population density and the availability of low-cost land for landfill was not an issue historically, there was little need to consider WtE as part of the waste management solution. Contrast this with Europe and countries such as Japan and parts of the USA, where due to high population density and a lack of landfill space, WtE has been an integral and accepted part of their waste management solution for decades and continues to increase in popularity as modern incinerators release less pollution than older models and energy supply issues reverberate globally.
This suggests that the issue of public perception is a surmountable obstacle in embracing WtE in Australia.
Globally, the WtE market is forecasted to reach US$42.74 billion in value with the market growing at a compound average rate of 6% per annum from 2018 to 2024. In the CEFC’s Bioenergy and Energy from Waste market report in November 2016, they identified an opportunity for up to A$5 billion of new investment in the bioenergy and WtE sector in Australia between 2015 and 2020.
With 23 million tonnes of urban waste being sent to landfill every year in Australia, State and Territory governments across the country are in various stages of developing policies which support the diversion of waste to landfill and the development of the WtE sector.
Note: this is an abbreviated version of the original article which can be found here.