Home Magazine Up for Debate

Hearing different points of view was one of the goals of conducting the Renewable Energy from Waste Roundtable in early May, and the invited panelists helped meet this goal.

At the discussion, representatives from several major solid waste and recycling companies, an energy-from-waste plant operator, a technology provider, a project financier, a trade association chairman and a leading solid waste industry consultant contributed differing views on government policy and the potential future of the energy-from-waste sector.

Joseph Vaillancourt of Waste Management Inc., Jim Little of Waste Connections Inc. and Jim Bohlig of ReCommunity represented the solid waste and recycling sectors at the Roundtable. Eric Herbert of ZeroWaste Energy LLC offered the viewpoint of a conversion technology provider while Ted Hansen of Greenwood Energy represented an up-and-running energy-from-waste producer.

James Stewart of the BioEnergy Producers Association offered the view of an association chairman trying to create change in the California regulatory and statutory climate in particular, and Harvey Gershman of Gershman, Brickner & Bratton Inc. was able to share some of his knowledge gathered during decades as a solid waste industry consultant.

Participants gathered in Las Vegas during WasteExpo, which took place April 30-May 3, 2012. Part I of the transcript of the Roundtable was presented in the Summer Issue of REW (See “Talking Points,” starting on page 30.) Following is the second of the two excerpted installments of the Roundtable.

REW: I’m curious about what folks around the table think about whether there are legitimate transportation fuel opportunities, and how would you rate the progress on this front? As well, how does the tremendous amount of natural gas now being produced domestically tie in?

HG: We’re in the midst of a study for the city of Plano, Texas. The topic of the study is waste to transportation fuels. We sent out a survey to see what people are saying and got some very limited responses. People want to make fuel, a lot are trying to make ethanol, but it’s a ways away. Landfill gas to fuel, that’s here. But to convert garbage to a fuel that the community could then put in their trucks or buses, we have a ways to go. And matching the supply to the demand is tricky. There is not enough garbage to really make a lot of fuel. So it’s a little out of sync in matching up. But it’s intriguing. It plays to their “our community is a green community” thinking. The notion that “Waste is going to a landfill, let’s change that.”

EH: The thing that impresses me the most is that there is a huge turn occurring toward fleets going to natural gas. [Refuse] truck makers will tell you that 90 percent of their orders for North America are for natural gas vehicles. It’s economics. The drop in natural gas prices is spurring it. Truck owners will tell you they’re saving $2,025 per route truck per month—that’s real money. That’s a change in direction. When I first saw natural gas prices going down I thought, “This is going to be tough,” because we’re producing biogas and we’d rather it have a higher value. But instead it’s absolutely helping us, because people want natural gas and they’re changing their fleets over. So we’ve seen with our bio-CNG that these customers want small-scale plants so the organic waste they’re collecting can be converted to natural gas for their vehicles. You talk about an [easy] sale to a community. When you communicate this process to a city, it’s very real and very tangible. And from a cost standpoint it’s not outside the fairway, and it’s doable at scale. We feel great about it. If the natural gas had a huge value that would be wonderful, but then the haulers wouldn’t all be buying natural gas trucks. Things happen in very strange ways, but that’s part of the big story right now—the conversion to CNG trucks.

JM: The fuels sector is a huge draw—there is huge demand for biofuels, there is no question about it, and it’s worldwide. But the structures still have to be well thought out and put in place in order to allow renewable fuels from waste to actually become a reality. You have to think about the operational and financing side. It’s not a question of elected officials being enlightened, but how do you remake the energy and the waste industry and the energy industry in this country? I think, as Jim Bohlig said, we’re seeing the beginning of it and it can’t be stopped. But it’s going to take a while. We’re seeing bright people, like those at Waste Management, become leading thinkers about how to do this. It’s not bogus, it is happening and it’s going to have to be worked out. Renewable energy from waste is not going to be just mass burn for the next 50 years, there’s just no way that’s going to happen.

REW: Cooperation is required, it sounds like, between waste generators, haulers, recyclers, technology providers and government entities. What are you experiencing in terms of cooperation? Are interested parties reaching an understanding of what they need to do for a good outcome versus perhaps the way they might have behaved five or seven years ago?

JB: It’s an interesting question. I think, having been in the waste industry and building a waste business over 20 years, I never would have thought I’d see what happened in San Jose, where they effectively put 22 haulers out of business by franchising. So the power of communities can be perceived as a great threat to the established system. There are those communities who understand that 16 trucks going down the same street is not a low-carbon solution. They know that won’t get you to zero waste very fast. I never thought that communities would have the courage to do what they did in San Jose, and maybe they’ll be the only one in the country; maybe it will be an anomaly. But I think it shows city governments are prepared to act in ways to upset the status quo. Unless the waste industry starts to provide solutions they are going to be in chaos, and chaos is worse than where they are today. Waste generators and communities are going to be willing to act together, and that’s not a bad model. I don’t think we should be frightened or challenged. I think it’s the best thing that can be done. I am very encouraged because I think there is a huge opportunity. I do not believe this kind of conversation could have taken place within this industry 20 years ago. I think the more we collaborate, the better we’re going to be serving our customers. That’s the fundamental realization that everyone has come to. The old model did not build as good of value creation as the new model. I give credit to David Steiner of Waste Management for saying that this can be a $40 billion business, not a $10 billion business, if we can find a way get to it. It’s really exciting, but we’ve got to collaborate, we’ve got to be transparent, help our communities and recognize where existing players are strong. We’re capable of playing rugby and competing, but it may not always be the best model for the future.

TH: We’ve talked about headwinds, like low energy prices and the conservatism in the financial sector, but the big tailwind that is blowing is having the Walmarts of the world demanding that their suppliers be landfill free. So we’re really trying to latch onto that. We’re starting to see some traction in what we call the close-the-loop concept. This involves working with a community or a Fortune 100 company that wants to close the loop on a “no more landfill” policy, but they don’t know what to do with their waste. So we can come in and partner with them to use part of their waste stream to create energy. When they go to their energy provider, a large employer has leverage to say, “You’ve got to help us [and accept this energy] or those jobs are going to go away.” The [entity that] has the waste has lots of leverage. They’re hiring people, they’re consuming energy, they’re paying taxes and they can even provide some balance sheet financing.

JL: On the West Coast, where we work a lot, there is a rate of about 52 percent franchising agreements in our markets. There is no a competing hauler down the street, so we’re often the sole provider of waste services. In this same region, they have already raised their cost structures significantly to go away from landfilling and to put large recycling plants in place. I think it’s probably the greatest opportunity to get this sector to the next level. It’s the walk before you run kind of thing. Eventually, I think the rest of the country will go more and more toward franchising. If we get those local governments that work in franchise environments to embrace these technologies, we still have to do a good job of vetting technology providers. I’ve talked to probably 100 of the providers. There ought to be a way to help define who the real players are in this WTE market, because it will slow us down and some of these failures are going to be hard to overcome.

JV: Partnership is not only one of the key ways to advance, I think it’s the only way. Building this infrastructure and the logistics is pretty capital intensive. WM is actually investing in our future competitors. In most instances we’re minority partners or project department developers with them. We’re coming to the party as a minority investor in competing technologies hoping to play a role in these broader partnerships and to underwrite some of these projects. For us, if we can get 50 projects out there as an 8 percent investor, it’s better than funding two projects at 100 percent. We feel like we need to keep the inertia. We’re doing things we would never have done as a company 10 years ago. There clearly is a lot of misrepresentation going on. One has to ask how well some communities understand all of this.

REW: How would you describe the approach environmental advocacy groups are taking toward waste-to-energy. Is it unanimous or are there a range of approaches?

HG: There are lies and there is a lot of misinformation and references to old data that is put out. Everything is labeled as an incinerator. Yesterday I moderated a panel (at WasteExpo), and Patrick Mathews of Salinas Valley (Calif.) had a slide that noted to always address misinformation and don’t be afraid to stand up for the truth. There is a tremendous amount of misinformation and a lot of lying that goes on. And elected officials, if they’re not sure about it, won’t do anything.

JS: We’ve endured seven years of misrepresentation of the work we’re trying to do. What’s maybe even more frustrating to me is that in a number of cases the national environmental organizations, such as the Sierra Club and Union for Concerned Scientists, have written eloquent papers endorsing gasification. But their local chapters may lobby against the very legislation that can make those policies happen. We’ve encountered that in California.

REW: In the big picture, do the opportunities in this sector outweigh the challenges?

EH: I always view it as opportunities. Every challenge out there is just another opportunity, something to be solved and something to be fixed. I love the industry and the people in it. I love all the dynamics. It’s a fight, it’s fun and you have to view it that way. It’s not always going to be great or easy.

JV: I think the stage we’re at is we’re facing the challenges to get to the opportunities. The opportunities are materially large based on the challenges, which are many and frenetic and messy. But they’re all doable. I think you’re going to see a lot of sub-sectors spawned from a lot of these technologies, which drive whole new business models. It’s a journey worth taking and I’m pretty excited by it.

JM: I love what I do. I look at everything as an opportunity. I like to think we’ve contributed to some innovation in the finance markets. I also believe the dollars are going to follow the industry. I don’t see an overnight solution to the project financing problems the EFW industry faces. A lot of those problems come from the financial markets itself. But renewable energy is a huge industry and it’s out of the gate and it’s unstoppable. You can’t say that about a lot of industries in the United States right now. Finance capital has got to move toward some sort of investment. They can’t sit on the sidelines and say “We’re too nervous about risk” forever. That just doesn’t work and never has. We’re working with partners to make things happen. And I think that, ultimately, success builds on success and the dollars will come in and finance these projects. There’s no doubt in my mind. We’re seeing it, even if not fast enough to suit the industry right now.

Roundtable Participants Key

Jim Bohlig (JB) of ReCommunity, Charlotte, N.C.
Harvey Gershman (HG) of Gershman, Brickner & Bratton Inc., Fairfax, Va.
Ted Hansen (TH) of Greenwood Energy, New York
Eric Herbert (EH) ZeroWaste Energy LLC, San Jose, Calif.
Jim Little (JL) of Waste Connections Inc., The Woodlands, Texas
John May (JM) of Stern Brothers & Co., St. Louis
James Stewart (JS) of the BioEnergy Producers Association, Los Angeles
Joseph Vaillancourt (JV) of Waste Management Inc., Houston
Brian Taylor and Jim Keefe (REW) of Renewable Energy from Waste magazine

Roundtable podcasts
Podcasts containing excerpts from the Renewable Energy from Waste Roundtable can be listened to at www.REWmag.com.