Introduction - Deloitte United States · 2020-06-05 · 18.1 9.3 8.3 2.64 0 20 40 60 80 100 120...

Andrew Clinton Supply Chain and Manufacturing Operations Specialist Leader

Deloitte Consulting LLP

Introduction

Roy Johnston Director

Corporate Venturing

Waste Management, Inc.

Waste to Energy in the Renewable and Alternative Energy Space

©2014 Waste Management

September 2014

Waste-to-Energy: Potential in the Renewable and Alternative Energy Space?

Presented to the Deloitte Alternative Energy Seminar


Context


0

50

100

150

200

250

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Tons (Millions)

MSW in the United States: Generation and Disposal, 1960-2010

Landfill Diversion WTE

Macro trends in the generation and disposition of waste …

1 2

3

16M tons (10%)

85 M

tons

(34%)

1 Diversion (recycling, composting, conversion) is up >400% since 1985, while landfill volumes are down 2%.

2 Landfill volume declined 4% between 2005-2010.

3 Total waste generation has plateaued for the first time since 1960.

Source: Environmental Protection Agency


0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Per Capita MSW generation, lbs/person/day

… driven primarily by sustainability demands from customers and regulators and developing technologies

Sustainability / Efficiency 1

Technology 2

• Sort

• Recover

• Sell recyclables

• Dual stream

material

recovery

facilities

• Single stream

material

recovery

facilities

Generation 1 Generation 2

• Pre-sorted vs.

“no sort”

• Convert

• Sell new

product

• Enabling

technologies:

gasification,

pyrolysis etc.

At 4.43 lbs/person/day,

per capita MSW is

below 1990 levels

“Generation 2” technologies

often have alternative energy

potential


WM is North America’s leading environmental service provider

$13.9B REVENUE

$1.3B FREE CASH FLOW

TOP 10% OF S&P

DIVIDEND-PAYING

COMPANIES

$1.3B CAPITAL

EXPENDITURES

2013

Waste-to-Energy in the Renewable Energy Space


1 Energy Potential

Technolo

gy R

isk

Now 3-5 Years

GASIFICATION

SYNGAS/

BIOGAS

TO ETHANOL

ENGINEERED FUEL

COMPOST

>7 Years

PYROLYSIS

ANAEROBIC

DIGESTION

CELLULOSE

TO INDUSTRIAL

SUGARS

SYNGAS TO

CHEMICALS

SYNGAS TO DIESEL

2 Technologies

3 Obstacles and opportunities

Feedsto

ck

supplier

1

• Feedstock: right amount, time,

location; consistency of supply etc.

• Commercial supply agreements help

to underwrite project economics

Technical

partner

• Partner with deep technical expertise

• Technology: flexible, tolerable,

optionality

• Experience with similar systems

2

Off-

take

partner

3 • Partner with intimate knowledge of

product market (price drivers, optimal

quantity, processing, logistics,

• Commercial off-take arrangements to

remove some risk from project

Issues to consider …

• Questions

of

ownership

and

control

• Exclusivity

/

competiti

on

• Ownership

of

intellectu

al

property

• Preparatio

n for

future

financings

• Manageme

nt

decisions


Many different materials make up the waste (resource) stream …. 1


Material Tons (Thousands)

Energy

Content (Quadrillion BTU)

Paper 68,620 0.89

Glass 11,570 0.00

Metals 22,380 0.00

Plastics 31,750 0.82

Rubber &

Leather

7,530 0.17

Textiles 14,330 0.20

Wood 15,820 0.16

Food Waste 36,430 0.19

Yard

Trimmings

33,960 0.20

Misc.

Inorganic

3,900 0.00

Other 4,600 0.00

Total 250,890 2.64

0.89

0.82

0.17

0.2

0.16

0.19

0.2

0

0.5

1

1.5

2

2.5

3

Heat Content, by material type

YardTrimmings

Food Waste

Wood

Textiles

Rubber &Leather

Plastics

Paper &Paperboard

Quadrillion BTU 2.64

… each with a different energy potential and collectively equal to about 2.6 quadrillion BTUs or “quads”

1


Perspective: 1 BTU is about the energy on the tip of a match; 1 quad BTUs of energy is about 50 million tons of coal …

1

BTU = Energy Content*

1 BTU = 0.25 food calories, or about the

energy on the tip of a match

1,250 BTU = 1 x peanut butter and jelly sandwich

3,412 BTU = 1 KWH of electricity

125,000 BTU = one gallon of gasoline

20 million BTU = one short ton of coal (2,000 lbs)

1 quad BTU = 50 million tons of coal

• Approximately, of course

Source: Thank you to Peter J Wilcoxen, Associate Professor of Economics and Public Administration at Syracuse University for these handy comparisons: http://wilcoxen.maxwell.insightworks.com/pages/44.html


35.1

26.6

18.1

9.3

8.3

2.64

0

20

40

60

80

100

120

Consumption Waste Potential

US Energy Consumption, 2013

NuclearElectricPower

RenewableEnergy

Coal

NaturalGas

Petroleum

Sources: EPA, EIA, Waste Management

… so, the energy potential in waste is ~3% of total US energy consumption or ~25-30% of current renewable energy consumption

0.48

2.64

0

2

4

6

8

10

12

Consumption,2013

With WastePotential

US Renewable Energy Consumption, 2013

Waste

Bio-Fuels

Wood

Wind

Solar/PV

Geo-Thermal

9.3

1

Quadrillion BTU

Quadrillion BTU



Some of this energy potential is realized through ~700 bioenergy projects (primarily combustion, “FOG” processing, anaerobic digestion)

Source: Bloomberg New Energy Finance Database

2

Category

Technology

Physical

Engineered Feedstock / Fuel

Maceration and decontamination

Mechanical Biological Treatment (MBT)

Mechanical Heat Treatment (MHT)

Biological

Chemical

Composting

Anaerobic Digestion

Fermentation

Hydrolysis

Hydrotreating

Transesterification

Thermo-

chemical

Combustion

Gasification

Pyrolysis

Torrefaction

Smelting

(1) Sources: Bloomberg New Energy Finance, Waste Management, includes pilot & demo plants, as of end 2013

Estimated Projects– Waste

as Feedstock (US/Canada)1

10-20

10-20

5-10

5-10

3,500-4,500

>30

0

5-10

1-5

>25

>300

5-10

5-10

10-20

2-4

What technologies exist to extract this energy value? 2


Technolo

gy R

isk

Now 3-5 Years

GASIFICATION

SYNGAS/

BIOGAS

TO ETHANOL

ENGINEERED FUEL

COMPOST

>7 Years

PYROLYSIS

ANAEROBIC

DIGESTION

CELLULOSE

TO INDUSTRIAL

SUGARS

SYNGAS TO

CHEMICALS

SYNGAS TO

DIESEL

Technologies continue to develop … 2


Scale in

Proximity to waste streams

Technical scale up risks

Scale out

Variability - pricing

Variability - regulations

Technology risks - efficacy

Financial risks

Proximity to off-take customers

… but creating new supply chains and business models (rather than pure technical efficacy) are the main challenges

Feedstock

management &

preprocessing

Primary

conversion

technology

Intermediate

product cleanup

Conversion to

final product

New Supply Chain

Commodity risk

3

In our experience, technical efficacy has rarely been the main obstacle to MSW to biofuels

commercialization. Rather, supply chain complexity, scale imbalance, regulatory and

commodity risks are proving important issues.


Diesel

Waste stream Sorting /

processing Outputs

Primary

Conversion

Conversion to

products

Ethanol

Solid Fuel

Chemicals

Syngas

Homogenous

bioslurry

Pyrolysis

Gasification

Mechanical

separation

Biological

fermentation

FT Gas to liquids

Shred and

dry material

Methane capture

Sort out and

shred plastics Industrial Waste

Medical Waste

Hazardous Waste

Organics

Synthetic crude

MSW

Electricity

Compost and

fertilizers

Auger and

water infusion

Composting

Biogas Anaerobic

digestion

Technologies Technologies Technologies Technologies

Waste conversion pathways to value are complicated 3


Capital flows reflect these challenges …

$0

$2

$4

$6

$8

$10

$12

$14

$16

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$B

Worldwide biofuels funding, disclosed

Source: Bloomberg New Energy Finance: Disclosed funding of worldwide biofuels projects, 2000-2013

After a surge in

activity, capital has

retrenched and

financing for longer

commercialization

horizons has become

more costly and

difficult to obtain.

3



Lessons learned from “steel in the ground”

3


Opportunity: good partners are those with important, long-term strategic interests in the project over and above investment return

Feedstock

supplier

1 • Feedstock: right amount, time, location;

consistency of supply etc.

• Commercial supply agreements help to

underwrite project economics

Technical partner • Partner with deep technical expertise

• Technology: flexible, tolerable, optionality

• Experience with similar systems

2

Off-take partner 3 • Partner with intimate knowledge of product

market (price drivers, optimal quantity,

processing, logistics,

• Commercial off-take arrangements to remove

some risk from project

Issues to consider …

• Questions of ownership

and control

• Exclusivity / competition

• Ownership of intellectual

property

• Preparation for future

financings

• Management decisions

3


• Sorting and recovery: Generation 1 technologies sort the waste stream

and recover components of value.

• Generation 1 widely deployed: ~650 MRFs in the US; older dual-stream

systems are being replaced by automated single-stream facilities with

higher yields.

• Organics are important in Generation 1: Cities are trending towards food

and yard waste bans, pushing organics out of landfills into composting and

anaerobic digestion. WM has 33 organics processing facilities.

• Conversion: Generation 2 technologies focus on the chemical conversion of

waste to other products (principally fuel).

• Development status: Generation 2 technologies are in development, but not

widely deployed yet (e.g., Enerkem, Fulcrum, Agilyx, etc.).

• Fracturing continues: Some Generation 2 technologies will continue the

trend of fracturing the waste stream and thus tend to require pre-sorting

(Generation 1 technology) for optimal use.

Generation 1

Technology

Generation 2

Technology

MSW to biofuel Gen 2 technologies: feedstock supply is important: pre-

sort, recover recyclables, or take unsorted MSW?

How prevalent will Generation 2 technologies become, particularly MSW to biofuels or other energy feedstock?

3


1 Energy Potential

Technolo

gy R

isk

Now 3-5 Years

GASIFICATION

SYNGAS/

BIOGAS

TO ETHANOL

ENGINEERED FUEL

COMPOST

>7 Years

PYROLYSIS

ANAEROBIC

DIGESTION

CELLULOSE

TO INDUSTRIAL

SUGARS

SYNGAS TO

CHEMICALS

SYNGAS TO DIESEL

2 Technologies

3 Obstacles and opportunities

• Organics

• E-waste

• Recycling/re

covery

• New =

Annual WM MSW landfill volumes have fallen 30.4M tons (-36%) since 2005. The EPA estimates total MSW generated fell 4M tons (-

0.2%) and landfilled MSW decreased 8M tons (-5.6%) during 2005-2011

Waste stream Value chain Business model Information

The composition and

volume of the waste

stream will continue to

change

Landfilling as the end

of the traditional

waste value chain is

under pressure

New business models

will begin to replace

the traditional collect

& dispose model

• Processing

• Manufacturin

g

• Conversion

• System

orchestratio

n / new

supply chain

• Non-

traditional

alliances

• Closed loop

• Value-added

Themes

Potential Trends

What we get… What we do… How we do it… What we know…

Knowledge and

communication will be

the key to success and

sustained advantage

• Data &

analytics

• Customer

needs/dema

nds

• Marketing

needs/dema

nds

Context

Summary

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Introduction - Deloitte United States · 2020-06-05 · 18.1 9.3 8.3 2.64 0 20 40 60 80 100 120...

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