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Trash Into Treasure: How Waste Turns into Energy Profits

Posted by Yuan-Sheng Yu on Nov 23, 2015 4:27:46 PM

Waste – a material that is not wanted or the unusable remains or byproducts of something.
Treasure – something that is very special, important, or valuable.

Seldom does one possess an abundant amount of an item that can be described as waste and treasure. But turning waste into treasure dates back more than 4,000 years as ancient Empires wrote about the use of manure and compost in agriculture. Innovation in monetizing food waste continues today with companies like FoodLoop (client registration required) delivering discounted pricing on food that is about to expire. Of course, monetizing waste is not restricted to food or to mere simple biorecycling or waste prevention. In the materials space, recycling of used paper into new has been known for more than 1,000 years, and naturally extended into metal, glass, and plastic. More recently, using waste as a low-cost feedstock into higher value products has received more attention such as when producing athletic and play areas from recycled tires. However, the area where waste innovation has the most impact and the opportunity for growth is in energy.

Identifying the opportunities in energy waste is no easy feat as the landscape is highly varied and complex, ranging from waste heat and carbon capture to converting landfill trash into fuel to the emergence of waste feedstocks (client registration required). Those looking to find new business opportunities in waste-to-energy need to navigate a tricky and evolving technology, regulatory, and public relations minefield. With this drastic change in the industry, we identified several attractive opportunities that highlight the variety in technology and feedstocks, but each have addressable markets of hundreds of billions of dollars or more.

On-site power generation taps into food waste as companies begin adopting the use of renewable energy. Despite many nations still archaically resorting to incineration as a sad excuse of “waste-to-energy”, the adoption of more energy efficient anaerobic digestion has been prevalent for years in certain regions such as Europe. But small-scale anaerobic digestion offers advantages over both incineration and a large-scale digester, providing on-site power generation with locally sourced food waste. For example, Anaergia deployed one of its patented two-stage, high-solids anaerobic digesters at the New York Hilton Hotel to convert food waste from the hotel to 1.75 MW of electricity and 2.7 MW of heat, to replace 50% of the electricity and 35% of the steam demand for the building.

Biofuel production adds additional revenue stream to companies with abundant supplies of waste oils in their supply chains. As the biofuel industry shifts from crop-based feedstocks towards next-generation feedstocks and novel fuels, waste oils and renewable diesel have emerged making up 61% and 73% of projected biofuel capacity in 2018 according to our Alternative Fuels Tracker (client registration required). Diamond Green Diesel, a joint venture between Darling Ingredients and Valero Energy, uses Darling Ingredients’ existing business of collecting animal by-products and used cooking oil (UCO) to feed its 130 million gallons per year renewable diesel facility. The addition of this facility, coming online in 2014, added $72.2 million in revenue (client registration required) to Darling Ingredient’s operations.

Landfills provide the potential to address various markets from electricity generation to fuels, and eventually chemicals. MSW is one of the largest organic waste streams, accounting for 36% of global organic waste (client registration required), such as cellulosic biomass. But the landfill itself offers two distinct streams of waste feedstock: landfill gas and organic waste. Tapping into its own operations, Waste Management signed a 15-year offtake agreement (client registration required) with Fulcrum BioEnergy for the production of biojet fuel through gasification and Fischer-Tropsch conversion. Using a similar Fischer-Tropsch approach, Waste Management also entered a joint venture (JV) with Ventech Engineers International, NRG Energy, and Velocys to produce both fuels and chemicals from landfill gas.

These technologies address nearly every issue plaguing first-generation alternative fuels, whether it be the volatility of crop pricing, feedstock availability, and feedstock cost. So has the holy grail of energy been found? Not yet. Despite the many benefits of waste feedstocks and the possibility of large waste generators and collectors sitting on a metaphorical gold mine, just like an actual gold mine, the value has to be extracted. The emergence of both commercially-viable technologies and increased interest in waste feedstocks will drastically shake up the value of waste moving forward. The companies mentioned above have taken a giant stride forward to achieve higher value products from its waste streams. But the evolution will require creative partnerships connecting the upstream and downstream as well as continued improvements in technological efficiencies. As waste continues to become a more available resource and global economic growth further strains energy supply, the opportunity to turn trash into treasure will grow, for those that have the technology to mine it.

 

For more on Lux Research’s waste-to-fuel coverage contact us. For more information about Lux Research visit us at www.luxresearchinc.com/