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Organic Waste Economic Values Analysis Summary Report

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Organic Waste Economic Values Analysis Summary Report Environment Protection Authority Consultancy report: Organic waste economic values analysis Summary report This report has been prepared by consultants for the Environment Protection Authority (EPA) and the views expressed do not necessarily reflect those of the EPA. The EPA cannot guarantee the accuracy of the report, and does not accept liability for any loss or damage incurred as a result of relying on its accuracy. Department of Industry and Trade Environment Protection Agency ORGANIC WASTE ECONOMIC VALUES ANALYSIS SUMMARY REPORT January, 2002 Prepared in association with Access Economics Ref: 3091-01 NOLAN-ITU Pty Ltd ACN 067 785 853 ABN 23 359 240 890 P.O. Box 393 Level 1, 625 High St, East Kew Victoria 3102 Telephone: (03) 9859 3344 Facsimile: (03) 9859 3411 NOLAN-ITU PTY LTD ACN 067 785 853 ABN 23 359 240 890 Melbourne PO Box 393 Level 1, 625 High Street East Kew VIC 3102 Tel: (03) 9859 3344 Fax: (03) 9859 3411 Copyright © Nolan-ITU Pty Ltd 2002 This document is and shall remain the property of Nolan-ITU Pty Ltd. The document may only be used for the purpose for which it was commissioned and in accordance with the terms of engagement for the commission. Unauthorised use of this document in any form whatsoever is prohibited.© Printed on Recycled Paper REF: 3091-01 Document Issue and Status Rev. Status Date Project Manager Reviewer 1-0 Preliminary Draft 18 July 2001 John Nolan Bruno Schacher 1-1 Internal Draft 19 July 2001 John Nolan Sam Bateman 1-2 Draft 10 August 2001 John Nolan Sam Bateman 1-4 Final Draft 13 November 2001 John Nolan Sam Bateman 1-5 Final Draft No. 2 16 January 2002 John Nolan Sam Bateman 1-6 Final 31 January 2002 CONTENTS 1 STUDY OBJECTIVES .........................................................................................1 2 SUMMARY OF KEY OUTCOMES ......................................................................2 3 TERMS OF REFERENCE ...................................................................................2 4 TERMINOLOGY ..................................................................................................3 5 CURRENT ORGANIC PROCESSING INDUSTRY OVERVIEW .........................3 6 AVAILABILITY OF FEEDSTOCK .......................................................................4 7 EXISTING AND POTENTIAL PRODUCT MARKETS.........................................4 Compost Products 4 Renewable Energy 5 8 ALTERNATIVE ORGANIC PROCESSING SCENARIOS...................................6 Scenario 1 – Base Case 7 Scenario 2 - Expansion of Current Organic Processing Industry 8 Scenario 3 - Inclusion of Other Organics in Current Industry 8 Scenario 4 – Residual Treatment - Pyrolysis 8 Scenario 5 – Residual Treatment – Anaerobic Digestion 8 Scenario 6 - Residual Treatment – Pyrolysis & No Recyclable Organics Collections 9 9 ASSESSMENT TOOLS.......................................................................................9 10 KEY FINANCIAL ASSUMPTIONS ....................................................................10 Evaluation Period 10 Ownership 10 Number of Facilities 10 Gate Fees 10 Transport Costs 11 Labour Costs 11 Land Value 11 Value of Compost to Agricultural Industries 12 11 ANALYSIS OF THE EXISTING INDUSTRY......................................................12 12 FINANCIAL EVALUATION OF FUTURE SCENARIOS....................................13 3091-01/DIT EPA - rpt1-6(sum).doc Department of Industry and Trade & Environment Protection Agency CONTENTS 13 COST BENEFIT ANALYSIS ON ECONOMIC VARIABLES.............................14 Processor Operating Profit 16 Agricultural Users Benefit 16 Job Creation 16 Sensitivity Analysis 16 14 ENVIRONMENTAL ANALYSIS ........................................................................17 15 KEY STUDY OUTCOMES.................................................................................18 1. Economic Benefits of the Existing Industry 18 2. Environmental Comparison with Landfilling 19 3. Economic Benefits to the State 19 4. Role of Residual Waste Treatment Technologies 19 5. Treatment of the Combined Waste Stream in Preference to Source Separation 19 16 ACKNOWLEDGEMENTS .................................................................................20 3091-01/DIT EPA - rpt1-6(sum).doc Department of Industry and Trade & Environment Protection Agency 1 STUDY OBJECTIVES The objective of this economic value analysis study is to quantify and evaluate, as far as possible, the broad economic, environmental and social costs and benefits of existing and potential organic waste collection, processing, and product development industries to the welfare of South Australia; so that government, industry and the community can make informed decisions on organic waste management options. Industries to be considered include those based upon source separation of organics to produce high value compost products, and those based upon treatment of the residual waste fraction to produce renewable energy, and in some treatment processes - lower value compost products. The renewable energy organic processing industry is complimentary to the “source separation” processing industry, when it utilises the residual waste stream only. However, it is competing when organic feedstock is augmented by the inclusion of organic wastes which are currently, or could be, source separated for processing and the production of compost based products. It is intended that the study will: � provide the South Australian Government and other stakeholders with sound information on the range of potentially viable organic processing industries; � advance understanding of the sustainablity parameters which form part of the decision making process; and � contribute to the national body of knowledge which is being developed to assist waste managers to undertake assessments of alternative organic processing technologies. The study is restricted to organic processing industries that are or may be established within 100 km of the Adelaide CBD and their product markets which extend beyond the region. The study has been undertaken on behalf of the Department of Industry and Trade and the Environment Protection Agency by Nolan-ITU. Access Economics has contributed to the study by conducting the financial analysis and economic cost benefit analysis. This summary report is supported by a comprehensive and confidential report provided to the Department of Industry and Trade and the Environment Protection Agency. 1 3091-01/DIT EPA - rpt1-6(sum).doc Department of Industry and Trade & Environment Protection Agency 2 SUMMARY OF KEY OUTCOMES The key study outcomes are summarised below: i) Economic benefits to the State derived from the existing “source separated” organic processing industry are indicated by the analysis. These are due to downstream agricultural flow-on benefits and high labour requirements. ii) All of the organic processing options considered, including the existing and expanded source separated composting industry as well as residual waste treatment using pyrolysis and anaerobic digestion technologies, result in improved environmental outcomes compared with landfilling only. iii) The “source separation” composting scenarios result in the greatest benefit to the State due to downstream agricultural flow-on benefits and high labour requirements, and that augmentation of the current “source separation” organic processing capacity will result in additional benefits. iv) There is also a role for new thermal treatments, enclosed composting and anaerobic digestion in the treatment and resource recovery from residual wastes. They can co­ exist with composting of source separated organics, provided that environmental performance is clearly established and the technology has been fully tested and is recognised as being both technically and commercially viable. v) Adoption of domestic residual waste technologies to the exclusion of ‘source separation’ alternatives is not considered desirable unless it is demonstrated that the performance of the specific technology under consideration would result in improved environmental and economic outcomes. 3 TERMS OF REFERENCE The terms of reference for the study are as follows: � Gather information from relevant sources to establish the overall operation and sector impacts. � Interview a selection of clients to cover the key market segments and to gain qualitative data on the effects of the products. � Analyse and assess these effects against statistical data on industry size to form economic contribution values. � Provide consolidated summary tables of environmental benefits and costs including greenhouse gases and energy efficiencies and of overall findings of the economic and employment analysis. 2 3091-01/DIT EPA - rpt1-6(sum).doc Department of Industry and Trade & Environment Protection Agency 4 TERMINOLOGY The potential sources of organic waste material considered include recyclable organics (RO), commercial wet organics (CWO), domestic food waste (DFW) and domestic residual waste (DRW). Recyclable organics refers to ‘green’ organic wastes such as leaves, tree prunings, and shrubs from household yards, parks and gardens, and road reserves. Commercial wet organics includes organic wastes from the agriculture, and food processing industries such as manures, wool scouring wastes, grape marc, animal carcases, and biosolids. Domestic food waste is the food fraction of the waste stream generated by households. Domestic residual waste refers to the residual waste placed by householders in the garbage bin after source separation has occurred. For
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