Will energy from waste become the key form of bioenergy in Asia?

Analysis from Renewables 2018

Energy from Waste (EfW) is undoubtedly becoming more important in Asia, as rising municipal solid waste (MSW)1 production in many countries means cities must rapidly develop new waste management solutions. However, while China is rapidly rolling out EfW technology, its potential is underexploited in other Asian countries. When undertaken in a best-practice manner, EfW facilities can deliver environmental, health and energy benefits, offering a valuable waste management solution.

1 Municipal waste can be defined as waste collected and treated by or for municipalities. It covers waste from households, commerce and trade, office buildings, institutions and small businesses, as well as yard and garden waste, street sweepings and the contents of litter containers.

MSW production is growing in developing and emerging Asian economies

The combination of urbanisation and economic growth in many Asian countries means that solutions are needed to dispose of increasing volumes of MSW. Urban population growth increased 8% in China, 7% in Thailand, 5% in Indonesia and 4% in Viet Nam over 2010‑16 (World Bank, 2018). Urbanisation in India and Pakistan is also on the rise, although at a lower rate. Considering population growth, this trend resulted in an additional 160 million city-dwellers in these countries over the same period. In terms of economic growth over 2010‑16, gross domestic product (GDP) increase in all these countries exceeded the global average.

MSW production per capita has increased as a result of these larger urban populations and the higher living standards afforded by GDP growth. Over 2010‑15, annual MSW production in China, Thailand, Viet Nam, India and Pakistan combined grew by an estimated 60 Mt, to over 300 Mt; China accounted for over half of this increase. Combined waste from these countries could more than double during 2015‑25, resulting in over 600 Mt of MSW annually by 2023.

MSW production in China, India and Pakistan, 2010-2023


Urban population shares in selected countries, 2006-2016


If not correctly managed, MSW impacts human health and the environment in a range of ways. Health hazards result from ground and surface water contamination by leachate, and from air pollution from informal waste burning. Ineffective collection and disposal of waste also attracts vermin and insect infestations that spread disease, and MSW decomposition produces methane, which has a significantly higher global-warming potential than CO2.2 For these reasons, the impetus for cities to provide effective waste management is strong.

2 Methane’s global-warming potential is 28 times that of CO2 over a 100-year timespan, according to the Intergovernmental Panel on Climate Change (IPCC) (UNFCCC, 2016).

Status and outlook for EfW deployment in these Asian countries

China has the largest installed EfW capacity globally (7.3 GW), with 339 plants in operation at the end of 2017. EfW has grown by 1 GW per year on average in the past five years, and now represents the largest form of bioenergy capacity, capable of managing just over 100 Mt of solid waste per year (almost 40% of national production). Capacity in China grew at an annual average growth rate of 26% over the past five years, compared with 4% in OECD countries over 2010-16. Consequently, EfW capacity in China is now equivalent to 40% of that installed in all OECD countries combined. It has been expanding more slowly in the other five Asian countries mentioned, however, at an average rate of 16% annually.

Bioenergy additions in China, 2013-2017


EfW capacity growth in China, 2013-2017


Government targets indicate that EfW capacity will continue to expand in China: under its 13th FYP, 10 GW of the 23‑GW bioenergy target for 2020 is allocated to EfW, which will account for more than 50% of MSW treatment nationwide. Within the Renewables 2018 main case forecast, therefore, EfW capacity in China grows to over 13 GW by 2023, and by 2025 it could manage 260 Mt of MSW. However, there have been incidents of public opposition to EfW on air quality and health grounds, so realising projected growth will require sensitively conducted public consultations and the use of best available technologies.

Several policies are spurring EfW capacity deployment: first, a FIT of RMB 0.65/kWh (USD 95/MWh) has been in place since 2010, and local municipalities also support EfW through waste disposal fees, low-cost loans and fiscal support. In addition, the 13th FYP allocates more than USD 40 billion of funding to new facilities. This combination of measures makes EfW development economically attractive.

EfW deployment in India has been slow: just under 300 MW of capacity had been installed at the end of 2017, and the country’s largest plant (24 MW) was commissioned in New Delhi just last year. Factors favouring further EfW deployment include the availability of tipping fees, tax incentives and financial de-risking measures. In addition, states have been directed to procure all electricity generated from EfW projects, and national waste management rules encourage waste segregation and require that non-recyclable waste of high calorific value be used for energy. Conversely, low rates of processing and treating collected MSW hinder sector expansion.

Thailand is also in the early stages of EfW deployment. Several projects are in development and capacity could grow to over 200 MW by 2021, and a longer-term target of 550 MW by 2036 is in place under the Alternative Energy Development Plan. A FIT of USD 155/MWh to USD 190/MWh currently supports deployment, but development is being scrutinised by community groups to ensure projects meet the necessary construction and operation standards.

In Indonesia, Viet Nam and Pakistan, EfW deployment is hampered by several key challenges:

  • Underdeveloped waste collection services, segregation infrastructure and recycling.
  • Welfare considerations for “waste pickers” whose livelihood depends on landfill sites.
  • Low waste‑disposal fees and the prevalence of “open dumping” practices.
  • High financing costs for facilities, given that the track record for EfW plant development is limited.
  • Lack of public acceptance.
  • Administrative barriers related to permitting.

However, policy support in all three countries is gaining strength. Pakistan introduced an EfW tariff of USD 100/MWh in 2018, and projects are in development in Lahore and Islamabad. Viet Nam has introduced fiscal tax exemptions, a guaranteed power offtake, and a tariff of USD 73/MWh to USD 105/MWh to encourage EfW projects, and the Asian Development Bank has made loan funding available for EfW plants in the Mekong Delta. In Indonesia, a national strategic project has been announced to develop EfW plants in 12 major cities with a purchase tariff of USD 133/MWh.

Is EfW a valid solution to growing MSW production?

Best-practice energy recovery, compared with landfills, can deliver both sanitary and environmental benefits. EfW technology considerably reduces the volume of waste produced, so EfW facilities require far less land area than landfill sites do. In addition, waste disposal sites in many counties do not meet sanitary landfill standards by fully isolating waste from the surrounding environment, and uncontrolled burning often happens when waste collection and disposal are inadequate, which negatively impacts air quality. The use of EfW plants with controlled high-temperature combustion and pollution control technology is a superior solution.

EfW is primarily a waste management rather than energy solution, as it can process a high share of municipal waste but supplies a relatively low share of city energy demand. Nevertheless, it does deliver electricity and, when there is a suitable offtaker, heat at the point of demand. This can help offset rising energy demand from an increasingly urban population with higher standards of living. Also, since waste is domestically sourced, EfW supports energy supply diversification.

However, EfW should only be deployed as part of the wider waste management hierarchy of prevention, preparing for reuse, recycling, (energy) recovery and disposal. This requires that municipal governments undertake integrated waste management planning to maximise the reuse and recycling potential of materials prior to energy recovery. Furthermore, sufficient collection and source-segregation infrastructure is needed so that refuse-derived fuel (RDF) with suitable energy and moisture content can be provided to EfW facilities.

Several other factors are important to ensure best practice and economical EfW development:

  • Application of best available pollution control technologies.
  • Monitoring to ensure emissions to air and water, as well as noise and odour, remain within regulatory limits.
  • Stakeholder consultation with local communities to gain public confidence.
  • Waste disposal fees (i.e. charges levied upon waste received at a processing facility), possibly in the form of landfill taxation or gate/tipping fees.