landfill

Natural Resource Economics

Amira AL-Zadjali / Balqis Jadad

Economic

Analysis Of

Landfill Recycling

Outline Introduction

Background information

Economic analysis

Financial analysis

Concluding Remarks

Introduction All world looking for Sustainability

Economic growth

human activity waste (problem)

Waste more than environmental capacity

need (solution)

Threat to Sustainability waste management :

Recycling

Reduce

Reuse

An example : US Case

• U.S. Environmental Protection Agency’s Landfill Methane Outreach Program (LMOP)

• Objective : encouraging the recovery and beneficial use of landfill gas (LFG) as an energy resource.

• (problem) (solution)

Effective and efficient

Problem Element and Explanation

Principal component: Methane (CH4)

Methane as (green house gas) GHG is over 20x more potent by weight than CO2.

Landfills are the third largest human-made source of methane in the United States.

Methane is more abundant in the atmosphere now than anytime in the past 400,000 years and 150% higher than in the year 1750.

A landfill is a location designed for the systematic long-term storage of waste under conditions that will prevent the contamination of air and water.

Landfill gas (LFG) is a by-product of the decomposition of municipal solid waste (MSW):

• 50% methane (CH4)• 50% carbon dioxide (CO2)• 1% non-methane organic compounds (NMOCs)

What is landfill ?

Method of LFG collection :

Vertical

Horizontal

Post-collection

• After collection:• Flared• Energy recovery system

• For every 1 million tons of municipal solid waste MSW:

• 0.8 megawatts (MW) of electricity• 432,000 cubic feet per day of LFG

• If uncontrolled, LFG contributes to smog and global warming, and may cause health and safety concerns

Landfill Characteristics:

Period : 1994-2014

Estimated Waste-In-Place at Closure (tons): 4,000,0001 million tons of MSW 432,000 cubic feet per day of LFG

4 million tons of MSW ?

Production of LFG/day= (4*432.000)/1= 1,728,000 cubic per day of LFG

Average Waste Acceptance (tons/yr): 200,000

Average Depth of Landfill Waste (ft): 50

Area of LFG Well field to Supply Project (acres): 80

Description of the Case Study

Loan Lifetime (years): 10

Interest Rate: 6.0%

General Inflation Rate: 2.5% (applied to O&M costs)

Equipment Inflation Rate: 1.0%

Discount Rate: 6.0%

Down Payment: 20.0%

Financial Assumptions

The first step in the evaluation process is to perform a preliminary economic feasibility assessment. In evaluation process we need to study the costs and the benefits.

If the

Costs > Benefits : Don't go ahead

Costs < Benefits : go ahead

Economic Component

ECONOMIC

EVALU

ATIONPROCESS

Decisions of Use

Privately Developed

Projects

Municipality‐Developed

Projects (maximum

profit)

Direct-use project

Privately Developed

Projects

Municipality‐Developed

Projects

Electricity project

LFG projects

• Capital (i.e., equipment) costs include:

• Design and engineering and administration • Permits and fees • Site preparation and installation of utilities • Equipment, equipment housing, and installation • Startup costs and working capital

• O&M cost elements include:

• Parts and materials • Labor • Utilities • Financing costs • Taxes • Administration

Cost Components

Direct-Use Project Revenues (privet)

Non-Direct-Use Project Revenues (social)

E.g.: reducing externality by reducing the negative effect of using non-renewable resource of energy )

Benefit Components

Direct-Use Project Cost

Gas compression and treatment to condition gas for the end user’s equipment.

A gas pipeline to transport LFG to the end user.

A condensate management system for removing condensate along the pipeline.

Pipeline to convey gas to project site: 1,683,165 $

Skid-mounted Filter, Compressor, and Dehydration Unit:1,096,608 $

Total Capital Costs: 2,779,773 $

O&M Costs: $128,782 (for initial year of operation)

Total cost : 5,688,328$

These financial results DO NOT include the costs associated with the LFG collection and flaring system.

Direct-Use Project Benefit The revenue for direct-use projects = sale of LFG to

> the end user.

but prices will vary depending on site-specific negotiations, the type of contract, and other factors.

In recent years, typical LFG prices have ranged from $4.00 to $8.00 per million British thermal units (MMBtu) or 0.38¢ to 0.75¢ per megajoule.

Direct Use Production and Sales Summary: Pipeline Length From Landfill to End User (mi): 5.0

LFG Average Utilization (million Btu/yr): 220,091 (during the life of the project)

Initial Year LFG Price ($/million Btu): 5.0

So the revenue= 220,091*5

= 1,100,455$

Cont…Environmental Benefits:

• cleaner air.

• renewable energy.

• economic development.

• improved public welfare and safety.

• reductions in greenhouse (global warming) gases.

Financing Analysis Financial Results:

Net Present Value: $7,501,924 (at year of construction)

NPV=-C+R0+ (R1/1+r)

Internal Rate of Return: 92%

( r ) when NPV=0

Net Present Value Payback (yrs): 2 (years after operation begins)

In 2 years you will cover the cost

Financing Approaches

Private Equity Financing

Project Finance

Municipal Bond Financing

Direct Municipal Funding

Lease Financing

In Oman the availability of the project

This project is not available in Oman.

Their are many assumption for not availability of the project in Oman such as:

High cost of the project.

Full oil dependant country

Acknowledgment

Tom Frankiewicz

Program Manager

U.S. EPA LMOP

(202) 343-9232

Frankiewicz.thomas@epa.gov