Download - Landfill
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Natural Resource Economics
Amira AL-Zadjali / Balqis Jadad
Economic
Analysis Of
Landfill Recycling
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Outline Introduction
Background information
Economic analysis
Financial analysis
Concluding Remarks
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Introduction All world looking for Sustainability
Economic growth
human activity waste (problem)
Waste more than environmental capacity
need (solution)
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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
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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.
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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 ?
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Method of LFG collection :
Vertical
Horizontal
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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
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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
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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
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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
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ECONOMIC
EVALU
ATIONPROCESS
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Decisions of Use
Privately Developed
Projects
Municipality‐Developed
Projects (maximum
profit)
Direct-use project
Privately Developed
Projects
Municipality‐Developed
Projects
Electricity project
LFG projects
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• 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
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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
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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.
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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$
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Cont…Environmental Benefits:
• cleaner air.
• renewable energy.
• economic development.
• improved public welfare and safety.
• reductions in greenhouse (global warming) gases.
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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
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Financing Approaches
Private Equity Financing
Project Finance
Municipal Bond Financing
Direct Municipal Funding
Lease Financing
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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
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Acknowledgment
Tom Frankiewicz
Program Manager
U.S. EPA LMOP
(202) 343-9232