Barun Roy: Wealth from waste

In many countries, private companies increasingly involve themselves in waste management to capitalise on this need-based business

The scavengers of Smokey Mountain in Manila’s Tondo district know it very well, and rag-pickers all over the world have known it all the time: Trash has value and is a resource; for countless poor in the slums of Mumbai or Sao Paulo or Mexico City, it’s the only means of livelihood. Only those who produce it or are charged with its removal have, by and large, treated it as total waste, to be thrown away no matter how or where, with the least concern if that’s going to poison our soil and pollute our air.

But that’s changing, not out of any sudden realisation of the value of trash or any bite of conscience over the future of our environment, but out of sheer necessity, since it becomes increasingly evident that, at the rate mankind is producing trash, there won’t be any suitable place left to dump it anymore and we could be drowning in our own waste. Bangalore showed us recently that landfills are no longer a viable answer. Manila’s Smokey Mountain is already 10 storeys high, a standing monument of shame.
 

Ten years ago, a World Bank report said 2.9 billion urban residents worldwide used to generate some 0.68 billion tonnes of municipal solid waste per year, or about 0.64 kg per person per day. Today, there are three billion urban residents in the world, producing 1.2 kg of solid waste per person per day, or some 1.3 billion tonnes per year. The prediction is that, by 2025, there will be 4.3 billion urban residents worldwide, each generating an average of 1.42 kg every day, totalling 2.2 billion tonnes every year.

But here’s the twist in the tale. If the growing volumes of waste, increasingly dominated by often dangerous recyclables, pose a direct challenge to our age-old dump-and-forget attitude to waste management, they’ve also opened up new business opportunities. Handling waste is becoming so big and complicated a task that many countries are finding it immensely more sensible, and even cheaper in the long run, to call in private companies to help out; and private companies, our latter-day rag-pickers, seem to have discovered in it a profitable new means of corporate livelihood.

Waste management has come a long way from open dumping to new alternatives like energy production and resource recovery using modern technologies, vastly widening the scope for the private sector to fit in. Analysts say the global waste management business is already worth $390 billion a year and will keep on growing by 10 to 20 per cent annually in the foreseeable future. Asia, economically the most dynamic growth area in the world today, naturally will have a major share of it.

In fact, from the private entrepreneur’s point of view, the waste business looks potentially so good that even a corporate big gun like Hong Kong’s Li Ka-shing has decided to get involved. One of Li’s companies, Cheung Kong Infrastructure Holdings, is paying the equivalent of $501 million in cash to buy New Zealand’s second-biggest waste-management firm, EnviroWaste Services, from an Australian private equity company, Ironbridge Capital. “Since the volume of waste continues to rise, waste services offer a great potential for growth,” the company noted in a statement after signing the deal early January.

EnviroWaste is a vertically integrated waste-management company serving about 500,000 residential and business customers across New Zealand. It owns a full network of collection and recycling depots, landfills, transfer stations, and plants to convert landfill methane into electricity. Its business principle is to divert as much recyclable and compostable elements as possible from the waste before it reaches landfills.

Singapore – where 60 per cent of municipal solid waste is recycled overall, 38 per cent is burned to produce energy, and only two per cent is sent to an offshore landfill – is perhaps the best example of how private interest in the waste business can be best exploited in long-term public interest. Waste collection and recycling in the island republic has been privatised for over a decade now, and waste-energy generation is going the same way. A private company, Keppel Corporation, now runs two of Singapore’s four waste-to-energy incineration plants, accounting for 58MW of their 168 MW total installed capacity.

The private role in Singapore’s waste management took a significant new direction in April 2012, when Sembcorp Industries opened a plant, built at a cost of $27 million, which burns waste wood to produce 20 tonnes per hour of processed steam for dedicated commercial customers on Jurong Island. A second boiler, able to generate 40 tonnes per hour, will be ready later this year, while two more will go into production in 2014, taking total production to 140 tonnes of steam per hour. Sembcorp says this operation has been profitable from day one and is only its first step towards building up a strong waste-based, customer-specific renewable energy portfolio.

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