BC Business
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Collecting trash for cash. Methane and carbon gas could earn landfills carbon credits on the Chicago Climate Exchange. The potential for landfills to sell those credits to polluters will one day be worth more than the tipping fees.
The plant could produce 40 to 60 jobs, generate $1 million in taxes, and spin off related businesses. Steam from the generator could heat vegetable greenhouses or water for a land-based tropical food-fish aquaculture operation. And air emissions from the plant are said to be 100 times less polluting than the smoke that belched from the former pulp mill. Gold River can deal with that. For the company, landing some of Metro Vancouver’s garbage would be worth millions in tipping fees, power sales to BC Hydro and carbon credits for the green energy it produces. Gold River and Green Island aren’t the only ones seeing gold in garbage. Green Island’s is one of 23 proposals, most backed by communities like Gold River, fighting to win the right to take 500,000 tonnes of Metro Vancouver’s garbage. Metro Vancouver is in a garbage mess. By 2010 the Cache Creek Landfill – the destination of about one-third of Vancouver’s garbage – will be full. No replacement has been picked and there’s no deadline for finding one. Sure, there are several communities like Gold River begging for the garbage, but the waste business is not what it used to be; not just any vacant piece of land will do. Getting a landfill approved has never been harder and, as Metro Vancouver found out, landfills are a sticky political and social issue. But with hundreds of millions of dollars at stake, plenty of private companies can’t wait to get their hands dirty for a piece of the pile. “The general public wouldn’t recognize today’s waste industry,” says Jim Thompson, president of Waste Business Journal, a San Diego-based waste-industry research and consulting firm. “Landfills don’t begin to look like they did 20 or 30 years ago. They are environmentally sound, high-tech operations run by big blue-chip companies.” Changes in the Lower Mainland’s waste industry follow an industry-wide pattern. In the 1970s and ’80s, most communities had a small dump where a bulldozer covered the garbage with dirt. Thompson characterizes the old method as “the most environmentally incorrect approach to waste disposal.” Water leached through the garbage and carried pollution into groundwater. Decomposing garbage created carbon dioxide and methane that escaped into the atmosphere, not only adding to greenhouse-gas emissions, but imparting a stench to the area and attracting wildlife. Governments responded with air, water and waste legislation that demanded liners, leachate collection and disposal, gas collection, smell and animal control, and proper remediation and monitoring after the landfill’s useful life. “The industry panicked,” says Thompson. “The regulations dramatically increased the costs of running a landfill. Small towns couldn’t afford the rules.” Tipping fees increased and private industry saw an opportunity to capitalize on economies of scale: build a big landfill and bring in garbage from many municipalities and make more money. Thompson says that, whereas operating costs for a 60,000-tonne landfill are US$25 to US$30 a tonne, at a 300,000-tonne operation costs are more like US$15 a tonne. Cities such as New York and Chicago started shipping their garbage thousands of kilometres to massive landfills. Private industry saw another opportunity for profit by combining collection and landfill operations. To keep the landfills running at maximum capacity and efficiency, operators gobbled up collecting companies in nearby cities and communities, feeding all the garbage into the facilities they owned. The economies of scale grew and, in some cities, big companies started to look like monopolies. At the same time, companies started to realize they could make money from processing garbage more carefully. Recyclables could be sorted and sold, and burnables could be packed in bales as fuel for a boiler to create steam and energy. Methane gas could be collected to power vehicles. Even the act of collecting the methane and carbon dioxide gas, required under B.C.’s Environment Management Act of 2004, could earn landfills carbon credits on the Chicago Climate Exchange. The system is still being set up, but the potential for landfills to sell those credits to polluters will one day be worth more than the tipping fees, estimates Forrest Wright, chief administrative officer for the Beaver Region Waste Management Services Commission, which owns a massive landfill near Ryley, Alberta. “If you offered me three oil wells or one fully approved landfill, I’d take the landfill in a heartbeat,” says Wright. “If you get the big clients, the revenue potential is quite large.” Ryley has the City of Edmonton contract, worth about $60 million, and is one of the 23 communities vying for Metro Vancouver’s garbage. Wright believes the Vancouver contract could be worth at least $100 million. Total tipping fees for Metro Vancouver were $78 million in 2006 and about $26 million of it is up for grabs. Wright says methane collection could net two times the tipping fees, and carbon credits may one day yield three times the tipping fees. Sounds good. The problem is getting a landfill approved, and that’s a long, slow and expensive road. That’s why Russ Black, the GM for Wastech Services Ltd., a major player in Vancouver with $40 million in waste-derived revenue in 2006, says hauling is where the money is at in Vancouver. “Most of the money is in curbside collection,” he says. “It’s a very competitive business and that benefits the municipalities. But it also opens up a lot of opportunities for up-and-coming players.” Many markets are underserved: think the busy construction industry. The same can’t be said on the disposal side. Metro Vancouver has a monopoly on where residential waste ends up, and its fees are so low that commercial collectors also use Metro Vancouver facilities, instead of developing their own landfill sites. Today Metro Vancouver produces 3.2 million tonnes of waste a year. Half of that is recycled. Just over a million tonnes is disposed of locally. The remaining 500,000 tonnes goes to Metro Vancouver’s landfill in Cache Creek. At that rate, the landfill will be full by 2010. A replacement has yet to be determined, despite significant industry interest. How did Metro Vancouver end up in this crisis? It’s a long story that began in 1986 with the opening of the Coquihalla Highway. The toll road diverted traffic from Highway 1 and Cache Creek, the fuel-up, spend-the-night, grab-a-bite town at the junction of Highways 1 and 97. Almost overnight, seven gas stations and 53 Greyhound bus drivers and their families packed up and moved. “The town fell on pretty tough times,” says John Ranta, Cache Creek’s mayor and one of the few Greyhound drivers who didn’t leave. In response, the town started looking for a landfill site. By 1989 a spot had been picked, all the approvals were in place and a Metro Vancouver-Wastech contract to take a maximum of 500,000 tonnes of garbage from Vancouver’s eastern suburbs was signed. The contract, good through 2016, requires Wastech to collect garbage and tipping fees at transfer stations throughout the Lower Mainland. The garbage is loaded onto trucks and driven to Cache Creek. In exchange, Wastech shares the assets with Metro Vancouver and can look for other ways of making money from the garbage and facilities. For example, Wastech earns several million dollars a year hauling wood chips to Vancouver on the return trip from Cache Creek. It also hauls waste to Cache Creek from Powell River, Thompson-Nicola and Nanaimo; plus, it operates recycling depots and is looking at selling garbage as fuel to Gold River’s Island Energy. Wastech gives all the money earned from its operations to Metro Vancouver, which pays Wastech operating costs plus a 12-per-cent profit. Wastech’s revenue is $40 million a year. The landfill generates $1 million a year in tax revenue for Cache Creek and provides 120 jobs. Metro Vancouver has a similar public-private partnership at its Waste to Energy facility on Burrard Inlet. That facility opened in1988 to burn 280,000 tonnes of Vancouver’s garbage. Metro Vancouver pays $15 million a year to Veolia Environmental Services to run the facility. Veolia sells the steam to Norampac Inc.’s paper-recycling mill and 16.5 megawatts of power to BC Hydro, generating revenues of $12 million a year. Despite its best efforts to divert as much refuse as possible to the energy plant and to reduce waste through reduce, reuse and recycle initiatives, Metro Vancouver knew from the outset that the Cache Creek Landfill would eventually fill up. “Even with all the alternatives, we realized there was always going to be a need for some landfill capacity,” says Chantal Babensee, a senior engineer with Metro Vancouver. “So, we started to look for options to replace it.” The search began in 1995. An initial look at expanding the Cache Creek facility was pooh-poohed because it would mean moving onto Crown Land and opening up the potential landfill to First Nations feedback. Metro Vancouver looked around for a suitable site on fee-simple land instead. After some initial studies, it identified a small portion of the Ashcroft Ranch, a 4,200-hectare, 100-year-old working farm 20 minutes from Cache Creek. Metro Vancouver bought the ranch in 2000 for $4.5 million. “We thought if we bought fee-simple land, we wouldn’t have to deal with the First Nation issue,” says Marvin Hunt, chair of the Metro Vancouver Waste Management Committee and a Surrey councillor. “That turned out to be a misguided belief.” Hunt says Metro Vancouver worked with the provincial government through the various provincial approvals for a landfill, spending $1 million on the environmental assessment alone for the Ashcroft site. Then in 2005, “one of the First Nations in the area told the provincial government there was no need for a landfill; there are alternatives,” recounts Hunt. Without responding specifically to the First Nation objection, the province decided that the whole process had to be more open and transparent, and should be opened to competing bids. George Abbott, then the minister of sustainable resource management, decided to suspend the assessment and told Metro Vancouver it would need to amend its waste-management plan before proceeding. “We were shocked when they did this,” Hunt says, still in disbelief and frustrated two years later. “We’d worked closely with the government so we could deliver exactly what they wanted.” He thinks the province was worried the Ashcroft Ranch landfill could open up the debate over First Nations’ right to private land. Metro Vancouver responded by taking a year to understand exactly what the province wanted it to do. Then in 2006, it issued a call for expressions of interest for a replacement landfill. An advisory group was formed and a consultant was hired to oversee the process and ensure it was kept at arm’s length from Metro Vancouver. Twenty-three proposals were received for sites as far away as Alberta and as close as Delta from companies that ranged in size from massive to tiny. Metro Vancouver included its Ashcroft Ranch proposal for consideration. An independent panel made up of representatives from First Nations, the Union of B.C. Municipalities and Metro Vancouver vetted the proposals. Then Dillon Consulting Ltd., the independent evaluator/consultant, did a technical analysis. Dillon wasn’t convinced that any of the proposals would be ready in time, Hunt says. But something had to be done, so in July Dillon suggested the five most likely in-province choices: Green Island, Ashcroft Ranch, Highland Valley Copper Landfill in Logan Lake, an extension to the Cache Creek Landfill and CCS Landfill Services in Fort St. John. The plan now is to sort through those options to find a short-term solution as soon as possible and then find a longer-term option from among the original 23 submissions. “We have no definitive date for choosing,” Hunt says. “As you work through this kind of process, land mines come up. But we do have a definitive date when Cache Creek fills up.” To further complicate the process, it isn’t even possible to plan a fail-safe backup, such as, say, loading the garbage onto a train bound for a massive landfill in Washington state, as the consultant suggested. The deliberations have to remain transparent and unbiased, so a backup plan can’t be made until a replacement landfill has been chosen, Hunt says. Cam Hantiuk says he has a solution for Hunt’s woes. The director of public affairs for Western Canada for Waste Management Inc. says Metro Vancouver has to relinquish control of disposal to private businesses. If it does, the crunch will go away. “We could double the life of the Cache Creek landfill if we were given an opportunity to get involved in the disposal side,” he says. Waste Management collects 200,000 tonnes of garbage in the Lower Mainland every year. It is involved in waste management throughout B.C. and is one of the biggest players in North America. But if Waste Management took residential garbage out of Metro Vancouver, it would be fined. “There’s no incentive for private industry to be innovative when you have a monopoly like this,” Hantiuk says. Hunt responds that the monopoly keeps costs low, and few municipalities or taxpayers are complaining about that. Despite its frustration with Metro Vancouver, Waste Management submitted a plan for a waste-to-energy plant, one of the 23 bids for replacing Cache Creek. Logan Lake and Teck Cominco Ltd. submitted another. When Teck Cominco’s Highland Valley Copper mine closes in 2019, Logan Lake’s tax base will shrink by half. The duo is proposing to cushion the shut-down’s blow by backfilling exhausted sections of the open-pit mine with garbage, creating 186 jobs and $800,000 in tax dollars annually. The community is backing the plan. But the proposal is not without controversy, mostly based in a community 45 minutes away. “Highland Valley has recognized what a significant impact a landfill can have on a community,” says Cache Creek’s John Ranta. “They are trying to pirate our industry away from us. Predatory economic development is not constructive, and it’s not something we believe in.” If Ashcroft Ranch wins the proposal, the jobs and tax dollars will continue to help Cache Creek, he says, but if Highland Valley wins, the jobs and money will move with the garbage. “That would have a huge detrimental impact on our local area,” he says. So when the Ashcroft Ranch proposal stalled in 2005, Cache Creek started work on a two-part contingency plan to protect its interest. In addition to throwing its support behind the Ashcroft Ranch proposal, the town resurrected Metro Vancouver’s original proposal to expand the Cache Creek site, with a few changes. Ranta says the plan is to add landfill space and a waste-to-energy bioreactor on site. The power plant would use water from the community waste-treatment plant to speed up methane production in the landfill. The methane would be used to help burn the garbage. “We’re optimistic that there’s a light at the end of the tunnel and it’s not a train,” says Ranta. “We’re optimistic common sense will prevail.” But for Forrest Wright in garbage-happy Ryley, Alberta, common sense means sending him Metro Vancouver’s garbage, and the more the better. Wright has a vision to make the Ryley landfill the largest in North America. He says it has a 330-million-tonne capacity, enough room to take all of Canada’s garbage for 50 years. The problem is, shipping garbage out of province or out of country is not a popular option. Marvin Hunt says the idea irks environmentalists and locals. He doesn’t hold out a lot of hope for proposals such as Ryley’s. “A lot of people will move heaven and earth to keep that from happening,” he says. But the fact remains, something has to be done about Vancouver’s looming garbage crisis, and the longer the drama draws out, the more money will be up for grabs. “Despite our best efforts, we still produce more garbage per capita every year,” says Waste Business Journal’s Thompson. “There will always be a need for more services.”