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Proven Technology, Strong Economic Case for Palo Alto use of Anaerobic Digestion

posted Mar 26, 2010, 8:51 PM by Unknown user   [ updated Mar 26, 2010, 9:43 PM ]
In March of 2008, in response to a contract by the California Integrated Waste Management Board, the Department of Biological and Agricultural Engineering at UC Davis published "Current Anaerobic Digestion Technologies Used for Treatment of Municipal Organic Solid Waste".  This is a really thorough and very readable examination of the opportunity to use this technology in California.  

One question that frequently comes up in discussion is "If this technology is so great, why hasn't it been deployed in the United States?"   The UC Davis report addresses this question with:

"Although the U.S. has a long history of treating agricultural and municipal wastewater with anaerobic digesters, no commercial-scale solid waste digesters are operating despite several favorable (though economically marginal) feasibility studies and laboratory findings. Generally in the U.S. and most of California, landfills continue to be the lowest-cost option for managing MSW [municipal solid waste], since unlike Europe and Japan, space for new landfills is not as scarce, waste management policies are less rigorous, and full life-cycle costs and impacts are not accounted for. Furthermore, the energy market and regulatory mechanisms for licensing MSW AD and other conversion facilities in California have not been developed to easily accommodate commercial systems.

"AD facilities are capable of producing energy and reducing the biodegradable content of the organic waste prior to composting, which reduces emissions of pollutants and greenhouse gases. However, these environmental and public health benefits have not been adequately internalized economically, especially considering the lack of familiarity with the technology. Investors and city planners will be more likely to adopt AD of MSW if additional revenues are provided initially. These revenues can come from supports for the energy produced (i.e. tax credits and guaranteed markets), increased tipping fees and, potentially, green or carbon credits.

"Nonetheless, interest in AD of MSW is growing, and several California jurisdictions are investigating landfill alternatives that include AD. The technologies have been used successfully for over ten years in Europe where the industry continues to expand. Facilities were also built recently in Canada, Japan, Australia and several other countries.

Anaerobic digestion of municipal organic waste is a proven technology, but until very recently the economic case has been marginal -- not compelling.  Palo Alto just happens to be one place in the United States where the economics is as compelling as the environmental benefits. This is because:
  • We are one of only two cities in California incinerating our wastewater sludge.  It seemed like a good idea at the time: natural gas was cheap back then and hauling sludge to a landfill was expensive.  Retiring the incinerator will save us more than $1 million per year, depending on how fast natural gas prices rise.  
  • We run our own energy utility, which has a need to increase the percentage of renewable energy delivered.  The biogas produced by a anaerobic digestion system can run an generator, producing enough renewable energy for 1400 homes.  This ready market provides a revenue stream that will help offset the costs of operation.
  • We have an existing, well established and well utilized collection system for yard waste, as well as a new program collecting food waste from restaurants and other commercial buildings.   
  • We also have an existing operation selling compost, with an established clientele. 
Palo Alto can process our three streams of organics (yard, food, and sewage) in one anaerobic digestion facility, and thereby retire the incinerator, save on disposal costs, and generate revenues from renewable electricity and compost.  Although a careful cost/benefit analysis should be done as part of a feasibility study, the economic case for Palo Alto looks very strong.