WASTE-TO-ENERGY SUCCESS FACTORS IN SWEDEN AND THE UNITED STATES

ANALYZING THE TRANFERABILITY OF THE SWEDISH WASTETO-ENERGY MODEL TO THE UNITED STATES

Matt Williams December 2011

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CONTENTS
I. Background ........................................................................................................ 3 II. Introduction ....................................................................................................... 3 III. History of Energy and WTE in Sweden ............................................................ 3 IV. History of Waste-to-Energy in the U.S ............................................................. 5 V. Waste-to-Energy Success Factors ................................................................... 6 1. High Landfill Tipping Fees ............................................................................. 6 2. Policies Favorable to Waste-to-Energy ......................................................... 7 3. Extensive District Heating Network ............................................................. 10 4. Absence of Cheap Domestic Sources of Energy ......................................... 10 5. A High Price of Electricity ............................................................................ 11 6. Ample Supply of Waste ............................................................................... 11 7. Public Support ............................................................................................. 12 8. High Recyling Rate ...................................................................................... 12 9. Limited Land Resources .............................................................................. 13 VI. Shifting Economic Factors in the US ............................................................. 13 1. Increased Price of Electricity ....................................................................... 14 2. Higher Oil Prices Increase the Price to Ship to Landfills ............................. 14 3. Higher Metal Prices are Increasing the Revenue from Metal Recovery ...... 14 4. The Number of Permitted Landfills has Declined in the United States ........ 14 VIII. Conclusion and Recommendations ............................................................. 14 1. Locations in the US with the Greatest WTE Potential ................................. 15 2. Policy Opportunities for the United States ................................................... 16 3. Opportunities to Influence Public Perception ............................................... 16 IX. Appendix ....................................................................................................... 18 Figure 4 Waste-to-Energy Success Factors ................................................. 18 Figure 5 Energy Recovery Source: AvFall Svirge ..................................... 19 Figure 6 District Heat Production in Sweden ................................................ 19 Figure 8 States with RPS and/or Defining WTE as Renewable In State Law ........................................................................................................................ 20 X. References: .................................................................................................... 21

I. BACKGROUND
Earlier this year, I had the opportunity to work on a consulting project in Sweden, sponsored by the George Washington University School of Business, in which my team looked at the market feasibility of several Swedish clean technologies for the American market. During our tour of Sweden, we visited several energy companies where we learned about the many fascinating things that these companies are doing to incorporate renewable energy technologies into their energy mix specifically biomass, wind and waste-to-energy. I was particularly intrigued by many of the innovative waste treatment methods that I saw. For example, in VafabMilj, we visited a facility that converts food waste to biogas, which is used to fuel the city buses in the city of Vsters. We also visited a combined heat and power (CHP) plant at Mlarenergi, which currently uses forestry waste as a feedstock, but was in the initial stages of building a second facility that would generate both electricity and heat from household waste for the city of Vasteras. During these visits, I wondered why the US, a country that produces massive amounts of waste, is not using these readily available waste-to-energy technologies that have proven so successful in Sweden to a greater degree. This summer at the American Council on Renewable Energy (ACORE), I had the opportunity to work on a research project of my choosing. Inspired by my visit to Sweden, I began to explore whether the US has the potential to replicate Swedens success at harnessing waste from energy. For the project, I used ACOREs resources and also worked under the guidance of Professor Anna Helm at The George Washington University as part of an independent study. I discovered that although Sweden, when compared to the US, possesses a relatively unique set of characteristics that have contributed to its recent waste-to-energy expansion, significant opportunities still exist for growth in the US waste-to-energy market.

II. INTRODUCTION
Sweden is widely considered a waste-to-energy (WTE) success story. International comparisons show that Sweden is the global leader in recovering energy from waste [Figure 5]. In 2009, 49 percent of all household waste, or 232.6 kg per person was converted into energy.1 Sweden continues to add WTE capacity as it continues to wean itself off of fossil fuels. In the US you will find a much different set of circumstances. Although WTE in the US was off to a promising start in the 1970s and 1980s, the number of WTE facilities in the US declined over the next few decades. In 2009, 12 percent of all household waste, or 85.7 kg per person, was converted to energy. 2 This report looks at the current state of the waste-to-energy industries in Sweden and the United States and explores at the transferability of Swedens waste-to-energy model to the US market. Although there are several ways to generate energy from waste (gasification, etc.) this report primarily looks at energy recovery from household waste through incineration.

III. HISTORY OF ENERGY AND WTE IN SWEDEN

Sweden has a long history of harnessing energy from waste. The first waste incineration plant with energy recovery opened over 100 years ago in 1904. In the late 1940s,

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following World War II, Sweden began to significantly expand its district-heating network, providing an outlet for waste-to-energy in the coming decades. In the 1970s, Swedens heavy dependency on oil left it extremely vulnerable to the oil shocks of the 1970s. During this time period Sweden introduced nuclear to its energy mix and reintroduced coal. It was also during this period that a major expansion of waste-to-energy plants began. In the 1980s coal once again started to become a major source of energy, but as Sweden has increasingly looked to be more environmentally friendly and less dependent on foreign sources of energy, it has turned to renewable sources such as biofuels, wind and waste. The use of biofuels, peat and waste in the Swedish energy system has increased over the years, from a little over 10 percent of total energy supply in the 1980s to over 22 percent (127 TWh) in 2009. In 1996, Swedens electricity market was deregulated. The ensuing years were characterized by rapid restructuring through mergers and acquisitions, lower electricity prices and a search for new marketing strategies in the competitive market.3 It is unclear what effect, if any this has had on the adoption of alternative fuels, such as waste-to-energy. The Role of Renewables Renewable energy has played a major role in Swedens push to become independent from fossil fuels. In 2005, Swedens government set a target of producing 50 percent of its energy from renewable sources by 2020 and achieving complete carbon neutrality by 2050.4 Currently Sweden produces 45 percent of its energy from renewable sources.5 It supplies almost all its electricity from nuclear and hydroelectric power, but is increasingly moving towards biomass and waste-to-energy.6 Thus far, Sweden has been extraordinarily successful at weaning itself off of oil. In 1970, oil accounted for over 75 percent of Swedish energy supply. By 2009, the figure was just 32 percent, chiefly due to the declining use of residential heating oil. Sweden has also substantially decreased its coal consumption. Peaking at over 5 trillion tons of coal consumed in 1986, it now consumes a third of that at 1.8 trillion tons. One of the main drivers of this increase has been biomass and biofuels. In 2010, Sweden hit a major landmark when Svebio reported that 32 percent of Swedens total energy production is generated from biomass. The total energy consumption generated from biomass in Sweden grew from 88 TWh to 115 TWh between 2000 and 2009. In recent years, the increase in demand for woody biomass has resulted in higher prices which rose 36 percent from 2000 to 2010.7 As a result, household waste is becoming a much more attractive feedstock option.

The Expansion of WTE In Sweden

In the last decade, WTE has expanded at a rapid rate. From 1999 to 2010, waste incineration with energy recovery increased from 39 percent to account for 49 percent of the countrys waste treatment methods. In 2009, 2,173,000 tons of household waste and 2,497,830 tons of industrial or other waste were treated by incineration, with energy recovery at roughly 32 Swedish waste-to-energy facilities. 13.9 TWh of energy was produced through incineration, of which the equivalent of 12.3 TWh was used for heating and 1.6 TWh for electricity. This amounted to 15 percent of Swedens district heating needs and 2.45 percent of all of Swedens total energy needs (including transportation, aviation, etc.). Due to a confluence of factors, which will be explored later, waste-toenergy now has the lowest energy production cost of all known and proven technologies

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in Sweden. WTE installed capacity is therefore expected to continue to expand for the foreseeable future.

IV. HISTORY OF WASTE-TO-ENERGY IN THE U.S

The first waste-to energy facilities in the US emerged in the early 20th century. These basic facilities generated steam from incineration of waste, but were typically quite dirty. In the 1970s and 80s, the US waste-to-energy industry appeared to be taking off. This was spurred in part by regulation and incentives that were enacted in response to the energy shortage of the 1970s. One instrumental policy was congress passage of the Public Utility Regulatory Policies Act (PURPA) in 1978. This mandated that the price paid for electricity to Qualifying Facilities, which included waste-to-energy plants, must be equal to the utility's avoided cost of energy and capacity. As a result, WTE plants received a higher price for their power than they likely would have otherwise.8

Stagnation and Decline

By the 1990s, more than 15 percent of all US household waste was burned for energy recovery and nearly all non-hazardous waste incinerators were recovering energy. This time period however was the peak of the industry in the US. The number of WTE plants thereafter began to decrease as several factors began to their profitability. First, between 1990 and 2004, production tax credits for production of energy from waste were rescinded. In addition, even though most of the facilities had installed pollution control equipment, they did not have adequate controls to address the newly recognized threats posed by mercury and dioxin emissions. In the 1990s, this lead to the enactment by EPA of Maximum Achievable Control Technology (MACT) regulations that resulted in the retrofit of the Air Pollution Control (APC) systems of most facilities. Several smaller units that could not afford the costly retrofits were forced to shut down. Furthermore, the development of large environmentally-sound Subtitle D landfills made landfill disposal more plentiful and less expensive. The confluence of these factors affected the profitability of the most WTE plants in the US and many were forced to shut down. In the mid 2000s, there was evidence that the WTE might again be ready for resurgence. The American Jobs Creation Act of 2004 expanded the federal production tax credit for renewables to include energy from waste. In 2005, the Energy Policy Act of 2005 defined Municipal Solid Waste as a renewable energy, thus making it eligible for loan guarantees.9 Despite these new incentives, there have only been modest signs that WTE is poised to make a comeback in the US and the industry continues to fight negative public perceptions. Although passage of the American Recovery and Reinvestment Act in 2009 extended the 1.1/kWh tax credit until 2013, there is uncertainty about whether these tax credits will again be extended.10

US WTE Today
Currently, The United States has 87 waste-to-energy plants that generate approximately 2,720 megawatts, or about 0.4 percent of total US power generation.11 In 2009, the United States combusted about 29 million tons for energy recovery (about 12 percent of all waste). The first new WTE capacity in almost 2 decades was recently added in Fort Meyers, Florida and other new capacity is being added in Maryland, Minnesota and Hawaii.12 In addition, the first new greenfield WTE facility in over a decade is currently

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being planned and is estimated to be completed in 2014. These developments however are relatively modest considering the size of the US and its energy needs.

V. WASTE-TO-ENERGY SUCCESS FACTORS

This section identifies success factors that can help drive successful deployment of waste-to-energy capacities. Additionally, it analyzes the degree to which these factors have played a role in Sweden and the US. These factors are summarized in Figure 4 of the Appendix.

1. HIGH LANDFILL TIPPING FEES

Perhaps the largest driver of waste-to-energy has been the gate fees or tipping fees levied by landfills for receiving a quantity of waste (typically per ton). High gate fees can make landfills cost prohibitive and energy recovery a more economical alternative means to dispose of waste. Although Sweden has an abundance of land relative to its population, its landfills are expensive. As of 2005, average tipping fees equivalent to 135 per ton or approximately $175.13 In the United States, although tipping fees have risen in recent years, the average fees remain relatively inexpensive at $44.14 In the United States, waste-toenergy plants are most common where landfill tipping fees are highest, most notably the Northeast and Mid-Atlantic [Figure 2 and Figure 3].

Figure 2 - Landfill Tipping Fees in the United States

Figure 3 Operating WTE Plants in the United States By State15

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Operating WTE Plants in the U.S. By State

Washington (1) Maine (4) Oregon (1) Minnesota (9) Wisconsin (2) Michigan (3) Iowa (1) Indiana (1) Virginia (5) California (3) N. Carolina (1) S. Carolina (1) Alabama (1) Georgia (1) New York (10) Massachusetts (7) Pennsylvania (6) Connecticut (6) New Jersey (5) Maryland (3) New Hampshire (2)

Utah (1)

Alaska (1)

Florida (11)

Hawaii (1)

States with operating plants (number of plants in state) Source: Ted Michaels, Integrated Waste Services Association, June 2007.

2. POLICIES FAVORABLE TO WASTE-TO-ENERGY

Government policies can play a major role in creating incentives for waste-to-energy. In Sweden there have been a number of Government and EU policies designed to help move Sweden and Europe away from dependency on fossil fuels, and which have encouraged utilities to develop increased waste-to-energy capacity. The following list, while not all-inclusive, demonstrates policies that can be instrumental in helping to spur WTE development. A. Price on Carbon/Carbon Tax Placing a price on greenhouse gas emissions, provided the price is high enough, incentivizes emitters to reduce emissions. A price on carbon typically comes in the form of a cap and trade system, or a carbon tax. Swedish energy companies are currently under the influence of both a carbon tax and the European Union Emissions Trading Scheme (EU ETS). However, waste-to-energy is not included in the Emission Trading System and therefore does not require carbon credits. In 1991, Sweden enacted a CO2 tax of 0.25 SEK/kg (about $100 per ton) on the use of oil, coal, natural gas, liquefied petroleum gas, petrol, and aviation fuel used in domestic travel. In 2007, the tax was SEK 930 ($140) per ton of CO2. In Sweden the carbon content for household waste is assumed to be 12.6 percent by weight, which is far less than fossil fuels. Therefore, although household waste in Sweden is in fact taxed, the rate that it is taxed is significantly less than fossil fuels. Currently coal is taxed at a rate of 0.41 SEK/kWh while household waste is taxed at 0.16 SEK/kWh. In Combined Heat and Power (CHP) plants, coal is taxed at a rate of 0.093 SEK/kWh while household waste is taxed at .032 SEK/kWh.

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Swedens carbon tax made it much more costly to burn coal and oil for energy and lead many power plants to convert to using biomass as a feedstock.16 Today biomass generates 20 percent of all energy consumption in Sweden, and as of 2010 wood-fired district heating systems satisfies more than half of the residential heat demand.17 The carbon tax has also proven to be a significant source of revenue for the Swedish government, bringing in 28,289 million SEK. Energy taxes in general have brought in approximately 73,492 million SEK or 9.3 percent of all state revenue. Unlike Sweden, which has both a country-level carbon tax and also participates in the EUs cap and trade system, the United States does not currently have a price on carbon. Several localities have passed carbon taxes, such as San Francisco, which in 2008 passed a 4.4 cent/kWh tax and Montgomery County Maryland, which passed a 5 cent/kWh tax in 2010. These localities however represent a relatively small portion of the United States population. The short-term prospects for a national price on carbon in the form of a carbon tax or a cap and trade system seem unlikely in the current political climate. In the survey of the US power industry, only 40 percent believe that a price on carbon will be set in the next 5 years.18 B. High Landfill Taxes and Fees / Bans on Landfilling High landfill taxes drive-up gate/tipping fees paid to landfills and help encourage recycling and waste-to-energy. In Europe, these have proven to be extremely effective at diverting wastes from landfills and encouraging growth in the WTE industry.19 In Sweden, since 2006, the tax alone on waste sent to landfills has been 435 SEK a ton (currently equivalent to $72.5) ton. This has made it expensive to dispose of waste of landfills and is one of the primary reasons that Sweden has such a high recycling rate.20 In 2007, a similar tax was introduced on the incineration of waste for energy. However, this was subsequently removed in 2010 in an effort to compete with WTE plants in Norway.21 While the lack of an incineration tax remains controversial, no tax on burning MSW for energy currently exists. Other Policies that have helped divert trash away from Swedens landfills include the 1999 EU landfill directive, the 2002 Swedish ban on landfilling of combustible waste, the 2005 Swedish ban on landfilling of organic waste and the 2008 new EU Waste Framework Directive. In the United States there is currently no national landfill tax or fee, although some fees currently exist at the local or state level. Currently the highest landfill tax in the United States is in San Jose, California, where the tax is $13 per ton, well below any taxes in Sweden. C. Recognition of Waste-to-Energy as a Renewable Resource When governments recognize waste-to-energy as renewable, WTE projects can be eligible for incentives and programs that they otherwise would have been. In Sweden and the rest of the EU, the organic portion of waste-to-energy is recognized as a renewable resource.22 The United States EPA states that waste-to-energy facilities are clean reliable renewable sources of energy with less environmental impact than almost any other source of energy. However, only 24 states and the District of Columbia recognize it as renewable. -8-

D. Preference to Waste-to-Energy in the Solid Waste Management Hierarchy Both Sweden and the United States prefer waste prevention, reuse and material recycling to energy recover. Both countries also prefer energy recovery to landfilling, or incineration without energy recovery. In the 2008 EU Waste Framework Directive, the five stages of the waste hierarchy are introduced as (1) waste prevention, (2) reuse, (3) material recycling, (4) other recycling e.g. energy recovery and finally disposal. According to the directive efficient energy recovery now counts as recycling. The United States EPAs Solid Waste Management Hierarchy is almost identical and can be found in Figure 7. Figure 7 The EPA Solid Waste Management Hierarchy

E. Renewable Portfolio Standards Renewable portfolio standards (RPS) are standards that obligate retail sellers of electricity to supply retail customers a certain amount from renewable energy sources. As stated earlier, Sweden has set a target of generating 50 percent of its energy from renewable sources by 2020. In the United States, no such target exists. There are currently 33 states in the United States that have renewable portfolio standards, of which 5 have voluntary standards instead of binding targets [Figure 8]. F. Direct Subsidies / Tax Credits Subsidies can come in many forms such as production grants and tax credits, feed-intariffs, low interest / preferential loans to producers, or accelerated depreciation allowances. Sweden currently offers production tax credits for renewables such as wind energy, but does not currently have production tax credits for waste-to-energy. Long-term production tax credits can be an extremely effective tool for incentivizing renewable energy industries, due to the high capital costs.

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In the United States, production tax credits have proven to be an effective policy measure for incentivizing renewable industries. The American Jobs Creation Act of 2004 expanded the federal production tax credit for renewables to include energy from waste. Although passage of the American Recovery and Reinvestment Act in 2009 extended the 1.1/kWh tax credit until 2013, there is uncertainty about whether these tax credits will again be extended.23

3. EXTENSIVE DISTRICT HEATING NETWORK

Waste incineration is much more efficient at producing heat than it is electricity. Furthermore, district-heating plants can provide higher efficiencies and better pollution control than localized boilers. Therefore, when a district-heating infrastructure exists, WTE plants become more effective source of energy. In a district heating system, thermal energy is distributed to individual buildings or houses from a central plant by means of steam or hot water lines. The thermal energy is typically produced from either a boiler or a combined heat and power plant (CHP) a plant that incinerates fuel to produce electricity and transfer excess heat through a heat exchanger to supply hot water or steam to the district-heating network. When using municipal solid waste for electricity generation alone, it can only achieve efficiencies of 20-30 percent. However, when used for combined heat and power (CHP) applications, waste-to-energy plants can achieve efficiencies of 85-90 percent. At Swedish WTE plants with cogeneration, the sale of heat for district heating can be the largest and most dependable revenue stream and provide 40-50 percent of total annual revenues. Gate fees and sale of electricity to the grid both typically provide the rest of the revenue stream, each representing approximately 25 percent of revenues.24 Sweden has a long tradition of using district heating for urban areas. The first districtheating network was introduced in 1948. The district-heating network in Sweden was expanded considerably during the late 1940s after World War 2, creating an outlet for energy from waste incineration.25 Now, district heating can be found in every Swedish city. Currently 15 percent of the district heating production in Sweden originates from waste-to-energy production, and 90 percent is produced from renewable sources.26 In the United States, natural gas is the primary heating fuel (52 percent) and district heating is much less common. Furthermore the relatively warmer climate means that most regions of the United States have lower potential revenue from district heating sales, thus making it unlikely that district heating will be a viable option in warmer parts of the US. As a result, waste-to-energy plants in the US are not typically used for district heating purposes. They therefore have fewer revenue streams and cannot achieve the same efficiencies that CHP plants do. As of 2008, there were 5,800 district heating/cooling systems in the United States, which provide 320,000 GWh or roughly 5 percent of US heating/cooling. Of this, approximately 14,000 GWh came from WTE energy.27 Of the 87 WTE plants in the United States, only 28 sell steam for district heating (21 of these co-generate electricity and steam, while the other 7 produce steam only).28

4. ABSENCE OF CHEAP DOMESTIC SOURCES OF ENERGY

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Abundant sources of cheap traditional energy sources can put WTE at economic disadvantage for both power generation and heating. Sweden lacks an abundant domestic supply of the fossil energy resources such as coal, oil or natural gas. It does however have rich, natural supplies of coniferous forests, hydropower and the potential for wind generation (the technical wind-power potential, according to the Swedish Wind Energy Association, is 540 TWH/year). Before 1945, domestic biomass and imported coal were the two primary sources of energy. Then, between 1945-1975, the country became highly dependent on imported oil for electricity production. The oil shock of the 1970s lead to decreased use of oil between 1975 and 1985, with the revival of coal and the introduction of nuclear. Since 1985, a focus on the environment and a search for renewable resources has lead to an increase in the use of biomass as an energy source and has helped encourage the proliferation of waste-to-energy plants. The United States has long benefited from abundant domestic fossil-fuel reserves to supply its massive electricity, heating and transportation needs. Although it relies heavily on oil imports to meet gasoline demand, and is thus highly exposed to fluctuations in the world price of oil, vast quantities of coal, and recently discovered supplies of natural gas could potentially provide cheap electricity and heating to Americans in the foreseeable future.29 Additionally, the US oil and coal industries have benefited from a century of subsidies and supporting infrastructure, which provides these fuels with a competitive advantage over newer and less-established technologies like waste-to-energy.30

5. A HIGH PRICE OF ELECTRICITY

When electricity prices are higher, waste-to-energy power producers receive a higher price for the energy they produce. In Sweden, the price of electricity has been considerably higher than it has in the US. In September 2011, the price of electricity in Sweden was approximately 0.20 ($0.36) per kilowatt-hour. Of this, about 4 cents is a consumer electricity tax. In the United States, the price of electricity in real terms peaked in the early 1980s and has been hovering around 10 cents per kWh ever since.31 This price has remained relatively low due largely to abundant and inexpensive coal and natural gas supplies. Additionally, the absence of electricity taxes or a true accounting for the externalities that result from the production of electricity from dirty sources the pollution and carbon emissions created keeps the electricity costs in the US much lower than in other European Countries. Finally, many argue that fossil fuel companies benefit from direct and indirect subsidies, which helps keep the price of fuel down.

6. AMPLE SUPPLY OF WASTE

To state the obvious, for waste-to-energy to be a viable energy source, there must be an adequate supply of waste to use as feedstock. Just as in the rest of the world, Swedish consumers are producing much more waste than they did decades ago. This can largely be attributed to economic growth, which is highly correlated with consumption and the resulting waste. Although Swedes are recycling more, solid waste in Sweden has tripled since 1960s. As landfills have become increasingly cost prohibitive, more waste is now being funneled to waste-to-energy plants.

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The average Swede produces 512 kg32 and Sweden as a whole produces 4.7 billion kg of waste per year. Although the amount of waste that the average Swede produces has been steadily climbing, it appears to have reached a peak. In 2009, waste decreased by 5 percent, although this was likely a result of the recession. In the US, there is no shortage of waste from which energy could be recovered. According to the EPA, in 2009, the United States produced over 243 million tons (220 billion kilograms) of municipal solid waste (MSW) per year.33 This works out to 2 kilograms (4.3 pounds) per person per day or 712 kg per year. In the US, MSW peaked in 2007 at 255 million tons and then decreased in 2008 and 2009. Despite Swedens growing supply of waste, in stark contrast to the United States, it now has more WTE capacity than it does waste. As a result, Sweden is importing waste from other countries such as Great Britain and Norway. In 2009, Sweden imported 36,480 tons of household waste for incineration. The United States, on the other hand, is a net exporter of trash, with most of its cast-offs going to China in the form of scrap metal, waste paper and e-waste.34

7. PUBLIC SUPPORT
Swedes are famous for their commitment to the environmental and their knowledge of environmental issues. In a 2008 poll, 87 percent of Swedes said they had personally taken action to reduce their C02 emissions the highest percentage among European countries.35 Although most Swedes prefer recycling to waste-to-energy, they are generally supportive of WTE as a waste disposal method as the number of plants has grown oven, and as regulations and technological advancements have decreased the emissions of Swedish WTE plants by over 90 percent since the 1980s. In the United States, the commitment to the environment and climate change is not nearly as prevalent. This year, a Gallup poll found that only 51 percent of Americans said they worry a great deal or fair amount about climate change.36 This combination of less awareness and less environmental commitment means less public support for policies than you see in Sweden and other western European countries. Furthermore, the earlier, dirtier days of waste-to-energy in the United States created a negative perception of the WTE industry. Most Americans are relatively unaware of the environmental benefits that waste-to-energy offers, which creates and additional barrier for WTE proponents in the US to overcome.

8. HIGH RECYLING RATE

Although recycling and waste-to-energy might at first seem to be in direct competition with one another, this is not the case. In fact, throughout Europe and the United States there is a positive correlation in communities between WTE usage and recycling.37 Many recyclable materials, such as metal and glass, provide no energy potential. It is therefore better that these materials are recycled and not sent to WTE plants. Although one might argue that recycling may not directly lead to waste-to-energy, it is clear that communities that tend to be better at recycling tend to also be better at recovering energy from waste. Sweden has one of the best recycling rates in the world, with an almost 50 percent material recycling rate (13 percent of waste is composted and 35 percent is recycled)38

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The result is that less than 2 percent of waste ends up in landfills, and the remaining 48 percent is converted into energy. Conversely, in the United States, the majority of waste (54 percent) is landfilled and only 34 percent is recycled. As Sweden has demonstrated, there is clearly room to increase both recycling rates and the WTE capacity by reducing the amount of waste sent to landfills.

Figure 1 Waste Management Method Comparison

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

34% 48% 12% Recycling / Composting Waste to Energy 54% 49% Landfill

United States

3% Sweden

9. LIMITED LAND RESOURCES

WTE often makes greater sense for densely populated areas or areas with high land prices because real estate prices drives up the fees at landfills making it more expensive to ship waste to less densely-populated areas. This is one of the reasons that WTE has succeeded in countries like Denmark and Japan, where land is scarce and real estate prices are high. In Sweden, the cost of land has been less of a factor than it has in other countries. Sweden has a considerable amount of land relative to its population although 85 percent of Swedes live in urban areas. Still, although Sweden is famous for its high cost of living, real estate prices remain relatively inexpensive. Although the United States has abundant land, real estate prices can vary considerably. You will find many of the waste-to-energy plants in densely populated areas like Long Island and Cape Cod. Thus, land prices do appear to be a driver for US waste-toenergy.

VI. SHIFTING ECONOMIC FACTORS IN THE US

Although WTE growth has been stagnant in recent years, there are several reasons for optimism for the US WTE energy industry. The increasing price of electricity, transportation fuels, and metals, coupled with a decrease in landfill capacity, is creating economic pressures that could lead to a resurgence for the WTE industry.

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1. INCREASED PRICE OF ELECTRICITY

If the price of electricity increases, it will become more profitable for a WTE plant to sell electricity to the grid. While no one knows for sure what will happen to electricity prices, a recent survey of executives and managers in the utility sector found that more than 70 percent of all respondents agree or strongly agree with the statement energy and commodity prices will rise significantly in the next five years.39

2. HIGHER OIL PRICES INCREASE THE PRICE TO SHIP TO LANDFILLS

Waste-to-energy plants, unlike landfills, can be located on small plots of land close to urban centers. As the price of oil increases, which most experts expect that it eventually will, it will become more expensive to ship waste to landfills that are not near city centers. WTE facilities will thus become a more economical option for many communities.

3. HIGHER METAL PRICES ARE INCREASING THE REVENUE FROM METAL RECOVERY
In recent years, metal prices have been increasing. WTE plants in the United States currently recover 49 percent of all ferrous metals and 8 percent of non-ferrous metals they process.40 As the price of metals continues to increase, there will be stronger incentives for plants to look for ways to expand ferrous and non-ferrous metal recovery effectiveness. It is possible to recover a much higher percentage of metal than plants currently do. The SEMASS WTE facility in Massachusetts is now able to recover 90 percent of the metal that it processes. 41One 2007 study estimated that if US plants were to increase their recovery efficiency, they could realize $162 million from the sale of recoverable metals and savings on avoided tipping fees.42 As the potential for this additional revenue stream becomes more evident, new WTE plants may become more attractive as metal recovery plays an increasing role in WTE capital budgeting decisions.

4. THE NUMBER OF PERMITTED LANDFILLS HAS DECLINED IN THE UNITED STATES

In 1988, there were 7,924 landfills permitted in the United States, but by 2005, that number had shrunk to 1,654. Although the capacity of the average landfill was substantially increased, some are concerned that unless new landfills are added, the United States will not be able to adequately manage with its waste generation. Currently existing landfills have a combined total of about 20 years of capacity at present generation rates. If new capacity is not added in the coming years, tipping fees may increase, thus tilting the economics more in favor of WTE.

VIII. CONCLUSION AND RECOMMENDATIONS

Given the significantly dissimilar success factor profiles of Sweden and the United States, it is unlikely that waste-to-energy in the United States will experience the same - 14 -

level of success that it has in Sweden in the near future. However, significant opportunities still exist for companies in the US to profitably pursue waste-to-energy. In fact, some companies and governments are already finding that it is the most economical option. For instance, the US Capitol recently announced that it plans to divert 90 percent of its waste to a nearby waste-to-energy facility because it was the most cost-efficient solution.43 Furthermore, as the economic factors continue to shift with an increase in electricity prices, fuel prices, metal prices, and a decrease in landfill capacity, waste-to-energy should eventually become the most economically competitive waste disposal option in many locations of the US. It is thus important to determine which locations provide the greatest potential for WTE success, and explore policies and opportunities to influence public perception that could expedite the transition to a country that better utilizes WTE as a waste-management and energy solution.

1. LOCATIONS IN THE US WITH THE GREATEST WTE POTENTIAL

Although the US as a whole lacks many of the success factors that have helped drive waste-to-energy in Sweden, many locations within the US can still provide ample opportunities for waste-to-energy to thrive. Areas that meet some or all of the following criteria could be the best candidates for future WTE expansion. 1. Areas Close to Urban Centers: WTE plants typically make greater economic sense when they are located closer to urban centers. This helps keep the cost of transporting the waste down, and allows these plants to charge higher tipping fees. Higher population density is one of the contributing factors to the greater number of waste-to-energy plants in the northeastern United States. 2. Areas with District Heating: District heating is not nearly as prevalent in the United States as it is in Sweden. However it does exist in certain locals, such as New York City and Minneapolis. 3. States that have RPS Standards and Define WTE as Renewable: There are currently 33 states in the United States that have renewable portfolio standards (RPS), of which 5 have voluntary standards instead of binding targets. There are also currently 25 states that legally define waste-to-energy as a renewable resource, of which, 21 have RPS standards. These 21 states offer potential for increased waste-to-energy [Figure 8]. 4. Areas that Impose a Price on Carbon: In December 2010, California passed an extensive carbon-trading plan aimed at cutting greenhouse emissions. If the plan is implemented, California will have the second largest carbon trading market behind Europe and may thus be more attractive for waste-to-energy developers. Other locations in the US that levy a carbon tax such as Boulder, Colorado; San Francisco, California; or Montgomery County, Maryland may also present more opportunities for waste-to-energy development. 5. Areas with Higher Electricity Prices: In 2010 New England, the Mid Atlantic, Alaska and Hawaii boasted the highest average electricity prices.44

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6. Areas with High Tipping Fees: The northeast states typically have the highest tipping fees, with an average of $70.04 in 2004.45 Other states such as Wisconsin, Washington and Oregon have higher than average tipping fees.

2. POLICY OPPORTUNITIES FOR THE UNITED STATES

As Sweden has illustrated, policy favorable to WTE can be instrumental in encouraging its success. In the United States, the following policy opportunities have the greatest potential to incentivize waste-management companies and energy companies to fund WTE projects: 1. States and Municipalities Can Levy Taxes on Tipping Fees: Although some US municipalities charge landfill taxes, most are relatively modest, at around $1 or $2 per ton (a far cry from the 435 SEK tax in Sweden). This has proven to be a very effective policy instrument in Sweden and the EU, yet is rarely discussed in the US. 2. The Per Kilowatt Production Tax Credit for WTE Should be Extended Past 2013: This will help create certainty in the market of future revenue streams, and help WTE developers justify the immense capital costs required to finance WTE facilities. 3. More States Should Recognize WTE as a Renewable: Although the federal government officially recognized waste-to-energy as a renewable resource, currently only 24 states and the District of Columbia officially do. 4. Impose a National Price on Carbon: Although this seems unlikely under the current political climate, a price on carbon could go a long way to help encourage investment in clean and less carbon intensive forms of energy such as solar, wind and waste-toenergy.

3. OPPORTUNITIES TO INFLUENCE PUBLIC PERCEPTION

Public perception holds great importance in energy policy decision-making. A public that is better educated on the benefits of waste-to-energy will be more likely to demand action from public officials and policy makers at the federal, state and local levels. Before WTE can take-off in the United States, it will be important to change any negative perception and dispel any misconceptions that exist. It will thus be important for to emphasize the following points. 1. Waste-to-Energy Helps Reduce Greenhouse Emissions: Waste-to-energy helps avoid greenhouse gases in several ways: By reducing methane emissions that would otherwise be generated if the waste was instead sent to a landfill and allowed to decompose By avoiding carbon dioxide emissions that would have been generated by a fossil fuel power plant By increasing the recovery of ferrous and nonferrous metals, which is more energy efficient than production from raw materials. 2. Waste-to-Energy Is Clean: Just as in Sweden, WTE facilities in the US have to comply with strict governmental standards on the emissions. In the last decade most WTE plants in the US have undergone expensive retrofits, and as a result have dramatically - 16 -

reduced their emissions to comply with the EPAs Maximum Achievable Control Technology (MACT) standards. After analyzing the inventory of waste-to-energy emissions, EPA concluded that waste-to-energy facilities produce electricity with less environmental impact than almost any other source of electricity. 3. Waste-to-Energy Does NOT Compete with Recycling: Contrary to what many think, waste-to-energy plants do not compete directly with recycling. Much of the recyclable waste, such as a glass and metals, cannot be converted into energy. In fact, communities that rely on waste-to-energy maintain on average a higher recycling rate than other communities. Furthermore, waste-to-energy plants offer additional opportunities to recycle because of the increased handling of waste streams. WTE facilities recover over 750,000 tons of ferrous metals every year that would otherwise be landfilled.46

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IX. APPENDIX
FIGURE 4 WASTE-TO-ENERGY SUCCESS FACTORS
Success Factors High Tipping / Gate Fees Policies Favoring Waste-to-Energy: Price on Carbon/Carbon Tax High Landfill Taxes and Fees Recognition of Waste-to-Energy as a Renewable Resource Preference to Waste-to-Energy in the Waste Management Hierarchy Renewable Portfolio Standards Direct Subsidies / Tax Credts Extensive District Heating Network Ample Supply of Waste Shortage of Cheap Domestic Sources of Energy Lack of Cheap Land High Price of Electricity Public Support High Recycling Rate Swede n Yes Yes Yes Yes Partial Yes Partial No Yes Yes Yes Yes Yes Yes Yes United States No No No No Partial Yes Partial Partial No Yes No No No No Partial

*Partial indicates either that the success factor may exist in certain locations within the country, or that it exists to a lesser degree.

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FIGURE 5 ENERGY RECOVERY SOURCE: AVFALL SVIRGE

FIGURE 6 DISTRICT HEAT PRODUCTION IN SWEDEN47

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FIGURE 8 STATES WITH RPS AND/OR DEFINING WTE AS RENEWABLE IN STATE LAW
State Alaska Arkansas Arizona California Colorado Connecticut District of Columbia Delaware Florida Hawaii Iowa Illinois Indiana Massachusetts Maryland Maine Michigan Minnesota Missouri Montana New Hampshire New Jersey New Mexico Nevada New York North Carolina North Dakota* Oregon Pennsylvania Rhode Island South Dakota* Texas Utah* Vermont* Virginia* Washington Wisconsin N/A N/A 15% 33% 20% 23% 20% 20% N/A 20% 105 MW 25% N/A 15% 20% 40% 10% 25% 15% 15% 23.80% 22.50% 20% 20% 24% 12.50% 10% 25% 8% 16% 10% 5,880 MW 20% 10% 12% 15% 10% 2025 N/A 2020 2022 2017 2015 2025 2021 2015 2025 2021 2020 2015 2013 2021 2015 2025 2020 2019 2015 2015 2025 2013 2022 2020 2015 RPS Target Year N/A N/A 2025 2030 2020 2020 2020 2019 N/A 2020 Yes Yes No Yes No Yes Yes No Yes Yes Yes No Yes Yes Yes Yes Yes Yes No Yes Yes Yes No Yes Yes No No Yes Yes No Yes No No No Yes Yes WTE Defined as Renewable

Yes *Five states, North Dakota, South Dakota, Utah, Virginia, and Vermont, have set voluntary goals for adopting renewable energy instead of portfolio standards with binding targets.

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