Department of the Environment, Water, Heritage and the Arts Waste Technology and Innovation Study

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Market and non-market barriers

  1. Market Barriers

By far the most obvious market barrier to innovation in waste management is the low cost of landfilling in many areas. In markets where landfilling costs are high, such as Sydney, a number of AWT facilities are operational and in the planning stages. It is expected that in the next ten years not only will all municipal waste generated in Sydney be processed through AWT facilities, that there will also be a number of facilities for the separation of the C&I stream and the processing of some of its components.

A key element in the high price of landfilling in Sydney has been the NSW Waste Levy. The NSW levy is currently over $50 per tonne and AWT is an increasingly common form of municipal waste processing. In Melbourne, where landfilling prices are currently quite low and the waste levy is only $15 per tonne, there are virtually no AWT plants at present. However, the Victorian Advanced Resource Recovery Initiative (VAARI), which commenced in early 2009, intends to investigate the most appropriate way to establish up to 8 AWT facilities across Greater Melbourne. It aims to contribute to a target of recovering 65% of municipal solid waste by 2014. The scheme includes consideration of the adequacy of existing waste collection systems to match the proposed AWT processing of collected wastes. _

Gate fees for Sydney’s putrescible transfer stations are around $190-$200 per tonne. This makes the treatment of waste, the estimated cost of which is $100-$140 per tonne, much more cost effective than landfilling. Even in Sydney, where landfill charges are the highest in the country, the cost of waste disposal for businesses is still relatively low compared with other more significant operating costs, such as labour and rent.

Planning for sufficient AWT facilities to be commissioned and operating in the Greater Sydney Metropolitan Area is not sufficiently advanced for the NSW Waste Strategy targets for municipal waste to be achieved before their 2014 target dates. There are also insufficient economic drivers to force commercial wastes to be diverted to AWT facilities, so it is unlikely that the commercial waste targets will be met either.

Most of the AWT plants built in Australia so far have been funded by private consortia and waste companies either responding to tenders from local government or asking local government to enter 10-20 year contracts. These are needed to provide the surety with which to fund the construction and operation of the facilities. Local government contracts with AWT providers range from 10 to 20 years and are for financing, construction and operation of the AWT facility. The council(s) agrees to direct all municipal waste that they or their contractors collect to the plant for the contract period. They often also pay an availability fee to cover the financing costs of the plant and an agreed rate per tonne for waste received. In some cases, councils have also provided the land and environmental approvals for the successful tenderers.

Different funding models of alternative waste technology plants are being explored. Private organisations can enter into BOO (build, own, operate) projects in which they build the plant, own it and operate it accepting waste from customer councils. Private organisations and governments can also form partnerships in BOOT (build, own, operate, transfer) projects in which they build the facility, own it and operate it for an agreed period or until agreed standards or benchmarks are reached and then ownership is transferred to the client council.

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