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WASTE/ENERGY: WTE Report Focuses On Socioeconomics

May 1, 1994

3 Min Read
WASTE/ENERGY: WTE Report Focuses On Socioeconomics

Thomas Scarlett

The typical county that is considering a waste-to-energy (WTE) initiative is wealthier than the national average, located in a metro politan area and already has recycling programs and material recovery facilities, according to a National Renewable Energy Labo ratory (NREL) study. In fact, communities that must abide with stronger state environmental regulations and recycling goals are the ones that are more likely to consider WTE.

The decision to deliberate WTE reportedly is not related to landfill availability (measured by number of landfills per capita) and, in terms of population growth, found no significant difference between WTE and non-WTE counties.

The size of the proposed facility in relation to the community's waste stream is a significant factor in a community's decision. Size affects possible public acceptance of WTE "because of resultant opportunities for waste importation and actual or perceived effects on other waste management methods, especially recycling," according to the report. Study participants also stressed the importance of involving the public early in the decision-making process.

Population was found to be another significant factor. Communities that have considered WTE have average populations of 385,000, while those that haven't considered it have average populations of 41,000. The less rural the population is within the county, the more likely WTE will get a hearing, according to the report.

As with most major decisions, several financial considerations must come into play. Therefore, the study's researchers considered a variety of financial issues that were believed to affect the success of WTE.

Municipalities, according to the report, "are successfully adjusting to altered financial conditions by taking a four-pronged approach to financing." First, local jurisdictions have selected a combination of financing mechanisms in their financial packages. Second, jurisdictions are increasingly using local-sector resources such as county revenues and taxable revenue bonds for financing. The third approach, which is partly in response to the tax reform of 1986, includes trying new methods of financing. And finally, private-sector participation is being sought more aggressively.

The use of private equity to finance WTE projects has grown dramatically since tax reform went into effect. In 1984, 25 percent of WTE facilities used private equity capital for financing; in 1990, the number of facilities increased to 45 percent.

Facilities that were eventually canceled reportedly did not use any innovative financial methods within their financial packages. But it is unclear from the study's findings whether the absence of innovative financing killed such projects, or if they simply did not get far enough off the ground for unusual approaches to even be considered.

In general, NREL could not find any identifiable differences between counties that begin a WTE project and then abandon it and those that see the projects through to completion (see chart).

The impetus for the study came from the slowing pace of WTE activity in recent years. Although less than 1 percent of all municipal solid waste (MSW) was burned to retrieve heat energy in 1970, 16 percent of MSW was used for WTE in 1990. While many experts are forecasting greater gains by 2000, the rate of new projects has slackened considerably during the last four years.

The authors of the study gathered data on all successful and canceled U.S. WTE initiatives between 1982 and 1990. They also conducted in-depth investigations of four specific projects (two successful, two not) in Florida, New Jersey, Michigan and Tennessee.

The National Renewable Energy Laboratory is operated by the Midwest Research Institute for the U.S. Department of Energy. For a copy of the study, "Waste-to-Energy in the United States: Socioeconomic Factors and the Decision-Making Process" (report # TP-430-5694), contact: Sally Evans, National Renewable Energy Laboratory, 1617 Cole Blvd., Golden, Colo. (303) 231-1243.

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