RESEARCH REPORT. Smart Waste

RESEARCH REPORT Smart Waste Advanced Collection, Processing, Energy Recovery, and Disposal Technologies for the Municipal Solid Waste Value Chain: Global Market Analysis and Forecasts Published 2Q 2014 Mackinnon Lawrence Research Director Eric Woods Research Director

Section 1 EXECUTIVE SUMMARY 1.1 The Evolving MSW Management Market Both a threat to public health and environmental security and a strategic renewable resource, municipal solid waste (MSW) remains an inevitable byproduct of civilization and a prime target for clean technology innovation. Meanwhile, the MSW management industry is entering a period of active development, as the total volume of waste generated globally is expected to grow from 1.5 billion tons in 2014 to 2.2 billion tons by 2023. Two macro trends define the expected MSW management industry advancements over the next 2 to 3 decades:» Growing waste volume: 97% of waste volume growth is expected to come from Asia Pacific and Africa, primarily in developing economies across these regions.» Changing waste composition: MSW composition will change as developing countries transition to consumer-oriented economies and become more complex due to increasing volumes of electronic waste (e-waste) and new types of waste entering the waste stream. Although these changes will not occur suddenly, this dynamic evolution in an otherwise stable industry offers a wealth of opportunities. Existing waste hauler stakeholders and new waste management industry market entrants will have fertile ground for commercializing disruptive technologies. Municipal governments tasked with contracting for MSW services will benefit from the maturation of these emerging smart technologies. While one of the key measures of a society s advance is the degree to which it can distance itself from its trash, waste is increasingly viewed as a strategic resource. Efforts to divert an increasing percentage for higher-value applications are driven by innovations across the value chain. This focus on waste as a strategic renewable resource for material and energy recovery is at the heart of the smart MSW revolution. The commercialization of emerging smart technologies that improve MSW management, in particular, offer stakeholders the opportunity to enhance MSW collection, increase diversion and recycling, generate renewable energy, and optimize the environmental performance of landfills. 1.2 The Smart MSW Technology Opportunity There is no widely recognized bright line distinguishing traditional MSW management technologies from smart MSW management technologies. Essentially, the smart MSW technology market involves the integration of advanced technologies into a strategic solution that enhances sustainability, resource efficiency, and economic benefits. The use of these technologies results in more integrated waste management offerings that move beyond the traditional use of labor, diesel trucks, and open pits to discard waste. 1

Navigant Research expects that, in the future, these solutions will form an ecosystem of technologies spanning the entire MSW chain of command. This integrated model aims to maximize the renewable benefits of MSW as a strategic resource while minimizing the longterm externalities associated with discarding waste. Smart MSW technologies touch on four separate phases of the traditional MSW management value chain (including representative technologies):» Smart collection (e.g. radio frequency identification [RFID] tagging, global positioning system [GPS] routing, and pneumatic tubes)» Smart processing (e.g. advanced material recovery facilities [MRFs] and mechanical biological treatments [MBTs], and refuse-derived fuel [RDF] production facilities)» Smart energy recovery (e.g., waste-to-energy [WTE], waste-to-fuels [W2F], and landfill gasto-energy)» Smart disposal (e.g. sanitary landfilling, bioreactor landfills, and solar integration) Smart MSW technologies are diverse, including examples such as RFID and GPS solutions to streamline collection, optical sorting to enhance automation at processing facilities, gasification of MSW into advanced biofuels, and sensors and software used to remotely monitor landfill performance. 1.3 Smart MSW Technology Market Trends Although an estimated 43% of the global MSW stream is handled by some aspect of the smart MSW technology market at some point along the existing waste chain of command, the market is in a nascent stage of development. Even in mature waste management markets like North America and Western Europe, opportunities abound for commercializing emerging technologies and extending investments across the entire waste management value chain. General rules of thumb will help guide waste management strategies in the future, affecting the rate of diffusion of smart MSW technologies:» The development of advanced infrastructure is and will be expensive for many years for most of the countries that need it the most.» The required infrastructure, even when the financial resources are available, is delivered much slower than the rapid growth of waste generation.» The current waste management systems are not capable of jumping from open dumps to high-tech systems. These rules of thumb suggest that the diffusion of smart MSW solutions will take time, despite strong support for integrating advanced technologies, due to the relative cost to basic infrastructure upgrades. 2

Meanwhile, the evolution of MSW management practices is not linear in all cases and encompasses a broad suite of technologies at varying levels of commercialization. Many of these technologies are deployed jointly as a strategic platform to maximize the synergistic benefits each offers. For example, at a minimum, many countries will incorporate at least some aspect of smart MSW management, such as sanitary landfills combined with landfill gas-toenergy (LFGTE) recovery. In some cases, the utilization of smart MSW management strategies and technologies will be far more pervasive than in others. In Western Europe, for example, limited space, high landfill tipping fees, regulations that encourage alternatives to landfilling, available capital, and strong incentives for renewable energy all combine to make the region the most mature smart MSW technology market globally. In the developing world, the speed with which technologies from more mature smart MSW technology markets can be transferred and adopted remains a key question for the waste management industry. 1.4 Market Forecasts Navigant Research estimates that 644.0 million tons of MSW was managed by smart MSW technologies in 2014. This volume is expected to increase to 938.4 million tons by 2023, representing $42.2 billion in cumulative revenue generated from installed smart MSW technology over the forecast period. Between 2014 and 2023, annual revenue from smart MSW technology is expected to experience a 12.2% compound annual growth rate (CAGR), significantly outpacing annual revenue growth from conventional MSW technology (4.0% CAGR). Chart 1.1 Cumulative Smart MSW Technology Revenue by Region, World Markets: 2014-2023 $45,000 $40,000 North America Eastern Europe Latin America Africa Western Europe Asia Pacific Middle East Smart MSW Share 44% 43% ($ Millions) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 43% 42% 42% 41% (Smart MSW Share) $5,000 41% $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 40% (Source: Navigant Research) 3

Globally, 43% of MSW generated will be handled by smart MSW technology in 2014. This share is expected to decline slightly as MSW generation volume growth outpaces smart MSW technology investment. North America, Western Europe, and Asia Pacific will generate the greatest share of smart MSW technology revenue globally over the forecast period. The smart energy recovery segment, by far the most mature of the four smart MSW technology segments analyzed in this report, is expected to account for 64% of cumulative new revenue in the smart MSW technology market. This reflects continuing investment in mature technologies like incineration-based WTE and LFGTE and the deployment of emerging conversion platforms that require higher upfront capital. 4

Section 2 MARKET ISSUES 2.1 The MSW Opportunity The municipal solid waste (MSW) opportunity is substantial across all geographies. A truly democratized resource, all societies generate waste, and in turn, must devise strategies for managing it. Although population growth and urbanization are not the only indicators of waste generation, they are critical ones. Recently surpassing 7 billion people, the world s population is not only growing in number, but its propensity to consume is also accelerating. By 2030, the global population is forecast to reach 8.6 billion, with growth highest in countries in Asia Pacific, Latin America, and Africa. As a result, the amount of MSW generated throughout the world continues to accelerate despite stabilizing volume growth in many high-income economies. With waste generation rates set to more than double over the next 20 years in low- and middle-income countries, the costs of managing the waste is also expected to see a steep rise. Cost increases will be most severe in low-income countries (more than fivefold increases) followed by middle-income countries (more than fourfold increases), according to World Bank. Meanwhile, MSW sits at the confluence of three global challenges associated with population growth: energy supply, climate change, and waste generation. All three challenges are compounded by increasing urbanization rates and rising incomes, particularly in developing countries throughout Asia Pacific, Latin America, and Africa. With nearly 2 billion tons of MSW generated in urbanized areas a volume expected to grow at an annual rate of 4% worldwide over the next decade opportunities to leverage smart MSW technologies are widespread. 2.1.1 Understanding Waste Streams There are many types of wastes generated worldwide, including:» Household» Commercial» Industrial» Construction and demolition» Agricultural» Sewage» Mining and quarrying 5

Of the various types of waste generated, MSW represents the portion relevant to this report. MSW is primarily composed of waste that is produced by the household, but also includes some commercial and industrial waste similar in nature to household waste and would otherwise be deposited in municipal landfill sites. Different jurisdictions strictly regulate the materials that are included in MSW, which leads to significant variance among definitions and composition within different countries. Specifically, definitions determine the combustible, renewable, organic, and biological components and the characterization of MSW as biomass or a renewable feedstock. These characterizations have important consequences for determining if waste management strategies like waste-to-energy (WTE) can qualify for any subsidies and financing opportunities. Although there is general agreement across jurisdictions with respect to the exclusion and inclusion of hazardous and non-hazardous materials in MSW classifications, definitions vary considerably across different countries and international organizations. Some opponents argue that since MSW is partially composed of products produced from fossil fuels, it should not be treated as a renewable resource, but this remains the exception. 2.1.2 Global MSW Generation On a global scale, calculating the amount of waste generated is challenging because many countries do not track waste generation or disposal statistics. In developing countries, this is partially linked to a lack of formalized municipal waste collection systems. Where this data is collected, inconsistencies in the way countries report statistics definitions and surveying methods employed by countries vary greatly can lead to substantial discrepancies among published studies. Accordingly, a range of conflicting estimates is offered. A recent report published in 2012 by World Bank, What a Waste, is among the most widely cited studies. 1 According to this study, the amount of MSW generated is growing faster than the rate of urbanization. World Bank estimates that roughly 3 billion urban residents generated an average 1.2 billion kg per capita per day (1.3 billion tonnes per year or 1.43 billion tons per year) in 2012. By 2025, this is expected to increase to 4.3 billion urban residents generating about 1.42 kg per capita per day of MSW (2.2 billion tonnes per year or 2.4 billion tons per year). This represents a 900 million tonnes (992 million tons) increase in a little over a decade, a near doubling of the total volume of MSW generated globally today. 1 What a Waste: a Global Review of Solid Waste Management, World Bank, 2012. 6

Building on this analysis, Navigant Research projects that the total MSW generated globally in 2014 will be 1.5 billion tons, increasing to 2.2 billion tons by 2023. Substantial growth in the volume of waste generated in Asia Pacific and Africa will be one of the defining trends of the next decade in the global waste management market. Chart 2.1 MSW Generation Volume Share by Region, World Markets: 2014-2023 100% 90% 80% 70% 60% 50% 40% 30% Africa Latin America Eastern Europe North America Middle East Asia Pacific Western Europe 20% 10% 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Sources: Navigant Research, World Bank) 2.1.3 Regional MSW Composition Often composed of carbon-rich matter, MSW is an underutilized resource throughout the world, but it also presents many unique challenges. Specifically, the heterogeneous nature of MSW limits the degree to which cookie-cutter solutions can apply to a large swath of the market. For example, certain types of plastics have more than 3 times the heat content of yard trimmings or organic textiles, but may present more challenges with respect to conversion. Variances in composition may necessitate tailored strategies for handling waste streams. In many cases, MSW handling must account for varying moisture content and materials sizing, which in some cases necessitates the preprocessing of the waste prior to thermal treatment typically involved in the WTE recovery process. Income levels, economic growth, and changing lifestyles affect MSW composition. In general, most of the MSW generated globally contains high fractions of organics and paper, compared to the lower amounts of plastics, glass, and metals. Poorer households generate higher fractions of organic waste than wealthy ones; the same goes for lower-income nations. There are discrepancies observed between rural and urban households, as well, with rural areas also generating higher percentages of organic waste. High fractions of organics lead to a dense and humid waste that affects not only the collection and transport system, but also its recycling 7

potential. In high-income countries, the consumption of processed food and packaged products results in a higher percentage of inorganic materials such as metals, plastics, and glass. Generally, all low- and middle-income countries have a high percentage of compostable organic matter in the urban waste stream, ranging from 40% to 85% of the total. Waste streams in higher-income countries, by contrast, have a higher percentage of inorganics. The relative proportion of MSW components across select countries is depicted in Chart 2.2. Chart 2.2 MSW Composition by Country, Select Markets: 2012 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Others Glass Metal Plastic Paper Organics 0% Indonesia Brazil Nigeria China Poland India France South Korea United States Canada Japan Germany (Source: World Bank) 2.1.4 MSW, Urbanization, and Rising Levels of Affluence The long shadow of societal development, waste generation is an unavoidable byproduct of urbanization and rising incomes, which lead to greater use of resources and, inevitably, more waste. While population growth drives a general increase in waste generation (more people equals more waste), urbanization and rising levels of affluence can also accelerate waste generation rates (waste generation per capita), often outpacing a jurisdiction s ability to safely and sustainably manage the problem. Despite efforts by activists to curb superfluous consumption, and therefore waste, urbanization and affluence is placing significant pressure on governments around the world to manage rapidly growing volumes of waste. In the face of multiple threats energy security, environmental degradation, climate change, resource depletion, etc. integrated waste management approaches are playing an increasingly important role in coordinating a suite of strategies across the waste value chain in accordance with ecological and domestic energy principles. 8

2.1.4.1 Urbanization and Waste Generation Among these trends, urbanization presents the greatest challenge for waste management infrastructure. Over 50% of the global population roughly 3.2 billion people currently lives in urban areas or cities. By 2050, this share is expected to grow to 70% of the estimated 9.6 billion people on Earth, resulting in a more than doubling of urban residents globally (6.7 billion people) over the next 30 to 40 years. Assuming relative consumption patterns remain static over this period, this would result in a doubling of the amount of waste that must be collected and managed over that time. With 83% of waste under active management today globally, there is significant growth potential in the waste management industry. As illustrated in Figure 2.1, the urbanization trend is increasing more rapidly in the developing world, especially in Africa, Asia, and Latin America. Compared to the more developed economies in North America and Europe, these areas are already lacking pervasive collection, management, and processing infrastructure, making the acceleration of waste generation an even more acute challenge. In particular, WTE offers significant benefits for these countries, which are also facing significant challenges associated with meeting fast-increasing electricity demand as well. Figure 2.1 Percentage of Population at Mid-Year Residing in Urban Areas by Region: 1950-2030 (Source: United Nations) 9

2.1.4.2 The Rise of the Global Middle Class Coupled with urbanization, rising level of affluence acts as an accelerant on waste generation in developing economies. Improvement in relative living standards within countries, which goes hand-in-hand with increased purchasing power, drives increases in the rate of consumption. In most developing economies, waste generation rates range between 0.5 kg and 1.5 kg per capita per day. In developed economies, this rate is typically closer to 2 kg to 3 kg per capita per day. The gross national income (GNI) of countries based on purchasing power parity per capita is often used as a measure for comparing the relative standards of living across different countries. As shown in Chart 2.3, this measure shows a high degree of correlation with waste generation rates per capita across economies in various stages of development. Chart 2.3 Waste Generation per Capita to Gross National Income Ratio, World Markets: 2014 3.0 (Waste per Capita - kg) 2.5 2.0 1.5 1.0 China Brazil Nigeria Indonesia Turkey Mexico Russia Poland South Korea United States Canada Germany United Kingdom Japan 0.5 India - $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 (Gross National Income per Capita, PPP - $) (Sources: Navigant Research, World Bank) 2.1.4.3 Megacities: A Super-Sized Challenge While all urban centers throughout the world grapple with solid waste management challenges, the situation is most acute in the world s rapidly emerging megacities. Generally defined as having over 10 million inhabitants, with space at a premium and shantytowns on the rise, megacities are quickly morphing into megaregions or megacorridors. By 2015, there will be 21 projected megacities globally, with over half in Asia Pacific. By 2030, this number is expected to increase to more than 35 megacities with almost 1 billion inhabitants. By 2050, 7 out of 10 people will live in megacities, offering the benefits of concentrated living but also some of the biggest public works challenges in human history. While megacities will struggle to keep pace 10

with providing the necessities of urban living with explosive population growth, MSW management provides opportunities to promote sustainable growth, including environmental stewardship, low carbon energy, and material recycling. These areas will be laboratories for many waste management-related innovation and investment strategies. Figure 2.2 Map of World s Megacities: 2006 (Source: City Mayors Foundation) 11

2.2 Defining the Smart MSW Management Value Chain The MSW value chain sometimes referred to as the waste chain of command extends from the upstream source of trash, typically a home, business, or other entity, to downstream final disposal in landfills or other means of final treatment. Navigant Research segments this value chain into four primary categories of technologies and activities examined in this report (outlined in Figure 2.3). Figure 2.3 MSW Management Value Chain Collection Generation Aggregation Source separation Transport Processing Sorting Recycling Compostinng Energy Recovery Waste-to-energy Waste-to-fuel Disposal Open dumping Landfilling (Source: Navigant Research) In this study, the smart MSW technology value chain is organized across the same four categories as the conventional waste management value chain, but includes many more stakeholders and technology options that increase efficiency, energy and material recovery, and landfill diversion. As a whole, the smart MSW market involves a diverse set of stakeholders, with vertically integrated companies among the most visible. While numerous traditional stakeholders are embracing various aspects of the smart MSW value chain, many small and medium enterprises (SMEs) offer innovative solutions that enhance the overall efficacy of waste management efforts by improving collection rates, increasing diversion, or mitigating the reliance on landfills. Key stakeholder groups are described briefly below:» Integrated waste management players: Provide services ranging from the collection of MSW to final disposal. These private or publicly traded stakeholders are more prevalent in developed economies where municipalities are more likely to contract out the management of waste streams. Regionally, the integrated waste management market is highly consolidated. 12

» Specialized waste management companies: Provide specific MSW management services along the value chain, typically relying on proprietary technology and processes to maintain market share. These companies are often privately owned» Technology vendors and solutions providers: Offer products for the waste management industry, in some cases exclusively, as part of a broader suite of product offerings to industrial markets. These players can be software vendors and IT solutions providers, or providers of control technologies, process equipment, RFID solutions, and hardware for processing solid waste. There are few leading players in this space, as most companies provide highly specialized products. While multiple stakeholders are involved in the collection and aggregation of MSW to final disposal or treatment, the relative maturity of various stages along the value chain varies significantly across countries. As described below, broad generalizations may be made about waste management practices across low-, middle-, and high-income countries. Developed economies are the primary target of growing investments in automation and IT capabilities, owing to efforts by integrated waste haulers to reduce operating costs in the face of stagnating waste generation rates and mitigate dependence on landfills due to more stringent regulations. Energy recovery projects are common across all countries, though Kyoto Protocol-financed Clean Development Mechanism (CDM) efforts are the primary driver of the adoption of landfill gas-to-energy (LFGTE) projects in developing economies. Chart 2.4 Typical MSW Disposal Methods by Country Type, Representative Markets: 2012 100% 90% 80% 70% 60% 50% 40% 30% 20% Other WTE Recycled Compost Landfills Open Dumps 10% 0% United States (High Income) Poland (Upper Middle Income) Jordan (Lower Middle Income) Cambodia (Low Income) (Sources: Navigant Research, World Bank) 13

2.2.1 Low-Income Country Value Chain Low-income countries spend a predominant share of resources on upstream and midstream waste collection efforts and infrastructure, with only a fraction going toward downstream treatment and disposal. Despite these efforts, a large proportion of waste is left uncollected and is disposed in informal pits near and intermingled with population centers. 2.2.2 Low- and Upper-Middle-Income Country Value Chain In developing and transitional countries typically classified as middle-income countries the largest share of investment is earmarked for improving the delivery of solid waste management services, with basic services delivered across a fraction of the population base. Meanwhile, a smaller, disproportionate share of resources is allocated toward the reduction and segregation of materials at the upstream source (e.g., recycling), as well as toward downstream processing and disposal. In some largely populated developing economies, like Brazil and India, waste picker networks have helped improve recycling rates, but frustrate efforts to transition toward more robust segregation of waste streams and diversion practices. Additionally, poor accountability, owing to weak regulatory frameworks and unregulated markets for recyclables, has frustrated top-down efforts to modernize the waste management value chain. 2.2.3 High-Income Country Value Chain In developed economies, investment is targeted primarily toward mitigating the dependence on landfills through diversion or waste mitigation, especially where space constraints either drive higher tipping fees or necessitate alternative disposal strategies. High-income countries have taken up recycling as an integral part of their waste (and resource) management systems. They have invested heavily in both physical infrastructure and communications strategies to improve their processing and disposal capabilities. 2.3 Market Drivers While the drivers of solid waste management are diverse, at its core, waste management is a utility service embedded in the fabric of modern society. No matter how effective waste mitigation efforts may be, waste is an inevitable byproduct of civilization. Waste poses significant health and environmental safety risks. The effective management of waste includes mitigating the negative health and environmental externalities while also extracting value from waste in the form of raw materials or energy. 2.3.1 Public Health and Environmental Security In most jurisdictions, mitigating the public health impact remains the primary motivation of solid waste management programs. Left untreated, accumulated waste can become a breeding ground for insects, vermin, and scavenging animals, which have been linked to the spread of air- and water-borne diseases. Surveys conducted by UN-Habitat show that in areas where waste is not collected frequently, the incidence of diarrhea is twice as high and acute respiratory infections are 6 times higher than in areas where collection is frequent. 14

The mitigation of environmental impacts also drives waste management investment. While the waste management sector makes a relatively minor contribution to greenhouse gas (GHG) emissions estimated at approximately 3% to 5% of total anthropogenic emissions globally according to the United Nations Environment Programme, the waste sector is in a unique position to move from being a minor source of global emissions to becoming a major saver of emissions. Methane emissions from landfill represent the largest source of GHG emissions from the waste sector, contributing around 700 MtCO 2 e globally. 2.3.2 Urbanization and Sprawl By its very definition, urbanization is a necessary prerequisite for MSW to exist in the first place. Different from agricultural waste, urban settlements produce a unique blend of waste components that necessitate collection and disposal or some degree of treatment. However, while MSW is an inevitable byproduct of urbanization, the growth of urban areas both in population and geographic area can be impeded by the accumulation of trash. Many of the world s most famous cities face some form of geographic constraints, whether hemmed in by mountains or coastline, or in some cases, when urban growth rings are established to prevent sprawl and protect valuable agricultural areas in close proximity to urban areas. Informal heaps of trash and landfills occupy valuable real estate in or around the urban center. These informal trash heaps impede efforts to improve quality of life in densely populated areas in many fastgrowing economies like China, India, and Nigeria. Landfills are a key concern for densely populated developed economies across Europe, Japan, and the U.S. Northeast. By addressing concerns around informal dumping and expanding landfills, smart waste management can reclaim areas overrun by trash and mitigate the dependence on urban landfills. 2.3.3 MSW as a Strategic Resource The effective management of carbon whether to reduce dependence on petroleum resources or mitigate the amount of carbon in the atmosphere to combat climate change has forced a broad-scale effort to exploit renewable resources. Composed of plastics, organics, and other carbon-rich material, MSW is an ideal renewable energy resource because it is generated near areas of high demand for energy and coastal areas facing unique threats from climate change (studies show that 14% of the world population is under threat from sea level rise). Reliance on MSW mitigates dependence on imported energy resources as well, enhancing efforts to improve energy security. While MSW conversion to energy results in new emissions, it allows for a second bite at the apple, so to speak. In other words, carbon material has already been converted into a product that was consumed and discarded. The conversion of that material into heat, gas, or liquid allows that resource to be consumed again as a feedstock for energy conversion. MSW left to decompose in landfills also produces methane gas, a GHG more than 20 times more potent than CO 2. The capture of methane or conversion of MSW into gas (either synthetic gas [syngas], a.k.a biogas) allows this gas to be consumed as a gas or liquid energy source. 15

2.3.3.1 A Negative Cost Feedstock MSW is particularly attractive as a feedstock for energy inputs because it is available at negative cost (i.e., can be a revenue source for facilities utilizing MSW as an input feedstock). In areas where MSW is managed by a formalized infrastructure, a tipping fee is paid to cover the cost of landfilling a given volume of trash. Likewise, facilities that utilize MSW as a feedstock can receive a similar tipping fee in lieu of payment to a landfill operator. In areas where tipping fees are particularly high Western Europe, the U.S. Northeast, and Japan these fees can provide a valuable revenue source for facility operators, helping to defray the high upfront costs associated with the construction and operation of a WTE conversion facility or biorefinery converting MSW to liquid fuels. Within the energy industry, this configuration has advantages over traditional energy conversion facilities (e.g., coal-power generation plants, natural gas generation plants, petrorefineries, etc.) that must build the cost of their feedstock into their pricing structure. 2.3.3.2 The Rise of Landfill Mining Urban mining involves the reclamation and recycling of raw materials, minerals, and scrap metal from end-of-life (EOL) products in urban areas (old electronic equipment, buildings, and waste). Similarly, the value of MSW as a resource has manifested in efforts to mine trash from landfills in select areas. Although a rare occurrence outside of recycling initiatives aimed at discarded electronic waste (e-waste), this trend is expected to increase in the future, as incumbent resources are increasingly depleted and advanced MSW conversion technologies gain traction in the market. Urban mining also allows crowded metropolitan areas to reclaim landfill areas for future development to accommodate population growth and urban expansion, especially in areas where urban sprawl has enveloped traditional landfills. Nevertheless, urban mining is still in its infancy. Currently, the economics have yet to materialize into a compelling business case in most areas of the world. According to major waste haulers, though, the trend is likely to gain traction within a decade. 2.4 Market Challenges Despite the strong drivers for MSW management and technology innovation, many barriers persist that prevent more widespread commercialization. MSW is a particularly challenging feedstock to work with due to its heterogeneity and variation in composition across geographies. Smart MSW technology is capital-intensive due to the infrastructure requirements for many projects. As such, the availability of working capital will be a key determinant in how well waste management operators make the jump to more sophisticated, integrated service offerings. 2.4.1 Waste Composition Due to its heterogeneous nature and variance across income levels, geographies, and lifestyles, waste presents many challenges with respect to processing and energy recovery. Some materials found in MSW have higher heat content than others. For example, certain types of plastics have more than 3 times the heat content of yard trimmings or organic textiles. 16

In general, combustible non-biogenic materials are characterized by higher heat contents per unit weight than combustible biogenic materials. Thus, the ratio of biogenic to non-biogenic material volumes can have a considerable effect on the heat content of the waste stream. MSW utilization is impeded by its varying moisture content and materials sizing, which in some cases necessitates the pre-processing of the waste prior to thermal treatment. Increasingly, source separation of waste the separation of homogenous materials from the MSW is gaining in importance throughout the world. In some cases, the biogenic portions of MSW may also be separated for biological treatment to maximize the recoverable energy and postprocessed materials. Collecting and recycling waste close to its source of generation reduces the remaining amount of waste to be handled further and alleviates the municipal burden. 2.4.2 Out-of-Sight, Out-of-Mind One of the primary challenges to smart MSW technology adoption is the status quo, which in most cases is the relative ease and low cost of landfilling. From a society s perspective, modern landfill management eliminates many of the immediate public health threats associated with waste. For waste haulers, landfilling is a relatively inexpensive solution that translates into tidy profits in the form of tipping fees. Where land is cheap and abundant, it is nearly impossible to upset this balance, enabling waste to be removed and disposed of indefinitely. In the United States, this dynamic is in full display. In most cases across the country, the default option is to ship waste off to a remote landfill. Away from the densely populated areas along the East and West Coasts, low tipping fees and relatively inexpensive land translate into low-cost waste management, which mitigates the penetration of smart MSW solutions. Along the more densely populated coasts, where land is available at a premium, higher tipping fees and diminishing landfill capacity are upsetting the status quo. In these situations, the general public and policymakers are more likely to contemplate smart MSW alternatives to traditional landfilling. 2.4.3 Not in My Backyard A corollary to the out of sight, out of mind dynamic described above, in many regions globally, the public remains deeply opposed to the siting of MSW processing facilities near urban centers. The perception around traditional WTE combustion facilities, especially in places like the United States, is that they spew harmful chemicals and contaminants into the environment. Much of the opposition to incineration and the thermal treatment of MSW dates back to the time when the air emissions of incinerators were not controlled, leading to significant levels of untreated flue gas escaping into the atmosphere. Not surprisingly, not in my backyard (NIMBY) has proven to be one of the strongest barriers to the development of WTE, modern material recovery facilities (MRFs), and other smart MSW solutions. Faced with limited land availability and incinerating at least 70% of its MSW, Japan has been successful at ratcheting up restrictions on emissions to drive technological advances in the treatment of incinerator emissions. The Japanese public remains widely supportive of gasification facilities. Public opposition to smart waste processing infrastructure in Scandinavia 17

is also insignificant, and the barriers to develop WTE are lower than in other countries. In these cases, governmental efforts focused on educating municipalities and the broader public has proven to be effective. The Swedish government in particular has been successful at involving the local population and minimizing the potential for public backlash to the construction of WTE facilities. The negative perceptions around WTE and other waste processing infrastructure have started to be addressed through innovative architectural design. While there are a handful of facilities incorporating architectural elements to better blend in with the urban landscape, concept designs have expanded thinking around how to appease public opposition through outside-thebox renderings. In Denmark, the international architectural firm Bjarke Ingels Group is developing a project that incorporates a facade to mask the industrial core of the facility while doubling as a ski slope for recreational purposes. Dubbed Amagerforbraending, the project will replace an adjacent 40-year-old power plant and represents the single largest environmental initiative in Denmark. With a budget of $640 million, the project will be completed in 2015. Figure 2.4 Artist s Rendering of Amagerforbraending Facility (Source: Bjarke Ingels Group) 2.4.4 Cost Cost remains a significant barrier to the advancement in smart waste practices and infrastructure. Generally, developing economies lack the capital to collect and manage waste at a basic level, let alone invest in smart waste. This is partly due to the prevalence of municipal stakeholders driving investment in the waste management industry. These entities are often faced with rapidly expanding populations and multiple infrastructure and service demands with inadequate means to collect revenue from its citizenry. Private investment in these economies is mostly focused on building and managing sanitary landfills and landfill gas (LFG) recovery projects. While the Kyoto Protocol was still in force, many (if not most) projects in the latter category were funded through the CDM, established under Article 12 of the Protocol. 18

Investment in smart waste within developed economies is spearheaded primarily by private stakeholders. Private companies focused on waste hauling, for example, are actively investing in IT and automation enabling technologies to reduce operating costs. Infrastructure projects such as MRFs, WTE facilities, and gasification projects are often built in partnership with or in response to solicitations initiated by municipalities. Given the relative cost of resource and energy recovery to landfilling, regulations and incentives are key contributors to investments in these projects. World Bank recently published the following cost metrics for various waste management applications. As can be seen in Table 2.1, there is significant variance even within country income classifications. Table 2.1 Estimated Solid Waste Management Costs by Disposal Method, World Markets: 2012 Lower Middle Income ($876-$3,465 GNI/Capita) Upper Middle Income ($3,455-$10,725 GNI/Capita) Disposal Method Unit Low Income (<$876 GNI/ Capita) High Income (>$10,725 GNI/Capita) Collection ($/tonne) $20-50 $30-75 $40-90 $85-250 Sanitary Landfill ($/tonne) $10-30 $15-40 $25-65 $40-100 Open Dumping ($/tonne) $2-8 $3-10 N/A N/A Composting ($/tonne) $5-30 $10-40 $20-75 $35-90 WTE Incineration ($/tonne) N/A $40-100 $60-150 $70-200 Anaerobic Digestion ($/tonne) N/A $20-80 $50-100 $65-150 (Source: World Bank) While there is no general cost metric that dictates which waste management solutions should be deployed in given locations and circumstances, there are general rules of thumb that help guide waste management strategies:» The development of advanced infrastructure is and will be expensive for many years for most of the countries that need it the most.» The required infrastructure, even when the financial resources are available, is delivered much slower than the rapid growth of waste generation.» The current waste management systems are not capable of jumping from open dumps to high-tech systems. These rules of thumb suggest that the diffusion of smart MSW solutions will take time, despite strong support for integrating advanced technologies due to the relative cost to basic infrastructure upgrades. 19

2.4.5 Policy Uncertainty Regulatory uncertainty is often cited among waste industry stakeholders as a key obstacle to increased investment in smart MSW infrastructure development. For example, industry stakeholders seek long-term environmental and renewable energy policies that put WTE or liquid fuels derived from waste on par with competing technologies. Irrespective of the current market climate, investors have limited tolerance for investments that carry a high degree of risk. Due to the challenging economics associated with advanced waste recovery projects, a changing regulatory and policy landscape may limit investor appetite, thereby making it more difficult to access financing. Policy risk may also drive up the cost of capital and make it harder for more expensive infrastructure projects to prove economic viability. 2.4.5.1 Climate Change and GHG Regulation The failure of international consensus to materialize around a binding climate change agreement has resulted in haphazard and narrow national efforts to regulate GHGs, narrowing the availability of incentives that offer price for MSW energy recovery projects. As a result, many renewable energy project developers, as well as the financing community, have viewed carbon pricing as icing on the cake for projects like LFG recovery and WTE. In developing countries, however, CDM-related financing has played a crucial role in getting LFG recovery projects built. 2.4.5.2 Evolving Waste Management Policies 2.4.6 Shale Gas Developed countries like the United States and member states within the European Union (EU) are in the beginning stages of implementing robust integrated waste management policies. As developing countries manage the collection and handling of waste in a more coordinated way, they are likely to follow suit. Because integrated waste management requires the coordination of laws and regulations affecting a range of stakeholders, the evolving policy landscape will create many uncertainties in the market and have knock-on consequences for competing solutions. For example, the success of recycling and composting programs will affect the composition and volume of waste streams reaching WTE facilities. According to the International Energy Agency s Are We Entering a Golden Age of Gas? report published in mid-2011, a rapid increase in natural gas production is expected by 2035, with unconventional sources accounting for a quarter of total production. Gas is forecast to meet one-quarter of global energy demand by 2035, with demand growing 2% annually, compared with just 1.2% for total energy. Total electricity demand will increase 70% by 2035, underpinned by a near doubling of gas-fired generation. The emergence of shale gas in North America in particular has stifled investment in new energy recovery projects due to the relative cost of developing natural gas-fueled generation and waste-fueled generation (i.e., LFGTE, anaerobic digestion, and incineration). Growth in shale gas production is also likely to have a longer-term dampening effect on electricity rates in the 20

United States, which will stifle investment in new MSW energy recovery projects across the country. Syngas derived from MSW, a nascent segment within the smart MSW technology market, will be affected by shale gas developments, as well. A low-btu gas consisting mostly of carbon monoxide and hydrogen, syngas is combustible and can be used as a fuel for internal combustion engines (ICEs), such as in a diesel engine, while mimicking the properties of propane. Current gasifier technologies, however, are not financially competitive on a commercial scale. 2.5 An Emerging Policy Framework No one policy will define the smart MSW technology market. Managing waste is a complex task that requires the coordination of changes in consumption and waste production patterns, appropriate technology, organizational capacity, and cooperation among a wide range of stakeholders. Incentives and regulations around how waste is managed will play a central role in driving investment in waste management and in further developing the smart MSW technology landscape. Policies that discourage reliance on landfilling appear to have the most profound impact, as evidenced by progress in Western Europe, but energy recovery-focused policies show the greatest potential for encouraging the growth of smart MSW technologies. 2.5.1 The Waste Management Hierarchy The waste management hierarchy (also described as the waste management pyramid) has gained traction globally as a communication tool used by governments and advocacy organizations to encourage sustainability and responsible stewardship of waste resources. Figure 2.5 illustrates a prioritization of waste management strategies starting from the most favored strategy (avoidance or prevention) to the least favored strategy (landfilling and incineration without energy recovery). Figure 2.5 Waste Management Hierarchy (Source: European Commission) 21

The proper application of the waste hierarchy has several purported benefits:» Prevents emissions of GHGs» Reduces pollutants» Saves energy» Conserves resources» Creates jobs» Stimulates the development of green technologies The United States and the EU have both adopted policies based on the waste management hierarchy that prioritizes objectives for waste diversion from landfills. In the EU, the waste management hierarchy provides a blueprint for stringent regulations targeting the waste stream, ultimately culminating in zero landfill initiatives. In the United States, where waste management regulations are generally less stringent, the hierarchy serves as an aspirational objective, but has yet to be formally translated into a broadly applicable regulatory regime. In both cases, recycling and waste diversion (or landfill avoidance) are the principal means by which policymakers minimize the environmental and land use impacts of waste. Typically, legislation will require that a specific percentage of waste be diverted from landfills. This was the case in California, which passed one of the most aggressive laws in 1989, requiring cities and counties to divert 25% of waste by 1995 and 50% by 2000. As a result, the landfilling rate in California dropped from 90% in 1989 to 42% by 2007. 2.5.2 Zero Waste Initiatives Zero waste initiatives are gaining traction as a policy tool for driving compliance with the waste management hierarchy. While it is impossible to eliminate waste entirely, zero waste goals are effective drivers of innovation across the waste management value chain. Zero waste initiatives are most common in jurisdictions where the following three factors are in place:» Limited landfill capacity» Self-directed manufacturer interest in avoidance of use of virgin material input to reduce costs» Diversion of organics to reduce the amount of methane generation from landfills Some jurisdictions have enacted legislative mandates aimed at achieving zero waste. These mandates are more stringent than aspirational goals set by a number of communities around the world. While most jurisdictions prioritize reduction and recycling programs, in places like Japan where space is at a premium, the adoption of thermal treatment strategies for waste help reduce the volume of waste that ultimately is landfilled. Landfill directives in the EU make it increasingly difficult to site new landfills and indirectly discourage waste disposal due to increases in tipping fees. 22

2.5.3 Incentives 2.5.3.1 Landfill Taxes In some cases, zero waste initiatives can inhibit alternative approaches to waste recovery. The most hardline proponents of zero waste have prevented proposals for MRF and WTE facilities, arguing that such facilities frustrate efforts to reduce waste generation as prioritized by the waste management hierarchy. Incentives are the carrots that encourage greater utilization of waste as a resource and discourage reliance on landfilling and other last resort disposal practices. They are available primarily in higher-income countries with established waste management regimes. Among those, countries with more landfilling constraints and more stringent regulations around disposal (e.g., the EU and Japan) tend to be more inclined to rely on incentives to divert MSW away from or reduce the volume of MSW disposed in landfills. A landfill tax or levy is a form of tax that is applied in some countries to increase the cost of landfill. Landfill taxes are typically levied in addition to the overall cost of landfill and form a proportion of the tipping fee. The goal of landfill taxes can be generally divided into three categories:» Raise general revenue» Generate funds for inspection programs or long-term mitigation of environmental impacts related to disposal» Inhibit disposal by raising the cost in comparison to preferable alternatives (similar to an excise, or sin, tax) In zero-waste jurisdictions, or where space is at a premium, this latter goal is a key driver of smart waste investment. New Zealand, the United Kingdom, and California all have landfill taxes in place to discourage reliance on landfilling compared to other disposal alternatives. 2.5.3.2 Pay-as-You-Throw Pay-as-you-throw (PAYT) is a usage pricing model for disposing of MSW in which users are charged a rate based on how much waste they discard for collection to the municipality or local waste hauler. Prices are determined by the weight or size of waste discarded. Units are typically identified using different types of bags, tags, containers, or radio frequency identification (RFID). Three primary PAYT models are typically implemented:» Full unit pricing: Users pay for all the garbage they want collected in advance by purchasing a tag, custom bag, or selected size container.» Partial unit pricing: The local authority or municipality decides on a maximum number of bags or containers of garbage, with collection paid by taxes. Additional bags or containers are available for purchase should the user exceed the permitted amount. 23

» Variable rate pricing: Users can choose to rent a container of varying sizes, with the price corresponding to the amount of waste generated. PAYT programs have been linked to improved diversion rates, reduction in the total volume of solid waste landfilled, waste management cost reduction, and in some cases, increased revenue for waste haulers. In successfully implemented programs, a 17% to 23% reduction in MSW has been achieved based on historical examples. Data from Europe shows that the source separation of certain material fractions can rise by over 100% after the introduction of PAYT, even when the respective collection systems for source-separated waste are already in place. Although PAYT programs have been around for several decades, a spectrum of technological approaches to unit pricing, such as advances in RFID tagging and greater integration of data analytics, has contributed to an increase in the number of countries implementing programs. High investment and maintenance costs remain potential obstacles to the introduction of PAYT. Currently, an estimated 25% to 30% of the U.S. population is served by PAYT programs, compared to over 30% in Japan. Germany, the Netherlands, Sweden, Denmark, Austria, and Finland have been aggressive adopters of PAYT programs, which reflects a broader trend across Europe. 2.5.4 Energy Recovery MSW s primary attraction as a feedstock for energy recovery is its wide availability as a feedstock in close proximity to population centers where most energy is consumed globally. Moreover, MSW flips the traditional energy producer business model on its head by turning feedstock traditionally one of the key operational cost drivers into a revenue source. Energy recovery facility operators are typically paid a tipping fee to remove waste on behalf municipalities. MSW is generally considered a renewable resource because it is sustainable and nondepletable. Despite this general designation, zero-waste advocates assert that MSW should not be treated as a renewable resource since portions of MSW consist of non-renewable elements. Under this view, to determine the percentage of energy output from MSW conversion that qualifies as renewable, there must be a measurement of the percentage of the feedstock coming from biological sources (e.g., food, paper, fabric, wood, or leather) and from fossil fuel sources namely plastics. Due to the technical challenges this entails, policies generally count the whole volume of MSW as renewable. Accordingly, incentives for energy recovery from MSW are typically embedded in biomass-related initiatives focused on the production of power generation, renewable heat, or liquid fuels for transportation applications. Generally, the cost of energy recovery from waste necessitates incentives to compete with incumbent energy sources. For power markets, typically this includes feed-in tariffs or net metering. For liquid fuel markets, renewable identification number (RIN) credits in the United States and other favorable tax treatments have incentivized the upgrading of waste-derived biogas or syngas into fuel products like ethanol, renewable diesel, and biomethane. Other 24

incentives focused on driving investment in infrastructure projects utilizing waste as a feedstock include:» Direct capital investment subsidies, grants, or rebates» Tax credits» Energy production payments or credits» Public financing 2.5.4.1 Renewable Power and Thermal Targets Renewable energy targets set either aspirational or mandated goals for the integration of renewable energy from biomass and waste in national electricity and thermal production portfolios. These targets are an important mechanism for directing long-term policy around MSW and reducing market risk for investors and project developers. A sampling of international mandates across individual countries is outlined in Table 2.2. Table 2.2 Waste Power and Thermal Policy Targets by Country, World Markets: 2014 Country Renewable Targets Biomass Power & Thermal Targets Australia 20% by 2020 N/A Brazil 16% by 2020 N/A China 3% by 2020 30 GW by 2020 Germany 50% by 2030 65% by 2040 14% by 2020 (renewable heating) 80% by 2050 Indonesia N/A 810 MW by 2025 Japan 1.6% by 2014 N/A Norway Additional 30 TWh/year by 2020 14 TWh annual production by 2020 Philippines 40% by 2020 76 MW by 2010 94 MW by 2015 267 MW by 2030 Sweden Additional 25 TWh/year by 2020 N/A United Kingdom 15% by 2020 N/A 28 Member States of the EU (EU-28) 20% by 2020 N/A United States 80% by 2035 (aspirational) Contained in state-level Renewable Portfolio Standard (Source: Navigant Research) 25

2.5.4.2 Next-Generation Fuels Increasingly, biofuels are becoming big policy and big business as countries around the world look to decrease petroleum dependence, reduce GHG emissions in the transportation sector, and support agricultural interests. Among potential feedstocks, MSW is considered to be one of the ultimate feedstocks for advanced biofuels. Biofuels demand is primarily driven by obligatory consumption and supply mandates, which form the backbone of biofuels policies worldwide. Voluntary consumption and supply targets further stimulate investment and signal a commitment to expanding biofuels use on all continents. While consumption mandates target finished fuel products like ethanol or biodiesel, supply-oriented mandates are more fuel-agnostic and seek to carve out a market for advanced biofuels derived from non-food feedstocks like MSW. Supply-oriented targets currently call for 96 billion gallons of global biofuels production by 2023, representing a 61 billion gallon increase over project fiscal year 2014 production. The United States Renewable Fuel Standard (RFS), which is administered by the Environmental Protection Agency, is currently the most ambitious biofuels production mandate in the world. The RFS calls for 36 billion gallons of biofuels to be produced by 2022, up from 11.1 billion gallons in 2009. The rule offers four separate categories in which fuel pathways can qualify, caps ethanol production from corn starch at 15 billion gallons, and introduces the first ever GHG regulatory system in the U.S. transportation fuel industry. The EU has taken a slightly different approach under its Renewable Energy Directive (RED), calling for 10% of transportation fuels to come from alternative sources. Biofuels are expected to account for the bulk of this quota, but member states are given the authority to enact rules for compliance. Many member states are phasing out blending mandates and associated incentives in favor of building advanced biofuels production to meet RED targets. The RED also contains an unparalleled and comprehensive list of requirements to guarantee that only biofuels produced in a sustainable manner are allowed in the EU energy mix. All told, the U.S. RFS and the EU s RED call for 50 billion gallons of biofuels to be produced by 2023, representing 52% of the volume from all supply mandates globally. The bulk of this production is expected to come from advanced biofuels. 26

China and India are expected to introduce supply mandates by 2020. China is leaning toward a 10% supply mandate beginning in 2020. India is aiming to implement a 20% biofuels supply mandate starting in 2017. With Thailand s existing 20% mandate, supply targets across the Asia Pacific region call for 46 billion gallons of biofuels production by 2023. Chart 2.5 Volume of Biofuels Supply Targets by Key Markets, World Markets: 2014-2023 120,000 (MGY) 100,000 80,000 60,000 United States European Union China India Thailand Rest of World 40,000 20,000-2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) While generating power from MSW is well-established in the EU, in the United States and, increasingly, in emerging markets like China and Brazil, conversion to liquid fuels is currently at the cusp of early commercialization. As of 2Q 2014, 12 named projects are in the global pipeline that aim to produce the spectrum of alternative fuels from MSW feedstock. This pipeline of projects represents an estimated 200 MGY of new production capacity or less than 1% of the theoretical potential for biofuels production from global waste (~35 BGY). The realization of this capacity would represent a doubling of current production of biofuels worldwide, with waste-to-fuels (W2F) contributing a growing percentage of the volume of advanced biofuels. 27

Section 3 TECHNOLOGY ISSUES 3.1 MSW Innovations With tightening regulations targeting the generation and management of waste and competition for hauling contracts increasing, technological innovations are gaining more traction in the market. While the industry has historically been slow to adopt new technologies, with a sharper focus on reducing operational costs and utilizing waste as a strategic resource, waste companies have increasingly gone on the offensive to maintain market share and grow revenue. In mature technology markets, waste haulers have sought to own solutions outright. In emerging technology categories, waste haulers are investing directly in emerging early-stage companies with novel technologies and increasingly incorporating third-party solutions. Specifically, technological innovation in the waste industry is targeting improvements in efficiency through greater levels of automation, integration of IT, greater utilization of data analytics, and the recovery of valuable materials and energy. For waste haulers, efforts are focused on reducing costs. For new entrants, waste offers a valuable feedstock for a variety of high-value applications. As illustrated in Figure 3.1, smart MSW technologies touch on the four separate phases of the traditional MSW management value chain previously discussed (including representative technologies). Figure 3.1 Smart MSW Technology Landscape Pneumatic tubes RFID tagging GPS routing Fuel switching Advanced MRFs Advanced MBTs RDF facilities Smart Collection Smart Processing Smart Disposal Smart Energy Recovery Sanitary landfilling Bioreactors Solar integration Incineration WTE Gasification WTE Gasification W2F LFGTE & AD (Source: Navigant Research) 28

3.2 Smart Collection Relative to other phases of the smart waste value chain, opportunities for innovation in the upstream collection stage are more focused on developed economies. Most activity in this phase involves coordinating public outreach efforts to improve compliance with upstream waste management goals such as separation of organic and landfill waste fractions that promote waste diversion. Examples include the introduction of disposal liners for organics and pneumatic waste tubes that automate the collection of trash in various applications. These efforts include separation at the source, which involves behavioral challenges supported by educational outreach efforts by municipal governments and other stakeholders. They are often tied to recycling and composting efforts, but are not widespread globally. In rare cases, incentives may help drive proactive separation at the consumer level. Increased use of RFID technology is also an emerging trend in Europe and the United States. Other technology innovations in this phase are more operationally focused. Examples include fuel switching for waste hauler fleets from diesel-based fuels to electric, natural gas, or biomethane derived from LFG or biogas. The use of global positioning system (GPS) tracking for truck fleets and data analytics can drive efficiency and when combined with RFID technology enhance customer engagement programs. 3.2.1 RFID Technology RFID describes the wireless non-contact use of radio frequency electromagnetic fields to transfer data for the purposes of automatically identifying and tracking tags attached to objects. In short, RFID can attach a material object to a stream of data, which has data analytic applications across a range of industries. RFID tags are already being used in some sectors as a green technology, particularly in relation to the green management of supply chains. In the waste industry, RFID tagging is gaining traction as a tool for the collection of waste, particularly in PAYT pricing programs, recycling applications, the recovery of materials at EOL, and other applications. 3.2.1.1 RFID and PAYT Programs RFID installed in bins can help enhance participation in PAYT programs, which are described in more detail in Section 2.5.3.2. PAYT systems that charge customers according to the user s actual waste generation, measured by weight or volume, have already been implemented in many countries and have resulted in improved waste collection efficiency and services. RFIDbased waste pricing models for the disposal of MSW have been shown to enhance the effectiveness of PAYT programs by enabling more accurate and automated monitoring of program participation. RFID can also be used to monitor the behavior of users so that fines may be levied for improper discarding of recyclables in the primary trash can, for example. 3.2.1.2 Internet of Garbage Cans RFID is being deployed to better time and organize waste collection routes to coordinate with bin filling level data. Specifically, the route and schedule of collection trucks can be optimized via statistical filling level data, gained by identifying and weighing bins using RFID. Each waste 29

bin is equipped with an RFID tag, which is read while the waste bin is being emptied. RFID tags are also increasingly embedded in recycling bins to better track customer participation in sorting programs. Most of these applications are combined with technologies, such as ultrasonic sensors or cameras to measure the filling level and GPS, General Packet Radio Service (GPRS), and geographic information system technology to transfer the data to the waste collector, thereby enabling real-time route planning for waste haulers. Evidence from Europe suggests that these improvements can lower collection costs by up to 40%. 2 3.2.1.3 RFID and Waste Sorting Integrating RFID with trash receptacles is also aimed at enhancing waste sorting to assist recyclers. Such integration has begun to gain traction in select municipalities, particularly in Europe. The concept involves a scanner integrated into a trash receptacle that automatically records what is being disposed of using universal product codes or RFID tags attached to the trash. This would not only allow recyclers to better sort the waste, but could also provide a cash back channel (e.g., PAYT) to consumers recycling goods of value. At the waste processing stage, RFID can assist in automatically tracking waste products not correctly disposed of by households. 3.2.2 GPS Routing Systems and Data Analytics The use of GPS solutions is not new in the waste industry. Companies have used GPS tracking to more closely monitor drivers. GPS offers other benefits for hauling company managers, as well. Specifically, the modern components of routing systems GPS vehicle location data, onboard computers, and software programs all combine to give today s refuse fleet manager the ability to track in real-time service delivery. The consulting firm Aberdeen Group found in a study that companies using GPS tracking for their fleets see, on average, a 13.2% reduction in fuel costs and a 13.4% reduction in overtime expenses. 3.2.3 Vacuum (Pneumatic) Systems Pneumatic waste collection systems consist of inlets for specific types of waste connected to vacuum tubes, typically sunk underground, that aggregate the waste stream for further processing. These systems serve as a utility infrastructure enhancement for areas with high storage costs or limited space for waste, accessibility challenges for garbage trucks (e.g., older cities), and strict environmental codes or standards. Overall, pneumatic conveying systems are rapidly gaining ground in the waste industry, and many new projects are in the planning stages or already in development in various countries. Although requiring more capital investment to install, pneumatic waste systems provide significant savings over traditional waste collection strategies. Typically monitored and operated remotely Envac operates systems deployed globally from its headquarters in 2 Smart Trash: Examining the Impact of RFID Tags in the Recycling Industry, RAND Corporation, 2012. 30

Stockholm, Sweden savings include reduced personnel costs, as well as waste vehicle and fuel costs. The average reported return on investment is 10 to 12 years. Pneumatic waste collection systems are typically deployed in one of two configurations. Singleline systems are the conventional type of automated waste collection system. In a single-line system, the pipeline network forms a tree-like layout, where the waste station is located at the root of the tree and the waste inlets are located along the branches. In ring-line systems, under development by companies like MariMatic, the main pipeline both starts and ends at the waste station. Typical applications for automated waste-conveying systems include large, modern metropolitan areas, as well as residential areas, in healthcare facilities, town shopping centers, or airports. RFID tags are sometimes incorporated to help allocate billing across system users. Recent proposals to install pneumatic waste infrastructure are being considered in high-density cities like New York and Mecca. 3.2.4 Fuel Switching Waste haulers, particularly those in the United States, are updating their fleets to incorporate more natural gas-fueled trucks with the aim of reducing fuel costs and emissions. Depending on geographic location and proximity to gas lines, the average price of natural gas is $1.50 to $2.00 less per diesel gallon equivalent as of June 2014. At this rate, TrilliumCNG projects that refuse haulers could save $20,250 annually over the vehicle s useful life of 8-10 years. According to projections, this favorable cost trend will likely extend well into the future. Additionally, refuse fleet operators can get fixed-price, multiyear contracts from suppliers of compressed natural gas (CNG) and liquefied natural gas (LNG). The use of bio-derived fuel equivalents (e.g., LFG or biogas upgraded to biomethane) is also on the rise. In many countries, upgraded biogas is viewed as an environmentally attractive alternative to diesel and gasoline for buses, local transit vehicles, and refuse trucks. The revised renewable fuel standard (RFS2) in the United States, RED in the EU, and low carbon fuel standards (e.g., California Low Carbon Fuel Standard [LCFS]) all incentivize the uptake of biofuels alternatives in ground transportation applications. Since garbage trucks return to a base facility at the end of a route, it is often more financially viable to locate a biomethane upgrading facility at a garbage truck depot or other such fleet operation than at a retail gas station. 3.3 Smart Processing The smart processing phase of the MSW value chain, which includes the sorting of waste materials for recycling, composting, and preparation for backend applications like energy recovery, is the smallest smart waste segment by revenue. However, this phase offers perhaps the most opportunities for innovation and advances in the reduction of waste disposal. Technological innovation in the midstream phase is generally focused on increasing automation and enhancing operational efficiency. With zero-waste regulations coming into force in select 31

markets, materials and organics diversion from landfills is attracting growing investment in technology solutions that facilitate these activities. 3.3.1 Advanced MRFs In order for products in municipal waste streams to be reused, they must first be sorted. Although industrial automation has improved this process, most of the work is still done by hand in MRFs. A labor-intensive process, these facilities typically have high operating costs and thin profit margins. Since their introduction in the mid-1980s, these facilities have operated as dirty MRFs (accepting comingled trash) and clean MRFs (accepting only recyclable waste streams). Although no two MRFs are exactly the same, as each represents a unique configuration of technologies and systems designed to match the feedstock and meet the needs of the community, recent advances in technology and industrial automation are improving profit margins and sorting efficiency for newly constructed facilities. These facilities combine advances in screening, air, and optical separation technologies to improve sorting capabilities. Infinitus Energy is one company that is pioneering MRF innovation. It is developing a project in Montgomery, Alabama, that will enable residents to place all trash in a single city-issued bin, which will then be processed in an advanced MRF facility to eliminate up to 85% of the waste heading to the city s landfill. The system, which is designed, manufactured, and installed by Bulk Handling Systems (BHS), features BHS screens and Nihot air and NRT optical separation technologies designed to recover up to 95% of available recyclables at a rate of 30 tons per hour. 3.3.2 Mechanical Biological Treatment Mechanical biological treatment (MBT) is the generic name for processes that treat MSW mechanically and biologically. The integration of MBT with anaerobic digestion is one of several variants of MBT configurations. Mechanical treatment results in fractionated streams of recovered waste in the form of refuse-derived fuel (RDF) and solid recovered fuel (SRF) both feedstock for thermal WTE and co-combustion. The biological treatment is either aerobic or anaerobic. Aerobic treatment produces a compost while anaerobic treatment recovers energy from the waste. 3.3.3 RDF Facilities The main objectives of MBT are to:» Reduce the volumes of the waste to be landfilled» Improve resource recovery through recycling, producing a degradable or combustible residue, and stabilize residuals ending up in landfills Facilities that generate RDF a fuel produced by shredding and dehydrating MSW using a waste converter technology are commonly collocated with WTE facilities that require a fuel source of a particular particle size and other specific characteristics depending on the conversion technology. While advanced RDF processing methods (e.g., pressurized steam 32

treatment in a waste autoclave) can remove or significantly reduce harmful pollutants and heavy metals to create materials for a variety of manufacturing and related uses, innovations in waste shredding and processing represent the greatest near-term opportunities to expand RDF production. RDF has significant potential as the fuel of choice for incineration and gasificationbased WTE facilities. 3.4 Smart Energy Recovery 3.4.1 WTE With respect to smart waste innovations, the smart energy recovery segment represents the largest and most mature segment in the MSW value chain. The only alternative to landfilling for treating post-recycling MSW is by controlled combustion or other thermal treatment for the recovery of energy, metals, and an ash residue that is suitable for road building and other construction purposes. Although the primary method for recovering energy from waste involves incineration, a range of technology platforms are emerging that aim to convert MSW into higher-value products like heat, gas, and liquid fuels for energy applications. These technologies are generally categorized as W2F. WTE technologies are incineration, biological, or gasification-based platforms that utilize waste as a feedstock for the production of electric and thermal energy. Robust, simple, and proven incineration technologies currently lead the market. Incineration facilities currently account for 98% of the global thermal WTE technology market today. RDF incineration, which involves the pre-processing of MSW and the removal of metals and other bulky items, is technologically mature but has not gained widespread market traction. Biological WTE technologies have a high degree of technology maturity but are lagging on market penetration. Advanced thermal treatment technologies such as gasification address the economic and environmental issues posed by conventional combustion. However, due in large part to costs associated with deployment, these technologies are less mature and are in the development or pilot stages. Many of these technologies have the potential to produce more electric power from the same amount of fuel than would be possible by direct combustion. This is mainly attributable to the separation of corrosive components (ash) from the converted fuel, thereby allowing higher combustion temperatures in boilers, gas turbines, ICEs, and fuel cells. Most of the high-tech advances in WTE technology occur at the air emissions control level. Stringent permitting requirements and public opposition have forced the industry to upgrade this equipment to reduce the amount of pollution produced by these facilities, especially given their location in urban centers. Other areas of innovation include MSW processing equipment and bottom ash treatment. 33

Table 3.1 Commercialization Status of Energy Recovery Technologies, World Markets Technology Development Stage Market Penetration Mass Burn/Water Wall Commercial High Mass Burn/Modular Commercial High RDF/Dedicated Boiler Commercial Low RDF/Fluid Bed Commercial Low Pyrolysis Demonstration Low Gasification Early commercialization Low Anaerobic Digestion Commercialization Low Mixed-Waste Composting Early commercialization Low Chemical Decomposition R&D Low 3.4.1.1 Incineration (Source: Navigant Research) The incineration of waste (with energy recovery) is the most common energy recovery platform deployed today and can reduce the volume of disposed waste by up to 90%. There are currently more than 800 WTE facilities deployed in at least 40 countries. Based on an average capacity of roughly 245,000 tons per year, Navigant Research estimates that WTE facilities worldwide consumed more than 200 million tons of MSW in 2013. The number of WTE facilities is also growing, led primarily by a rapid building spree in China. As shown in Chart 3.1, nearly 90% of WTE facilities worldwide are presently found in Europe and Asia Pacific, with the EU-28 accounting for more than half of the facilities throughout the world. Chart 3.1 WTE Incineration Plant Market Share by Region, World Markets: 2013 Rest of World 2% North America 10% Asia Pacific 37% Europe 51% (Source: Navigant Research) 34

WTE plants today are much more advanced than incinerators, their outdated predecessors. WTE facilities use high temperatures to extract energy from the trash, whereas incinerators only attempt to reduce the volume of the trash. Additionally, WTE plants employ sophisticated emissions control systems, while incinerators usually employ only rudimentary pollution control equipment. Converting waste to energy works in much the same way as coal- or biomass-powered facilities. MSW is first burned to release heat, which then turns water into steam. The highpressure steam turns the blades of a turbine generator to produce electricity, which is then distributed via transmission infrastructure to end-use customers. Figure 3.2 WTE Incineration Diagram (Source: ecomaine) Most modern WTE facilities combust post-recycled waste in highly controlled and efficient combustion systems, recover energy from the combustion process, and are equipped with proven air emissions control technologies that minimize potential emissions. Modern facilities work differently from old-fashioned municipal incinerators that burned trash inefficiently, had minimal, if any, air emissions control systems, and did not recover any of the energy released during the combustion process. The process in modern facilities is closely monitored via control equipment, remote sensors, and computers to ensure optimal processing of the waste. Incineration is expensive in terms of capital and operating costs, and it requires high standards of operation and maintenance. In many developing countries, MSW generally has a low energy value because of its high moisture content and the prior removal of paper and plastic by waste pickers. Incineration of such developing world waste typically requires an additional fuel that is comingled in order to keep waste burning. 35

3.4.1.1.1. Incineration Variants There are many variants on the traditional incineration WTE plant. These are described briefly below:» Mass burn: Mass burn facilities are the most basic WTE technology on the market and the most widely deployed. In mass burn WTE plants, the MSW is combusted as received. This means that waste is not presorted and sized to obtain a homogenized fuel.» RDF burn: In the RDF or SRF combustion process, the MSW is pre-shredded to create a more uniform composition. The pretreatment of the waste yields high rates of combustion.» Fluidized bed (FB): FB technology enables RDF feedstock to be combusted in a bed of sand that is fluidized by air injection. The purported advantages of FB are stable combustion and simple operation. 3.4.1.1.2. Advanced Thermal Recycling Advanced thermal recycling (ATR) is an optimized combustion system aided by advanced monitoring equipment that enables more complete burning of the combustible material than a new technology. The process is quickly becoming the standard for direct combustion facilities, leading to marked improvements in combustion efficiencies and reductions in emissions. Many new WTE facilities, and expansions of existing plants, are integrating ATR processes. The technology typically integrates a pre-processing recycling step that increases landfill diversion rates and the recovery of recyclable materials. 3.4.1.2 Biological Treatment Anaerobic digestion is a naturally occurring process that can convert almost any organic material into biogas and solid digestate material. The most common biogas system deployed worldwide is the anaerobic digester (AD), which is typically used on farms to treat manure waste. Increasingly, AD units are being deployed to capture methane gas from wastewater treatment facilities and organic MSW waste streams. Although the underlying process is the same, LFGTE facilities are generally larger operations that capture the methane gas produced from decaying organic trash in managed landfills. AD units are typically deployed on a commercial basis as a smart waste strategy where strong regulations prohibit the disposal of organics in landfills. LFG recovery is typically deployed where regulations around air quality are the strictest in order to improve environmental protection and public safety. Gas recovery from landfills has become a standard technology for energy recovery (LFGTE) in most industrialized countries where these regulations are typically found. Although more costly, increasingly, LFG is used in combined heat and power (CHP) engines or as a supplement to natural gas. 36

3.4.1.2.1. Direct Use Throughout the developing world, the direct use of biogas is one of the most common sources of energy utilized. Typically, biogas burners or modified consumer appliances are used for heating and cooking purposes. On a community or commercial scale, biogas conversion in direct combustion systems provides the simplest method of direct utilization onsite. Direct utilization of biogas usually occurs within 5 miles of a facility. Commercial applications include boiler, dryer, and process heaters, as well as infrared heaters and greenhouses. 3.4.1.2.2. Electricity Generation If a biogas extraction rate is sufficient, a gas turbine or ICE may be used to produce electricity to sell commercially or use for onsite generation. Although the biogas can be used directly in limited cases, it is usually subjected to some degree of gas cleaning. Minimally, this includes the removal of solids and liquid water that can leave corrosive components and siloxanes and may damage conversion equipment. In most commercially run biogas power plants today, gas or converted diesel-fueled ICEs have become the standard technology. These units convert biogas into mechanical energy, powering an electric generator to produce electricity. Appropriate electric generators are available in virtually all countries and in all sizes. Again, the technology is well-established, and operations and maintenance costs are low, making the process a viable option in all regions. Although gas turbines are occasionally used as biogas engines, especially in the United States, they are generally more expensive than internal combustion sets. In addition, due to their spinning at high speeds and high operating temperatures, the design and manufacturing of gas turbines is challenging and maintenance requires specialized skills not always available on site. Where cost and servicing is available, gas turbines are capable of meeting some of the strictest exhaust emissions requirements. While electricity generation is typically an inexpensive route for biogas utilization, efficiency is quite low (estimates suggest average efficiencies of 30% high heating value [HHV]). Table 3.2 provides relative efficiencies of prime mover technology applications and their commercialization status as deployed in CHP configurations. Table 3.2 Biogas Utilization Efficiency in Conversion Technologies Technology Electric Efficiency (HHV) Field Experience Commercialization Status Steam Turbine 5%-30% Extensive Numerous models Gas/Combustion Turbine 22%-36% Extensive Numerous models Microturbine 22%-30% Extensive Limited models Reciprocating ICE 22%-45% Extensive Numerous models Fuel Cell 30%-63% Some Commercial introduction, demo Stirling Engine 5%-45% Limited Commercial introduction, demo (Source: U.S. Environmental Protection Agency) 37

3.4.1.2.3. Vehicular Use Biogas, if upgraded to biomethane and compressed for use as an alternative transportation fuel in light and heavy duty vehicles (biocng or biolng), can use the same existing technique for fueling already being used for CNG vehicles. In many countries, biomethane sometimes referred to as renewable natural gas (RNG) is viewed as an environmentally attractive alternative to diesel and gasoline for operating buses and other local transit vehicles. Methanepowered vehicles are generally quieter and produce fewer emissions than diesel counterparts produce. The application of biogas in mobile engines requires compression to high-pressure gas (>3,000 psig) and may be best applied in captive (fleet) vehicles like garbage trucks, municipal buses, and taxis. A refueling station may be required to lower fueling time and provide adequate fuel storage. In the United States, biomethane-based transportation fuels qualify for an RIN credit under RFS2, providing an additional revenue source for producers. Chart 3.2 RNG Production by Region, World Markets: 2014-2023 120 (BCFY) 100 80 60 North America Europe Asia Pacific Latin America Rest of World 40 20-2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 3.4.1.3 Advanced Thermal Treatment The advanced thermal treatment of waste includes technologies such as pyrolysis and gasification. Although advanced thermal technologies have been deployed in a handful of facilities, widespread deployment has been hampered by scale-up issues. The advantage of gasification is the potentially higher thermal efficiency of the gas turbines compared to the steam turbines used in the conventional combustion process. Additionally, gasification processes reduce air emissions, particularly dioxins, and improve the quality of the ashes for disposal. However, so far, experience has revealed that WTE gasification processes hardly 38

3.4.1.3.1. Gasification 3.4.1.3.2. Pyrolysis achieve the energy efficiencies of modern combustion and have proven costly in terms of megawatts of electricity produced. Consequently, gasification and pyrolysis technologies have little operating history processing MSW, compared with a long history of commercial experience for mass burn combustion and RDF technologies. Although gasification and pyrolysis systems are claimed to be superior to mass burn systems, including those utilizing plasma arc gasification technology, limited operating experience makes it impossible to draw conclusions about their reliability. Gasification uses high temperatures that convert organic materials at controlled amounts of oxygen into carbon monoxide, hydrogen, CO 2, and methane. Hydrogen is high in energy, and an engine that burns pure hydrogen produces almost no pollution. Hydrogen fuel is also compatible with fuel cells. Pyrolysis leads to the chemical decomposition of organic material at elevated temperatures of 430 C (806 F) in the absence of oxygen. The main product, syngas, can be used as a fuel to generate electricity or steam or as a basic chemical feedstock in the petrochemical and refining industries. There are 12 commercial facilities in Japan and Germany that process municipal and industrial waste, each processing an estimated 100 tons to 400 tons of MSW per day. Despite this limited development to date, the commercialization outlook for pyrolysis remains uncertain. According to one examination of the market, MSW pyrolysis facilities can be characterized as having previous failures at scale, uncertain commercial potential; no operating experience with large-scale operations. 3.4.1.3.3. Plasma Arc Gasification 3.4.2 W2F The plasma arc technology is a heating method that can be used in both pyrolysis and gasification systems. This technology was developed for the metals industry in the late 19 th century. Plasma arc technology uses high temperatures (3,871 C or 7,000 F) to break down the feedstock into elemental byproducts. A significant requirement for the MSW plasma arc gasification process is that the MSW must be pre-processed before being fed into the plasma arc gasifier. There are no commercially operating MSW plasma arc gasification facilities in North America and only one known facility worldwide. W2F involves the conversion of MSW into liquid fuels and chemicals for use in transportation and industrial process applications. Many of the conversion pathways in this category include frontend processing steps described earlier in this section. RDF, biological treatment, and gasification are common frontend processes used to prepare MSW for further conversion into commodity fuel and chemical products. Although there is significant interest among project developers and advanced biofuels industry stakeholders in using MSW as a strategic feedstock, 39

cost and conversion challenges have resulted in only a handful of projects nearing commercial scale. Several technology platforms are among the front-runner pathways for expanding the installed base of W2F capacity. The most common of these involves plasma torches that convert MSW to a syngas, which is then fermented or combined with various catalysts (typically via a Fischer- Tropsch pathway) into a synfuel. Synfuel is then upgraded to various fuel products using widely available refining platform treatments, including hydrocracking, oligomerization, isomerization, and hydrogenation. Upgrading processes typically yield distillate and kerosene fuels for ground and aviation applications or synthetic gasoline. However, processes that use proprietary microbial organisms may also be used to produce alcohol-based fuels like methanol and ethanol. W2F projects typically also generate electricity for onsite consumption and export to the grid. This can provide an additional revenue source beyond the collection of tipping fees and products produced at the facility. W2F plants are capital-intensive projects and thus have high upfront capital costs (nearly 2 times or more than that of a commercial refinery project processing heavy oils such as the Alberta tar sands). Obtaining financing for these plants, especially for a newer technology, remains a challenge. Based on public announcements, there is an estimated 84 million gallons per year of capacity in the pipeline. INEOS Bio s Vero Beach facility is the only commercial facility in operation as of June 2014 capable of processing MSW. Table 3.3 W2F Commercial Biorefinery Projects, World Markets: 2014 Project Company Country Platform Capacity (MGY) Online Vero Beach INEOS Bio United States Gasification 8 2013 Blairstown Fiberight United States Biochemical 6 2014 Sierra BioFuels Plant Fulcrum Bioenergy United States Gasification 10 2015 Edmonton MSW-to-Biofuels Enerkem Canada Gasification 10 2015 GreenSky London Solena Fuels United Kingdom Gasification 50 2017 Total 84 (Source: Navigant Research) 3.5 Smart Disposal For the fraction of waste that ultimately finds its way to landfills, LFG capture and active landfill management practices offer alternative solutions for maximizing the value of discarded waste. 3.5.1 Sanitary Landfills Sanitary (or engineered) landfills are sites where waste is managed to prevent environmental contamination. In these facilities, waste is isolated from the environment while it degrades biologically, chemically, and physically. Although sanitary landfills are deployed extensively in 40

high-income economies, they have great potential across emerging economies that typically rely on open dumping of trash for disposal. Sanitary landfills integrate a number of strategies and technologies. For example, LFG extracted from landfills is used as a tool for venting gas buildup, reducing the release of chemicals, and mitigating GHG emissions. Gas released at landfills is caused by the natural breakdown of organic material, which releases a methane-rich gas (a GHG 20-23 times more destructive than CO 2 ). In some cases, LFG is flared or treated to remove impurities for direct use or electricity generation depending on the economics of collection. Although more expensive, sanitary and engineered landfills are much more efficient at generating and allowing the collection of LFG. Table 3.4 LFG Collection Efficiencies by Landfill Type Landfill Type Efficiency Sanitary or engineered landfills ~60%-90% Open and managed dump sites ~30%-60% (Source: Navigant Research) Sanitary landfilling, which is the controlled disposal of waste on the land, is well-suited to developing countries as a means of managing the disposal of wastes because of the flexibility and relative simplicity of the technology. Currently, the implementation and practice of sanitary landfilling are severely constrained in economically developing countries by the lack of reliable information specific to these countries, as well as by a shortage of capital and properly trained human resources. 3.5.2 Bioreactor Landfills The most significant innovation in landfill management is likely to come from the integration of remote monitoring networks, sensors, and IT that can enhance the biological, chemical, and physical processes already taking place. Building off the smart grid model, large waste management companies, such as Waste Management and Progressive Waste Solutions, are demonstrating that it is possible to improve the bottom line by enhancing landfill performance. By monitoring the digestion process remotely in landfills under management, for example, these companies can optimize gas production from thousands of miles away across a number of sites. In one example, Waste Management is spearheading a project to accelerate the decomposition of organic wastes in so-called bioreactor landfills. Currently deployed at four test sites, the process involves controlling the addition and removal of moisture from the waste mass, the collection and extraction of LFG, and in some cases, the addition of air. 3.5.3 Landfill and Solar Integration Advances in thin film solar technologies are allowing for the integration of landfill covers with solar-generating capabilities. The first installation to incorporate solar into landfill covers represented a significant breakthrough for EOL landfills that could not accept additional waste, and therefore, could not generate additional income. 41

HDR Engineering is the first known company to design and install a solar landfill capping system in 2009 in San Antonio, Texas. In partnership with Republic Services, HDR integrated an exposed geomembrane cap design and modern PV technology with a landfill closure. In 2011, Republic Services executed a project worth $5 million outside of Atlanta, Georgia, in which approximately 7,000 solar panels were integrated into a landfill cap to generate more than 1 MW of renewable electricity. Republic Services, one of the biggest waste management services in the United States, owns and operates Hickory Ridge and sells the energy collected to Georgia Power. 42

Section 4 KEY INDUSTRY PLAYERS 4.1 Integrated Waste Management Players Integrated waste management players are private stakeholders that provide services ranging from the collection of MSW to final disposal. These players are more prevalent in developed economies where municipalities are more likely to contract out the management of waste streams. Regionally, the waste management market is highly consolidated. Two companies Republic Services and Waste Management account for more than half the MSW generated within the United States. In the EU, the market is led by French multinationals Veolia Environnement and Suez Environnement, as well as Remondis, a privately held company based in Germany. Other global regions are typically served by private companies owned by individual municipalities. 4.1.1 Beijing Capital Group Company Beijing Capital Group of Beijing, China, is a state-owned firm engaged in infrastructure, real estate, and financial services businesses in China and Hong Kong. Through these three core businesses, Beijing Capital invests and operates subsidiaries in water treatment; waste collection and separation; the incineration or anaerobic digestion of waste for power generation; package solutions for residue disposal; construction of utilities; and urban transport facilities. The company reported revenue of $3.7 billion in 2013. Beijing Capital is among the latest integrated waste management firms to invest abroad, acquiring Transpacific Industries Group s New Zealand operations for $950 million in 2014. This acquisition was strategically motivated, as it gives the company access to environmental and truck management technology. It also gives Beijing Capital greater expertise in dealing with hazardous waste and managing waste beyond the traditional landfill method. The company currently manages major landfills in China and is well-positioned to capitalize on the country s rapidly maturing waste services industry. Beijing Capital is the smallest entity profiled in this category. Yet, the company is a good example of how municipally owned operators are acquiring expertise to broaden their portfolio of waste management and technological capabilities. 4.1.2 Republic Services Republic Services is a publicly traded integrated waste management company employing 36,000 people. The company is based in Phoenix, Arizona, and is the second-largest waste management company in North America. It serves more than 13 million residential and municipal customers through the United States, Canada, and Puerto Rico and also has commercial and industrial operations. A waste management, comprehensive waste, and environmental services company, Republic Services handles more than half of all garbage 43

collection in the United States together with its competitor, Waste Management. Republic Services generated $8.2 billion in revenue in 2013. The company maintains substantial operations in the waste management business, including: 336 collection operations, 199 transfer stations, 190 active landfill disposal sites, 69 recycling plants, and more than 70 renewable energy projects (a third of its landfill operations), all in North America. The company is actively investing in novel approaches to landfill management, including operating these facilities as bioreactors and carbon sequestration efforts. Republic Services has focused a great deal of investment on reducing operational costs and increasing automation. In recent years, the company has invested more than half of its annual fleet expenditures on upgrading to natural gas-fueled vehicles. More than 60% of its residential fleet is fully automated, helping to enhance efficiency and reduce costs. The company s recycling-focused operations are on the processing and sale of old corrugated cardboard, old newspaper, aluminum, glass, and other materials. In 2012, the company opened what is widely regarded as the largest recycling facility in the world, a 110 ton per hour, multiple waste stream facility in Milpitas, California. The MRF processes residential and commercial single-stream material for recycling, as well as dry and wet commercial recyclables. It processes more than 400,000 tons per year and diverts at least 80% of the material collected. 4.1.3 Suez Environnement Suez Environnement is a division of publicly traded GDF Suez specializing in integrated waste management. Employing 80,000 people, the company is based in Paris, France, and is the second-largest waste management company in Europe by revenue, but maintains global operations. Operating largely in the water treatment and waste management sectors, and formerly an operating division of Suez, the company was spun out as a standalone entity as part of the merger to form GDF Suez in 2008. Suez Environnement generated $20 billion in revenue in 2013; an estimated 60% of revenue was specifically related to the management of solid waste. The company s three core businesses include the treatment, production, and distribution of drinking water; the collection, recovery, and treatment of wastewater; and the collection and processing of non-hazardous and hazardous waste, the recycling of waste, and street cleaning. Suez currently operates 45 WTE plants throughout France, as well as additional facilities in the United Kingdom, Belgium, Germany, and Taiwan. These plants have capacities ranging between 100,000 and 200,000 tons per year. Suez Environnement is particularly focused on the operation and management of WTE plants, with particular expertise at operating plants with high performance. The company works primarily with municipalities to construct and operate the plants and, in some cases, arranges financing for new projects. It executes several different business models in different countries. In Germany, for example, Suez Environnement is active in the construction of new plants 44

without an operation contract. In Holland, the company s model is more focused on selling the plants to industrial users that need to treat hazardous waste. Suez Environnement has seen a slight dip in revenue in recent years after posting strong growth in its waste division in 2011. Recent merger talks with rival firm Veolia have largely been denied by executives in both companies. 4.1.4 Veolia Environmental Services Veolia Environmental Services is a division of publicly traded Veolia Environnement, specializing in integrated waste management. Employing 77,000 people across 15 countries, the company is based in Paris, France, and is the largest waste management company in Europe by revenue. It is the only global manager of liquid, solid, non-hazardous and hazardous waste; onsite waste processing; industrial cleaning and process maintenance; and recycling, recovery, and disposal for both the public and private sectors. The company provides services to more than 280,000 industrial and commercial clients, generating $11.1 billion in revenue in 2013. Over the past 5 years, Veolia Environnement has invested over $1.5 billion in recycling and recovery infrastructure. The company has been particularly active in the EU, where zero landfilling policies are beginning to take effect. In the United Kingdom, for example, it operates seven large-scale centralized composting facilities. It also has developed technology to recover valuable resources from street sweepings. Veolia s WTE assets remain particularly strong. It currently has the capacity to supply 86 million MWh of energy while converting 38 million metric tons (42 short tons) of waste into new materials and energy. The company most recently (May 2014) opened a 26 MW WTE facility in Staffordshire, United Kingdom that will process around 330,000 tons of residual waste annually. Veolia was hit especially hard by the economic crisis of 2009, which diminished the value of some of its most lucrative municipal contracts. The company is emerging from a significant restructuring of operations and termination of operations in nearly 40 countries to restore profitability. The result is a more focused effort to target industrial customers. Recent merger talks with rival firm Suez Environnement have largely been denied by executives in both companies. 4.1.5 Waste Management Waste Management is a publicly traded integrated waste management company employing just under 45,000 people. The company is based in Houston, Texas, and is the largest waste management company in North America. It serves more than 27 million residential, industrial, municipal, and commercial customers throughout North America. The company recently sold operations in Canada and Puerto Rico, but maintains a presence in the United Kingdom and China. In the latter country, it owns a 40% stake in Shanghai Environment Group Co. Ltd, a wholly owned subsidiary of Shanghai Chengtou Holding Co. Ltd. A waste management, comprehensive waste, and environmental services company, Waste Management handles more 45

than half of all garbage collection in the United States together with its competitor, Republic Services. The company generated $14.4 billion in revenue in 2013. Waste Management maintains substantial operations in the waste management business, including: 367 collection operations, 355 transfer stations, 273 active landfill disposal sites, 16 WTE plants, 134 recycling plants, 111 beneficial use LFG projects, and 6 independent power production plants. Waste Management subsidiary, Wheelabrator Technologies Inc., specializes in collecting waste and converting it into renewable electric power. In addition to its WTE combustion plants, Wheelabrator currently mines half of the company s 273 landfill sites in North America for methane gas, generating an estimated 550 MW of electricity. Roughly 9.82 million MWh of energy in 2013, this is more than the solar industry produced (9.25 million MWh) last year, according to U.S. Energy Information Administration data. The company aims to expand energy recovery capacity by an additional 300 MW by 2020. Another Waste Management subsidiary, WM Recycle America LLC, is North America s largest residential recycler, managing more than 8.5 million tons of materials, including metal, plastic, glass, electronics, and paper, at 128 facilities. Recognizing stagnating growth due to a flatlining of top-line growth in waste volume across North America and increasing competition from SMEs across the waste management value chain, the company launched a venture capital arm called the Organic Growth Group in 2006. This group invests in companies working on breakthrough technologies that use garbage as a renewable resource. A few are described below:» Harvest Power: Developed a process for recycling food, yard, and organic waste into renewable energy, compost, and natural fertilizers. Resulting biogas is cleaned and can be distributed through natural gas pipelines or further compressed into LNG.» Agilyx: Developed a patented system to gasify industrial plastics, including those with contaminants, and convert them into synthetic crude for diesel and other transportation fuels. The current system converts 10 tons of plastic per day into 60 barrels (9,080 liters) of oil.» Enerkem Inc.: Developed a proprietary thermochemical technology for converting waste into cellulosic ethanol, methanol, and industrial chemical byproducts. The company is building its first full-scale commercial facility in Edmonton, Alberta, and another is planned for Mississippi. In 2014, Waste Management joined with oil & gas giant NRG Energy and two other companies Ventech Engineers International and Velocys to develop smaller-scale, gas-to-liquids technology. The goal is to use the gas created by landfills to produce renewable fuels and chemicals. 46

The investments listed above aim to solve two challenges for Waste Management: find technology that has commercial application for waste reduction; and become a supply source and deliver the waste it collects as fuel for these companies to exploit. The effort seeks to flip Waste Management s business model on its head, transforming it into a feedstock supply and brokerage operation rather than a collection and disposal service. As part of an inevitable maintenance of its investment portfolio, the Organic Growth Group has exited several investments and increased stakes in others in the past 12 to 18 months. While interpreted by some as admission of failure in several key accounts, this restructuring is likely indicative of efforts to derisk its investment portfolio and shift its focus toward commercial-stage investments. 4.1.6 Other Integrated Waste Management Players Globally, the field of integrated waste management companies remains highly localized, but some international mergers are underway. Most firms operating beyond their host country s borders are highly focused on regional operations. Table 4.1 provides a brief summary of several of the largest key players from around the world. Table 4.1 Other Integrated Waste Management Companies Industry Participant Description Revenue Employees Markets Served China Everbright International Ltd. Progressive Waste Solutions Remondis Waste Connections Provides environmental protection project management and consultancy services Third-largest non-hazardous solid waste dumper in North America Waste division of Rethmann, a privately owned German company Provides solid waste collection, transfer, disposal, and recycling services in mostly secondary markets in the western and southern United States Public/ Private $228 million 2,000 Asia Pacific Public $2 billion 3,984 North America Public $8 billion 17,000 Western Europe, Eastern Europe, Asia Pacific, Middle East Private $1.3 billion 6,000 North America Public (Source: Navigant Research) 4.2 Specialized Waste Management Technology and Solutions Players Specialized waste management companies provide specific MSW management services along the value chain, typically relying on proprietary technology and processes to maintain market share. These companies are often privately owned, or in cases like Wheelabrator, operate as subsidiary companies of the larger integrated waste management companies described earlier. Specialized waste management services include recycling processing, e-waste services, WTE conversion, and ferrous or non-ferrous metal recovery. 47

4.2.1 Covanta Holding Corp. 4.2.2 Enerkem Covanta Holding Corp. is a publicly traded company employing 3,500 people. The company, which is based in Morristown, New Jersey, provides waste and energy services to municipal entities primarily in North America through its subsidiaries. It mainly engages in the owning and operating of infrastructure for the conversion of WTE, as well as other waste disposal and renewable energy production businesses. Covanta currently owns and operates 46 WTE facilities across the United States (greater than 50% of the facilities operating across the country) and 15 additional WTE plants in Europe and Asia. The company generated $1.7 billion in revenue in 2013. Covanta s other solid waste management business activities include owning and operating 18 transfer stations and 4 ash landfills in northeastern United States, providing waste procurement services and recovery of metal from its WTE facilities. In addition to its WTE facilities, the company operates 11 additional energy generation facilities. These include wood biomass and hydroelectric renewable energy production facilities in North America and an interest in a 24 MW (gross) coal-fired cogeneration facility in Taixing City, China. Handling 7% of the United States total amount of post-recycled waste, Covanta s success is underpinned by a strong presence in the market and close relations with municipalities across the country. Faced with limited growth prospects in the WTE market in the United States, the company remains primarily focused on lowering the costs of its core operations and expansion opportunities in select countries in Europe where landfill directive regulations are driving investment. It remains well-positioned to capture an expanding portion of the emerging U.S. thermal WTE market. Covanta currently holds a license agreement from Martin, a German grate furnace specialist, and is currently expanding and developing projects in Hawaii, Canada, the United Kingdom, and China. Enerkem is a privately held company majority-owned by institutional, clean technology, and industrial investors. As of October 2013, the company employed 160 people. Based in Montreal, Canada, Enerkem is a waste-to-biofuels and chemical company that manufactures, owns, and operates community-based advanced biorefineries founded on its proprietary gasification and catalytic synthesis technology. The company is pre-revenue but announced a loss of $19.1 million in the first three quarters of 2011 in its F-1 registration statement (it has since withdrawn its initial public offering). Enerkem is unique in its approach, which is based on a standardized packaged system that is assembled offsite. This approach facilitates the establishment of decentralized and scalable plants located near the supply of raw material. The company s modules allow for 10 million gallons (36 million liters) of output per year, which allows for deployment around urban centers where space is more constrained. In addition to pilot and demonstration facilities, Enerkem commissioned a 10 million gallon per year commercial facility in Edmonton, Canada, in June 2014, making it the first pureplay W2F company to reach commercial operation. The company will ramp up biomethanol production initially and an ethanol module will be added later in 2014. 48

4.2.3 Envac Group 4.2.4 Fiberight Currently on hold, Enerkem has announced plans to develop a second facility at the Three Rivers Landfill site in Pontotoc, Mississippi. It aims to recycle and convert the MSW that is currently sent to the landfill site into 10 million gallons of ethanol per year. Envac Group, based in Stockholm, Sweden, is a privately held waste collection technology company fully owned by Stena Adactum AB, a company in the Stena Sphere. Envac invented the pneumatic waste system, a network of high-pressure vacuum tubes used to collect and aggregate waste underground. Installing its first system in 1961, the company currently has operations across 35 offices in 21 countries in Europe, Asia Pacific, Latin America, and the Middle East. Its parent company, Stena Sphere, generated total revenue of $9.3 billion in 2012 and employs approximately 20,000 people. Envac s services include designing, installing, and operating stationary vacuum systems that handle waste and recyclable materials. Its systems are akin to utility service infrastructure piping is installed underground eliminating the need to manually empty bins and service waste collection with garbage trucks. Although pneumatic waste collection systems can handle many types of waste streams, a high degree of customization per system is typically required, limiting the pace at which the market can grow. Solutions are generally ideal in high-density areas or facilities urban environments, hospitals, airports, and commercial office parks and where there is little capacity for onsite storage. Fiberight is a privately held company with four employees. Based in Catonsville, Maryland, the company incorporates several technologies to convert the organic fraction of MSW into ethanol. The company is pre-revenue and is currently constructing its first commercial facility in Blairstown, Iowa. Fiberight s MSW-to-biofuels conversion platform involves a proprietary pulping method that makes recycling from a dirty MRF much cleaner and easier. The company is also working closely with the Danish biotech firm Novozymes, which has developed a solution to convert biomass pulp derived from waste into cellulosic ethanol. Of the material that will be hauled to the Blairstown facility, 50% will contain organic material. Another 30%, including items such as cardboard, cans, wood and glass, will be recycled and about 20% will go to the landfill. Fiberight has operated pilot plant facilities since 2008-2009. In March 2014, it commenced construction on its waste processing facility in Marion, Iowa. In addition to isolating biofuels feedstock from MSW, Fiberight s technology also separates recyclable components such as plastics and metals. Targeting commissioning in 2014, its Blairstown ethanol production facility will have a commercial capacity of 6 million gallons per year and coproduce biogas to power the facility. The company s expansion strategy involves replicating its prototype commercial plant in markets with 100,000 or more population within a 5-mile radius, with a special focus on municipalities with landfill limitations and high landfill tipping fees. 49

At an estimated $40 million, the Blairstown project is smaller scale and much more capital efficient than emerging commercial projects focused on converting MSW to biofuels using thermochemical platforms. Contrasting this approach, Fiberight is targeting in the case of Blairstown the conversion of a shuttered ethanol refinery, closed-loop operations, and a streamlined permitting process. 4.2.5 Harvest Power 4.2.6 Inashco Harvest Power is a privately held organics management company employing 600 people. The company is based in Waltham, Massachusetts, and maintains operations in Florida, the Northeast, Mid-Atlantic, and West Coast of the United States and in Ontario and British Columbia, Canada. Founded in 2008, Harvest utilizes high solids anaerobic digestion and composting to maximize the value of organic materials, a technology that has been in commercial use across Europe for over 20 years. By targeting organics such as food scraps and yard debris that would otherwise be landfilled, the company generated revenue in excess of $130 million in 2013 from the sale of soil amendments, mulches, power. As a solutions provider, Harvest Power s success depends heavily on public acceptance and consumer education around the circular economy and diversion of organic waste from the MSW waste stream. In municipalities where source-separated organics is mandated (e.g., San Francisco in the United States and Vancouver in Canada), the company s model has proven to be highly successful. Currently, regulations in the United States driving the separation of organics from the waste stream lag behind those of Europe. Combined with relatively inexpensive landfilling costs in the United States, access to organic feedstock remains a potential inhibitor of growth. That said, many low-hanging organic recovery opportunities remain underutilized across North America. A partnership with Waste Management, however, gives the company access to large waste streams for organic feedstock it otherwise would not be able to access. As of May 2014, Harvest Power operated 35 organic waste processing facilities in North America. Other strategic investors include Generation Investment, Kleiner Perkins Caufield Byers, Munich Venture Partners, and True North Venture Partners. Inashco is a privately held subsidiary of the Fondel Group, a global player in the metal trading sector. A fast-emerging player in the material recovery segment within the waste management industry, Inashco employs 45 people. The company is based in Rotterdam, Netherlands and maintains operations in five countries: the Netherlands, Belgium, Germany, Italy, and the United States. Founded in 2008, Inashco offers an innovative bottom ash recycling solution for the waste combustion industry, specifically focusing on the improved recovery of aluminum and other non-ferrous metal (lead, copper, and zinc) particles down to 1 mm. The company has not disclosed its revenue publicly. 50

4.2.7 Leidos Through Fondel, Inashco has access to a dedicated channel for selling recovered non-ferrous products to the global market. Combined with a specialized solution for recovery of finer metal particles than incumbent solutions on the market, the company has the potential to capture significant market share in the metal recovery technology market as a bolt-on to both existing and new build WTE facilities. The company announced in March 2014 the formation of a 50/50 joint venture (JV), Eco Recovery Solutions, with Waste Management-owned Wheelabrator. The latter s selection of Inashco is a strong endorsement of the viability of the company s technology. It is credited in part to Inashco s strong track record in Europe and its ability to process fresh ash without aging, which results in oxidation and diminished product values. Leidos, previously known as Science Applications International Corp. (SAIC), is a Fortune 500 scientific, engineering, and technology applications company that addresses a wide range of critical issues related to national security, infrastructure, health, energy, and the environment. The company s approximately 23,000 employees serve customers in the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. government civil agencies, and selected commercial markets. Headquartered in Reston, Virginia, Leidos is projected to generate $7 billion in annual revenue. The government services and IT portion of the company, also spun out of the SAIC parent company in 2013, is worth an estimated $4 billion and retained the SAIC name. As well as its defense and security work with government, Leidos also has significant involvement with the state and local government in many areas, including energy, water, and waste management projects. The company expanded its portfolio of energy and waste management services in 2009 through the acquisition of R.W. Beck, a 77-year-old engineering and business consulting services firm of 550 employees specifically focused on supporting the utility industry. The acquisition of R.W. Beck provided deep knowledge of the utility business, as well as technical expertise across many utility business areas. Leidos expertise in waste management includes scientists, engineers, planners, and financial analysts. Together, they provide a complete support service covering everything from strategy definition to design and procurement. They also draw on expertise in other Leidos companies. One of the key areas in which Leidos has been working with local governments has been in solid waste management. The company provides a full service offering for waste management from initial consultation and strategy definition through to financial feasibility, facility planning, permitting, design, and procurement. Solid waste experts also collaborate with other parts of Leidos, including construction engineering. As part of a project team, the company is presently assisting Maui County, Hawaii in evaluating various waste conversion technologies to identify potential alternatives to the present fuel sources of power for this island community. 51

In general, Leidos sees the industry moving to more integrated solid waste management programs. This is an idea that has been around for a long time, but improvements in conversion technologies have made it more feasible. Changes in waste management regulations allowing local authorities to have more control on how and where waste is processed also make waste conversion a more commercially and economically viable approach than landfilling. 4.2.8 MBA Polymers MBA Polymers, based in Nottinghamshire, United Kingdom, is a privately held company founded in 1992 that employs 350 people. MBA produces post-consumer recycled plastics from EOL durable goods, such as computers, electronics, appliances, and automobiles. Using an innovative platform for separating and reprocessing mixed plastics, the company is one of the only plastic recyclers in the world producing a near virgin product, generating approximately $50 million in annual revenue. Since raising its first round of venture capital in 1999, MBA has attracted more than $150 million from investors. Its latest round was a Series H aimed at scaling up capacity. The company has acquired more than 60 patents in developing its proprietary process, which uses less than 20% of the energy required to produce virgin plastics from petrochemicals, and borrows separation techniques from mining, metal recycling, and food processing, among others. MBA produces five major plastics used in manufacturing durable goods: acrylonitrile butadiene styrene (ABS), high-impact polystyrene (HIPS), high-density polyethylene (HDPE), polypropylene (PP), and filled PP. The post-consumer recycled plastics are sold to manufacturers of IT equipment, electronics, appliances, automobiles, office equipment, building products, and home and garden products in the United States and internationally. MBA s plastics are appearing in more high-end applications, like Nespresso coffee machines, Electrolux vacuum cleaners, and Hewlett-Packard electronics. Nearly 70% of the materials processed go back into the economy and 48% is transformed into near virgin quality plastic. MBA sources its raw materials by partnering with large recyclers, and these materials go to one of its three processing plants. None of these facilities are located in the United States, since the lack of recycling requirements makes it difficult to secure a steady supply stream. MBA s facility in Richmond, California is used primarily for R&D. Its first processing plant was built in Guangzhou, China in 2006 after MBA was able to contract a steady stream of e-waste from Guangzhou Iron & Steel. China processes most of the e-waste stream from the United States. MBA built another facility in Kematen an der Ybbs, Austria in 2006 for processing primarily e- waste from Müller-Guttenbrunn, a company providing EOL recycling services. The third plant, which processes primarily auto-shredder residue from metal recycler, EMR, was built in Worksop, United Kingdom in 2010. Currently, MBA processes more than 125,000 tons of material per year and this volume is increasing. 52

4.2.9 Rockwell Automation Rockwell Automation, based in Milwaukee, Wisconsin, is a privately held provider of industrial automation solutions employing 22,000 people. With operations in 80 countries, Rockwell specializes in industrial automation, power, control, and information solutions, offering fully integrated solutions for the waste management industry. The company generated total revenue of $6.4 billion in 2013. Rockwell Automation has developed a specialization in developing fully integrated waste plastic-to-energy plant solutions. This expertise includes the design and build of process skids, automation architecture, software, and power control and engineering/startup services in one fully integrated solution. The company won a $15 million engineering, procurement, construction, and management contract from Vadxx Energy LLC in early 2014 to build a commercial-scale, plastic waste-tosynthetic crude energy facility in Ohio. The new plant will transform EOL plastics into energy products, utilizing Rockwell Automation s multidiscipline control platform to deliver an integrated smart plant. In 2012, the company won a contract from Cynar, a technology company in the WTE market, to design and build an EOL plastic to fuel conversion plant in the United Kingdom. 4.2.10 Ros Roca Environment Ros Roca Environment, based in Tarrega, Spain, is a privately held company employing 1,600 employees. The company operates as a subsidiary of Ros Roca Group. It is composed of several companies from different countries providing waste cycle process services internationally. Ros Roca Environment s range of product offerings includes:» Manufacture, sale, and rental of equipment for street cleaning and waste collection» Design, development, and construction of engineering process systems for transfer, sorting, composting, biomass, biogas, upgrading, anaerobic digestion, and energy recovery plants» Design, development, and construction of pneumatic waste conveyance systems The company is a pioneer in developing technology for recycling waste through dry and wet anaerobic digestion. It has designed and built 25 plants for anaerobic digestion throughout Europe. Focusing on the Biostab AD technology, Ros Roca Environment s technology operates in a single-step wet mesophilic system. The system is designed to be flexible with regard to the types of input (i.e., food waste, energy crops, animal manure, and MSW). In addition to expertise in waste treatment including MBT, sorting, digestion, and composting systems Ros Roca Environment is also an emerging provider of pneumatic waste collection solutions. Preliminary deployments are in 18 Spanish cities and include big developments as well as smaller installations for hospitals, airports, markets, and residential buildings. 53

Ros Roca Group is the only company worldwide to offer solutions for the management and treatment of waste, as well as for the transport and redistribution of gas in any conditions. Thus, it is well-positioned to take advantage of the commercialization of MSW gasification technologies beginning to gain traction in the market. 4.2.11 Sims Metal Management 4.2.12 Solena Fuels The largest listed metals and electronics recycling company in the world, Sims Metal Management, is a publicly traded company employing 6,400 people. The company is based in New York, New York with primary operations in the United States, Australia, and the United Kingdom. Operating in three core areas metals (ferrous and non-ferrous) recycling, electronics recycling, and municipal recycling the company generated $7.2 billion in revenue in its fiscal year 2013. Sims operates more than 265 facilities globally and processed an estimated 7.5 million tons of ferrous scrap in 2013. Faced with challenging market conditions (e.g., fluctuating metal commodity prices, market disruption in key emerging markets like Turkey, etc.), the company sees growth potential in increased efficiency in its operations. Currently, Sims derives 60% of its revenue from North America, with its core business focused on ferrous metal trading (40%- 50% of total revenue). The company s outlook remains intricately tied to the recovery of the international scrap metal recycling industry, which has faced significant challenges from the global economy over the last several years. Sims could see organic growth from the integration of emerging technologies that enable greater automation of operations through the incorporation of sensors and monitoring software. Solena Fuels, based in Washington, D.C., is a privately held company and one of the leading emerging ventures targeting the W2F market. Relying on its patented Solena Plasma Gasification and Vitrification process capable of producing a synthetic fuel gas (BioSynGas) from the thermal conversion of MSW, Solena aims to build, own, and operate aviation and marine biofuels production plants around the world. The company is pre-revenue. Solena s process involves feeding biomass principally, MSW into a high-temperature (5,000ºC) gasification reactor powered by a plasma heating system, which converts the MSW into a stable syngas. The syngas is then cooled and cleaned in a process that removes sulfur compounds, chlorides, other volatile metals, and acid gas that may be present in order to eliminate emissions. It can be used as a natural gas replacement to power combustion gas turbines for power production (biopower) or catalytically converted into synthetic liquid biofuels, such as biodiesel or aviation biofuels. Solena s platform includes a fixed-bed Fischer-Tropsch platform supplied by Velocys. 54

Currently, Solena s commercialization efforts are focused on developing its 50 million gallon per year GreenSky London project. Being developed in partnership with British Airlines and worth $309 million, GreenSky will be sited at Thames Enterprise Park, part of the site of the former Coryton oil refinery in Thurrock, Essex, and is expected to commence commercial operation in 2015. British Airways agreed to a 10-year offtake agreement in 2012. At full operation, the project is estimated to produce 20 MGY of biojet fuel and 20 MGY of green diesel. Upon completion, Solena aims to develop similar projects each year with disclosed partners, including:» Solena Berlin (with Lufthansa)» Solena Sydney (with Qantas Airways)» Solena Gilroy (California)» Solena SAS (Sweden) Solena s biorefinery projects are estimated to cost $330 million. More than 15 commercial airlines have signed onto Solena s platform. Additionally, the company has been active in assessing the aviation biofuels supply chain potential in various countries, most recently in Turkey. 4.2.13 Wheelabrator Technologies Wheelabrator is a privately held subsidiary of Waste Management employing 1,200 people. Based in Hampton, New Hampshire, the company is a pioneer in the U.S. WTE industry, designing, building, and continuing to operate the first commercially successful facility in Saugus, Massachusetts since 1975. Currently the second-largest WTE plant operator in the United States, the Waste Management subsidiary operates 17 WTE plants across the country with a combined processing capacity of more than 23,250 tons per day of MSW and an electric generating capacity of 669 MW. Wheelabrator is based in Hampton, New Hampshire and reported revenue in excess of $1 billion. The company has maintained a strong environmental record throughout its operating history and is expected to maintain its market position by expanding market share over the next decade. It provides technology under a license agreement with Hitachi Zosen Inova (formerly Von Roll Inova). Hitachi Zosen Inova provides the systems related to grates, furnaces, and boilers. Wheelabrator sources the other equipment from other suppliers that offer the best available technologies. The company has formed several JVs with the aim of underpinning future growth. In March 2014, it struck a deal with ferrous recovery pioneer, Inashco BV, to apply the company s proprietary technology at its facilities to increase the recycling of ferrous and non-ferrous metals from the WTE process. In Asia, Wheelabrator and its parent Waste Management formed a JV with Chinese company Shanghai Chengton. The JV, Shanghai Environment Group (SEG), is managing the operations of two WTE facilities and is actively developing an additional six projects. In the United Kingdom, Wheelabrator has joined Hitachi Zosen Inova in providing 55

operations and maintenance support at Cory Environmental s Riverside WTE plant in London. The Cory Environmental/Wheelabrator Consortium was recently selected as the preferred bidder to build and operate a new 270,000 tons per year WTE project in Norfolk County. Wheelabrator also has several projects under development. It is currently a preferred vendor on the construction of a $527 million WTE project in Frederick County, Maryland. Wheelabrator is also in public consultation to develop a proposed facility in Wales that will be able to process up to 220,000 tons of non-recyclable household waste per year in an investment estimated to be more than $1 billion over the 25-year lifetime of the project. 4.2.14 Other Technology and Solutions Players There are a number of technology vendors and solutions providers that offer products for the waste management industry in some cases, exclusively and in many others, as part of a broader suite of product offerings to industrial markets. These players range from software vendors and IT solutions providers to control technologies, process equipment, RFID solutions, and hardware for processing solid waste. There are few leading players in this space, as most companies provide highly specialized products. Table 4.2 Other Integrated Waste Management Players Industry Participant Description Revenue Employees Markets Served Public/ Private Air Products Provides customers in industrial, energy, technology, and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services $10.2 billion 21,000 Global Public Bulk Handling Systems HID Global Tana Oy Designs, manufactures, and installs processing systems tailored to extract recyclables from the waste stream Among other products, offers RFID technology for the waste industry and logistics No. 3 in the global landfill compactor business; manufactures landfill compactors and waste shredders used in landfill operations, recycling processes, and bioenergy production N/A 300 Global Private $123 million 2,100 Global Private N/A N/A Global Private (Source: Navigant Research) 56

Section 5 MARKET FORECASTS 5.1 Smart MSW Technology Market Overview Navigant Research estimates that 84% of the MSW generated globally was under active management in 2013, with 1.2 billion tons of MSW collected and 236.7 million tons uncollected. Annual MSW management revenue is expected to reach $197.2 billion globally in 2014, including the cost of collecting, processing, and disposal, as well as the advanced treatment of waste through energy recovery and diversion. Navigant Research expects annual new MSW management revenue to more than double from $5.3 billion in 2014 to $10.7 billion in 2023. Navigant Research expects the smart MSW technology market to contribute significantly to new revenue generation in the global waste management industry between 2014 and 2023. By 2023, 938.4 million tons will be managed by smart MSW technology, representing 42% of the annual MSW generated globally that same year. This represents a slight decrease in the share of waste handled by smart MSW technologies in 2014 (43%). However, rapid growth in global MSW generation volumes will result in MSW generation outpacing the construction and maturation of waste management infrastructure, particularly in developing economies across Asia Pacific and Africa facing rapid urbanization. Chart 5.1 Annual MSW under Smart Management by Region, World Markets: 2014-2023 1,000 900 800 North America Eastern Europe Latin America Africa Western Europe Asia Pacific Middle East (Million Tons) 700 600 500 400 300 200 100-2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 57

In total, the global smart MSW technology market is forecast to generate $42.2 billion in cumulative revenue over the next decade (2014-2023). This represents 52% of cumulative new revenue growth in the MSW management industry over the forecast period. Annual revenue from smart MSW technology is expected to nearly triple by 2023, resulting in a 12.2% compound annual growth rate (CAGR) between 2014 and 2023, compared to a CAGR of just 4.0% across the entire MSW management market. As a result, annual smart MSW technology revenue will surpass conventional MSW management revenue by 2019. Chart 5.2 Annual New MSW Management Revenue by Technology Type, World Markets: 2014-2023 $7,000 $6,000 Smart Conventional $5,000 ($ Millions) $4,000 $3,000 $2,000 $1,000 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) The drivers and prioritization of smart MSW management vary considerably from region to region and country to country. Generally, all regions share a commitment to investment in sanitary landfilling as a low-cost enhancement to waste disposal over open dumping. In many countries, however, municipal governments are still struggling to develop basic infrastructure to collect and manage trash in the first place. Where waste is collected, energy recovery remains a high priority, but upfront capital investment requirements will limit most activity to more developed economies. The integration of IT capabilities, automation, and data analytics represents the most exciting area of growth in the smart MSW management value chain. The expansion of RFID and GPS capabilities combined with data analytics is expected to continue in North America, Western Europe, and high-income economies across all global regions. 5.2 Forecast Assumptions Given the high variability across published MSW generation data sources, Navigant Research s forecasts rely principally on country-level MSW generation data published in World Bank s widely cited What a Waste report (2012). From this data, Navigant Research quantified the 58

share of waste generated by region that is either actively managed (collected) or not collected. Within the managed portion, Navigant Research used country-level data to estimate the portion that is collected, recycled and composted, and disposed across global regions. Navigant Research combined this data with in-house assumptions for various energy recovery technologies. From these volume estimates, Navigant Research estimated the global market for MSW technology solutions using cost range data published by World Bank for collection, sanitary landfill, open dumping, composting, WTE incineration, and anaerobic digestion solutions. Using assumptions about market penetration across the four segments analyzed in this report (smart collection, smart processing, smart energy recovery, and smart disposal), Navigant Research estimated the market value attributable to smart technologies. The smart MSW technology market consists of advanced processes and strategies that support efforts to comply with emerging waste hierarchy disposal strategies. These technologies focus on reducing the negative externalities associated with waste accumulation while maximizing the value extracted from waste as a renewable resource. Representative technologies include:» RFID tagging» GPS and route optimization software» Advanced MRFs» W2F biorefineries» Bioreactor landfills Navigant Research s forecasts do not simply represent an all-inclusive inventory of all the technologies that make up the smart MSW technology market. Instead, this report seeks to quantify the current MSW market processed by smart MSW technology solutions. In some cases, waste will be processed by one or more smart MSW technology; in most cases, by none. Navigant Research expects that in the future, these solutions will form an ecosystem of technologies spanning the entire MSW chain of command. This future scenario could consist of the following actions:» A discarded bag of trash is deposited in a pneumatic waste inlet at a residential building and is automatically piped underground to an underground aggregation center.» The waste is initially processed by an optical sorter that triggers an RFID sensor to initiate a pickup monitored halfway around the world.» It is transported by a biocng-fueled garbage truck to a W2F biorefinery and processed into renewable aviation biofuels and other renewable energy products. 59

» The resulting residues are then discarded in a sanitary landfill capped with a solarintegrated liner when it reaches its end of service. Currently, Navigant Research assumes these technologies are deployed haphazardly, sometimes on a trial basis, and predominately in mature economies where the high collection rates and mature MSW management processes are already in achieved. Forecasts in this report assume that existing policies, incentives, and trends remain in place for the life of the forecasts. 5.3 Smart MSW Technology Forecasts by Segment The smart MSW technology market is composed of four segments roughly paralleling the linear value chain described under the waste hierarchy paradigm. Navigant Research expects strong growth from each segment, but smart energy recovery will remain the most mature and lucrative segment over the forecast period. Smart collection is expected to see the fastest growth overall with annual revenue increasing at a 14.6% CAGR between 2014 and 2023. Chart 5.3 Annual Smart MSW Technology Revenue by Segment, World Markets: 2014-2023 $7,000 $6,000 $5,000 Smart Collection Smart Processing Smart Energy Recovery Smart Disposal ($ Millions) $4,000 $3,000 $2,000 $1,000 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 5.3.1 Smart Collection The smart collection segment of the smart MSW technology market represents the third-largest segment over the forecast period, accounting for 12% of the cumulative revenue within the smart MSW technology market between 2014 and 2023. Smart collection remains primarily confined to higher-income markets where nearly 100% of the population is served by waste hauling infrastructure. Additionally, investment in this segment is mostly associated with mature waste management markets where garbage truck fleets and curbside disposal practices 60

are more common. While pneumatic waste collection infrastructure is gaining traction in the developed world, investment remains confined to isolated applications and initiatives by a handful of municipalities. Drivers of smart collection technology adoption include an increased focus on reducing costs and improving operational efficiencies, fueled by high labor costs and increasing fuel prices. Technologies like RFID and GPS are among emerging subsegments. While individual waste bin identification with RFID technology and PAYT programs have become quite common in Europe and isolated high-income economies in Asia Pacific, it is still less of a method used in other parts of the world, including in the United States. However, the U.S. market is seeing greater investment flow toward reducing fuel costs via fuel switching swapping diesel-fueled trucks for natural gas and greater use of GPS solutions to optimize collection routes. Together, North America ($695.5 million), Western Europe ($2.6 billion), and Asia Pacific ($1.5 billion) are expected to represent 96% of the cumulative revenue in this segment over the forecast period. Chart 5.4 Annual Smart Collection Revenue by Region, World Markets: 2014-2023 ($ Millions) $900 $800 $700 $600 $500 $400 $300 North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa $200 $100 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 5.3.2 Smart Processing The smart processing segment represents the smallest segment within the smart MSW technology market. Consisting of technologies like optical sorting and innovations driving increased automation, as well as advanced MRFs, RDF facilities, and MBT facilities without energy recovery, the segment is expected to generate $2.8 billion in cumulative revenue between 2014 and 2023. With tightening regulations driving increased diversion and expanded utilization of waste as a strategic feedstock, North America ($1.0 billion) and Western Europe 61

($1.2 billion) are expected to generate 77% of the cumulative global revenue in the segment over the forecast period. High levels of organics and a heavy dependence on informal waste picker networks in countries like Brazil and India remain barriers to investment in this segment across the developing world. Chart 5.5 Annual Smart Processing Revenue by Region, World Markets: 2014-2023 ($ Millions) $450 $400 $350 $300 $250 $200 $150 North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa $100 $50 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 5.3.3 Smart Energy Recovery Representing 66% of annual revenue in the smart MSW technology market in 2014, smart energy recovery s relative maturity in the waste management market reflects a combination of commercialized technologies, demand for renewable energy, and large upfront capital needed to build infrastructure. Navigant Research expects strong market demand for energy recovery technologies and solutions over the forecast period due to incentives for baseload renewable power projects, increasing momentum around climate change regulation, and increasing liquid fuel costs. Over the forecast period, the smart energy recovery segment is expected to generate $27.0 billion in cumulative revenue and exceed $4.0 billion in annual revenue by 2023. Incineration-based WTE infrastructure makes up the largest share of the energy recovery technology market alongside LFGTE projects. Advanced gasification technologies for power and/or fuels production show tremendous promise to revolutionize energy recovery efforts, but high cost and investment risk will limit development to a handful of first-mover projects primarily in North America and Europe in the first half of the forecast period. Although biogas recovery via anaerobic digestion is a relatively low-cost solution, challenges associated with sorting organics from waste streams will remain a key impediment to market growth for this smart 62

energy recovery subsegment. LFGTE will see continued investment, but momentum will shift away from North America, due to the relative price of shale gas, and Western Europe, due to landfilling bans, to other high-growth regions with increasing demand for landfilling capacity. Annual smart energy recovery revenue across Asia Pacific ($1.1 billion) is expected to surpass revenue in North America ($1.0 billion) and Western Europe ($1.0 billion) by 2022. Chart 5.6 Annual Smart Energy Recovery Revenue by Region, World Markets: 2014-2023 ($ Millions) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa $1,000 $500 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 5.3.4 Smart Disposal Currently the second-largest smart MSW technology segment by annual revenue ($389.7 million in 2014), the smart disposal segment is the only market segment analyzed in this report where investment trends favor developing economies outside of North America and Western Europe. Across fast-growing economies in particular, disposal is presently the low-cost option for managing waste. Many of these countries rely predominately on open dumping or other informal waste disposal strategies. The expansion of sanitary landfills that mitigate the environmental and health harm associated with informal MSW disposal, coupled with improved collection infrastructure, will drive an increase in investment in advanced landfilling infrastructure and innovations. Niche technology segments are expected to gain moderate traction in developed economies, particularly in North America and Western Europe, where smart MSW disposal infrastructure has already achieved a high level of penetration. Niche technologies include automated bioreactor landfills and landfill covers integrating solar PV generation. Overall, the smart disposal segment will generate $7.4 billion in smart MSW technology cumulative revenue between 2014 and 2023, reaching nearly $1.2 billion in annual revenue by 2023. Asia Pacific ($2.6 billion cumulative revenue) is expected to generate 35% of cumulative smart disposal revenue. 63

Chart 5.7 Annual Smart Disposal Revenue by Region, World Markets: 2014-2023 ($ Millions) $1,400 $1,200 $1,000 $800 $600 North America Western Europe Eastern Europe Asia Pacific Latin America Middle East Africa $400 $200 $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (Source: Navigant Research) 64

5.4 Smart MSW Technology Forecasts by Region The smart MSW technology market is expected to grow rapidly over the next decade, reaching $42.2 billion in cumulative revenue by 2023. Annual smart MSW technology revenue in North America is expected to reach $1.6 billion by 2023, growing at a 12.0% CAGR over the forecast period. Western Europe is the most mature market, with annual smart MSW technology revenue reaching $1.7 billion by 2023 at a 9.1% CAGR. Asia Pacific, the fastest-growing market over the forecast period, is expected to see annual revenue grow at a 16.3% CAGR, reaching $2.0 billion by 2023. Eastern Europe, Latin America, the Middle East, and Africa will generate a combined $1.1 billion by 2023. Despite overall strong growth, the share of MSW handled by smart MSW technology is expected to decline slightly over the forecast period as MSW generation volume growth outpaces the rate at which smart MSW technologies are adopted in the market. Chart 5.8 Cumulative Smart MSW Technology Revenue by Region, World Markets: 2014-2023 $45,000 $40,000 North America Eastern Europe Latin America Africa Western Europe Asia Pacific Middle East Smart MSW Share 44% 43% ($ Millions) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 43% 42% 42% 41% (Smart MSW Share) $5,000 41% $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 40% (Source: Navigant Research) 5.4.1 North America Opportunities in the North American smart MSW technology market remain highly fragmented, as applicable regulatory regimes, incentives, and cost drivers vary significantly state by state in the United States and province by province in Canada. In general, higher landfill tipping fees, more restrictive disposal regulations, and more progressive municipalities in the Northeast and along the West Coast have led to greater investment in waste recycling, diversion, and energy recovery than in other parts of the United States. Lower electricity rates across the country and the rise of shale gas have restricted development of WTE, LFGTE, and AD projects utilizing 65

waste as a resource. That said, federal drivers targeting advanced biofuels and strong enduser demand from the U.S. military for advanced biofuels derived from non-food based feedstock have driven substantial investment into the W2F companies. A handful of RFIDenabled curbside collection programs, advanced MRF projects, and other investment across the smart collection, processing, and disposal segments are early signs of growing investment in smart MSW technologies. In North America, the large hauling companies have slowly pushed smaller companies out of the way by leveraging their economies of scale. As such, the North American waste management sector has been whittled down into an oligopoly shared primarily by two big public companies: Waste Management and Republic Services. Recent investments by Waste Management, the leading waste management company in the United States by revenue, in emerging waste conversion companies are fueled in part by its recognition that revenue growth opportunities remain nearly flat in North America over the next decade. Diversifying service offerings and shifting emphasis on waste as a strategic resource likely presage a shift in market investment toward smart innovations across the region. The high level of consolidation, however, could stifle penetration of innovative technologies and solutions across the smart MSW market. North America is forecast to generate $11.0 billion in cumulative smart MSW technology revenue. Smart energy recovery ($7.6 billion) is expected to account for 70% of cumulative smart MSW technology revenue generated in North America. Chart 5.9 Annual Smart MSW Technology Revenue by Segment, North America: 2014-2023 ($ Millions) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 Smart Collection Smart Processing Smart Energy Recovery Smart Disposal Smart MSW 80% 78% 76% 74% 72% (Smart MSW Share) $400 $200 70% $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 68% (Source: Navigant Research) 66

5.4.2 Western Europe Western Europe is the most mature smart MSW technology market globally. Nearly 100% of waste generated is expected to be handled by smart MSW infrastructure at some point along the value chain by 2018. Aggressive policies targeting the landfill avoidance and incentives for renewable energy have led to active investment in smart MSW technology innovation and the commercialization of broad suite of associated technologies. A key difference between the EU and other key markets examined in this report is a strict prohibition against the creation of new landfill sites. As a result, the use of landfills is shrinking in the EU, with countries like Switzerland, Sweden, and Denmark achieving upwards of 50% diversion of MSW to energy recovery. Western Europe is also expected to lead the world in the integration in smart processing technology ($1.2 billion in cumulative revenue between 2014 and 2023), achieving at least 40% diversion of MSW to recycling and composting. Overall, the region is forecast to generate $13.0 billion in cumulative revenue in smart MSW technology, with smart energy recovery ($8.2 billion) and smart collection ($2.6 billion) representing 83% of the smart MSW technology market in the region. Western Europe is expected to see a deceleration in revenue growth post-2020 as renewable energy policies reach their legislatively defined compliance deadlines. These forecasts do not speculate as to whether these policies will be extended. Chart 5.10 Annual Smart MSW Technology Revenue by Segment, Western Europe: 2014-2023 ($ Millions) $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- Smart Collection Smart Processing Smart Energy Recovery Smart Disposal Smart MSW 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 102% 100% 98% 96% 94% 92% 90% 88% (Smart MSW Share) (Source: Navigant Research) 67

5.4.3 Asia Pacific The Asia Pacific region has the greatest potential for advances in MSW infrastructure across both conventional and smart technology categories. While MSW generation across the region far exceeds any other individual region (Asia Pacific MSW represents 35% of the global total in 2014), at least 28% of MSW generated remains unmanaged. This share is expected to increase to 31% by 2023, underscoring the significant challenges ahead for a region facing rapid urbanization and a rising middle class population. As a region composed of a diverse mix of countries at varying stages of development, a few general trends can be applied to the region as a whole. Japan and South Korea are the furthest along in terms of incorporating and investing in smart MSW technology. In many ways, these countries are mirroring developments in Western Europe more so than the United States. Faced with a number of constraints due to its size, geography, high population density, and consumption levels, Japan has been at the vanguard of waste management. The country already utilizes RFID technology as part of its collection infrastructure and has been a pioneer in the adoption of thermal treatment of waste. It landfills less than 25% of its waste and incinerates more than 80% in advanced facilities with leading emissions control technologies. Japan has also been an early adopter of advanced thermal processing technologies, with the only two known commercial WTE plasma gasification plants in the world located in the country. By contrast, China, which accounts for roughly half of the MSW generated across Asia Pacific, is looking to upgrade its relatively immature waste management infrastructure. While the country is home to more than 100 WTE facilities the government aims to build 400 or more facilities over the next decade it relies on landfills for 85% of the MSW that is currently managed. These landfills are filling up quickly, which points to increasing investment in smart MSW technologies and strategies that promote diversion and energy recovery. 68

Asia Pacific, the No. 3 and fastest-growing regional smart MSW technology market by annual revenue in 2014, is forecast to generate $11.3 billion in cumulative revenue between 2014 and 2023. Revenue is more evenly allocated across segments than in North America and Western Europe, with smart energy recovery ($7.0 billion) and smart disposal ($2.6 billion) representing 85% of the smart MSW technology market in Asia Pacific. Chart 5.11 Annual Smart MSW Technology Revenue by Segment, Asia Pacific: 2014-2023 $2,500 $2,000 Smart Collection Smart Processing Smart Energy Recovery Smart Disposal Smart MSW 30% 25% ($ Millions) $1,500 $1,000 $500 20% 15% 10% 5% (Smart MSW Share) $- 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0% (Source: Navigant Research) 5.5 Conclusions and Recommendations The smart MSW technology market remains highly dynamic, with significant upside potential across all phases of the MSW management value chain. Although Navigant Research estimates that 43% of the MSW generated globally is handled by smart technology at some point along the chain of command, the penetration of smart MSW technologies is just scratching the surface across all regions. Increased adoption of these technologies remains highly dependent on stable and strong policies driving alternatives to landfilling and available capital to drive investment in emerging technologies. Globally, the smart energy recovery segment is expected to be the most lucrative segment within the smart MSW technology market. The wide availability of commercially viable technologies (e.g., incineration and anaerobic digestion) and increasing interest in renewable energy solutions across all global regions will drive growth in that segment. 69

North America, Western Europe, and Asia Pacific remain the most mature smart MSW technology markets globally. Western Europe, which faces limited space for landfills, strong regulations driving diversion, high energy prices, and strong incentives for the adoption of renewables, is expected to be the most diverse smart MSW technology market over the forecast period. Asia Pacific will see a dramatic increase in revenue from the energy recovery and disposal segments as countries like China and India grapple with increasing volumes of MSW. Finally, smart MSW technology revenue in North America is projected to be highly concentrated in the energy recovery segment of the market as advanced gasification and W2F technologies continue gain commercial viability. 70

Section 6 COMPANY DIRECTORY Air Products 7201 Hamilton Boulevard Allentown, PA 18195, USA www.airproducts.com +1.610.481.4911 Beijing Capital Group Co., Ltd. 15/F, Capital Group Plaza No. 6 Chaoyangmen North Street Dongcheng District Beijing, 100027, China www.bjcapital.com +86.10.5838.5566 Bulk Handling Systems 3592 West 5 th Avenue Eugene, OR 97402, USA www.bulkhandlingsystems.com +1.541.485.0999 China Everbright International Ltd. Far East Finance Centre, Room 2703, 27/F 16 Harcourt Road Hong Kong www.ebchinaintl.com +852.2804.1886 Covanta Holding Corp. 445 South Street Morristown, NJ 07960, USA www.covanta.com +1.862.345.5000 Enerkem 1130 Sherbrooke Street West, Suite 1500 Montreal, Quebec H3A 2M8, Canada www.enerkem.com +1.514.875.0284 Envac AB Fleminggatan 7, 3 tr SE-112 26, Stockholm, Sweden www.envacgroup.com +46.8.785.00.10 Fiberight LLC PO Box 21171 Catonsville, MD 21228, USA www.fiberight.com +1.800.728.9886 Harvest Power 221 Crescent Street, Suite 402 Waltham, MA 02453, USA www.harvestpower.com +1.781.314.9500 HID Global 15370 Barranca Parkway Irvine, CA 92618, USA www.hidglobal.com +1.949.732.2000 Inashco Petroleumweg 32 D 3196 KD Rotterdam, Netherlands www.inashco.com +31.10.240.26.20 Leidos, Inc. 11951 Freedom Drive Reston, VA 20190, USA www.leidos.com +1.571.526.6000 71

MBA Polymers Sandy Lane Worksop Nottinghamshire, S80 3ET, United Kingdom www.mbapolymers.com +44.1909.504900 Progressive Waste Solutions 400 Applewood Crescent Vaughan, Ontario L4K 0C3, Canada www.progressivewaste.com +1.905.532.7510 Remondis SE & Co. KG Brunnenstr. 138 44536 Lunen, Germany www.remondis.com +49.2306.106.0 Republic Services 18500 Allied Way Phoenix, AZ 85054, USA www.republicservices.com +1.480.627.2700 Rockwell Automation 1201 South 2 nd Street Milwaukee, WI 53204, USA www.rockwellautomation.com +1.414.382.2000 Ros Roca Environment SL Av. Cervera s/n Apartado de Correos 31 Tarrega, 25300, Spain www.rosrocaenvironment.com +34.97.350.81.00 Sims Metal Management Ltd. 16 West 22 nd Street New York, NY 10010, USA www.simsmm.com +1.212.604.0710 Solena Fuels 1000 Potomac Street, NW Suite 301 Washington, D.C. 20007, USA www.solenafuels.com +1.202.682.2405 Suez Environnement Tour CB21 16 place de l Iris Cedex, Paris 92040, France www.suez-environnement.com +33.1.58.81.20.00 Tana Oy Haapaniementie 1 FI-40801 Vaajakoski, Finland www.tana.fi +358.20.7290.240 Veolia Environmental Services 36/38 Avenue Kléber 75116 Paris, France www.veolia.com +33.1.71.75.00.00 Waste Connections 3 Waterway Square, #110 The Woodlands, TX 77380, USA www.wasteconnections.com +1.832.442.2200 Waste Management 1001 Fannin, Suite 4000 Houston, TX 77002, USA www.wm.com +1.713.512.6200 Wheelabrator Technologies Inc. 4 Liberty Lane West Hampton, NH 03842, USA www.wheelabratortechnologies.com +1.800.682.0026 72

Section 7 ACRONYM AND ABBREVIATION LIST 28 Member States of the European Union... EU-28 Acrylonitrile Butadiene Styrene... ABS Advanced Thermal Recycling... ATR Anaerobic Digester... AD Billion Cubic Feet per Year... BCFY Billion Gallons per Year... BGY British Thermal Unit... Btu Bulk Handling Systems... BHS Carbon Dioxide... CO 2 Clean Development Mechanism... CDM Combined Heat and Power... CHP Compound Annual Growth Rate... CAGR Compressed Natural Gas... CNG Degrees Celsius... C Degrees Fahrenheit... F Electronic Waste... e-waste End-of-Life... EOL European Union... EU Fluidized Bed... FB General Packet Radio Service... GPRS Gigawatt... GW Global Positioning System... GPS Greenhouse Gas... GHG 73

Gross National Income... GNI High Heating Value... HHV High-Density Polyethylene... HDPE High-Impact Polystyrene... HIPS Information Technology... IT Internal Combustion Engine... ICE Joint Venture... JV Kilogram... kg Landfill Gas... LFG Landfill Gas-to-Energy... LFGTE Liquefied Natural Gas... LNG Low Carbon Fuel Standard (California)... LCFS Material Recovery Facility... MRF Mechanical Biological Treatment... MBT Megawatt... MW Megawatt-Hour... MWh Millimeter... mm Million Gallons per Year... MGY Million Metric Tons of Carbon Dioxide Equivalent... MtCO 2 e Municipal Solid Waste... MSW Not in My Backyard... NIMBY Pay-as-You-Throw... PAYT Photovoltaic... PV Polypropylene... PP Pounds per Square Inch Gauge... psig 74

Quarter... Q Radio Frequency Identification... RFID Refuse-Derived Fuel... RDF Renewable Energy Directive (European Union)... RED Renewable Fuel Standard (United States)... RFS Renewable Fuel Standard 2 (United States)... RFS2 Renewable Identification Number... RIN Renewable Natural Gas... RNG Research and Development... R&D Science Applications International Corp.... SAIC Small and Medium Enterprise... SME Solid Recovered Fuel... SRF Synthetic Gas... syngas Terawatt-Hour... TWh United Kingdom... U.K. United Nations... UN United States... U.S. Waste-to-Energy... WTE Waste-to-Fuels... W2F 75

Section 8 TABLE OF CONTENTS Section 1... 1 Executive Summary... 1 1.1 The Evolving MSW Management Market... 1 1.2 The Smart MSW Technology Opportunity... 1 1.3 Smart MSW Technology Market Trends... 2 1.4 Market Forecasts... 3 Section 2... 5 Market Issues... 5 2.1 The MSW Opportunity... 5 2.1.1 Understanding Waste Streams... 5 2.1.2 Global MSW Generation... 6 2.1.3 Regional MSW Composition... 7 2.1.4 MSW, Urbanization, and Rising Levels of Affluence... 8 2.1.4.1 Urbanization and Waste Generation... 9 2.1.4.2 The Rise of the Global Middle Class... 10 2.1.4.3 Megacities: A Super-Sized Challenge... 10 2.2 Defining the Smart MSW Management Value Chain... 12 2.2.1 Low-Income Country Value Chain... 14 2.2.2 Low- and Upper-Middle-Income Country Value Chain... 14 2.2.3 High-Income Country Value Chain... 14 2.3 Market Drivers... 14 2.3.1 Public Health and Environmental Security... 14 2.3.2 Urbanization and Sprawl... 15 76

2.3.3 MSW as a Strategic Resource... 15 2.3.3.1 A Negative Cost Feedstock... 16 2.3.3.2 The Rise of Landfill Mining... 16 2.4 Market Challenges... 16 2.4.1 Waste Composition... 16 2.4.2 Out-of-Sight, Out-of-Mind... 17 2.4.3 Not in My Backyard... 17 2.4.4 Cost... 18 2.4.5 Policy Uncertainty... 20 2.4.5.1 Climate Change and GHG Regulation... 20 2.4.5.2 Evolving Waste Management Policies... 20 2.4.6 Shale Gas... 20 2.5 An Emerging Policy Framework... 21 2.5.1 The Waste Management Hierarchy... 21 2.5.2 Zero Waste Initiatives... 22 2.5.3 Incentives... 23 2.5.3.1 Landfill Taxes... 23 2.5.3.2 Pay-as-You-Throw... 23 2.5.4 Energy Recovery... 24 2.5.4.1 Renewable Power and Thermal Targets... 25 2.5.4.2 Next-Generation Fuels... 26 Section 3... 28 Technology Issues... 28 3.1 MSW Innovations... 28 3.2 Smart Collection... 29 77

3.2.1 RFID Technology... 29 3.2.1.1 RFID and PAYT Programs... 29 3.2.1.2 Internet of Garbage Cans... 29 3.2.1.3 RFID and Waste Sorting... 30 3.2.2 GPS Routing Systems and Data Analytics... 30 3.2.3 Vacuum (Pneumatic) Systems... 30 3.2.4 Fuel Switching... 31 3.3 Smart Processing... 31 3.3.1 Advanced MRFs... 32 3.3.2 Mechanical Biological Treatment... 32 3.3.3 RDF Facilities... 32 3.4 Smart Energy Recovery... 33 3.4.1 WTE... 33 3.4.1.1 Incineration... 34 3.4.1.1.1. Incineration Variants... 36 3.4.1.1.2. Advanced Thermal Recycling... 36 3.4.1.2 Biological Treatment... 36 3.4.1.2.1. Direct Use... 37 3.4.1.2.2. Electricity Generation... 37 3.4.1.2.3. Vehicular Use... 38 3.4.1.3 Advanced Thermal Treatment... 38 3.4.1.3.1. Gasification... 39 3.4.1.3.2. Pyrolysis... 39 3.4.1.3.3. Plasma Arc Gasification... 39 3.4.2 W2F... 39 78

3.5 Smart Disposal... 40 3.5.1 Sanitary Landfills... 40 3.5.2 Bioreactor Landfills... 41 3.5.3 Landfill and Solar Integration... 41 Section 4... 43 Key Industry Players... 43 4.1 Integrated Waste Management Players... 43 4.1.1 Beijing Capital Group Company... 43 4.1.2 Republic Services... 43 4.1.3 Suez Environnement... 44 4.1.4 Veolia Environmental Services... 45 4.1.5 Waste Management... 45 4.1.6 Other Integrated Waste Management Players... 47 4.2 Specialized Waste Management Technology and Solutions Players... 47 4.2.1 Covanta Holding Corp.... 48 4.2.2 Enerkem... 48 4.2.3 Envac Group... 49 4.2.4 Fiberight... 49 4.2.5 Harvest Power... 50 4.2.6 Inashco... 50 4.2.7 Leidos... 51 4.2.8 MBA Polymers... 52 4.2.9 Rockwell Automation... 53 4.2.10 Ros Roca Environment... 53 4.2.11 Sims Metal Management... 54 79

4.2.12 Solena Fuels... 54 4.2.13 Wheelabrator Technologies... 55 4.2.14 Other Technology and Solutions Players... 56 Section 5... 57 Market Forecasts... 57 5.1 Smart MSW Technology Market Overview... 57 5.2 Forecast Assumptions... 58 5.3 Smart MSW Technology Forecasts by Segment... 60 5.3.1 Smart Collection... 60 5.3.2 Smart Processing... 61 5.3.3 Smart Energy Recovery... 62 5.3.4 Smart Disposal... 63 5.4 Smart MSW Technology Forecasts by Region... 65 5.4.1 North America... 65 5.4.2 Western Europe... 67 5.4.3 Asia Pacific... 68 5.5 Conclusions and Recommendations... 69 Section 6... 71 Company Directory... 71 Section 7... 73 Acronym and Abbreviation List... 73 Section 8... 76 Table of Contents... 76 Section 9... 82 Table of Charts and Figures... 82 80

Section 10... 84 Scope of Study... 84 Sources and Methodology... 84 Notes... 85 81

Section 9 TABLE OF CHARTS AND FIGURES Chart 1.1 Cumulative Smart MSW Technology Revenue by Region, World Markets: 2014-2023... 3 Chart 2.1 MSW Generation Volume Share by Region, World Markets: 2014-2023... 7 Chart 2.2 MSW Composition by Country, Select Markets: 2012... 8 Chart 2.3 Waste Generation per Capita to Gross National Income Ratio, World Markets: 2014... 10 Chart 2.4 Typical MSW Disposal Methods by Country Type, Representative Markets: 2012... 13 Chart 2.5 Volume of Biofuels Supply Targets by Key Markets, World Markets: 2014-2023... 27 Chart 3.1 WTE Incineration Plant Market Share by Region, World Markets: 2013... 34 Chart 3.2 RNG Production by Region, World Markets: 2014-2023... 38 Chart 5.1 Annual MSW under Smart Management by Region, World Markets: 2014-2023... 57 Chart 5.2 Annual New MSW Management Revenue by Technology Type, World Markets: 2014-2023... 58 Chart 5.3 Annual Smart MSW Technology Revenue by Segment, World Markets: 2014-2023... 60 Chart 5.4 Annual Smart Collection Revenue by Region, World Markets: 2014-2023... 61 Chart 5.5 Annual Smart Processing Revenue by Region, World Markets: 2014-2023... 62 Chart 5.6 Annual Smart Energy Recovery Revenue by Region, World Markets: 2014-2023... 63 Chart 5.7 Annual Smart Disposal Revenue by Region, World Markets: 2014-2023... 64 Chart 5.8 Cumulative Smart MSW Technology Revenue by Region, World Markets: 2014-2023... 65 Chart 5.9 Annual Smart MSW Technology Revenue by Segment, North America: 2014-2023... 66 Chart 5.10 Annual Smart MSW Technology Revenue by Segment, Western Europe: 2014-2023... 67 Chart 5.11 Annual Smart MSW Technology Revenue by Segment, Asia Pacific: 2014-2023... 69 Figure 2.1 Percentage of Population at Mid-Year Residing in Urban Areas by Region: 1950-2030... 9 Figure 2.2 Map of World s Megacities: 2006... 11 Figure 2.3 MSW Management Value Chain... 12 82

Figure 2.4 Artist s Rendering of Amagerforbraending Facility... 18 Figure 2.5 Waste Management Hierarchy... 21 Figure 3.1 Smart MSW Technology Landscape... 28 Figure 3.2 WTE Incineration Diagram... 35 Table 2.1 Estimated Solid Waste Management Costs by Disposal Method, World Markets: 2012... 19 Table 2.2 Waste Power and Thermal Policy Targets by Country, World Markets: 2014... 25 Table 3.1 Commercialization Status of Energy Recovery Technologies, World Markets... 34 Table 3.2 Biogas Utilization Efficiency in Conversion Technologies... 37 Table 3.3 W2F Commercial Biorefinery Projects, World Markets: 2014... 40 Table 3.4 LFG Collection Efficiencies by Landfill Type... 41 Table 4.1 Other Integrated Waste Management Companies... 47 Table 4.2 Other Integrated Waste Management Players... 56 83

Section 10 SCOPE OF STUDY Navigant Research has prepared this report to provide direct and interested stakeholders with market forecasts and analysis for the smart MSW technology market. The report covers key economic, business, and social drivers, as well as technology issues, regulatory factors, and the competitive landscape, related to smart MSW technologies. This analysis focuses on four technology segments within the MSW value chain: smart collection, smart processing, smart energy recovery, and smart disposal. The report s purpose is not to provide an exhaustive technical assessment of smart MSW technologies. Rather, it offers a strategic qualitative assessment of current market positioning and issues that global stakeholders face, as well as a quantitative assessment of the market. Navigant Research strives to identify and examine new market segments to aid its readers in the development of their business models. All major global regions are included and the forecast period extends through 2023. SOURCES AND METHODOLOGY Navigant Research s industry analysts utilize a variety of research sources in preparing Research Reports. The key component of Navigant Research s analysis is primary research gained from phone and in-person interviews with industry leaders including executives, engineers, and marketing professionals. Analysts are diligent in ensuring that they speak with representatives from every part of the value chain, including but not limited to technology companies, utilities and other service providers, industry associations, government agencies, and the investment community. Additional analysis includes secondary research conducted by Navigant Research s analysts and its staff of research assistants. Where applicable, all secondary research sources are appropriately cited within this report. These primary and secondary research sources, combined with the analyst s industry expertise, are synthesized into the qualitative and quantitative analysis presented in Navigant Research s reports. Great care is taken in making sure that all analysis is well-supported by facts, but where the facts are unknown and assumptions must be made, analysts document their assumptions and are prepared to explain their methodology, both within the body of a report and in direct conversations with clients. Navigant Research is a market research group whose goal is to present an objective, unbiased view of market opportunities within its coverage areas. Navigant Research is not beholden to any special interests and is thus able to offer clear, actionable advice to help clients succeed in the industry, unfettered by technology hype, political agendas, or emotional factors that are inherent in cleantech markets. 84

NOTES CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value) (1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2014 U.S. dollars unless otherwise noted. Percentages may not add up to 100 due to rounding. 85

Published 2Q 2014 2014 Navigant Consulting, Inc. 1320 Pearl Street, Suite 300 Boulder, CO 80302 USA Tel: +1.303.997.7609 http://www.navigantresearch.com Navigant Research has provided the information in this publication for informational purposes only. The information has been obtained from sources believed to be reliable; however, Navigant Research does not make any express or implied warranty or representation concerning such information. Any market forecasts or predictions contained in the publication reflect Navigant Research s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in the publication. Navigant, and its subsidiaries and affiliates hereby disclaim liability for any loss or damage caused by errors or omissions in this publication. Any reference to a specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply an endorsement, recommendation, or favoring by Navigant Research. This publication is intended for the sole and exclusive use of the original purchaser. No part of this publication may be reproduced, stored in a retrieval system, distributed or transmitted in any form or by any means, electronic or otherwise, including use in any public or private offering, without the prior written permission of Navigant Consulting, Inc., Chicago, Illinois, USA. Note: Government data and other data obtained from public sources found in this report are not protected by copyright or intellectual property claims. 86