Carbon costs of waste revealed: the Hyder figures behind the Gov’s CPRS decisions

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The Hyder Consulting Assessment of Landfill Legacy Issues, commissioned by the Federal Government to help guide the design of its Carbon Pollution Reduction Scheme, is for the first time being made public. Considering a range of possible scenarios, it puts a dollar figure on the likely costs of carbon emissions from legacy waste – and they are lower than many pundits might have expected.

A landfill that opened in 1980, receives 400,000t of mixed waste annually and is scheduled to close in 2015 (five years after emission trading kicks off) would need to apply a surcharge of between $7.73 and $13.74 per tonne of waste to cover its future carbon liabilities, depending on which state it is in.

These figures assume a carbon permit price of $20/tonne, 60% gas capture at the site, and a 10% discount rate. If the cost of carbon permits rises to $40/tonne, the required surcharge would also need to be doubled.

Using the same assumptions and looking at the same sized facility, but one which opens as emission trading kicks off in 2010 and has no legacy waste to worry about, Hyder says it would need to impose a surcharge of $2.89-$4.95 per tonne to cover future carbon costs.

The man behind the numbers, Hyder’s Dr Ron Wainberg, says the figures put “an order of magnitude” on carbon costs, but he stresses there are large differences between individual landfills and each site needs to be considered individually.

Hyder modelled three scenarios for its theoretical large landfill, which was located in WA, NSW or Victoria. As well as the above situations where the sites have the opportunity to pass on carbon costs, it also considered a situation where the site opens in 1975 and closes in 2010, with no opportunity to recover carbon costs from its customers.

Assuming carbon permits cost $20/tonne, the site would close with a $33.6 million carbon liability if it was located in WA, $43 million if in Victoria, and $55.5 million if in NSW. The figure can change dramatically, however, depending on how the site is managed.

“The impact of gas capture is really significant. You put in just mediocre gas capture and it brings [carbon liabilities] back,” says Wainberg.

The modelling shows a site taking 400,000t/yr from 1975 to 2010, with no gas capture, would remain above the government’s 25,000 tonne CO2e threshold until 2076 if it was located in WA, 2071 in Victoria and 2069 in NSW.

But installing gas capture radically reduces liability timeframes and costs. In the same scenario, but assuming 60% gas capture (which Hyder considers average), emissions remain above the threshold until 2045, 2051 and 2045 respectively.

At ‘best practice’ 75% gas capture, emissions fall below 25,000t in 2032, 2038 and 2036 respectively.

Wainberg’s take home message for landfill operators is pretty obvious given these figures: “if you don’t have gas capture, start thinking about it – it can have an enormous impact.”

Weighing up the scale of emissions from legacy waste, the end goal of reducing greenhouse emissions, modelling which shows gas capture can massively reduce liabilities and figures that suggest operators should be able to relatively easily recover carbon costs if they remain open for five years after the CPRS legislation passes, Wainberg ultimately recommended legacy waste should not be indefinitely left outside the CPRS.

“[But] you can’t just suddenly throw a switch and expect people to get out there and collect landfill gas…you’ve got to give people a chance to do something about it,” says Wainberg.

This is why Hyder recommended operators be given until 2014 – five years after CPRS legislation passes – to prepare and install gas capture before legacy waste is covered under the scheme.

Clearly the government liked the idea, although its white paper suggests operators should be given a little extra time, excluding legacy emissions until 2018.

The full report is to be available for download off the government website in the near future, and Inside Waste will provide a link as soon as it is available. In the meantime, interested parties can email [email protected]

He will give the first public presentation of the results tomorrow at a WMAA Queensland breakfast meeting in Brisbane.