From state to state: Australia’s thermal energy from waste policy landscape

6 July 2021

Energy from waste (EfW), also known as waste to energy, refers to the family of technologies and methods that process residual materials, turning them into energy.

EfW technology offers tried and tested solutions for maximising the value of residual materials only, as long as the waste management hierarchy is adhered to – which states that energy recovery should only be applied when avoidance, re-use and recycling options are unsuitable or unviable. Yet even as we progress towards a circular economy, there will be industrial processes that create residual materials. Arguably it is better to cycle these resources back through the economy and maximise their value through energy recovery, as opposed to landfilling.

The thermal EfW sector is well-established in Europe, and projects have been widely implemented in the United States, as well as Singapore and particularly Japan in Southeast Asia. In Australia, interest in energy recovery is growing. Australian government green bank, the Clean Energy Finance Corporation (CEFC), recently identified a potential infrastructure pipeline of projects worth A$4-7.8 billion across recycling, bioenergy and waste, and thermal energy recovery.

Despite its economic opportunities and potential to support more efficient resource use, thermal energy recovery – distinct from biological EfW processes such as anaerobic digestion – remains controversial in Australia. To date, only a handful of proposals have reached financial close. Meanwhile, we are still sending volumes of residual material – 27 million tonnes in 2017-18 – to landfills, which, along with biological emissions and incineration, emitted more than nine (9) million tonnes of CO2 equivalent in 2017-18. What is going on?

Waste policy disharmony creates barriers to thermal EfW investment in Australia

Lack of long-term policy certainty and regulatory inconsistency in the EfW space among the states and territories is a major barrier to investment. In 2020, the Commonwealth’s Committee on Industry, Innovation, Science and Resources acknowledged the lack of national policy clarity on EfW, as well as waste and resource recovery (WARR) governance in general, as problematic. Thermal EfW is not permitted in the ACT and guidance is yet to emerge from the Northern Territory or Tasmania; however, policy frameworks do exist in all other states.

In terms of how they fit within the states’ overarching waste strategies, the most cohesive and forward-looking EfW frameworks are in South Australia and Queensland. However, Western Australia’s supportive policy approach has seen it attract the most investment, and its EfW sector is the most advanced at present.

South Australia’s Thermal energy from waste (EfW) activities position statement

Published in April 2020, EPA South Australia’s EfW position statement is currently Australia’s most workable EfW policy approach in terms of how it complements the state’s existing WARR targets.

Nested within existing policy on waste management and resource recovery – that being South Australia’s Waste Strategy 2015–2020 – the statement is aligned with European best practice and covers thermal EfW. It also reiterates South Australia’s existing Standard for the production and use of Refuse Derived Fuel (RDF).

The South Australian framework for EfW safeguards the higher order resource recovery practices of the waste management hierarchy. The policy is laid out within the context of South Australia’s requisite kerbside waste source separation practices. To further ensure that thermal EfW plants in South Australia treat only residual waste, a condition of project approval is that proponents demonstrate a genuine and ongoing lack of alternative markets for feedstock materials. In addition, EfW facilities must demonstrate a R1 Indicator of 0.65 or greater regarding energy recovery. This is calculated by the European Union’s R1 Energy Efficiency Formula, which is the internationally-accepted benchmark for thermal combustion energy recovery facilities.

In terms of social license, thermal EfW project proponents in South Australia must develop dedicated communications strategies and engage in respectful and “genuine dialogue” with local communities. Moreover, facilities must continuously monitor air emissions for key particulates and chemical compounds, with the resulting data made publicly available in real time. Again, this is consistent with international best practice.

Queensland’s Energy from Waste Policy

The Queensland Government’s Energy from Waste Policy released in June 2020 is a comprehensive policy, covering biological, chemical, mechanical and thermal EfW technologies. Similar to South Australia’s position statement, the policy fits within the zero waste vision of Queensland’s Waste Management and Resource Recovery Strategy. Notably, it does not incentivise EfW, but rather aims to provide industry certainty while ensuring new facilities are in Queenslanders’ best interests.

Queensland’s EfW policy also borrows from European benchmarks and refers to the waste management hierarchy in determining that only residual materials can be used for energy recovery. Residual waste is defined as materials that are not technically, environmentally and economically practical (TEEP) for reuse or recycling. Waste considered ‘TEEP’, will adapt over time alongside changing material streams, and as Queensland seeks to minimise ‘waste’.

As well as proving that proposed facilities will meet or exceed the R1 energy efficiency threshold of 0.65, EfW proponents in Queensland must demonstrate genuine and proactive community engagement when lodging an application.

Western Australia’s Position statement on waste to energy: Getting our WasteSorted

In September 2020, the Government of Western Australia’s Waste Authority released revised guidance on EfW. The new Position statement on waste to energy: Getting our WasteSorted follows Western Australia’s 2019 Waste avoidance and resource recovery strategy 2030, and replaces the Waste to Energy Position Statement (Thermal Treatment) 2013.

The Waste Authority’s new position statement references circular economy principles and European EfW standards, including the R1 Indicator for energy efficiency. It recognises the importance of community engagement and social license to operate with regards to new EfW proposals. This latest guidance also recommends continuous monitoring of emissions wherever possible and requires that EfW plants process only residual materials from 2020 onwards. The definition of “genuinely residual” waste is variable and depends on the local availability of material recovery and recycling options, as these vary between different regions of Western Australia.

Western Australia’s EfW framework has been the most enabling for project developers to date, with two (2) large-scale thermal combustion projects currently under construction near Perth. Avertas Energy in Kwinana and the East Rockingham Waste to Energy Facility will together process 700,000 tonnes of residual materials annually. Both projects are working with Blue Phoenix Group, a company that develops technologies for processing incinerator bottom ash (IBA) in order for this by-product to be repurposed. IBA has been applied overseas to diverse applications, including construction material in roads, buildings and even electronics. Such innovations are key in unlocking the full potential of thermal EfW to support more sustainable and efficient WARR practices.

Recycling Victoria: A new economy and the draft Waste to energy framework

The overarching policy for thermal EfW in Victoria is outlined by the Department of Environment, Land, Water and Planning’s (DELWP) Recycling Victoria: A new economy, the state’s ten (10)-year policy and action plan for waste and recycling published in February 2020. DELWP also recently released its draft Waste to energy framework, which operationalises the EfW section of this overarching policy.

Recycling Victoria recognises the potential of thermal EfW, in concert with other waste management and resource recovery activities such as recycling, to support economic growth and Victoria’s circular economy transition. To safeguard the waste management hierarchy, Recycling Victoria commits to a waste to energy ‘cap’. Designed to prevent overinvestment in thermal EfW, the cap imposes a one (1) million tonne annual limit on the volume of residual material that can be thermally treated for energy recovery in Victoria up to 2040 (however there is no commensurate cap on how much material can be landfilled).

The draft Waste to energy framework provides clarity on the cap, specifying that it will apply only to thermal EfW (and not to landfill gas recovery or biological EfW projects), and that feedstock volumes of facilities approved or operational before the release of this draft framework on 28 June 2021 will be exempt. The framework defines “permitted waste” that can be used for thermal energy recovery within the cap as “truly residual wastes for which no further recycling or sorting… is possible”.

While the draft does not mention energy efficiency requirements, these are foreshadowed by Recycling Victoria, which stipulates that thermal EfW projects in the state must “meet best-practice energy efficiency standards” – for which the R1 Indicator is globally recognised. Recycling Victoria also emphasises the need for project proponents to secure a social license to operate from local communities in order to gain approval.

Victoria’s draft Waste to energy framework is open for targeted consultation until Sunday, 8 August 2021.

New South Wales

In June 2021 the NSW EPA released the updated policy on thermal EfW in New South Wales, the NSW Energy from Waste (EfW) Policy Statement. This new document is the state’s third iteration policy on EfW, and was developed in response to the recommendations of the Chief Scientist and Engineer’s 2020 Energy from Waste Report.

With this new version, the NSW EPA aims firstly to ensure that EfW projects developed in the state meet and exceed world best practice standards for air emissions, and secondly to provide regulatory clarity to industry and communities.

The policy promotes source separation and emphasises that only residual materials leftover after genuine resource recovery operations can be used as thermal EfW feedstock, which is in line with world best practice and the waste management hierarchy. The requirement that facilities demonstrate that at least 25% of energy generated is captured as electricity, and any residual heat is recovered as far as practicable, is also in line with the globally recognised R1 Indicator of 0.65.

During the consultation period, WMRR emphasised some potential difficulties regarding the then-draft statement’s monitoring requirements for air emissions standards. Air emissions limits – though stringent – may be achievable, however the requirement that facilities keep key chemical compound and particulate levels within these strict thresholds continuously, every hour, poses significant challenges. These requirements moreover deviate from international best practice in Europe and elsewhere, where concentrations are measured and reported continuously as half-hour and 24-hour averages and therefore allow for unplanned operational upsets that may result in exceedances within acceptable limits for short periods of time. Further, there is a lack of clarity at present as to how these strict monitoring requirements will be enforced, with new text added to the policy indicating that the NSW EPA may apply different limits to individual facilities on a case-by-case basis.

In its submission to the NSW EPA’s draft policy statement, WMRR highlighted the need for specification of ‘Other Than Normal Operating Conditions’ (OTNOC). This was also a recommendation of the Chief Scientist and Engineer’s 2020 report. Yet a framework for OTNOC remains noticeably absent from the finalised Energy from Waste (EfW) policy statement. Instead, the NSW EPA intends to apply OTNOC provisions to specific projects individually as part of the licensing process.

Despite the significant challenges posed to thermal EfW project proponents in NSW by this latest policy, Stage One (1) of the NSW Department of Planning, Industry and Environment’s (DPIE) Waste and Sustainable Material Strategy 2041 does acknowledge the role of thermal EfW in reducing emissions and diverting waste from landfill. The NSW government is also creating regional circular precincts that incorporate energy recovery facilities, such as the Parkes Special Activation Precinct.

Towards State and Territory consensus on a nationally coordinated policy framework for EfW

In 2020, the Commonwealth Standing Committee on Industry, Innovation, Science and Resources released a report in which they recognised the need for a national framework to drive long-term regulatory and policy certainty across all areas of material management. Such an approach is certainly needed in the thermal EfW space.

States that pursue overly stringent, inflexible or unclear approaches to thermal EfW governance risk driving investors into jurisdictions with more favourable policy landscapes and greater regulatory clarity. These states will lose out on the economic opportunities presented by EfW, and moreover risk locking in unsustainable material management practices such as landfilling.

However, to secure longer-term circular economy and net zero goals, favourable EfW investment conditions must be accompanied by sensible regulatory approaches. This calls for an overarching systems-based approach to WARR governance underpinned by the waste management hierarchy. Such an approach, as is the standard in Europe, aligns EfW policy frameworks with higher order material recovery safeguards, such as mandatory source separation. This ensures that, whatever their material makeup, EfW feedstocks are genuinely residual waste. Regulation should moreover permit and encourage research and development into emerging innovations in improved material re-use – such as repurposing IBA for use in roads and other construction projects.

There is possibly also a need to move beyond contentions that only large-scale energy recovery with annual feedstocks of more than 200,000 tonnes per annum are commercially viable. Industry and governments should rather look to more flexible and innovative approaches that promote a greater diversity of project proponents and allow the thermal recovery of energy from smaller waste streams.

In all of this, it is important to remain realistic. While the goal of a ‘zero waste’ society is something to aspire to, it remains undoubtedly elusive as demonstrated by the more advanced waste management systems of Europe and abroad. It is precisely because there will always be some volume of residual waste – even in a circular economy – that we must work now to thoughtfully carve out a role for EfW in Australia’s states and territories that can support efficient material management within an integrated, systems-based national WARR policy framework.