City landfill leaders sign deal to make mountain of money out of trash heap
Aug. 7, 2010 at 3:07 a.m.
The city of Victoria signed an agreement to sell methane gas produced from the bowels of its landfill.
Once operations begin, the landfill methane could earn the city a few hundred thousand dollars a year - and almost $1 million each year after nine years.
Selling renewable energy also comes with other possible benefits: Carbon credits. Once gas begins flowing to a Victoria plant, the city might additionally shop the credits it earns on the carbon market.
City environmental service leaders say this flow of gas, money and carbon credits could continue for a century and beyond, and help to extend the life of the landfill.
Mayor Will Armstrong calls the news monumental.
"I think, in a lot of ways, it is. It's a fantastic project," said Jerry James, the city's director of environmental services. "It puts us on the same tier as a number of other, bigger cities. We're taking a resource we have and creating income from it."
Decomposing trash releases methane gas, which is in full supply buried among more than 20 years of city garbage stacked 70 feet high.
The landfill, located in a remote area of southern Victoria County, releases enough methane gas to power 5,500 homes, or a quarter of all those in the county, each year.
Partly because the landfill is outside the city, costs to tie the gas into Victoria's power grid proved less cost-effective than piping it to a paying customer, James said.
The city signed a contract with Midland's Renovar Energy Corp., which will pay to build a plant at the landfill, tie into the gas and find a customer to buy it.
Renovar now is in talks with two Victoria manufacturing plants, one of which seems likely to buy the discounted gas to operate its boilers, James said.
This plant will also pay for a gas pipeline from the landfill to its location. It's the company's responsibility to determine a pipeline route and work with landowners if need be.
Per the deal, the city receives $110,000 in up front money from Renovar, as well as ongoing royalties. The money will remain with the landfill, but leaders say they're unsure how they'll spend or invest it.
Controlling monthly costs to city trash customers is one option.
While the city considers several deal options, one popular plan pays the city a few hundred thousand dollars in royalties the first few years and then $900,000 by year nine.
This plan is structured this way to let the manufacturer recoup its pipeline installation expense, which totals about $1 million a mile.
Royalties for the city will fluctuate, however, based on gas flow rate and percent methane, as well as natural gas prices.
Before gas flows to a plant, the city will first cap a portion of the landfill. The cap, paid for by municipal money set aside a long time ago, will keep water out of the trash and the gas buried in the heap.
"We have no additional investment in this project whatsoever," said Darryl Lesak, the city's assistant director of environmental services. "The rest is paid for by private companies."
Thirty landfill wells, drilled to varying depths, already tap into the gas, which is flared off and thus "cleaner" than releasing methane.
Each year, the flaring off of this gas releases 20,617 tons of carbon dioxide into the air, according to an Environmental Protection Agency calculator. That pollution is equal to the amount of carbon dioxide produced by 32,517 passenger vehicles.
By trapping and using the gas, however, the city hopes to improve air quality.
"We're a city that's on the bubble as far as non-attainment and ozone levels go," James said. "This will help."
By reducing to zero the greenhouse gas emissions from the gas flares, the city coffers might also get help in the form of carbon credits. The federal government assigns these credits, earned by reducing emissions such as carbon dioxide, a monetary value, and they can be sold and traded.
Because the landfill's methane production will likely increase over time - the more garbage added, the more decomposition occurs - these benefits could continue for 100 years and beyond.
"We'll be online in 20 months. That's our hope," Lesak said. "It's a good deal for the city now, and it's a good deal for the city for a long time to come."