Insights

INFRAREAD issue 11 | asia-pacific 16 Apr 2018 Waste-to-wealth initiatives: Examining policy settings in Asia-Pacific

The development of waste to energy (WtE) and other waste projects is usually dependent on a combination of environmental and public health policies and (sometimes) energy policies. Without the right policies being in place it is challenging to develop long-term waste projects. Local circumstances can greatly affect policy development – but increasingly a policy in one jurisdiction can affect other jurisdictions and wider markets.

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In this article,1 we outline some frequently used policy levers in the Asia-Pacific region and consider specific jurisdictions.2 For each jurisdiction, we consider the key policy levers used, landfill regulation and diversion, the environment for developing waste projects and, in some cases, the use of WtE projects to achieve environmental and public health outcomes. 

Our next article will consider material recovery facilities (MRFs), mechanical biological treatment (MBT) facilities, organic recovery facilities (ORF) and food and organics (FOGO) projects, including the responses to recent structural market changes affecting them. Our fifth article will outline the more frequently used policy levers in Europe, the Americas (Argentina, Brazil, Canada, Mexico, Peru, and the USA) and Africa. 

Policy is important but it can and will change

Policy is ever-present: The People's Republic of China (PRC) has recently changed its policy on the importation of recyclables.3 This policy change has affected waste projects which relied on exporting recyclables to the PRC, with the recycling industries in many jurisdictions now needing to consider how to respond to the structural change resulting from this policy change. In Australia, for example, container deposit schemes are being introduced in some states for the first time, with the policy objective of increasing levels of recycling, thereby diverting recyclables from landfill.4 In Europe and America, there is renewed focus on how best to combat the presence of plastics in our oceans and rivers.5 There is increasing recognition of the need for countries to work together to address the issue of plastics in our oceans.6 Thus, local and international policy underpins the waste sector in many ways.

Policy does not stand still: These recent "headline" policy developments illustrate that policies can and do change, and that a policy in one jurisdiction can have a significant impact on commercial interests in other jurisdictions. In our first and second Waste-to-Wealth articles, we noted the importance of change in law provisions in waste projects. The recent policy change in the PRC has resulted in owners and operators of waste projects (and MBTs and MRFs in particular) looking closely at the change in law provisions in their contracts. Why? The economics of many projects rely heavily upon the ability to sell recyclables into the PRC. Given the nature of the PRC policy change, structural change has arisen in some jurisdictions, forcing policy makers to consider again the importance of markets for recyclables.

As noted in our previous articles, the Waste Management Hierarchy (see Diagram 1) is the touchstone for environmental and public health policy initiatives around the world.7

Diagram 1: The Waste Management Hierarchy 

In our first Waste-to-Wealth article, we noted that legislative initiatives have sometimes underpinned the development of waste projects to achieve outcomes reflective of the Waste Management Hierarchy. The most significant of these is EC Council Directive 26 April 1999 (Directive 1999/31/EC). This was the catalyst in the European Union for government sponsored initiatives and regulatory policy settings aimed at diverting waste from landfill and facilitating investment in waste sorting, processing and treatment alternatives. In some form or another, the principles represented in the Waste Management Hierarchy have influenced the policy levers in each of the specific jurisdictions covered below.

In this article we consider the policies of the larger and more populous and still urbanising jurisdictions in Asia (the PRC, India, Indonesia, and the Philippines) and, as a point of different emphasis, Malaysia, which has high urbanisation levels, but still needs to respond to environmental and public health issues arising from waste.

Revisiting policy levers in Projects

Core policy drivers: Outlined in the table below are the key policy levers which are combined to allow WtE and other waste projects to be developed and to be economically sustainable. These include environmental and public health policy levers as well as energy policy levers which enable WtE projects to derive revenue (being Core Policy Drivers). In considering specific jurisdictions, we look at what we regard as the current dynamics in those jurisdictions, including, as appropriate, key policy levers used in these jurisdictions.

Implementation: The right mix of municipality powers and enforcement must exist to support and sustain the Core Policy Drivers. It is also important to recognise that policy implements change over time, not overnight, and that landfill still has a role to play.

Core Policy Drivers: Environmental and public health levers 

Environmental prohibitions prohibiting or reducing ocean dumping, prohibiting open dumping and prohibiting landfilling of specified waste streams. Regulation of this kind is prevalent across Asia-Pacific.
Environmental standards for landfill to address contamination, leeching into the water table and methane emissions. Regulation of this kind is typical across Asia-Pacific.
Environmental standards on emissions to limit emissions, contamination and residue disposal for waste projects. Regulation of emissions to air is increasingly prevalent across Asia-Pacific.
Co-ordinated approval and licensing process to allow timely and effective development. This is recognised as important, and has been introduced in the PRC, Indonesia and Malaysia.
Licensing for expansion of project over time to take advantage of increased waste arising in specific areas. This is permitted in most jurisdictions, but is a project-by-project issue.
Classification of waste to regulate how and where waste may be disposed of and to license receipt of waste. Classification of waste has become typical across Asia-Pacific.
Disposal of Hazardous Waste, Medical Waste and e-waste to divert from landfill to  specialist disposal to provide additional feedstock. As might be imagined, this is regulated across Asia-Pacific.
Specification of residue to regulate how and where residue may be disposed. This is increasingly regulated across Asia-Pacific.
Enforcement of approvals and regulation: as noted above, many of the key policies  to achieve beneficial environmental and public health outcomes are in place, but in some jurisdictions achieving those outcomes is dependent on enforcement.
Consistency of regulation and enforcement: Unless regulations are consistent and enforced across a jurisdiction, market forces will find a way to dispose of waste at the least cost and for the greatest profit, even in jurisdictions with developed waste collection systems.
 Core Policy Drivers: Energy drivers creating revenue opportunities 
Revenue from renewable energy generation under power purchase agreements, into market, under contracts for differences or the feed-in tariff (FiT) regime (or other regimes). While there are FiT (and other) regimes in place across Asia-Pacific, not all of them apply to WtE projects. Sale of power and heat to co-located businesses within development zones to promote smaller refining and paper businesses or to provide district heating. This is favoured in some jurisdictions, but is not widely used across Asia-Pacific. Allowing broader revenue opportunities including the development of land to enable sponsors to cross-subsidise WtE projects and other revenue streams. This is not used to any great extent across Asia-Pacific.
 Non-Core Policy Drivers
Revenue from particular waste generators such as C&IWand C&DW9 and particular waste streams, such as from shopping centres or malls. As yet this is not used across Asia-Pacific. Revenue from landfills to manage available landfill capacity over time, e.g. requiring a WtE project to take landfilled waste at a higher Gate Fee10 and methane off-take. In some Asia-Pacific jurisdictions methane is being captured. Revenue from government-sourced waste where municipalities are able and willing to pay, which may result in higher Gate Fees. As yet this is not used.
Large power users pay more for WtE energy to close revenue gap, but preventing material increase in power prices for all users. As yet this is not used on a regulated basis across Asia-Pacific. 
 
Government pays higher price for WtE energy to close revenue gap, but preventing material increase in power prices for all users. As yet this is not used on a regulated basis in Asia-Pacific jurisdictions other than where a government chooses to contract for energy supply.
 
Revenue from reusable and recycled products where there exists a sophisticated separation at source or pre-sort regime. This is a key policy outcome across Asia-Pacific.
 
 Levelling the playing field

Waste and landfill levies to incentivise more environmentally beneficial waste projects on a consistent basis across jurisdictions. In the Asia-Pacific region this policy lever is not prevalent.

Gap funding including government grants and subsidies to achieve environmentally beneficial outcomes using WtE projects. There are examples of gap funding, but it is not a policy lever that is prevalent across Asia-Pacific. Revenue from MSW11 processing and treatment including Gate Fees because municipalities choose WtE over landfill. This remains a policy decision to be taken at a micro-level, but as yet Gate Fees alone are not at a level to sustain WtE projects.

As we consider specific jurisdictions in the Asia-Pacific region, it is important to recognise that policy – and therefore law – is not fixed, nor should it be. Policy and law may need to change to respond to the needs of the specific jurisdiction over time. While it is important for each jurisdiction to be aware of private sector concerns in relation to investing in waste projects, it is as important for governments to review continuously and to put in place policies that respond to the particular circumstances of and within each jurisdiction, including recognising that implementing policies may take longer than anticipated. In this context, private sector participants who understand how to respond to changing circumstances will have a greater ability to respond to changing policies (including through contractual change in law provisions) over time. 

As such, the risk of change in law is important to the private sector investing in waste projects. If a project is to be project financed, debt and equity financiers will want to contract on the basis of economics that are sustainable for the term of the debt and which will allow equity its required return. For these purposes, debt and equity will want to understand the likely regulatory and enforcement prospects, in order to satisfy themselves that underlying costs and revenue remain relatively predictable.

Policy levers by jurisdiction — "Culture eats policy for breakfast"

Background and context

No one size fits all: Each jurisdiction in Asia-Pacific is unique. While we may identify common policy levers, if one looks closely, they are in fact different, in both form and substance. Each policy must be understood in the context of the specific jurisdiction as it has been developed to be responsive to, and to be implemented in, that particular jurisdiction.

Policy must recognise what is achievable: Adapting a truism from the world of business management ("Culture eats strategy for breakfast") so it is with policy: culture eats policy for breakfast. If a policy is not cognisant of the culture in which it is intended to work (in the sense of being achievable within a particular jurisdiction) then it will not work. 

Scale of Asia-Pacific: The Asia-Pacific region matters. At least one-third (and, by some estimates, up to 40 per cent) of the world's waste will be produced within the Asia-Pacific region by 2050, with the PRC, India and Indonesia likely to produce close to, if not more than, 70 per cent of the region's waste. The way in which these jurisdictions respond will be critical to the environmental outcomes and the health outcomes of their populations, as well as for the region and the world generally. 

Space does not permit us to cover each jurisdiction within the Asia-Pacific region, but we are currently preparing a "ready reckoner" of policy across the region, including for Bangladesh, Pakistan, Sri Lanka and Vietnam, as well as for Japan and South Korea. This will be available on the Ashurst website later this year. 

PRC

The PRC continues to experience rapid urbanisation,12 with a resulting increase in municipal solid waste (MSW): an estimated 180 to 200 million tonnes of MSW is collected annually, and there is also an informal waste collection industry collecting what is likely to be material quantities of MSW. The concentration of urbanisation in the PRC provides opportunities for more effective and efficient waste management and disposal, with the possibility of planning over the medium - and long-term for optimal waste collection and disposal. 

The PRC has been developing policy levers to respond to the production of increasing quantities of solid waste (including MSW) for some time. One of the reasons for the change in policy on the importation of recyclables is the desire to manage the waste arising within the PRC more effectively, and to allow effective waste recycling policies to be developed and to mature. As the population of the PRC urbanises and the standard of living continue to increase, so too does the volume of MSW (in both absolute and per capita terms) along with the pressure to dispose of that MSW. 

Landfill continues to be the predominant means of disposing of waste. While landfill may not be considered to be a viable option over the medium to long term, it is nevertheless an important part of the current waste disposal industry in the PRC. This will continue into the medium term. That said, landfill is increasingly regulated. In this context WtE projects are seen as the key alternative to landfill, with an ever-increasing number of WtE facilities being developed. 

With the development of WtE facilities has come a recognition that emissions from WtE facilities need to be controlled, and for this purpose emissions need to be regulated and the "right" WtE technology needs to be used. The two go hand-in-hand, with emissions (and the control of them) being a function of the pre-treatment of feedstock, efficient combustion and the control of flue gases, all of which are dependent on the WtE technology chosen. 

Emissions and their control is a solid waste issue, not just an MSW one. MSW is one of four major solid wastes produced in the PRC, the others being industrial solid waste (which may be regarded a sub-category of commercial and industrial waste), hazardous waste and agricultural waste. While all solid wastes give rise to environmental and health concerns, industrial solid waste is responsible for the greatest level of environmental degradation as its emissions degrade air quality. A challenge for the continued development of the WtE industry in the PRC is to distinguish itself from the production and treatment of industrial solid waste and its associated emissions. This will be possible through the use of thermal technologies that achieve more efficient combustion and that control flue gases and emissions generally. A particular challenge in this area arises because many municipalities prefer a direct procurement methodology for WtE technologies, and there are instances in which a lower (or the lowest) capital cost option has been preferred over more efficient and cleaner (principally, lower emission) technologies. 

More broadly still, waste disposal and waste management needs to be considered in the context of the targets for major pollutant emissions reductions (principally NOx and SOx)13 as part of the 13th Five Year Plan and the recently introduced Carbon Trading Scheme. This illustrates our general point that each policy needs to be considered and understood in the broader context. 

The challenge for the PRC is balancing its continued economic growth while at the same time ensuring the sustainability of that growth by avoiding or mitigating adverse environmental and health impacts of growth. This is a challenge for many jurisdictions across the Asia-Pacific region, but one that the PRC is particularly well placed to manage. 

The PRC is an excellent example of a jurisdiction that has recognised that there is no "one size fits all" approach and which does not have a "set and forget" set of policy solutions. The portfolio of policy levers being used by the PRC will continue to develop, including at provincial and municipal levels, in response to particular circumstances and needs.

India

India continues to experience strong economic growth, and, as a result, the volume of waste produced by the Indian population is increasing. As yet, the levels of urbanisation in India have not reached the levels in the PRC, but over time it is reasonable to expect that they will. India has recognised that the urban environment and urbanisation itself results in the production of solid waste,14 and that there is therefore a need to regulate those who generate waste. 

It is also clear that the continued growth of urban populations is contributing to the ever-increasing levels of MSW production in India. It is difficult to estimate the quantity of waste that is produced in the urban environment: estimates of MSW range from 62 to 80 million tonnes per year, of which approximately 50 to 55 million tonnes comes from the urban environment. It is estimated that up to 90 per cent of waste is open dumped or burned, rather than being disposed of in regulated (i.e. approved engineered/sanitary) landfill. (In passing, we consider that the estimates of waste arising in India are likely to underestimate materially the actual waste arising.)

Key legislation in India (critically, the Solid Waste Management Rules, 2016) recognises that, in the urban environment, a key policy objective is to allow the development of a system to promote the effective collection and recovery of reusable and recyclable solid waste from multiple sources of solid waste within that urban environment. This policy is intended to increase the quantity of solid waste that is collected (and, as a result, to reduce the quantity of solid waste not collected and which may give rise to environmental and health degradation). This policy recognises the existing interests of all participants in the urban environment including, importantly, the waste pickers. The policy thus recognises that the private sector in India has developed a sophisticated, but labour intensive, system for recovering reusable and recyclable materials from waste, and that it makes sense to make use of this system.15   

Given the composition of MSW (18 to 25 per cent (by mass) comprises waste capable of being recovered), making use of the waste pickers can only be part of the solution. The balance of waste comprises approximately 40 to 45 per cent organic fraction and 35 to 40 per cent inert fraction. The relatively high levels of organic and inert fractions, and the high recovery rates achieved by waste pickers, means that the calorific value of the MSW available for WtE projects in Indian cities is at the lower end of the calorific values required for efficient combustion using thermal WtE technologies. This is one of the reasons for the relatively low number of WtE projects in India. There are, of course, other reasons, the key one being that waste management systems in India are continuing to develop. If it were possible to implement source separation of the organic fraction having higher levels of moisture and the inert fraction, it could be possible to develop WtE projects on a consistent basis in India. 

In addition, and just as importantly, the key legislation recognises that implementation of waste management policy is a municipal and local issue within a national framework, thereby allowing appropriate responses to local conditions. The development of waste management systems in India is currently at a critical juncture. Given the estimated levels of unregulated disposal of MSW, engineered/sanitary landfill capacity needs to developed in the short - to medium-term, possibly with other solutions which divert waste from landfill, including WtE projects. 

Indonesia

As the third most populous country in the Asia-Pacific region, with increasing urbanisation (much of it on Java, the most populous island in the world) the way in which Indonesia responds to the environmental and health consequences of increasing levels of MSW may provide a blueprint for other jurisdictions around the world. 

As noted in our first Waste-to-Wealth article, it is estimated that Indonesia produces between 64 and 66 million tonnes of MSW a year. If all this MSW were collected it would provide the feedstock for 115 50MW WtE facilities, equivalent to one sixth of Indonesia's planned 35GW expansion of installed capacity by 2019. In response to this opportunity, the Ministry of Energy and Mineral Resources (MEMR) has developed a Waste to Energy Guidebook (MEMR Guidebook). The MEMR Guidebook provides an overview of both the waste industry in Indonesia and the prospective range of projects as well as providing a lot of useful information for any municipality wishing to develop a WtE project. In addition, the MEMR Guidebook is realistic in that it recognises that landfill remains an important part of Indonesia's waste management industry.

In the context of the PRC, India and Indonesia the challenge is to manage the calorific value of the MSW (or other feedstock) which is delivered to WtE projects: as referred to above in relation to India, the calorific value of the feedstock is a key consideration in the design of all WtE technologies. In each of the PRC, India and Indonesia the level of moisture in the MSW is critical: because of the nature of the organic fraction in the waste stream and because reusables and recyclables may have been removed (as is the case in India), the moisture level of the MSW is likely to be higher (i.e. it is wetter) and the MSW will have a lower calorific value. 

In Indonesia (as well as in the PRC and India) there is a need to balance the use of MSW that is wetter with the interests of existing stakeholders who remove some of the  higher calorific materials from the waste stream. Although this may result in the use of less thermally efficient WtE technologies it is not helpful to be dogmatic. It needs to be recognised that WtE projects are just a part of the broader waste management solution in Indonesia: as the MEMR Guidebook states, the most appropriate technology should be preferred, which is not necessarily the most thermally efficient. As a general statement and as a starting point, moving grate thermal technology is generally considered to be the most appropriate option, providing as it does a reasonably high level of flexibility to deal with variations in the composition of the MSW, a reasonably high level of efficiency, a proven track record, lower levels of emissions to air (flue gases) compared to some other thermal technologies, as well as reasonable capital and operating costs.

Diagram 2: The contractual framework for WtE under a PPP16

The key elements for any WtE project in Indonesia are the off-take agreement for power which is entered into with the Indonesian State-owned power utility PLN (the Power Purchase Agreement or PPA) and the supply of waste from the applicable municipality's sanitation agency or department. It is likely that the PPA will provide all (or most of) the revenue stream for the project company to develop the WtE project. It is less likely that the municipality's sanitation agency or department will pay the project company a Gate Fee for taking waste delivered by it, but the municipality may take an interest in the WtE facility. 

Under MEMR Regulation No. 50 of 2017 on the Utilisation of Renewable Energy Resources for Electricity Production (MEMR Regulation 50/2017), the feed-in tariffs (FiT) payable by PLN are based on Biaya Pokok Penyediaan Pembangkitan (BPP) (Basic Costs of Production), being PLN's costs in supplying electricity, excluding costs for electricity transmission and distribution. In this respect, PLN must refer to the BPP as the calculation threshold in purchasing renewable electricity. The BPP comprises: (i) Local BPP based on the location of the relevant power plant (Local BPP); and (ii) National BPP based on the average of all Local BPP (National BPP). The Local and National BPPs applicable from 1 April 2018 until 31 March 2019 are set out in MEMR Decree No. 1772 K/20/MEM/2018.

For power plants powered by waste (PLTS), the FiT payable by PLN is either:

  • if Local BPP is greater than National BPP: 100 per cent of Local BPP; or
  • if Local BPP is equal to or less than National BPP: the tariff agreed by PLN.

On 8 January 2016, the President enacted Presidential Decree No. 3 of 2016 on the Acceleration of National Strategic Projects (PD 3/2016). PD 3/2016 listed WtE projects located in Semarang (Central Java Province), Makassar (South Sulawesi Province) and Tangerang (Banten Province) as National Strategic Projects.

These WtE projects enjoy certain benefits, including:

  • expedited/simplified processes for the licences required for projects, namely a Location Permit, an Environmental Licence, a Forestry Land Use Licence (if the location of the project is located in a forestry area) and a building construction permit, in addition to other fiscal and non-fiscal incentives (e.g. exemption from import duty);
  • government support for any spatial layout adjustments required for project development;
  • the land acquisition law for public interest development may be used, providing timing and cost certainty for the acquisition of land;
  • possible government guarantees; and
  • support from government for WtE development.

On 15 June 2017, the President enacted Presidential Decree No. 58 of 2017 (through an Amendment to Presidential Decree No. 3 of 2016) for the Acceleration of National Strategic Projects (PD 58/2017). Under PD 58/2017, the government added five new WtE projects to the list of National Strategic Projects. These five additional projects are located in Jakarta (DKI Jakarta Province), Bandung (West Java Province), Surakarta (Central Java Province), Surabaya (East Java Province) and Denpasar (Bali Province). 

Pursuant to MEMR Reg 50/2017, PLN is obliged to purchase the electricity generated by PLTS.

Indonesian law recognises that projects may be delivered in a variety of ways, including traditional BOO17 and BOOT18 delivery models. Critically important to the development of WtE projects as a sustainable industry across Indonesia is the ability of the government at every level to be assured that each WtE project is economically sustainable. The MEMR Guidebook emphasises this.

Based on a study undertaken by the MEMR's Directorate of Bioenergy, the challenges for WtE in Indonesia are as follows:19

  • no uniformity in the payment of, or the amount of, any Gate Fee;
  • a need for increased awareness by regional governments of the use of MSW as a feedstock for WtE projects;
  • a perception by regional governments that the sale of electricity to PLN means that the regional government does not need to manage waste through Gate Fees: a deeper understanding of the basis on which PLN purchases electricity is required;
  • limited funding is allocated for managing waste; and
  • regional governments do not have the necessary "know-how" to prepare procurement documents and there is no uniform mechanism for procurements.

As well as an increasing interest in developing WtE projects in Indonesia, other initiatives which are already in place are helping the country to address environmental and public health issues, and are improving the urban environment. For example, Indonesia's second largest city by population, Surabaya, has a population of approximately 3 million within the city itself, and a population of 6.5 million in its larger urban area. It is estimated that nearly 1,800 tonnes of waste is produced each day. The municipality itself collects nearly 1,550 tonnes of waste per day, and it is estimated that close to 250 tonnes is recovered by the private sector. 

The system of waste management in Surabaya (including a long-standing arrangement in which the private sector plays an important part through waste banks to which recyclables are delivered) has made a material contribution to improving the environmental and public health outcomes in Surabaya over the past 15 years or so. For those visiting Surabaya over the years, the change has been clear to see. 

Malaysia

Malaysia has a population of approximately 31 million people, producing approximately 9,125,000 to 10,950,000 tonnes of MSW a year (equivalent to 25,000 to 30,000 tonnes of waste per day). While the volume of MSW production is not at the levels of the PRC, India or Indonesia, the Malaysian government's waste management policies encourage the collection of waste and it is estimated that more than 70 per cent of MSW generated in Malaysia is collected from kerbside or from collection centres. As such, Malaysia has the necessary systems in place to collect MSW as feedstock for WtE facilities. The issue for Malaysia is how to develop WtE projects in an economically efficient way as part of its ever-developing waste management system, while at the same time developing state of the art engineered/sanitary landfill facilities (some with annual capacity in excess of 1 million tonnes a year) and methane collection systems. 

In the Malaysian context, neither the rate of population growth (historically fast, but slowing), nor the rate of urbanisation (close to 75 per cent) are going to drive the development of a large WtE energy industry. Rather the development of WtE projects will tend to be more strategic as part of the Malaysian federal government's policy objective of reducing the quantity of waste landfill and greenhouse gas emissions from landfill, and generating energy from solid waste.

The policy settings in Malaysia have long responded to the fact that a high proportion of the landfill sites in Peninsula Malaysia have limited remaining air/void space. The majority of existing landfill sites are open landfills, as opposed to engineered/sanitary, and as such there are environmental and health implications arising from existing landfill sites. Landfill will remain a requirement of Malaysia's waste management industry, but the challenge is how best to extend the life of some landfill sites and manage the closure of others.

One of the distinguishing features of the Malaysian waste management industry (compared to the PRC, India and Indonesia) is the opportunity for separation at source of reusable and recyclable materials. There is an opportunity in Malaysia to encourage higher rates of recycling, and this may be an area that will be considered in the medium term. We say the medium term because, at present, the issue with increased recovery of recyclables is finding a market for them (as has been shown by the response of exporting nations to the PRC's prohibition on importing foreign recyclables). Notwithstanding the policy of reducing MSW sent to landfill and the reduction in greenhouse gas emissions from landfill, in the absence of a market for increased volumes of recyclables recovered, what is the best means of disposing of them? It may be that, in the medium term, one solution is the increased use of recyclables as feedstock for WtE facilities, even though in the longer term, there is a desire to move to an outcome higher up the Waste Management Hierarchy, including reuse. 

Philippines

The Philippines has a population of approximately 107 million people, producing approximately 12,775,000 to 14,600,000 tonnes of MSW a year (or 35,000 to 41,000 tonnes a day). The most recent estimates place production at a little under 41,000 tonnes a day, with over 70 per cent of this waste comprising household waste. (As with the estimates of MSW produced in India, it is likely that more MSW than this is actually produced.)  Depending on the source of forward estimates, by 2025 the Philippines may be producing between 16,425,000 and 18,250,000 tonnes of MSW a year (or 45,000 to 50,000 tonnes of waste a day). There are estimates from 2012 which predict up to 28,100,500 tonnes a year, i.e. a doubling of some other forward estimates. What this illustrates is that, as the population of the Philippines continues to urbanise, the assumption is that more waste will be produced. As urbanisation increases, so too does the need for effective management of increased levels of MSW. 

The Philippines recognised the need to address the management of MSW relatively early, and put in place a policy framework intended to address the environmental and public health issues arising from the ineffective management of MSW, including closure of landfill and a prohibition on incineration as the natural alternative. Under the laws of the Philippines, each municipality (in the Philippines, referred to as a local government unit (LGU)) is obliged to establish a waste management system to manage MSW within its geographical area. In addition, the law has placed an emphasis on the avoidance, reduction and recycling of MSW, including by requiring separation at source, so as to divert MSW from landfill: the law requires that not less than 25 per cent of MSW must be diverted or recovered. 

While there have been and remain challenges (including, in particular, enforcement) many municipalities working with the private sector have achieved relatively high levels of separation at source and recycling (with close to 10,000 MRFs in operation across the Philippines) achieving diversion rates of up to 48 per cent in Metro Manila. A key challenge remains the relatively low collection rates for MSW in some areas. The contrast between areas can be stark: one of the real successes has been the level of collection of MSW in some urban areas – for example, it is estimated that the collection rate in Metro Manila is in the 85-87 per cent range – but in other areas 40 per cent rates are said to exist. The level of collection has a direct impact on the effectiveness of the management of MSW.

Notwithstanding the use of policy levers, some key policies remain to be implemented (and enforced). Open dumping remains the predominant practice: even though municipalities were obliged to close their then-existing open dumping landfill sites some years ago, many of these landfill sites remain in use. Furthermore, while engineered/sanitary landfills have been developed, these have not been developed at the rate projected by government policy, and the environmental and public health objectives sought to be achieved have therefore not been achieved at the projected rates. 

This is an illustration of the practicalities of waste management "bumping up" against the cost of implementing policy, and the time taken to do so. To address the costs issue, the government is suggesting to municipalities that they work together to share the costs of the development of engineered/sanitary landfills. This is an approach which has been used successfully in other jurisdictions, although in each jurisdiction it is important to confirm that a municipality is permitted to work with other municipalities, and the extent to which it may do so.

As with other jurisdictions, the development of long-term solid waste management plans by municipalities to outline the way in which waste is to be managed within their geographical areas is key. In this context, there are clearly opportunities for municipalities to plan co-ordinated waste management with other municipalities. We understand that the level of submission of 10-year plans by municipalities for approval by the Department of Environment and Natural Resources' (DENR) Environmental Management Bureau continues to increase. That said, many municipalities are still to establish solid waste management boards, submit plans, and move to engineered/sanitary landfills. 

Over the past two to three years, the private sector has proposed (on an unsolicited basis) the development of WtE projects in the Philippines, and from statements from the DENR there is a clear recognition that the prohibition on incineration does not apply to all WtE projects: the critical issue for the DENR is the following of appropriate guidelines in relation to emissions to air. 

This acceptance of the possible development of WtE projects reflects a recognition that other policy levers need to be applied to satisfy the environmental objectives of the Philippines (including the management of greenhouse gas emissions from landfill) provided public health concerns (emissions to air) are appropriately managed. Given the collection rates of MSW in Metro Manila, the development of a WtE facility (announced in 2016) at Quezon City (within the area of greater Manila) may be regarded as a natural private sector response to assured levels of necessary feedstock to enable the development of WtE facilities. (Other WtE facilities are planned and will follow.) In the Philippines, as in all jurisdictions, the choice of technology will be key, particularly in response to the higher level of the organic fraction in the waste stream. 

Conclusion

Policy levers are critical to the effective implementation of waste management systems. The variety of responses described above illustrates that the policies in place in individual jurisdictions must recognise the needs of, while at the same time recognising what is achievable in, that particular jurisdiction.

In our next article we will consider MBT, MRF, ORF and FOGO projects, and the key commercial and legal issues relevant to each, as well as the trend towards facilities that are able to process all forms of waste using mechanical and biological treatment.


 

1.   This article continues the "Waste-to-Wealth" series: previous articles appear in issue 9 and issue 10 of InfraRead (go to Ashurst.com and search "Waste-to-Wealth").
2.   
With so much activity taking place across Asia-Pacific, we will cover Europe and the Americas (which we had also planned to discuss) in a later article.
3.   
In July 2017, the PRC notified the World Trade Organisation that it would ban the importation of 24 categories of recyclable and solid waste ('foreign garbage') by the end of 2017. The ban has affected the recycling industries in a number of jurisdictions. 
4.   
Container deposit schemes (CDS) aim to achieve the avoidance, reuse and recycling of waste: the outcomes at the pinnacle of the Waste Management Hierarchy – see Diagram 1. South Australia's Environment Protection Authority has reported that its CDS has promoted an overall return rate of 79.9 per cent.
5.   
The Norwegian container recycling scheme requires consumers to pay an additional charge per bottle, which is then refunded when the bottle is deposited in a recycling machine. If Norway's recycling rates are any indication, the scheme is highly successful, with 97 per cent of plastic bottles being recycled. In March 2018, the UK government announced that, subject to a consultation later in 2018, it will be introducing a deposit return scheme in England for single use drinks containers (whether plastic, glass or metal). 
6.   
For example, the Commonwealth Heads of Government meeting in London in April 2018 will include a discussion on how to protect our oceans.
7.   
For example, the Solid Waste Management Rules, 2016, applicable in India, define waste hierarchy as the priority in which the solid waste is to be (or should be) managed by giving emphasis to prevention, reduction, reuse, recycling, recovery and disposal, with prevention (i.e. avoid) being the most preferred option and disposal to landfill being the least preferred. 
8.    
C&IW or C&I waste is commercial and industrial waste from commercial and industrial premises.
9.    
C&DW or C&D waste is construction and demolition waste from construction and demolition sites.
10.   
A Gate Fee is an amount paid by a municipality for acceptance and processing of waste at a landfill or waste project.
11.   
MSW is municipal solid waste (as distinct from sewage or waste water).
12.   
It is now estimated that 60 per cent of the population of the PRC lives in urban areas (including a material percentage of the population travelling to the urban environment to work, and in that urban environment produce waste). This figure is expected to exceed 70 per cent by 2030. There are over 100 cities in the PRC with populations of more than 1 million people, and 15 municipal areas of more than 10 million people.
13.   
NOx is the generic term for the Nitrogen Oxides which are most relevant to air pollution; SOx is the equivalent term for Sulphur Oxides.
14.   
The Solid Waste Management Rules, 2016 define solid waste as including "solid or semi-solid domestic waste, sanitary waste, commercial waste, institutional waste, catering and market waste and other non-residential wastes, street sweepings, silt removed or collected from surface drains, horticultural waste, agriculture and dairy waste, treated bio-medical waste excluding industrial waste, bio-medical waste and e-waste, battery waste, radioactive waste…".
15.   
It is our understanding that waste pickers are able to recover a very high percentage of reusable and recyclable material from municipal solid waste. Again our understanding is that approximately 80,000 people are engaged as waste pickers for every 3 million tonnes of reusable and recyclable material recovered.
16.   
This is a facsimile of Figure 8.2 of the MEMR Guidebook, p129, which is reproduced with kind permission of the MEMR.
17.   
Build Own Operate (BOO) means that the project sponsor builds, owns and operates the WtE project, and the municipality (or government agency, authority or corporation) contracts with the WtE project for the provision of services using the WtE project (i.e. the provision of waste acceptance, treatment and processing).
18.   
Build Own Operate Transfer (BOOT) means that the project sponsor builds, owns and operates the WtE project for the term of the BOOT contract, providing services to the municipality (or government agency, authority or corporation) and then transfers the WtE to the municipality (or government agency, authority or corporation) at the end of the term of the BOOT contract, usually at the option of the municipality, and typically for a nominal purchase price on the basis that the municipality has effectively paid for the WtE project through the payment of service charges.
19.    
Extracted from a Presentation entitled "Policy on Waste to Energy Development in Indonesia" dated 18 December 2017, prepared by the MEMR's Directorate of Bioenergy.

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ENERGYSOURCE 19 | INFRAREAD 10

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