That Council:


1.         Authorise staff to finalize and execute a Letter of Intent with Plasco Energy Group Inc. and Plasco Energy Ottawa Inc. setting out the terms and conditions under which a long-term agreement for a full scale waste conversion facility could be executed, as described in this report; and,


2.         Delegate to the City Manager the authority to negotiate and execute a Long-Term Waste Disposal Agreement (“long-term agreement”) with Plasco Energy Group Inc. and Plasco Energy Ottawa Inc. according to the terms and conditions set out in the Letter of Intent.



RecommandationS du Comité


Que le Conseil :


1.         autorise le personnel à finaliser et à conclure une lettre d’intention avec Plasco Energy Group Inc. et Plasco Energy Ottawa Inc. afin d’établir les conditions d’une entente à long terme pour l’exploitation d’une installation de transformation des déchets à échelle réelle, comme l’explique le présent rapport;


2.         accorde au directeur municipal le pouvoir de négocier et de conclure une Entente d’élimination des déchets à long terme (« entente à long terme ») avec Plasco Energy Group Inc. et Plasco Energy Ottawa Inc. selon les conditions spécifiées dans la lettre d’intention.





1.      Deputy City Manager's report Public Works and Services dated 2 June 2008 (ACS2008-PWS-SWS-0005).


2.   Extract of Draft Minutes, 10 June 2008 to be distributed prior to Council.


Report to/Rapport au :


Planning and Environment Committee /

Comité de l'urbanisme et de l'environnement


and Council / et au Conseil


2 June 2008 / le 2 juin 2008


Submitted by/Soumis par :

R.G. Hewitt, Deputy City Manager/Directeur municipal adjoint,

Public Works and Services/Services et Travaux publics 


Contact Person/Personne ressource : Albert Shamess, Director/Directeur

Solid Waste Services/Services de gestion des déchets solides

(613) 580-2424 x25873, albert.shamess@ottawa.ca


City Wide/à l'échelle de la Ville

Ref N°: ACS2008-PWS-SWS-0005




plasco energy update and long term waste CONVERSION agreement




Mise À jour sur Plasco Energy et Entente de transformation des déchets à long terme




That the Planning and Environment Committee recommend that Council:


1.         Authorise staff to finalize and execute a Letter of Intent with Plasco Energy Group Inc. and Plasco Energy Ottawa Inc. setting out the terms and conditions under which a long-term agreement for a full scale waste conversion facility could be executed, as described in this report; and,

2.         Delegate to the City Manager the authority to negotiate and execute a Long-Term Waste Disposal Agreement (“long-term agreement”) with Plasco Energy Group Inc. and Plasco Energy Ottawa Inc. according to the terms and conditions set out in the Letter of Intent.




Que le Comité de l’urbanisme et de l’environnement recommande au Conseil :


1.                  d’autoriser le personnel à finaliser et à conclure une lettre d’intention avec Plasco Energy Group Inc. et Plasco Energy Ottawa Inc. afin d’établir les conditions d’une entente à long terme pour l’exploitation d’une installation de transformation des déchets à échelle réelle, comme l’explique le présent rapport;


2.                  d’accorder au directeur municipal le pouvoir de négocier et de conclure une Entente d’élimination des déchets à long terme (« entente à long terme ») avec Plasco Energy Group Inc. et Plasco Energy Ottawa Inc. selon les conditions spécifiées dans la lettre d’intention.





The purpose of this report is to provide an update on the current status of the Plasco Demonstration Facility and to detail the terms and conditions of the non-binding Letter of Intent upon which a long-term agreement for a commercial facility would be based.  Finally, the report seeks the delegated authority to negotiate and execute this long-term agreement.


Currently, the City of Ottawa collects approximately 300,000 tonnes/year of municipal solid waste (MSW) from residential sources.  Of this, approximately 32% is diverted from landfill, and is either composted or recycled. Implementation of the City’s Source Separated Organics (SSO) Program, commencing in 2009, will divert organic materials from disposal and help the City to achieve its target of 60% diversion for residential MSW.


Even at an increased diversion rate, Ottawa will have a continued need to landfill approximately 40% of waste generated in the region.  The Plasco facility could provide a means of recovering energy from the remaining waste and diverting it from disposal, further reducing the long-term reliance on landfill.


A description of the plasma gasification process used by Plasco is provided as Document 1 to this report.  The Plasco Demonstration Facility is designed to provide a Proof of Concept for a commercial scale facility.  It allows Plasco to work through the issues associated with building a facility from a pilot to a full scale operation, including issues associated with handling large volumes of waste on a consistent and ongoing basis.





Demonstration Facility


On September 28, 2005, Council authorized staff to enter into an agreement with Plasco Energy Group Inc. and Plasco Energy Ottawa Inc. (collectively referred to, in this report, as “Plasco”).  Development and construction of the plant proceeded through 2006 and 2007.  During the latter part of 2007, commissioning of the facility using controlled feedstock, primarily agricultural waste, was completed.


For the Demonstration Facility, Plasco was responsible for the financial risk of the project.  All planning, design, approval, insurance, construction and future decommissioning costs for the demonstration project have been borne entirely by Plasco. 

The City is responsible for providing a site at the Trail Waste Facility and paying a tipping fee for waste supplied for disposal at a cost considered by the City to be comparable to Trail Road landfilling.


Key Objectives


The Plasco Demonstration Facility helped move the City closer to the following two key objectives set out in Ottawa 20/20 and the City’s Strategic Plan.


(1)        “Reduce greenhouse emissions by up to 20% by the year 2012.”


The synthetic gas created from the process is one of the cleanest and most efficient fuel sources for generating electricity.  It both displaces high carbon dioxide (CO2) generating coal power with low impact generation and it diverts waste that could produce methane emissions away from disposal in a landfill.  Each tonne of waste processed through Plasco results in a 34% reduction in greenhouse gases (CO2 Equivalent), over waste disposed at the Trail Road Landfill.  (Source - Plasco Energy).


(2)        “Extract value from our waste by a predetermined dollar amount.”


The City is changing the way it thinks about waste, from a waste material to a valuable resource, and is implementing programs to recover value from the waste stream.  The Plasco Demonstration Facility is a step in this direction.  It successfully delivered electricity to the grid on October 27, 2007 using a controlled feedstock.  The first load of municipal waste was accepted on January 26, 2008, and Plasco delivered electricity generated from MSW to the grid on February 7, 2008.


Through February, March and April of 2008, Plasco continued to refine its operations, gaining important experience running with MSW diverted from the Trail Road Landfill.  In March 2008, Plasco had a two-week maintenance shutdown to install new equipment to improve the feed system for MSW.  In April 2008, operations at the facility came back online and Plasco was able to briefly reach the targeted processing rate of 75 tonnes per day, their regulatory limit.


Letter of Intent


City staff continues to work closely with Plasco on resolving any outstanding issues associated with the operations of the Demonstration Facility.  Emission standards were met throughout the testing and commissioning procedure in the Fall of 2007 and Plasco has held meetings with their Public Advisory Committee (see the “Consultation” section below for a more detailed description of this Committee).  Plasco posts their Continuous Emissions Monitoring data on their publicly available www.zerowasteottawa.com website.


The progress of the Demonstration Facility has been encouraging and the partnership arrangements possible through working with Plasco to expand the Demonstration Facility to a full-scale operation have the potential to provide economic benefit to the City, through revenue sharing arrangements. 

As Plasco continues with its Demonstration Facility it could take time to develop a full-scale facility once the technical and economic viability requirements have been satisfied.  Further, Plasco has a two-year limit on the Certificate of Approval for the Demonstration facility after which they cannot accept waste.  In order to reduce any lag time between that occurring and a full scale facility being available, staff is negotiating a Letter of Intent outlining the terms and conditions under which a contract for a commercial facility could be signed, and is recommending that we proceed with negotiations for the long-term agreement.


In developing the Letter of Intent the following factors have been considered as essential requirements for future negotiations:


Environmental compliance:  The system must demonstrate the ability to meet or exceed environmental standards in accordance with Ontario Ministry of the Environment regulations.  The compliance standards applied by the Province to the operation of the Demonstration Facility must be met at all times or bettered.  Where possible this will include continuous emissions monitoring and full public disclosure of this data.


Performance:  The system must demonstrate the ability to achieve the intended outcomes, i.e. handle the required volumes consistently with adequate waste conversion and energy production, on an ongoing basis with minimal shutdowns.


Financial and technical backing:  There must be adequate financial and technical resources to carry out the project and to decommission the project.


Similar to the agreement for the Demonstration Facility, the long-term agreement will include the following:






The effect of this will be to provide a drier waste stream with a higher and more predictable energy content than if the organics were to remain in the waste delivered to Plasco.  The financial benefit to the City of higher energy content in the waste could be, from lowest cost to highest, as much as $21 per tonne, depending on the final energy content of the waste delivered.  The City would receive price protection against tipping cost escalation with long-term security on tipping fees.  The City will be obligated to pay a tipping fee for waste delivered, based on the energy content of the waste and adjusted for inflation.  The tipping fee and other financial arrangements are the subject of a confidential attachment to this report (Document 4 and 5).


Based on the Letter of Intent, the long-term agreement will also include:


(1)        Plasco will design, build, own and operate a commercial facility in the City of Ottawa.  Plasco will provide for the payment of all construction and operating costs of the facility, including the cost of disposing of all residues (both liquid and solid) produced by the facility.  The facility will be designed to process approximately 136,000 tonnes of waste per year based on a processing capacity of 400 tonnes per day.  The facility will process waste delivered by the City in accordance with the terms and conditions of the agreement.  The commercial facility must comply with all federal, provincial and municipal laws and regulations, including applicable environmental laws regarding the discharge of water, residue and the handling of solid waste as negotiated in the long-term agreement with Plasco.  For further details of the terms and conditions of the confidential Letter of Intent please see Document 3 held on file with City Clerk’s Office.


(2)        A full commercial Plasco facility will take about two years to complete and bring into operation, once environmental approvals have been obtained.  Environmental performance of that plant must equal or better compliance standards being met today by the Trail Road Demonstration Facility.  As mentioned above, beginning the planning for a commercial facility now will allow the City to more quickly integrate this technology properly into our waste planning going forward.


(3)        The City will be protected from financial risk by the proposed terms, and the Province as a condition of continued operation, will address the required environmental standards.  As a result, proceeding with the implementation of the commercial facility provides an alternative for recovering value from what Ottawa currently landfills.  The funding and risk will continue to be borne by the proponent.


Finally, the processing of 136,000 tonnes of waste through a Plasco facility on an annual basis will significantly reduce the amount of waste requiring disposal and increase the life of the Trail Road landfill.  If we consider that the recycling and SSO programs combined would bring us close to 60% diversion, then adding the quantity of waste sent to Plasco for processing to our quantities of waste diverted from disposal would bring us close to 100% of the residential waste stream diverted from disposal to alternate uses. 

In practical terms we are unlikely to reach 100% as there are materials in the waste stream that cannot be recycled, composted or delivered to Plasco for processing but the impact of our diversion efforts on the life of the Trail Rd. landfill will be significant.


In order for Plasco to effectively develop a facility of size and scale anticipated, to ensure economic stability and viability, and to provide benefit to the City a long-term agreement for a period of at least 20 years will be required.


The City of Ottawa also stands to achieve signficant benefits from the success of this commercial facility.  These benefits will include:



Even though it is early in the evaluation of the Demonstration Facility and project development cycle there are significant advantages to the City in moving forward with Plasco at this time.  These are benefits for the City stemming from its ongoing partnership in commercializing the Plasco process and acting as host for the demonstration and first commercial facility.  The original agreement sets out that, provided the City of Ottawa wished to continue and commit to a full commercial scale plant by July 1, 2008, the City would be entitled to receive a $5 per tonne royalty for all tonnes processed in North America to a maximum capacity of 2,000 tonnes per day for ten years.  It is expected that this could generate up to almost$3.5 million year in additional revenue for the municipality.


Accordingly, the City would be agreeing to continue to provide waste and pay predictable tipping fees based on the energy content of the waste as outlined in the confidential schedule of tipping fees provided in Document 4.


Plasco bears all of the business risk of providing the technology and processing the waste in a way that is financially viable for them.  The City is protected from increasing tipping fees other than for the consumer price index (CPI).  This means that there can be no price increase for the City should costs of processing be higher or revenues be lower than expected, except for CPI. All such risks will rest with Plasco, however Plasco reserves the right to proceed to full-scale development only if the facility will be economically viable.  Results to date provide the company with the confidence to move forward and the financial strength to fully carry the burden of any remaining technology risk.  As a result the City has a new option for diverting, preserving landfill capacity, and recovering value from waste.


The long-term financial benefit of being the first facility developed are significant as the City stands to gain financially through revenue sharing as this technology spreads throughout North America.  The City will also receive benefit through sharing of revenues for power generated.  Further details on this are included in the confidential attachment to this report and will be held on file with City Clerks (Document 5).




In addition to the environmental implications described above, the Ministry of Environment must issue appropriate Certificates of Approval for operation of a waste processing facility and for air emissions before the project can proceed and Plasco will need to undertake all required studies associated with this before the facility can be constructed.  The designs will be submitted by Plasco to the Province for review and approval, and issuance of the necessary Certificates of Approval.  Plasco will also be required to go through the City’s planning approval process.


The timeline for the development of a full-scale facility, including sufficient time for proving the operation through the evaluation project, as well as design, approvals and construction requirements is expected to be approximately 2 years.


Both the federal funding agency and the provincial approval authority currently require ongoing monitoring of air emissions.  These requirements would remain in place for a full-scale facility.




Plasco established a Public Advisory Committee (PAC) in April 2007.  The PAC includes expertise in air quality and waste management, as well as members who reflect the concerns and interests of the facility's nearest neighbours and who reflect the broader interests of the Ottawa community.  Bell-South Nepean Ward Councillor Jan Harder is Chair of the PAC and has followed the project closely since its inception.  The PAC must meet no fewer than four times a year and not less than once a quarter.


The role of the PAC is to review sampling techniques and air emission data provided from the Demonstration Facility.  The PAC is supported by and has full access to City staff, Plasco staff and the third-party monitoring professional engineers who oversee the air emission monitoring.  All air monitoring data is published in a detailed report on a monthly basis and presented to the Public Advisory Committee for review and comment, as well as posted on Plasco's website.


As part of the development of any large-scale facility, Ministry of Environment regulations for approval will be followed, including all public notifications with respect to any environmental approvals needed for waste processing or electricity generation.


The potential lease of City owned property for a facility near the Trail Road Landfill to Plasco was circulated to all City Departments, including the Housing Branch, Public Works and Services and Planning, Transit and the Environment, to determine if the property was required by any other City Department or if there were any objections or concerns with respect to the potential lease of this City property. 

No Department expressed a requirement in retaining the property for a City mandated purposes.  The utility companies and Advisory Committees were also circulated and there were no requirements for easement protection or objections to the proposed used. Staff will report to the Corporate Services and Economic Development Committee for information once the final terms of a lease have been negotiated.




Once the facility is commissioned the budgetary impact will include the tipping fees to Plasco less any returns to the City through revenue sharing.  Beginning in the first year of full operation, the expected budgetary pressure for tipping fees at Plasco based on 136,000 tonnes per year will; be in the range of $8,000,000.  This will be offset by savings through reduced operating costs at the landfill, savings in landfill capacity, deferral of development of a new landfill and revenue sharing with Plasco.  The contract will provide for revenue sharing with the City if Plasco revenues annually exceed the base established in the contract.  Revenues could result from any source including increased power price or additional power sales, value of carbon credits or the value of the additional products including aggregate, sulphur or salt which are produced through Plasco’s process.


This facility also has the potential to avoid the capital costs to plan, design, and construct new landfill capacity.  The implementation of Plasco will extend the life of the landfill and ultimately delays the requirement for a new landfill that could cost in excess of $150 million dollars to build.  The financial advantage to the City of this delay in landfill timing, if for example the processing of waste through Plasco over the term of the contract resulted in a 10 year delay in landfill development and delay in the City assuming its long term liabilities associated with the Trail Landfill, would be in the range of $25 million or approximately $19 per tonne of waste processed over that period.


The actual savings in landfill capacity and timing of deferral of the need for a new landfill depends on many factors outside the scope of what Plasco is able to accomplish.  It depends on the success of our recycling and organics composting programs, as well as what happens with the Industrial, Commercial and Institutional (IC&I) portion of the waste stream.  The strategy for handling the IC&I waste stream will be the subject of a future report.  Staff are currently undertaking a review of the Integrated Waste Management Master Plan to assess the impact of changes in the City’s programs, as well as changes in the operating context for solid waste management within the City.


The details of the financial benefits to the City are outlined in a confidential attachment (Document 5) of this report and will be discussed in camera.  In general terms, the City can expect to benefit substantially every year for the next ten years as a result of the City’s negotiated rights contained within this agreement.




Document 1:     Plasco Operations Description


Document 2:     Plasco Engineering Reports for February and March 2008


Document 3:     Letter of Intent (to be issued separately and on file with City Clerk)

Document 4:     Summary of MSW Properties, Feedrates and Tipping Fees (to be provided in-camera)

Document 5:     Details of the Financial Benefits (to be provided in-camera)




Deputy City Manager, Public Works and Services, in consultation with Legal Services, to negotiate and execute the Letter of Intent between the City of Ottawa and Plasco, outlining conditions under which long-term agreements for a full scale facility could proceed.


A long-term agreement between the City and Plasco will be negotiated and executed under the direction of the City Manager, in consultation with Legal Services, according to the conditions outlined in the Letter of Intent.