1. Plasco
Long-term Waste PROCESSING Agreements
ENTENTES À LONG TERME AVEC
Plasco PORTANT SUR LA TRANSFORMATION DES DÉCHETS
That Council approve:
1.
A new lease with Plasco
for the continued operation of Plasco’s Trail Road Demonstration Facility for
20 years with four optional five-year extensions based on the terms and
conditions outlined in this report and detailed in the agreement framework
contained in Document 1;
2.
A 20-year lease with
Plasco for a commercial scale facility located on City property at 3704 Moodie
Drive with four optional five-year extensions based on the terms and conditions
outlined in this report and detailed in the agreement framework contained in
Document 1;
3. A 20-year waste
conversion agreement with Plasco with four optional five-year extensions for
facilities at 3704 Moodie Drive and 4420 Trail Road based on the terms and
conditions outlined in this report and detailed in the agreement framework
contained in Document 1; and
4. Delegation
of authority to the City Manager, in conjunction with the City Clerk and
Solicitor, to make any necessary minor, non-monetary adjustments to the terms
and conditions outlined in this report and detailed in Document 1 and to sign a
long-term waste conversion agreement and applicable leases with Plasco for the
facilities at 4420 Trail Road and 3704 Moodie Drive based on the terms and
conditions outlined in this report and detailed in the agreement framework
contained in Document 1.
Que le Conseil approuve :
1.
la signature d’un nouveau bail avec
Plasco pour l’exploitation continuelle de l’installation de démonstration du
chemin Trail de Plasco d’une durée de 20 ans, avec quatre périodes de
prolongation optionnelles de cinq ans selon les conditions définies dans le
présent rapport et présentées en détail dans le cadre de l’entente inclus dans
le Document 1;
2.
la signature d’un bail de 20 ans
avec Plasco pour des installations commerciales situées sur un bien-fonds de la
Ville au 3704, promenade Moodie, avec possibilité de quatre périodes
optionnelles de prolongation de cinq ans, selon les conditions définies dans le
présent rapport et présentées en détail dans le cadre de l’entente inclus dans
le Document 1;
3.
la conclusion d’une entente de 20
ans avec Plasco portant sur la transformation des déchets ainsi que quatre
périodes optionnelles de prolongations de cinq ans portant sur des
installations situées au 3704, promenade
Moodie et au 4420, chemin Trail, selon les
conditions définies dans le présent rapport et présentées en détail dans le
cadre de l’entente inclus dans le Document 1;
4.
que les pouvoirs soient délégués au
directeur des Services municipaux ainsi qu’au greffier municipal et chef du
contentieux afin qu’il apporte tout ajustement mineur non monétaire aux
conditions définies dans le présent rapport et présentées au Document 1 et
qu’il signe une entente de transformation des déchets à long terme avec Plasco
concernant les installations du 4420, chemin Trail et du 3704, promenade
Moodie, selon les conditions et modalités définies dans le présent rapport et
présentées en détail dans le cadre de l’entente inclus dans le Document 1.
DOCUMENTATION :
1. Deputy
City Manager, Infrastructure Services and Community Sustainability report dated
5 December 2011
(ACS2011- ICS-ESD-0039);
2. Extract of Draft Environment Committee Minute
to be issued separately.
Report to / Rapport au:
Environment Committee
Comité de l'environnement
and Council / et au Conseil
Submitted by / Soumis
par: Nancy
Schepers, Deputy City Manager/Directrice municipale adjointe
Infrastructure Services and
Community Sustainability/Services d’infrastructure et Viabilité des collectivités
City-Wide / À l’échelle de la Ville |
|
Ref N°:
ACS2011-ICS-ESD-0039 |
SUBJECT: Plasco Long-term Waste PROCESSING Agreements
OBJET: ENTENTES À LONG TERME AVEC Plasco
PORTANT SUR LA TRANSFORMATION DES DÉCHETS
That the Environment
Committee recommend Council approve:
1. A new lease with
Plasco for the continued operation of Plasco’s Trail Road Demonstration
Facility for 20 years with four optional five-year extensions based on the
terms and conditions outlined in this report and detailed in the agreement
framework contained in Document 1;
2. A 20-year lease with
Plasco for a commercial scale facility located on City property at 3704 Moodie
Drive with four optional five-year extensions based on the terms and conditions
outlined in this report and detailed in the agreement framework contained in
Document 1;
3. A 20-year waste
conversion agreement with Plasco with four optional five-year extensions for
facilities at 3704 Moodie Drive and 4420 Trail Road based on the terms and
conditions outlined in this report and detailed in the agreement framework contained
in Document 1; and
4. Delegation of
authority to the City Manager, in conjunction with the City Clerk and
Solicitor, to make any necessary minor, non-monetary adjustments to the terms
and conditions outlined in this report and detailed in Document 1 and to sign a
long-term waste conversion agreement and applicable leases with Plasco for the
facilities at 4420 Trail Road and 3704 Moodie Drive based on the terms and
conditions outlined in this report and detailed in the agreement framework
contained in Document 1.
Que le Comité de
l’environnement recommande le Conseil d’approuver :
1. la signature d’un
nouveau bail avec Plasco pour l’exploitation continuelle de l’installation de
démonstration du chemin Trail de Plasco d’une durée de 20 ans, avec quatre
périodes de prolongation optionnelles de cinq ans selon les conditions définies
dans le présent rapport et présentées en détail dans le cadre de l’entente
inclus dans le Document 1;
2. la signature d’un bail
de 20 ans avec Plasco pour des installations commerciales situées sur un
bien-fonds de la Ville au 3704, promenade Moodie, avec possibilité de quatre
périodes optionnelles de prolongation de cinq ans, selon les conditions
définies dans le présent rapport et présentées en détail dans le cadre de
l’entente inclus dans le Document 1;
3. la conclusion d’une
entente de 20 ans avec Plasco portant sur la transformation des déchets ainsi
que quatre périodes optionnelles de prolongations de cinq ans portant sur des
installations situées au 3704, promenade
Moodie et au 4420, chemin Trail, selon
les conditions définies dans le présent rapport et présentées en détail dans le
cadre de l’entente inclus dans le Document 1;
4. que les pouvoirs soient
délégués au directeur des Services municipaux ainsi qu’au greffier municipal et
chef du contentieux afin qu’il apporte tout ajustement mineur non monétaire aux
conditions définies dans le présent rapport et présentées au Document 1 et
qu’il signe une entente de transformation des déchets à long terme avec Plasco
concernant les installations du 4420, chemin Trail et du 3704, promenade
Moodie, selon les conditions et modalités définies dans le présent rapport et
présentées en détail dans le cadre de l’entente inclus dans le Document 1.
This report seeks Council approval of a recommended framework for a Long-Term Waste Conversion Agreement between the City of Ottawa and Plasco for the processing of City residential solid waste at facilities located on City land at 4420 Trail Road and 3704 Moodie Drive and leases for those facilities. The framework is attached as Document 1.
The report also seeks Council approval for the delegation of authority to the City Manager, in conjunction with the City Clerk and Solicitor, to execute these agreements and applicable leases based on the terms and conditions detailed in the framework and the ability to make minor, non-monetary adjustments if necessary.
These recommended agreements are the next step in a partnership between the City and Plasco that began in 2005 to develop and commercialize the company’s waste-to-energy plasma gasification technology. The agreements are being recommended for approval because they represent an opportunity to improve the City’s environmental, economic development and financial performance over the coming years while mitigating all risk to the City associated with the commercial launch of a new technology.
Plasco’s technology will help the City achieve its solid waste management goal of diverting as much residential waste as possible away from the City-owned Trail Road Landfill and will instead convert residential waste into electricity, which will be sold to the grid. Successful deployment of the Plasco technology along with the City’s recently approved waste diversion targets will help the City to extend the life of the Trail Road Landfill by an additional 28 years with a projected closure date of 2070. This will be possible because if successful, Plasco will turn almost all residential solid waste that doesn’t get recycled into an asset.
By entering into these agreements, the City will defer costs of finding a location for and building a new landfill, estimated at $250 million in today’s dollars, for 28 years. The agreements will also allow for significant reduction of staffing and operating costs at the Trail Road Landfill.
As a result of entering into the Plasco Long-Term Waste Processing Agreements, the City will purchase 109,500 tonnes of waste conversion capacity for $9.1 million per year. This will be offset by reduced operating costs at the City’s Trail Road Landfill operation and result in an $8 million budget pressure over the four year period from 2013 to 2016.
In this period, strategies will be developed for Council to consider, including blending the savings from the change in the collection service level with the operating pressures from the Plasco agreement to mitigate the impact to households.
Depending on the success of Plasco, this impact can be offset further by marketing fees to be received from Plasco upon their opening of new Canadian or U.S. facilities, electrical generation revenues, and the reduced capital servicing costs in the longer term given the City’s landfill life being extended.
In order to fully appreciate the long-term value of agreements based on the framework in Document 1, a net present value analysis was conducted.
The conservative financial analysis shows solid waste services would be delivered over the life time of agreements based on the framework for a cost of just under $1 million per year more than the status quo.
The same financial analysis with the assumption of good success at the company’s Ottawa plants shows solid waste services would be delivered over the life time of agreements based on the framework at a cost of $700,000 more per year than the status quo.
The same financial analysis with the assumption of success by the company in other U.S. and Canadian jurisdictions shows solid waste services would be delivered over the life time of agreements based on the framework for less than $400,000 more per year than the status quo due to increased revenue provisions for the City.
The execution of these agreements will also launch the City into a new realm on Economic Development. They will be the culmination of a process that saw the City take a leadership position by entering into a partnership to help a company incubate, refine and commercialize its technology. These agreements will mark Ottawa as a progressive, business-minded City that is willing to embrace and assist innovative business opportunities.
It is understood that during the commercial launch of any new technology there is risk. However, through negotiations with Plasco, the City has sought and been granted mitigation clauses against this risk. Plasco is taking all risk associated with financing, building and operating its facilities with no City investment. Plasco has also assumed risk surrounding operational performance, environmental performance, and financial viability.
In summary, staff are recommending approval of the framework for these agreements as outlined in this report and detailed in Document 1 because these agreements make environmental, financial, and economic development sense without exposing the City to undue risk and will help the municipality further its long-term strategic objectives of achieving environmental and economic sustainability.
BACKGROUND
On September 28, 2005, Council authorized staff to enter into a partnership agreement with Plasco Energy Group and Plasco Energy Ottawa Inc. (Plasco) for the construction and development of a demonstration plant at the Trail Road Waste Facility. This facility was built in 2006 and 2007 as a proprietary process to convert waste material into synthetic gas that is then used to generate electricity. The plant commenced operations in 2007. The partnership gave the company the opportunity to test, refine, seek environmental approval for and market its technology.
On June 11, 2008, Council approved the following:
1. Authorize 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.
A Letter of Intent (LOI) was subsequently signed by representatives of the City and Plasco on July 14, 2008. The LOI outlines the terms and conditions under which a contract for a commercial facility could be signed.
In anticipation of the LOI terms and conditions being met, the City Manager has been actively negotiating with Plasco on a long-term waste conversion agreement, including a full-scale commercial waste conversion facility. The final terms and conditions for this agreement to be executed were met in October 2011. Since then, the pace of negotiations has increased, and this has resulted in the recommended long-term agreements outline in this report and detailed in Document 1.
Although the June 11, 2008 Council direction is for the City Manager to execute the agreement when the terms and conditions are met, final Council approval of these agreements are being sought because of the passage of time since the previous Council direction, during which a municipal election took place.
The Plasco demonstration facility was designed to provide Proof of Concept for a commercial scale facility. The demonstration facility has allowed Plasco to refine its operations, gain Ministry of the Environment approval, and increase the reliability of the solid waste processing system that will be in place at a full-scale facility by showing the technology can handle large volumes of waste on a consistent and on-going basis in a manner that is compliant with environmental regulations.
As such, the LOI identified the following conditions for future negotiations.
Environmental Compliance: The demonstration facility must meet or exceed environmental standards in accordance with Ontario Ministry of the Environment (MOE) regulations.
The compliance standards applied by the Province for the operation of the Demonstration Facility have been met. Plasco proceeded through the Environmental Screening process to seek approval for the permanent operation of the Demonstration Facility. Certificates of Approval, for Waste Processing and Air Emissions, were issued by the Ministry on October 24, 2011. The MOE letters outlining the acceptance of the Plasco Demonstration Facility emission data are provided in Document 2.
Performance: The demonstration facility must show the ability to handle the required volumes consistently with adequate waste conversion and energy production on an on-going basis with minimal shut downs.
A description of the operation and the net energy production of the demonstration facility is provided by Plasco in Document 3. The demonstration facility has largely operated on a campaign basis (hours at a time) as opposed to continuously. As a result, operational reliability on a continuous basis has not yet been fully demonstrated by Plasco. However, through the operation of the Pilot Demonstration Facility, material handling and processing improvements have been identified and implemented. Plasco is confident these improvements will result in operational reliability. Under Plasco’s certificate of approval, the Ministry of the Environment requires emissions from the engines to be processed by a flare, and this has resulted in limited engine run time and limited amounts of electricity generated at the demonstration facility. Plasco has indicated it is in discussion with the Ministry to establish testing procedures for organic compounds in engine exhaust to allow these exhausts to be released directly to atmosphere, Tests conducted on the engine exhaust have shown organic compounds to be either non-detectable or so low as to be of no concern.
Financial and technical backing: There must be adequate financial and technical resources to carry out the project and decommission the project.
Plasco has indicated it has secured investors to build, commission and, if necessary, decommission the full-scale commercial facility.
DISCUSSION
City of Ottawa Long-term Waste Management Needs
Currently, the City of Ottawa collects approximately 335,000 tonnes of residential solid waste per year. Of this, approximately 42 per cent is diverted from the landfill and is either composted or recycled. Diversion rates are expected to continue to increase as participation grows in the Green Bin and recycling programs with the implementation of bi-weekly garbage collection in late October 2012.
Also, the City has recently begun development of a long-term Waste
Plan. On
November 23, 2011, Council approved waste diversion
goals as part of the Ottawa Waste Plan – Phase 1 Report: Vision, Guiding Principles,
Goals, Objectives and Targets (ACS2011-ICS-ESD-0036) and the following vision:
By
2042, Ottawa will have room in its municipal landfill because as a community we
improved our rates of reducing, reusing and recycling, and managing our assets
wisely.
Through the approval of the Ottawa Waste Plan – Phase 1 Report, the City
adopted the Waste Management Hierarchy shown in the graphic below.
The driving concept behind this hierarchy is to have as much waste as
possible dealt with by programs and actions in descending order. Specifically:
·
Reducing
the amount of waste produced is goal number one;
·
Reusing
what is still produced is goal number two;
·
Recycling
or composting what can’t be reused is goal number three;
·
Recovering
value from what can’t be recycled or composted is goal number four; and
·
Landfilling
what is left over is the last option.
In addition to adopting this waste management hierarchy, Council
approved the following guiding principles:
·
Minimize
waste generation;
·
Maximize
waste diversion;
·
Reserve
municipal landfill capacity for residential residual waste; and
·
The City
leads by example.
By adopting the
hierarchy and guiding principles, the City has set the goal of increasingly
higher waste reduction and diversion targets over the coming decades.
Assuming the City achieves these goals, enters into agreements with Plasco, and Plasco performs as planned, the following graph represents how the City’s residential waste stream will be handled by various programs and technologies in the municipality’s suite of waste management approaches.
As you can see, there will be more than enough residual waste after the first three Rs of the hierarchy have been exhausted, to ensure large amounts can be processed by Plasco while leaving a substantial remainder to buffer potential changes in waste stream volumes.
This is because Ottawa is expected to grow by 300,000 people over the next 30 years, and with this growth, total residential waste generation is projected to increase from 335,000 to 450,000 tonnes per year. As demonstrated above, even with projected reduced per capita generation and increased diversion rates, Ottawa will have a continued need to dispose of significant quantities of residual waste over the term of the recommended contract.
In keeping with the waste hierarchy, Plasco technology will provide a means of directing much of this post-diversion waste to recovery and away from landfill disposal. This will further reduce our long-term reliance on the Trail Road landfill, extend the life of this City asset and delay the need for a new landfill, and, at the same time, recover energy from the waste being processed.
It is important to note that the City’s Trail Road landfill will
continue to provide that important service. This is because regardless of the
success of aggressive diversion programs and implementation of agreements with
Plasco, residual waste will continue to be generated and require appropriate
disposal. For example, non-combustible
residuals, non-hazardous ash and slag from the Plasco treatment processes will
need a location for disposal. In
addition, waste generation rates vary quite significantly over the course of
the year, and it would not be cost-effective to oversize the Plasco facility in
order to have the processing capacity to handle the variability in waste
generation volumes. Finally, Plasco will also require a location to direct
wastes during scheduled and unscheduled maintenance at their facilities, and as
such, a landfill will continue to be required as part of a comprehensive waste
management system.
Long-term Waste Conversion Agreement (WCA)
The following two sections of the report describe the major commitments of the long-term agreements proposed between the City and Plasco for two Plasco facilities, namely the Plasco Commercial Facility (PCF) and the Plasco Trail Road Demonstration Facility (PTR).
As is stated in the recommendations in this report, Council is being asked to approve the terms and conditions for the agreement and leases based on the framework attached as Document 1. Council is also being asked to delegate authority to the City Manager, in conjunction with the City Clerk and Solicitor, to make minor, non-monetary changes to the agreement and leases and finally to enter into agreements with Plasco based on the framework attached as Document 1.
For ease of reference, highlights of the terms and conditions contained in the framework are presented below. If there is any discrepancy between the highlights in this report and the framework attached as Document 1, these are to be resolved in favour of the framework.
Plasco
Commercial Facility (PCF)
General
Under the
terms and conditions of this proposed agreement, Plasco will be responsible for
designing, permitting, constructing, operating and maintaining a commercial
waste processing facility at 3704 Moodie Drive. Plasco will pay all
construction and operating costs of the facility, including the cost of
disposing of all residues (both liquid and solid) produced by the facility. This
full-scale facility will consist
of three 135 tonnes/day strings of municipal solid waste processing equipment,
which Plasco expects to operate at 87% availability for effective capacity of
128,600 tonnes per year. The PCF will
provide the City with access to 109,500 tonnes of processing capacity annually,
which will result in a significant reduction in tonnage being brought to the
Trail Waste Facility (TWF) for ultimate disposal. The City will have first call
on the additional capacity of the PCF if and as it is available.
Term (Document 1, p. 61)
The term of the proposed agreement is for 20 years, beginning upon the
commencement of operations at PCF, with options for City to extend the contract
by five years, four times. Should the City choose to extend the term, Plasco
has the ability to reject the extension due to lack of economic viability. In
this, case the agreement would come to an end. Conversely, the City has the
choice at the commencement of each five-year extension to terminate the agreement.
However, given the significant capital investment Plasco will have made in
constructing the facility, should the City choose to not continue, Plasco will
have the opportunity to extend its waste processing operations at this site for
any or all of the remaining four, five-year terms in order to process waste not
provided by the City of Ottawa.
Commencement (Document 1, p. 61, 62)
Plasco is obligated by the proposed agreement to commence construction
of the Commercial Facility no later than March 31, 2013. The commencement of
construction is defined as having all necessary construction financing in place
to the satisfaction of the City, and to have awarded a minimum of $5 million
worth of equipment manufacturing contracts by that date. Should Plasco not
achieve these requirements by that date, the City may, at its sole discretion
and with written notification, inform Plasco that it is terminating the
agreement. The City’s decision on this matter is final and not subject to the
dispute resolution process contained in the agreement.
Delivery Obligations (Document 1,
p. 64)
The City is obligated to deliver, or arrange to have delivered, 109,500
tonnes per year of solid waste to the facility. In order to process this
amount, Plasco’s facility must be capable of receiving and processing 300
tonnes of solid waste per day, seven days per week for a weekly delivery
requirement of 2,100 tonnes per week. In the event that the City is unable to
meet its delivery obligations, Plasco will be entitled to the prevailing
tipping fee for any deficiency in delivery and any lost profits, be they due to
lost sale of power or aggregates or on carbon tax credits. Should a delivery
shortfall occur, Plasco is obligated to take steps to mitigate the revenue and
costs impacts of the shortfall.
Ramp Up (Document 1, p. 62)
Plasco will begin operations at the PCF in a Ramp Up Period that
recognizes the fact that processing capacity at the facility will increase over
time as operating experience is gained and potential equipment bottlenecks or
weaknesses are identified and cured. This Ramp Up period could begin as early
as December 2013, but no later than March 31, 2016, and cannot extend for more
than three years. At any time during this Ramp Up period, Plasco will have one
opportunity to ‘right size’ the capacity of the facility. This ‘right sizing’
will allow Plasco to reduce the processing capacity of the facility below the
nominal 300 tonnes per day capacity, which will reduce City commitment to the
same level. Plasco cannot increase the processing capacity during this process,
only decrease the amount.
Waste Stream Quality (Document 1,
p. 66, 67, 68)
Waste must be accepted by Plasco except for specific types of waste
stated in the contract. Unacceptable
waste includes:
(i) Metal and non-combustible items such as bicycles, appliances, barbeques, automobile parts, concrete and non-combustible Construction and Demolition Waste, and similar material;
(ii) Household Hazardous Waste and Hazardous Waste; and/or
(iii) Materials which if Processed would violate the Permits, could pose a risk to the safety of persons or property or could cause a violation of the Environmental Performance Standards.
These types of
waste will be accepted if they are in household waste collected in accordance
with the City’s Solid Waste Management By-law as currently administered. The
facility agrees to accept all City municipal solid waste delivered and the City
is obligated to use commercially reasonable efforts to enforce its current
Solid Waste Management By-law. On its part, Plasco acknowledges that the
properties and qualities of solid waste will be variable. The agreements address shortfalls in waste
quality arising from high moisture content by allowing the City to cover the
shortfall by delivering higher quantities with acceptable levels of moisture
content at a later time. Unacceptable
waste is returned to the City at no cost nor credit for their delivery.
Should the PCF fall behind in its processing obligations it may make up
the waste shortfall by processing more than the required amount when capacity
is available. Plasco may request the City to deliver additional solid waste to
the facility and the City is required to make ‘commercially reasonable’ efforts
to deliver additional waste, up to a maximum of 10,000 tonnes in any one year.
Plasco may also request additional waste above 300 tonnes per day to build a
“cushion” above its processing requirement. That cushion cannot exceed 20,000
tonnes. A record of this excess processing capacity can be used to offset any
Plasco processing shortfall in the subsequent five (5) year period.
Processing Commitments (Document
1, p. 66, 67, 68, 69, 70)
While the intent of the contract is to have all City delivered wastes
processed at the PCF, Plasco retains the ability to direct City wastes to the
Trail Road Demonstration Facility for processing. This flexibility on Plasco’s
part provides Plasco with extra processing capacity ensuring greater
reliability to process the City’s waste. Once the Commercial Facility has
commenced operations, the tipping fee paid by the City is fixed at the then
established tipping fee, regardless of the facility at which its waste is
processed. Total deliveries by the City to either the Demonstration Facility or
the PCF contribute to the City required delivery of 300 tonnes per day
Plasco does have the ability to process non-city solid waste at either
or both of the facilities if permitted by the MOE in the facilities’
certificates of approval. However, Plasco is bound to ensure that the City’s
committed waste processing capacity is retained first, and that any additional
processing capacity must first be offered to the City for consideration. Controls
will be required to ensure that the commercial residual and hazardous waste are
not mixed with residential waste processed at the facilities.
Plasco will be responsible for processing all wastes delivered to their
site, except for quantities of unacceptable wastes occurring in larger
quantities than would normally be found in the residual waste stream. These
materials are to be returned to the City at no cost nor credit for their
delivery. Easily separable incidental amounts of hazardous wastes received at
the facility are to be removed from the processing stream and disposed of in
conformance with regulatory requirements. Plasco will be reimbursed for the
cost of handling and disposal of City delivered hazardous wastes. The diversion
of these materials away from landfill disposal will assist the City in meeting
its overall diversion targets.
It is also recognized that the moisture content of solid waste can vary
significantly over the course of the year. The agreement sets 45 per cent as
the upper threshold of moisture content (MC) for materials to be processed. In
the event that solid waste delivered to facility is above this MC limit, or
conversely, the dry weight of material delivered falls below 165 dry tonnes per
day, then the City is required to make ‘commercially reasonable’ efforts to
deliver additional solid waste from within its normal waste collection
operations to make up the dry tonnage requirement. Should the City not be able
to make up the tonnage in the short term, then the City will accumulate a
processing shortfall. A record of this shortfall will be maintained and Plasco
may request that it be made up in periods during higher tonnage collection
periods.
In
the event that Plasco Ottawa is unable to process the amount of City waste
required by the minimum yearly tonnage obligation in one or more years, the
City may elect to reduce its minimum daily and yearly tonnage to the greater of
either: (i) the annual average amount for the immediately preceding three-year
period of City waste actually processed by Plasco Ottawa, notwithstanding the
minimum yearly tonnage; or (ii) the amount of City waste actually processed by
Plasco Ottawa during the preceding year, notwithstanding the minimum yearly
tonnage. The City’s election may be made
at the end of any operating year during the term of the WCA or any extension
thereof following the fifth operating year after Commencement of Operations.
Slag/Aggregate (Document 1, p. 63)
As noted previously, it is to be recognized that the PCF and TRF will
continue to require a facility to dispose of residual materials left after the
Plasco gasification process. The fully processed material is referred to as
‘slag’ and early estimates are that it will represent approximately 15 per cent
of delivered waste tonnage. Testing by Plasco has determined that this material
does not require controlled disposal and can appropriately be disposed of at
Trail Road. Plasco expects to sell this material as construction aggregate.
However, any unsold material may be disposed of by Plasco in the Trail Road
Landfill. Under the agreement, from now until the end of the Ramp Up Period,
this material may be disposed of at Trail Road at a tipping fee of $20 per
tonne, but once the Ramp Up Period is completed, the tipping fee for this
material will increase to the tipping fee paid by the City to Plasco for
incoming materials at the time the ramp up period is complete. Should the City
choose or need to use this material in on-going Trail Road operations, for
instance, as a road building material, then this material would be accepted at
Trail Road at no cost. Plasco has also identified the possibility that this
material may be used as a replacement for mined construction aggregate or
possibly as a material in cement. Should Plasco be successful in developing
these or other alternative uses for the slag, it is anticipated that a lesser
amount of material will be disposed of at Trail Road.
Inability to Process (Document 1,
p. 70)
In the case that PCF together with any capacity available at TRF after
the ramp-up period will on occasion be unable to fully process the entire City
waste processing commitment, the City is to receive and dispose of this waste
at the Trail Road Landfill to the extent that the City can receive and properly
dispose of this material. The City will be credited with the delivery of this
material as though it had been fully processed with no processing charges and
Plasco will be responsible for all direct costs of such disposal. In the event
that the City is unable to receive and properly dispose of this material at
Trail Road, Plasco will be responsible for the direct costs of the proper
disposal of this material at another site.
Tipping Fees (Document 1, p. 63)
Effective the day of commencement of operations at the PCF, the City
will pay a tipping fee of $83.25/tonne for solid waste material delivered and
processed at both the PCF and the company’s Trail Road Facility. This rate will
be adjusted annually at the rate of CPI.
On the same date, Plasco will pay the City the same tipping fee for all
waste brought to the Trail Waste Facility, including slag, excepting slag the
City chooses to incorporate into road building at the Trail Road Facility.
Non-City waste
(Document 1, p. 71)
Plasco does have the ability to process non-hazardous industrial,
commercial or institutional (IC&I) wastes at the PCF, if permission is
granted by the MOE in the certificate of approval. In the event that these
wastes are unable to be processed, for any reason, then the maximum amount that
may be diverted to Trail Road is 120 tonnes per day and 50,000 tonnes in total
over the term of the agreement. The tipping fee to be paid to the City in this
situation will be the highest of the prevailing City tipping fees for this type
of waste, the fee that Plasco pays for this waste, or the tipping fee paid by
the City for processing of City waste at Plasco at the time this situation
occurs.
Revenue Sharing (Document 1, p. 64)
The agreement has provisions for revenue sharing should Plasco revenues
in any one year exceed $34,100,000. This figure is subject to adjustment
post-commissioning to reflect the actual cost of construction of the facility
and annually to reflect CPI applied to operating costs included in the Revenue
Baseline. In the event that annual revenue exceeds this adjusted Revenue
Baseline, the City is to receive the first $822,500 above the baseline; Plasco
would receive the next $2,467,500 and the two parties would share, on a City 25
per cent and Plasco 75 per cent basis, any annual revenues above $37,390,000.
In recognition of the City’s commitment to Plasco and the development of
this process, Plasco has offered the City a marketing fee to a total amount of
$18 million with an annual maximum of $3 million to be paid based upon a $5 per
tonne for all processing carried out in North America, excluding the first site
constructed in California since this facility was confirmed prior to the
agreement with the City of Ottawa.
Mandatory Cost Increases
(Document 1, p. 64, 65, 66)
The operation of the PCF is governed by a number of laws and
regulations. The agreement has been developed recognizing that given the term
of the contract, the possibility of regulatory change must be considered. This
element of the agreement is referred to as a Mandatory Cap provision. To that
end, any regulatory change that would affect the operation of the PCF, but
would not affect the Trail Road Landfill, is subject to the following financial
risk allocation condition. With any regulatory change of this nature, the
City’s risk responsibility is to make up the shortfall by applying any revenue
sharing amount to which the City may be entitled and funding to a maximum $10
million over the life of the contract as follows. First, the City will forego
revenue sharing provisions of the agreement. Second, at the City’s option, any
additional funding to the maximum of $10 million may be paid as a lump sum or
through increases to the then current tipping fee with increase not to exceed
50 per cent of that fee. Plasco becomes responsible for any and all costs above
this aggregate total. Should the
regulatory change be one that would or does affect the operation of the Trail
Road Landfill operations, then the City is responsible for all capital and
operating costs necessary to comply with this change.
Termination (Document 1, p. 74)
Plasco has the right to terminate operations at the PCF should the
facility’s continuing operation prove not to be economically viable, or if it is
not possible to operate the facility in compliance with environmental
performance standards. This determination must be made with due consideration
of any relief possible through the mandatory cap provisions.
Facility Expansion (Document 1,
p. 71)
The agreement allows Plasco to build an additional three processing
streams at the Moodie Road site with the maximum capacity of 135 tonnes per day
each. The City has retained the right of first offer on this additional
processing capacity should Plasco proceed with a facility expansion.
Dispute Resolution (Document 1,
p. 74, 75)
The agreement has also been provided with a formal dispute resolution
process that includes both mediation and a final arbitration step. The
arbitration is final and binding upon the parties.
Plasco
Trail Road (PTR) Demonstration Facility (Document 1, p. 80, 81, 82)
After City Council voted in 2005 to enter into a partnership with Plasco
to help commercialize its plasma gasification process, this facility was built
in 2006 and 2007 as a proprietary process to convert waste material into
synthetic gas that is then used to generate electricity. The PTR facility has
been developed and modified over the last five years with significant capital
investments by Plasco at no cost to the City.
The Ministry of the Environment has overseen the operation of the
facility and evaluated air emissions from the process. The MOE’s confirmation of PTR air emissions
are provided in Document 2.
In 2011, Plasco conducted an Environmental Screening Assessment for the
conversion of the Trail Road Pilot Demonstration Facility to a permanent
Demonstration Facility with a processing capacity of up to 135 tonnes per day.
The completion and filing of the Screening Report occurred in October.
Certificates of Approval (Waste Processing and Air) were issued by the
Ministry of the Environment for the facility on 24 October 2011. These
approvals permit the facility to process 85 tonnes per day of residential and
Industrial, Commercial and Institutional (ICI) waste originating from within
the City of Ottawa on a permanent basis. Consistent with its Environmental
Screening report, Plasco has indicated that they ultimately plan to request
approval to increase the daily operating tonnage to a maximum of 135 tonnes per
day.
The term of the agreement for the TRF will be twenty years with four
extension options of five years each.
A tipping fee of $43.23/tonne City residential waste delivered is
proposed for this facility. This fee is lower than the fee for the commercial
facility in recognition that the City will have to be flexible in the delivery
of waste at the demonstration facility.
This fee will be adjusted annually based on CPI. Inert waste and
non-hazardous ash will be disposed at the TWF at the same tipping fee paid to
Plasco. Slag may be brought to TWF for
disposal at $20/tonne (adjusted annually by CPI). These fees will only be in effect until the
Plasco Commercial Facility (PCF) commences operations, at which time the
various fee structures for the PCF facility (tipping fee, residuals and slag)
will be in effect.
The PTR facility has been permitted to receive both residential and/or
ICI waste. Until such time as the PCF has commenced operations, the PTR waste
handling priority will be with City solid waste. Thereafter, the PTR facility
will be then used to process ICI waste and as a backup for the PCF. Plasco has
agreed to controls to ensure that the ICI residual and hazardous waste are not
mixed with the residential waste at this facility.
As with the PCF WCA agreement, the City of Ottawa will be financially
responsible for the proper disposal of all incidental residential hazardous
waste found in the garbage delivered to Plasco.
Property Leases – Plasco Trail
Road Demonstration Facility (Document 1, p. 82, 83, 84) and Plasco Commercial
Facility (Document 1, p. 77, 78, 79, 80)
Both the PTR and the PCF will require separate property leases. The
duration of these leases will, generally, match the Waste Conversion Agreement
durations and options.
Plasco will be responsible for paying a rent amount of $10,000 per year
for each site, adjusted annually for CPI. Both sites are next to the Trail Road
Landfill and have little commercial value.
For the PCF, Plasco will be responsible for obtaining the necessary
planning approvals to construct the PCF, including obtaining Site Plan
Approval. Cost for obtaining and complying for that Site Plan Approval are to
be paid by Plasco.
Modifications are required for stormwater collection and treatment at
Trail Road site. Plasco is responsible for demonstrating that they have made
the necessary changes and obtained the necessary revised Certificate of
Approval for their stormwater facility for this facility. Failure to obtain
such may result in the termination of the TRF lease by the City.
At the conclusion of processing operations at either of the TDF and PCF,
Plasco will be responsible for decommissioning these facilities and returning
the site to its original condition. To establish the original condition of each
site, Plasco is required to conduct a Phase II environment assessment of each
site.
Financial Impact Analysis
A financial analysis compared continuing residential waste processing at
the City’s existing Trail Road Landfill to various scenarios under a Plasco
Long-Term Agreement. Both operating
costs and capital investment requirements related to Landfill were forecasted
based on known agreement terms or reasonable assumptions for the forty year
extended agreement timeline.
Of particular importance to this analysis is the estimated remaining
life of the Trail Road Landfill, which upon exhaustion will require the City to
make a significant investment in a new landfill. A recent study estimated that based on the
City’s projected diversion targets, the current site would reach closure at
2042. Alternatively, when the same study
was altered to reduce 109,500 tonnes of waste per year from Trail (the amount
of waste contracted to Plasco for processing) its life was extended to 2070 or
by 28 years. As a result, the City’s
capital costs associated with securing a new landfill, estimated at $250
million in 2011, for periodically capping cells in the landfill, and for
closing the landfill are all deferred under a Plasco agreement.
A 40-year status quo scenario was developed with the assumption that
current Trail Landfill operating costs would continue to increase at the rate
of inflation.
The analysis matched the status quo against three possible scenarios
over 40 years under agreements with Plasco based on the framework in Document
1:
1.
Plasco
processes the City’s yearly tonnage obligation as set out in the agreement, with
“limited success” as the revenue baseline established in the agreement is not
reached;
2.
Plasco’s
operations at its Ottawa facility are successful, and the City receives the
first level of revenue sharing as per the terms of the framework at $822,000
per year; and
3.
Plasco’s
technological success leads to further facilities in North America leading to
the City earning the total $18 million marketing fees over a six year period
commencing in 2020, in addition to the first level of revenue sharing for
Plasco’s Ottawa Commercial Facility.
Common to all three Plasco scenarios are:
·
Reduced
operating costs at Trail effective 2017 as fewer staff would be required, and
the number of vehicles being operated would be reduced;
·
Tipping
fees payable to Plasco for processing the full annual capacity of 109,500
tonnes reserved for Ottawa; and
·
Capital
costs for capping of Trail Landfill cells at extended intervals.
As landfill capacity would remain at the end of the forty year analysis
period, a residual value was estimated based on the fair market value of a new
site at year 40, prorated to account for the varying capacities. This value would be higher under the status
quo scenario since a new landfill would still have an estimated 40 years of
life, whereas under a Plasco scenario only 16 years of life would remain for
the Trail Road Landfill. This residual
value estimate is included to provide a valid comparison of capital assets
utilized over the analysis period.
The scenarios and elements of the analysis are outlined in the following
table. The assumptions employed are
conservative in nature and are listed in the note to the table.
Financial comparison of Status
Quo Scenario and Plasco Long Term Waste Processing Scenarios:
Net present value (benefit)
cost in $2012 millions
Based on 40-Year Agreement
Term
Scenario
Element |
Status
Quo at Trail Landfill |
Plasco
Agreement “Limited Success” |
Plasco
“Ottawa Success” Scenario |
Plasco “Worldwide
Success” Scenario |
Notes |
Solid Waste Processing Costs |
150.8 |
349.4 |
349.4 |
349.4 |
Under all Plasco
scenarios Trail Road Landfill costs are reduced, & tipping fees are paid
to Plasco on a per tonne basis. |
New Revenue Stream |
- |
(0.8) |
(12.7) |
(24.3) |
Revenue sharing from Plasco’s
Ottawa Commercial Facility, marketing fees from opening of new facilities
worldwide, rental revenue paid to City for use of land for Demonstration and
Commercial Facilities. |
[A] SUBTOTAL Operating
Impacts |
150.8 |
348.6 |
336.7 |
325.1 |
|
Capital Investment re Existing Trail Road
Landfill Site |
41.6 |
21.5 |
21.5 |
21.5 |
Capping costs for Trail
Road Landfill and closure costs under the Status Quo scenario. |
Capital Investment for New Landfill Site |
248.4 |
- |
- |
- |
Under Status Quo scenario
the Trail Road Landfill closes in 2042 and a new landfill site is required. Under all Plasco scenarios the Trail Road
Landfill site life is extended 28 years to 2070 |
[B] SUBTOTAL Capital Investment Impacts |
290.0 |
21.5 |
21.5 |
21.5 |
|
[C]
Remaining Life of Landfill at Year 40 |
(182.5) |
(73.0) |
(73.0) |
(73.0) |
Assuming diversion
targets in Ottawa’s Waste Plan are achieved, Trail Road Landfill has 30 years
life remaining. With a successful Plasco implementation, the landfill’s
lifespan will be extended by 28 years. |
TOTAL
(NPV) [A]+[B]+[C] |
258.3 |
297.1 |
285.2 |
273.6 |
|
Variance
from Status Quo |
- |
38.8 |
26.9 |
15.3 |
|
*Assumptions:
·
Ongoing operating costs increase at the rate of CPI estimated
at 2% per annum
·
Capital construction costs increase at the rate of the construction
price index at 3% per annum, land costs increase at the rate of 10% per annum
per review of comparable assessment data
·
Discount rate of 4.25% per annum was applied to arrive at
2012 $ values
·
Plasco’s Commercial Facility becomes operational mid-2014
with full processing capacity at 2016
·
Trail Road Landfill Operating Cost savings realized from 2017
forward
·
Landfill life figures received were provided by third party
engineering experts
As demonstrated above, operating costs under a Plasco contract exceed
the continuing operations of the City’s Trail Road Landfill. However, this is a reflection of the added
capital costs embedded in the tipping fees payable to Plasco for development of
its facility. These are largely offset
as the City’s capital outflow is reduced by approximately $270 million in 2012 dollars
within the next 30 years. Trail Road
operating savings of over $80 million in current dollars would be realized over
the 40-year agreement. Lastly, the
potential for new revenue streams for the City would be possible under a Plasco
agreement as the City would share in Plasco’s success and be rewarded for its
commitment to new alternative technology for waste disposal.
When viewed under a forty-year timeframe, the net present value figures suggest
that there is only a marginal cost of between roughly $400,000 and $950,000 per
year to the City for adopting agreements based on the framework in Document
1. On a per household basis, this works
out to between $1.75 and $3.00 per year over the lifetime of the proposed
agreements.
Economic Development
Benefits
A continuation of Plasco’s Trail Road Demonstration Facility for 20 years plus extensions and a new Plasco facility on Moodie Drive together with a Long-term Waste Conversion Agreement with Plasco will provide significant direct and indirect economic development benefits for the City of Ottawa, both direct and indirect.
Within its economic development mandate, the City has an important leadership role in fostering innovation helping to brand Ottawa as an internationally renowned hot-bed for developing world-leading advanced technologies, particularly within the Clean-tech sector. Plasco’s international headquarters are located in Ottawa, and delegates from around the world come to Ottawa to tour the Plasco Trail Road facility. This is not only an opportunity to showcase Plasco’s cutting edge technology, but it also boosts Ottawa’s reputation as a place for innovation.
Due to the partnership between the City and Plasco, which began in 2005, the company has been able to demonstrate that it is a leader in waste-to-energy technology and can operate within applicable environmental legislation. Plasco’s environmental performance has been confirmed through independent testing and monitoring by the Ministry of Environment.
Plasco has attracted over $250 million in investments already. This “Green Capital” provides a foundation on which to build a green technology hub.
Ottawa will also be the direct beneficiary of substantial direct economic benefits through the new arrangement with Plasco. Plasco is already a significant source of local, high-quality employment and currently employs 130 local employees: 92 at its headquarters in Kanata, and 38 at Plasco Trail Road (PTR). The new facility will create roughly 50 new jobs. In addition, hundreds of supply and construction‐related jobs will result from the creation of the new plant.
Plasco has actively contributed to the community and the Province at large over the past five years through targeted spending:
(i) Over $100M spent in Ontario in services, $52,294,406 of which was paid to Ottawa businesses for services;
(ii) Over $7M spent in Ontario on consumables, $1,482,158 of which was purchased from Ottawa businesses; and
(iii) Over $43M spent on salaries, which paid the salaries of 130 people employed in the Ottawa area.
Additionally, the resultant slag created as a by-product of Plasco system has the potential to be used to foster a significant new industry in Ottawa through its re-sale as an aggregate. The City of Ottawa could show leadership again by helping demonstrate that the aggregate is a good alternative to mined materials.
If Plasco successfully demonstrates large-scale deployment of its technology with the City of Ottawa, it is expected that many more municipalities around the world will look at the technology even more favorably. Any growth in Plasco’s business is good news for its local Ottawa operations, as it would translate to continued and increased research and development funding conducted in Ottawa.
The City would also benefit financially should Plasco be successful in marketing it technology to more jurisdictions in North America.
ENVIRONMENTAL IMPLICATIONS
The City of Ottawa will achieve significant environmental benefits from
the operation of the Plasco Trail and Commercial facilities.
The City’s recently approved Municipal Waste Management Master Plan
vision is:
By
2042, Ottawa will have room in its municipal landfill because as a community we
improved our rates of reducing, reusing and recycling, and managing our assets
wisely.
By directing 109,500 tonnes per year of solid waste to the PCF for
processing, the City will have moved significantly towards achieving that
objective. It is anticipated that in the first few years of the agreement, up
to 15 per cent of the volume of solid waste delivered to Plasco will be
returned to Trail Road as slag for disposal. City staff project that as
alternative uses for this material are developed, this amount will reduce to
approximately 5%. By meeting the waste
diversion targets established in Ottawa’s Waste Plan and by the re-direction of
residual waste to Plasco, the Trail Road life expectancy will be extended by approximately
28 years to 2070.
Staff have reviewed the assumptions provided by Plasco with respect to the GHG emission calculations resulting from the operation of the PCF and feel that they are reasonable.
It is recognized that through processing solid wastes at this facility,
the City will reduce green house gas emissions by 155,615 tonnes of eCO2
annually. This calculation is based on information supplied by Plasco on
emissions that will be produced from its operations compared to GHG emissions
avoided by not landfilling the solid waste that will now go to the company’s
facilities and the coal electrical generation emissions that will be displaced
as result of Plasco feeding power to the grid.
Plasco is projecting to produce gross energy amounts equal to 1.4 MWh of
electricity for every tonne processed in its facilities. Using waste supplied
by the City at the minimum 109,500 tonnes per year, the PCF is expected to
consume 6 MW of power on an annual basis while producing 22 MW of energy. This
is projected to result in 16 MW of net baseload energy going into the grid from
a currently un-utilized fuel source. Plasco expects to process an additional 52
tonnes per day, which the City may supply, increasing total power produced to
26 MW while consuming 7 MW.
Prior to the establishment of facilities of this nature, it is necessary
for the proponent, in this case Plasco, to complete an environmental assessment
considering all potential environmental impacts. Plasco successfully completed
the necessary assessment for the Trail Road Facility in September 2011. Plasco expects to begin a similar assessment
on the PCF in early 2012.
Subsequent to the completion of the Environmental Assessment and prior
to the commencement of operations at a commercial facility, Plasco is required
to obtain the following Certificates of Approval from the Ministry of the
Environment:
·
Waste
Disposal Site – governing the overall operation of the facility;
·
Air –
governing the air emissions discharged from either facility, and
·
Stormwater
– governing the collection and disposal of stormwater on the site.
Each of these Certificates will establish a number of performance
requirements governing the operations of the facility and ensure compliance
with appropriate environmental standards. They will also require, as a minimum,
annual performance reporting, of which the City will obtain copies in order to
monitor Plasco’s commitments.
Plasco has already obtained Certificates of Approval for the Waste
Disposal Site and Air for the Trail Road site. Plasco is in the process of
upgrading stormwater collection and storage facilities on site and is required,
as a condition precedent on the lease for the Trail Road site, to obtain an
updated Certificate for its stormwater facility.
Each facility will generate both solid and liquid wastes requiring
disposal. Plasco has determined that:
·
Solid
waste known as ‘slag’ can be disposed of as an acceptable non-hazardous
material at the Trail Road Landfill. Plasco is also exploring the possibility
of other beneficial uses for the slag and will focus on this once slag material
is being produced in significant quantities;
·
Liquid wastes generated on site must be pre-treated and demonstrated to
meet the City’s Sewer Use By-law limits prior to transport and disposal at the
R.O. Pickard Environmental Centre. Should Plasco be unable to demonstrate
that liquid wastes comply with the City’s Bylaw, they will be responsible for
proper disposal of these wastes at appropriate facilities.
Plasco intends to treat water recovered from waste processed at the PCF
to groundwater release quality.
Should liquid or solid wastes be created that do not meet non-hazardous
disposal limits, Plasco will be responsible for proper disposal of these wastes
at appropriate facilities.
The PCF will be located on a groundwater attenuation zone for the closed
Nepean Landfill Site. A City-owned and
operated groundwater treatment facility is located on the leased property. The City has several groundwater monitoring
wells and surface water monitoring stations on the property. The integrity of the City’s monitoring
program and environmental performance of the full-scale facility have been
addressed in the lease agreement between the City and Plasco. Impacts to the environment will be addressed
in the MOE approval process.
RISK MANAGEMENT
IMPLICATIONS
In negotiating this agreement, the City and Plasco have come to
agreement on many issues of risk that may affect the operation of the
facilities. These issues include the following risks:
·
Solid
waste quantity and quality delivery obligations;
·
Operational
stability, redundancy and capacity;
·
Environmental
performance;
·
Financial
and economic viability issues;
·
Dispute
resolution; and
·
Regulatory
change.
Each of the risk mitigation strategies have been described in greater
detail earlier in the body of the report.
One of the major areas of negotiation since entering into the LOI
surrounded the City’s responsibility for delivering solid waste with a high
energy content make up. In the LOI, the tipping fee to be paid and the tonnage
of material to be delivered to the PCF by the City was directly tied to the
energy content of that waste. Through negotiation, the City has been able to
remove all responsibility for the energy content of the delivered waste and has
thereby moved all risk for this issue to Plasco. This separation of
responsibility extends to include the fact that the City is not responsible for
the energy content of waste possibly affected by regulatory change. All risk
associated with changes in energy content of waste delivered to Plasco resides
with Plasco.
On November 15, 2011, Council approved Phase 1 of Ottawa’s Waste Plan
that establishes the vision for solid waste management over the next 30
years. Aggressive waste diversion targets
have been adopted by Council that if met, will result in significant decreases
in the per capita waste generation rate by 2042. In addition, there may be future regulatory
changes that could affect the nature and quantity of residual waste in the City. As a result, the City has assumed a
conservative processing capacity requirement at the Plasco facilities to
mitigate these risks.
Assuming the City’s waste generation targets in Phase 1 of Ottawa’s
Waste Plan are met in 2042, there will still be significant quantities of
residual waste. Residual waste tonnages
vary through the year with February historically being the lowest residual
waste generating month. The chart below illustrates that assuming the 2042
waste reduction targets are met, there will still be sufficient waste to meet
the City’s 2100 tonne/week commitment to Plasco. However, the month of February will be
relatively tight based on conservative estimates. As such, the City during the month of
February throughout the term of the contract may at times be required to source
small quantities of waste to meet its weekly commitment to Plasco. Non-recyclable waste lumber and other combustible
building materials from the Trail Waste Facility could be redirected to Plasco
to make up for any potential short fall that may occur.
The City has a Settlement Agreement with Waste Management Inc. that reserves 90% of the Carp Landfill’s capacity for City waste if the City directs 30% of the residual residential waste to the Carp Landfill. Should the City opt not to send any residential residual waste to the Carp Landfill, Waste Management Inc. is only required to reserve 75% of its capacity for City waste. As waste generation rates decline over time based on the vision of Ottawa’s Waste Plan, there may be years where all of the City’s residual waste not going to Plasco will have to be directed to Carp to reserve the 90% capacity pending Council’s future direction.
Plasco Ottawa’s liability for a failure to perform its processing
obligations is limited to an amount of $10,000,000, adjusted annually for CPI.
Plasco will be required to maintain a Decommissioning Security in the amount of $1 million for the decommissioning of the Plasco Commercial Facility. The City will have the option to draw upon the Decommissioning Security and undertake the decommissioning of the Commercial Facility in the case that Plasco Ottawa fails to perform the decommissioning of the Commercial Facility when required.
Plasco will be required to maintain insurance in form and content
acceptable to the City, including provisions for environmental impairment and
third party claims against the City.
Taken as a whole, agreements based on the framework contained in Document 1 alleviate any undue risk associated with the launch of a new commercial technology and provide opportunity to realize the environmental and economic sustainability benefits describe in this report.
RURAL IMPLICATIONS
The full-scale facility is located in the Rideau Goulbourn Ward. The Plasco Facility is located in a rural
area near landfill operations, active pits and agricultural activities. The Plasco facility should not have any
impact on any of those operations.
In 2007, Plasco established a Public Advisory Committee for the Trail
Road Demonstration Facility. The PAC included members with expertise in air
quality and waste management, representatives of the facilities neighbours, and
others reflecting the broader community. Barrhaven Ward Councillor Jan Harder
has chaired the PAC since its inception and had followed the project closely.
The PAC reviewed sampling techniques and air emission data provided for
the Demonstration Facility.
Also, Plasco conducted an Environmental Screening Report (ESR) for the
permanent operation of the Trail Road demonstration facility to ensure that all
environmental impacts of the facility are identified and mitigated. The ESR required mandatory public
consultation and allowed for public and agency comment on the proposed
undertaking. A Statement of Completion
was issued by Plasco on August 29, 2011.
The Plasco Commercial Facility will have to complete an Environmental
Assessment of its Moodie Road site in accordance with the Ontario Environmental
Assessment Act. This process will include mandatory provisions for public
consultation.
It is likely that the MOE will require a Public Liaison Committee (PLC)
for the Full-Scale Facility. Typically,
PLCs are composed of local landowners and residents living along haul
routes. These PLCs are usually required
to meet quarterly.
COMMENTS BY THE WARD COUNCILLOR(S)
This report has City-wide implications. However, both the demonstration
plant and the proposed commercial plant are in Rideau – Goulbourn Ward. Councillor
Moffatt is aware of this report.
LEGAL IMPLICATIONS
The operating requirements for the long-term commercial facility and Trail Road Demonstration facility are primarily governed by the Ministry of Environment approval processes for the applicable Certificates of Approval, including for waste processing and air emissions. Document 1 includes the general terms and conditions that will be incorporated into the authorized leases and service agreements. In light of the foregoing, there are no legal impediments to implementing the recommendations in this report.
STRATEGIC PRIORITIES
In June 2011, Council approved its term of office priorities. The City’s participation in this agreement with Plasco contributes positively to many of these priorities.
Environmental Stewardship: Promote long-term sustainability and reduce our environmental footprint by maintaining and improving the quality of our air and water, by utilizing green technology and promoting energy efficiency, and by protecting our natural resources and land to enhance the quality of the environment for our residents.
Reduce Environmental impact: Put in place an approach to the ecosystem that encourages sustainability and takes into consideration natural cycles (water, carbon nutrients) as well as natural habitat before and during development.
Agreements based on the framework in Document 1 will allow Plasco’s technology to reduce the City’s emission of green house gases while directing residential waste from landfill and producing a sustainable source of electricity that will be sold back to the provincial power grid.
The City has begun the development of a long range municipal waste management master plan which has established as its principal goal, the extension of the life of the Trail Road Landfill beyond the year 2042. By participating in this agreement, and reducing the delivery of municipal solid waste by 109,500 tonnes per year, we are extending the life of the Trail Road landfill by 28 years.
Economic Prosperity: Promote Ottawa Globally: Support growth of the local economy. Invest in community organizations that support the local economy, both urban and rural, by promoting local industry, creating infrastructure to stimulate growth, including hubs for innovation.
Agreements based on the framework in Document 1 will allow the Council to satisfy many of the directions contained in this priority.
Governance, Planning and Decision Making: Making sustainable choices: Promote a sustainable, resilient and
livable future by applying a sustainability lens to decision making that
considers long-term impact. In some cases, the City will rethink current
practices. In all cases, the City will make decisions and solve problems in a
way that improves economic health, cultural vitality, social and environmental
responsibility.
By entering into
these agreements, the City will be contributing to a more sustainable future.
Financial Responsibility: Maintain
and enhance the City’s financial position: Develop processes and tools to
ensure that tax dollars are spent wisely by making strategic decisions and
finding ways to improve the value we can deliver for the tax dollar.
By entering into these agreements, the City will be extending the life of the Trail Road Landfill and avoiding very significant future costs to site and construct additional landfill capacity. This is being achieved by slight net increase in the cost of delivering solid waste services.
TECHNICAL
IMPLICATIONS
The City has recently undertaken a technical review of thermal technologies available to handle residential waste. There are numerous technologies available to thermally process solid waste, including Plasco’s plasma gasification process.
Of the innovative technologies identified, Plasco is the only new thermal technology for which the MOE has given a Certificate of Approval. The MOE issued Certificates of Approval in 2011 for the on-going operation of PTR following the successful completion of an Environmental Screening process based on the environmental performance of the PTR.
The review concluded that there is no other technology currently available that will provide the benefits the Plasco system provides for the tipping fee contained in the recommended framework for agreements with the company detailed in Document 1.
As a result of entering into the Plasco Long-Term Waste Processing Agreement the City will experience over a 4 year period commencing in 2013 increased operating budget pressures totaling approximately $8 Million. Pressures will be offset by reduced operating costs at the City’s Trail Road Landfill operation; from revenue sharing with Plasco; marketing fees to be received from Plasco upon their opening of new North American facilities; and reduced capital servicing costs in the longer term given the City’s landfill life being extended.
In the shorter term, strategies will be developed for Council to consider blending the savings from the change in the collection service level changes with the operating pressures from the Plasco agreement to mitigate the impact to households.
Document 1 – Proposed Agreement Framework
Document 2 - Pilot Demonstration Facility
Report
Document 3 – MOE Letters on Emissions from PTR (3A, 3B, 3C)
Upon Council approval of the recommendations contained in this report,
the City Manager, in conjunction with the City Clerk and Solicitor, will
execute waste conversion agreement and applicable leases with Plasco based on
the terms and conditions outlined in this report and detailed in the legal
framework contained in Document 1.