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‘Waste' to energy’: making fuel out of plastic waste
Sustainability Outlook spoke to MK Merchant, Chairperson and CEO of MK Aromatic, about making fuel out of plastic waste
You process plastic waste into hydrocarbon fuels. Can you provide a quick overview on your operations?
Our technology doesn't need plastic waste to be sorted, washed or cleaned. Any kind of plastic can be put in our plant, and what you get is high quality crude polymer oil, which is a hydrocarbon mixture. We have 2 plants operating in Thailand. We are also putting up plants in Myanmar and Cambodia. These have been commissioned by the governments of these respective countries. In India, we have a plant in India in Chennai. We are setting up 2 plants in Goa, and 1 more plant in Bangalore, for the Bangalore municipality. All our commercially sized plants have a capacity of 10 tonnes per day.
When you compare with plastic waste littering, our present capacity is very insignificant. If you take Delhi for example, Delhi generates about 700 tonnes of post-consumer waste plastics per day.
This is currently not being recycled and ends up in the landfill. We are creating a backend supply chain for plastics. Our ability to invest in the back-end supply chain depends on our ability to sell our product at competitive prices and minimise costs of production, so that the surplus can be used not just for business growth but also, to set up collections for plastic waste.
Consider the power sector briefly. For new types of generation to be competitive, you cannot go beyond Rs. 5 or 6 / per unit, and if solar or wind are more expensive, then subsidies are required. When it comes to hydrocarbon oils, you can create great value-add than just through direct power generation. We have enough surplus in creating our oils that we can invest in creating a backend supply chain. We buy our plastic waste at 10 rupees / kg, to deliver Rs. 40-50 rupees / kg worth of fuel. Further, we sell our fuels at refinery prices for traditionally sourced fossil fuels, hence there is complete parity between our fuel and traditional fuel products.
To set up the back-end supply chain, we get input from rag-pickers, small NGOs who engage in this space, companies and governments. We have centers for collections from rag-pickers. We give out Rs. 200 / day, and during each day, one person can pick about 20 kilos of plastic waste. We support the rag pickers with fair wages, and we can absorb some of this collections cost, as these rag-pickers are a very important part of the chain in terms of collecting plastic from garbage sites, drains etc.
How big is the waste problem for Indian cities?
Most of major cities lead to about 4000 to 7000 tonnes of solid waste per day. It is important to note that out of this about 60% is organic waste, which just decomposes. Everything you see around you will have a plastic component. In terms of total municipal solid waste, Delhi generates about 5000 tonnes of municipal solid waste per day and around 12 to 15% of this is waste plastics. In terms of plastic waste, Bombay generates about 1000 tonnes/day, Chennai and Bangalore average at 400 tonnes/day.
About 10 tonnes of plastic per day can produce 10,000 litres of fuel oil under our technology. One of the major developments in our country is that people are talking about putting waste to energy plants. Now, this is just incineration. The difference is that in India, we are blessed with good weather unlike areas such as Europe where most of the waste (almost 60%) is inorganic waste and rarely decomposes. In India, if we start ‘Waste' to energy’: making fuel out of plastic waste using waste incineration, it's just not going to burn. We are going to use fuel on burning waste that would otherwise decompose.
Could you explain why 'waste to energy' incineration plants in India will not be able togenerate power?
To generate 1MW of power, ideally you need about 8000 calorific value per tonne of waste. However, the calorific value of input waste is very low in India. It is less than 2000 calorific value per tonne (1500-2000 kcal/kg). So, if a plant is to generate the balance of the energy, 6000 calories has to either come from fossil fuels or electricity which is introduced in the burning process.
So who is paying for the additional fuel/energy?
The government will in effect, pay for these fuels, by having to pay a huge tipping fee to deliver the waste to the plants. You lose so much power in burning waste that there is very little energy to upload into the grid.
The government is actively inviting bids for waste to energy plants in order to solve the problems of over-filled landfills - but incineration plants will not improve the overall situation. Incineration as a waste management strategy for cities needs to be re-thought.
Why aren't the municipal authorities in India thinking about alternatives to incineration?
Most of the incineration technology companies are international and they are attempting to sell in India. However, there is lack of understanding that our waste mix is different.
In addition, the government must acknowledge that:
- these plants are really expensive,
- second that these plants are being sold under the assumption that they will generate power and will connect to the grid, but this has not really borne out.
Let's talk about the product itself. Who buys the fuel?
Typically the companies we work with are large consumers of fuel oil (e.g. HUL or Britannia), and/or a large producer of plastic waste (e.g. TVS motors). Virtually any industry can leverage this opportunity created by this plastic to fuel technology.
Major consumer good manufacturing companies are very large consumers of fuel oil. Unilever uses our fuel to directly energise a plant near Pondicherry, as does Britannia.
For large corporates, it is possible to position this technology as an end of life waste management solution for retail brands looking to offset waste from consumer goods or catalyse sustainable packaging. In this case, funds to support parts of the project can come from companies' CSR budget.
Plastic to fuel plants are not mainstream. What sort of future do you see for these technologies?
Ideally, these sorts of plants need to come up in dump sites / landfill sites across the industry [to get bulk access to plastic waste]. These plants need to be decentralised. That is what we're trying to do. Today, municipal solid waste in India is very bulky and most of this is due to plastic waste. Hence plastics choke up landfill sites. When you remove the plastic from the system, you address two issues - the issue of environment, and of energy.
The MP state government is proposing to set up five plants. So every state has to set up these plants, and then ensure waste access.
What implementation challenges do you face?
The central government needs to legislate to enable companies like ours to work on dump sites. Most of the municipalities in the country don't have money - they are all broke. A lot of the budget goes into waste management – people have to collect the waste, take it to a transfer station, and finally to a landfill. However, most municipalities do not have resources to implement additional projects related to waste management. We also need to work with state governments, as setting up plant also becomes a state government issue. A state government will run a tendering procedure. These processes are very time consuming. It took us almost a 1 to 1.5 years to get clearance for a project.
How much does one 10MW plastic to fuel plant cost? How do you calculate payback? What are the long term revenue streams for your business?
It is INR 200 million turnkey project. The payback is there, but varies depending on location. All ofour investment is being funded by the revenue stream benchmarked to fuel sales price being Rs. 40/kg. We also need to make sure that the rate of conversion of plastic to fuel is highly efficient so that we can see at really low refinery prices, while still having a surplus. Charity is not sustainable.
Ten years from now, the cost of raw materials will go up. The refinery prices for cost of petrol or diesel will also go up, and they are already rising. However, the production of fuel will not be able drive demand for this technology. The core of this is that it is still a solution for waste management for the government. The government needs to invest and own the plastic garbage. The primary beneficiary is the government. A standalone business will grow if it's linked to the government, for example, a government can mandate that all the garbage from an airport, for example, needs to be sent to one waste processor. There is also an informal sector that is burning plastic on open furnaces, which is very harmful. Therefore the government needs to intervene in this area.
A lot of your work creates urban resilience and energy security. Have public sector or development agencies been able to support you with financing?
More than financing, I think the government needs to move faster. I don't think financing is a big issue. We have no issues with funding.
The government needs to move faster, as I mentioned earlier, these projects are high statutory projects. Government is critical for the success of these projects.
How does plastic to fuel compare with other uses of plastic (e.g. textiles, cement industry, construction, roading)? How clean is the process for making fuels from plastic?
The formal plastic to fuel sector can produce high quality fuel that is low in sulphur through a process that has minimal environmental impact. We also use a zeolyte catalyst that is made inhouse. There is no air pollution from our process and our fuel is low-sulfur. In our process, out of 100 kg of plastic, 80% turns to oil and 20% remains as coal.
When you look at alternative use-cases for plastic, for example in making of roads, there is a limitation. You can only use a particular low density plastic. Consequently there is additional cost associated with sorting, grading and aggregating this type of low density plastic. This includes monetary costs, as well as implied energy and resource costs. As a solution, plastics for roads & construction just do not make sense. Further, this approach does not process other forms of plastic, for example, those used in packaging of biscuits or chips. A similar logic applies when you think about plastics being used in cement, pellets, or as fibre for textiles – I have to create more cost in order to get rid of something.
We are offering long term solutions. Plastics are a very valuable resource and versatile material. For companies who are willing to put their skin in the game, we are willing to provide our facilities and solutions.