From the October 2008 issue of Investment Advisor • Subscribe!

Going Green With Garbage

Our bulging landfills may be hiding buried treasure

When many advisors and their clients get together these days, topic number one is energy. Retirees are concerned that escalating costs for gasoline and electricity will force them to make adjustments to their lifestyles in their golden years. Other clients want to know what energy investments are likely to offer the strongest, and safest, returns. They're also concerned about the impact of runaway energy costs on every other sector of the global economy.

At the same time, when we talk about the environment or virtually any "green" topic, the discussion always veers back to energy--how much is being used, what kind, what results from carbon emissions, and how much does going green cost, among other issues.

Although dealing with our energy needs is the crux of the problem, there are really a host of interrelated issues involved in the green world. Among them is the question of waste and what to do with it. It turns out that recycling is only the beginning.

Although some people approach recycling programs with evangelic fervor and others only do it because their municipality forces them to recycle, it's rare today to find anyone who doesn't recycle to some degree. Yet despite massive public and private recycling efforts to reuse paper, plastic, and metal, or the efforts of food banks and charitable programs like City Harvest in New York--which rescues an estimated 20 million pounds of excess food every year from restaurants, manufacturers, wholesalers, greenmarkets, hotels, corporate cafeterias, grocery stores, and farms to help feed the hungry--we still produce a lot of waste.

According to figures from the Environmental Protection Agency, Americans produced 4.5 pounds of waste per person per day in 2000, for an annual total of 232 million tons of municipal solid waste. That's up significantly since 1960 when per capita waste production was 2.7 lbs. when with a smaller population the annual total was a mere 88.1 million tons.

That's a lot of garbage, most of which winds up in landfills. Contrary to urban myth, landfills are not mostly filled with fast food containers, disposable diapers, and old washing machines, although those things can certainly be found there, as can all kinds of paper, household goods, containers, food scraps, yard waste, and inorganic waste. Not to mention sludge from water and wastewater treatment facilities, septic tanks, construction and demolition debris, medical waste, slaughterhouse waste, grease, and grit trap waste. (For a fascinating study of what happens to all our stuff after we're done with it, I highly recommend Rubbish, the Archaeology of Garbage, by William Rathje and Cullen Murphy, University of Arizona Press, 2001.)

There's Gas in Them Hills

It turns out that all that rubbish isn't just sitting there underground doing nothing. It's turning some of the organic matter in that landfill into energy.

After a landfill closes and is planted over with grass and shrubs the refuse buried beneath it slowly decomposes, producing methane and other gases. Unless captured first by a gas recovery system, methane generated by the landfill is emitted when it migrates through the landfill cover. During this process, the soil oxidizes approximately 10% of the methane generated, and the remaining 90% is emitted.

If that methane is not captured it can build to the point where it causes an explosion and escapes or, more likely, it will gradually migrate through the layers of the landfill, which oxidizes about 10% of the methane with the remaining 90% finding its way into the atmosphere. According to a recent New York Times article, landfill methane is "at least 20 times more potent than carbon dioxide, the principal greenhouse gas." The same article cites EPA estimates that landfills account for 25% of all methane releases linked to human activity.

In order to limit some of that methane, the EPA has ruled that all landfills must have landfill gas management (LFG) and that large landfills in the U.S. must either "flare," which is essentially venting the gas, lighting it, and letting it burn off, in which case it is just lost, or captured. Once captured it can be used at the site to generate electricity or shipped via pipelines to nearby industrial operations that rely on natural gas.

According to a report from the International Energy Agency in August 2008 (Turning a Liability into an Asset: Landfill Methane Recovery in India), around 25% of the methane produced in U.S. landfills is converted to energy and an additional 22% is flared. Most landfills will produce gas for between 20 and 30 years after they close, with peak production coming in the early years. According to the report, as of April 2007 there were 450 projects currently capturing and converting LFG to energy with an additional 369 flaring the LFG. Another 120 landfill-gas-to-energy (LFGE) projects are currently in the planning stages.

Electricity from landfill gas is still miniscule in terms of total energy needs (only 0.4% of the nation's total electricity demands comes from landfill-gas-to-energy projects, although it sounds better when you say it's enough to supply the needs of 1.3 million Americans), although the potential seems pretty obvious. While many of these projects are municipally funded, there also would seem to be numerous opportunities for investment in suppliers of the necessary technology and in landfill operators and waste management companies.

It's important to note that not all landfills are suitable for methane recovery. If they are too small or made up of the wrong materials (e.g., construction debris) there just won't be enough methane to make it feasible. For those with the right conditions, however, the lifespan of methane production is likely to be 30 years. So while any individual landfill will have a limited run as an energy source, landfills and garbage are likely to be something that we never run out of.

A Municipal Success Story

The methane in landfills occurs naturally, it's not free. But then again, neither is capturing the energy potential of the sun, wind, waterfalls, and petroleum deposits. While there certainly was an investment required, in the case of Keene, New Hampshire, it was an investment that paid off.

Keene, population 22,563, installed a landfill-gas-to-energy generator at the municipal landfill in order to reduce air emissions and realize cost savings from self-generated electricity. The project was initiated in 1994 and expanded five years later.

According to information at the Web site www.cleanair-coolplanet.org, the estimated gas collection rate is 372,600 standard cubic feet per day, or 260 standard cubic feet per minute. The city funded the project itself at an estimated cost of $280,000. Payback was achieved in five years with continued annual electrical savings of more than $50,000 beyond payback.

Landfill gas is also high in carbon dioxide and there are projects underway to capture that as well. One idea is to use the CO2 to help plant growth in greenhouses built at or near the landfill site. There are five such greenhouse projects currently underway in the U.S. according to a report, Conventional and Emerging Technology Applications for Utilizing Landfill Gas, from the EPA's Landfill Methane Outreach Program.

Programs that concentrate on ways to capture readily available energy will only increase as the breakeven point on investments creeps ever lower. Turning gas from garbage into electricity l isn't getting something for nothing, but it's close, and it will produce energy a lot faster and with a much lower impact on the environment than any amount of offshore drilling.


Managing Editor Robert F. Keane can be reached at bkeane@investmentadvisor.com.

Reprints Discuss this story
This is where the comments go.