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Digging for gold amongst the garbage

By Yu TianYu (China Daily)
Updated: 2008-09-08 14:12

China is expected to become the world's largest renewable energy market and savvy businesspeople inside and outside the country are panning for gold in the booming industry.

They are exploring solar, wind and hydropower, and also extracting energy from garbage, a smelly business that's also pretty rosy.

US-based Covanta Energy Corporation, subsidiary of Covanta Holding Corporation, a leading force in energy-from-waste, is among these ambitious gold-diggers.

Covanta is an internationally recognized owner and operator of large-scale energy-from-waste renewable energy projects.

With over 20 years of experience, Covanta's 38 facilities provide communities in the US with an environmentally sound solution to their solid waste disposal needs by using that municipal solid waste to generate clean, renewable energy.

In the US, Covanta processes approximately 15 million tons of municipal solid waste each year, conserving 19 million cubic meters of landfill space and generating 8,250,000 MWh of electricity, the equivalent of burning 3.5 million tons of coal.

China generates an estimated 280 million tons of waste annually, most of which is disposed in landfills.

Mountains of garbage have caused great environmental pollution and occupied large areas of land across the country along with its vigorously developing economy.

Covanta is expanding its business in China, with targets in the Bohai Rim, Yangtze River Delta and Pearl River Delta.

"Although, we haven't got wholly owned plants in China, we still wish to share our world-leading technologies and innovation abilities with our Chinese partners," says Joe O. Neuhoff, III, director of business development at Covanta Energy.

In April of 2007, it bought a 40-percent stake in Chongqing Sanfeng Environmental Industry Co Ltd, a subsidiary of Chongqing Iron &Steel Ltd, marking the entry of the world's leading operator of large-scale waste-to-energy facilities to China.

"We are very excited about our new partnership with Chongqing Iron & Steel and about Sanfeng as a solid platform for growth in this dynamic market," says Anthony Orlando, president and chief executive officer of Covanta, in a previous media report.

The Sino-US joint venture, Chongqing Sanfeng Covanta Environmental Industry Co Ltd, is running two 1,200-ton per day energy-from-waste plants in Chongqing municipality and Fuzhou of Fujian province. Each one is generating 24 mW electricity a day.

The company has signed an official concession agreement for its third plant with 1,800 tons of capacity in Chengdu. It is expected to be completed in late 2011.

In December of 2007, Covanta and Guangzhou Development Industry (Holdings) Co Ltd formed a new joint venture - Guangzhou Development Covanta Environmental Energy. It is aiming to design, construct and operate garbage fuel plants in the rapidly developing Pearl River Delta region.

In August of this year, Covanta opened up its Asia-Pacific headquarters in Shanghai.

"We are willing to work with our partners who know the country's regulations, policies, customer needs and the market very well, in a bid to expand our business and promote our environmentally friendly notions in China," says Neuhoff.

"Right now, China is only a small part of our business since we only have two joint venture plants," says Neuhoff.

But Covanta is looking at tremendous opportunities in China's renewable energy sector as the Chinese government is endorsing energy-from-waste technology, he adds.

China's first energy-from-waste plant was put into production in 1988 in Shenzhen. During the period of the 10th Five-Year Program (2001-2005), over 30 plants were built in Shanghai, Tianjin, and Hangzhou.

According to the 11th Five-Year Program (2006-2010), the country is planning to construct about 60 energy-from-waste plants.

The Ministry of Housing and Urban-Rural Development has outlined a National Waste Disposal Plan to increase energy-from-waste from less than 2 percent of waste disposal in 2005 to 30 percent by 2030.

The government gives an 0.25 yuan (4 cents) per kilowatt-hour subsidy and an exemption from value-added tax, along with other favorable tax breaks and subsidies for garbage fuel projects.

In European countries, governments impose tariffs to discourage landfills. It is one of the greatest ways to encourage the energy-from-waste sector, Neuhoff says, but in the long term, China will have more, Neuhoff says.

"We'd like to share view points with the Chinese government when they are resealing climate change legislation, energy policies and renewable energy policies," he adds.

Facing many domestic competitors, Neuhoff is confident about his business in China. The company employs local Chinese staff and its local partners provide them added value.

"Covanta is very pleased to take part in China's green campaign to fight against environmental deterioration and climate change," says Neuhoff.