Organics collection mandates NSW – overcoming ‘barriers’
By: Mike Ritchie, MRA Consulting Group
The presentation from NSW EPA provided some important feedback from Councils and Industry on the Organics Collection ‘mandates’. The mandates are the requirements in the Strategy for Councils to introduce FOGO collection by 2030 and for large commercial food generators to introduce food collections (Commercial Food or COFO) by 2025. These mandates are powerful market signals that will drive resource recovery and greenhouse gas emissions reductions. They will result in thousands of jobs over time.
Councils and industry did give the EPA some interesting feedback on implementation which I have provided below (in bold) and also tried to elucidate some solutions.
The challenges to mandated FOGO (2030) and COFO (2025):
Shortage of processing capacity to manage extra supply – especially metro areas
This is an oft cited concern, but it assumes that industry cannot build composting/Anaerobic Digestion (AD) facilities fast enough to meet growing demand. Industry can and will, with the right signals.
When you look out at the horizon you will notice that there are no empty composting facilities waiting to be filled up. There is no excess processing capacity. Processing capacity almost exactly matches the supply of FOGO and GO from Councils and business. Supply = Demand.
Very few investors will spend up to $20m “on spec” for a new composting plant without guaranteed FOGO/COFO supply. They won’t build now and wait around until 2030 for the organics to turn up. That has never happened. Just ask ANL, SoilCo, Cleanaway and SUEZ for example. They built composting facilities when Councils went to tender for supply. Even Council run facilities were only built when Council committed to the GO or FOGO decision.
If we want additional processing capacity now, then the best way is to foreshadow the date at which FOGO will commence and call for tenders for the construction and operation of composting facilities. As I wrote in a recent article, it is not a chicken or egg story- it is all chicken. Councils must name the date that supply commences.
(I hope that the 2030 date does not encourage some Councils to pause and wait a few years before considering FOGO. That would be counterproductive.)
Need for infrastructure – Transfer stations, AD
Same point. This is the market operating efficiently.
No-one will invest in transfer stations or AD processing unless they are confident that the FOGO or FO (respectively) is available and in what tonnages.
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These are not barriers but “Decision Gates”. Once the decision is made to go to FOGO and a tender is released, industry will invest. There is a real appetite for investment in Circular Economy and Resource Recovery right now.
It is just a matter of the EPA or Councils specifying the tonnages, from whom and by when. That is best done through a tender with firm commitments by Councils to providing FOGO supply. Even though the EPA has required Councils to have the service by 2030, there is no reason that they cannot go to tender now for commencement in a few years. In fact, investors/banks are falling over themselves to get into FOGO and anything ‘Circular Economy’.
(An important point for Councils that are considering FOGO. If you do it now voluntarily you can generate Australian Carbon Credits (ACCUs). If you wait for it to be mandated in 2030 you will not be able to claim ACCUs. Anything done under government mandate or regulation is not voluntary abatement and therefore does not qualify.)
The biggest challenge is planning approval and the time it takes. The Department of Planning and the EPA need to work together to develop a SEPP (State Environmental Planning Policy; or equivalent) to permit fast-track approvals of essential waste infrastructure. (I could write another whole article on just that point. My colleague Esther has written a similar one, reviewing the 2041 NSW strategy from a planning perspective. There are solutions but so far Planning has left it to the market and proponent-initiated applications.).
The best option by far is if Councils can provide a site (e.g. old landfill) and obtain planning consent themselves before tendering for a (Design Build Own Operate) composting facility. That allows industry to focus on construction and operation without the time delays associated with obtaining planning consent (which can be several years). (By the way, planning consents can be modified if the successful tenderer has a plan slightly different from the approval obtained by Council.) Otherwise, Councils will need to allow for the additional time for Tenderers to obtain planning approval.
MRA has several clients seeking planning approval for Transfer Stations, AD and composting facilities but there is little likelihood the proponents will actually build the facilities without contracted tonnes of supply.
In Sydney, Cleanaway, Veolia and Remondis now own the major Transfer Stations. These are all capable of receiving and transhipping FOGO. But again why would these companies go to the early expense of retrofitting their sites without FOGO material being available? Same story with AD. I don’t know of many investors who will build AD plants ‘on spec’. Only when Government announces the details of the COFO mandate (and particularly names which businesses are required to have COFO) will industry be able to firm up investment.
Contamination – critical at every stage – household, business, facility-level, end-product
Nationally, contamination in FOGO is on average one sixth of the contamination of the yellow bin (2% v 12%). That is a good thing. Residents know what food and garden organics is. But contamination must be managed. The receival environment (farms and gardens) is not tolerant of any contamination. That is not true of Materials Recovery Facilities as they can send incoming contamination to landfill (albeit, at significant expense). So contamination in FOGO is a problem.
We must educate, educate and educate. Albury Council have a great model. They charge $2.50/t on every tonne entering their landfill site and hypothecate 100% to education. They have a 0.5% contamination rate on FOGO bin material.
On the output compost side, we need to be very careful of compost contamination. We don’t want to leave micro-plastic in the environment or on farms. MRA has produced Compliant Compost, a certification protocol for those supplying compost to fresh vegetable and salad producers that imposes higher standards than AS4454 (the Australian compost standard). The “Local Government Best Practice Standard (MRA)”, which can be built into contract KPIs, halves the amount of plastic, glass and other contaminants that is allowed in AS4454 . It also requires that material is composted to high maturity thresholds, ensuring it is fit for purpose. This higher standard will cost slightly more to achieve but it ensures that the compost always complies with regulations and more importantly, farmers and households can use compost without the risk of contamination.
[I would add here that the EPA’s (all of them in Australia) need to give industry some surety around PFAS (and other emerging chemicals). PFAS, the “forever chemical” is all pervasive in our economy. It is in clothing, it is in the non-stick layer of your frying pan, it is in your carpet, in fire-fighting foam and is in most of your furniture. It is in food waste in low concentrations. EPA regulators need to set and stick to, a regulatory threshold that allows Councils and industry to invest in FOGO with certainty. Investment risk associated with PFAS regulatory uncertainty, is a real barrier and not just a decision gate].
Need for strong end markets – ensure viability of the service, industry
Agreed. The market “pull” has always been weak for composts. Farmers have an upper “willingness to pay” for NPK fertilisers. Composts can supply NPK and provide other significant benefits such as water-holding capacity, organic carbon, soil carbon sequestration, reduced run-off etc. But they cannot exceed the willingness to pay barrier. So Councils and the State Governments, also have a role to play in underpinning the growing FOGO compost market.
All Council contracts should have at least a 25% “buy back” policy where Council buys back the compost for Parks and Gardens, Open Space and even free give-away to the public. MRA’s model contracts can build this into the Contract Specification.
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MUDs – space, high resident turnover, diverse communities, high contamination concerns
Agreed. These are real issues that need to be managed. They are not a reason to not proceed with FOGO in multi occupancy residences. The experience of Randwick (with high MUDs, high resident turnover and diverse communities) is that good and consistent education keeps contamination low. The experience in Australia to date is that FOGO education is easier to communicate and delivers much lower contamination rates than yellow top bins. And rolling out to MUDs and SUDs alike means one consistent message to the whole community. The other key to managing contamination is closing the loop – having the community see that their food waste is going onto their sporting fields or to farms to create more food.
Viability in remote and regional areas
Composting is almost always cheaper in remote and regional areas than the cities, because of lower land costs and lower labour rates. Composting requires large parcels of land and lots of labour (jobs). I accept that collection costs are higher in the regions due to density of collections but this doesn’t change the overall equation that FOGO is cheaper in the regions than the cities.
The main reason composting is not “viable” in remote and regional areas is that the landfill prices are historically much lower (or free). Composting ‘competes’ with landfill for FOGO materials. If ‘viability’ is being measured against cheap and often underpriced landfill, then it is true FOGO composting may be not viable.
Many rural and regional landfills are not priced to cover their full costs (and certainly not their externality costs) and most are currently not required to pay the NSW levy. As such they are artificially cheap competitors. Little wonder that compost is not ‘viable’ on a dollar for dollar comparison in some rural areas.
Composting is a brilliant local jobs generator. Councils should be doing FOGO just for the local jobs. It is cheaper than almost all other jobs generation costs and it comes with the added benefits of greenhouse gas reduction, Australian Carbon Credit Unit generation (for avoiding landfill and carbon sequestration) and because it is cheaper than landfill (when full costs including externality costs, are accounted for).
If a Council finds that composting is not ‘viable’, I invite them to review their landfill operations and costs.
Outcomes-based design – goal is net zero emissions by 2030, need highest volumes soonest to deliver
Agreed. Waiting until 2030 to require FOGO is a policy mistake. If we want to achieve net zero by 2030 then we need to require FOGO much sooner and preferably before 2025. Melbourne, Perth and Adelaide all require it by 2025. We should also require COFO by the end of 2023. These are entirely achievable. Naming the dates will bring forward Council decisions and infrastructure investment.
Policy makers must not forget that landfills emit emissions for up to 40 years after the waste has been placed in the ground. Every tonne we landfill between now and 2030 could still be emitting in 2070 or thereabouts. Those emissions themselves need to be offset. The sooner we get on with FOGO and diverting organics from landfill, the better. Industry and Councils could not be more right on this one. Industry is ready to invest its $millions but it needs clear policy settings.
The Government is to be congratulated on its mandates for FOGO and COFO. I wish the dates were sooner and I hope the EPA will review this. Human behaviour being what it is, we have given some Councils and business licence to wait until 2030 and 2025 respectively.
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I hope we can encourage earlier adoption by agreeing some of the solutions mentioned above.
Mike Ritchie, is the Managing Director at MRA Consulting Group.
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