Identifier
Created
Classification
Origin
07CHENNAI706
2007-12-07 06:16:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Chennai
Cable title:  

TURNING TRASH TO TREASURE IN TAMIL NADU

Tags:  ENRG EINV SENV ECON IN 
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VZCZCXYZ0000
RR RUEHWEB

DE RUEHCG #0706/01 3410616
ZNR UUUUU ZZH
R 070616Z DEC 07
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 1377
INFO RUEHCG/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCPDOC/USDOC WASHDC
UNCLAS CHENNAI 000706 

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EINV SENV ECON IN
SUBJECT: TURNING TRASH TO TREASURE IN TAMIL NADU


UNCLAS CHENNAI 000706

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ENRG EINV SENV ECON IN
SUBJECT: TURNING TRASH TO TREASURE IN TAMIL NADU



1. (SBU) Summary: Rapid urban growth has spawned several challenges
for the South Indian state of Tamil Nadu, including managing the
disposal of an increasing amount of solid waste. A variety of
projects are on the drawing board or already in practice to convert
this mountain of waste into something with economic value, from
fertilizer to electricity. Yet, none of these projects appear to be
economically viable at present. Reform of the regulatory
environment, however, may allow at least some of these ideas to be
sustainable, offering potential investment opportunities in the
process. End Summary

From waste to fertilizer?
--------------


2. (SBU) Tamil Nadu's (TN) urban population increased by nearly 50
percent from 1991 to 2001 -- more than any other state in India
during this timeframe -- a trend that continues. This increase has
left municipal authorities grappling with a mounting solid waste
management problem. TN's Commissioner for Municipal Administration
told us that not-in-my-backyard (NIMBY) objections from homeowners
and environmentalists have limited the number of landfill sites that
authorities can use for disposal and that many of these sites are
reaching capacity.


3. (SBU) Looking for a creative solution, the Commissioner said that
one possibility was utilizing commercial-scale compost pits to
convert solid waste into fertilizer. He also explained that his
department had invited tenders from private entrepreneurs to
establish these composting facilities. He added that the TN
government, hoping to establish a public-private partnership, would
provide the land and the solid waste while the contractors would
establish the necessary facilities and manage the sale of the
fertilizer.


4. (SBU) The private sector, however, tends to view such projects
skeptically. The Chief Financial Officer (CFO) of a Hyderabad-based
company specializing in handling hazardous waste told us that the
financial viability of the composting scheme was doubtful. Not only
would farmers need to be convinced of the quality of the compost, he
said, they would also need to have some economic incentive to choose
compost over chemical fertilizer. The ease-of-use of bagged

commercial fertilizer and the fact that it already has a functioning
distribution network, he emphasized, means that composted fertilizer
-- which is more difficult to use and currently lacks a distribution
system -- would need to be significantly cheaper than its chemical
competitor to be economically viable. He doubted that a composting
scheme would achieve this.

From waste to electricity?
--------------


5. (U) Another option for waste disposal is to use it as fuel to
generate electricity. There are several methods for accomplishing
this, including burning it directly; compacting it into pellets that
are then burned; and capturing the methane produced when waste is
composted, and using that to power a generator.


6. (SBU) The CFO of the Indian branch of Covanta Energy, a New
Jersey-based waste and energy company, told us that all of these
processes face problems in India. One key issue with using
incineration to generate electricity, he said, is that urban trash
tends to have a low calorific value because it is generally picked
clean of recyclables and high-calorie waste as it passes through the
collection system. Getting enough energy to generate electricity
effectively, he explained, therefore requires adding fuel like coal,
which quickly decreases the economic rationale for the project.
Tamil Nadu's Municipal Commissioner also recognized this problem,
explaining that this is why he supported composting vice
incineration.


7. (SBU) Covanta's CFO also complained that the Tamil Nadu
government wants to treat electricity-producing incinerators as
power plants, rather than as waste-management facilities. He said
that these kinds of projects need income from a tipping fee (for
managing the waste) as well as a competitive fee for the electricity
produced. Tamil Nadu, he maintained, is not prepared to view (and
pay for) this kind of project in this way.


8. (SBU) Another problem with incineration is that some
environmental groups oppose it on environmental grounds. A lawyer
for one such group told us that incineration was simply
"inappropriate" for the environment. He also said that India's
legal system makes it relatively easy to file public interest
litigation to stop such projects. Covanta's CFO told us that this
kind of uninformed, instinctive "environmentalism" tends to overlook
the fact that some 40 percent of the capital cost of a modern
waste-to-energy facility is devoted to technology that mitigates
environmental impact of burning waste. This technology, he
asserted, means that modern incineration techniques should not be
confused with the noxious fume-belching machines of earlier
generations.

Biomethanation holds potential, maybe
--------------

9 (U) The environmental lawyer told us that one waste-to-energy
technique he supports is biomethanation. This is a process that
turns waste to a gas that can be used for running generators. We
visited one such 250-KW facility in Chennai, located adjacent to one
of Asia's largest fruit and vegetable markets. The facility's Chief
Executive Officer (CEO) explained that it is the first project of
its kind in India, and said that the project, which began operating
in 2005, was built mainly to demonstrate the concept. The plant,
which relies mainly on Austrian- and German-manufactured equipment,
receives vegetable waste from the market, slices it into small
pieces, and composts it, capturing the methane produced in the
composting process. Any solid materials left over after the
methanation process are suitable for use as fertilizer, the CEO
said.

More fruit, please
--------------


10. (SBU) While stressing that the facility was a success as a
demonstration for the concept, the CEO lamented that the
state-sponsored project is not financially viable under current
conditions, for two main reasons. The first is that the facility
receives mainly fibrous vegetable waste, like leaves, which produce
little methane when decaying. Items that produce more methane, like
old fruit and potatoes, tend to be picked out and fed to animals
before the waste reaches the biomethanation facility, he said. (The
load of waste we saw contained mainly lettuce, with a few pumpkins.)
Because of the low quality of the waste, he explained, the 30 tons
of vegetable matter delivered per day is only enough to operate the
generator for approximately 13 hours daily, instead of the 20 hours
it can operate at full capacity. This translates to an average
daily production of about 150 KW, or about 100 KW short of the
facility's 250-KW capacity. The facility itself, he said, consumes
a full 40 percent of this electricity to process the incoming
waste.


11. (SBU) This productivity shortfall leads to a second reason for
the project's inability to turn a profit: electricity costs.
Processing the daily intake of vegetable matter takes longer than
the 13 hours per day that the generator can run on the methane
produced, so not only is the facility underproductive, it actually
has to import electricity when the generator is not operating.
Adding to this cruel irony, the facility pays nearly twice as much
for the electricity it imports as it gets when it sells its
electricity to the grid.

Comment
--------------


12. (SBU) Theoretically, modern waste management and alternative
energy projects in South India hold promise for potential U.S.
investors, particular in mid-sized cities, some of which do not have
modern waste management systems in place. In practice, however,
investors would need to plot their strategies very carefully. For
waste-to-energy projects, they will need to be able to utilize lower
quality waste than similar projects use in Western countries. They
will also want to ensure that they will be able to get both the
quantity and quality of waste required, which may be more difficult
than one might expect. Composting projects may become more
sustainable if India had a developed market for organic foods, as
suppliers would then demand organic fertilizer. In short, waste
management may offer opportunities for investors in India, but
investors need to be prepared to work in a market and a regulatory
environment largely unfamiliar with these kinds of projects.

HOPPER