Environmental Technologies Industries
||Environmental Technologies Industries
|Taiwan Environmental Export Market Plan|
|Chapter 5 - Solid Waste Disposal Market|
Overall Disposal Strategy
Solid waste has long been one of Taiwan's most prominent and controversial environmental issues. Starting in the early 1990s, the growing mounds of solid waste and the illegal dumping of trash began attracting public attention, turning solid waste into a sensitive political issue. Taiwan severely lacks available space for siting disposal facilities; meanwhile, the rate of trash generation in recent years has been growing at a staggering rate, as shown in table 16.
Table 16 - Per Capita Municipal Solid Waste Generation Rates
Source: Taiwan Environment Protection Administration
Refuse Produced (kg per capita per day)
Daily municipal waste generation has grown from a rate of 0.78 kg/person in 1987 to 1.14 kg/person in 1997. Total municipal solid waste is generated at a rate of 24,000 metric tons per day. Industrial solid waste is currently estimated at 17 million metric tons per year, but that number is believed to be fairly conservative. Over 90 percent of municipal waste is properly treated, but less than 50 percent of industrial waste is properly treated.
Primarily in recognition of Taiwan's space limitations, the Taiwan Environmental Protection Administration (TEPA) in 1998 committed Taiwan to incineration as the prime means of solid waste disposal. TEPA launched a program to build 21 large-scale municipal solid waste incinerators with a total capacity of 21,900 metric tons per day. In total, the incinerators would be capable of handling roughly 75 percent of Taiwan's municipal waste. The remaining portion of the waste stream was to be handled primarily by landfills and recycling.
Despite strong efforts by TEPA, the incinerator program has encountered significant problems in implementation and has fallen behind schedule. Of the 21 planned incinerators, only 5 are currently in operation (see table 17). As a result, public landfills remain the predominant method of solid waste disposal. There are two types of public landfills in Taiwan, basic and sanitary. Most of Taiwan's landfills built today are sanitary landfills. Sanitary landfills have detailed regulations specifying the use of liners, effluent treatment equipment, and other equipment to prevent secondary pollution; basic landfills do not. Although sanitary landfills are relatively new, as figure 5 illustrates, they are rapidly replacing basic landfills. Unfortunately, Taiwan's landfill capacity is diminishing at a growing rate. Currently, 44 towns and townships in Taiwan lack proper municipal solid waste disposal sites.
Table 17 - Status of Original Incinerator Projects
Tons per day
To help relieve the pressure on the landfill system over the long term, TEPA has implemented mandatory recycling programs for certain products and has begun aggressively promoting curbside recycling throughout the island. TEPA reckons that roughly 40 percent of the municipal waste stream is recyclable (see figure 6).
Composting has only played a small role in solid waste disposal to date, but many local governments have shown an increasing interest in composting technologies over the last year. Taipei and Taichung county governments have initiated composting programs specifically for vegetable markets.
Industrial waste, on the other hand, has received limited attention. Under current regulations, industrial waste is not allowed to enter municipal landfills. The severe shortage of industrial solid waste disposal sites only compounds the overall solid waste disposal siting problem. Handling of industrial solid waste (particularly hazardous waste) represents one of the biggest future challenges for TEPA.
The future of Taiwan's solid waste management most likely lies in the private sector rather than the public sector. Over the last two years, TEPA has made an increasing commitment to privatize solid waste disposal services in an attempt to spur the development of facilities. TEPA is preparing to bid out waste incinerators on a build-own-operate and build-operate-transfer (BOO/BOT) basis, and Taipei City has finally privatized its municipal solid waste collection services. If successful, these privatization projects will be models for future projects.
Solid Waste Disposal Act
All solid waste management is governed by the Solid Waste Disposal Act passed in 1988. The act is modeled after the U.S. Resource Conservation and Recovery Act. It establishes a cradle-to-grave chain of custody and defines how solid waste is categorized.
Figure 6 - Taiwan's Municipal Solid Waste Stream Composition
Under the Solid Waste Disposal Act, solid waste is categorized as either municipal or industrial. Industrial solid waste is further broken down into hazardous and nonhazardous waste. Hospital (or medical) waste is included in industrial waste. Industrial solid waste generators are responsible for disposing of their own waste through on-site facilities or a licensed disposal company. Under the regulations, industrial solid waste may not enter municipal landfills. Companies are responsible for their waste until it is properly treated. In theory, companies can be fined if a disposal or transport company dumps their waste illegally, but such fines are rarely levied in practice.
One of the most controversial clauses in the Solid Waste Disposal Act relates to recycling. Under Article 10, manufacturers of certain products are responsible for the recycling of their product. The law forces these manufacturers to establish and subsidize recycling networks for their products. TEPA has the authority to mandate the recycling of any product that fits the following criteria: “it is bulky or difficult to dispose of; it contains hazardous materials; it is non-biodegradable; or it has recyclable value.”
To date, regulations require the recycling of 18 items including polyurethene terephthalate, polyethylene, polypropylene, polyvinyl chloride, glass, paper, steel cans, aluminum cans, computers and other household appliances, cars and scooters, lubricating oils, agricultural pesticide containers, medical waste containers, tires, polystyrene, and paper cartons.
To promote private investment in disposal facilities, recent amendments to zoning rules for industrial parks were made to encourage codevelopment of private solid waste disposal facilities for shared use. Companies that have excess capacity are further encouraged to accept solid waste from outside sources.
In early 1997, the Legislative Yuan passed amendments to the Solid Waste Disposal Act authorizing TEPA to establish a recycling system modeled on the German green dot system, a significant divergence from the U.S. regulatory model. Specifically, the new regulations require the establishment of common recycling funds to be managed by committees comprised of industry, environmental groups, and academia. The funds will be used to subsidize the recycling industry and research and development for recycling technologies. In addition, the new laws require the employment of external verification bodies. To date, a number of international verification companies have submitted bids.
Municipal Solid Waste Disposal Infrastructure
Incinerator Development Plans
Municipal solid waste incinerators are one of the few environmental big-ticket items in Taiwan. All 21 of the first-round, large-scale incinerator projects have been awarded and are at varying stages of completion. In addition, TEPA has recently announced a new round of eight projects to be offered on a BOT/BOO basis. (Refer to appendix A, table A-3, for details of TEPA’s large-scale incinerator plans.)
The first 21 projects encountered substantial delays, but TEPA hopes that the BOT/BOO format will help expedite the process by speeding funding and engaging more professional project management.
While it is too late to enter into the bidding for either of the first two rounds of large-scale incinerator projects, opportunities still exist for supplying parts to the projects or participating in facility operation and management. There has also been talk of a third round of six to seven large-scale incinerators, but details have not yet been made available.
In addition to the large-scale incinerators, TEPA also intends to open bidding on 15 small-scale incinerators, and the central government will offer a subsidy of roughly $3.5 million. Intended as a stopgap measure while the large-scale incinerators come on-line, the small-scale incinerators are designed to handle 1,350 tons of municipal solid waste per day. Additionally, operators with excess capacity will be allowed to accept waste from outside sources.
TEPA is also promoting a series of small-scale projects (less than 30 metric tons per day) in remote districts and islands. Three of the projects have already been bid out, and the remainder are due for completion by June 1999. TEPA has been increasing efforts to expand Taiwan's solid waste infrastructure to more remote areas and will likely pursue similar projects in the future.
Difficulties in Implementation
Taiwan's incinerator program has been hampered by numerous difficulties that have delayed some of the projects by several years. By far the biggest problem has come from “not-in-my-backyard” (NIMBY) protests, which local governments have had difficulty in managing. Workers at incinerator sites have encountered strong opposition from community groups, including protests and blockades of construction sites. Some local politicians complicate the siting problem by using the projects as political bargaining chips in negotiations with the central government or other local factions.
From a business perspective, finding the right partner has posed a substantial challenge for many firms. For the most part, successful foreign companies have chosen to team with local companies that either have good local connections or already have access to a site. However, many companies entering the market have found partnerships to be difficult because of communication barriers and cultural differences in the way of doing business.
Beyond partnering issues, prospective bidders must also be prepared to face the challenges of the government procurement process. Many companies have complained about the speed and efficiency of the bureaucratic process surrounding incinerator construction. Although procurement reform has been ongoing since 1996, there are still plenty of red tape hassles and requirements. For example, companies must obtain permission from local elected representatives before beginning construction -- a process that can involve considerable time and economic investment.
The specifics of the contracts have also been a highly contentious issue. The original set of 21 turnkey agreements were criticized as being vague and not adequately outlining compensation for extra work and not offering sufficient protection to consortium members. In addition, obtaining changes in the work plan was often difficult and led to delays in the construction process.
In the case of the BOO/BOT projects, the bidding requirements and implementation plans have already undergone several revisions. TEPA is committed to privatization and has made a strong effort to improve the bidding terms to avoid some of the problems that arose in the first round. However, the BOO/BOT incinerators are a first for TEPA and will undoubtedly encounter difficulties.
Under the current bidding terms, the incinerator projects will be awarded by local governments, which for the most part have limited experience with waste incinerator projects. Each government will hire a single consultant to handle the project. In general, the consultants have a substantial amount of influence over the process.
Landfill Development Plans
Despite the massive incinerator construction program, Taiwan is still in severe need of new landfill space. Over the summer of 1997, a loss of landfill access led to trash piling up on the streets of Chung Li for several weeks as county officials scrambled for a solution. The event received a high degree of publicity and substantially raised the profile of solid waste disposal problems.
According to TEPA, Taiwan has 266 sanitary landfills with a total capacity of 16,709 metric tons per day (includes industrial and municipal waste). The provincial government estimates there are 316 total landfills. However, nearly 70 percent are either at capacity or within two years of reaching saturation (see figure 7). In 1996, the provincial government entered into the second stage of their waste disposal plan. The plan targets the construction of 143 new landfill sites and upgrade of 180 existing sites by the year 2002.
In addition to the 143 planned landfill sites, TEPA also unveiled plans to develop emergency sites to solve the immediate crisis. Upon taking office in September 1997, Premier Vincent Siew announced that he would seek to resolve Taiwan's solid waste problems within two years. One month later, TEPA announced plans to borrow 132 hectares of land from the Taiwan Sugar Corporation to establish emergency landfills for 24 towns and townships. However, much of Taiwan Sugar's land is located in southern Taiwan, so an alternative solution will have to be found for townships located in the north.
NIMBY Protests in Taiwan
More and more, county-level politicians are promoting incinerators as the solution to Taiwan's solid waste problem. In a survey conducted during local elections in December 1997, incineration was the method recommended by most legislators. However, at the same time community protests have risen substantially.
Since the late 1980s, NIMBY protests have consistently thwarted the efforts of TEPA and local governments to develop incinerator facilities to handle Taiwan's growing mountains of municipal solid waste. During the early 1990s, sites around Taiwan were rocked by community protests that local governments had difficulty quelling. The most violent protest occurred in the township of Ren Wu and ultimately involved 1,500 riot police. In one well-publicized case, the local elected leader publicly pleaded with the protesters to accept the construction of the facility.
While few communities are willing to put up with the addition of late-night traffic by garbage trucks, the larger public concern is over the potential secondary pollution of the incinerator facilities, especially dioxin emissions. Dioxins are produced when plastics are burned at relatively low temperatures and are among the most highly toxic substances known. Public concern has been fueled by reports of dioxin problems in Japan -- the supplier of the most predominant technology chosen for Taiwan's incinerator program. A recently released report indicates that Japan has the highest dioxin concentrations in the world, and the low-temperature, mass-burn technologies used by the Japanese have been blamed as the primary source.
TEPA recently passed new regulations to assuage public concern about residual dioxins. Regardless of promises made by the government or contractors, many local residents simply lack faith in the ability of air pollution control technologies to remove pollutants such as dioxins. As a result, the citizen protests are expected to continue.
Barriers to Developing Private Landfill Facilities
Private landfills face many of the same siting difficulties as incinerators. Communities often strongly oppose landfill development, and negotiations to obtain permission to use a site can be time consuming. In general, waste management companies often require two years to construct a landfill.
The economics of developing a landfill site have also been further complicated by recent fluctuations in land prices and currency exchange rates. Taiwan's land prices had been rising rapidly for many years, but are now showing signs of potentially devaluing. With falling land prices, returns on the resale of land may be less than the original purchasing price.
Rigid competition constitutes a sizable market barrier for U.S. firms trying to penetrate the incinerator market. In particular, Japanese technology suppliers have established a strong presence in Taiwan's incinerator market. The Japanese companies have been awarded the majority of the incinerator projects by wooing key decisionmakers early in the procurement process and offering highly competitive bids. In addition to the Japanese awards, two European companies have also won six contracts (four by Volund and two by Steinmuller). American companies have not had any success in the bidding to date. Even U.S. companies recog-nized as experts in the field, such as Foster Wheeler, have yet to win a project. Camp-Dresser McKee and other U.S. com-panies may still get some of the design work for the projects.
Many U.S. and European incinerator contractors have claimed that the bidding process for the first round of 21 turnkey projects was tainted by corruption. Organizations such as the U.S. Agency for International Development's U.S.-Asia Environmental Partnership and the American Institute in Taiwan (the de facto U.S. Embassy in Taiwan) are adamantly making this a high-profile issue and are continually pushing TEPA to make its bid process more transparent. It appears that the TEPA administrator is working to make that happen. Future rounds of bids will involve BOO/BOT projects. Private funding of the BOO/BOT projects makes the bidding process less susceptible to public corruption and may allow U.S. companies to compete on a more level playing field.
In the future, competition from Japanese companies will remain stiff, but it is believed that the market will be more receptive to European and American companies due to increasing demand for advanced technologies. Pursuing projects will require a substantial investment of time and effort, particularly in the early stages.
The biggest barrier for U.S. companies entering the municipal solid waste landfill market, aside from siting difficulties, is local competition. There are already numerous local waste management companies active in the field that are capable of designing and constructing high-quality landfills, creating little need for foreign technology.
The wide use of illegal, substandard landfills is another reason U.S. companies will not find the solid waste landfill business profitable in Taiwan. Until controls on solid waste disposal tighten, it will be difficult for companies operating high-quality landfills to compete economically with local companies. Opportunities may develop in the future for advanced technology liners should landfill requirements tighten.
Foreign companies such as Cleanaway, Rethmann, and Wheelabrator have established offices in Taiwan, but none has developed private landfills. Several international operators have tried to establish landfill sites in the past, but few have gained a strong foothold in the market.
Figure 7 - Landfill Capacity
Best Prospects for U.S. Firms
The best opportunities in municipal solid waste disposal lie in incinerator projects either as a supplier of components or as a lead contractor. Companies interested in the projects will need to identify a local partner and begin tracking the projects early on in the process. As noted, there may also be opportunities for operation and maintenance contracts on incinerators. Finding professional local operators in Taiwan can prove difficult. However, this difficulty may also create a niche for foreign operators.
Although Japanese technology suppliers have established a strong presence in Taiwan's incinerator market, their incinerator projects have met with significant protests out of growing concern for the type of incinerator technology being implemented. The potential market opportunity here lies with advanced incinerator technologies, particularly with pre-burn separation capabilities.
Another major challenge is unusable ash that is produced by the mass-burn technologies. For every three tons of trash burned, the result is one ton of ash. Currently, this waste is going to landfills, poorly lined in many cases, giving rise to the possibilities of highly toxic leachate contamination of groundwater. The potential market opportunity here lies with advanced U.S. liner technology as a partial solution to the growing problem.
For companies interested in entering the waste hauling industry, it will probably be necessary to develop a private landfill, which is tied into the siting problem. To date, waste hauling is still dominated by local companies, and opposition to private landfill development is strong. Few major international players have chosen to focus on landfill work.
Industrial Solid Waste Disposal
Defining the Market
TEPA estimates place the industrial solid waste volume at 17 million tons per year, but many industry sources estimate that the real volume may be significantly higher. Despite the large volume of waste, the industrial waste market has been slow to develop. Of the 17 million tons, roughly 46 percent actually undergoes proper treatment.
The main obstacle to developing the market has been the inability of government agencies to reliably track and monitor waste disposal. With over 96,000 factories spread around Taiwan, most local Environmental Protection Bureaus (EPBs), which are charged with enforcing the law, lack the training and resources to adequately do so.
Efforts are further hampered by the lack of reliable data on industrial solid waste generation to serve as a baseline for tracking waste disposal. Most TEPA data on solid waste generation are obtained through interviews with factories and therefore are difficult to verify. However, this situation will change with a new tracking system that is being developed. Until then, the market will most likely not begin to mature for international waste disposal companies until improved tracking systems are in place and more reliable data are developed.
Future Plans for Industrial Solid Waste Disposal
TEPA hopes to drive development of future industrial solid waste facilities with private capital. Recognizing that the current business climate is not favorable to encouraging investment, TEPA and IDB have initiated efforts to alleviate siting difficulties and simultaneously tighten enforcement of waste disposal regulations. In what may turn out to be a landmark case, charges were recently brought against a hauling company located in southern Taiwan.
A new computerized tracking system will form the core of TEPA's enforcement efforts. TEPA is currently conducting a comprehensive survey on industrial solid waste generation rates and the characteristics of the waste. The information will be entered into the tracking system's central computer database and will allow TEPA to track waste more efficiently.
Simultaneously, IDB and TEPA are revising zoning regulations in industrial parks to make it easier for companies to build private facilities on unused space within their factory complex. In addition, IDB has also agreed to set aside a percentage of the land space in future industrial parks for the development of solid waste disposal facilities on a BOO basis.
To help overcome the economic barriers faced by small-scale solid waste generators in constructing facilities, IDB has developed the Common Waste Treatment Scheme. Groups of companies are allowed to jointly invest in developing a waste disposal facility to handle their waste stream.
While TEPA hopes that the bulk of industrial waste can be handled by companies themselves, TEPA is also working with IDB to develop a small number of incinerators within industrial parks on a BOT/BOO basis. So far, only one facility, located in Hsinchu and capable of processing 200 tons of waste per day, has been planned on a BOT basis, but it is expected that TEPA will eventually announce up to four additional facilities. Projections for growth rates are unavailable; however, TEPA estimates that 120,000 tons per year of private incineration capacity currently exists.
In total, there are over 300 solid waste disposal companies in Taiwan. International companies have found Taiwan's industrial solid waste disposal market difficult to enter. The market is currently dominated by local haulers that often compete at low prices and then dump the waste illegally. Cleanaway and Rethmann are the only major international waste management companies currently operating in Taiwan.
IDB's Five-Year Plan for Treating Industrial Solid Waste
In 1993, the Industrial Development Bureau (IDB) launched a five-year plan to increase the percentage of properly treated industrial waste from 30 percent to 50 percent. As of mid-1997, the rate had been raised to 46 percent. Not surprisingly, the program's primary emphasis has been on waste reuse and recycling, with incineration as a second choice. The program has been particularly successful in stimulating the reuse of nonorganic solvents, spent acids and catalysts, fly ash, and rubber products.
IDB Five-Year Plan Targets for Properly Treated Industrial Waste (in metric tons)
|Recycling and Reuse |
|Common Waste Treatment Scheme|
|Waste Treatment Companies|
|Centralized Facilities in Industrial Parks|
|Local Government Municipal Waste Treatment Facilities|
Volume of Properly Treated Industrial Waste as a Percentage of Target Volume
Best Opportunities for U.S. Firms
Opportunities currently exist to supply small-scale incinerators to private companies, but the key driver will be development of reliable tracking systems and enforcement of disposal regulations. Given the current low transport costs offered by illegal or low-quality waste hauling companies, combined with the low cost of landfilling, very few companies can justify the cost of building their own incinerators. However, as hauling companies are increasingly held to a higher standard and disposal costs increase, investing in facilities will become a more attractive option.
Pollution Prevention and Waste Minimization
In some planning circles of government and industry, pollution prevention and waste minimization are gaining gradual attention as logical long-term solutions to sustainable development in Taiwan. Areas that are being more actively pursued include recycling, reuse, and the efficient use of resources.
Waste Reuse and Recovery
TEPA encourages waste reuse as the first choice for disposal whenever possible. In 1993, IDB initiated a five-year plan with the goal of raising the percentage of properly treated solid waste to 50 percent. By mid-1997, 46 percent of solid waste was disposed of properly, primarily through promoting waste reuse and recovery (or waste exchange programs). The electronics, electroplating, and petro-chemicals industries have been particularly active in waste exchange programs for solvents and sludge. Organic solvent recovery is one area still in need of technologies.
Innovative Disposal Plans: The Common Waste Treatment Scheme
The Common Waste Treatment Scheme (CWTS) is a plan that provides financial and simplified permitting incentives to industrial waste generators who establish a waste treatment facility that is used to treat the wastes of other related industrial entities. The program stipulates that the waste generator or generators must be the majority (minimum 51 percent) owner; nonwaste generators are allowed to be minority owners. The plan is meant to assist the large number of small generators for whom on-site treatment is economically unattractive. In response to this program, a handful of industry groups have rallied together to develop “common” treatment facilities, including leather manufacturers, printed circuit board manufacturers, and pharmaceutical manufacturers.
The experience of the pharmaceuticals industry has been typical of the program. Taiwan's pharmaceutical manufacturers are primarily formulators, thus solid waste streams are small and primarily nonhazardous. In response to rising concerns regarding the landfilling of their wastes, 20 members of the International Research-Based Pharmaceutical Manufacturers Association, which consists of foreign pharmaceutical companies from the United States, Japan, and Europe, agreed to assess the feasibility of setting up a joint facility under the CWTS to recycle and incinerate their packaging and returned drug wastes. After commissioning a feasibility study, TEPA and IDB decided that the 20 companies would provide the funding for a dedicated off-site facility employing waste segregation, incineration, and transportation capabilities. The group has established its company (called Green Management International) and will subcontract operation and management services. Since initiating the project, eight additional pharmaceutical companies have joined the association, including five local companies.
Solid Waste Recycling
TEPA has set a target to recycle 40 percent of all solid waste by the year 2000. To date, the recycling program in Taiwan has met with mixed success. For example, paper recycling has increased 3 percent since 1990 to about 55 percent, but most consumer product recycling levels still fall short of the projected goal.
TEPA has focused its recycling program on consumer products. Over the long term, the government may expand the program to include recycling of similar materials in industrial waste streams as well. For the immediate future, TEPA and IDB will continue to encourage and promote industrial waste recycling, but the only mandated recycling will be of items in the municipal waste stream.
The establishment of recycling management committees under the March revisions to the Solid Waste Disposal Act will make large sums of money available to subsidize the industrial recycling of materials — possibly creating opportunities for recyclers to invest in Taiwan or for companies to provide recycling technologies to existing facilities. The government expects that the system established will lead to a significant increase in recycling rates. However, many people within the recycling industry feel that the subsidies offered are still too low and that the fundamental economics of recycling in Taiwan are not solid enough.
Taiwan has an extensive domestic recycling industry for certain materials such as plastics, but for the most part recycling has not been a highly profitable business despite the subsidies provided. The German company Rethmann is the only foreign investor in plastics recycling.
Best Opportunities for U.S. Firms
Opportunities in the traditional recycling industry are small. Currently, the lack of markets for recycled materials has prevented recycling from being very profitable (especially certain basic materials such as glass or steel). The exception may lie in personal computer and home appliance recycling. Between now and the year 2000, IDB estimates that Taiwan will sell 2 million computers per year. The computer industry was required to establish a management committee and develop a recycling network by March 1998. Companies with innovative end uses for recycled materials that can generate a high market value may be able to establish a niche for themselves in the recycling market.
Additional opportunities also lie in supplying equipment to recycling industries such as vehicle shredders and related auto recycling technologies, container/bottle sorters, or lube oil recycling technologies. Taiwan has the highest vehicle density in the world, but there is currently only one operational auto shredder on the island. Technologies that can help lower operating costs for plastics, paper, or aluminum recycling will be of particular interest in Taiwan. A niche opportunity lies in helping Taiwan dispose of tires. Currently, there are no suitable technologies to dispose of the vast number of waste tires that have been collected over the last several years.
Even better opportunities lie in industrial waste exchanges. Both TEPA and IDB have shown a strong preference for industrial waste reuse and recovery, and have established waste exchange programs to facilitate the reuse of industrial wastes. Chip producers, in particular, are aggressively seeking ways to extract expensive solvents from the sludge that is produced from manufacturing chips. The solvents are used in the fabrication of silicon wafers but are lost in the manufacturing process. The potential here is great given that Taiwan produces one-quarter of the world's eight-inch silicon wafers.
Other opportunities may lie in providing verification services for the mandatory recycling programs. Several European and American auditing companies have already entered the bidding process for upcoming projects.
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