Azmi & Associates Lawyers | View firm profile
In the era of modern technology we are living in today, the proverb of “one man’s trash is another man’s treasure” has never been truer than ever. With the discovery by scientists and experts of the law of conservation of energy – where energy can neither be created or destroyed, by using modern technology, we have been able to convert solid waste that we used to perceive as nothing more than a liability into a new sustainable source of energy.
Briefly, solid waste can be converted into energy through combustion process of the waste itself or through process of producing combustible fuel commodity such as methane or synthetic fuel from the solid waste. The world has seen a considerable growth in demand for Waste to Energy (WtE) plants due to several factors including the limited space available for conventional landfills, energy companies diversifying their business as well as the depleting supply of fossil fuels.
Moreover from the statistics in 2012 in Malaysia, in average, a person in rural areas generates about 0.73kg of solid waste while a person living in urban areas generates around 0.83kg of solid waste per day and the numbers are increasing over time. One can simply do a quick calculation to estimate the amount of solid waste produced per day for a country with a population of no less than 30 Million and how much energy can be produced with that amount of solid waste.
Below are some of the issues concerning the investment in and development of WtE projects.
Firstly, an investor in WtE project must consider the rate of tipping fee that can be charged to its customers. A tipping fee (alternatively referred to a gate fee) is a fee chargeable to any person who disposes waste in a landfill or a WtE plant whereby in Malaysia it is paid by the Government of Malaysia or the local authorities and is normally charged according to the weight of the waste disposed. The tipping fee may be used by the landfill operators or WtE project owners to cover their operational cost including maintaining the sanitary landfill site.
The rate for tipping fee at conventional landfills currently is about RM50/mt. Given that the cost of operation for WtE plant is higher than conventional landfills, WtE plant operators must formulate an efficient cost saving business model to ensure that the tipping fee at its WtE plant remains competitive compared to the tipping fee that is offered by conventional landfills operators.
In order to accommodate and incentivise industry players to invest more in WtE projects, the government, including the relevant ministries, state governments, and local authorities have a bigger role to play.
The government and industry players are recommended to come together at the negotiation table and compromise on various terms i.e. the reduction of the tipping fee by operators, exemption or reduction of any applicable taxes for WtE projects, allocation of funding for WtE initiative for research and development, and lowering the legal barriers to enter the industry.
Similar to any other industry, the Government of Malaysia may catalyse the participation of industry players in WtE projects by providing the necessary funding to investors. To achieve the government’s vision to have 20% of renewable energy by the year 2025, it is estimated that the industry will need an at least RM33 Billion worth of investment.
This can be done through a direct funding allocation by the government via government grants or low interest government loan scheme. The current fund’s priority areas by the Ministry of Science, Technology and Innovation (MOSTI) that covers, amongst others, chemical waste management, climate change, and smart cities can be utilised by WtE plant investors if they are able to creatively integrate their WtE project into one of the fund’s priority area.
Alternatively, the government may also create more programs to encourage private financial institutions to provide better financing to the industry players such as Green Technology Financing Scheme that is currently available under MOSTI. The reduction of financial cost to enter will enable more players to enter the industry and subsequently increases the number of WtE plants in the country.
Importation of Solid Waste
The importation and management of solid wastes in Malaysia is subject to stringent laws and enforcement by the Malaysian government. Recently Malaysia made it to the global headline regarding the news on the sudden surge of importation plastic waste from a few developed nations including France, the UK, the US and Canada.
The minister-in-charge then, YB Yeo Bee Yin, has immediately instructed 150 containers of illegally imported plastic waste to be sent back to their country of origin.
Subsequently, the government made a strong statement in Parliament stating its position that Malaysia is not a ‘global dumping ground'. Currently under the Customs (Prohibition of Imports) Order 2017, any company who wishes to import solid plastic waste is required to obtain an Approved Permit (AP) issued by the Ministry of Housing and Local Authority through its agency, National Department of Solid Waste Management.
Therefore, any person who wishes to import plastic solid waste for any use, in this case for the purpose of energy generation process, will be required to comply with a certain import requirements as set out by the relevant authorities including compliance with ISO 14000 environmental impact certificate, compliance with factory operation regulations and having a physical premise to process the plastic solid waste imports.
Another legal aspect to be concerned regarding the operation of WtE plant is none other than the regulations set out for the by-product of the energy generation process which is the plant’s gas emission.
Over the years, energy experts have been in a constant debate on whether WtE plant is actually a better solution or a worse polluter for the environment. It is estimated that the burning of 1 Mg of municipal waste in incinerators is associated with the production of about 0.7 to 1.2 Mg of carbon dioxide. To reduce the amount of gas emission by factories, the Government of Malaysia gazetted regulations setting out the licensing procedures and requirements to be adhered by operators.
In relation to the gas emission from WtE plants, the Environmental Quality (Clean Air) Regulations 2014 provides a clear limit values and technical standards to be complied by operators.
Separation at Source
Finally, the efficiency of energy production at WtE plant will be depending on various factors including weather condition, waste composition,waste characteristics, moisture content and recycling rate.
In 2012, the recycling rate amongst Malaysians was considered low as the rate of recycling was below 9.7%. In 2015, the government announced that it will strictly enforce the rule in separation of solid waste by consumers.
Under Section 74 of the Solid Waste And Public Cleansing Management Act 2007, any person who fails to separate his or her solid waste in accordance with the direction by the Director General is liable to a fine not exceeding Ringgit Malaysia One Thousand (RM1,000.00).
At first sight, the enforcement of such law is seen as a progressive move which will result in a better waste composition for the purpose of recycling and energy generation at WtE given that a better solid waste composition will eventually produce greater output of energy.
Unfortunately in reality, such enforcement has yet to result in any significant effect as the rate of public participation in the separation of their solid waste is still low.
For the year 2019, only 10% of the 1.25 million high rise households actually separated their solid waste at source despite the law having been in force for three years.
In addition to better enforcement and stricter punishment as far as the laws are concerned, Malaysia could also benefit from the organisation of more public awareness campaigns (whether through formal education since early age or other means) to promote wider participation from the public in the separation of waste at source.
In conclusion, there is a pressing need for more definitive actions from all stakeholders including the government, industry players, and consumers in facilitating the progress and further development of WtE projects in Malaysia. This may be done by lowering the barriers to entry, provision of incentives and minimising the development and operational costs.
1 Main Report of Survey on Solid Waste Composition, Characteristics & Existing Practice of Solid Waste Recycling in Malaysia by Department of National Solid Waste Management, Ministry of Urban Wellbeing, Housing and Local Authority
2 Solid Waste Management Lab 2015 – Final Lab Report, PEMANDU
5 MOSTI Research & Development Fund Guideline, 23 April 2020
13 Main Report of Survey on Solid Waste Composition, Characteristics & Existing Practice of Solid Waste Recycling in Malaysia by Department of National Solid Waste Management, Ministry of Urban Wellbeing,Housing and Local Authority
Prepared By: Mohd Farizal Farhan Abd Ghafar & Mohd Salahuddin Saufry Hamzah