Japanese lessons on waste-to-energy

Nguyen The Vinh

With the rise in urbanisation, the amount of waste generated in Vietnam increases every year. According to the Japan International Cooperation Agency’s report on the Vietnam Waste Project, the total amount of collected municipal solid waste in Vietnam was 15.6 million tonnes in 2015. In large cities like Hanoi or Ho Chi Minh City, around 7,000-8,000 tonnes of waste are produced daily. The majority of the waste collected, roughly 71.1 per cent, ends up in landfills, which increases the risk of groundwater contamination and can potentially affect public health.

Generally, Vietnam’s landfill situation is quite similar to those in other cities in Asia– and the fact is that local media often report stories related to complaints raised by residents living next to landfills. Such complaints put pressure on both local and national governments to solve this issue.

According to a report by the Vietnam Association for Conservation of Nature and Environment, the generation of municipal waste in Vietnam is forecasted to reach 40 million tonnes per year in 2025, which is almost the same size the amount of waste produced in Japan in 2015. This means that the market size is large enough to attract various waste treatment technologies – among them, waste to energy (WtE) technologies such as incineration and power generation by waste heat seem to be one of the most practical solutions for Vietnam. This technology offers a sustainable solution that has the potential of reducing waste volume by 90 per cent and generating energy for urban areas where land resources are becoming limited, while the electricity demand is rising higher due to the process of industrialisation, with Vietnam forecasted to become a major manufacturing hub in the region.

Japan used to face the same waste problem that Vietnam is currently dealing with during its industrial development period. To solve these issues, WtE technology was adopted as one of the most practical solutions, since Japan did not have enough space for landfills, especially in urban areas. In the 1960s, the first WtE plants in Japan were built using public budgets, both local and central government budgets. At the time, the waste characteristics of Japan were quite similar to those of Vietnam now, including no separation at the source, low calorific value, and high moisture content. This means that Japan’s experience in solving waste issues by introducing WtE technology can be a suitable model that Vietnam could follow.

The Vietnamese government has introduced several policies and incentives to attract investments into this area with the following policies:

- Decision No.31/2014/ QD-TTg of the prime minister indicates that power companies have to buy electricity from waste-to-power projects for 20 years at a price of 10.05 US cents per kilowatt-hour;

- The corporate income tax (CIT) rate of 10 per cent is applied to newly established enterprises investing in power plant projects for a period of 15 years and could be extended if the projects are classified as large-scale ones, using high or new technology and in special need of investment;

- Equipment and machinery to create fixed assets of projects is exempted from import duties;

- Special encouraged projects are exempted from land use fees/rents or said fees can be deducted (depending on the location of the projects); and

- For capital incentives, Vietnam Development Bank provides access to low-interest loans.

It has been four years since these policies were announced; however, the actual implementation of WtE in Vietnam is still limited – so far, only one small-scale WtE plant, financially supported by Japan’s New Energy and Industrial Technology Development Organization, is under operation. The media often reports about WtE projects with much larger scale, but it seems that they are all still on paper, without having been implemented yet. There must be several challenges behind the scenes to make these kinds of projects difficult to implement.

Here are just some key points from Japan’s experience and practices that might offer some suggestions to policy makers in Vietnam to consider when designing a domestic solid waste policy framework.

- Budget: Most of the construction and operation cost is covered by the local general budget of municipalities. Others are covered by subsidies from central and local governments and user charges. Local governments plan to prepare budgets for the construction of WtE plants over the next 10 years. The central government also prepares subsidies each year to support their projects. User charges are basically applied to waste collection. One of the examples is waste bags. In certain cities, people are required to buy specific plastic waste bags designated to dispose waste, the price of which varies depending on the size of the bag. This system motivates people to reduce the amount of waste as well.

- Technology selection: Waste content varies depending on municipalities, so technology should be carefully selected. Most municipalities set up a technical committee consisting of academics and technical specialists. The proposal from bidders such as technology providers or investors is evaluated by these experts, with various aspects being examined, including safety, energy efficiency, recyclability, and so on. The technical committee scores it technical points, price-pulsing points, and evaluates bidders by total points. Not only the price, but also the technical aspects are taken into account in selecting projects.

- Community awareness: Source separation is one of the keys to operate WtE plants effectively. Municipalities as well as schools make tremendous efforts to create source separation systems in society. Municipalities frequently hold residential meetings to enlighten people about the importance of separation and recycling. Every student in elementary school visits a WtE plant once in their school life in order to learn the waste treatment cycle. People “naturally” understand the importance of source separation through their daily life.

Co-ordination of cities: There is a guideline to require municipalities to investigate the possibilities of wide-area waste management. In Japan, it is common to create co-ordination mechanisms among cities, specialising in waste management in order to seek greater efficiency. It contributes to efficient waste collection and provides the scale merit, as a larger-scale WtE plant enables higher power generation.