The burning question: grass versus garbage

For more than a year, public and private players have insisted that burning refuse-derived fuel (RDF) is the best economic and environmental new fuel source for Rock-Tenn. Now a new study contradicts this consensus, saying that "sufficient quantities of biomass fuel sources within 75 to 100 miles of Rock-Tenn to provide all of Rock-Tenn's energy needs."

RDF proponents insist that it is economically and environmentally sustainable. Its economic sustainability, however, is based on taxpayer-funded subsidies. RDF production takes place at a Newport plant, which has relied on public subsidies in the $14-$17 million per year range for 20 years. The plant was recently sold to a consortium of private investors, who will continue to receive public subsidies.

Rock-Tenn When the High Bridge power plant stops burning coal in June, the Rock-Tenn recycling plant in St. Paul will lose its energy source. That poses major concerns for a wide variety of stakeholders throughout the metro area and beyond. Concerns focus on the sources of energy that will replace the coal-generated steam of Xcel's High Bridge plant. The Rock-Tenn plant, which began as family-owned Waldorf Paper in 1908 and was bought by Rock-Tenn corporation in 1997, processes half of all paper recycled in Minnesota, about one thousand tons daily. Rock-Tenn is an international recycling and manufacturing firm, with about 10,000 employees in plants in the United States, Canada, Mexico and Chile. In St. Paul, Rock-Tenn employs about 500 people, at an average salary of $60,000, according to senior executive Jack Greenshields, and spends about $75 million annually on goods and services. Previous stories in this series: Re-fueling Rock Tenn: environmental and economic challenges Who's on First? Keeping track of the players Following the money: who pays and who profits Garbage or green energy: a look at the issues around RDF

Digging Deeper: the hidden costs of RDF

RDF is economically attractive only because of substantial public subsidies funded by taxpayers in Ramsey and Washington counties.

The complicated economics of RDF pose deeper problems. Processing municipal solid waste into RDF requires expensive technology. The RDF processing plant in Newport was built 20 years ago by NRG Energy, Inc. and has been supported by massive public subsidies. By July 2007, Ramsey and Washington Counties will have paid the full capital and financing costs of the facility. The 20-year agreement provided them with an option to buy the facility at the end of the contract in July 2007. But that isn't happening.

Instead, NRG sold the facility to Resource Recovery Technologies (RRT), a new company formed by a few former senior management employees of NRG and a private equity investment company, EBF Associates. Ramsey and Washington Counties agreed to a new contract with RRT providing for continued public subsidies to the plant through 2012.

Currently, the RDF produced at the Newport plant is delivered to Xcel Energy, which burns it along with coal in order to produce electricity. Unfortunately, RDF is a high-maintenance fuel. It is difficult to manage, expensive to burn, and requires extensive emissions control equipment. That is why Xcel does not pay for RDF—instead it is paid to take the fuel. RDF has a "negative price point." Instead of paying for it, the end user (Xcel now, and possibly Rock-Tenn in the future) is paid to take it.

RDF proponents say it is an economically sustainable fuel. And it may be—so long as its production is subsidized with taxpayer dollars.

Comparing the costs

In order to figure fuel costs, according to the Green Institute's Carl Nelson, "You need three pieces to the puzzle – the fuel, the conversion technology, and the load that you're matching it to."

Fuel cost is the first part of the puzzle. RDF has a negative fuel cost, at least for as long as its production is subsidized by public funds. Fuel costs for other biomass fuels vary, but it is possible to put together a package of available biomass fuels that can be economically competitive with RDF.

The conversion technology costs more for RDF than for most other biomass fuels. The Green Institute study does not have complete figures on conversion technologies. Financing costs are a significant variable in these costs, and depend in part on what mix of public financing is available.

The load means the amount of energy that is needed. Rock-Tenn already is implementing some energy-saving measures, and investing more money in energy efficiency could substantially reduce the load in the long term.

Types of biomass fuel

The Green Institute study was funded by Rock-Tenn, the City of St. Paul, the St. Paul Port Authority, Ramsey-Washington County Resource Recovery Project Board, Resource Recovery Technologies (RRT), Eureka Recycling and the Green Institute.

The study focused on availability, cost and future supply and demand for various non-RDF fuels, concluding that there are "sufficient quantities of biomass fuel sources within 75 to 100 miles of Rock-Tenn to provide all of Rock-Tenn's energy needs." The biomass fuel sources surveyed include:

Urban wood waste includes waste from tree trimming and clearing, construction and demolition wastes, and wood in the municipal solid waste stream. Contaminated waste, which has lacquer, varnish, glue or chemical treatment, would require additional processing for pollution control. Most urban tree waste and "clean" construction waste is already committed to either District Energy for energy generation in St. Paul or to production of mulch, but urban wood waste could make up part of the fuel mix for a Rock-Tenn biomass plant.

Milling residues, mainly oat hulls, could come from the Twin Cities and from as far away as Canada, but are not available in large enough quantities at low enough prices to make them a viable fuel source.

Agricultural residues, mainly corn stover (the stalks and residue left after corn is picked) are in plentiful supply. While competition from the ethanol industry is expected to increase prices, Rock-Tenn should be able to buy all the corn stover that it will need.

Grasses are the most promising dedicated energy crops, but have not yet been widely planted. Production of grasses for energy production is just beginning, making it difficult to predict the amount available and costs in the future. But the report estimates that a combination of agricultural residues and dedicated energy crops could provide more than half of Rock-Tenn's energy needs.

Forest residues would come from Minnesota's timber industry, providing an additional source of biomass.

Environmental Sustainability

As the Green Institute study points out, "a biomass plant has impacts both 'upstream' and 'downstream' of the plant. Upstream impacts include the impacts of growing, harvesting, processing and transporting the biomass. ... Downstream impacts include noise and health impacts from air and water emissions and ash disposal. Air emissions have the most significant downstream impacts."

The upstream impacts of grass fuels include significant positives: "less inputs (fertilizer and chemicals) and less mechanical cultivation. ... Grasses can also provide ecological benefits through increased habitat and carbon sequestration and improvement of water quality, compared to conventional crops."

The counties back RDF because incineration ranks higher on their scale of environmental priorities than land-filling wastes.

What's next?

Decision-making rests with several players. Obviously, Rock-Tenn will decide what kind of fuel to use and whether to keep the plant open. The St. Paul Port Authority, Ramsey County, Washington County and the City of St. Paul are among the public entities whose decisions factor in the process, including decisions on financing and public subsidies. District Energy currently has an agreement with Rock-Tenn to build an energy plant on Rock-Tenn's campus, and can decide either to continue or to end this agreement.

Once the various parties have reached a decision, a proposal would need to be made to the Minnesota Pollution Control Agency (MPCA) with an Environmental Assessment Worksheet. After the MPCA evaluates this worksheet, it will decide whether a full-scale (time-consuming and expensive) Environmental Impact Statement is necessary.

Community input into the process could happen at community meetings to be scheduled in May, and through a citizen advisory committee still under formation.