Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services

SUBJECT:

Vancouver Landfill: Landfill Gas Projects

 

RECOMMENDATION

POLICY

On May 3, 1994, Council agreed to support the Regional Solid Waste Management Plan (SWMP), which includes requirements to upgrade the Vancouver Landfill.

On October 16, 1990, Council adopted the Clouds of Change program of actions, committing to reduce carbon dioxide emissions by 20% by 2005 compared to 1988.

Consultant awards exceeding $30,000 require Council authorization.

SUMMARY

This report recommends two projects involving landfill gas (LFG) generated from the Vancouver Landfill: the beneficial use of the collected gas, and engaging Golder Associates Ltd. to provide engineering services for an expansion to the Landfill gas collection system.

It is recommended that the City enter into an agreement with Maxim Energy Group Ltd. (Maxim), and if applicable, CanAgro Produce Ltd (CanAgro), for the sale of LFG for beneficial use purposes. Maxim proposes to utilize landfill gas collected by the City in either a cogeneration system to produce electricity and beneficially utilize waste heat, or in a simple cycle electricity generating system. Electricity from either system would be sold to B.C. Hydro and heat from the cogeneration system would be used to heat CanAgro's greenhouses located in Delta.

This project will result in a number of benefits:

· a reduction in the consumption of non-renewable energy by up to approximately 500,000 gigajoules per year, equivalent to providing the annual energy requirements to approximately 3,000 to 4,000 homes;

· a reduction in greenhouse gas emissions of approximately 30,000 tonnes per year of carbon dioxide equivalents, similar to removing approximately 6,000 automobiles from the road; and

· revenues to the City of approximately $250,000 to $300,000 annually for a term of 20 years, which will be used to offset the cost of operating the Landfill's gas control system .

This report also recommends that Golder Associates Ltd. be retained at a cost of $143,955 plus GST to provide engineering services for an expansion to the Vancouver Landfill gas collection system. Funding for the entire project, including engineering and construction, estimated at $1,750,000 was approved by Council on May 8, 2001. Council's approval will be sought for award of a construction contract for this project after engineering work is complete.

PURPOSE

The purpose of this report is to recommend that the City enter into an agreement with Maxim Energy Group Ltd. (and if applicable, CanAgro Produce Ltd.) for the sale of Vancouver Landfill gas for beneficial use purposes. The report also recommends Council approve the award of a contract to Golder Associates Ltd. to provide design and construction engineering services for an expansion to the landfill gas collection system at the Vancouver Landfill.

BACKGROUND

As part of the City of Vancouver's solid waste management system, the Vancouver Landfill receives approximately 400,000 tonnes of municipal solid waste each year. Under the City of Vancouver's agreements with the municipality of Delta and the Greater Vancouver Regional District the Landfill is expected to operate until at least 2040. Future operations will be restricted to the existing landfill footprint and involve increasing the height of the Landfill.

Landfill gas (LFG) consisting primarily of methane and carbon dioxide, is a natural by-product of the landfill process. LFG is generated from the biological decomposition of organic wastes (food wastes, yard trimmings and paper) commencing a few months after deposition of the waste and for several decades following landfill closure. LFG is collected to prevent odours, reduce greenhouse gas emissions and to recover energy.

Under the Landfill's B.C. Ministry of Water, Land and Air Protection Operational Certificate (OC) Vancouver has an obligation to manage landfill gas from the Vancouver Landfill. Although beneficial use of LFG is not mandated, the OC specifies that if Vancouver does not make sufficient progress towards beneficial use, the Ministry of Water Land and Air Protection may mandate it.

On July 27, 1999 Council approved a recommendation from the City Engineer to upgrade and expand the Vancouver Landfill gas (LFG) control system, and to seek proposals for beneficial use of the gas. A budget of $5,400,000 was set for upgrading and expanding the LFG control system.

The expanded LFG collection system was completed by February 2001, and the system has operated continuously since that time. The majority of LFG collected at the Landfill is currently flared for the purpose of controlling odours and greenhouse gas emissions. In addition to flaring, approximately three percent of the collected LFG is used to provide heat and hot water for the Landfill's administration building. Based on the current rate of LFG collected and flared, approximately 500,000 gigajoules of energy per year is available for utilization. This amount of energy is equivalent to serving the annual energy requirements for approximately 3,000 to 4,000 homes.

DISCUSSION

Landfill Gas (LFG) Beneficial Use

In January 2001, Engineering Services issued a request for proposals (RFP) for beneficial use. The basis of the RFP was to find a partner that would beneficially use the LFG. The City expected that a partner could be found to design, finance, build and operate a beneficial use facility and provide the City with a royalty based on the amount of LFG provided to the partner.

On April 17, 2001 five companies responded to the RFP. Three companies were short-listed based on an evaluation of proposal quality, technical and economic feasibility, and potential benefits to the City:

In August staff entered into negotiations with the top ranked proponent, Maxim Energy Group Ltd.(Maxim). Maxim is proposing to either use the LFG in a cogeneration system at CanAgro Produce Ltd. or alternatively generate electricity at the Landfill using simple cycle technology. In both cases the electricity would be sold to B.C. Hydro.

Cogeneration using LFG involves burning the LFG in an electrical generating system and then utilizing the waste heat, in the form of hot water. The heat would be used to heat CanAgro's greenhouses which are located directly south of the Landfill. All of the energy used by CanAgro will directly reduce the amount of non-renewable energy used by the greenhouse facility.

Simple cycle electrical generation involves burning the LFG to generate electricity without recovering the waste heat. Simple cycle electrical generation recovers approximately 30% to 35% of the available energy, whereas cogeneration can recover up to 85% of the available energy.

Maxim's proposal is to provide the City of Vancouver with a royalty of up to 10% of gross revenues for a cogeneration facility or up to 12% of gross revenues for a simple cycle facility. The initial revenue to the City for either project is expected to equal $250,000 to $300,000 per year. The proposed revenue projections include revenues for greenhouse gas (GHG) emission off-set credits because the electricity price offered by B.C. Hydro is based on B.C. Hydro assuming ownership of any credits. A GHG off-set credit represents a reduction in emissions equivalent to one tonne of carbon dioxide. GHG credits are tradable when a buyer with a high cost option for emission reductions purchases a lower cost option from a seller. The electricity price that B.C. Hydro is offering includes the potential value of GHG credits from the project and is substantially higher than would be available if the project was not considered beneficial to the environment.

Under either a cogeneration or simple cycle scenario, the City's only obligations would be to provide Maxim with LFG as well as a small amount of land for infrastructure under a lease agreement. Maxim proposes that the City and Maxim enter into a 20 year agreement which is consistent with Maxim's agreement with B.C. Hydro for the supply of electricity.

Maxim has advised that overall revenues to the City are anticipated to be higher for a simple cycle system than a cogeneration system due to the additional cost associated with building and maintaining a pipeline to CanAgro. The City's preference is cogeneration since:

· there is a potential to beneficially use a greater quantity of LFG since any gas that is surplus to the electrical generating portion of the cogeneration system can be burned directly by the greenhouse as heating fuel;

· cogeneration is superior from an environmental perspective as more energy is recovered and greenhouse gas emission reductions are greater;

· cogeneration provides a larger community benefit through working with an existing neighbour to lower their energy costs.

The final location for the facility will depend on whether Maxim and CanAgro can obtain all of the authorizations required for the cogeneration facility and the detailed economics of the two options. The ultimate type and location of the proposed LFG beneficial use system will be approved by the General Manager of Engineering Services and Director of Legal Services.

The day-to-day operation of the LFG collection system, which includes wells, pipelines, blowers and flares is the responsibility of a contractor hired by the City to operate the system. The City will maintain this responsibility under the proposed agreement to ensure the maximum available LFG is collected thus preventing odours and greenhouse gas emissions. Once a contract for beneficial use is in place, the City will pursue seeking proposals for the operation of the LFG control system. There may be an opportunity to reduce costs by contracting with the same contractor responsible for operating the beneficial use system. This determination will be made when proposals are received. Council's approval will be sought for the award of a LFG system operation and maintenance contract.

Landfill Gas (LFG) Control System Expansion

On May 8, 2001 Council approved the expenditure of $1,750,000 for the next phase of LFG system expansion. This expansion is to occur in the eastern-most area of the Landfill - the most recently filled area of the site. The expansion will result in approximately 20 percent more LFG available for beneficial use, will further minimize the potential for off-site odours, and will further reduce greenhouse gas emissions from the Landfill.

On November 1, 2001 Engineering Services issued a Request for Proposals to threeconsultants for the next phase of Vancouver Landfill gas system expansion, involving engineering design, tender preparation and contract administration services. The consultants were pre-qualified based on previous work completed for the City and their proposals submitted for Landfill gas projects in 1999 and 2000.

On November 28 three proposals were received with total costs as follows (excluding GST):

Based on a detailed evaluation of the proposals, it is recommended that Golder Associates Ltd. be awarded the work on the basis of best value for the City, their qualifications, experience and the scope of work they propose. Golder's proposal was also the least expensive of the proposals that the City received.

Prior to Engineering Services proceeding with this recommendation for award of the project to Golder, in December the City Engineer authorized that Golder be retained to complete a technical assessment of the collection efficiency of the Landfill's existing LFG control system for a cost of $30,000. City policy stipulates that consulting assignments with value not exceeding $30,000 can be awarded by the General Manager of Engineering Services. In the event that the overall project is not awarded to Golder, the preliminary work could be used by the successful consultant. Early completion of this work by Golder will expedite the completion of the entire project, regardless as to which consultant is awarded the project. The remaining portion of the work that the General Manager of Engineering Services is seeking Council authority to award is $143,955.

FINANCIAL IMPLICATIONS

The proposed Vancouver Landfill gas utilization contract with Maxim will result in revenues of approximately $250,000 to $300,000 annually for a contract term of 20 years. Revenues to the City from the project may increase in the future with opportunities for additional energy use and potentially the recovery of carbon dioxide. All revenues from the project will be used to offset the cost of operating the LFG control system and therefore reduce the overall cost of operating the Landfill. The annual cost of operating the LFG control system is approximately $250,000. The overall annual cost of operating the Landfill is approximately $10,000,000. The reduction in costs should result in a small reduction in annual Solid Waste Utility fees (less than $1/household/year reduction).

The total cost of the next phase of Landfill gas collection system expansion, including engineering and construction costs, is estimated at $1,750,000. This expenditure will be funded with a loan from the Solid Waste Capital Reserve with repayment by Landfill users through the Burns Bog Rate, as approved by Council on May 8, 2001. The estimated cost ofengineering for this project is $173,955. Once engineering work is complete and the construction is tendered, Council's approval will be sought for the award of a construction contract.

ENVIRONMENTAL IMPACT

The beneficial use of the Vancouver LFG is an environmentally responsible means of energy conservation. LFG used as an alternative fuel will reduce the consumption of non-renewable energy by up to approximately 500,000 gigajoules per year, (equivalent to providing the annual energy needs to approximately 3,000 to 4,000 homes), and will result in a reduction in greenhouse gas emissions of approximately 30,000 tonnes per year of carbon dioxide equivalents (equivalent to approximately 6,000 automobiles).

By expanding the Vancouver Landfill gas collection system the City will ensure that the Landfill will continue to meet environmental standards, and provide cost-effective management of municipal solid waste with minimal environmental impact.

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