VicWater Circular Economy Policy Submission

Date: 7 August 2019

Circular Economy Policy Team
Department of Environment, Land, Water and Planning
PO Box 500 East Melbourne VIC 8002
via email: circulareconomy@delwp.vic.gov.au

Thank you for the opportunity to respond to the discussion paper: A circular economy for Victoria - Creating more value and less waste. VicWater is the peak body of the Victorian water industry with its membership comprising Victoria’s 19 statutory water corporations. They are responsible for the provision of urban water and wastewater services, rural water supply including irrigation and related drainage services. And they are significant, unostentatious leaders in the development of circular economies particularly through their related waste and environmental services.

The discussion paper effectively describes and links the many related issues, challenges and factors affecting Victoria’s aspirations for a more circular economy. Challenges in the global recycling industry provide an immediate context for the circular economy policy and managing these will necessarily be a focus of the strategy. Nevertheless, the discussion paper also addresses issues and opportunities pertaining to liquid and organic waste streams.

From VicWater’s perspective, an immediate opportunity for the circular economy policy is to recognise and elevate the water industry’s role. This could include formalising links between water corporations, Sustainability Victoria and DELWP’s Waste and Recycling Division, as well as developing a targeted support package to invest in new infrastructure and utilise new waste streams.

Despite a historical separation between the water industry and government’s waste regulators, the water industry has been on an independent journey toward a circular economy for many years. Wastewater systems have historically been linear in design, collecting sewage and liquid trade waste, treating it to protect public health and the environment and then discharging treated water to the environment. Water corporations have, more recently, commenced transitioning to ‘resource recovery’ systems that produce biosolids, composts, recycled water and energy. In doing so, water corporations have become leaders and innovators in the State’s growing circular economy.

This submission will provide further evidence of our members’ leadership while identifying opportunities, actions and policy settings that would support greater water industry participation in the circular economy.

Waste to energy

• A number of water corporations already operate waste to energy facilities, including Yarra Valley Water, North East Water, Melbourne Water and Western Water. Their commercial success demonstrates the water industry’s innovation and leadership in the circular economy.
• There remains a significant volume of food waste (40 per cent of all household and commercial waste) that is disposed to landfill. Data included in the discussion paper together provides a strong case prima facie for the circular economy policy to expand energy generation from food waste through suitable policy instruments and incentives.VicWater notes that the policy (p20 of the discussion paper) will consider a package of measures to increase the recovery of organic materials from disposal in landfill, including food and garden organic collections for most Victorian households, and rules to prevent disposal of organic material to landfill.VicWater supports household collection of food waste in principle. However, given household collection comes with well-known risks and challenges, caution should be taken. Household recycling is clearly plagued with contamination and a household food waste collection would likely face similar challenges – for example garden waste in a food waste bin.For the purpose of supplying waste to energy facilities, a household food waste collection would be vastly preferable to green waste, or a combined food/green waste collection. Garden waste, in particular, is problematic for anaerobic digestion.
• Our members’ experiences with operating waste to energy infrastructure corroborates the conclusions of the Government’s 2017 discussion paper “Turning waste into energy” – in particular, the need to secure a suitable supply of co-digestion materials.Many existing waste to energy facilities operated by our members utilise a dedicated supply of high COD waste from commercial sources. Source control and maintaining pure waste streams is of utmost importance to the commercial success of these waste to energy plants. The positive financial return from waste to energy facilities even when material is physically trucked to the digester emphasises the value of uncontaminated feedstock.The fact that some waste to energy facilities utilise a more varied waste stream should not give confidence that all waste to energy facilities can accept all organic waste and that a generic organic waste policy could be applied.Promoting the growth of an economically viable and sustainable waste to energy industry should be the highest priority of the Government’s circular economy policy, rather than adopting policy instruments that aim to immediately increase waste processing.VicWater recommends an initial focus on utilising commercial, premium sources of organic waste for waste to energy, rather than lower-value or household sources. Such an approach would lessen contamination concerns whilst building on existing successful models and their proven economics and business cases.
• VicWater cautions against blunt instruments that immediately deter the disposal of organic material in landfills. In isolation, their impact will result in more organic waste being disposed of in the sewer as a cheaper and easier option for some households and businesses.Policy measures that unwittingly incentivise increased disposal of organics in the sewer would have major repercussions and cost implications in terms of the capacity and maintenance of sewerage systems. Ultimately, this would be a community cost.Organic and food waste is responsible for generating sulphurous gases in the sewer which have a corrosive effect on pipes and sewer infrastructure. Increasing the proportion of this material in the sewer will result in significantly higher community costs for wastewater services, as augmentation is accelerated and maintenance costs rise.
• Although a combined organic waste and sewerage source material is utilised in some digesters, a further advantage of keeping sewage out of this waste stream is that it allows more flexible use of the compost.

Buffer protection and the water industry’s role in the circular economy

• A balanced circular economy policy should consider opportunities for government to play a proactive role in the circular economy, rather than focus the way government regulates or subsidises private companies, councils and landfill operators.Our industry is well placed to lead a more proactive role. Water corporations are government-owned, efficiently run and highly competent asset managers. Wastewater treatment plants’ size, high capacity connections to the electricity grid, and proximity to urban and industrial centres make them ideal sites for hosting waste to energy facilities.Despite these advantages, wastewater treatment plants’ convenient location renders them under constant threat of buffer encroachment. Currently, buffer zones are inadequately recognised in planning schemes and increased pressure to develop close to the boundaries of wastewater treatment plants can potentially lead to negative amenity for the eventual occupants, an increase in customer complaints, reputational loss for the water businesses and increase the need for plant modifications, or at worst, relocation of the entire plant.Any future scenario in which a wastewater treatment plant is forced to move due to buffer encroachment would undermine subsequent commercial opportunities for the new site to host a waste to energy facility, particularly one that relies on trucked-in waste streams.VicWater is currently working with DELWP Planning to strengthen buffer protections for wastewater treatment assets in line with recommendations of the Major Hazard Facilities Advisory Committee.

  The circular economy policy should support efforts for greater buffer protection, around wastewater treatment plants, to maximise the public value and opportunity that can be derived from these assets in the future.

• The Parwan Employment Precinct in Bacchus March provides a case study in the benefits of an proactive and integrated approach that leverages the Government’s planning policy role and the water industry’s asset management expertise, including: a suitable buffer can be installed around the entire industrial precinct, co-located food production and wastewater treatment/waste to energy will minimise transport costs, and premium sources of food and animal waste can be utilised.

Biosolids and recycled water

• Notwithstanding the fact that biosolids and recycled water are not within the scope of the circular economy policy, they are some the state’s greatest circular economy successes and should be acknowledged.
• Water corporations support biosolids policy that expands beneficial reuse opportunities, including:
  (1) land application, (2) energy generation, and (3) recycling (for example into construction materials or new fuels). Our members continue to invest in research to make new opportunities commercially viable.
• Expanded land application will require the development of new subordinate regulatory instruments to fit the new Environmental Protection Act 2018. Although the new regulatory framework promises to be more flexible and risk-based, land application of biosolids will be subject to greater scrutiny of risks from emerging contaminants such as PFAS. As our understanding of these risks increases, the long-term viability of land application of biosolids may be disrupted.
• As with waste to energy, VicWater cautions against blunt instruments to quickly dis-incentivise (or increase the cost of) disposal of contaminated material in landfills. Past increases in the waste levy have immediately resulted in more contaminated waste being illegally dumped in the sewer (or worse the stormwater system) as a cheaper and easier option.Most industrial contaminants that are illegally dumped in the sewer are not treated via standard wastewater treatment processes. As a result, they restrict beneficial reuse opportunities biosolids and recycled water.Treatment augmentations to remove trace (but nevertheless harmful) contaminants at the wastewater treatment plant are often significantly more expensive than treatment or disposal at the source.
• Thermal biosolids-to-energy is an emerging technology that could provide an alternative reuse pathway for contaminated biosolids. Despite its promise, this option would undermine efforts to achieve proper source control and by competing with the land application pathway, prevent returning important nutrients to the soil.

Trade waste

• The acceptance and processing of industrial trade waste is another circular success story of the water industry. Two (related) lessons from the water industry trade waste management regime which may be relevant to the Government’s circular economy policy are source control and customer engagement, as outlined below.
• Source control – water corporations work with customers to optimise the beneficial use or treatment of waste streams, even at the cost of revenue. This may include:
  • Trade waste acceptance criteria is subject to regular review and (in collaboration with customers) optimisation, taking a whole of network approach
  • Assisting customers implement pre-treatment to meet acceptance criteria
  • Assisting customers identify independent commercial opportunities from their waste stream (for example building their own waste to energy facility)
  • Working backwards from risk-based compliance limits for biosolids, recycled water and environmental discharge to ensure waste is treated in the most efficient fashion and at the most appropriate location.
• Customer engagement is critical to achieving source control objectives. Water corporations recognise that poor engagement, blunt instruments or heavy-handed implementation increases the risks of illegal dumping (to sewer or the environment).

Prescribed Industry Waste (PIW) Levy

• VicWater notes that the Government is reviewing the landfill levy and PIW levy settings as part of the general circular economy policy. Although water corporations do not generate substantial volumes of prescribed waste through day to day operations, water corporations are liable to pay significant sums of PIW levy fees when disposing of material generated during environmental remediation, or by operating environmental infrastructure that is designed to remove pollution from the environment. In a recent example, Melbourne Water paid $300,000 of PIW levy to dispose of material collected during the emergency clean-up of Stony Creek after a nearby factory fire.
  VicWater supports the overall policy principles of the PIW levy to incentivise reuse rather than disposal, particularly where it applies to commercial waste streams or waste generated through commercial activities. However, VicWater questions whether this levy should apply to material generated during emergency environmental clean-ups and by infrastructure such as constructed wetlands – the sole purpose of which is to remove pollution from the environment.As a waterway manager and operator of significant environmental infrastructure that actively protects Port Phillip Bay and Western Port, Melbourne Water will continue to be liable for these charges, diverting financial resources away from other waterway remediation activities unless PIW policy settings are changed.

Water industry participation in strategic policy development and grant programs

• Our members are increasing applying for grants to help fund circular economy infrastructure such as waste to energy plants. Although these grants are welcome, a review of funding models is recommended.The process by which Government provides funding support for building a publicly-owned asset (a waste to energy facility at a wastewater treatment plant) should be separate to the process by which Government considers funding for a similar asset which will be owned and operated by private business.VicWater would welcome more detailed engagement from DELWP’s Waste and Recycling Division and Sustainability Victoria regarding funding opportunities which are targeted at the unique strengths of the water industry, and which recognise the advantage of public asset ownership for promoting broader community benefits.
• VicWater would also welcome more detailed engagement from DELWP’s Waste and Recycling Division and Sustainability Victoria regarding strategic policy development to implement the Government’s circular economy policy. This submission has identified the potential for unintended consequences to arise from certain policy formulations, such as a costly increase in sewer degradation or increased illegal dumping. Close engagement between government and the water industry offers the best way to prevent their occurrence.

VicWater looks forward to further opportunities to be involved in the Circular Economy Policy. Please contact James Cleaver (James.Cleaver@vicwater.org.au) should you have any questions, or if you would like to discuss any of the issues raised herein in greater detail.

Yours sincerely
Peter Morison
Chief Executive Officer