December 14, 2011
OTTAWA — Pinning their hopes to a pledge that Ottawa taxpayers are supremely well protected from any financial risks, city council has signed off on a long-term contract to have Plasco Energy Group dispose of garbage with its “plasma gasification” process.
The attitude that carried the day was perhaps best expressed by College Councillor Rick Chiarelli, who declared that the “risk to taxpayers from this deal is virtually nonexistent … if it turns out it fails, we’re back to where we are now.” He rejected the notion that the fact Ottawa is Plasco’s first big customer is significant: “That’s the definition of being in on the ground floor of it.”
In all, said Chiarelli, “I think this is easy to vote for, because it provides an opportunity for significant upside and because there’s almost no downside risk associated with it.”
He was one of many councillors to lavish praise on city manager Kent Kirkpatrick, who negotiated the framework of a contract with Plasco, led by technology entrepreneur Rod Bryden, that’s to last 20 years, with the option for four extensions of five years each. Plasco would take 300 tonnes of city garbage a day (about half of the non-recycled, non-composted garbage Ottawa produces now) and process it into burnable gas and slag, at a cost of $83.25 a tonne in the first year, rising with inflation after that. To answer skepticism about Plasco’s technology, which has never been used on such a scale before, the contract contains numerous provisions to ensure the city only pays for garbage Plasco actually processes. And in recognition of the city’s contributions to Plasco’s development, the city is in for royalty payments if the company grows.
The exact legal language has yet to be finalized.
According to the city’s calculations, once all the major costs and revenues are accounted for, the deal will cost between $400,000 and $950,000 a year over a full 40-year contract, compared to the status quo of landfilling Ottawa’s leftover garbage. All the scenarios assume great success in getting Ottawans to divert more recyclable and compostable waste.
Councillor Maria McRae swore that no matter how successful Plasco is in getting rid of Ottawa’s garbage, neither she nor the “awesome” council environment committee she chairs will rest when it comes to promoting recycling, composting and other diversion efforts. The city’s recycling contracts are coming up for renewal and staff are scouring the market for companies that will take Styrofoam and “film plastics” like bags and food wrap that aren’t currently blue-binnable, she said.
“We are up to the challenge. This council is. Our staff is,” she said. “Our residents — they are up to the challenge.”
Mayor Jim Watson likewise argued (and voted) for signing the Plasco deal, saying it’s a crucial move in diversifying Ottawa’s economy, promoting a local green-technology business that’s already attracting interest from around the world.
“This is a business deal from which the city will benefit as Plasco moves to large-scale commercialization,” he said. And above all, the contract will protect the city if Plasco can’t deliver what it promises. It simply won’t be taxpayers’ problem, he said — all that will be lost is a few years of time examining other alternatives to a landfill that’s already projected to stay open till 2042 before the Plasco deal is taken into account.
Bryden says Plasco’s plan is essentially to build three carbon-copies of the demonstration plant it’s modified and upgraded and tweaked over the last several years, and for which it secured provincial environmental approvals in October. It’s emerged in the 10 or so days of debate over the contract that the longest the plant has run at a time is six days, including scheduled maintenance shutdowns, and has consistently processed about 56 tonnes of garbage a day in that time. But that was good enough for an independent engineer who reported on the run for Plasco’s investors, who in turn came through with more than $100 million for the company afterward.
Councillors took their vote despite earlier revelations that a senior member of Plasco’s executive team, Brian Guest, had also recently worked under Kirkpatrick on city files from light rail to the 2012 budget, and that a technical report on technologies that compete with Plasco’s contained information that was up to two years out of date. Indeed, McRae said in the meeting that memos updating and clarifying things councillors had previously been told were flying around as late as Wednesday morning.
The deal with Plasco is sole-sourced — no other company was invited to bid, on the grounds that no other company could meet certain standards that Plasco does: taking garbage as it comes off the back of a collection truck, processing it into energy using thermal technology, charging as little as $83.25 a tonne, and already holding a certificate of approval from Ontario’s environment ministry. A late memo from Dixon Weir, the city’s general manager of environmental services, did allow that a competitor called Alterna NRG has five operating facilities around the world and is working on one in Dufferin County, but said that at best its approvals in Ontario are “months away.”
At this point, said Alterna NRG spokeswoman Shannon Sharp in an email, with the council vote already taken, “Alter NRG’s only request to the decision makers within the City of Ottawa, is that they recognize that there are other successful technology companies in this space beyond Plasco.”
Watson said something better is always just around the corner, and it’s time to get on with a technology that’s ready to go now.