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$100 million loan facility from ADB to help build municipal waste-to-energy plants in Vietnam

$100 million loan facility from ADB to help build municipal waste-to-energy plants in Vietnam

On February 2, the Asian Development Bank (ADB) signed
a $100 million loan facility agreement with China Everbright International
Limited (CEIL [1]) to help build a
series of municipal waste-to-energy (WTE) plants in primary and secondary
cities in the Mekong Delta in Vietnam. This initiative will be the first
municipal WTE public-private partnership (PPP) project in the country.

Due to rapid urbanisation, during the period from 2004 to 2015,
waste generation in Vietnam increased by about 78.2% from 15.6 million tons per
year to about 27.8 million tons per year. A significant portion of the waste
collected is disposed of in landfills within 200–500 meters of residential
areas and less than 30% of those sites are classified engineered or sanitary
landfills. This poses a significant threat to public health because of the
contamination of ground and surface water from untreated leachate; emissions of
airborne pollutants; and the spread of flies, mosquitoes, rodents, and dust.

To address the increasing problems of MSW (municipal solid
waste) management, the Government of Vietnam issued several laws and
regulations calling for an immediate attention to the management and disposal
of waste in an environmentally sustainable manner.

Waste-to-energy (WTE) was recognised as an effective method
to reduce the waste volume by 90% and eliminate methane emissions. WTE
technologies use the waste heat from incineration to produce electricity and
heat. In 2014, the Prime Minister issued a directive to encourage private
sector investments in WTE projects—to manage the increasing volume of solid
waste and help address the country’s electricity requirements. The directive
includes a feed-in tariff (FIT [2]) equivalent to $0.1005 per kilowatt-hour.

Despite these policies and the increased interest of
municipal governments in clean technologies, market barriers continue to limit
private sector participation in WTE. To date, only one plant, supported by
technical assistance funds and grants, has been built with a capacity to treat
75 tons of industrial waste per day and a power generation capacity of 1.93
megawatts (MW). Key bottlenecks include lack of an effective public–private
risk allocation and inadequate access to long-term finance.

This loan facility will support the construction and
operation of a series of WTE plants with advanced clean technologies in
multiple municipalities in Viet Nam. Each WTE plant will treat municipal solid
waste and supply electricity to the local electricity grid. CEIL will develop
and invest in WTE subprojects in Viet Nam to facilitate the harmless treatment,
reduction, and reuse of household waste in the cities and produce clean
electricity.

These municipal-level PPP projects in Viet Nam are smaller
than the central government-led PPP projects and more difficult to attract
private sector participation.

“The agreement signed today will be a new model to improve
solid waste management in cities, and also mitigate climate change by reducing
methane and increasing energy generation from renewable sources,” said
Christopher Thieme, Deputy Director General of the Private Sector Operations
Department at ADB.

[1] CEIL is one of the
world’s leading integrated environmental protection companies with
environmental protection projects spanning 18 provinces and municipalities in
the People’s Republic of China. As of end of 2017, CEIL had 43 WTE projects in
operation with a combined processing capacity of 39,100 tons per day and
generation capacity of about 4,300 gigawatt-hours per year.

[2] FIT refers to a policy mechanism designed to accelerate investment in renewable energy technologies. Under FITs, eligible renewable electricity generators, including homeowners, businesses and organisatiions are paid a cost-based price for the renewable electricity they supply to the grid.

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