You are on page 1of 94

JESSICA Instruments for Solid Waste Management in Greece STUDY

INCEPTION REPORT
November 2009

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

TABLE OF CONTENTS

1. 2. 2.1.

EXECUTIVE SUMMARY ................................................................................. 6 INTRODUCTION ............................................................................................. 8 WASTE GENERATION AND MANAGEMENT IN GREECE..................................... 8 Waste Types and Amounts in Greece.............................................................. 8 Waste Management in Greece ...................................................................... 16

2.1.1. 2.1.2. 2.2. 2.3. 2.4.

RATIONALE ........................................................................................................... 32 STUDY BACKGROUND ......................................................................................... 32 STUDYS SCOPE AND OBJECTIVES ................................................................... 33 Scope ............................................................................................................. 33 Objectives ...................................................................................................... 36 STUDY FRAMEWORK & APPROACH .......................................................... 39

2.4.1. 2.4.2. 3. 3.1.

OVERALL APPROACH .......................................................................................... 39 Baseline Study ............................................................................................... 39 Preliminary screening..................................................................................... 40 Technical and financial analysis ..................................................................... 40 JESSICA implementation plan (Model) .......................................................... 42

3.1.1. 3.1.2. 3.1.3. 3.1.4. 3.2.

CRITICAL ISSUES OF THE PROJECT ................................................................. 43 Objective criteria for using Jessica ................................................................. 43 MSW Projects Maturity Plan .......................................................................... 47 STUDY WORK PLAN .................................................................................... 52

3.2.1. 3.2.2. 4. 4.1. 4.2. 4.3. 4.4. 5. 5.1.

METHODOLOGY SUMMARY ................................................................................ 52 DELIVERABLES ..................................................................................................... 54 TIME PLAN............................................................................................................. 55 MEETINGS - CONSULTATIONs WITH KEY STAKEHOLDERS ............................ 55 PRELIMINARY STUDY.................................................................................. 56 Baseline Study ........................................................................................................ 56 Region of ATTIKI ........................................................................................... 56 Prefecture of THESSALONIKI ....................................................................... 62 Compost and RDF / SRF Market .................................................................. 65 MSW management tariff system. ................................................................... 67

5.1.1. 5.1.2. 5.1.3. 5.1.4.

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.2.

Preliminary Technical Description of TWO Case Studies ....................................... 69 MBT Plant - Sorting and Biological Drying (Mixed Waste) in West Attiki........ 69 MBT - Anaerobic Treatment Source Separated Waste .............................. 72 MBT - Aerobic Treatment Source Separated Waste .................................. 74

5.2.1. 5.2.2. 5.2.3. 5.3. 6. 6.1.

case study - Financial Model methodology ............................................................. 77 CONCLUSIONS AND RECOMMENDATIONS .............................................. 89 Conclusions ............................................................................................................ 89 Waste Treatment ........................................................................................... 89 MSW facilities products market ...................................................................... 90 Public Environmental Awareness................................................................... 90 MSW Management tariff system .................................................................... 91

6.1.1. 6.1.2. 6.1.3. 6.1.4. 6.2. 7.

RECOMMENDATIONS .......................................................................................... 91 APPENDICES ................................................................................................ 93

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

ABBREVIATIONS

EC EIB ERDF EU HF JESSICA MA NWMP PPP UDF SWM NSRF OP MBT WtE SRF RWMP EEA EPR HERRCO C&D ELV WEEE JMD TCG MD PD PPC WMA MRF

European Commission European Investment Bank European Regional Development Fund European Union Holding Fund Join European Support for Sustainable Investment in City Areas Managing Authority National Waste Management Plan Public and Private Partnership Urban Development Fund Solid Waste Management National Strategic Reference Framework Operational Programme Mechanical & Biological Treatment Waste to Energy Plant Energy-rich solid recovered fuel Regional Waste Management Plans European Environment Agency Extended Producer Responsibility Hellenic Recovery Recycling Corporation Construction and Demolition Waste End of Life Vehicles Waste Electrical and Electronic Equipment Joint Ministerial Decision Technical Chamber of Greece Ministerial Decision Presidential Degree Public Power Corporation Waste Management Authorities Materials Recovery Facilities

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

MS BMW MBT RDF PFI NSRF OP SOP ROP ERDF ESF EFF OPESD CEB EIA PEIA ACMAR NTUA AUTH ALAPT EAFRD GET

Member State Biodegradable Municipal Waste Mechanical and Biological Treatment Refuse Delivered Fuel Private Finance Initiative National Strategic Reference Framework Operational Programmes Sectoral Operational Programmes Regional Operational Programmes European Regional Development Fund European Social Fund European Fisheries Fund operational program Environment and Sustainable Development Council of Europe Development Bank Environmental Impact Assessment Preliminary Environmental Impact Assessment Association of Municipalities and Communities in the Attiki Region National Technical University of Athens Aristotle University of Thessaloniki Local Authorities of Prefecture of Thessaloniki European Agricultural Fund for Rural Development Greek Environmental Technology S.A.

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

1. EXECUTIVE SUMMARY
The draft Inception Report forms the first deliverable of the Study: JESSICA Instruments for Solid Waste Management in Greece (ref. IR 831) implemented by the consortium Euroconsultants S.A. (Greece) & Epta Ltd (Greece), under contract from the EIB. The project started on August 17th, 2009 and includes, according to the study ToR, the clarification and finalization of the Study objectives, proposes objective criteria for the evaluating JESSICA investment deployment and provides a detailed work plan.

The study will include an analysis of the potential for using the JESSICA instrument for SWM sector in Greece and will suggest recommendations for setting up the new JESSICA investment framework.

The study will be organized in 2 Phases in addition to the present Inception Phase:

The Implementation Phase

During this phase all activities related to the achievement of the project objectives will be implemented. It will include, briefly: a) an analysis of the institutional and legal environment of Solid Waste management in Greece b) an assessment of the SWM related on-going programs, major projects, funding instruments, private sector involvement and of the market gaps that need to be filled c) identification and review of case studies for JESSICA implementation and d) formation and evaluation of possible JESSICA mechanisms and structures for SWM sector in Greece. This phase will involve the frequent contact and required reporting to EIB and to the JESSICA steering / technical committee, in addition to the continuous consultations with key stakeholders of SWM sector in Greece.

The Concluding Phase

This phase covers the last 2 months of the project during which the Final Report will be drawn up for submission, bringing together the input from all individual short-term experts into an overall evaluation of all project outputs. Following the approval of the Final Report, its main findings will be presented at a seminar / workshop.

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

During the elaboration of the this report , several key issues were identified that must be addresses, including: Scope of the study in terms of geographical coverage, type of waste and phase of SWM process. Criteria, which SWM projects must meet to be considered for Jessica credit, in addition to the general criteria set out for Jessica application Criteria for choosing UDF management model Steps, study methods and consultations with SWM key stakeholders

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2. INTRODUCTION

2.1.

WASTE GENERATION AND MANAGEMENT IN GREECE

Waste management represents a significant challenge, while developing an environmentally sustainable strategy of waste management procedures constitutes a major goal for all European Union countries. The quantities of waste generate in Greece depending on their source and type, existing waste management and future planning according to National and Regional Waste Management Plans (abbreviated NWMP and RWMP respectively) are briefly described in the following paragraphs.

2.1.1. Waste Types and Amounts in Greece

Solid waste can be classified into different types depending on their source as follows: a) Municipal Solid Waste (MSW) b) Industrial / Agriculture Waste c) Medical (hospital) Waste d) Special Streams

Generally, waste generation and composition data depend strongly on the management practice used and are notoriously uncertain. In Greece, the data most vulnerable to inaccuracy and uncertainty is hazardous medical waste generation, due to the fact that unfortunately most hospitals and clinics are not fully compliant with relative regulations and do not monitor their hazardous wastes. Moreover there is not a sufficient auditing system in place mainly due to lack of specialized personnel from competent authorities. Industrial waste generation is also vulnerable to inaccuracy, because waste generation depends on industrial production which is subject to many financial factors and is not easily predictable. MSW generation is well monitored, as well as special streams waste generation, due to the establishment of various producer responsibility schemes.

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2.1.1.1.

Municipal Solid Waste

According to Eurostat and the European Environment Agency (E.E.A.), Municipal Solid Waste (MSW) includes predominantly household waste (domestic waste) with the addition of commercial waste (waste from premises used wholly or mainly for the purposes of a trade or business or for the purpose of sport, recreation, education or entertainment), non hazardous waste from industry and waste from clinics and hospitals, which are similar in nature and composition to household waste, collected by or on behalf of municipal authorities and disposed of through the waste management system. The composition of municipal waste may vary from municipality to municipality, depending on the local waste management system. Generally MSW consists of putrescibles, paper, plastics, glass, metals, wood, textiles and other materials such as rubber and leather. MSW includes also green waste from garden or parks, such as grass, flower cuttings and hedge trimmings. In the following figure the solid waste categorization and the fractions of solid waste that are including in the MSW are depicted.

Figure 1: Solid Waste Categorization

According to Eurostat data published on March 9 2009, in 2007, the annual MSW generation in Greece is estimated around 5 million tonnes. The following figure depicts the annual generation of MSW in Greece from 1995 until 2007.

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Annual Total MSW Generation in Greece 6.000


Total MSW production ('000 tn)

5.000 4.000 3.000 2.000 1.000 0 1995 1996 1997 1998 1999 2000 2001
Year

2002

2003

2004

2005

2006

2007

Figure 2: Annual total generation of MSW in Greece (Eurostat)

According to the same study, in 2007 the annual MSW generation per capita in Europe lied between 294 kg in the Czech Republic and 801 kg in Denmark. In Greece itr reaches up to 448 kg per capita (see Annex 1). The following figure depicts the annual generation of MSW per capita in Greece from 1995 until 2007.

Annual MSW Generation per capita in Greece 500 450 400 kg per capita - year 350 300 250 200 150 100 50 0 1995 1996 1997 1998 1999 2000 2001 Year 2002 2003 2004 2005 2006 2007

Figure 3: Annual generation of MSW per capita in Greece (Eurostat)

10

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Per capita waste generation is strongly correlated with income and social development but also affected by waste awareness and education. Figure 3 shows an increase of just over 33% in the period 1995-2000, but with a tendency to level off from 2001 onwards. However, annual MSW generation per capita is still increasing, and unless a national strategy for waste prevention and reduction is successfully developed and implemented, the upward trend seen over the last two decades, is expected to continue.

In general, nowadays it is estimated that more than 5.2 million tones of MSW are produced annually in Greece, 39% of which are produced in the area of Attiki and 16% are produced in the region of Central Macedonia that includes the prefecture of Thessaloniki (11%). In other words, the total annual production of municipal solid waste in these two areas exceeds 2.600.000 tonnes per year, as it is outlined in the following table.
Table 1: Annual MSW generated quantities in Attiki and Thessaloniki

Prefecture Attiki 1 Thessaloniki

MSW 2001 (tn) 1.775.000 450.0002

MSW 2009 (tn) 1.990.000 618.0003

Detailed calculations for 2009 and future trends estimations based on waste generation per capita and population increase, for both Attiki and Thessaloniki, will be presented during the next reports.

2.1.1.2.

Industrial / Agriculture Waste

Industrial waste can be classified into 3 different types, namely Non Hazardous (Municipal) Waste, Non Hazardous (Private) Waste and Hazardous Wastes.

Non Hazardous Industrial (Municipal) Waste This category includes waste that is similar in nature and composition to household waste and collected by or on behalf of municipal authorities and disposed of through the waste management system. This category includes mainly packaging material (paper, glass, plastic, metals and wood) from consumer products.
1 2 3

According to RWMP calculations According to Waste Management Authority of Thessaloniki calculations Based on preliminary estimations of Waste Management Authority of Thessaloniki

11

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Non Hazardous Industrial (Private) Waste This category includes non hazardous waste streams such as industrial packaging materials, waste from food processing, animal by-products that are not potentially harmful to animals, the public or to the environment (in accordance with Regulation (EC) No 1774/2002), farm waste etc, that are similar in nature to MSW but the management responsibility lies with producers according to the Extended Producer Responsibility (EPR) strategy. EPR uses political means to hold producers liable for the costs of managing their waste and end of life products. Hellenic Recovery Recycling Corporation (HERRCO), which is the competent authority for managing packaging waste, has come to an arrangement with packaging producers as stated in the legal framework, in order to ensure that packaging waste is being collected and recycled (see section 2.1.2.1). According to HERRCO4, 20% of the total MSW amount comprises of packaging waste (packaging material from consumer products) while the total amount of packaging materials produced (from municipal and private waste) in 2007, is estimated around 1.000.000 tonnes, out of which 504.000 tonnes (50%) where recycled. Apart form packaging waste, estimations about the quantities of other waste streams kin this category are highly uncertain as no sufficient quantity and quality data are available.

Hazardous Waste This category includes hazardous waste streams, such as flammable, corrosive, toxic, explosive etc. According to Ministry of Environment, in 2007, 330.000 tonnes5 of hazardous waste (including hazardous medical waste, hazardous chemicals and specific special steams i.e. batteries and used oils) were produced in Greece. Around 62% of that amount was disposed while the rest was recycled. In addition, during 2004, 1.550 tonnes where transferred abroad (mainly to Germany - over 70%) for processing. The largest amounts are produced in Attiki 48,5%, central Macedonia 12,6%, Central Greece 10,2%, Thessaly 6,9% and Western Greece 5,2%.

4 5

www.herrco.gr http://www2.minenv.gr/press/doc/0702281.doc

12

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2.1.1.3.

Medical wastes

Medical waste can be classified into 2 different types, namely Non Hazardous (Municipal-Like) Waste and Hazardous Medical Waste.

Non Hazardous (Municipal) Waste This category includes waste that is similar in nature and composition to household waste (kitchen waste, packaging waste etc) and collected by or on behalf of municipal authorities and disposed of through the waste management system.

Hazardous Medical Waste Medical wastes include waste from hospitals, clinics, labs and nursing homes that are classified as infectious and bio-hazardous and could potentially lead to the spread of infectious disease, and thus require proper disposal. For these types of waste the management responsibility lies within the producer (hospitals, clinics etc), and according to Ministry of Environment, it is estimated that 15.000 tonnes of hazardous medical waste are produced annually in Greece. The largest amounts are produced in Attiki (50 %) and central Macedonia (15 %). Currently a modern incinerator is operating in the Attiki Region with a total annual capacity of 8.000 tonnes per year, which is capable of handling all the quantities produced in the region of Attiki. In the rest of Greece, medical institutions have their own incinerating kilns, although weaknesses exist as, in some cases these are not suitable for incinerating hazardous waste. Due to the hazardous nature of medical waste it is necessary to monitor the implementation of the current legislation. The collection of waste from small medical facilities is also a matter that has to be looked into.

2.1.1.4.

Special Streams

Special streams include Construction and Demolition Waste (C&D), Batteries, End of Life Vehicles (E.L.V.), Waste Electrical and Electronic Equipment (W.E.E.E.), Used Tires and Used Oils. Extended producer responsibility schemes have been set-up in Greece for special waste streams, an overview of which is provided in the paragraphs below.

Construction and Demolition Waste (C&D) The term construction and demolition waste refers to a wide variety of materials such as excavation materials, road construction waste, demolition waste and construction-site waste.

13

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

According to the Joint Ministerial Decision (J.M.D.) regulating landfilling of waste, disposal of construction and demolition waste should take place only in landfills for inert materials. There are not specific data about the production of C&D waste in Greece; however according to the Technical Chamber of Greece (TCG, 20066), in 2006, 5.5 million tonnes were produced, out of which less than 5% were recycled or reused.

The recycling of C&D waste is a relatively unexplored area in Greece. The potential benefits of using recycled aggregates can be economic, social and environmental, such us the avoidance of waste disposal charges and Landfill Tax, the reduced costs of transporting aggregates if recovery material facilities are available locally and the increase in local employment. Therefore, it is recommended further analysis and a supplementary study on this subject.

End of Life Vehicles (ELV) The national management scheme for ELV (Greek abbreviation: EDOE) was approved by the Ministerial Decision (M.D.) 105136/10.06.04 (907/17.06.04) and its operation is governed by the regulations of Law 2939/2001 and Presidential Degree (P.D.) 116/2004. Owners of E.L.V. are obliged to hand them in designated collection points or authorized treatment facilities without being charged since there is no market value for the vehicle. In 2008, the scheme was active in 32 prefectures covering 85% of the total population, while the same year around 62.696 E.L.V. were recycled7.

Waste Electrical and Electronic Equipment (W.E.E.E.) Producers of Electric and Electronic equipment sign the Entry Agreement, regularly declare the quantities of products marketed in Greece and pay the legally required financial contribution to "Appliances Recycling S.A.". The scheme also cooperates with local authorities in order to set collection points for citizens. In 2008 it is estimated that was collected 47.250 tonnes of W.E.E.E. and processed around 39.000 tonnes8.

6 7 8

http://library.tee.gr/digital/m2173/m2173_oikonomou.pdf http://www.edoe.gr/ http://www.electrocycle.gr Official site of Appliances Recycling S.A.

14

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Used Tyres Current legislative statutes forbid the landfilling of used tires. According to Law 2939/01 and P.D. 109/04 tire producers are obligated to create or participate to recycling schemes for used tires. Owners or final users of used tires are obliged to hand them to collection points or approved management schemes. The competent scheme called Ecoelastika S.A. begun its operation in 1-11-2004 in the Prefectures of Viotia and Fthiotida (Central Greece, north of Attica). From the 54.638 tn produced in 2008, 46.697 tn (85%) where collected. Nowadays the scheme is active in both Greek mainland and islands. Around 14,2% of the tyres collected have been co incinerated in the cement industry, 78,5% where recycled while the rest was either stored or exported9.

Batteries The competent management scheme for batteries AFIS S.A. started its operation in March 2004. Afis has come to an agreement with importers/producers of batteries, which contribute a fee for every battery sold in the Greek market in order to cover the costs for collection, transportation, recycling and dissemination activities. Battery recycling rates are very high. Collection bins have been placed in 33.000 spots spread out across Greece. During 2007, 442 out of 2.100 tonnes of batteries where recycled which equals to a percentage of 21%. In 2008, the percentage reached up to 26%10, which exceeds the target established from European Union for 2012 (25%).

Used Oils In June 2004 the competent authority Greek Environmental Technology S.A. (GET) was created for the management of waste oils. The company is cooperating with major oil consumers like the Army and the Public Power Corporation (P.P.C.) and has focused in promoting cooperation with municipalities. The producers of waste oils are obliged to hand the waste to approved collectors. Around 36.550 tn of waste oils have been collected and regenerated which equals to 60,9 % of the totally produced waste11.

http://www.ecoelastika.gr http://www.afis.gr http://www.eltepe.gr Official site of Greek Environmental Technology S.A

10 11

15

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2.1.2. Waste Management in Greece

2.1.2.1.

Competent Authorities

The Ministry of Environment (until Sept 2009: Ministry of Environment, Spatial Planning & Public Works) is the main actor involved in waste management and particularly: Defines waste management policy Is responsible for the legislative framework and proposes the issuing of legislative regulations (Laws, Presidential Decrees, Join Ministerial Decisions, and Ministerial Decisions) and issues circulars for the implementation of the legislation. Prepares the National Planning of non hazardous Solid Waste and the National Planning of hazardous Solid Waste, which contains the goals and actions regarding waste management. Evaluates proposals for the funding of waste infrastructure according to the regional and national planning (in case of funding through OPESD - see section 2.1.2.5)

The Ministry of Interior is responsible for the establishment of the registry of waste competent authorities, while the Ministry of Finance is directly involved in the funding of waste management infrastructure projects.

Moreover, according to the NWMP the municipalities are responsible for waste collection and transportation. The operation of transfer stations, the processing and disposal of waste lies within the jurisdiction of Waste Management Authorities (WMA), which are public entities, supervised by Local Authorities Councils. For waste streams not included in MSW the management responsibility lies with producers. Especially for the special waste streams that are included in Law 2939/01 (electrical waste, tires, vehicles etc) recycling is carried out by producer responsibility schemes created and financed by the producers.

It must be noted that during the issuing of permission, funding, construction and operation of solid waste management infrastructure numerous authorities are involved as stated in the national and EU legislation. For example forest and archeological authorities and the Ministries 16

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

of Health and Culture need to deliver an opinion on the environmental impact assessment studies

Regarding recycling, HERRCO (Hellenic Recovery Recycling Corporation) has been established in order to organize the municipal and industrial recycling program according to the provisions of packaging directive. Thus, HERRCO is cooperating with municipalities in order to collect packaging separately from mixed Municipal Solid Waste, and also managing packaging waste produced directly from industries, in order to ensure that packaging waste is being collected and recycled. At the same time contracts have been signed with several municipalities in order to install and expand the separation at source system of packaging material. Packaging waste is temporarily stored in blue bins (source separation) that are provided by HERRCO and afterwards transferred to Materials Recovery Facilities (MRF).

Apart from HERRCO the following recycling systems from private companies have been also approved:

Recycling system for used oil packaging (Greek abbreviation: KEPED). This system aims to collect and recover used waste oil packaging waste. During 2007 3.900 tonnes where recovered and recycled. Packaging waste management system of the Vasilopoulos S.A. (M.D. 106156 , OJG 1108/22.7.2004). This system has recovered and recycled 1.240 tonnes of private label packaging waste and an additional 2.450 tonnes of other packaging waste. Collection system based on the establishment of refund recycling centers. Those centers accept and sort the materials and provide a small financial compensation. The Central Union of Municipalities and Communities of Greece is participating in the system and it will function in a supplementary way to the system of HERRCO.

2.1.2.2.

Impact of EU Legislation

Greece, as any other Member State (MS), is under the obligation to meet certain targets regarding material recycling and the diversion of biodegradable waste. Council Directive 1999/31/EC of 26 April 1999 refers to the disposal of waste to landfills. The aim of the Directive is to define measures, directions and guidance, in order to prevent or reduce, as far as 17

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

possible, the adverse effects of the landfill of waste on the environment, in particular on surface water, groundwater, soil, air and human health, by providing stringent operational and technical requirements on the waste and landfills.

The Directive requires from the MS to set up a national strategy for the implementation of the reduction of Biodegradable Municipal Waste (BMW) going to landfills in a specific interval of time by means of recycling, composting, biogas production or materials/energy recovery, and notify the Commission of this strategy.

More specifically the Directive sets the following targets:

In 2006, BMW going to landfills must be reduced to 75 % of the total amount of BMW produced in 1995, for which standardised Eurostat data are available; In 2009, BMW going to landfills must be reduced to 50 % of the total amount of BMW produced in 1995 for which standardised Eurostat data are available; In 2016, BMW going to landfills must be reduced to 35 % of the total amount of BMW produced in 1995 for which standardised Eurostat data are available.

Countries, such as Greece and United Kingdom, where more than 80% of the waste ended up at landfills in the reference year gained a 4-year extension in order to reach the aforementioned targets. Greece is formulating its strategies by placing targets for the years 2010, 2013 and 2020. This requires the adoption of treatment technologies that results in either the recycling of the material (such as composting) or the recovery of energy (such as thermal treatment).

Based on Eurostat, official data for Greece exist for years 1985, 1990, 1991, 1992, 1997 and 2001. The majority of the data reported to Eurostat are based on estimations, since in the 80s and the early 90s uncontrolled or semi-controlled dumping was the common practice in Greece. As for MSW composition, data from field measurements exist for only a few areas such as Athens, Creta, Thessaloniki, etc. Official data on national level were published in the M.D. 14312/1302 that reported a total quantity of 3,9 million tones in 1997 of which 2,6 million tonnes are biodegradable (67,0%). Based on the above, year 1997 was chosen as a basis for calculations, and the targets from Greece are:

18

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

In 2010, BMW going to landfills must be reduced to 1.95 million tonnes; In 2013, BMW going to landfills must be reduced to 1.3 million tonnes; In 2020, BMW going to landfills must be reduced to 0.91 million tonnes.

Regarding packaging materials which are collected separately through the competent scheme HERRCO, the following targets have been set (J.M.D. 9268/469/2007):

No later than 31 December 2011, 60 % as a minimum by weight of packaging waste will be recovered or incinerated at waste incineration plants with energy recovery

No later than 31 December 2011, the following minimum recycling targets for materials contained in packaging waste will be attained:

(i) 60 % by weight for glass; (ii) 60 % by weight for paper and board; (iii) 50 % by weight for metals; (iv) 22,5 % by weight for plastics, counting exclusively material that is recycled back into plastics; (v) 15 % by weight for wood.

2.1.2.3.

Current Practices

In the last two decades, and especially during the 1994-1999 and 2000-2006 Programming Periods, priority was given to the construction of compliant infrastructure and therefore most of the 13 Regions lack in waste processing infrastructure. Therefore, despite of the NWMP that was introduced in 2003, most of the waste management systems operated in Greece are not in full compliance with the requirements of Landfill Directive, which establishes diversion rates of biodegradable municipal waste from landfills, and the revised Waste Framework Directive 2008/98/EC, which encourages the separate collection of bio-waste with a view to the composting and digestion of bio-waste.

More specifically, according to Eurostat data (2009), in 2007 landfilling rate in Greece lied at 84%, the recycling rate at 14% (62,7 kg per capita out of 450kg generated) and composting at

19

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2% (8,96 kg per capita - year). With 84% of its municipal solid waste sent to landfill in 2007, Greece landfilled much more than the 42% recorded across the EU as a whole (see Annex 2). Particularly low levels of landfilling were recorded by Germany with just 1% of MSW being disposed of in this way, the Netherlands (3%), Belgium (4%) and Sweden (also 4%).

The following figure depicts the total amounts of MSW that were disposed and treated in Greece, from 1995 until 2007, according to Eurostat data.

MSW Treatment in Greece

6.000 MSW treatment ('000 tn) 5.000


Recycling

4.000 3.000 2.000 1.000 0 1995


Composting Landfill

1996

1997

1998

1999

2000

2001 Year

2002

2003

2004

2005

2006

2007

Figure 4: Management of MSW in Greece, from 1995 until 2007 (Eurostat)

Regarding disposal facilities, there are in operation 65 Landfills; among others, one compliant landfill is currently in operation in Attiki (Fyli), and one in Thessaloniki (Mavrorahi). Moreover 32 are under construction and 41 are in preparatory phase (environmental and technical studies are being conducted). Regarding the illegal landfills according to the responsible ministerial Commission, until the end of 2007, 492 small uncontrolled landfills across the country received municipal solid waste. However, during the last two years, significant steps have been made towards closing and restoration of these uncontrolled landfills.

Three Mechanical and Biological Treatment (MBT) plants have been constructed; one in Attiki, one in Kalamata (Peloponnese) and one Chania (island of Crete). The unit in Attiki, which is one of the biggest MBT plants in Europe, treats mixed municipal waste, produces Refuse

20

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Delivered Fuel (R.D.F.) good quality compost and its annual capacity reaches 450.000 tonnes. The waste treatment plant in Chania, has an annual capacity of 70.000 tonnes, treats mixed municipal waste and recyclable materials that are separated collected and produces only low quality compost. The treatment plant in Kalamata is the oldest, has a capacity of 32.000 tonnes per year but is now temporarily non operational due to a legal battle between its constructors and operators. Moreover in Heraklion (island of Crete) and Kefalonia (one of the Ionian islands) two MBT plants are under construction.

Regarding the recycling facilities, currently 23 mechanical recover facilities for the separation of collected recyclable materials have been constructed and are operational in Greece.

2.1.2.4.

Future Planning

In line with EU and international best practice, the hierarchy in the waste management sector according to the NWMP is based on the following three priciples.

1. Prevention or minimization of waste production (quantitative minimization) as well as the minimization of the waste content in hazardous substances (qualitative minimization) 2. Utilization of waste (reuse, recycling and energy recovering) 3. Safe final disposal of residues

In accordance with the above, several compliant residual waste landfills and treatment units are foreseen for the next years across the country, in order to achieve the targets for diversion of biodegradable waste and recycling. In the following table, the major existing and planned facilities for waste treatment in Greece are outlined.

21

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 2: Existing and Planned Waste Treatment Facilities in Greece

Location

Capacity tn MSW per yr

Capacity tn BMW per yr

Begining of operation Existing facilities(Plants)

Technology / Funding (committed )

Ano Liosia Chania Kalamata Heraklion Kefalonia

450,000 70,000 32,000 70,000 10,000

200,000 53,600 21,440 46,900 6,700

2004-2006 2005 1997 2010 2010

MBT, composting enriched organic fraction MBT, composting enriched organic fraction (EU Cohesion Fund: 16.5 million) MBT, composting enriched organic fraction MBT, biodrying MBT, biodrying

Facilities (Plants) under planning Hmathia Serres Zante Island Aitoloakarnania Fokida Corfu Island Rhodes Island ILIA Thiva Ahaia (Patra) Thessaloniki_1 Thessaloniki_2 Athens Fyli_1 Athens Fyli_2 Athens Fyli_3 Athens Fyli_4 Athens Keratea_1 Athens Grammatiko_1 Athens Keratea_2 Athens Grammatiko_2 70,000 N/D N/D N/D N/D N/D N/D N/D 350,000 120,000 400,000 N/D 700,000 400,000 67,000 80,000 40,000 40,000 127,500 127,500 50,000 N/D N/D N/D N/D N/D N/D N/D 80,400 301,500 N/D 402,000 280,000 47,000 53,600 26,800 26,800 90,000 90,000 2011 2012 N/D N/D N/D N/D N/D N/D N/D 2011-2012 2012 N/D 2013-2014 2012-2013 Under Consideration 2011-2012 2011-2012 2011-2012 2012-2013 2012-2013 MBT, biodrying and AD MBT, Technology not selected yet MBT, Technology not selected yet MBT, Technology not selected yet MBT, Technology not selected yet MBT, Technology not selected yet WtE MBT, Technology not selected yet WtE MBT (EU Cohesion Fund: 55 million) All options open (PFI12: 280 million) All options open MBT, Biological Drying Mechanical Treatment Source Separated Biowaste, Anaerobic Digestion Source Separated Biowaste, Composting or AD Source Separated Biowaste, Composting or AD Source Separated Biowaste, Composting or AD MBT, Technology not selected yet MBT, Technology not selected yet

12

Private Finance Initiative

22

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Regarding planned disposal facilities, among others, one compliant residual waste landfill is in preparatory phase in Thessaloniki, and two compliant residual waste landfills are under construction in southeast and northeast Attiki.

2.1.2.5.

Waste Management Funding Framework

National Strategic Reference Framework The NSRF (National Strategic Reference Framework) 20072013 constitutes the reference document for the programming of European Union Funds at national level for the 20072013 period. The architecture of the NSRF 2007-2013 Operational Programmes (OPs) was formulated in such a way as to implement the country's strategic choices in the best possible manner, whilst also taking into account new data for the programming period 20072013 (63% of the country's population in a state of transitional support).

The new scheme is characterised by a smaller number of Operational Programmes in relation to the previous 20002006 period, leading to a more flexible management scheme. The countrys strategic planning for the 2007 - 2013 period will be implemented through eight (8) Sectoral OPs, five (5) Regional OPs and twelve (12) European Territorial Cooperation OPs. Thus, during the 20072013 period, all accessibility infrastructure projects will be implemented through a single OP, while there will no longer be a distinct OP for the sectors of health and culture and the relevant actions will be carried out through Regional and Sectoral OPs.

The Sectoral Operational Programmes are the following:

S.O.P. Environment & Sustainable Development (co-funded by Cohesion Fund & ERDF) S.O.P. Accessibility Improvement (co-funded by Cohesion Fund & ERDF) S.O.P. Competitiveness and Entrepreneurship (co-funded by ERDF) S.O.P. Digital Convergence (co-funded by ERDF) S.O.P. Human Resources Development (co-funded by ESF) S.O.P. Education and Lifelong Learning (co-funded by ESF) S.O.P. Public Administration Reform (co-funded by ESF) S.O.P. Technical Support for Implementation (co-funded by ERDF)

23

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

As stated, there is no sectoral operational programme dedicated to urban development. However, all sectoral programmes comprise of priority axes that directly or indirectly promote the target of sustainable urban development. The most relevant ones are as follows:

S.O.P. Environment & Sustainable Development, priority axis 4 - soil protection and solid waste management. S.O.P. Accessibility Improvement, i.e. priority axes of transport infrastructure, means of public transport etc. S.O.P. Competitiveness and Entrepreneurship, priority axis that ensure the adequate energy capacity for the country through the use of Renewable Energy Source.

For the implementation of the countrys development planning during programming period 2007-2013, Greece was divided into five regions, which correspond to five Regional Operational Programmes (R.O.P.), as follows:

O.P. Macedonia - Thrace O.P Western Greece Peloponnesus Ionian islands O.P. Crete and Aegean islands O.P. Thesally - Mainland Greece Epirus O.P. Attiki

The regional operational programmes formulate priority axes dedicated to sustainable urban development while, additional funding mechanism such as the global grants (article 42 & 43 Of Regulation 1083/2006) are foreseen. Additionally, all the regional operational programmes make a reference to potential JESSICA usage, in order to achieve the objectives. Furthermore it must be noted that Athens belongs to the O.P. of Attiki, while Thessaloniki to the O.P. of Macedonia Thrace.

24

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Financial Framework European Funds for Cohesion Policy The allocation of Community resources for Cohesion Policy of period 2007-2013, was decided at the session of the European Council held in December 2005. Greece is allocated EUR 20.4 billion in current values (including national match funding). These resources will be used to finance interventions through the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.

The total amount of funding, as well as its annual allocation, is separately designated for each type of Region. Thus, a total amount of EUR 9.4 billion is allocated to the 8 Regions classified under Objective Convergence. EUR 6.5 billion is allocated to the 3 Statistical phasing out Regions (Attiki, Central and Western Macedonia). In the 2 Phasing In Regions (Mainland Greece, Southern Aegean) are allocated EUR 0.63 billion. Additionally, for the Programmes falling under Objective 3, there are Community funds available in the amount of EUR 0.21 billion. As laid down in the Greek National Strategic Reference Framework, from the total amount of the aforementioned amounts, namely EUR 16.7 billion, EUR 12.36 billion is channelled to the new Operational Programmes through the European Regional Development Fund (ERDF) and the remaining EUR 4.36 billion will be channelled thereto through the European Social Fund (ESF). Additionally, Community funds of EUR 3.7 billion are earmarked for Greece through the Cohesion Fund.

Finally, EUR 3.9 billion, are invested to Greek regions, through the Programmes of the Ministry of Rural Development and Food. These resources are part of the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF).

S.O.P. Environment & Sustainable Development The operational program Environment and Sustainable Development (OPESD 2007-2013), was submitted during September 2007 and was approved during October November 2007. The program consists of eleven priority axis. As stated, solid waste management is included in Axis 4 (Soil Protection and Solid Waste Management) which aims to protect public health, soil and underground water from the pollution caused by uncontrolled dumping of solid waste.

Together and in accordance with the regional operational programs, the necessary infrastructure in order to divert the biodegradable fraction of MSW from landfills towards

25

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

treatment facilities that are described in the Regional Plan will be financed. The OPESD through the Cohesion Fund and the Regional Operational Programmes through the ERDF will cover the costs for the construction of transfer stations, treatment units and landfills including the costs for rehabilitation of all uncontrolled dumpsites throughout the country.

Priority will be given to actions described in the regional solid waste management plans. The total budget of Axis 4 for Soil Protection and Solid Waste Management in the OPESD reaches 288.995.000 . This amount consist of 179.380.000 from Cohesion Funding, 44.845.000 from National Funding and 65.770.000 from other sources (e.g. private investments). OPESD has already distributed almost the total amount to certain Regions for regional solid waste management plans. In the region of Attiki, the total funding that have beet committed for waste management from OPESD and other sources, is approximately 145M, although the final amount is not yet distributed officially.

In the following diagram, the allocation of the above-mentioned funds is outlined.

Figure 5: Allocation of the National Strategic Reference Framework funds

26

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

At this point, shall be mentioned that only ERDF and ESF streams are eligible for JESSICA instruments.

In the following table, facilities scheduled to be funded from Structural Funds and additional needs for financing are outlined (based on estimations from preliminary data).

Table 3: Funding from structural funds for waste management facilities in Greece Estimated budget ( M) 220 300 120 500 60 40 100 30 30 30 60 10 10 25 400 1.935 939 996 Allocated funds from Structural Funds ( M) 190 240 100 144 55* 10 Estimated Gap ( M)

Infrastructures Disposal Rehabilitation Transportation Treatment Plants MBT MBT To be defined MBT MBT MBT To be defined MBT MBT MBT To be defined

Description new landfills existing landfills Transfer Stations Attiki Patra Hmathia Thessaloniki Corfu Island Ilia Aitoloakarnania Eastern Macedonia/Thrace Zante Island Fokida Serres Other treatment plants according to the RWMP Subtotals

No of Plants 40 400 80 8 1 1 1 1 1 1 2 1 1 1 n/a

200

* already committed

Based on the above-mentioned estimated budgets of the planned facilities in Attiki, the following diagram outlines the additional funding (including national and/or private matching funds) that is needed for the implementation of the Regional Solid Waste Management Plan.

27

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 6: Additional funding that is needed for the implementation of the SWM Plan in Attiki

Specific economical data have been requested from competent authorities and will be presented during next reports.

Public Private Partnerships (PPP) framework

Law 3389/2005 establishes a new legal framework for the implementation of Public - Private Partnerships in Greece. This legal framework aims to promote the implementation of PPP projects, taking into consideration the experience gained from concession agreements that were successfully implemented in Greece, especially for large scale projects in transportation sector (i.e. new Athens Airport, Attiki Odos motorway, Rio-Antirrio bridge), but also the important attempts over the last years to implement privately funded projects in other sectors.

The implementation of PPPs has been the issue of consultation for many years in Greece. It was necessary to overcome a legal gap in Greece, which led each contractual agreement for a project co-financed by the private sector for ratification by the Parliament. Furthermore, lot of issues, hindering the negotiations for the financing of the projects and causing delays in their implementation, had to be settled.

It was also necessary to create a framework, through which private entities would be able to implement projects and services, without imposing indirect / shadow charging schemes for end users.

28

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

The time required to tender a PPP project depends on its maturity and the actions already taken by the Contracting Authority (the public institution) to ensure the successful implementation of the project. The main characteristic of this procedure, according to the international practice and given the lack of internal capacity in PPP projects, is the recruitment of external, financial, technical and legal advisors. These advisors assist the authorities to prepare projects faster and more effectively, since the tender documents and procedures differ from those of traditional Public Procurements. The new tasks needed In the PPP tenders and provided by the external advisors, are: Project Financial Model, Risks allocation matrix, Payment mechanism model, Public Sector Comparator - VfM, market sounding survey, financial advise to the Public Entities, till the SPV financing is definitely ensured and the relevant loan contracts are signed. Also, in PPP tenders, emphasis is given in the project operation and maintenance requirements, instead of the detailed technical design as it is usually the case for traditional Public Procurements.

PPP schemes are complementary not only to traditional public works, but also to other forms of partnerships between the public and the private sector, such as the concession agreements or collaborations between Local Authorities and private partners. Anyhow, the Ministry of Finance intends to offer to Public Authorities a new additional mechanism & financial tool (PPPs though the Law 3389/2005), the use of which is upon them. To choose between the two options (concession or PPP through the new Law), the Local Authorities should take into consideration the benefits and setbacks of each procedure: Concession through existing Public Procurement Law: More familiar procedure and tender documents, shorter tender procedure, but tighter legal environment of contract implementation PPP through the new law 3389/2005: accelerated approval of project permits / licenses, supplementary public financing, more effective legal provisions for possible disputes between Contracting Authority and SPV, but lengthy procedures for project approval and tendering.

So far (Oct 2009) the following two SWM projects have been approved by the Joint Ministers Committee for PPPs:

29

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Project 1: Implementation of an integrated waste-management system in the Prefecture of Thessaloniki

Contracting Authority: Date of approval: Indicative Budget Project Duration: Construction Period: Operation Period:

Union of Municipalities of the Greater Thessaloniki area 30 Jan 2008 242 million euros (+20% insurance cost and heavy maintenance cost) 29 years 4 years 25 years

Forecasted period of SPV selection: mid 2010 Project Details: This PPP project involves the design, financing, construction, maintenance, facility management and operation of the new infrastructure of the integrated waste management system in the Prefecture of Thessaloniki for a period of 29 years. More specifically, the private partner will undertake the design, construction, maintenance and operation of a plant that will treat solid waste of the North-western unit of the Prefecture of Thessaloniki. This plant will be composed of a treatment and exploitation unit and a compliant residual waste landfill. This unit will be constructed upon any proven technology that can meet the targets set by the Community Directives and the output specifications set by the Contracting Authority. The unit will have a capacity of 400.000 tons per year. Moreover the private partner will be given the right to commercially exploit the output of the unit (such as recyclable products, biogas, RDF, energy, etc.)

Project 2: Implementation of infrastructure for the Integrated Waste Management System in the Region of Western Macedonia Contracting Authority: Date of approval: Indicative Budget Project Duration: Construction Period: Operation Period: DIADYMA S.A. 02 Aug 2007 97 million euros (+20% insurance cost and heavy maintenance cost) 27 years 2 years 25 years

30

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Forecasted period of SPV selection: mid 2010 Project Details: This PPP project involves the design, construction, financing, maintenance, facility management, and operation of the new infrastructure, aiming at covering the waste management requirements imposed by the Community Directives. Contracting Authority of this project is DIADYMA SA (Local Authorities Development Agency, responsible for the design development and operation of the Integrated Waste Management System of Western Macedonia). More specifically, the SPV that will be selected will undertake the following: The design, construction, maintenance and operation of the central integrated waste management installations, which will be composed by a treatment and exploitation unit and a compliant residual waste landfill. This unit will be constructed upon any proven technology that can meet the targets set by the Community Directives and the output specification set by the Contracting Authority. Moreover the SPV will be given the right to commercially exploit the output of the unit (such as recyclable products, biogas, RDF, SRF , etc.) The maintenance and operation of the existing network of waste transfer stations, when the treatment unit begins its operation. This network consists of ten transfer stations and their mobile equipment. The capacity of the above mentioned unit starts from 120.000 tons per year, reaching 152.000 tons per year by the end of the partnership, the operational period of which is 25 years. This PPP project is a part of the strategic plan of the Region of Western Macedonia. The construction and operation of the treatment comes to integrate the existing integrated waste management system of the Region, thus creating a waste management model, completely compatible with the environmental strategy of the European Union. The implementation of this project ensures that the amount of waste to landfill decreases, the environmental impact of treating biodegradable waste is minimized, and that commercially exploitable products are produced. Moreover, the construction and operation of the treatment unit results to doubling the life cycle of the existing landfill and maximizing the impact of the investment made during the 2002 - 2004 period, financed by the Cohesion Fund.

31

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

2.2.

RATIONALE

Given the above, recently the Greek Ministry of Economy and Finance has expressed interest in using the JESSICA (Joint European Support for Sustainable Investment in City Areas) Instrument in pursuit of the countrys urban agenda as set out in its National Strategic Reference Framework (NSRF-2007-2013) and associated Operational Programmes (O.Ps). JESSICA is an initiative of the European Commission (EC), the European Investment Bank (E.I.B.) and the Council of Europe Development Bank (C.E.B.), aimed at using financial engineering mechanisms to support investments in sustainable urban development as a component of integrated regeneration. The JESSICA initiative is designed as a financial engineering instrument with a revolving nature: it allows combining subsidies, loans, guarantees and other financial products. By using financial engineering measures, JESSICA aims to create a leveraging effect in attracting additional financial resources for urban renewal and development projects.

The Ministry has already requested an Evaluation scoping study necessary both to review the instrument's potential in the Greek context and to test options for its effective implementation. In this context, this scoping study has already been concluded, identifying the prospects and potential benefits for the deployment of JESSICA in the country. The results of this study highlighted the advantages of using a Holding Fund (H.F.) structure employing E.I.B. as H.F. whereas, at the same time, making reference to the need for subsequent studies focusing not only on sustainable projects in place making, but also on, inter alia, waste management. As a result, Greece was the second country after Portugal that signed a MoU with the E.I.B. in December 2008, which foresees the formulation of a Holding Fund (H.F.).

2.3.

STUDY BACKGROUND

On the basis of the proposals made in the scoping study as well as the recently amended regulations aiming at the acceleration of the absorption of Structural Funds in the EU-27, the Ministry of Economy and Finance is committed to implementing JESSICA, inter alia, in the area of waste management, necessitating to target more precisely the focus on the actual implementation of JESSICA in the country. Given the above, and further to joint consultation

32

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

with the EC and the Ministry, a further study focusing on deployment of the JESSICA instrument to support investment in waste management was required.

2.4.

STUDYS SCOPE AND OBJECTIVES

2.4.1. Scope

The overall aim of the study is twofold: To assess in detail the development of an economically and environmentally sustainable mechanism (model) for municipal solid waste management, including commercial waste, in Attiki and Thessaloniki, under the framework of JESSICA initiative. To propose specific projects which promote the sustainable development of the waste management in these two urban areas, and could be included and benefitted from JESSICA.

2.4.1.1.

Type of Projects

Waste management involves the collection, transportation, processing, recycling and disposal of waste materials, as well as the final de-commissioning and rehabilitation of disposal sites at the end of their useful life. The study will cover mainly capital intensive projects that include transfer stations, mechanical biological treatment systems that combine a sorting facility with a form of biological treatment such as composting, biological drying and anaerobic digestion, materials recovery facilities and combustion (incineration) facilities. It is very important to mention that for the techno-economical analysis and evaluation, the complete process of waste management life cycle will be taken into account. Generally, a holistic approach to waste management includes technical and economical data from generation of waste to final decommissioning of facilities, including e.g. cost of waste collection and transportation, supplementary transport stations, infrastructure works (building installations, structural, electromechanical etc), control and monitoring works, landfill rehabilitation costs etc.

33

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

In the following table, all existing and planned facilities for waste management in Attiki and Thessaloniki are outlined, which could be considered as a preliminary list of potential projects for further analysis and evaluation.

34

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 4: Existing and Planned Facilities for Waste Management in Attiki and Thessaloniki
Prefecture Population Existing Facilities 1 Compliant Residual Waste Landfill (West Attiki Fyli) 3.761.810 (2001) 1 MBT plant (Mixed wastes) 450.000 tn/year Attiki 4.237.651 (2009) (Estimation) 4 MRFs (Recyclable Wastes) 170.000 tn/year 2 Compliant residual Waste Landfills 2 MRFs (Recyclable Wastes) Thessaloniki 1.084.001 (2009) (Estimation) Total 40.000 tn/yr 1 Compliant Residual Waste Landfill (South Thessaloniki-Mavrorahi) 1 MBT Plant (Mixed wastes) 1 Compliant Residual Waste Landfill 1 MRF (Recyclable Wastes) 180.000 + tn/ year N/A 20.000 tn/yr 55M 9M N/D N/D N/D N/D 1 MBT Plant (Mixed wastes) 400.000 tn/ year Under Construction 280M Mavrorahi 2 MBT plants (Organic Waste) 1 MBT plants (Organic Waste) 40.000 tn/year each 80.000 tn/year Total 39 35 East Attica (Keratea & Grammatiko) West Attica - Fyli (West Attiki Fyli) 2 MBT plants (Mixed wastes) 127.500 tn/year each Total 180 East Attica (Keratea & Grammatiko) 1 Anaerobic Treatment plant (SS Organic Waste)14 67.000 tn/year 20M West Attica - Fyli TYPE of PLANTS 1 MBT Plant for SRF production (Mixed wastes) 1 Mechanical Treatment Plant (Mixed wastes) Planned Facilities CAPACITY 700.000 tn/year 400.000 tn/year ESTIMATED BUDGET 153M 85M LOCATION13 West Attica - Fyli West Attica - Fyli

800.764 (2001)

13 14

Refers to sites that have been already identified. Under Consideration

35

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

In addition to the above, several central transfer stations are also foreseen for both areas. In general, transfer stations are used for the temporary deposition of waste and function as a supplementary infrastructure, used to enhance the operation of the integrated waste management system, although in some cases they are considered to be mandatory for the whole process. All these parameters will be analyzed and evaluated for both areas under examination.

Specific technical and economical data for the aforementioned projects, such as type and level of technology, nominal capacity, investment and process costs, revenues from material and potential energy recovery etc, have been requested from competent authorities.

2.4.2. Objectives

The main objectives of the study is the analysis of institutional and regulatory environment, the evaluation of potential JESSICA implementation in waste management sector, the overview and evaluation of MSW projects case studies, the development of scenarios for JESSICA implementation and the proposal of an action plan in order to provide a long-term solution to solid waste management problems by ensuring financial sustainability to the Model.

The Model is expected to:

Take into account the need to develop an integrated approach to waste management, including its relationship with other aspects of urban development and the requirements of the different components of the waste management process, as well as to cover its sustainability aspects, including a long-term balance of the waste management cycle from generation to treatment to final disposal and de-commissioning of facilities. Be based on an assessment of the gaps between the supply and demand of funding summarise the rationale for the establishment of a UDF for "Integrated Waste Management" for sustainable urban development, including an assessment of the investment needs in this sector and an analysis of the scope of existing structures. In order to map the current situation, the study shall review and update: a) relevant technical parameters: waste generation rates, anticipated collection and recycling rates, municipalities/population covered; b) regional solid waste management plans and spatial

36

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

planning; c) location of sites: identification of existing waste treatment sites including dumpsites and a critical analysis of potential future treatment sites in terms of environmental and logistic issues and potential imbalances in Attiki and Thessaloniki; d) collection of data and information regarding Municipal Waste Management, including commercial waste; and e) the legal framework for the development of such activities. Analyse how financial engineering actions and products targeting waste management could fill financial gaps; review the potential for using UDFs to accelerate investment, and determine the interest and readiness of potential key market players, such as banks, IFIs (EIB), stakeholders from both the public sector (e.g. municipalities, association of municipalities) and private sector (e.g. waste managers) and other entities, in endorsing the JESSICA concept and running UDFs supported by SF contributions. Identify the main beneficiaries of the solid waste service (private households, business, public institutions, etc.) and assess their ability and willingness to pay for the service to ensure financial sustainability of the model and hence contribute to providing a long-term solution to solid waste management problems in respective urban regions. Indicative, revenues coming from beneficiaries will include gate fees and third party income (electricity selling, recyclates, composting materials, etc.). Identify ERDF resources available for supporting integrated waste management interventions and other requirements under the Greek Operational Programmes (e.g. sources of funding, existing ceilings, eligibility criteria, etc.) as well as potential funding from other (national) programmes. Provide different concrete scenarios for revolving investment instruments, with the participation of ERDF funding, to implement solid waste facilities in Attiki and Thessaloniki, and possibly other contributions. In this respect, the study shall pay particular attention to providing independent and autonomous solutions as regards the integrated waste management process (i.e. separation and recycling, mechanical and biological

treatment and/or composting, incineration, final disposal, etc.). Identify how the most suitable model could be financed (i.e. contributions from public and private participants). In particular, the following elements need to be addressed: fund structure; the fund's investment strategy, products and targeted beneficiaries. In essence, identify the need for technical assistance to establish UDFs and, as appropriate, what the essential components of the envisaged assistance should comprise.

37

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Identify the administrative and legal framework and constraints and propose respective solutions (i.e. how the model should be structured and how the corresponding UDF should be set up and participate in the model). The proposed solutions should be compatible with the SF Regulation on expenditure, monitoring and auditing activity. Propose an action plan for a short to medium-term implementation of the proposed solutions.

More specifically, the study will provide a complete picture of the existing situation in Attiki and Thessaloniki, by reviewing the location and sites of the facilities in use, the relevant technical parameters such as waste generation rates, anticipated collection and recycling rates etc, and will identify and evaluate investment needs in the sector, by analyzing the potential future treatment sites in terms of environmental, economical and logistic issues, as well as identify potential imbalances.

The environmental and economic benefits of different treatment methods depend significantly on local conditions such as population density, infrastructure etc, as well as on markets for associated products (energy, recyclables and composts). In addition, the proposed management services have to keep pace with demand, be appropriate to needs, be costeffective and optimize the environmental and social profit, thus in the study the main beneficiaries of the solid waste services, as well as costs and revenues, including gate fees and third party incomes, such as electricity selling, recyclables, compost etc. will be identified and analyzed. The legal framework for the development of such activities will be also reviewed and evaluated.

38

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

3. STUDY FRAMEWORK & APPROACH


3.1. OVERALL APPROACH

The following chapter of the inception report outlines the framework and approaches to be used in this study.

The overall approach, will include a baseline study, which will provide a better understanding of the existing waste management practices in Attiki and Thessaloniki, a preliminary screening of the potential projects in these areas based on high importance criteria such as maturity level and budget, an evaluation of the overall market and demand for funds over the next years, a technical and financial analysis of anticipated commercial performance of the projects under evaluation, and finally a strategy formulation for implementing JESSICA funding mechanisms.

3.1.1. Baseline Study

A baseline study will be carried out first, to provide a better understanding of the existing waste management practices in Attiki and Thessaloniki. This baseline study needs to address comprehensively the range of areas of importance to waste management services, including institutional, operational and financial aspects such as waste quantities and composition, existing MSW management operations, institutional and financial framework, prediction of future waste quantities and analysis of shortfalls and constraints.

The main objective of data collection on waste quantities and composition is to determine the demand for collection, transfer, treatment and disposal facilities. Data on waste composition can also be helpful in establishing the current status of recycling in the MSW management system and the feasibility of resource recovery and waste treatment schemes. The results of this study will need to be adjusted based on assumptions and evaluations which should take into account the effects of seasonal variations as well as the tourist nature of the district.

The collected and summarized data on the present waste quantity and composition will form the basis for predictions of the future waste generation and composition during a 20 years period. The predictions will take into account predicted future changes in population, 39

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

GDP/average income and related changes in consumption patterns, changes in economic structure, and other factors that are believed to have an influence on the waste generation. In particular, three scenarios (central, min and max) for estimating waste growth will be evaluated, assuming different growth rates in waste production (waste grows by 1% yearly, by 35% in the 20-year period, and by 3% yearly). The approach used, and the assumptions made will be clearly presented.

The results from the predictions will be presented in tables and on maps (allocation of waste sources) for the years 2010, 2015, 2020 and 2028 as the predicted future:

total waste generation in the region/prefecture (tn/year), unit waste generation in the region/prefecture (kg/cap-day), waste composition using the same breakdown as in the study of present conditions.

3.1.2. Preliminary screening Next a preliminary screening of the planned projects in the areas under examination will be performed, based on exclusion criteria, such as maturity level (implementation time 20102015), as well as high importance criteria such as estimated budget, committed funds etc. The process will include a short technical description

The process will lead to a number of projects that will be analyzed and evaluated in depth.

3.1.3. Technical and financial analysis Once the projects to be evaluated have been determined, a Technical and Financial Analysis of anticipated commercial performance of the potential projects will be the next step, where the solutions available will be addressed and analyzed, in order for the most environmentally, socially and economically sustainable projects to be identified and evaluated.

The techno-economic study report shall be divided into two parts:

The Technical Study of the project/works The Economic evaluation estimation of the cost of the project/works

40

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

The Technical Study of the Project will be structured into chapters, containing the following:

Introduction: All data relating to the study as well as the kind and purpose of each project will be given.

Description of Projects locations: This part will include a short description of each Projects location with regard to the waste sources and national planning.

Design parameters of each Project: In this chapter all the design data will be described and evaluated (depending on the available data), i.e. the population to be served, quantitative and qualitative waste feedstock data, calculations of each projects capacity etc.

Technical description of each Project: In this chapter a short technical description of all individual installations (plant, residue treatment, control installations etc) and works (road and landscape construction), that are to be constructed for the proper operation of each project will be described and evaluated. In particular, for the design of the plant, there will be a description (the depth of which will be based on the available data) of each project, which will include: a) description of reception unit (i.e. mechanical treatment) and forwarding incoming waste, b) description of main treatment unit depending on the technology used, c) description of possible secondary treatment stage of products, d) description of method of forming and storing products, e) description of the management method and disposal of recovered recyclable products and by-products from their treatment (prices and markets for them), f) description of the management method of non-use materials / residues for final disposal (e.g. landfill), including mass and energy balance, antipollution works, project benefit etc. The waste flows will be presented by flow chart broken by type, showing each separate flow which is especially important for a newly built plant.

Control works and monitoring of the environmental impacts and parameters: In this chapter reference will be made to the projects monitoring of the incoming waste, gas emissions and the performance of each individual project etc. Special note will

41

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

be given to the calculation of greenhouse gas (GHG) emissions and the possible offset benefits arising (i.e. use of compost instead of fertilizers and energy production).

Organization and operational works of the project: This chapter deals with the organization and operation of the project.

Indicators: Performance indicators and sustainability metrics (such as diversion form landfill) will be presented by waste system elements collection, transportation, recycled, deposited, etc.

The Economic Evaluation will be based on the technical data and will contain the following:

a) Budget estimate for the construction cost of the works b) Data as to the organization and operation of the installations (operating hours, required personnel etc) and the operational costs of the works for a period of 15-25 years (depending on the nature of the facility) c) Data for the maintenance of all the installations and maintenance cost for a period of 15-25 years d) Data for the de-commissioning of the plant, and rehabilitation of the site. e) Cash-flow presentation, identifying the sources of revenue and expense per annum

3.1.4. JESSICA implementation plan (Model)

A strategy plan for JESSICA implementation for SWM sector in Greece will be the final step, where the key conditions for creation of JESSICA structures (Urban Development Funds) will be assessed, along with the combination of JESSICA and existing public funds - grant mechanisms. The action plan for JESSICA implementation addressing management and legal issues & procedures for setting up the new instrument within a certain timetable will be the final stage of the strategy plan.

42

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Data and information will need to be collected in a broad range of areas, including socioeconomic, environmental, political and institutional issues. Combinations of methods will be used to collect and analyze these necessary data. The methods will include desk research, market and legal analysis, interviews and consultations, case study analysis, technical and financial evaluation of projects, multicriteria analysis, financial modeling, S.W.O.T analysis etc.

3.2.

CRITICAL ISSUES OF THE PROJECT

3.2.1. Objective criteria for using Jessica

Next, objective criteria for both case studies and JESSICA implementation model are outlined.

3.2.1.1.

Projects selection criteria analysis

The analysis of each characteristic of all the alternative projects will be based on the selection and examination of different criteria that are aiming to define the optimal solution to the examined situation. The criteria that will be used in this fall into the following five categories: environmental, financial, technical, legal and social criteria. These include both quantitative and qualitative measures.

Generally, the application of all waste treatment technologies has been fraught with problems that have often arisen because of over-optimistic assessments of technical, institutional and financial feasibility. Overestimations of the calorific value of the waste in case of incineration projects, market demand for compost and recyclables, technical skills and available operation and maintenance budgets, has been a major cause of failure of investments in waste treatment technology. All these risk factors will also be taken into consideration during the evaluation of each project and incorporated into the analysis of each scenario. Some of the key issues are presented next:

Feedstock Availability and Composition Risks Waste quantity and composition influence directly the functioning and capacity of waste management projects, as well as their viability because quantity and composition determine the products and/or energy recovery from treatment facilities, and thus the

43

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

potential revenue streams. In planning an upgrade of existing or development of new systems/facilities it is therefore of utmost importance to determine current and future waste quantity and composition as accurately as possible.

Market Demand Risks The viability of MBT plants rests on the availability of outlets for the principal products and residues. In the case of MBT plants that create (refuse derived fuel) RDF and solid recovered fuel (SRF), the main barriers to development are the planning problems associated with the construction of dedicated Waste to Energy plants to receive the fuel, and the lack of secure long-term markets for the fuel in the cement, power and other energy-intensive industries that could try alternatives to fossil fuel. In the case of MBT plants that create a biologically stable product for landfill the main uncertainty relates to whether the product complies with the requirement of the Landfill Directive for the diversion of biodegradable waste from landfills. In cases where an MBT plant produces a recyclable or marketable product (compost etc) the issue of product quality and consistency is paramount if a long-term market is to be secured. Products developed from mixed waste inputs are generally too contaminated to permit uses other than in low value applications.

3.2.1.2.

JESSICA implementation model

A full scheme for the JESSICA vehicle organization comprises the establishment of a Holding Fund (H.F.) and Urban Development Funds (U.D.F.). JESSICA is a flexible vehicle, which allows the implemented configuration to be adjusted to specific conditions and needs of a given Country / Region and sector. On the legal and administration side, the legal and management framework of the U.D.F. remains for analysis and clarification within the study outputs. One initial strategic issue to be clarified is whether the UDF will also cover sectors additional to the SWM sector(s), for example energy efficiency projects, notably waste-to-energy, regeneration of surrounding areas, compensation measures for municipalities etc.

Regarding the establishment of U.D.Fs, the following options will be reviewed and evaluated in order to support the strategic decision process:

44

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Legal form of U.D.F.: Equity Fund (Law 2992/2002) or Joint Venture (Societe Anonyme) between Public Entity and Private Investor / Financial Institution, which will be selected through a public procurement procedure. Public Administration Level of U.D.F. establishment: Centralized or Regional / Local U.D.F. Involvement and roles of Ministry of Economy & Finance, Regional Authorities and Regional Funds, Local Authorities Other current development Funds as possible partners of U.D.F.

The above issues will be examined taking in consideration the restrictions of the current Greek legislation framework, the EU State Aid applicable rules and the lessons learnt from the establishment and operation of similar type of Funds in Greece. The basic criteria for choosing the U.D.F. structure are:

Conformity with the national legal framework (i.e. Law 3389/05 for PPPs)

Flexibility and efficiency of U.D.F. management structure Capability of potential involved public bodies Time limitations for establishment and operation of U.D.Fs

We have to point out that there are no equity instruments in Greece focused on urban development not to mention on sustainable MSW systems. The only relevant existing legal framework is the Equity Funds framework focused on private sector which can be adapted for the Jessica HF/UDF development and operation. An overview of Equity Funds framework is presented afterwards:

Equity Funds in Greece and relative legal framework

The Greek Venture Capital (VC) & Private Equity (PE) industry has been active in Greece and in the South East European Region since the early 90s. The Greek Venture Capital market starts to develop and acquire considerable size after 1997. At that point a significant percentage of the investment capitals are raised and two major funds are established by the foreign firm Parthenon Trust, in 1998 (350 million euro) and in 2001 (750 million euro). Since then private and semi-public financing institutions for high-technology ventures were developed 45

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

to satisfy a slowly emerging demand (i.e. TANEO). A few private VCs emerged either as affiliates to large banks or as initiatives of other financing institutions. Foreign VCs funding research-intensive start-ups were identified. The commercial banks have acted as intermediaries in the flow of small volumes of funding from the Operational Programmes to SMEs and microenterprises, thus reducing the administrative burden of the managing authorities of the programmes and facilitating access to the funds for the beneficiaries.

The first attempt to set a legal framework which will give incentives for the growth of the VC industry was made with the enforcement of Law 1775/88. The aforementioned law introduced the Venture Capital Provision Firms (EPEK). These structures were obliged to have the legal form of a Greek Socit Anonyme (S.A.). and 51% of the firms portfolio should consist of investments in high technology companies. However, the law was judged as inadequate and was amended later on by Law 2367/1995 (articles 5 and 9). The new law renamed the EPEK to Venture Capital Firms (EKES). This second law did not limit EKES strictly in high-tech investments but allowed investments also in enterprises in other sectors such as agriculture, manufacture, tourism or retail that their legal form is that of a an S.A. or Ltd and that are non-listed (article 5). It should be pointed out that an EKES can transfer the management of its assets and achievement of their goals to specialized firms (article 5). EKES are subsidized up to 20% for investments only in high-tech firms (article 7), the tax rate of the EKES is 20%, while its share-holders are exempted from taxes on gains made by distribution of share gains (article 8). A new legislative regulation was introduced in 2002, by Law 2992/2002 aiming to further support the growth of the Venture Capital Industry. The law foresees the establishment of AKES which is a closed-end venture capital mutual fund, formed as a partnership. The structure is tax transparent for domestic and non-domestic investors with the ability to be exempted from having a permanent establishment when investing through the fund. Both management fees and carried interest are not liable to VAT. AKES pay corporate income taxes at a rate of 20% of profits distributed to shareholders. Corporate income tax does not apply to corporate profits which are not distributed to shareholders but are retained within the company for reinvestment. However, the AKES is not free from undue restrictions and can only invest in non-listed Greek Socit Anonyme and Limited Liability Companies. The law enables the transformation of EKES operating under Law 2367/1995 to AKES without any tax (article 7).

46

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

In 2000 Law 2843/2000 5 established the New Economy Development Fund S.A. (TANEO). TANEO is a Greek government backed Fund-of-Funds. Initially the government was the only investor, but later on the fund raised also private capital. Based in Athens, the fund has 150 million euro under management, 105 of which come from foreign investment institutions and Greek investors and 45 million euro from the Greek government. The fund was structured by the UK fund of funds group Westport Private Equity. TANEOs mission is to produce financial returns at the same time as jump-starting the venture capital industry and boosting the Greek economy by investing in Greek private equity funds. TANEO invests in all types of funds from buy-outs to earlystage venture capital (venture funds, mutual funds etc). TANEO offers investors government guarantees, but the small size of the Greek market dictates an opportunistic strategy in the allocation of capital. At present TANEO holds a share of 49,99% in eleven VCs of the following SMEs sectors: IT- Computer Related Biotechnology - Health Industrial products Materials Eco-Business Agro - Business - Beverages Services Another state sponsored Fund is the Digital Leap Fund (established by Law 568/2005) for the Information Society sector. The fund was expected to invest 100 million EURO in 30-50 companies for a period of 10 - 12years. A procedure for the selection of the Fund Manager commenced two years ago, but was cancelled. The Fund Manager fee was determined as 2%3% of the Funds budget, with additional fee of Funds carried interest at 20% of capital gain. In addition to Fund Manager, there is provision for Fund Treasurer (bank or other financial institution).

3.2.2. MSW Projects Maturity Plan

One of the most critical parameter for case study selection is the maturity level of each one, which is mainly based upon the current phase of the licensing process. All waste management units (Landfills, MBT, MRF, Transport Stations etc) are subject to the same steps of licensing. According to the J.M.D 15393/02, the licensing process of all the proposed projects is divided into the next steps:

47

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Step 1: Project Idea - Concept Competent Waste Management Authorities (WMA) assign to consultants the preliminary assessments (feasibility and techno-economic studies) in order for the final concept and idea to be established. Study

Step 2: Assignment and Preparation of the Preliminary Environmental Impact Assessment (EIA Screening / Scoping Study Report) After the concept has been established, WMA assign the preliminary environmental impact assessment to private engineering consultants. The preparation of a Preliminary Environmental Impact Assessment Study is necessary according to Article 7 of J.M.D. 50910/03 for all projects. Assignment can be done through open competition which lasts approximately 1 month or direct commission, while preparation usually lasts 1-2 months, depending on the special characteristics of the project under examination.

The EIA Screening / Scoping Study shall cover all aspects and matters that must be evaluated and assessed on the basis of existing Greek and Community legislation. The Study must be submitted for approval.

Step 3: Approval of Preliminary Environmental Impact Assessment The Preliminary Environmental Impact Assessment Study has to be submitted to the competent Prefecture, Region or Department of the Ministry of Environment, and be approved by them and a number of other public authorities such as the Prefecture Environment Department and the Archeological Department of the Ministry of Culture.

Step 4: Assignment and Preparation of the Environmental Impact Assessment (EIA Report) The next step is the assignment of the Environmental Impact Assessment Study from the WMA to private engineering consultants. . Assignment can be done through open competition which lasts approximately 1 month or direct commission, while preparation usually lasts 1-2 months, depending on the special characteristics of the project under examination. The MPE must also be submitted for approval.

48

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Step 5: Approval of the Environmental Impact Assessment and publication of Environmental Agreements. The next step which is submitted to the competent Prefecture, Region or Department of the Ministry of Environment depending on the population covered and the type of the facility. After a number of authorities have delivered their opinion, the Environmental Agreements Conditions are issued. These are necessary for the construction of all waste management related infrastructure.

Step 6: Assignment and Preparation of Technical Engineering Studies and Tender Documents In this step, the preparation of all the appropriate technical engineering studies and tender documents are assigned by WMA to private engineering consults, in order for all the necessary information about the implementation of the project to be identified and assessed. The Tender Documents, among others, include:

Technical Specifications for all construction works / equipment Preliminary design / studies and drawings Bills of quantities with pre-measurements

Step 7: Application for Funding In this step WMA, usually with the assistance of the aforementioned consulting engineers, prepare and submit a complete application file for co-funding of the Project by either the Cohesion Fund in accordance with the European Union requirements (application only to Major Projects), or R.O.P funds.

Step 8: Project Tender In this step candidates (constructors) submit their tenders, and WMA, usually with the assistance of the aforementioned consulting engineers, evaluate the tenders and prepare an evaluation report.

Step 9: Assign and Construction The final step involves the contract assignment and construction of the project based on the above-mentioned evaluation report.

49

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Next a schematic representation of the above steps is presented.

Figure 7: Schematic representation of the licensing process steps

50

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

The total estimated time from the assignment of the EIA Screening / Scoping Study to project tendering, varies approximately from 17 to 34 months.

In case of special PPP (Law 3389/2005), WMA submits a preliminary application to Special Secretariat for PPPs, and after the approval, assign the whole procedure (steps 2-6) to a Technical Consultant through open competition or direct commission, which is responsible for the preparation of all necessary design, studies and documents; hence the amount of time that is needed for steps 2-7 is decreasing.

In terms of licensing and permitting, the most critical stages are highlighted in red in Figure 5, and include both the approval of the Preliminary Environmental Impact Assessment Study and the Environmental Impact Assessment Study, with respect to obtaining approval of competent authorities and regulatory agencies. Moreover, during these stages, the community has the largest opportunity to access the information and raise any objections to the projects. .

51

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

4. STUDY WORK PLAN


4.1. METHODOLOGY SUMMARY

As laid out in the consultants proposal, the phases, activities, work packages and deliverables are presented in summary in the following table:

Phase I: Inception

Phase II: Implementation

Phase III: Finalization

Activities: Conclude contracting arrangements Establish working relationships with stakeholders Review and revise work plan Establish effective communication system Establish objective criteria for using JESSICA in the SWM sector in Greece

Work Packages (WPs): WP1: Analysis of Institutional and regulatory Environment WP2: Evaluation of potential JESSICA Implementation in Waste management Sector WP3: Case studies of JESSICA implementation WP4: Development of scenarios for JESSICA implementation

Work Package (WP): WP5: Action Plan for JESSICA implementation in waste management sector

Deliverable: Inception Report

Deliverables: Study Progress Reports Special Reports

Deliverables: Final Report Draft UDF establishment legal documentation Study findings presentation

Methods: Inception meetings Mobilize resources

Methods: Consultations with EIB/ MoE&F/ Jessica SC / stakeholders Desk research / Market / Legal framework analysis, Fund & Project Financial modelling SWOT analysis Case studies analysis

Methods: Consultations with EIB/ MoE&F/ Jessica SC

Month 1

Months 2 - 3

Months 4-5

52

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Combinations of the following methods will be used to collect the necessary data and to evaluate the numerous alternative options for JESSICA mechanisms application in the SWM sector in Greece:

Desk research Desk research will be used for collecting and analyzing relevant secondary data. Information sources included EU-level legislation (on the EU Structural Funds, JESSICA instrument, etc.), NSRF 2007 2013, Operational Programmes, Regional and Local Waste Management Plans, related legal acts as well as statistical information. The market and legal analysis will be based on this method. Market analysis will include a review of the need for solid waste management investment for each phase of the waste management cycle, maturity of the market for PPPs and a description of existing public programmes and other available financial instruments to promote and encourage investment in waste management. Legal analysis will be used to describe legal context and necessary requirements and restrictions for the implementation of JESSICA in Greece, in compliance with EU regulations and national legal acts (related to State aid rules, public procurement, PPPs, legal forms of establishing and managing UDFs, other relevant legal issues).

Interviews and stakeholders consultations Interviews and stakeholders consultations will be used in order to gain the opinions and experience of key actors, who are responsible for the management of NSRF 2007 2013 and the planning, implementation and financing of SWM projects in Greece.

Technical Evaluation Cases will be selected following a rigorous preliminary screening process, and then quantitative and qualitative information for all potential projects will be collected and best use will be made of the available information. All the alternative solutions available will be addressed and analyzed, and the most environmentally, socially and economically sustainable projects will be identified and evaluated thought the application of a multicriteria analysis.

Financial modeling Financial modeling will be used for the determination of market gaps and the most effective means of improving access to financing for public and private bodies in implementing solid

53

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

waste management projects in Greece and to compare cash-flows and returns between employing traditional grants vs. JESSICA mechanisms. It will be used for the determination of the most appropriate strategy for JESSICA introduction in Greek market and to tailor the type and scale of financial support (equity investments, loans, guarantees). Project Financial Modeling will be also used for the financial evaluation of the selected case studies - SWM projects.

SWOT analysis Strength Weaknesses Opportunities Threads analysis will be used for evaluation of critical options related to the launching and implementing JESSICA instrument in Greece

4.2.

DELIVERABLES

The above work packages and methods should achieve the following deliverables: 1st Progress Report: Analysis of institutional and regulatory environment of SWM in Greece (Work Package 1)

Evaluation of potential JESSICA implementation in Waste management Sector Analysis of supply & demand financial gap & Case studies Actual Projects / Programs implementation, using JESSICA instruments (Work Packages 2 & 3)

Draft Final Report:

Strategy and Action Plan for JESSICA structure implementation (Work Packages 4 & 5)

Final Report:

Executive Summary and synthesis of the above Progress Reports after consultations with EIB and the Ministry of Finance and Economy & MA

54

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

4.3.

TIME PLAN

The study duration is 5 months and it will finish on December 31st, 2009. Most project activities and consultations will take place in the period mid October December 2009 and will be concluded with the Final Report and public presentations.

An indicative time plan of the study progress is as follows:

Dec 2009 Jan 2010

Submission of 1st Progress Report Submission Presentation of Draft Final Report Revision Final version

4.4.

MEETINGS - CONSULTATIONS WITH KEY STAKEHOLDERS

Through the study progress, it is proposed that meetings - consultations between the study experts and the following SMW key stakeholders, should be conducted, with the cooperation of JESSICA steering / technical committee:

MINISTRY OF ECONOMY & FINANCE ASSOCIATION OF COMMUNITIES AND MUNICIPALITIES IN THE ATTICA REGION ASSOCIATION OF LOCAL AUTHORITIES OF GREATER THESSALONIKI ATTIKI REGIONAL AUTHORITY / ATTIKI REG. O.P. M.A. KENTRIKI MAKEDONIA REGIONAL AUTHORITY / K.M. REG. O.P. M.A.

55

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5. PRELIMINARY STUDY
5.1. BASELINE STUDY

5.1.1. Region of ATTIKI

5.1.1.1.

Waste Management Authority

The competent authority for waste management in the region of Attiki is the Association of Municipalities and Communities in the Attiki Region (ACMAR).

5.1.1.2.

Waste Generation and Composition

Indeed, waste quantity and composition influences directly the functioning and capacity required for waste collection and treatment/disposal systems and facilities. In planning an upgrade of existing or development of new systems/facilities it is therefore of utmost importance to as accurately as possible determine current and future waste quantity and composition.

Waste Generation In the following table waste quantities generated in Attiki in 2001, as well as estimations for future quantities according to RWMP of Attiki (2006) are outlined.

Table 5: Municipal Solid Waste Generation in Attiki (RWMP, 2006) Year 2001 2008 2010 2013 2020 2028 MSW (tn/y) West Attiki 1.520.280 1.685.935 1.736.670 1.816.240 2.015.530 2.270.665 MSW (tn/y) NE Attiki 127.385 141.620 145.635 152.570 169.360 190.530 MSW (tn/y) SE Attiki 127.385 141.620 145.635 152.570 169.360 190.530 MSW (tn/y) Total 1.775.050 1.969.175 2.027.940 2.121.380 2.154.960 2.651.725

56

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Detailed methodology and updated future trends estimations based on waste generation per capita and population increase, will be presented during the next reports.

Waste Composition In the following table, the change of composition of MSW over time in Attiki is presented, based on several detailed studies conducted by ACMAR, in conjuction with the National Technical University of Athens (NTUA).

Table 6: MSW composition in Attiki (ACMAR NTUA, 2008) Type of Waste Putrescibles Paper Plastic Metals Glass W-L-R-T15 Inert Other16 Total 1985 56,50 % 20,00 % 7,00 % 4,00 % 2,70 % 4,30 % 1,00 % 4,50 % 100,00 1991 48,50 % 22,00 % 10,50 % 4,20 % 3,50 % 3,50 % 3,30 % 4,50 % 100,00 1997 46,50 % 23,44 % 10,80 % 3,74 % 3,42 % 4,25 % 3,58 % 4,27 % 100,00 2008 43,60% 28,20% 12,50% 3,20% 3,20% 4,20% 1,20 % 3,90 % 100,00

In addition, MSW composition (2008) is depicted next.

15

Wood Leather Rubber - Textile Other types include batteries, fine material etc

16

57

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Glass 3,20% Metals 3,20% Plastic 12,50%

Other 9,30% Putrescibles Paper Putrescibles 43,60% Plastic Metals Glass Other

Paper 28,20%

Figure 8: MSW composition in Attiki in 2008 (ACMAR NTUA, 2008)

5.1.1.3.

Existing Facilities

In West Attiki, the existing facilities are the following:

One compliant residual waste Landfill in the area of Fyli, with annual capacity of 825.000 tonnes per year. One Mechanical and Composting Treatment (MBT 1) in Ano Liosia, with annual capacity of 450.000 tonnes per year for the treatment of mixed solid waste. The unit combines a sorting facility with biological treatment of composting, produces R.D.F. and compost, its operation begun on 2004 and is one of the biggest MBT plants in Europe. Detailed description of the facility will be presented during next reports.

Nowadays, these two facilities are the only MSW management units in Attiki, as it is presented in the next figure.

58

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 9: Existing MSW in Attiki

The following figure depicts future quantities and management of BMW in Attiki, in accordance with the targets established by EU Legislation, assuming a BaU scenario (Business as Usual) and waste growth of 1,5% yearly (central scenario). In depth analysis of various scenarios will be presented during next reports.

Figure 10: Future quantities of MSW and BMW generation and disposal in Attiki (waste growth:

1,5% yearly) 59

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.1.1.4.

Waste Management Facilities Planning

According to the Regional Plans several treatment units are foreseen for the next years in Attiki, in order to achieve the quantified targets for diversion of biodegradable waste shown on the above-mentioned figure. ACMAR has recently commissioned a study in order to evaluate the most appropriate technology for the treatment of 2.500-3.000 tonnes of solid waste that are still being disposed directly to Fyli Landfill. According to the results of the aforementioned study, the construction of the following waste treatment units has been proposed:

West Attiki A M.B.T. (Sorting and Biological Drying) plant in Fyli ,with annual capacity of 700.000 tones per year and the ability to treat mixed waste and produce S.R.F. (budget 153.510.000 ). A Mechanical Treatment plant with annual capacity of 400.000 tones for the treatment of mixed solid waste (84.311.500 ), possible combined with an Anaerobic Digestion and post-composting treatment plant with annual capacity of 67.000 tones of organic waste (budget 19.093.058 ). One Biological Treatment plant for separated at source organic waste with annual capacity of 80.000 tones per year (budget 35.000.000 ).

East Attiki According to the Regional Plans several treatment units are foreseen for the next years in Attiki, in order to achieve the quantified targets for diversion of biological (organic) waste. ACMAR has recently commissioned a study in order to evaluate the most appropriate technology for the treatment of 800 tn of solid waste per day that are still being disposed directly to Fyli Landfill (West Attiki). According to the results of the aforementioned study, the construction of the following waste treatment units has been proposed:

One Landfill in the area of Grammatiko, which is under construction, with annual capacity of 125.000 tn per year. One Landfill in the area of Keratea, with annual capacity of 125.000 tn per year. A mechanical and anaerobic biological treatment with annual capacity of 127.500 tn/year for the treatment of mixed solid waste in the South East Attiki (budget 89.083.400 )

60

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

A mechanical and anaerobic biological treatment with annual capacity of 127.500 tn/year for the treatment of mixed solid waste in the North East Attiki (budget 89.083.400 ) A Biological Treatment plants for separated at source organic waste in the South East Attiki with annual capacity of 40.000 tones per year (budget 17.000.000 ). A Biological Treatment plants for separated at source organic waste in the North East Attiki with annual capacity of 40.000 tones per year (budget 17.000.000 ).

The locations of the above-mentioned plants, as well as the existing MBT in Ano Liosia are depicted on the following map.

Figure 11: Locations of the existing MBT and under planning facilities in Attiki

61

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.1.2. Prefecture of THESSALONIKI

5.1.2.1.

Waste Management Authority

The competent authority for waste management in the region of Thessaloniki is the Association of Local Authorities of Prefecture of Thessaloniki (ALAPT), which is a legal entity of public law that was established in 1971 and consists of 47 municipalities of the prefecture of Thessaloniki. The Association is responsible for the construction of the new landfill in Mavrorahi, the application of Recycling Programs, the rehabilitation of previous waste disposal sites and the development of advanced research and awareness programmes, aiming at the environmental protection and sustainable and viable development.

5.1.2.2.

Waste Generation and Composition

Waste Generation In the following table waste quantities generated in Thessaloniki in 2001, as well as estimations for 2008 and 2010 quantities according to ALART estimations are outlined.

Table 7: Municipal Solid Waste Generation in Thessaloniki (A.L.A.R.T, 2008)


Year 2001 2008 2010 Thessaloniki 450.000 600.000 618.000

Detailed methodology and updated future trends estimations based on waste generation per capita and population increase, will be presented during the next reports.

Waste Composition In the following table, the change of composition of MSW over time in Thessaloniki is presented, based on several detailed studies conducted by A.L.A.R.T. (Research on quality and quantity composition of Thessaloniki's urban solid waste, using the European methodology MODECOM) and the Aristotle University of Thessaloniki (AUTH).

62

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 8: MSW composition in Thessaloniki (ALART AUTH) Type of Waste Putrescibles Paper Plastic Metals Glass W-L-R Inert Textile Other Total Composition (%) 2007 26,70% 29,20% 17,90% 4,40% 3,60% 6,20% 4,00% 3,00% 5,00% 100%

In addition, MSW composition (2007) is depicted next.

Other 18,20%

Putrescibles
Putrescibles 26,70%

Paper Plastic Metals Glass

Glass 3,60% Metals 4,40%

Plastic 17,90% Paper 29,20%

Other

.
Figure 12: MSW composition in Thessaloniki in 2007 (ALAPT , 2007)

5.1.2.3.

Existing Facilities

Nowadays, the only waste management facilities in Thessaloniki are one compliant residual waste Landfill in the area of Mavrorahi, and 2 MRFs for Recyclable Wastes separated at source, with a total nominal capacity of 40.000 tonnes per year. 63

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

The following figure depicts future quantities and management of BMW in Thessaloniki, in accordance with the targets established by EU Legislation, assuming a BaU scenario (Business as Usual) and waste growth of 1,5% yearly (central scenario). In depth analysis of various scenarios will be presented during next reports.

Figure 13: Future quantities of MSW and BMW generation and disposal in Thessaloniki (waste

growth: 1,5% yearly)

5.1.2.4.

Waste Management Facilities Planning

According to the Regional Plan two treatment units are foreseen for the next years in Thessaloniki, in order to achieve the quantified targets for diversion of biological (organic) waste. ALART has recently commissioned a feasibility study in order to evaluate the most appropriate technology for the treatment of 400.000 tn of MSW per year that are still being disposed directly to Mavrorahi Landfill. The technology is not selected yet, however the project will be financed thought PFI (280.010.000 ).

The locations of the above-mentioned plant, as well as the existing landfill in Mavrorahi are depicted on the following map. 64

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Mavrorahi

Tagarades

Figure 14: Locations of the existing MBT and under planning facilities in Thessaloniki

5.1.3. Compost and RDF / SRF Market The viability of any investment in solid waste processing depends on the optimisation of the available waste streams, the plant capacity and the existing and future markets for the materials produced (e.g recyclables, compost, energy etc). The latter, is a key parameter in the evaluation of the viability of any such investment, and an area where many unsuccessful ventures have paid insufficient attention.

Market analysis is as important for products where markets exist but are vulnerable to fluctuations (such as recyclables or energy) as for products where markets are not developed yet (such as compost). For example compost utilisation, is affected by and would benefit from several activities where further analysis in the Greek market context would be beneficial. Examples of these include the development and formal adoption of quality standards for domestic, agricultural, soil enrichment etc, use of compost, public attitude surveys on the use of 65

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

compost, evaluation of factors affecting compost quality etc. In the following sections, a brief description of the compost and RDF/SRF market is outlined, while further analysis will be performed during next reports.

5.1.3.1.

Compost market

Compost is a unique product which can improve the physical, chemical (nutritional) and biological properties of soil and plant growth media. These characteristics make compost a valuable product which can be used in a variety of applications. High quality composts have been produced from leaf and yard debris, biosolids, municipal solid waste, animal manures, agricultural by-products, food and a variety of industrial by-products. Generally a cleaner separated at source bio-waste fraction allows to produce high quality compost. Moreover the residue from anaerobic digestion (the digestate) can be composted and produce also good quality compost. According to EU Green Paper on the management of bio-waste in the European Union, compost in EU is used in agriculture (about 50%), for landscaping (up to 20%), to produce growing media (blends) and manufactured soil (around 20%), and by private consumers (up to 25%). Countries which produce compost predominantly from mixed waste and have undeveloped compost markets tend to use it in agriculture, for land restoration or landfill cover. The demand for compost varies in Europe depending mostly on soil improvement needs, and consumer confidence. EU soil policy calling on the Commission and the Parliament to act against the degradation of soil, as well as increasing consumer confidence in relation to the safe use of composts from waste, could enhance demand significantly. Nowadays, in Greece, the price of compost varies from 3.00 up to 15.00 / tonne (bulk) with an average price of 8 / tonne, depending on its properties and quality. The price of bagged, high quality compost in Europe reaches up to 120.00 / tonne, however, at this point, the market for high quality compost in Greece it is estimated to be very limited, due to the low price of competitive fertilizers.

5.1.3.2.

RDF- SRF market

RDF consists largely of organic components of municipal waste such as plastics and biodegradable waste. RDF processing facilities are normally located near a source of MSW and, while an optional combustion facility is normally close to the processing facility, it may also

66

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

be located at a remote location. SRF can be distinguished from RDF in the fact that it is produced to reach a standard such as CEN/343 ANAS.

RDF can be used in a variety of ways to produce electricity. It can be used alongside traditional sources of fuel in coal power plants. In Greece the R.D.F. produced in the M.B.T. of A. Liossia it is either stored or used in landfilling operations. The WMA of the Attica Region issued a market study in order to find a way to utilize the R.D.F. produced in the Athens treatment unit. The study included two big cement industries (AGET Iraklis and Titan A.E.) and other types of industry where big amounts of energy are required (Public Power Corporation, Steel Industries and Lime Industries) but there was no correspondence. A contract has been signed between AGET IRAKLIS and the WMA which states that initially 35.000 tn/year will be co incinerated in the AGET plant and that amount will increase to 75.000 tn/year. According to the contract AGET will receive 10 per tonne of R.D.F. co-incinerated. Totally 750.000 /year will be required. The contract was signed during February 2007 and has a five-year duration. Nevertheless the total amount of R.D.F. is still being landfilled. Construction and operation of Waste to Energy plants are expected to enhance demand and thus selling price significantly.

5.1.4. MSW management tariff system. Another important consideration is the impact the gate fees have on waste management tariffs and tariff evolution. This is especially important because the issue of affordability and willingness to pay is an area that needs to be evaluated carefully to ensure that the main beneficiaries of the solid waste services (private households, businesses, public institutions, etc.) will accept, participate and contribute constructively to the proposed investments.

As stated, municipalities are responsible for waste collection and street sanitation. In order to finance those activities, fees are imposed to the citizens. The allocation of fee to the citizens is done depending on the surface of the building they live. The sanitation fee is paid through the electricity bill and later attributed to the Municipalities by PPC. As a result citizens cannot evaluate the quality of the services provided by the municipality and no motive to reduce the waste quantities is being offered.

Collection cost varies depending on the geographical data and the equipment used, and usually it amounts over 80 /tonne. In the existing sanitary landfills the gate fee lies around 2567

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

30 /tn while the cost for processing waste in the existing MBT facilities is more than 50 /tn. However, the cost for managing solid waste is expected to increase since modern facilities will be constructed. This will be a good opportunity to change the way fee for solid waste is allocated and a Pay as You Through strategy to be introduced by WMA.

Regarding recycling, since the beginning of 2009, Municipalities receive an extra financial aid for the collection of recyclables by HERRCO. The amount scales according to the quantity of packaging waste collected per inhabitant, and is shown in the following table.

Table 9: Financial contribution to Municipalities for the collection of packaging waste Collected Waste per capita From (kg) To (kg) 0,0 8,0 8,1 15,0 15,1 20,0 20,1 25,0 25,1 30,0 30,1 -Financial Aid / tn 30 40 50 60 65 70

A more detailed analysis will be performed during next reports, to establish these figures more accurately.

68

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.2.

PRELIMINARY TECHNICAL DESCRIPTION OF TWO CASE STUDIES

In this chapter preliminary data about two projects in Attiki are briefly described.

West Attiki

5.2.1. MBT Plant - Sorting and Biological Drying (Mixed Waste) in West Attiki

5.2.1.1.

General Description

MBT is a term used to describe a particular waste treatment concept for the management of municipal and non-hazardous industrial and commercial waste. This MBT plant mechanical processes to separate out the dry recyclables such as glass and metals, with biological drying to drive out moisture and to stabilise the organic fraction of the incoming waste. In addition to the separation of dry recyclables from the incoming waste stream, the plant will be designed to produce an energy-rich solid recovered fuel (SRF) comprising organic matter, paper, plastics and other combustible fractions, that can be combusted in energy from waste plant or in an industrial furnace. The main activities involved are:

Shredding and pelletizing of feedstock mixed wastes Crushing and milling Screening and other mechanical waste classification processes Magnetic separation of metals, and ballistic sorting systems Biological drying

In addition to the above the plant will include wastewater and emissions treatment units, as well as monitoring works.

5.2.1.2.

Preliminary technical data

An indicative mass balance of the plant is presented next.

69

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 15: Indicative mass balance of the MBT Biological Drying in West Attiki

In the following tables, technical and economical data are presented, based on preliminary calculations.

70

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 10: Preliminary technical data for MBT Biological Drying in West Attiki MBT Biological Drying in West Attiki 1. Maximum capacity 2. Investment Cost 3. Process Cost (not including waste sent to landfill) 4. Cost of waste sent to landfill 700.000 153 40 20 1st Year: 400.000 5. Quantities of Waste (Feedstock) for 5 first years 3rd Year: 700.000 4th Year: 700.000 5th Year: 700.000 1. SRF17: 0 6. Income from Material and Energy Recovery 2. Metals: 60 7. Gate fee (Indicative) 8. Funding 74 N/D / tn metal / tn / tn SRF 2nd Year: 700.000 tn / year M / tn waste feedstock / tn waste to landifll

tn / year

Table 11: Preliminary economical data for MBT Biological Drying in West Attiki MBT - Biological Drying Costs Income Process Cost Cost of waste sent to landfill SRF Metals Gate Fee Profit (Euros / per year) Investment (Euro) (euro / tn waste feedstock) (euro / waste to landfill) (euro / tn SRF) (euro / tn metals) (euro / tn waste feedstock) Euro 40 20 0 60 74 Quantity 700.000 102.000 350.000 22.000 700.000 Euro 28.000.000 2.040.000 0 1.320.000 51.800.000 23.080.000

153,510,000

17For

landfilling operations

71

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

East Attiki Two identical MBT plants are foreseen in Northeast and Southeast Attiki. The plants will treat separated at source bio-waste, and will apply either aerobic or anaerobic digestion technology for the biological treatment of waste. The method is not yet defined (final decisions are expected during the next two months), thus both the possible technologies are briefly presented.

5.2.2. MBT - Anaerobic Treatment Source Separated Waste

5.2.2.1.

General Description

This MBT plant will accept separated at source biodegradable waste (bio-waste). During the mechanical stage the waste will be broken down into smaller parts by shredding and recyclable material will be removed, since the feedstock is not expected to be pure bio-waste. The biological stage will include anaerobic digestion and composting of the residue material.

Anaerobic Digestion (AD) is a process whereby organic waste is broken down in a controlled, oxygen free environment by bacteria naturally occurring in the waste material. Methane rich biogas will be produced thus facilitating renewable energy generation. The produced methane will be treated and provide energy for the plant and to the grid. The residual nutrient rich liquor and digestate will be composted and then will be suitable for use as fertiliser.

5.2.2.2.

Preliminary technical data

An indicative mass balance of the plant is presented next.

72

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 16: Indicative mass balance of the MBT Anaerobic Digestion in East Attiki

In the following tables, technical and economical data are presented, based on preliminary calculations.

Table 12: Preliminary technical data for MBT Anaerobic Digestion in East Attiki MBT Anaerobic Digestion in East Attiki Source Separated Waste 1. Maximum capacity 2. Investment Cost 3. Process Cost (not including waste sent to landfill) 4. Cost of waste sent to landfill 5. Income from Material and Energy Recovery 2. Electricity: 11 6. Gate fee (Indicative) 7. Funding 74 / tn waste feedstock / tn waste feedstock N/D 40.000 22 42 20 1. Compost: 8 tn / year M / tn waste feedstock / tn waste to landifll / tn compost

73

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 13: Preliminary economical data for MBT AD in East Attiki Euro 42 20 8 11 74 Quantity 40.000 12.000 11.644 40.000 40.000 Total Euro 1.680.000 240.000 93.152 440.000 2.960.000 1.573.152

Cost

Process Cost Cost of waste sent to landfill Revenues Compost Energy Gate Fee Profit (Euros / per year) Investment (Euro)

(euro / tn waste feedstock) (euro / waste to landfill) (euro / tn compost) (euro / tn waste feedstock) (euro / tn waste feedstock)

22.000.000

Specific economical data for other projects have been requested from competent authorities and will be presented during next reports.

5.2.3. MBT - Aerobic Treatment Source Separated Waste

5.2.3.1.

General Description

This MBT plant will accept separated at source biodegradable waste (bio-waste). During the mechanical stage the waste will be broken down into smaller parts by shredding and recyclable material will be removed, since the feedstock is not expected to be pure bio-waste. The biological stage will include composting of the material.

Composting is a natural biological process that is carried out by various natural microbes, including bacteria and fungi that break down organic material into simpler substances. These microorganisms require air and water; therefore, it is necessary to maintain proper environmental conditions for microbial life within the compost pile. The time window to produce compost depends on the composting process. In-vessel composting can produced compost in 7 to 10 days, while other composting systems may take more than 20days to produce a mature compost. Composting has the potential to manage organic material in the waste stream which cannot otherwise be recycled.

5.2.3.2.

Preliminary technical data

An indicative mass balance of the plant is presented next.

74

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 17: Indicative mass balance of the MBT Composting in East Attiki

In the following tables, technical and economical data are presented, based on preliminary calculations.

Table 14: Preliminary technical data for MBT Composting in East Attiki MBT Composting in East Attiki Source Separated Waste 1. Maximum capacity 2. Investment Cost 3. Process Cost (not including waste sent to landfill) 4. Cost of waste sent to landfill 5. Income from Compost Recovered 6. Gate fee (Indicative) 7. Funding 40.000 16 40 20 8 74 tn / year M / tn waste feedstock / tn waste to landfill / tn compost / tn waste feedstock N/D

75

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Table 15: Preliminary economical data for MBT Composting in East Attiki Euro 40 20 8 74 Quantity 40.000 10.000 14.000 40.000 Total Euro 1.600.000 200.000 112.000 2.960.000 1.272.000

Cost

Process Cost Cost of waste sent to landfill Revenues Compost Gate Fee Profit (Euros / per year) Investment (Euro)

(euro / tn waste feedstock) (euro / waste to landfill) (euro / tn compost) (euro / tn waste feedstock)

16.000.000

Specific economical data for other projects have been requested from competent authorities and will be presented during next reports.

76

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.3. CASE STUDY - FINANCIAL MODEL METHODOLOGY 5.3.1 General Description

There are three options regarding the HF UDF - Project SPV relationship: Jessica Equity or Jessica Loan or Jessica Loan + Jessica Equity. This means that the HF gives the funds repayable or not - to the UDF which in turn gives it as equity or loan or equity + loan to the projects. A financial institution (bank) may co-finance the projects along with the UDF and the private investors. UDF is a closed-end investment fund. A graphical representation of the parties involved is given in Figure 16.

Figure 18: General representation of the parties involved in Jessica financing

The financial model used here is based on inputs and assumptions. It produces intermediary results and (final) results. The SWM under analysis is the one with the highest capacity, i.e. the method of biological drying. Specifically:

77

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Inputs Project inputs are: investment cost, capacity, construction period, types of revenues and operating costs and their respective schedule.

UDF perspective inputs mainly concern the management fees and management costs. The HF perspective contains the same type of inputs as in the UDF level, but at the HF level.

Intermediary Outputs Depending on the Inputs, pro-forma Profit & Loss, Cash Flow and Sources & Uses tables are given for each Project Case (3 Cases).

Outputs Profitability and sustainability from the perspective of the project and all stakeholders involved is given in terms of IRR and Payback period. Stakeholders are the HF, the UDF, the private investor and the bank. Also tables summing up all outputs final and intermediary are given.

Assumptions for the Project SPV Loan to Equity ratio is 75:25. Dividends to shareholders are only considered after the repayment of the commercial loan and can not exceed, for each year, the amount of retained earnings plus net income for the previous year. Debt Repayments are done at the end of each year. Useful life of unit equipment is 25 years

Alternative Financial Models There will be analysis of 3 alternative financial models - cases, depending on the type of Jessica financing: a. Case 1: UDF participation as equity: 40% of total equity b. Case 2: UDF participation as loan: 50% of total loan c. Case 3: UDF participation as a combination of equity and loan: 30% of total equity and 40% of total loan 78

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

An overview of the alternative cases is given in figure 19. Sensitivity analysis For each case, a Sensitivity Analysis will be calculated, in order to determine how different values of projects variables (e.g. investment cost, capacity, gate fee, etc) will impact the main financial model outputs, from the perspectives of all the stakeholders: Private partner (Contractor), UDF, HF (see 5.3.4).

Figure 19: Overview of alternative financial models to be analyzed

79

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.3.2 Characteristics of SWM Method under analysis MBT Sorting and Biological Drying 5.3.2.1 Technical characteristics The main technical characteristics of the facility are:

Waste reception Waste grinding Biological drying. This process part aims to separate the highest water quantities in the least possible time through an exothermic bio-reaction. The system will be entirely sealed and automated, especially regarding air provision, transportation of material in process as well as of processed material. Processing time will not be less than 7 days. Mechanical separation and refinement of bio-stabilized product, where there is retrieval of ferrous and non-ferrous metals as well as non-combustible materials. Particularly, the stabilized material will be directed to a system of densometric, size, magnet and eddycurrent separators for the retrieval of ferrous and non-ferrous metals and the removal of heavy materials, such as pebbles and other inert contents. Gas waste treatment (dust, odors, volatile organic compounds) downstream the abovementioned processes. Such treatment will entail waste oxidation. Gaseous waste will become odorless compounds plus moisture. Oxidation will take place in 850 oC minimum, with reaction time at least 2 sec. Dust and odor exhaust section through use of bio- and bag-filters The Unit also includes a drying section for secondary fuel (SRF) production from mixed urban wastes. Particularly, incoming urban waste will be directed to the Reception section and subsequently to SRF production and recovery of metals and inert residuals.

Next, is presented an indicative process diagram of the Sorting and Biological Drying plant in West Attiki.

80

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Figure 20: Indicative process diagram of the Sorting and Biological Drying plant in West Attiki.

Biological drying of municipal solid waste is generally a proven process applied in numerous mechanical biological treatment plants in Europe. Nevertheless, modern drying plants need extensive control equipment in order to steer the process effectively. Further technical analysis (suitability, cost effectiveness of technology, technology risks etc) will be performed during next reports.

81

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.3.2.2 Financial characteristics

MBT Biological Drying in West Attiki 1. Maximum capacity 2. Investment Cost 3. Process Cost (not including waste sent to landfill) 4. Cost of waste sent to landfill 700.000 153 40 20 1st Year: 400.000 2nd Year: 700.000 5. Quantities of Waste (Feedstock) for 5 first years 3rd Year: 700.000 4th Year: 700.000 5th Year: 700.000 1. SRF18: 0 6. Income from Material and Energy Recovery 2. Metals: 60 7. Gate fee (Indicative) 8. Funding 74 N/D / tn metal / tn / tn SRF tn / year M / tn waste feedstock / tn waste to landfill

tn / year

MBT - Biological Drying Costs Income Process Cost Cost of waste sent to landfill SRF Metals Gate Fee Profit (Euros / per year) Investment (Euro) (euro / tn waste feedstock) (euro / waste to landfill) (euro / tn SRF) (euro / tn metals) (euro / tn waste feedstock) Euro 40 20 0 60 74 Quantity 700.000 102.000 350.000 22.000 700.000 Euro 28.000.000 2.040.000 0 1.320.000 51.800.000 23.080.000

153,510,000

18For

landfilling operations

82

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.3.3 Financial Model Inputs (in 000 )

UDF

Average rate Jessica Funds received TBD

Y1 to Y3 Management Fee 1.50%

Y4 to Y10 1.00%

Y10 to Y20 0.50%

Management Costs

HF

Average rate Funds under Management 100,000

Funds not used Return on Funds not used

Management Fee

1.50%

Management Costs

Note: Management costs in both the HF and the UDF tables are : personnel, office and other costs

83

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Case 1 Jessica Equity Funding

% Debt % Equity

75% 25%

Year 1 Funds needed Funds available 50,000 50,000

Year2 50,000 50,000

Year 3 53,500 53,500

Total 153,500 153,500

Equity Jessica Private Entity

25% 40.00% 60.00%

Year 1 5,000 7,500 12,500

Year 2 5,000 7,500 12,500

Year 3 5,350 8,025 13,375

Total 15,350 23,025 38,375

Debt Commercial Loan

75% 100.00%

Year 1 37,500

Year 2 37,500

Year 3 40,125

Total 115,125

Financial parameters

Commercial Loan interest rate

7.00%

84

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Case 2 Jessica Loan

Funding

% Debt % Equity

75% 25%

Year 1 Funds needed Funds available 50,000 50,000

Year2 50,000 50,000

Year 3 53,500 53,500

Total 153,500 153,500

Debt Jessica Loan Commercial Loan

25.00% 50.00% 50.00%

Year 1 6,250 6,250 12,500

Year 2 6,250 6,250 12,500

Year 3 6,6875 6,6875 13,375

Total 19,1875 19,1875 38,375

Equity Private Entity

75.00% 100.00%

Year 1 37,500

Year 2 37,500

Year 3 40,125

Total 115,125

Financial parameters

Commercial Loan interest rate Jessica Loan interest rate

7.00% 1.00%

85

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Case 3 Jessica Equity + Jessica Loan

Funding

% Debt % Equity

75% 25%

Year 1 Funds needed Funds available 50,000 50,000

Year2

Year 3

Total 153,500 153,500

50,000 53,500 50,000 53,500

Equity Jessica Private Entity

25.00% 30.00% 70.00%

Year 1 3,750 8,750 12,500

Year 2 3,750 8,750 12,500

Year 3

Total

4,0125 11,5125 9,3625 26,8625 13,375 38,375

Loan Jessica Loan Commercial Loan

75.00% 40.00% 60.00%

Year 1 15,000 22,500 37,500

Year 2 15,000 22,500 37,500

Year 3 16,050 24,075

Total 46,050 69,075

40,125 115,125

Financial parameters

Commercial Loan interest rate Jessica Loan interest rate

7.00% 1.00%

86

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

5.3.4 Financial Model Outputs Stakeholders Perspective Template

Private Partner Perspective

Jessica Equity

Jessica Loan

Jessica Equity/Loan

IRR Payback Funds Used

UDF Perspective

Jessica Equity

Jessica Loan

Jessica Equity/Loan

Management Fee Management Costs Margin IRR IRR w/o Fees Payback Funds Used

87

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

HF Perspective

Jessica Equity Management Fee Management Costs Margin IRR IRR w/o Fees IRR w/o Interest IRR w/o Fees & Interest Payback Funds Used

Jessica Loan

Jessica Equity/Loan

88

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

6. CONCLUSIONS AND RECOMMENDATIONS


6.1. CONCLUSIONS

While in many member states the main goal is to reduce waste generation and to increase recycling and recovery rates to meet certain targets regarding material recycling and the diversion of biodegradable waste, in Greece, the main problem until recently was the uncontrolled disposal in illegal landfills.

Nevertheless, during the last few years, significant steps have been made both in the fields of the organization (establishment of National Planning for Biodegradables and introduction of Waste Management Authorities) and management of waste (closing and restoration of uncontrolled landfills, construction of sanitary landfills). Furthermore, most of the WMA have already commissioned feasibility and EIA studies (most of them funded by ERDF) in order to evaluate the most appropriate technology applying to the jurisdiction area. Regarding the legal framework a number of E.U. regulations where incorporated into Greek legislation and an increase of environmental consciousness is being observed.

6.1.1. Waste Treatment Greece gained tremendous experience in handling problems and other emergency situations from the plants that were constructed and are currently in operation. Generally, appropriate feasibility studies that take into account the unique characteristics of each area (e.g. waste generation and composition), public dialog, appropriate allocation of funds (to most intergraded and well-designed projects), as well as private sector participation, can lead to a successful result.

Nevertheless, all the existing treatment plants have problems finding a way to utilize their secondary products which leads to extra disposal costs instead of revenues. Moreover, construction and operation of Waste to Energy plants are expected to enhance demand and thus selling price significantly. Furthermore, the overall delay observed in planning waste management facilities is due to the long time needed for the preparatory studies, acquisition of the necessary funds and permission to build. Also judging from the operation of the so far constructed MBT facilities, the diversion target of 2010 will be very hard to achieve.

89

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Recycling Regarding recycling, rates increase very rapidly and are approaching EU targets, due to the successful development and implementation of the municipal and industrial recycling program. Nowadays, over 1500 legally obligated enterprises have joined HERRCOs system, which continues to expand successful recycling efforts.

Biodegradable waste The environmentally sustainable strategy of waste management procedures constitutes a major goal for all European countries and one of the most critical factors to success is the bio-waste separation at source. In fact, in late 2009, the Commission intends to present an analysis and if appropriate, proposals and initiatives for an EU strategy on the management of bio-waste. Apart from the diversion of the biodegradable waste from landfills, the benefits of separate collection include enhancing the calorific value of the remaining MSW, and generating a cleaner bio-waste fraction that allows the production of high quality compost. Greece faces significant bio-waste management problems in comparison to Central Europe, although separate collection of organic waste is promoted in all Regional Waste Management Plans and numerous biological treatment projects are under planning. Thus the introduction of bio-waste separation at source and collection schemes is deemed necessary.

6.1.2. MSW facilities products market For products whose markets must be developed, this can be a further area of focus of the evaluation study. For example compost utilisation, is affected by and would benefit from several activities where further analysis in the Greek market context would be beneficial. Examples of these include the development and formal adoption of quality standards for domestic, agricultural, soil enrichment etc, use of compost, public attitude surveys on the use of compost, evaluation of factors affecting compost quality etc.

6.1.3. Public Environmental Awareness In the last few years an increase in environmental awareness regarding waste management and recycling has been observed. The low acceptance of waste treatment plants especially when it comes to decide the area which will host the plant is caused due to lack of communication between the local and regional authorities and the local population. The expected formation of local WMA will

90

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

be combined with programs that will aim to inform the public opinion in order to increase the acceptance of solid waste management facilities.

6.1.4. MSW Management tariff system Until recently the cost for managing waste in Greece was low compared to other countries since it included only collection and disposal. The allocation of fee to the citizens is done depending on the surface of the building. The sanitation fee is paid together with the electricity bill. As a result citizens cannot evaluate the quality of the services provided by the municipality and no motive to reduce the waste quantities is being offered. The cost for managing solid waste is expected to increase since modern facilities will be constructed. This will be a good opportunity to change the way fee for solid waste is allocated and the establishment of WMA throughout the country will help towards that direction.

6.2.

RECOMMENDATIONS

Greece is embarking on a long-term plan to overhaul its waste management practices. New technologies are needed to deal with an increasing burden of waste and that meet the demand for disposal, energy generation, recycling, and building new, closed-loop systems that limit waste generation. Funding for all needed investments is not secured from conventional sources (Public Investment Budget and Structural Funds). New financial engineering methods and mobilization of the private sector seems to be a solution to close the funding gap. The recent experience with PPPs in this sector shows the interest of the private financing community. Jessica could come as an instrument to accelerate the closing of the funding gap in Waste Management sector. However, significant decisions and administrative actions, as well as technological solutions, should be promoted, in order to pave the way for a new instrument as such.

Generally the following actions are recommended:

A. Administrative / legislative aspects: Consultations with Ministry of Finance, Regional Authorities & SWM Project promoters in Attiki & Thessaloniki, regarding the relative allocated funds and project maturing - tendering timetables, in conjunction with the application of Jessica

91

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Adaptation of the existing legal framework for inclusion Jessica HF / UDF operation mechanisms Provision of the possibility of Jessica UDF usage by SPV / consortia, after the PPP / concession contract awarding, at the early stage of relative tender procedure Improvement and simplification of the legislative framework in order to eliminate timeconsuming steps in Waste Management licensing process Change of the way fee for solid waste is allocated. Promote Pay as You Through strategy

B. Identification / promotion of new technologies / business lines: Further studies on waste generation and management of construction and demolition waste. The potential benefits of using recycled aggregates can be economic, social and environmental Implementation of pilot bio-waste source separated collection programs. Establishment of a market for compost and RDF/SRF. That can be achieved with promotion of eco-labelling standards, raise of environmental awareness, construction of waste to energy facilities etc.

C. Technical aspects: Construction of transfer station networks

92

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

7. APPENDICES

Annex 1: Generation of municipal waste in the EU 27, 1995 and 2007 (Eurostat, 2009)

93

EIB Study: Jessica Instrument for solid waste management in Greece Inception Report

Annex 2: Municipal Waste Landfilled per Capita (Eurostat, 2009)

94