Institutional Arrangements for Municipal Solid Waste Combustion Projects

260 Pages·2008·3.63 MB·English

Institutional Arrangements for Municipal Solid
Waste Combustion Projects

Dissertation
zur Erlangung des akademischen Grades
Doktor – Ingenieur (Dr.-Ing.)
an der Fakultät Bauingenieurwesen
der Bauhaus-Universität Weimar

vorgelegt von
Dipl.-Ing. Torsten Kleiss
aus: Rostock

Gutachter:

Prof. Dr. Hans Wilhelm Alfen

Prof. Dr. Michael Beckmann

Prof. Dr. Ashwin Mahalingam
Impressum

Schriftenreihe der Professur Betriebswirtschaftslehre im Bauwesen

Herausgeber:
© Bauhaus-Universität Weimar
Fakultät Bauingenieurwesen
Professur Betriebswirtschaftslehre im Bauwesen
Univ.-Prof. Dr.-Ing. Dipl.-Wirtsch.-Ing. Hans Wilhelm Alfen
Marienstr. 7A
D-99423 Weimar
Tel.: [phone]

Bezugsmöglichkeit
Verlag der Bauhaus-Universität Weimar
Fax: [phone]
E-Mail: [email protected]

Autor
Dr.-Ing. Torsten Kleiss
Email: [email protected]

Druck
docupoint Magdeburg GmbH

Umschlaggestaltung
Christian Mohr

ISBN 978-3-86068-366-8
Diese Veröffentlichung steht online als Volltext im Publikationsportal der Bauhaus-Universität
Weimar unter folgender URL zur Verfügung: http://e-pub.uni-weimar.de/volltexte/2008/1447/
II
Foreword
Foreword
Throughout the world, traditional ways of delivering physical infrastructure and public ser-
vices are reassessed to find new ways of providing them more efficiently. These assess-
ments do not merely focus on technical and economic aspects, but also address legislative
frameworks and organizational aspects to improve incentive structures among the different
stakeholders. Furthermore, research is conducted to examine whether and to which extent
public infrastructure can be provided in cooperation with or by the private sector.
The overall research goal of the doctoral thesis of Mr. Kleiss is to categorize and analyze
institutional arrangements for the provision of municipal solid waste combustion projects
(MSWC). Institutional arrangements describe the nature and structure of formal and informal
relationships between the various public and private stakeholders involved. The theoretical
framework is built upon microeconomics and new institutional economics, combining eco-
nomics, law, psychology as well as organization theory for better understanding of complex
economic realities and phenomena.
Obviously, research in this context has to be transdisciplinary, integrating theories, methods
and instruments of the different associated disciplines. Accordingly, this doctoral thesis pro-
vides a very comprehensive theoretical and empirical analysis of the MSWC sector and cov-
ers various technical, environmental, economic and organizational aspects. The market sur-
vey and nine representative case studies from Germany in Singapore are presented to vali-
date the elaborated institutional arrangements.
The theoretical and empirical findings of this thesis are of utmost importance to both re-
search and practice. Various useful implications are given for the technical and economic
development of MSWC projects and the formation of institutional arrangements. The doctoral
thesis of Mr. Kleiss does not only lay foundations for further research in the MSWC sector,
but is also highly relevant to other infrastructure sectors.

Weimar, November 2008 Prof. Dr.-Ing. Hans Wilhelm Alfen
III
Acknowledgment

Am Strande
Vorüber die Flut.
Noch braust es fern.
Wild Wasser und oben
Stern an Stern.

Wer sah es wohl,
O selig Land,
Wie dich die Welle
Überwand.

Noch braust es fern.
Der Nachtwind bringt
Erinnerung und eine Welle
Verlief im Sand.

Rainer Maria Rilke (1875-1926)

Now I stand at the beach and look out to the sea. Time already feels so distant when every-
thing around me was flooded and I struggled trough the rough waters of writing a doctoral
thesis. Obviously, I would not have survived without the help of so many people. I am grate-
ful to all of them.
First of all, I would like to thank my parents. They taught me how to swim and supported me
in all my aspirations. My partner Tiina was my lifejacket throughout the past years. Even
though she worked on her own doctoral thesis, she was a motivator, discussion partner and
editor at the same time.
I would like to express my heartfelt gratitude to Prof. Dr. Hans Wilhelm Alfen, who supervised
my work. I always enjoyed the warm, open, dynamic and professional environment at the
Chair of Construction Economics. I also thank Prof. Dr. Michael Beckmann and Prof. Dr.
Ashwin Mahalingam for their precious comments and evaluations.

IV
Acknowledgment
There are also many other professors and senior researchers who kept me afloat with their
advice and guidance. I would especially like to thank Prof. Dr. Renate Fruchter (Stanford
University), Prof. Dr. Satyanarayana N. Kalidindi (IIT Madras), Prof. Dr. Stephen Wearne and
Prof. Dr. David Ling (University of Manchester), Prof. Dr. Gerhard Girmscheid (ETH Zürich),
Prof. Dr. Robert Tiong (NTU Singapore), Prof. Dr. Ryo Hiraga (Nagoya University), Prof. Dr.
Stephen Ogunlana (AIT Bangkok), Prof. Dr. Wang ShouQing (Tsinghua University), Prof. Dr.
Werner Bidlingmeier (Bauhaus-Univeristät Weimar), and Dr. Mushtaq Memon (UNEP).
I would also like to thank many colleagues, who gave me feedback in several discussions
and doctoral colloquia. More than that, they also became good friends: Katrin Fischer, An-
drea Frank-Jungbecker, Katja Leidel, Anke Schwanck, Amber Jan, Dirk Daube, Matthias
Ehrlich, Andreas Leupold, Volker Schädel, Tillmann Sachs, Steven Kuh, Arno Blickling,
Raghu Kulkarni, Holger Graetz, Frank Kiesewetter, and Christian Höfler.
Among my former students, who contributed to this work in various ways, I thank especially
Susanne Trescher, Annika Feige, Lars Sittauer, and Björn Wündsch.
For supporting my data collection I would like to thank all 41 interview partners, as well as
the “Interessengemeinschaft der thermischen Abfallbehandlungsanlagen in Deutschland”
(ITAD), “Bundesverband der Deutschen Entsorgungswirtschaft” (BDE), and the “Verband
kommunale Abfallwirtschaft und Stadtreinigung (VKS) im VKU”.
Finally I am grateful to Dr. Madhumati M. Kulkarni for proof reading this work so thoroughly.

Zürich, November 2008 Torsten Kleiss
V
Contents
Contents
1 Introduction.......................................................................................................................1
1.1 Research context.......................................................................................................1
1.2 Research objectives...................................................................................................2
1.3 Research scope.........................................................................................................3
1.4 State of the research..................................................................................................4
1.5 Research methodology..............................................................................................5
1.6 Structure of the thesis................................................................................................6
2 Background.......................................................................................................................9
2.1 Waste classification...................................................................................................9
2.2 Characteristics of residual municipal waste...............................................................9
2.3 Waste management value system...........................................................................10
2.4 Economics of municipal waste generation...............................................................16
2.5 Summary..................................................................................................................20
3 Technical and economic characteristics of municipal solid waste combustion...............21
3.1 Introduction..............................................................................................................21
3.2 Solid waste combustion technology.........................................................................22
3.3 Externalities of municipal solid waste combustion...................................................30
3.4 Financial analysis of MSWC plants..........................................................................32
3.5 Summary..................................................................................................................44
4 Market specific aspects of MSWC..................................................................................45
4.1 Introduction..............................................................................................................45
4.2 Natural monopolies..................................................................................................48
4.3 Externalities.............................................................................................................58
4.4 Inadequate market adaptation.................................................................................70
4.5 Information failures..................................................................................................75
4.6 Summary..................................................................................................................78
5 Theoretical framework for institutional arrangements.....................................................79
5.1 Introduction..............................................................................................................79
5.2 Institutional dimensions............................................................................................80
5.3 Transaction cost economic approach towards institutional arrangements..............81
5.4 Application of transaction cost economic approach to MSWC..............................101
VI
Contents
5.5 Stakeholder Analysis.............................................................................................109
5.6 Summary................................................................................................................119
6 Empirical study in Germany..........................................................................................122
6.1 Background............................................................................................................122
6.2 Quantitative study..................................................................................................132
6.3 Qualitative study....................................................................................................141
6.4 Summary................................................................................................................173
7 Empirical study in Singapore.........................................................................................179
7.1 Background............................................................................................................179
7.2 Waste Management...............................................................................................180
7.3 Institutional environment........................................................................................182
7.4 Case study: MSWC Tuas South II.........................................................................183
7.5 Discussion..............................................................................................................190
8 Summary and conclusions............................................................................................192
8.1 Research objectives and methodology..................................................................192
8.2 Technical and economic aspects of MSWC..........................................................192
8.3 Microeconomic characteristics of the market for MSWC.......................................193
8.4 Theoretical framework for the institutional arrangements for MSWC....................195
8.5 Verification and quantification of the institutional arrangements in Germany
and Singapore.......................................................................................................195
8.6 Rationale for the emergence of the institutional arrangements in Germany
and Singapore.......................................................................................................196
8.7 Outlook and recommendations for further research..............................................198
9 References.....................................................................................................................9-1
9.1 Interviews...............................................................................................................9-1
9.2 Bibliography...........................................................................................................9-3
10 Appendix...................................................................................................................10-1
11 German summary.....................................................................................................11-1

VII
Contents
1 Introduction.......................................................................................................................1
1.1 Research context.......................................................................................................1
1.2 Research objectives...................................................................................................2
1.3 Research scope.........................................................................................................3
1.4 State of the research..................................................................................................4
1.5 Research methodology..............................................................................................5
1.6 Structure of the thesis................................................................................................6
2 Background.......................................................................................................................9
2.1 Waste classification...................................................................................................9
2.2 Characteristics of residual municipal waste...............................................................9
2.3 Waste management value system...........................................................................10
2.3.1 Waste collection................................................................................................11
2.3.2 Transfer............................................................................................................12
2.3.3 Waste transportation.........................................................................................12
2.3.4 Waste treatment...............................................................................................12
2.3.4.1 General......................................................................................................12
2.3.4.2 Thermal waste treatment...........................................................................13
2.3.4.3 Mechanical biological waste treatment......................................................14
2.3.4.4 Composting...............................................................................................15
2.3.5 Disposal............................................................................................................15
2.4 Economics of municipal waste generation...............................................................16
2.4.1 General.............................................................................................................16
2.4.2 Macroeconomic perspective.............................................................................16
2.4.3 Microeconomic model for waste separation.....................................................18
2.5 Summary..................................................................................................................20
3 Technical and economic characteristics of municipal solid waste combustion...............21
3.1 Introduction..............................................................................................................21
3.2 Solid waste combustion technology.........................................................................22
3.2.1 Waste receiving, storage, pre-treatment and charging.....................................24
3.2.2 Firing unit..........................................................................................................24
3.2.3 Energy recovery................................................................................................26
3.2.4 Flue-gas cleaning.............................................................................................27
VIII
Contents
3.2.5 Process control and monitoring system............................................................29
3.2.6 Auxiliary facilities..............................................................................................29
3.3 Externalities of municipal solid waste combustion...................................................30
3.3.1 Negative environmental impacts.......................................................................30
3.3.2 Positive environmental impacts........................................................................31
3.4 Financial analysis of MSWC plants..........................................................................32
3.4.1 Overview...........................................................................................................32
3.4.2 Elements of life-cycle costs..............................................................................35
3.4.2.1 Planning costs...........................................................................................35
3.4.2.2 Capital costs..............................................................................................36
3.4.2.3 Operating costs.........................................................................................37
3.4.2.4 Maintenance costs.....................................................................................38
3.4.2.5 Costs for disposal of residues...................................................................39
3.4.2.6 Financing costs..........................................................................................39
3.4.2.7 Other costs................................................................................................40
3.4.3 Revenues..........................................................................................................40
3.4.3.1 Gate fees...................................................................................................40
3.4.3.2 Energy revenues.......................................................................................41
3.4.3.3 Sale of recovered materials.......................................................................41
3.4.3.4 Subsidies...................................................................................................42
3.4.3.5 Availability payments.................................................................................42
3.4.3.6 Discussion.................................................................................................43
3.5 Summary..................................................................................................................44
4 Market specific aspects of MSWC..................................................................................45
4.1 Introduction..............................................................................................................45
4.1.1 The model of perfect competition.....................................................................45
4.1.2 The Problem of market failure..........................................................................46
4.1.3 Constraints of market failure concept...............................................................47
4.2 Natural monopolies..................................................................................................48
4.2.1 Characteristics of natural monopolies...............................................................48
4.2.2 Measures for natural monopolies.....................................................................50
4.2.3 Application to the MSWC..................................................................................53
IX
Contents
4.3 Externalities.............................................................................................................58
4.3.1 Technological externalities...............................................................................58
4.3.2 Measures for technological externalities...........................................................60
4.3.2.1 Education and ethical appeal....................................................................60
4.3.2.2 Taxes and subsidies..................................................................................61
4.3.2.3 Coase theorem..........................................................................................62
4.3.2.4 Tradable permits........................................................................................63
4.3.2.5 Command-and-control...............................................................................63
4.3.2.6 Liability for damages..................................................................................64
4.3.2.7 Public provision.........................................................................................65
4.3.3 Application to MSWC........................................................................................66
4.3.4 Pecuniary externalities......................................................................................69
4.3.5 Psychological externalities................................................................................70
4.4 Inadequate market adaptation.................................................................................70
4.4.1 Incomplete markets..........................................................................................71
4.4.2 Markets with unstable equilibrium.....................................................................71
4.4.3 Inflexible markets..............................................................................................72
4.4.4 Measures for inadequate market adaptation....................................................73
4.4.5 Application to MSWC........................................................................................73
4.5 Information failures..................................................................................................75
4.5.1 Incomplete Information.....................................................................................75
4.5.2 Uncertainty........................................................................................................76
4.5.3 Measures for information failures.....................................................................77
4.5.4 Application to MSWC........................................................................................77
4.6 Summary..................................................................................................................78
5 Theoretical framework for institutional arrangements.....................................................79
5.1 Introduction..............................................................................................................79
5.2 Institutional dimensions............................................................................................80
5.3 Transaction cost economic approach towards institutional arrangements..............81
5.3.1 General.............................................................................................................81
5.3.2 Attributes of a transaction.................................................................................83
5.3.2.1 Asset specificity.........................................................................................83
X