For discussion PWSC(96-97)104
on 19 February 1997

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 705 - CIVIL ENGINEERING
Environmental Protection - Refuse disposal
87DR - Bulk waste reduction - consultants' fees and investigation, phase II

Members are invited to recommend to Finance Committee the upgrading of 87DR, retitled "Waste reduction study phase II - feasibility study on building waste-to-energy incinerators", to Category A at an estimated cost of $34.5 million in money-of-the-day prices for undertaking a feasibility study on waste-to-energy incineration.

---

PROBLEM
PROPOSAL
PROJECT SCOPE AND NATURE
JUSTIFICATION
FINANCIAL IMPLICATIONS
PUBLIC CONSULTATION
ENVIRONMENTAL IMPLICATIONS
LAND ACQUISITION
BACKGROUND INFORMATION
87DR - Bulk waste reduction - consultants' fees and investigation, phase II

---

PROBLEM

The Director of Environmental Protection (DEP) estimates that if no action is taken to reduce the growing volume of waste that require landfill disposal, all existing landfills in Hong Kong will be exhausted by 2012.

PROPOSAL

2. DEP, with the support of the Secretary for Planning, Environment and Lands and the Director of Civil Engineering, proposes to upgrade 87DR to Category A at an estimated cost of $34.5 million in money-of-the-day (MOD) prices for engaging consultants to undertake a feasibility study on using waste-to-energy incineration to reduce the quantity of waste that need to be disposed of at landfills.

PROJECT SCOPE AND NATURE

3. The scope of the proposed feasibility study on building waste-to-energy incinerators includes -

1. conducting environmental impact assessments (EIAs), planning, transport and financial assessments for each of the potential sites and in the light of these assessments, recommending preferred sites;
2. carrying out outline design, engineering cost estimates and recommending the most suitable contractual arrangement for building waste-to-energy incinerators; and
3. developing a strategy for applying waste-to-energy incineration as a bulk waste reduction measure in Hong Kong.

JUSTIFICATION

4. The amount of commercial, industrial and domestic waste requiring disposal in Hong Kong has increased by more than 30% from 5 900 tonnes per day in 1986 to 7 800 tonnes per day in 1995. Currently, we dispose of waste atValley Landfill, the South East New Territories Landfill, the West New Territories Landfill, the North East New Territories Landfill and the Kwai Chung Incineration Plant. We will close the Kwai Chung Incineration Plant by mid 1997. In view of the current trend of waste growth, we anticipate that we will need to dispose of more than 12 000 tonnes of waste per day by the year 2004. As a result, we forecast that all the existing landfill capacities will be exhausted by the year 2012.

5. We commissioned 91DR "Bulk waste reduction - consultants' fees and investigation, phase I" in 1994 to identify appropriate measures for the reduction of waste requiring final disposal in Hong Kong. The consultants recommended an integrated plan for waste reduction comprising institutional arrangements, waste avoidance programmes, material recovery programmes and bulk waste reduction technology.

6. The consultants considered that state-of-the-art incineration based on waste-to-energy technology was appropriate for Hong Kong because of the availability of new technologies in meeting the stringent emission standards. Furthermore, the consultants advised that waste-to-energy incineration could reduce the volume of waste by up to 90% (about 70% by weight) after combustion. We estimate that about 80% of our municipal waste is combustible. Thus, by the year 2004, Hong Kong could be producing in the region of 10 000 tonnes per day of combustible waste.

7. Approximately 4 400¹ tonnes per day of waste could be handled The amount of waste we will need to dispose to the landfills will decrease from 12 000 to [DEP to provide] tonnes per day.megawatt generating capacity.if we implement the consultant’s recommendations of building two incinerators each with a design capacity of 1 million tonnes per year in the territory. This would reduce the waste by 70% by weight to some 1 300 tonnes per day and the net decrease of waste by weight would be 3 100 tonnes per day by the year of 2004. At the same time, some 65 - 90 megawatts of generating capacity would be generated. We are currently formulating a draft Waste Reduction Plan, of which waste-to-energy incineration will form an integral part, and we will consult the public on the draft plan in 1997. In view of the urgent need to reduce the volume of waste requiring disposal, we propose to conduct a feasibility study on waste-to-energy incinerators as a priority.

8. The heat generated by incineration can be used to produce electricity and hot water. The study will examine the potential for connecting the electricity produced by the waste-to-energy incinerators to the existing electricity grid. Depending on the location of the waste-to-energy incinerators, we shall also examine whether there are any opportunities to implement district heating or district cooling systems². The sale of electricity/heating/cooling environmentally sound but also will help contribute towards reducing the running costs of the incinerators.

9. The proposed study requires input with expertise in waste-to-energy incineration technology, socio-economics, finance, geotechnology and environmental pollution control. DEP lacks sufficient in-house resources and expertise, and considers it necessary to engage consultants who can form a multi-disciplinary team to carry out the work within a tight time frame.

FINANCIAL IMPLICATIONS

10. We estimate the cost of the study to be $34.5 million (see paragraph 11 below) in MOD prices, made up as follows -

Breakdown by man months of the estimate for consultants' fees is at the Enclosure.

11. Subject to approval, we will phase expenditure as follows -

12. We have derived the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices for the period 1997 to 1999. We will award the proposed consultancy on a lump-sum basis with provision for adjustments due to inflation as the consultancy will exceed 12 months. We will carry out the site investigations under a standard remeasurement contract. This contract will not allow for adjustments to the tender price due to inflation as the contract period will be less than 21 months.

13. The proposed study will not give rise to any recurrent expenditure.

PUBLIC CONSULTATION

14. During April to July 1996, we conducted a public consultation exercise inviting 51 organisations including relevant advisory bodies, the Municipal Councils, major business and industrial associations, green groups and professional bodies/institutions, to express their views on the recommendations and findings of the waste reduction consultancy study funded under 91DR. Those who have provided their views unanimously expressed support to the introduction of waste-to-energy incinerators in Hong Kong.

15. We introduced the proposal to develop waste-to-energy incinerators in Hong Kong, as part of the consultancy study under 91DR, to the LegCo Environmental Affairs Panel on 3 April 1996. At its subsequent meeting on 3 December 1996, the Panel discussed the Administration’s proposal to engage consultants to undertake studies to investigate the feasibility of developing waste-to-energy incinerators in Hong Kong. Members, in general, supported the proposal to build the proposed incinerators.

ENVIRONMENTAL IMPLICATIONS

16. The project involves feasibility and investigation studies only and will not have any direct impact on the environment. We will conduct EIAs as part of the consultancy for the waste-to-energy incinerators for each potential site. We will examine in detail the site specific environmental impacts and propose appropriate mitigation measures and an environmental monitoring and audit programme.

LAND ACQUISITION

17. The proposed study does not require land acquisition.

BACKGROUND INFORMATION

18. We upgraded part of 87DR to Category A as 91DR "Bulk waste reduction - consultants’ fees and investigation, phase I" at an estimated cost of $10.5 million in June 1993. We commenced the phase I study in February 1994 and completed it in May 1996.

19. Based on the findings of the study, the consultants developed an integrated waste reduction plan comprising a combination of measures (waste avoidance programmes, material recovery programmes and bulk waste reduction technology) building on existing waste recovery and recycling initiatives. The consultants proposed to implement the programmes progressively over a 10 year period aiming at reducing 50% of the waste disposed of at landfills by year 10.

20. In our 1995 Policy Commitments, we identified the study as one of the new initiatives for protecting the environment and stated that "an engineering feasibility study will be started to examine the development of bulk waste reduction facilities in Hong Kong to maximise the life span of our landfills".

21. We plan to commence the study in April 1997 for completion in October 1998 [DEP: Is it possible to complete the consultants selection process in one month? You may need to revise the schedule.].

(JJ163)

1 -- Most incinerators are incapable of handling waste at their design (maximum) capacity. The figures calculated are therefore based on a plant efficiency of 80%
2 -- A district heating and cooling (DHC) system distributes thermal energy from a central source to residential, commercial, and/or industrial consumers for use in space heating, cooling, water heating, and/or process heating. The thermal energy can be transferred by steam, hot water or chilled water lines. A DHC system usually consists of a central plant, a distribution network and user systems. The central production plant may be any type of boiler, refuse incinerator, geothermal source, solar energy or waste heat from electricity generation plant. The distribution network is insulated pipe work usually installed underground. The user system includes equipment which may take heat energy from the distribution network for heating directly or through a heat exchanger. Chilled water can also be produced by an absorption refrigeration machine by using the distributed heat energy.

---

Enclosure to PWSC (96-97)104

87DR - Bulk waste reduction - consultants' fees and investigation, phase II

Breakdown of estimate for consultants' fees

Notes

1. A multiplier factor of 3 is applied to the average MPS point to arrive at the full staff costs including the consultants' overheads and profit, as the staff will be employed in the consultants’ offices. The salary per month for Professionals (MPS 40) and Technical (MPS 16), as at 1.4.95 are $51,440 and $17,270 respectively.

2. The figures given above are based on estimates prepared by the Director of Environmental Protection. We will only know the actual man months and actual fees when we have selected the consultants through the usual competitive lump-sum fee bid system.

(JJ163)

---