Garbage to Gasoline: Converting Municipal Solid Waste to Liquid Fuels

Abstract

Liquid fuels are in high demand throughout the United States and crude oil is a finite resource. With strain on conventional sources for liquid fuels, the unconventional sources and new technologies to create liquid fuels are becoming more attractive as alternative options. One such conversion technology uses municipal solid waste (MSW) as the feedstock, offering the additional benefit of relief on another constrained resource: landfills. This paper provides an overview of the principal technologies that are being used to convert MSW to salable products and delves deeply into the potential for facilities that gasify MSW and convert the synthetic gas (syngas) to ethanol, diesel, or gasoline. The analysis also includes a financial model that assesses the financial viability of such a project under many different conditions, including financing choices (debt to equity ratio, project location, and interest rates). The results of the financial model indicate that sorting costs, tipping fees, and fuel prices have the largest effect on the financial viability of the project. In order to make an adequate internal rate of return, fuel prices need to be high and the project needs to be located in a region with high tipping fees. Other factors not accounted for in the model can also significantly impact the viability of this technology, including how the fuels are regulated under the Clean Air Act and which category they fall under with the Renewable Fuels Standard. These fuels are still relatively new to the market and the United States Environmental Protection Agency must clarify how they are defined and which regulations they are subject to. Having regulatory certainty will eliminate some risk for investors and will therefore make investing in MSW to liquid fuels conversion projects more attractive in the future.