Less Emissions and Less Waste: An Economic Analysis of a Waste-to-Energy Project for Bekasi City

Abstract

Waste-to-energy (WTE) can be a potential solution for Indonesia allowing for improved waste management, reduced emissions, and less waste in landfills. An economic analysis comparing WTE and landfilling using Bekasi City, Indonesia, as a case study is examined. Waste amounts are projected for 2015–2035 with baseline costs and emissions estimated. Next, parameters for the WTE scenario are presented followed by economic analysis with IRRs calculated. Sensitivity analyses are also conducted to assess changes on the returns, given different relative price changes in future. The WTE scenario considers three incineration plant sizes and two major revenue sources – per ton of cleaning benefit and electricity sales – not currently implemented under two different scopes: independent introduction of WTE and its reference to current landfilling strategy. The results show that there are possible conditions that make WTE financially feasible especially larger scale of projects with large collection volumes. The IRRs would then be largely improved by further aggressive feed-in tariff policy. Waste management should not be viewed solely as private sector service but a public good with social costs and benefits taken into account, since environmental benefits also improve the IRRs. National-level initiatives such as the National Waste Policy and the feed-in tariff provide a push and pull strategy for innovation in WTE, but additional policies for enhancing environmental awareness of the citizens can help hasten WTE adoption.