Economic Viability For A Large-Scale Model of Municipal Solid Waste Treatment in The Most Important Brazilian Economic Region

Volume 5, Issue 5, May – 2020 International Journal of Innovative Science and Research Technology
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Economic Viability for a Large-Scale Model of

Municipal Solid Waste Treatment in the Most
Important Brazilian Economic Region
Octavio Pimenta Reis Neto
PhD for Energetic Systems´ Planning, Mechanical Engineering Faculty at State University of
Campinas (PDSE/FEM/UNICAMP); ORCID: 0000-0002-7865-7526
Prior contact: Av. Mofarrej, 275 – Apto 212 B1, São Paulo/SP - Brazil, CEP 05311-000
IJISRT20MAY595 www.ijisrt.com 1377

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ABSTRACT
Despite the National Policy for Solid Waste (PNRS) in 2010, nothing has changed to the waste
disposal in Brazil. Planned to reach 100% of all Municipal Solid Waste (MSW) collected and treated
in landfills by Aug. 2nd, 2014, until nowadays, 42% of this total remains in dumps. Even the most
important national economic region treating its urban waste in landfills, what it has is no more than
4% of recycling and its landfills reaching the exhaustion. Building other ones is getting harder year by
year, due to water reservoirs around the region, high freight costs, waste disposal and the severe
control of emissions associated to its logistics.
This article comes to break the paradigm of investment and profitability proposing an alternative
to the land-use, achieving higher rates of recovering. The economic viability, carried out through well-
known financial variables and Monte Carlo analysis, has taken in account proven local waste
characteristics and market prices. Even considered a proposal highly intensive in capital and people,
the revenues from the sales would be enough to guarantee viability of 100% equity with IRR of 33.7%
and ROI of 24.5% per year within confidence of 99%.
Keywords: Solid Waste, Sorting, Recycling, Waste-To-Energy, Metropolitan Region Of São Paulo, Energy
Recovering.

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GRAPHICAL ABSTRACT

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STATEMENT OF NOVELTY
The statement of novelty comes from the proposal of an integrated large-scale model of treatment (or
Mechanical-Biological Treatment with Waste-to-Energy facilities) offering waste treatment service,
recyclables (plastic, metal, paper, and glass), an organic compost (fertilizer) and electricity to the most
important economic region of Brazil, a recognized developing country where urban waste treatment is
neglected.
An alternative to the landfills, the study intends to increment Brazilian researches for the integration of
solutions to treat the urban waste as a way to reach the ideal circular economy.

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CHAPTER ONE
INTRODUCTION
The Metropolitan Region of São Paulo (MRSP) is the biggest wealth generation center in Brazil. This
macro-region holds a large part of the national private capital with the most important industrial complexes,
commercial and financial headquarters installed and responsible for the Brazilian economic activity. It
represents 56% of São Paulo state´s GDP, 20% of Brazil´s one and its GDP per capita is 1.7 times bigger
than country´s one, by the Brazilian Institute of Geography and Statistics (IBGE, 2013) and São Paulo State
Foundation for Statistics (SEADE, 2011).
Directly associated with value and income generation, the amount of Municipal Solid Waste (MSW) is
equally high in this Brazilian region. The MRSP has São Paulo city, the capital of São Paulo state, with 11
million people, considered the largest of Brazil and one of the largest worldwide urban agglomerations.
With 39 cities, this region produces 21.4 thousand metric tons per day or annually 7.7 million metric tons of
MSW in 2013. This amount corresponds to 10% of all Brazilian’s MSW, and only São Paulo city
contributes with 62.5% at MRSP (ABRELPE, 2014; IBGE, 2013).
The absence of an Integrated Municipal Waste Management (IMWM) is one of the factors responsible
for hindering the coordination of an integrated action between municipalities, and that is why environmental
and financial costs are too high in this region. As for the household garbage collection in the urban area,
only five municipalities have less than 90% coverage in the MRSP. On disposal, approximately half of the
total municipalities have their wastes in landfills, and the other half in controlled landfills (Figure A 1),
what partially attends the Brazilian National Policy for Solid Waste (PNRS) (BRASIL, 2011; FUNASA,
2010).
In the MRSP, as well as in the city of São Paulo, the average of urban waste generation per capita is 2
lbs (about 1 kg) per day. The greater differential between MRSP and other Brazilian macro-regions,
concerning waste disposal, is the dumps’ eradication. The number of municipalities who disposal their
wastes in landfills out their limits increased from 23 in 2005 to 32 in 2009 (JACOBI and BESEN, 2011).
In 2010, 29 cities from MRSP (74.4%) had a selective collection, but only seven of them had 100%
urban area coverage. In 28 of them, recyclable collectors worked organized in cooperatives subsidized by
the governments. With 2,206 collectors, this selective collection covered 28 municipalities with 1,045
people in São Paulo city and 1,161 ones shared with the other 27 cities (Figure A 2). However, these

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cooperatives have shown low efficiency, because 70 to 80% of all recyclables collected are still coming
from the informal collectors working under precarious conditions in the streets of the cities (BESEN et al.,
2014; JACOBI and BESEN, 2011).
In a financial point of view, São Paulo’s selective collection has cost R$ 192 (or USD 79) per metric
ton, or the equivalent to R$ 8.3 million (or USD 3.4 million) per year. This cost represented a little bit more
than 1% expended in 2013 (R$ 725 million or USD 298 million) to collect, transport and dispose of MSW in
landfills and dumps, but it was twice higher than the conventional process (CEMPRE, 2013).
Most recent information from São Paulo’s Municipal Secretary of Services presents 31 collectors’
cooperatives working in the city with 3.2 thousand collectors, and despite having 10% as an agreed target,
no more than 4% of the MSW is recovered (CEMPRE, 2013; JACOBI and BESEN, 2011). Other important
information comes from the infrastructure available to the selective collection. Only 7% of the waste
collection fleet, working under contract in São Paulo, is available to support the selective collection. This
inefficient selective collection and its low coverage in São Paulo causes economic losses estimated at R$
749 million (or USD 308 million) per year. More than 1 million ton of paper, plastic, metal, and glass are
discarded and transported to landfills and dumps, instead of sorted and sold to return to the production
chains (BIZZOTTO, 2010).
Less waste recovered means to reduce the landfills lifetime in the region with too many restrictions to
build new ones. More than 50% of the RMSP is under environmental protection due to water reservoirs.
Programs for reducing the traffic and gas emissions in the transportation, high freight costs and disposal far
from the point of waste generation are main reasons that make difficult to build new disposal areas
(CETESB, 2014).
This MRSP’s scenario shown above is common in the world. Authors, such as ZHANG (ZHANG et al.,
2010) and RUOFEI (RUOFEI and SIBEI, 2010), report about sharp population growth in China and its
residues’ generation without appropriate treatment. The solution to the problem, as well as the majority
articles found to developing countries, is to replicate well-succeed European cases, especially Danishes
MSWM’s models. This task seems to be simple and trivial if it was not by the fact Denmark’s GDP is three
times bigger than MRSP’s one, and five times higher than Brazilian’s one. It’s one of the six European
nations, which has at least 90% of its MSW destined to save and generate energy through a selective
collection to recycle metals, glass, paper and plastic, organic composting and incinerating waste to produce
electricity and steam for heating. In these developed countries, there is an awareness culture of
environmental impact miigation based on conscious consumption through the 3Rs (Reduce, Reuse and

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Recycle). There is a clear understanding which waste is a public health problem, and due to this,
governments do not save investments to get solutions, avoiding land-use, mainly because, in most of the
cases, there is not its availability in Europe.
Most recent articles are coming with a new approach: procedures and technologies should complement
each other to improve the sustainability on waste treatment, mainly when the focus is to reach economic
viability and mitigation of environmental impacts. CIMPAN (CIMPAN and WENZEL, 2013) presents in his
study that it is possible to get an expressive reduction of CO2 emissions and high net profits, in comparison
with landfills, when applying the WtE process after the MBT one. The explanation comes from an improved
Refuse-Derived Fuel (RDF) with a higher Lower Calorific Value (LCV). Due to only “clean” recyclables
(metal, plastic, paper, and glass) and all wet portion (organics) are sorted, what remains is a mass with
enough “dirty” plastic and paper which are not feasible to be cleaned and commercialized.
A combination of technologies is also suggested by HAM (HAM and LEE, 2017) in his Korean article
for sustainable solid waste management. The author calls attention to the efficiency’s improvement when
associating technologies and, emphasizes that less amount of waste to be burn reduces WtE facility’s scale,
what is extremely important to let the business model less capital intensive and more viable.
WHEELER, from the Waste Management Magazine and KHALID, have written scientific texts where
both reinforced the importance of the technologies’ complementarity and called attention to the potential of
energy generation if considered anaerobic digestion in the MBT (KHALID et al., 2011; WHEELER, 2006).
The author WHEELER has estimated up to 15% of the UK’s energy demand could be supplied by its
biological anaerobic digestion. The same magazine published in 2013 a text informing a proposed £ 240
million small-scale waste facility is featuring MBT+WtE with 245 thousand metric tons per year (or about
0.5% of the annual production of waste) and 14 MW of capacity (WEKA, 2013). By the same authors, the
urban waste anaerobic bio-digestion is not very common on the industrial scale except when considering
wastewater treatment. That is because the MSW presents low-efficiency anaerobic digestion and business
economic viability when compared with bio-digestion of sewage sludge, agriculture, and livestock residues.
The heterogeneous composition of the urban organic waste and the presence of stabilizers and acidulants
retard the anaerobic bio-digestion in the reactors. So, the best way to get methane from MSW anaerobic
digestion is still in landfills where waste amount, degradation and pressure build-up are the matters of space
and time.

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Some Brazilian works and authors do not present an integration of existing technologies for MSW
treatment in the light of sustainability. SANTOS (SANTOS, 2011) discusses landfills and incinerators,
LIMA (LIMA, 2012) describes technological alternatives to several regions in the country, and even
VIEIRA (VIEIRA, 2011), writes about electricity considering all the urban waste, but neglecting mechanical
recycling and composting. Furthermore, they do not make an economic viability evaluation of introducing
expensive and more efficient technologies, such as Waste-to-Energy (WtE), applied in the poorest or
developing countries.

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CHAPTER TWO
OBJECTIVE
This article aims to present the economic viability and risk analysis of an integrated large-scale model
of MSW treatment at MRSP.

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CHAPTER THREE
MATERIALS AND METHODS
3.1. BUSINESS MODEL

The proposed model is a Mechanical-Biological Treatment with Waste-to-Energy (MBT+WtE)
facilities at MRSP. These facilities would supply the economy with the waste treatment service, recyclables
(metal, plastic, glass, and paper), an organic compost (bio-fertilizer) and electricity (Figure 1). The article is
not considering the potential revenues from energy generation through anaerobic digestion and the steam
from the WtE facilities.
The well-succeed practice of MSW treatment with energy generation in too many countries in Europe,
especially in Germany, MBT+WtE is the state-of-the-art technology regarding controlled emission and land-
use mitigation, as mentioned in last COP 21 (CHRISTENSEN et al., 2015). There, facilities receive
materials from the recyclables collection and separate them to reintroduction in the market, reducing
demand for more “virgin” materials and energy. Organics are aerated and well-drained to produce fertilizers
because biogas through anaerobic digestion in reactors is not viable yet, as already explained.
The remaining waste, or RDF (Refuse-Derived Fuel), burns under high temperatures in closed systems
where gases are washed, filtered and submitted to long periods of residence enough to break chemical
components. Ashes are the particulate by-products obtained by the incineration. Both ashes and gases must
attend legislation requirements described in Table C1.
Brazil has local legislation that guides residues thermal treatment. The Resolution CONAMA
No.316/2002, which defines procedures and criteria for treating them thermally, is too comprehensive as
American and European legislation who allow WtE facilities to operate their countries (CONAMA, 2002).
As seen in the table above, assumed a technology well-established in any mentioned regions, risks for health
and environmental seem to be under control and attending the Brazilian resolution. However, due to security
reasons, it should be considered technologies which can meet a more restrictive standard, such as the
European one which is more rigorous with emissions and control procedures.
Initially, only depleted mines of minerals (e.g., coal) received ashes to fill them and reduce the
environmental impact caused by the mining, but nowadays cement and pavements are receiving them, and
other applications are under development (LYNN et al., 2016).

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3.2. WASTE GRAVIMETRY, PROCESSES, AND PRODUCTS
The gravimetric composition assumed to MRSP’s MSW is the one used by Municipal Environmental
Sanitation Service of Santo André (SEMASA), a department of a social and economic representative city
from MRSP (SEMASA, 2008). Even being a data from 2008, it fits with the Brazilian Institute for Applied
Economic Research (IPEA, 2012), research performed four years later that showed MRSP’s waste
composition in detail.
In Table 1 are summarized and broken-down the weight fractions of waste, where will be processed
and what products and service the MBT+WtE model will produce.
Fractions of the 21 thousand metric tons per day of waste treated in each process are in Table C2 and
Table C3. The information about the mass amount fractioned in “wet” and “dry” portions was as an idea of
how much is possible to recover from a simple sorting. Without any additional process (washing and
drying), recyclers would buy recyclables (metal, plastic, glass, and paper) compacted and into bales.
Organics, the fraction extremely wet in the waste, would be to produce bio-fertilizer. Other waste contents
also considered wet, but in fact recognized as dirty, are fuel to the burning process.
Note the important waste recovery rate of 67% potentially achieved, considering organic composting
and recycling. In a scenario of average waste composition with 61% of organics, MIEZAH (MIEZAH et al.,
2015) estimates 76% of rate recovery in Ghana. It would be a remarkable level in comparison with the 10%
sought by São Paulo, and not achieved by now, or with the insignificant 2% performed nowadays in Brazil,
by the Brazilian Association of Waste Companies (ABRELPE, 2014). Besides that, this would be a rate
compared to the developed European countries, according to European Environmental Agency’s (EEA) data
(EEA, 2014).
3.3. POTENTIAL REVENUES, ASSETS, AND INVESTMENT

Annual revenues from sales of products and service calculated assuming market prices (Table 2),
Lower Calorific Value (LCV) references (Table C4), and the average LCV of the waste in the MRSP
(Table C5).
Especially talking about WtE facilities, technical configuration #3 (Table 3) and electricity fee were
used to calculate their revenues. This assumption is reasonable due to the previous sorting of “wet” and
“dry” fractions which improves the LCV to highest levels, as suggested by BOSMANS (BOSMANS et al.,
2013) when discussing benefits of combining Waste-to-Products (WtP) and Waste-to-Energy (WtE)
technologies.

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The economic analysis follows considering CNIM’s WtE technology that has more than 150 years of
experience in more than 15 countries and 2,800 employees. With 160 plants working all over the world and
treating 24 million tons per year, this company presents a technology with the best relation between
investment and RDF’s treatment capacity of USD 86 per metric ton in 10 years. Studies from The World
Bank’s procedures (BANK, 2000) and FEAM (FEAM, 2012), a Brazilian State Environmental Foundation,
and NIXXON (NIXXON et al., 2013) ratified that.
Considering an average exchange of R$ 2.34 per USD in 2013’s Brazilian Exchange, the estimated
investment to attend MRSP is R$ 4.5 billion (or USD 1.9 billion) (BACEN, 2018). The market recommends
units with 600 metric tons per day of capacity because of technical issues (units’ availability and
maintenance). Due to this, the MRSP should have 12 units well distributed to treat 33% of its waste daily as
shown in Table 4 compiled from
Figure B 1. São Paulo, the biggest city at MRSP, covered by 7 MBT+WtE facilities. Other five ones
would be covering the rest of the metropolitan region, shown as regions purple, red, yellow, green and blue.
Based on CNIM and past articles considering MBT+WtE facilities, also mentioned by DEMIRBAS
(DEMIRBAS, 2011), the total investment assumed to have all 12 facilities serving the MRSP in 2013 would
be R$ 5.8 billion (or USD 2.5 billion), or 1.3 times of what is required to have only WtE facilities.
This article is not considering an MBT with gasification, but only assets to sort recyclables (conveyors
and compactors), dryers and blowers to aerobic compounding. In case of gasification’s MBT assets, the
factor 1.3 must increase to 4.
3.4. FIXED, VARIABLE EXPENSES AND CAPITAL COST

Operational and Maintenance (O&M) costs for MSW’s treatment are between USD 50 and 110 per
metric ton, based on the previous study, fulfilling rigorous best practices of production and emissions’
control (BANK, 2000; FEAM, 2012; NIXXON et al., 2013).
All facilities would use some resources from the economy, such as public (gas, water, urban cleaning)
and maintenance services, especially when a WtE asset needs to meet sustainable aspects as discussed by
JAMASB (JAMASB and NEPAL, 2010). MBT+WtE facilities normally produce 8% of ashes (relative to
the weight amount burnt) as a by-product, normally disposed of in abandoned mines or used in pavements.
Maintenance and overhauling are also eventually required to keep the facilities working properly. Therefore,

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it takes in this study 1.5% and 6% of the annual gross income to by-product disposal and maintenance,
respectively, as mentioned by The World Bank and EPE reports (BANK, 2000; EPE; MME, 2018).
Other import operational assumption to the MBT+WtE model is the number of jobs. Following what is
recommended by FERRI, when considering collectors to select materials manually, it is strongly
recommended to use one collector picking up 730 metric tons of waste per year (FERRI et al., 2014). This
parameter sounds reasonable if considered the estimated mass balance in Table 1. Taking into account this
assumption, each collector would set-aside 43% of organics (313.9 mt per year) to dry and 33% of dirty
materials (240.9 mt per year) to burn. Recyclables would be 8% of paper (58 mt per year), 8% of plastic (58
mt per year), 1% of metal (i.e. aluminum) (7.3 mt per year), 1% of glass (7.3 mt per year) and 6% of other
(i.e. electronics) (43.8 mt per year). In comparison with a petrochemical production efficiency of plastics,
the operation is more than 34 times smaller. So, in this article will be accounted 10,678 workers, including
those to operate the WtE process. Besides that, the payroll considers two minimum wages per worker
including labor costs and benefits, meeting Consolidated Labor Laws (CLT) in Brazil (see Table D1)
(BRASIL, 1943).
This formal remuneration represents twice more of what people can get from the informal collection in
cooperatives at São Paulo city, based on the Brazilian Association for Business Commitment to Recycling
information (CEMPRE, 2013).
Table 5 presents labor costs, operation expenses, sectorial contributions, taxes and assets accounts
followed with local market practices.
The Law No. 9,991/2000 requires 1% of the net operating income (NOI) for electricity generation
ventures (DEPUTADOS, 2000). However, this article adopted The World Bank’s recommendation based on
0.5% of the total investment, or the equivalent to 1.55% of the NOI (BANK, 2000).
The National Agency for Electrical Energy (ANEEL) gives exemption to Distribution (TUSD) and
Transmission (TUST) fees since the auction for an alternative source of energy in 2007 (ANEEL, 2007).
Generation plants based on biomass, including MSW, with power capacity between 30 and 50 MW are
eligible by the ANEEL’s Resolution No. 482/2012 in its Article 3 and paragraphs III and IV (ANEEL,
2012).

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Capital for civil engineering, machines for treating recyclables and organics, filters, particulates and gas
washers are in CAPEX provisioned as 0.5% of the investment, as recommended by The World Bank
(BANK, 2000).
In the case of funding, the National Bank of Economic and Social Development (BNDES), a Brazilian
federal bank has a credit line for Environmental Sanitation and Water Resources. This line has an annual
TLP (Brazilian Long-Term Interest Rate), 1% of BNDES’s premium and more 1% accounted as risk,
covering 80% of the investment done by entrepreneurs (private and public players) (BNDES, 2018).
3.5. FINANCIAL ANALYSIS AND LEVEL OF CONFIDENCE

All economic viability was taking into account a cash flow period of 20 years, aligned to the period of
municipal concession given to an entrepreneur, and a depreciation of 10 years.
Revenues, Expenses (Fixed and Variable) and Financial costs were broken-down to understand where
strengths and weak points of the financial analysis would be for the year 2013.
This study used Monte Carlo Method to measure the risk through the confidence calculated by the
simulation using 10,000 random scenarios. Based on almost 20 years’ series of input variables (prices for
products and service, exchange, investment, amount of waste, and more), these scenarios allowed to
calculate other 10,000 decision output variables (NPV, IRR, PAYBACK, ROI and ROE). All available
records of these variables are in Table 6 and assumed as a normal distribution.
Taking into account historical moments of crises in the USA and Europe, where the technology is well-
used, is reasonable to consider an investment range of +/- 10% based on the original budget of R$ 5.8 billion
(or USD 2.5 billion) calculated to 2013.
Concerning waste generation rate, based on ABRELPE and CETESB’s (Brazilian Environmental
Sanitation Technology Company) data, last ten years represented a growth of more than 40% in the amount,
or +3,5% per year (ABRELPE, 2014; CETESB, 2014).

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CHAPTER FOUR
RESULTS AND DISCUSSIONS
Considering potential revenues through the MBT+WtE model to the year 2013, 58% of them would be
from sales of recoverable materials (metal, plastic, paper, glass, and bio-fertilizer). Electricity would
represent 25% and 17% coming from the service of MSW treatment provided to the cities at MRSP (see
Figure 2).
Plastic and bio-fertilizer would represent 48% and 20% of the total amount of recoverable’ revenues.
Attending the entire MRSP with 12 units, the model considers 504 MW of installed capacity and would
generate 4.5 TWh of electricity in 2013. This amount of energy would be equivalent to 25% of the
thermoelectric supply for the State of São Paulo, or 2% for the Brazilian territory. All public lighting
demand in the State of São Paulo would have the electricity produced and sold by MBT+WtE facilities at
MRSP (SEMESP, 2014).
The waste recycling rate would rise from the current 4% to up 24%, or considering organic composting;
the waste recovery rate could reach 67%.
The assumptions of operational and financial costs in the model would consume 56% of gross revenue,
resulting in 44% pocket margin (see Figure 3). In absolute value, this margin would be, in 2013, 26% of the
total budget invested in the MRSP.
Operational costs would take 25% from gross revenue, where fixed costs (or expenses) would be 94%
of the total, and HR component is the most important representing 66% from it (see Figure 4a). On the
other hand, more than 10.6 thousand formal jobs created at MRSP.
Financial costs demanding 31% of gross revenue would have tax payment as the heaviest variable, or
62% of their total (see Figure 4b).
The risk analysis was performed using 10,000 aleatory scenarios, built with records from the last ten
years. Considering a confidence interval of 99% (means only 50 lower and higher values discarded from
10,000 ones), the variables IRR, NPV, PAYBACK and ROI using cash flows of 20 years would be as shown
in Figure 5a, Figure 5b, Figure 5c and Figure 5d as a normal distribution with 99% of confidence interval
(mean ± 3 standard deviations).

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In average, IRR calculated would be 33.7% per year for the cash flow of 20 years considering constant
currency. Negative and positive scenarios, based on records from the last twenty years, would give 16.5% as
the lowest IRR, and 50.9% as the highest one (Figure 5a). Considering the average hurdle rate of 6.2%, the
calculated average IRR would be 5.4 times higher than it.
Value generation, assumed here as NPV, would present average value of R$ 10.8 (or USD 4.3) billion,
or 68% higher than the worst scenario of investment mentioned in Table 6. Taking into account negative
and positive historical scenarios, the model would create a minimum of R$ 2.1 (or USD 0.9) billion, almost
36% of the average amount of investment, and 334% for a maximum NPV of R$ 19.4 (or USD 7.8) billion
(see Figure 5b).
Analyzing the payback, the average time to pay the investment under conditions assumed in this study
would be 6.6 years (Figure 5c). For the best and worst scenarios, the range calculated would be from 4.4 to
8.8 years.
The proposal presents an average ROI (Return of Investment) of 24.5% per year (see Figure 5d).
However, even considering the lowest possible value of 7.9% per year, it would be higher than the highest
hurdle rate of 7.5%.
Assuming 2013´s market records, just to a cross-check, the model would delivery an IRR of 32.6%,
NPV of R$ 12.9 (or USD 5.5) billion, and a payback of 5.5 years, fitting perfectly within the confidence
interval. However, if the entrepreneurs decide to get BNDES’s funding for sanitary ventures, the IRR could
reach 116,3%. The value generation (NPV) would be R$ 13.4 (or USD 5.8) billion, and a payback of 6.9
years. ROI would be 22.9% in both cases but considering maximum BNDES funding of 80%; the ROE
(Return on Equity) would be 95,8% per year to the investors (see Table 7).
It is possible to find some initiatives of landfills generating electricity with gas, but their references to
the economic viability are pretty difficult to access in Brazil. ABREU and PICANÇO presented in their
researches economic viabilities to landfills with gas recovering considering market fees (waste disposal
service), prices (electricity) and efficiency on gas recovering and conversion to energy. By them, landfills
with gas recovering presents IRR in a range from 16% to 36% and an ROI from 2 to 5% (ABREU, 2009;
PICANÇO et al., 2011).

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Once more it is important to emphasize that this work does not seek to demonstrate the financial and
economic viability of the WtE facility. As pointed out in other studies, such as the FEAM or EPE, if
considered only WtE units to treat the MSW, there are not encouraged conditions to propose an alternative
to the landfills (EPE; MME, 2008; FEAM, 2012). The reasons are multiples, such as high investment, poor
waste (low LCV and high humidity) and an energy market without encouraging prices. Here, as seen in
articles already mentioned, the WtE technology (or other expensive existing technology) would be part of an
integrated high-scale line for MSW treatment. The most important for reaching the economic viability
would come from the sales of recoverable materials, such as plastic, fertilizer, paper, metal (mainly
aluminum) and glass, and from the waste treatment service supplied by the MBT+WtE model to the
municipalities. Using an RDF with an LCV improved by the MBT, the WtE facilities would be smaller and
more efficient what would close the portfolio with their electricity revenues.

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CHAPTER FIVE
CONCLUSIONS
Based on assumptions described in this article, it is economically viable to have MBT+WtE facilities in
the MRSP treating 100% of its waste with 99% of confidence. As shown, 12 facilities, attending 39 cities
would be profitable enough to be an alternative to the landfills in the metropolitan region.
Perfectly meeting the Brazilian PNRS' (National Policy for Solid Waste) requirements of having 100%
of the waste recovered through logistic reverse and recycling, the proposal would help the policy to work as
planned (BRASIL, 2011). However, the model proposed only works if some premises will not change, and
to assure them; it is important to review the current policy. It should consider other technologies of waste
treatment, besides the landfills, and suggest incentives for them, as explored by DEMIRBAS (DEMIRBAS,
2011) in his article. The service of waste treatment (or disposal) must always be a cost to the cities and
revenue for the sanitary projects, whatever the circumstance. Recovered materials, such as recycled plastic,
paper, glass, and bio-fertilizer, should have tax incentives to promote their usage and protect them against
the predatory competition of “virgin” commodities. Also, all waste-based electricity should have a special
fee because renewable sources of energy still depend on expensive energy production, gas, and particulate
emissions control technologies.
Even a model considering expensive technologies are liable to attend metropolitan regions like São
Paulo. Recycling and extracting as much as possible of organics from the waste, reduce the capital intensity
when investing in WtE units. Smaller units are necessary to produce electricity with more efficiency, and
best values come from sales of service and products. In the case shown in this article, the model presents
economic viability (e.g., IRR= 33.7% and ROE=24.5% per year) that would not be an obstacle to change the
status quo of dumps, landfills and low engagement on recycling. By the way, this viability can be better
(e.g., IRR=116.3%, ROI=22.9% per year and ROE=95.5% per year) with lines of financial credits with
substantial interest rates. A good example is the National Bank of Economic and Social Development
(BNDES), a Brazilian federal bank has a credit line for Environmental Sanitation and Water Resources with
low-interest rates with a minimum 20% of investor’s equity.
Breaking the paradigms of economic viability and negative social impacts, reducing the electricity
demand with less carbon release, hopefully, this article contributes to improving the PNRS. It is essential to
consider in it more technologies to manage the municipal waste, due to several different area characteristics,
to increase the coverage of the policy’s compromises, and to attract more investors and entrepreneurs.

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As already detailed, domestic waste anaerobic digestion is not typical on an industrial scale as well as
agriculture and livestock ones. Its residues composition with too many preservatives, demanding activation
(e.g., use of degradation promoters) to accelerate the process of degradation and gas production, and assets
too capital intensive, are still considered barriers to overcome. That explains why it is more common to
aerate and dry it to produce organic fertilizer.
In an upcoming article, this study will challenge the same model but consider MBT’s facilities with
gasification by anaerobic digestion to the MRSP’s scenario. Producing methane (CH4), the model could
consider a considerable increment of electricity and revenue, as recently published by HADIDI in his
research for Saudi Arabia (HADIDI and OMER, 2017).

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DECLARATIONS
 AVAILABILITY OF DATA AND MATERIAL
Materials and data availability at UNICAMP Bibliographic Repository
(http://repositorio.unicamp.br/handle/REPOSIP/333323).
 COMPETING INTERESTS
There are no competing interests affecting this article developed in a public institution of scientific
researches.
 FUNDING
Financial support to the research giving by Ministry of Education and Science (MEC) through Coordination
for the Improvement of Higher Education Personnel (CAPES) processes #33003017 and
#88881.135606/2016-01.
 AUTHORS' CONTRIBUTIONS
Through this article, the author intends to promote more discussions about alternatives to treat urban waste
and its potential to save and produce energy with notorious benefits to the Brazilian society and
environment.
 ACKNOWLEDGEMENTS
Thanks to the resources and orientation given by State University of Campinas (UNICAMP) and Carnegie
Mellon University (MCU).
 AUTHOR’S INFORMATION
A Brazilian researcher with 23 years of experience dedicated to study economic viability and impacts of
materials, composites, sources of energy and recycling to the society and environment.

ISSN No:-2456-2165
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IMPORTANT ASSUMPTIONS:
 Sorting phase done by workers

formally contracted;
 Sorting phase may be an alternative

to cooperatives of recyclables
(where not available), or work in
partnership with them;
 Operation must consider all

requirements of safety and health at
work;
 Previous segregation done by

society would be better to improve
the efficiency and work conditions;
and
 Technical capacitation is a must to

sort and to operate WtE assets.
Source: Author´s process flow Figure

drawing 1. Integrated waste recovering plant, or MBT+WtE facility

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Figure 2. Potential sales revenues
Figure 3. Pocket margin

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Figure 4a. Breakdown – Operational costs
Figure 4b. Breakdown – Financial costs

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Figure 5a. IRR analysis with a 99% confidence level
Figure 5b. NPV analysis with a 99% confidence level

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Figure 5c. Payback analysis with a 99% confidence level
Figure 5d. ROI analysis with a 99% confidence level

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Table 1. Estimated mass balance
IN PROCESS FLOW OUT
Process Fraction "Raw Materials" Fraction PRODUCTS/SERVICE
Biological 43% Organic 43% Fertilizer
Paper 8%
Plastic 8%
Mechanical Metal 1%
24% Recyclables
(Recycling) Glass 1%
MSW 100%
Other (e.g.,
6%
electronics)
Dirty plastics 24%
WtE 33% Textile, dirty papers, Electricity
9%
city cleaning
Urban Waste Service Treatment
All
TOTAL 100% 100% All Recyclables 100% All Revenues
Processes
Source: Compilation from Table C2, Table C3 and Table C4

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Table 2. References to prices and fees for sales revenues
PRICE´S
RANGE
REVENUE ORIGIN 2013’s MARKET PRICES REFERENCES
FROM 2000
TO 2016
35 – (ABRELPE, 2014)
MSW disposal Service 80 34
150 (CETESB, 2014)
1,300
Metal 2,800 1,197 –
3,300
USD
R$ per 162 – R$ per
Glass 180 77 per
metric 198 metric
metric
Recyclables ton 150 – ton (CEMPRE, 2013)
Paper 510 218 ton
510
600 –
Plastic 1,700 726
2,200
100 –
Fertilizer 125 53
150
R$ per USD R$ per
90 –
Energy Electricity 197 metric 84 per metric Aneel 2007 e 2013
430
ton MWh ton
Source: Author’s elaboration based on market references
Table 3. Configurations and specs for WtE units

Waste Installed Electricity
Min. LCV Operation Electricity
Config. Capacity Capacity Potential
(kcal/kg) (h/year) Efficiency
(m ton/day) (MW) (MWh)
#1 600 1,200 10 8,000 80,000 29%
#2 600 3,200 26 8,000 208,000 28%
#3 600 5,200 42 8,000 336,000 28%
#4 600 6,600 60 8,000 480,000 31%
Source: CNIM spec and configurations (CNIM, 2018)

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Table 4. Proposed distributions of MBT+WtE facilities at MRSP in 2013

QTY MBT WtE NR OF ESTIMATED
REGION (m (m (m UNITS % CAPACITY INVESTMENT
ton/day) ton/day) ton/day) (600 m t) R$ (USD) billion
Purple 928 622 306
Red 455 305 150 2 86% 0.9 (0.4)
Yellow 1,762 1,180 581
Green 2,714 1,819 896
3 100% 1.5 (0.6)
Blue 2,698 1,808 890
Gray 12,800 8,576 4,224 7 100% 3.4 (1.5)
TOTAL 21,357 14,309 7,048 12 98% 5.8 (2.5)
Source: Compilation from
Figure B 1
Table 5. The breakdown of operational costs

OPERATIONAL
EXPENSES
VALUE DESCRIPTION UNIT REFERENCES
 VC – Variable cost
 FC – Fixed cost
WTE’s human resource (CF) 3.1
Material consumption (VC) 0.9
Third party’s service (FC) Investment amount 1.5 % (BANK, 2000)
Maintenance (FC) 1.8
Overhauling (FC) 1.8
R$/metric ton
1 labor per 730 metric ton per 46 year * (FERRI et al.,
Sorting’s human resource (FC)
year of MSW (20) (USD/metric ton 2014)
year)
OTHER OPERATIONAL VALUE DESCRIPTION REFERENCES
Minimum wage’s range R$ 240 – R$ 937 (BRASIL, 2017)
Insurance 0.06% x Investment
(BANK, 2000)
R&D 0.5% x Investment

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TUSD (Distribution fee) - CCEE – Renewable Energy
TUST (Distribution fee) - (ANEEL, 2007)
TFSEE (sector’s service rate) R$ 470.63 per installed kW (ANEEL, 2013)
ONS’s contribution (sector’s
R$ 0.1/MWh
rate) Sector’s rate
CCEE’s contribution (sector’s (ANEEL, 2007)
R$ 0.1/MWh
rate)
Depreciation 10 years Market practice (BNDES, 2018)
IRPJ (income tax) 25% x Profit Brazilian’s income tax (RFB,
CSSL (social contribution) 9% x Profit 2018)
CAPEX 5% x Investment (BANK, 2000)
OTHER FINANCIAL VALUE DESCRIPTION REFERENCES
Exchange (USD/R$) 0.82 – 4.17 (BACEN, 2018)
WACC (TJLP+RISK+BNDES) 7% – 13% (BNDES, 2018)
(*) Considering remuneration of two 2014’s minimum wage plus CLT’s costs and benefits
Source: Author’s elaboration based on market references (BRASIL, 2017, 1943; MTE, 2018)
Table 6. References to calculate 10,000 scenarios of decision
Min (x- Mean Std dev
PARAMETERS Max (x+3σ) References
3σ) (x) (σ)
Investment (R$ billion) 5.3 6.4 5.8 0.2 (CNIM, 2018)
Exchange (R$/USD) 0.82 4.17 2.50 0.56 (BACEN, 2018)
Amount of Waste (k metric ton per day) 15.2 21.4 18.3 1.0
Destination Fee (R$ per metric ton) 35 120 77 14
Metal scrap (R$ per metric ton) 1,300 3,300 2,300 333
(ABRELPE,
Glass scrap (R$ per metric ton) 162 198 180 6
2016)
Paper scrap (R$ per metric ton) 150 510 330 60
Plastic scrap (R$ per metric ton) 600 2,200 1,400 267
Organic fertilizer (R$ per metric ton) 100 150 125 8
Electricity (R$ per MWh) 90 430 260 57 (MME, 2016)
Minimum Wage (R$ per month) 240 954 597 119 (BRASIL, 2017)
Annual Interest rate for funding (%) 6.8 9.5 8.2 0.4 (BNDES, 2018)
Annual TLP (former TJLP) (%) 4.8 7.5 6.2 0.4 (BNDES, 2018)
Source: Author’s elaboration based on the market’s references from 2000 to 2018

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Table 7. Comparison of equity versus funding (20 year’s cash flow)
VARIABLE 100% EQUITY 80% of BNDES’s FUNDING
IRR 33.7% 116.3
NPV R$ 10.8 (USD 4.3) billion R$ 13.4 (USD 5.8) billion
PAYBACK 6.6 years 6.9 years
ROI 24.5% per year 22.9% per year
ROE 24.5% per year 95.3% per year
APPENDIX A. Current MSW organization at MRSP
Figure A 1. MSW disposal´s map at MRSP adapted from JACOBI (JACOBI and BESEN, 2011) – colored

1411
International Journal of Innovative Science and Research Technology
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Figure A 2. Selective collection’s map at MRSP adapted from JACOBI (JACOBI and BESEN, 2011) -
Guarulhos 1,429.17
Mogi das Cruzes 344.08
Francisco Morato 147.94 Itaquaquecetuba 310.10
Franco da Rocha 117.59 Suzano 242.71
Caieiras 72.73 Ferraz de Vasconcelos 155.01
APPENDIX B. Proposed locations for MBT+WtE units at MRSP
Figure B 1. Distribution of MSW at MRSP in 2013 - colored

Mairiporã 62.14 Poá 92.23
Osasco 760.82 Cajamar 54.55 Arujá 62.46
Carapicuiba 349.01 MSW TOTAL (metric ton per day) 454.95 Santa Isabel 33.76
Source: Author’s draft based on CETESB’s data (CETESB, 2014)

Barueri 231.08 Biritiba Mirim 20.94
Itapevi 195.30 Guararema 16.67
Santana de Parnaíba 108.90 Salesópolis 7.34
Jandira 104.44 MSW TOTAL (metric ton per day) 2,714.47
Pirapora do Bom Jesus 11.96
www.ijisrt.com
MSW TOTAL (metric ton per day) 1,761.51
colored
Taboão da Serra 237.92
Embu das Artes 230.62
Cotia 198.85
Itapecerica da Serra 145.81
Embu-Guaçu 51.60
Vargem Grande Paulista 37.61
Juquitiba 16.38
São Lourenço da Serra 9.48
MSW TOTAL (metric ton per day) 928.27 São Bernardo do Campo 871.65
Santo André 775.40
Volume 5, Issue 5, May – 2020
Mauá 399.72
Diadema 366.05
São Caetano do Sul 140.73
Ribeirão Pires 106.98
IJISRT20MAY595
São Paulo 12,800.00 Rio Grande da Serra 37.71
MSW TOTAL (metric ton per day) 12,800.00 MSW TOTAL (metric ton per day) 2,698.24
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APPENDIX C. MSW´s gravimetric composition at MRSP
Table C1. Standards for Systems of Residues’ Thermal Treatment

CONAMA 316/2002 US-EPA EU-2000/76/EPC
RESTRICTIONS
(mg/Nm³) (mg/Nm³) (mg/Nm³)
Particulate material 70 11 10
Cl2 n.d. n.d. 10
HCl 80 29 10
HF 5 n.d. 1
SO2 280 63 50
NOx 560 264 200
CO (ppm) 100 45 50
Heavy Metals Class I (e.g. Cd) 0.28 n.d. 0.05
Heavy Metals Class II (e.g. Hg) 0.28 0.06 0.05
Heavy Metals Class III (e.g. Pb) 6.2 n.d. n.d.
Dioxins and furans (ng/Nm³) 0.1 - 0.5 0.14 0.1
Source: Compilation from CONAMA (CONAMA, 2002), EPA (US EPA, 2016) and European Standard
(EPC, 2000)
Table C2. Gravimetric composition to the MSW at MRSP

WET DRY
MATERIAL 76% 24%
GRAVIMETRY (%)
Aluminum 0.46 1.2
Rubber 0.12 1.22
Styrofoam 0.27 0.21
Natural wood 0.71 0.07
Processed wood 0.13 0
Metal 0.58 1.59
Paper 4.97 16.14
Cardboard 2.58 10.71
PET bottles 0.77 1.88
Various plastic 1.11 4.05

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PP bags, vessels, and packages 0.86 1.15
PE bags, vessels, and packages 28.73 24.39
Fabric 3.82 4.68
Tetrapack® packages 1.18 3.79
Glass 0.47 2.82
Organics 49.9 19.7
Other (e.g., lamps, batteries, electronic) 3.34 6.4
MSW's TOTAL COMPOSITION (%) 100.00 100.00
Source: Author’s estimate based on SEMASA and IPEA’s data (IPEA, 2012; SEMASA, 2008)
Table C3. Potential sorting of the MSW at MRSP

21,357.44
WTE SORTING
MRSP's MSW TOTAL
33% 67%
(metric ton per day)
7,153.29 14,204.15
MATERIALS
Aluminum 0.00 136.18
Rubber 19.48 62.53
Styrofoam 43.83 10.76
Natural wood 115.24 3.59
Processed wood 21.10 0.00
Metal 0.00 175.64
Paper 806.71 827.30
Cardboard 418.78 548.97
PET bottles 124.98 96.36
Various plastic 180.17 207.59
PP bags, vessels, and packages 139.59 58.95
PE bags, vessels and packages 4,663.35 1,250.18
Fabric 620.05 239.89
Tetrapack® packages 0.00 385.80
Glass 0.00 220.84
Organics 0.00 9,109.37
Other (lamps, batteries, electronics…) 0.00 870.19
(*) Considered wet by WTE heating and aerobic process
Source: Author’s potential estimate based on Table C2.

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Table C4. Lower calorific values for wet components in the MSW
MATERIAL Humidity (%) LCV (kcal per kg)
Organic 66 712
Plastics 17 8,193
Paper or cardboard 21 2,729
Fabric or leather 36 1,921
Wood 25 2,490
Rubber 5 8,633
Source: The World Bank, FEAM, and NIXXON (BANK, 2000; FEAM, 2012; NIXXON et al., 2013)
Table C5. The energetic potential for the RDF

FRACTION
33%
MSW's COMPONENT 7,153.29
QTY Composition LCV
(m ton per day) (%) (kcal per kg)
Aluminum 0.00 0.00% 0.00
Rubber 19.48 0.27% 23.51
Styrofoam 43.83 0.61% 50.20
Natural wood 115.24 1.61% 40.12
Processed wood 21.10 0.29% 7.35
Metal 0.00 0.00% 0.00
Paper 806.71 11.28% 307.76
Cardboard 418.78 5.85% 159.76
PET bottles 124.98 1.75% 143.15
Various plastic 180.17 2.52% 206.36
PP bags, vessels and packages 139.59 1.95% 159.88
PE bags, vessels and packages 4,663.35 65.19% 5,341.16
Fabric 620.05 8.67% 166.51
Tetrapack® packages 0.00 0.00% 0.00
Glass 0.00 0.00% 0.00
Organics 0.00 0.00% 0.00
Other (lamps, batteries, electronics…) 0.00 0.00% 0.00
MRSP's MSW TOTAL 7,153.29 100.00% 6,605.75
Source: Author’s potential estimate based on Table C3 and Table C4Error! Reference source not found.

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APPENDIX D. Human resources´ expenses
Table D1. The breakdown of monthly expenses with HR

TYPE OF EXPENSE REFERENCE VALUE
2014 national's minimum wage (R$ R$ 1,448.00
Sorting salary
724 or USD 309) USD 618.80
R$ 220.00
Transport voucher R$ 10 (USD 4.30) per day
USD 94.02
-R$ 86.88
Transport voucher discount 6% of employee's salary
-USD 37.13
R$ 330.00
Meal voucher R$ 15 (USD 6.41) per day
USD 141.03
R$ 150.00
Healthcare Market offer
USD 64.10
R$ 0.00
Another benefit -
USD 0.00
R$ 120.67
13th salary provisioning CLT (BRASIL, 1943)
USD 51.57
R$ 120.67
Vacation provisioning CLT
USD 51.57
R$ 40.22
1/3 of vacation provisioning CLT
USD 17.19
R$ 115.84
FGTS (Service fund) CLT
USD 49.50
R$ 22.52
FGTS (13th salary plus vacation) provisioning CLT
USD 9.62
R$ 289.60
INSS (Social security) 20.00%
USD 123.76
R$ 56.31
INSS (13th salary plus vacation) provisioning CLT
USD 24.06
R$ 2,826.95
Employee cost
USD 1,208.10
Factor (Employee cost/salary) 1.95
Source: Author’s compilations and calculations

Economic Viability For A Large-Scale Model of Municipal Solid Waste Treatment in The Most Important Brazilian Economic Region

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Economic Viability For A Large-Scale Model of Municipal Solid Waste Treatment in The Most Important Brazilian Economic Region

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Volume 5, Issue 5, May – 2020 International Journal of Innovative Science and Research Technology

Economic Viability for a Large-Scale Model of

Octavio Pimenta Reis Neto

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3.1. BUSINESS MODEL

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3.3. POTENTIAL REVENUES, ASSETS, AND INVESTMENT

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3.4. FIXED, VARIABLE EXPENSES AND CAPITAL COST

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3.5. FINANCIAL ANALYSIS AND LEVEL OF CONFIDENCE

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 Sorting phase done by workers

 Sorting phase may be an alternative

 Operation must consider all

 Previous segregation done by

 Technical capacitation is a must to

Source: Author´s process flow Figure

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Figure 2. Potential sales revenues

Figure 3. Pocket margin

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Figure 4a. Breakdown – Operational costs

Figure 4b. Breakdown – Financial costs

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Figure 5a. IRR analysis with a 99% confidence level

Figure 5b. NPV analysis with a 99% confidence level

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Figure 5c. Payback analysis with a 99% confidence level

Figure 5d. ROI analysis with a 99% confidence level

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Table 3. Configurations and specs for WtE units

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Table 4. Proposed distributions of MBT+WtE facilities at MRSP in 2013

Table 5. The breakdown of operational costs

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APPENDIX A. Current MSW organization at MRSP

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Figure B 1. Distribution of MSW at MRSP in 2013 - colored

Source: Author’s draft based on CETESB’s data (CETESB, 2014)

APPENDIX C. MSW´s gravimetric composition at MRSP

Table C1. Standards for Systems of Residues’ Thermal Treatment