Use of Alternative Fuels in the Cement Sector in Senegal: Opportunities, Challenges and Solutions Use of Alternative Fuels in the Cement Sector in Senegal: Opportunities, Challenges and Solutions The material in this work is copyrighted. Copying and/or work do not imply any judgment on the part of the World Bank transmitting portions or all of this work without permission may concerning the legal status of any territory or the endorsement or be a violation of applicable law. IFC encourages dissemination acceptance of such boundaries. The findings, interpretations, and of its work and will normally grant permission to reproduce conclusions expressed in this volume do not necessarily reflect portions of the work promptly, and when the reproduction is for the views of the executive directors of the World Bank or the educational and non-commercial purposes, without a fee, subject governments they represent. to such attributions and notices as we may reasonably require. 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The boundaries, colors, and parties named herein. denominations, and other information shown on any map in this Contact Information 2121 Pennsylvania Ave, NW Washington, DC 20433, USA ifc.org 2017  Photo: Curt Carnemark / World Bank Table of Contents Executive Summary 9 1. Background And Objectives 12 2. Approach And Methodology 14 3. The Use Of Alternative Fuels In The Cement Sector: Drivers And Global Practices 16 4. The Cement Sector In Senegal: Overview And Energy Demand Forecast 20 5. Technical Potential For The Use Of Alternative Fuels 22 5.1 Municipal Solid Waste 22 5.2 Agricultural Residue 28 5.3 Wastewater and Sewage Sludge 29 5.4 Waste Tires 30 5.5 Used Oils 30 5.6 Summary of Potential 31 6. Waste Management And Alternative Fuels: Policies, Practices And Barriers 32 7. Economic Potential For The Use Of Alternative Fuels 34 8. Summary And Conclusions 37 Annexes 38 List of Acronyms and Abbreviations AF Alternative fuels MRF Material recovery facility CO2 Carbon dioxide MSW Municipal solid waste C&D Construction and demolition OPEX Operational expenditure CAGR Compound annual growth rate ONAS Office national de l’assainissement CAPEX Capital expenditure du Sénégal (National sanitation bureau) EU European Union PET Polyethylene terephthalate EUR Euro PNGD Programme nationale de gestion des déchets (National program for FCFA West African CFA franc waste management) GDP Gross domestic product PP Polypropylene GJ Gigajoule PPP Private-public partnership GoS Government of Senegal PVC Polyvinyl chloride ha Hectare RDF Refuse-derived fuel HDPE High density polyethylene SSA Sub-Saharan Africa IDB Islamic Development Bank t Metric ton IFC International Finance Corporation TDF Tire-derived fuel l Liter US$ US dollar km Kilometer LDPE Low density polyethylene UCG Unite de coordination de gestion des déchets (solid waste management LHV Lower heating value coordination unit) m2 Square meter WWTP Wastewater treatment plant m3 Cubic meter Acknowledgments This report was produced as part of a broader assessment to promote the use of alternative fuels in the cement sector in Sub-Saharan Africa conducted in four countries: Ethiopia, Kenya, Nigeria and Senegal. The assessment was managed by Alexander Larionov and Sinem Demir (IFC). IFC commissioned Exergia S.A. to support the collection of information and analysis, and in particular its key experts, Kostas Batos, Konstantinos Georgakopoulos and Chris Theophilou. The team would like to acknowledge the contribution from stakeholders, including Abdoulaye Bibi Baldé (Minister for the Environment and Sustainable Development), Souleymane Diallo (Cabinet Director, Ministry of the Environment and Sustainable Development), Mariline Diara (Director of Environment, Ministry of the Environment and Sustainable Development), Ibrahima Diagne (UCG), Pierre Bonnet (Sococim), Renaud Claie (Sococim), Moctar Diaw (Sococim), Serigne Leye Thioune (Technical Services Director, Municipality of Dakar), Alioune Badar Diop (General Manager, National Office of Sanitation), Mbaye Diagne (General Manager, Global Pneu Services), Seydou Diop (Technical Manager, Urbaine D’Entreprise), Ndongo Fall (Director, SITCOM) and Issa Seck (Director, IDEX). The assessment was supported by the Korea Green Growth Partnership. The team would like to thank Eun Joo A. Yi (Program Manager) for support and guidance. The team is grateful to World Bank Group colleagues for guidance and inputs to assessment, as well as feedback on the report. We would like to thank Daniel Shepherd, Etienne Kechichian, Philippa McLaren, Michel Folliet, James Michelsen, Farouk Banna, Henri Sfeir, Jonathan Wanjiru, Jeremy Levin, Luis Alberto Salomon, Alexander Sharabaroff, Denis Obarcanin and Yana Gorbatenko. Foreword Rapid urbanization in emerging markets has created new challenges for economic development and poverty reduction. The need for more buildings, transport and other infrastructure has boosted demand for construction materials and especially cement, making it the centerpiece of the urban development agenda. In Sub-Saharan Africa, consumption of cement is expected to continue to grow over the coming decade. To meet this demand, over a dozen new kilns were launched in Africa in recent years. At the same time, increasing output poses challenges for cement producers, who invest significantly in sourcing energy and fuel, primarily coal or natural gas. An alternative approach is to improve efficiency and implement new technologies – such as waste heat recovery and renewable energy – and utilize alternative fuels, which are already used by major players in the cement sector globally. In IFC, a member of the World Bank Group, we have an investment portfolio in cement and construction materials of over $4.2 billion, and vast global experience in developing innovative solutions and leveraging best practices. For instance, we identify waste heat recovery opportunities as well as international best practices in the use of alternative fuels at cement plants. In 2016, IFC launched an initiative to help increase the use of alternative fuels in the cement sector in Africa, with a focus on several countries, including Senegal. The area around the city of Dakar is one of the prominent cement production clusters in West Africa, but also a major urban area, generating up to one million metric tons of waste each year. The main waste disposal site in the area, Mbeubeuss, is reaching its full capacity. Diverting the waste from the landfill, including conversion into fuel for cement plants, could be a sustainable solution. This report summarizes the outcomes of the assessment of alternative fuel opportunities in the country, with a focus on sourcing energy from municipal, commercial and similar waste, tires, sewage sludge and agricultural residue. It outlines the total potential as well as possible project models, involving linkages between the cement and waste management sectors. IFC has also assessed market barriers and offered measures that aim to increase the uptake of the use of alternative fuels. We hope that this report will provide useful information to policymakers, cement producers, waste management companies, as well as investors and project developers to realize the untapped potential for the use of alternative fuels in the cement sector in Senegal. Milagros Rivas Saiz Global Head of Cross-Industry Advisory Executive Summary From August 2016 to April 2017, in collaboration with the Korea Green Growth Partnership, IFC conducted an assessment of opportunities to increase the use of alternative fuels (AF) in Sub-Saharan Africa (SSA). The assessment focused on countries with the highest demand for cement in the region: Kenya, Senegal, Nigeria and Ethiopia. The assessment identified cement production clusters with high potential for substituting conventional fuels (primarily coal and natural gas) by co-processing these with fuels derived from waste streams. The assessment quantified opportunities for fuel substitution based on AF availability and the economic potential for fuel substitution. It also identified barriers to fuel substitution and measures for addressing these barriers. The AF considered in the assessment included refuse-derived fuel (RDF) produced from municipal solid waste (MSW), agricultural residue, sewage sludge (produced from wastewater), used tires and tire-derived fuel (TDF), used oils, and other similar wastes, where applicable. In Senegal, the assessment focused on the Dakar area, where both cement production and technical sourcing potential for AF are concentrated. At 7.9 million GJ/year, the technical sourcing potential amounts to almost 50% of total energy demand. Some cement companies are already using agricultural waste. The assessment shows that, with the creation of an enabling environment for private sector participation, the cement sector can substitute at least 25-30% of its thermal energy demand with AF, saving up to 10%, approximately US$6-7 million/year, in total fuel costs. RDF and TDF show the greatest economic potential. Further expansion of the use of agricultural residue may be more challenging and costly, given the dispersion of agricultural production across the country. Sewage sludge is not currently produced at required volumes, and infrastructure for producing bulk volumes of dry sludge is only planned to be developed in 10-15 years. Investment in material recovery facilities (MRF) to process MSW and tires to produce RDF and TDF respectively, will therefore be required, along with modifications to cement kilns. Total investment required by cement producers is estimated to be up to US$25 million. This is based on approximately US$15 million in expenditure being required for kiln modifications (US$5 million for each of the three companies in the Dakar cluster) and a contribution of up to US$10 million towards MRF establishment (assuming that the cement sector contributes up to 50% of total required investment of US$20 million, in order to secure supply and control prices). This investment will pay back in 3-4 years, depending on the sourcing model and fuel mix chosen by each of the players. To support realization of this opportunity, cement producers need to secure AF supply at predictable prices that remain below the current price of coal (around US$100/t, or US$3.8/GJ in thermal equivalent). The establishment of an efficient waste management system is therefore critical, as proven by global experience. This is, however, hampered by the current poor state of basic waste collection and transport infrastructure, and a lack of incentives for private participation in waste management projects. Globally, while cement producers tend to co-invest in AF production facilities, they are typically reluctant to invest in or support basic waste management infrastructure – this is a non-core business that imposes additional risks on operations. While Senegal does have a waste management policy in place, the policy framework does not promote private sector participation by setting targets or offering incentives for diversion of waste from landfills. Also, while secondary regulations supporting private sector involvement, such as those related to payments and contracting, may be in place, they are often not enforced. 10 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL The waste management system in Senegal is currently in transition: a coordinating agency responsible for waste management policy (at a national level) and operational management of waste in the Dakar area has been set up. One of the agency’s priorities is the creation of a framework that fosters Private-Public Partnerships (PPPs) and private investment in the sector. Investment US$ million / The following measures, implemented as part of Senegal’s payback (years) integrated solid waste management system, would encourage the use of AF by securing long-term supply and 25 / 3-4 incentivizing investors to develop the required facilities: (1) Clear definition of waste ownership and 18.5 responsibilities for key waste streams, including treatment of waste tires as a stand-alone stream, separate from MSW, and enforcement of the 7.9 obligation to collect and treat end-of-life tires; (2) Establishment of a waste quantities measurement THERMAL ENERGY DEMAND AND and metering system at all stages of waste TECHNICAL AF POTENTIAL, handling, which would enable payments for Million GJ/year waste management services to be linked to the volumes of waste processed; and Figure 1. Summary of (3) Establishment of a transparent long-term alternative fuel opportunities contracting approach for waste management for the cement sector in services. Senegal, US$/GJ Implementation of Extended Producer Responsibility is also SOURCING COST essential. This is one of the key mechanisms for ensuring that the total cost of waste is covered by payments from 6 2,5 2,1 4 3,8 ‘polluters’, including indirectly through the cost of goods. 4 Implementation will contribute towards creating a favorable 2 environment for investors, including local and international 0 RDF TDF Agri Coal private sector waste management service providers, financial institutions and cement companies. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 11 1. Background and Objectives In the past decade, countries in Sub- National and local governments are faced with the challenge of creating Saharan Africa (SSA) have been going modern urban infrastructure that supports sustainable growth of cities by reducing their environmental footprints. In Nigeria, for example, the through economic and social changes total amount of MSW generated is expected to reach more than 100 that are reshaping development and million t/year by 2020, almost double the recorded volumes in 2010. growth patterns and creating new challenges and opportunities for various 69 86 102 100 stakeholders, including the private sector, governments, and society as a whole. 0 2010 2015 2020 Rapid urbanization has led to significant Figure 2. Municipal solid waste generation growth of industrial and household in Nigeria, million t/year1 consumption, which in turn has triggered rapid growth in waste volumes, 200 100 149 including municipal solid waste (MSW), 100 wastewater, hazardous and chemical 0 wastes, and industrial waste. 2015 2020E Figure 3. Expected demand for cement in Sub-Saharan Africa, million t/year1 Another urbanization trend is the rapid growth in demand for new residential and commercial property and, therefore, increased demand for construction materials, including cement. From 2015 to 2020, the demand for cement in SSA is expected to increase by almost 50%, calling for new cement kilns to be built. On average, since 2010, compound annual growth (CAGR) of cement consumption in the region has been approximately 7%, with certain countries, including Ethiopia, Nigeria, Kenya and Senegal, showing even higher growth rates. 20% 7% 10% 9% 8% 8% 10% 0% SSA Ethiopia Nigeria Senegal Kenya Figure 4. Cement consumption growth (2010-2015 CAGR)1 1 Source: CW Group, 2015, Cleaner Cement Sector Africa: Context Study. 12 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Production of clinker and cement is highly energy intensive; In response to these challenges, IFC conducted a thermal energy and fuel contributes up to 40% of total study to identify opportunities for and barriers production costs. Availability of primary fuel is often a major challenge in markets where demand for cement is growing rapidly, to the use of AF in the cement sector in SSA, as is the case in SSA. Typically, coal and natural gas is used as the focusing on the countries with significant demand primary fuel for cement kilns. Many countries rely on imports for cement, including Senegal.2 The study had the of these fuels; these are often associated with a high cost of following objectives: transportation, customs, duties and surcharges, currency exchange risks and insecurity of supply. Ethiopia, for example, imports (1) Assess technical and economic potential for fuel coal from South Africa; the prices have been volatile in recent substitution in key cement production cluster(s) in Senegal; years and have been subject to upward pressure due to growing transportation costs and surcharges at the port of Djibouti. (2) Assess the overall market environment and identify barriers for implementation of AF projects, including 200 120 130 130 160 policy, administrative, financial and technical aspects, and 150 propose solutions that would enable private sector players, 100 50 including cement companies, to invest in infrastructure to 0 increase fuel substitution rates and make sourcing of AF Jan 16 April 16 July 16 Oct 16 economically feasible, thereby reducing cement companies’ Figure 5. Coal price in Ethiopia, US$/t environmental footprints and contributing to sustainable development of the country.   Given this situation, most major cement producers are looking for cheaper reliable alternatives. In Ethiopia, agricultural residues are increasingly being used as fuel for cement kilns. In other countries, including Kenya and Senegal, there have also been some positive experiences in the use of alternative fuels (AF). At the same time, substitution rates typically do not exceed 15-20%, which is relatively low, based on best practices in the European Union (EU) or the United States (US). Some of the waste streams that can become sources of fuel, such as MSW, sewage sludge, waste tires, oils, and other commercial or industrial waste, seem to be underexploited when compared to global best practices. This may indicate that there are certain barriers that prevent cement companies and other stakeholders from implementing AF projects. 2 Other countries included in the assessment are Ethiopia, Kenya and Nigeria. These countries are covered in separate reports. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 13 2. Approach and Methodology The potential for fuel substitution by The assessment draws on studies, reports and other data available from market stakeholders and the World Bank, as well AF was informed by the following as interviews conducted with 15 stakeholders, including cement activities: producers, environmental and waste management authorities, (1) Assessment of technical potential for and private waste management operators. Data included in the assessment was collected up to 31 March 2017. sourcing AF based on quantities of waste available (generated and collected, or It is worth noting that the economic potential for the use of technically feasible to collect) in the key alternative fuels was assessed primarily from the standpoint of cement production clusters; the cement sector. The assessment identifies costs and benefits for the cement industry (as well as associated waste management (2) Analysis of waste management practices, players). For each specific project or opportunity, further regulatory framework, and other factors analysis should be performed to assess financial implications that would affect accessibility and the cost of for the public sector, including the impact of various incentives and support measures. Such further analysis may include a sourcing key AF streams, in order to identify comparison of costs and benefits of operating or upgrading a barriers to full utilization of AF potential, and disposal site, as opposed to supporting construction of material development of solutions; recovery/RDF production facilities, in order to justify specific incentive schemes. (3) Assessment of the cost of sourcing AF under different scenarios involving To assess the potential for AF projects, the assumptions on available infrastructure, following assumptions were made: secondary regulations, and stakeholder participation; and (1) Based on waste composition data, assumptions were made as (4) Preliminary assessment of economic to the physical properties of key waste streams, their calorific feasibility of AF projects, based on required value and amount of available fuel (such as RDF or TDF) – see capital expenditure (CAPEX) by cement Annex 1 for details; companies and cost differential between AF (2) It was assumed that certain modifications would be and traditional fuels. performed on the cement kilns in order to maximize fuel substitution rate and burn AF (as specified in Annex 1); (3) Key stages of waste conversion into fuel would include collection, transportation, processing and then delivery to the cement kiln. Detailed assumptions on each of the technical and economic parameters regarding processing facilities and logistics, based on available data and IFC’s experience in the sector, are available in Annexes 2-4; 14 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL (4) For the purpose of the assessment, the total sourcing cost waste management service fees and payments, as well as was estimated for each AF stream reviewed. Under the revenue from recyclables. Details on the cost structure and assumptions are provided in Annexes 2-4; and baseline scenario, the total sourcing cost includes a sum of the costs incurred at all stages of waste-to-fuel conversion (5) For certain types of waste, some of the sourcing cost components were excluded for the purpose of the listed under item (3) above. The cost includes fixed and assessment. For the assessment of MSW/RDF costs, two variable operating expenditure (OPEX) as well as CAPEX scenarios have been considered, as indicated in Table 1 depreciation over the period of the economic life of the below, to reflect various possible scenarios of the market facilities and infrastructure (excluding pre-existing facilities). environment, capacity of sector players and regulatory Where appropriate, the cost of sourcing is adjusted for barriers, based on the data in Annexes 2 and 3. Table 1. Sourcing scenarios for municipal solid waste / refuse-derived fuel Cost Item Option 1 Option 2 Cost of primary collection and Excluded Included (with the exception of the cost transportation of MSW currently covered by waste management fees and addition of the depreciation of CAPEX required to maintain infrastructure) Cost of MSW processing at a Included (proportional to the volume of Included (full) comprehensive MRF waste converted into RDF) Cost of RDF delivery to the cement Included Included plant Cement sector participation in MRF 50% + adjustment of the sourcing cost 50% CAPEX for the revenue from recyclables USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 15 3. The Use of Alternative Fuels in the Cement Sector: Drivers and Global Practices Cement production is highly energy intensive – energy costs make up approximately 60% of total production costs. Thermal energy costs, in particular, are significant, representing 40% of production costs.3 Thermal energy needs vary from 3.2 to 4.2 GJ/t of clinker produced, depending on the process used.4 Dry process systems are the most efficient, using less than 3.8GJ/t.5 Modern cement plants tend to use from 3.3 to 3.5 GJ/t of clinker produced. The cement industry is therefore focusing on reducing thermal fuel costs by substituting conventional thermal fuels with lower cost AF arising from waste streams. Key waste streams that can be used as AF are plastic, biomass, tires, and solid industrial and household waste. These streams make up approximately 60% of AF used by major global cement producers. Photo: Alex Baluyut / World Bank OVERALL* BY CEMENT PRODUCER 100% 0% 20% 40% 60% 80% 100% 14% Lafarge group Plastic 6% Wood chip and other 8% biomass 9% Heidelberg group Tires Industrial and household 13% waste (solid) Holcim group 15% Waste oil Industrial waste and Italcementi group other fossil-based fuel 16% Agricultural waste 17% Cemex group Other AF *Overall proportions are estimated based on relative production of cement and clinker of producers Figure 6. waste used as af by selected major cement producers6 3 Electricity needs vary from 90 to 120kWh/t of cement produced. 4 Wet processes involve grinding raw materials in water to form a slurry, which is fed either directly into the kiln or to a slurry drier. Semi-wet processes involve dewatering raw slurry in filter presses; the filter cake is pelletized and fed to either a grate preheater or a filter cake drier. Semi-dry processes involve pelletizing raw material with water and feeding the mix into a grate preheater or to a long kiln. Dry processes involve grinding and drying raw materials to form a flowable powder, which is fed into the preheater or precalciner. 5 Source: http://hub.globalccsinstitute.com/publications/co2-capture-cement-industry/24-cement-plant-descriptions 6 Sources: Rahman, Rasul, Khan and Sharma, 2014, Recent development on the uses of alternative fuels in cement manufacturing process; Holcim, Annual Report 2011 Holcim Ltd, 2012; Securities and Exchange Commission, Italcementi Group, Annual report, 2015; Heidelberg Cement, Annual Report 2015; GBL Annual Report 2013. 16 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Globally, most large producers’ plants have achieved a substitution rate of 10-30%, with some plants reaching 100% substitution.7 European countries have advanced significantly, averaging 18% and reaching as high as 85% substitution. selected geographies* selected european countries (2011) 0% 50% 100% 0% 50% 100% EU (2012) Netherlands Belgium Japan (2012) Germany* Canada (2008) Sweden Poland USA (2004) Switzerland** Australia (2013) Spain * Data is for 2010 ** Includes only Holcim, data is for 2012 Figure 7. AF substitutION rates in selected regions and countries8 Poland’s fuel substitution rate has grown rapidly, from a negligible contribution in 1998 to over 60% in 2016. Some plants have achieved a rate of 85%. AF co-processing capacity, primarily for RDF, of 1.5 million t/year has been installed; this capacity is expected to grow to approximately 2 million t/year.9 7 Source: Wurs and Prey, Alternative fuels in the cement industry, University of Vienna, http://www.coprocem.org/documents/alternative-fuels-in-cement-industry.pdf 8 Source: Rahman, Rasul, Khan and Sharma, 2014, Recent development on the uses of alternative fuels in cement manufacturing process. 9 This capacity draws on municipal waste production of 15-20 million t/y. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 17 Factors contributing to Poland’s rapid AF substitution growth Poland’s strong growth in AF substitution, to over 60% in 2016, was supported by a range of factors, as set out below. Successive increases in landfill tax: - Adoption of a tax in 1998 prompted greater interest in AF (previously substitution had focused on hazardous wastes, which were forbidden to be disposed of at landfill sites); - Landfill taxes were extended to municipal wastes in 2001; and - The tax was increased significantly in 2008 from 4 EUR/t to approximately 17 EUR/t, with a 100% increase to be implemented between 2008 and 2018. Expanded supply of RDF due to overproduction in Germany following a ban on disposing of recyclable and organic waste at landfill sites in 2005; this drove the substitution rate in Poland to 20%. Clear responsibilities for waste collection by landfill operators and municipal waste management by municipalities, supported by adoption of relevant EU Directives (Waste Management, Waste Incineration, and Landfill Directives). Allocation of legal responsibility to manage used tires to tire manufacturers under the Extended Producers’ Responsibility principle – in response, tire manufacturers created a shared company to subsidize and organize tire collection and management. Investment in RDF handling facilities by all cement companies at their plants – Polish cement companies were willing to duplicate the AF experience of international cement groups, in order to reduce operating costs. Investment in shredding lines for RDF preparation by the waste management sector (typically local entrepreneurs supported by international companies or investment funds), supported by: - High potential demand for RDF from the cement sector, at up to 1 million t/year in source MSW volume equivalent; - Mid- to long-term contracts with the cement industry; - Subsidies provided by EU and local government funds (partly through an allocation of the landfill tax); and - Shared investment by both cement plants and RDF preparation plants in some cases. 18 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL AF substitution rates have also been increasing in other regions, Producer Responsibility, which engages producers of goods including emerging markets. In Egypt, Italcementi’s Katameya such as electronics, cars and car parts, and packaging in the plant has reached 8.3% substitution in two years, saving sector, and incentivizes them to invest in basic waste collection 115,000 t of CO2. Fossil fuels were replaced with biomass and transportation infrastructure, as well as waste recycling (such as chopped wood and cotton stalks) and high-quality and waste-to-energy projects. Globally, these are the types of RDF produced by a waste pre-treatment facility using material mechanisms that engage private investors and project developers diverted from landfills.10 In Mexico, CEMEX’s Tepeaca plant in this sector, while cement companies act as long-term off-takers uses 800 t of commercial and industrial residues per day supplied of fuel and may be reluctant to invest in basic infrastructure, as by Mexico City’s waste management facilities. In 2016, CEMEX this is outside their scope of business. There are, however, cases was planning to invest in RDF facilities to increase capacity to where cement companies co-invest specifically in the production 1,600 t per day.11 of fuels (such as RDF and TDF), on a standalone basis or as part of a comprehensive material recovery facility (MRF). This allows An important lesson from global best practices for the use of AF is that fuel substitution is driven not only by fuel prices cement companies to secure long-term supply of fuel as well as and access to fuel for cement kilns, but also to a great extent obtain more control of the prices and the value chain. by the waste management sector which is the main source of Therefore, the development of integrated solid waste AF. In many markets, strong incentives exist to divert waste from disposal sites and maximize recovery, including as energy management systems in African cities would be the major factor and fuels. Those incentives include different types of fees fostering the use of AF. However, experience from emerging and surcharges (such as gate fees) applied to various forms markets also shows that, in the medium term, it may be possible of waste and wastewater treatment. Furthermore, in certain to create a market environment and structure projects specifically cases, there is a complete ban on disposing of certain types of in the AF space with more proactive participation of the cement waste. Strengthening of the waste management sector is often sector. Such scenarios and opportunities are explored in the accompanied by implementing mechanisms such as Extended remainder of this report. 10 Source: Italcementi Annual Report 2015. 11 Source: CEMEX, 2015 Sustainable Development Report. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 19 4. The Cement Sector in Senegal: Overview and Energy Demand Forecast Senegal’s cement industry utilizes The Senegalese cement industry serves the third largest cement market approximately 18.5 million GJ/year in in Sub-Saharan West Africa – Senegal utilized 3.1 million t in 2015, compared to 23.2 million t in Nigeria and 5.5 million t in Ghana.12 thermal energy, served predominantly It is not known whether there are plans for major expansions or by coal. The price of coal is stable installations of new kilns before 2020. at US$100/t (or US$3.8/GJ thermal equivalent). Cement production is Senegal’s cement sector is dominated by three major regional players: Dangote, Sococim (Vicat Group) and Ciments du Sahel. At 100% capacity, dominated by three major players the total clinker output is estimated at 5.1 million t/year and the thermal (Sococim, Dangote and Ciments du energy demand is therefore estimated at 18.5 million GJ/year.13 Sahel) and is concentrated within a 50 km radius of Dakar. (Million Ton) Production Imports Apparent consumption Exports CAGR 4.0% CAGR 4.5% 2.5 2.6 2.7 2.9 3.0 3.1 3.2 3.4 3.5 3.7 3.8 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E Figure 8. CEMENT PRODUCTION AND CONSUMPTION IN SENEGAL14 12 Source: CW Group, 2015, Cleaner Cement Sector Africa: Context Study. 13 Source: Dangote Cement, Annual Report 2015. 14 Source: CW Group, 2015, Cleaner Cement Sector Africa: Context Study. 20 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Cement plant locations and production technology Plant capacity and thermal energy demand Cement capacity Clinker capacity Thermal energy (million t/year): (million t/year): demand (million Dangote Cement 7.5 5.1 GJ/year): 18.5 • Pout (41 km from Dakar) 100% • Integrated dry, new 1.5 1.2 4.5 DAKAR Sococim (Vicat) Dangote Cement • Rufisque (26 km from Dakar) 1.8 • Intergrated dry, new, with 3.5 6.4 Sococim 4-stage cyclone 50% Ciments du Sahel Ciments du Sahel • Kirene (47 km from Dakar) 2.1 7.7 • Integrated dry, new, with 2.5 preheated and precalciner SENEGAL 0% Figure 9. CEMENT PLANT LOCATIONS, CAPACITY AND ENERGY DEMAND15 The cement industry has good technical potential for AF The three cement companies in Senegal already use peanut shells substitution. The cement plants are concentrated around Dakar, from processing facilities as AF; however, the use of tires, waste oils in close proximity to the major metropolitan area, which is where and other industrial wastes is limited and MSW/RDF is not used at all. waste generation is concentrated. Furthermore, the cement plants use dry process, cyclone preheater technology and are currently In an effort to lower the cost of sourcing thermal energy, cement capable of achieving a substitution rate of 20-25% (with a plants are undertaking some initiatives to co-process AF with maximum theoretical replacement of 30%); this could be increased conventional fuels. At certain kilns, the fuel substitution rate to 50% with installation of appropriate AF equipment.16 reaches up to 25%, due to the use of biomass residues, used oils and tires.17 The major source of AF is peanut shells, making up Currently, however, the cement industry uses predominantly coal to 68% of the total AF volume. While husks are sourced from for its thermal energy needs. Most of the coal is imported from agricultural enterprises located up to 400 km away from the Southern Africa (including South Africa and Mozambique). The Dakar area, transport costs are kept low, as the cement trucks are resulting cost at the plant is US$100/t, which translates into also used to deliver the peanut shells. A detailed analysis of the AF US$3.8/GJ of thermal equivalent. According to cement companies, sourcing potential is provided in the next section. the price has been stable over the past few years and there have not been any major fluctuations. 15 Sources: CW Group, 2015, Cleaner Cement Sector Africa: Context Study; Interviews with sector players, 2016. 16 AF substitution potential depends on a range of factors, including waste availability, sourcing cost, and distance from the cement plants; each case must be assessed separately (see Section 2 of the report and Annexes 2-4). 17 Interview with the cement sector players, 2016. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 21 5. Technical Potential for the Use of Alternative Fuels RDF from MSW, agricultural residue and 5.1 Municipal solid waste waste tires available in the Dakar area The generation of municipal solid waste has been growing steadily. As in show the highest technical potential many countries in Africa, however, estimating quantities of available waste for sourcing as AF, at 7.9 million/GJ in is challenging due to the absence of reliable statistics and sub-optimal collection rates, especially outside major cities and in rural areas. thermal energy. This amounts to almost half of cement companies’ forecasted Across Senegal, MSW generation is estimated at 2.8 million t/year, based thermal energy demand. on a rate of 0.52 kg/capita/day.18 At the same time, urban population is growing rapidly and, by 2020, the total quantity of waste (measured at collection) could reach or exceed 3 million t/year. Waste volumes vary from state to state – states with a more urban character generate more waste than those with a rural character. Dakar, the major metropolitan area, accounts for approximately one-third of that amount at 0.8-0.9 million t/year with a 60-70% collection rate, according to the local waste management agency.19 When calculated on the basis of population and average generation, this figure is much lower, at around 500,000 t/year. This discrepancy highlights the difficulty of assessing MSW volumes in locations with high population growth and with a significant influx of daily workers. It also underlines the need for more precise measurement of waste quantities. MSW in Senegal (2020): 3+ million t MSW trends in Senegal, million t/year 3,5 Dakar 4 3,0 area 2,275 31% 2 1,1 0,7 0,9 0 Rest of 2015 2015 (collected) 2020 (forecast) Senegal 69% Total Dakar area Figure 10. FORECAST OF AVAILABLE MUNICIPAL SOLID WASTE 18 Source: World Bank, 2012, What a Waste, A Global Review of Solid Waste Management. 19 Interview with UCG. 22 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Photo: © Aisha Faquir / World Bank MSW is composed primarily of organic waste. Composition For the purpose of the assessment, it is assumed that the total varies broadly across locations. In Thiès, for example, MSW is amount of municipal and similar solid waste available in the reported to contain approximately 11% organic matter and at Dakar area by 2020 at the current rate of collection will be up least 9% plastics. 20 to 900,000 t/year. Based on the assumed waste composition, this translates into the potential for generating up to 350,000 t/year of RDF and 5.5 million GJ/year of thermal energy, which is up to 30% of the total forecasted thermal energy demand in the cement Other sector. Further assessment focuses on the Dakar area as the 39% Organic 10% largest cement production cluster, which also corresponds with the largest potential source of AF. Glass 1% Metals 3% Paper Plastic 10% 3% Figure 11. Senegal’s municipal solid waste composition (Dakar area)21 20 Interview with UCG. 21 Source: World Bank, 2012, What a Waste, A Global Review of Solid Waste Management. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 23 Accessibility of MSW is affected by the management of waste streams, from collection to disposal. Many areas in Senegal are either under-served or not served at all by waste management systems. Collection systems may not exist in some towns; where collection systems do exist, collected waste tends to be dumped in an uncontrolled manner along roads, in drain systems, or on the outskirts of settlements. Many settlements lack engineered landfills, and mixed streams of municipal, commercial and industrial waste are disposed of at informal dumpsites. This situation is exacerbated by inadequate policies, financial and operational constraints, and lack of awareness amongst citizens of good waste management practices.22 Legend Cement Industries Ciments du Sahel Dangote Cement Sococim (Vicat) Municipal waste generation 2015 DAKAR (tons/year) < 50,000 50,000 - 100,000 100,000 - 200,000 200,000 - 500,000 500,000 - 600,000 Senegal Administrative Setting Agence Nationale de la Statistique et de la Démographie Sénégal Figure 12. Municipal solid waste generation in major cities in Senegal23, 24, 25 22 Source: 2011, Regional evaluation of the SWM situation in target countries (report as part of the project “Integrated Waste Management in Western Africa”). 23 Source: http://www.citypopulation.de/Senegal.html 24 Source: 2014, Study on the characterization of waste in Senegal (provided by UCG). 25 In the absence of official data, waste quantities were estimated on the basis of population, using the most recent census (2013) and estimated population growth rates for each administrative region. 24 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Formal collection services are generally better developed in The use of waste transfer stations is not common practice in larger cities. Collection rates are estimated at approximately Senegal. Waste is most commonly transferred by collectors 50% in most cities and at least 60% in Dakar and Thiès. 26 directly to waste disposal sites. In Dakar, push-cart operators In Dakar, Unite de Coordination de Gestion des Déchets are reported to transfer collected waste to intermediate (UCG) is the government agency responsible for waste containers prior to final transfer to dumpsites. management operations, including MSW collection. It Most waste management actors report a lack of formal MSW procures services from 22 private contractors, which deploy sorting or treatment infrastructure. Limited MSW sorting 250 trucks and 350 push-carts, covering approximately is, however, conducted by private firms and the informal 1,400 km. These contractors are responsible for transferring sector. For example, IDEX, a private firm, was previously waste to dumpsites. In other cities and towns, waste involved in waste collection and is currently active in collection is managed by the municipalities, using either recycling paper, plastics, aluminum cans and wood residues municipal agencies or private contractors. Waste is collected (to produce briquettes). IDEX receives waste from collectors door-to-door by trucks, or, in areas that are inaccessible to or dumpsites, and sells recyclables either domestically to local trucks, by push-carts. It is not uncommon to see informal entrepreneurs or to other countries (including Tunisia and waste collectors using vehicles such as push-carts for door-to- China). Sorting by the informal sector ranges from sorting of door collection services in some cities. waste collected from households to salvaging materials such Collection Transfer Sorting and Disposal treatment • Municipalities Actors • Solid Waste Management Coordination Unit (UCG) in Dakar • Private firms (including contractors) • Informal sector • Collection by trucks and • Direct transfer to • Recovery of recyclables • Direct disposal at the Process informal vehicles disposal sites, except in • Limited treatment - two dumpsite Dakar where HDPE recovery units intermediate containers are used Figure 13. Municipal solid waste management in Senegal 26 Interview with a waste collection company, 2016. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 25 as plastics, paper, electric and electronic waste, glass and metals from landfill The cost of waste collection is sites. Although there are no statistics on waste quantities that are segregated, it partly covered by the waste tax is estimated that in Dakar approximately 1,500 t (mostly plastics) are recovered (established at state level but collected per month. by municipalities). The waste tax is reported to cover only 15% Some limited pre-treatment of plastics is conducted by two units at Thiès of collection costs, with the rest (PROPLAST) and Kaolack. These two units specialize in the recovery, milling subsidized by the state budget.29 and granulation of High Density Polyethylene (HDPE), which is then sold for No gate fee is applied for waste transformation. They are estimated to have a combined processing capacity of disposal. The management cost of up to 20 t/year of HDPE.27 Small-scale composting of the organic fraction of Mbeubeuss, estimated at 40 million waste is being initiated as part of the National Strategy for Waste Management. FCFA/month (or US$70,000),30 is Pilot projects are planned in Joal and Podor, with capacity of 10 t/year of waste. covered by the municipal budget. In the absence of a functioning Waste disposal is characterized by uncontrolled disposal of mixed waste to environmental monitoring and law numerous unofficial dumpsites. In Dakar, Mbeubeuss is the largest dumpsite, enforcement framework, the application covering approximately 100 ha. All three cement plants in the Dakar area are of a gate fee would constitute an located within 50 km of Mbeubeuss dumpsite. Mbeubeuss was established in environmental and health risk as it 1968 and receives mixed waste streams from the broader Dakar area. The site would increase illegal waste dumping. poses serious environmental and sanitary problems due to a lack of appropriate infrastructure (i.e. leachate and biogas collection), the waste types and quantities received, and the site’s close proximity to residential areas. Plans for a new landfill site in Sindia were proposed over a decade ago. These were, however, suspended due to unfavorable local reactions. Besides Mbeubeuss, a number of other dumpsites serve Dakar: surveys conducted from 2004 to 2005 identified more than 425 small unofficial dumpsites, sized from 5 m2 to 15 m2.28 27 Source: World Bank, 2016, Gestion des Déchets Solides Municipaux au Sénégal. 28 Source: Amadou Bélal Diawara, 2010, Les déchets solides à Dakar – Environnement, sociétés et gestion urbaine, Thèse de doctorat, Université Bordeaux III Michel de Montaigne. 29 Interview with the Municipality of Dakar, 2016. 30 Interview with UCG, 2016. 26 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL While there is some private sector participation in the sector, this as compared to the estimated cost of 9,000 FCFA/t or US$15/t remains limited. A key challenge is financing of initiatives. Private of waste collected and delivered to landfill) and have been the cause actors are awarded contracts of a limited duration (in general of disputes. This issue is a significant barrier to further development contracts of only one year are given), and contracts may be silently of waste recovery practices that limits private sector waste extended after expiration. The services are generally underpaid operators’ and cement companies’ engagement in AF projects – (7,500 FCFA/t or US$12/t on average as reported by service providers, it will be explored further in the next section. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 27 Photo: Daniella Van Leggelo-Padilla / World Bank 5.2 AGRICULTURAL RESIDUE Rice production, primarily in the Senegal River valley, is approximately 215,000 t/year. Approximately 30% of production The agricultural sector is essential for Senegal’s economy – it is machined in large rice mills, representing a potential represents 17% of Gross Domestic Product (GDP) and employs 13,000 t/year of recoverable rice husks.35 The remaining approximately 75% of the workforce. The theoretical energy 70% is consumed by the producers or machined by small hulling potential from exploitation of only rice, maize and coconut companies. Rice husks are not currently exploited as an AF. residues has been calculated at over 10 million GJ.31 Agricultural production, however, is spread across the country (in particular Millet, sorghum and maize production, covering an area of as production is primarily rain-fed and based on small farms). approximately 1.1 million ha, represents an average potential of Therefore, while large quantities of agricultural residues are 4.5 million t/year of dry biomass.36 The residues of these crops available, the use of residue as AF is constrained by transport remain in the field after harvest, where they are used for animal costs. Approximately 50% of residues is burned or otherwise feed. Their availability is, however, highly dependent on crop exploited on site. Significant potential may exist for onsite energy seasonality and collection and transport conditions. production of agricultural biomass (largely crop residues). In total, up to 5.2 million t/year of dry agricultural biomass may Peanuts, cotton, gum arabic and sugarcane are the primary cash be available for sourcing, much of it within the 100 km radius crops and millet, maize, sorghum and rice are the main food crops. from the Dakar area. However, interviews with stakeholders Peanut production is approximately 700,000 t/year,32 covering indicate that some of the cheaper sourcing options (such as 40% of cultivated land or 770,000 ha.33 Both of Senegal’s large peanut shells from processing plants) appear to be heavily utilized oil mills use peanut shells for energy, which would represent already. Further sourcing may require additional investment strong competition to increased use by the cement sector. in transportation and processing infrastructure and therefore SUNEOR (ex SONACOS) purchases 400,000 t/year of peanuts increased cost. Currently, cement players arrange for bulk and uses the shells as fuel in boilers. NOVASEN purchases 40,000 collection and deliveries from the designated collection points t/year and uses the resulting 20,000 t/year of shells to produce along the main cement transportation routes, as agreed with domestic fuel as a charcoal substitute, following the establishment agricultural companies. Assuming this sourcing model applies to in 2005 of a joint venture with CARBO (CARBOSEN).34 Small other agricultural residues, it can be estimated that around 10% hulling companies process the remaining peanuts. of all biomass could be technically available for cement plants, translating into 3-4 million GJ/year thermal energy. 31 Source: A macro analysis of crop residue and animal wastes as a potential energy source in Africa, Cooper C.J., Laing C.A., Journal of Energy in Southern Africa, 2007. 32 Peanut exports, once the economic engine of Senegal, dropped from 80% of total exports in the 1960s to 12%, in part because of competition with other oils, reduced yields and increased foreign trade barriers. 33 Source: http://www.new-ag.info/en/country/profile.php?a=530 34, 35, 36 Source: Ministry of Energy and Biofuels (2010 data). 28 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Photo: Matluba Mukhamedova / World Bank 5.3 Wastewater and sewage sludge Senegal’s sewerage system covers parts of major municipalities, such as Dakar. Dakar’s sewerage system covers up to 25% of wastewater, while septic tanks increase coverage to 70-80%. Most of the wastewater is discharged into the environment with limited processing or treatment. However, the government is actively developing wastewater treatment infrastructure, including sludge production facilities (although infrastructure for processing significant volumes is likely to be developed over 10-15 years). Senegal has nine wastewater treatment plants (WWTP): four are located in Dakar (Cambérène, Niayes of Pikine, SHS Guédiawaye and Rufisque) and five are located in cities in the regions of Thiès, Saly, Louga, St Louis and Kaolack. During 2010, these plants received 14,743,000 m3 of wastewater, of which 76% was treated. Of the treated wastewater, 3% was reused. In smaller cities, individual septic tanks are commonly used for wastewater treatment. The Government of Senegal (GoS), with support from the World Bank, developed three pilot stations for sludge production. These stations are located in Cambérène, in the Niayes area and Rufisque. Table 2. Capacity and technology of wastewater treatment plants in Senegal37, 38 Plant Technology Capacity (m3/day) Cambérène Activated sludge 19,200 Rufisque Impoundment 2,856 Saly Impoundment 1,020 Niayes Activated sludge 875 Kaolack Impoundment 600 Louga Aerated lagoon 600 Saint-Louis Impoundment 600 SHS Activated sludge 595 Thiès Activated sludge and impoundment 300 37 Source: National Sanitation Office of Senegal, ONAS, 2013. 38 ibid. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 29 Sludge production in the Dakar region was estimated to be more 5.4 Waste tires than 170,000 m in 2005. Cambérène, located in Dakar, is the 3 Although there are no reliable country-wide statistics or formal largest plant, with an average of 3,300 t/year of sludge extracted.39 collection systems, 100,000 t/year of waste tires is estimated to The plant was expanded in 2007, to serve a 200,000 population be available in the Dakar area.41 Waste tires are most commonly equivalent with a daily flow of 19,200 m3/day. A project was available in urban areas, and are collected and disposed of at initiated in 2016, with funding from the Islamic Development Bank dumpsites together with MSW. A small proportion is collected (IDB), to increase Cambérène’s capacity to 91,000 m3/day and by the informal sector and recycled for other uses (e.g. shoes) or cover three of the four sanitation zones of Dakar (it covered only burned to recover the wires. one zone in 2016). Rufisque is the second largest treatment plant in Dakar. It uses the lagoon technique and has a capacity of 45,400 Some of the private companies engaged in the tire import and population equivalent and an average daily flow of 2,856 m3/day distribution business are initiating a project to manage waste (in 2010). Sludge is also extracted from domestic septic tanks and tires, beginning with their own substantial stock. Plans include transported by truck to the existing stations of Dakar (or disposed supporting reuse, recycling (i.e. production of granules that can of locally in open pit areas). be used in tar) or shredding for co-processing at cement plants. Estimates suggest that this would use up to 30-40% of waste Dakar area tires, in which case up to 2.4 million GJ/year of thermal energy 120 000 potential could be available in the form of TDF. 100 000 5.5 Used oils 80 000 60 000 Although there are no formal statistics, it is estimated that 40 000 20,000-24,000 t/year of used oils are available.42 There is no 20 000 formal collection system for waste oil. Used oil is disposed of in - canals or collected by the informal sector during replacement WWTP capacity WWTP capacity Dry sludge output Dry sludge output (2015) (2025) (2015) (2025) of engine oil of vehicles and other machinery, and forwarded to regeneration facilities.43 Presently, accessibility and potential for Figure 14. Wastewater treatment and sludge use as AF of used oils is not considered to be substantial on a production in the Dakar area – current and expected national scale, though it may be possible to incorporate them as capacity and output by 2025, m3/day part of AF streams for specific projects. As shown above, the total amount of sludge that is expected to be available in the Dakar area in the medium term (3-5 years), does not demonstrate significant potential for use as AF. If the World Bank-supported initiatives are successful, however, the rate of conversion of wastewater treatment into sludge could be boosted to 60%. Sewage sludge is reported, however, to be exploited locally for biogas generation or as soil fertilizer; its relevance as an AF is therefore further limited.40 39 Source: http://www.iwawaterwiki.org/xwiki/bin/view/Articles/Senegal#HOverviewofHomeSanitation 40 Interview with ONAS, 2016. 41 Interview with a tire supply company 2016. 42 Interview with a cement company, 2016. 43 Interview with the Municipality of Dakar, 2016. 30 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Thermal energy 18,5 20 15 10 5,5 4 5 2,4 0 RDF Agri TDF Coal (demand) Figure 15. Technical potential for sourcing alternative fuels – summary for Senegal, MILLION GJ/YEAR 5.6 Summary of potential The assessment suggests that major technical opportunities for the use of AF may be associated with MSW in the Dakar area, which has significant thermal energy potential, amounting to almost 30% of the forecasted thermal energy demand in the cement sector. Agricultural residue, already being exploited by some major players, represents further potential. However, there are competing alternative uses which may represent sourcing risks. Tires and TDF may also represent significant potential, once collection systems have been put in place and/or upgraded (see Sections 6 and 7). The market environment, regulatory framework and barriers that prevent the full utilization of this potential, especially for RDF and agricultural residue, as well as the cost of sourcing these fuels under different scenarios, are explored further in Sections 6 and 7 of this report. Waste tires are most commonly available in urban areas, and are collected and disposed of at dumpsites together with MSW. A small proportion is collected by the informal sector and recycled for other uses (e.g. shoes) or burned to recover the wires. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 31 6. Waste Management and Alternative Fuels: Policies, Practices and Barriers Senegal’s environmental protection The GoS introduced waste management policies in 1972, at which point and waste management framework it established a fee for waste collection. In 1974, the GoS issued Decree 74-338 defining and regulating waste management practices (including is in transition towards an integrated landfilling and waste treatment). The Constitution of Senegal, adopted in waste management system that January 2001, reinforced waste management policy and regulations by prioritizes diversion of waste from introducing the concept of sustainable development. Article 8 stipulates disposal. A dedicated coordination that “every man is entitled to a healthy environment”. agency has been created to support In 2001, the Code of Environment entered into force as the principal sector reform, enforce existing policies legal instrument governing waste management. The Code, along with and deal with operational issues of waste associated decrees and orders, covers areas such as pollution of air, water management in the Dakar area. A number and land, environmental impact assessments, and domestic, industrial, of major infrastructure projects and chemical waste management. It specifies that: are being planned or implemented to Waste must be disposed of or recycled in an environmentally mitigate the environmental impact of sound manner, in order to remove or reduce its harmful effects on waste. According to a plan developed by human health or natural resources, fauna and flora (Article 30); Office National de l’Assainissement du Waste generators must ensure elimination, recycling or proper Sénégal (ONAS), however, it will take up disposal of waste by companies approved by the Minister of to 10-15 years for new WWTPs to run at Environment and Sustainable Development. The local authorities may sign contracts with waste generators for proper disposal or full capacity. A number of important recycling, and recycling must always be based on the standards in steps promoting waste recovery need force in Senegal (Article 31); to be taken to utilize the AF potential Municipalities should ensure the elimination of waste from fully, including establishing systems for households, in collaboration with national and regional services transparent long-term contracting, of the State, in accordance with the regulations in force (Article waste quantity measurement, and 32); and linking payments to volumes. Elimination of waste includes collection, transport, storage and processing necessary for the recovery of valuable materials or energy, or disposal at appropriate places (Article 33). 32 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL The Ministry of Planning and Local Governance has established One of the major challenges is the lack of a link between the Solid Waste Management Coordination Unit (UCG) to payments within the waste management system and waste coordinate waste management reform at a national level and volumes. A further challenge is the absence of a payment link conduct waste management operations in the Dakar area. UCG between polluters (residential, commercial and industrial) and has been given the following responsibilities: waste management service providers. This is best demonstrated by the indication, provided in the previous section, that payments Development of a national strategy for sustainable and for MSW collection cover around only 60% of the total estimated integrated waste management. cost of collection and transportation of the waste-to-landfill Support for and capacity development of local authorities sites. The government charges environmental tax that partially in sustainable waste management. fills the gap, but available information suggests that some of the contractors may significantly underinvest in their infrastructure Implementation of waste management programs, including and capacity (e.g. truck purchases, maintenance and staff waste recovery and treatment. training). Full implementation of the ‘polluter pays’ principle and In addition, UCG is responsible for coordination of the national other mechanisms such as Extended Producer Responsibility will program for waste management (PNGD), which is supported by result in the sector becoming more attractive for private players, the GoS and the IDB. The program focuses on Dakar, Kaolack, including cement companies. Tivaouane and Touba, and comprises five components: (i) reform In addition, despite the proactive efforts of the UCG, the long- of the laws and regulations of the sector; (ii) implementation of term contracting framework for waste management services has programs and establishment of infrastructure for the management still not been established. The UCG-coordinated framework of solid waste in the Dakar area; (iii) technical and financial support to local communities; (iv) communication and capacity exists in parallel with legacy contracts, creating disincentives building; and (v) coordination and follow-up evaluation of the for existing private players in the market and discouraging new program. The program is expected to result in a new integrated players from entering the market. In terms of deal structures, solid waste management framework, which will prioritize waste PPP solutions may be a possible way to implement projects in recovery, and set recovery targets, including for waste-to-energy the MSW space, including the establishment of RDF production and fuel, and promote incentives for diverting waste from landfills. facilities. While a general PPP framework exists in Senegal, there is a lack of specific experience in the waste management sector. Recent developments in waste management prove that the GoS is The joint efforts of the GoS and the World Bank may help build prioritizing the sustainable treatment of waste and wastewater. The capacity of stakeholders in this area. GoS is making significant efforts to develop waste management infrastructure that will support the realization of the technical The barriers that persist apply to all potential waste recovery potential of RDF. At the same time, analysis suggests that, at the projects. The impact of some of these barriers on the cost of operational level, there are still challenges that limit the use of AF sourcing key types of AF and economic feasibility of AF projects (along with other solutions for the recovery of waste). is explored in the following section. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 33 7. Economic Potential for the use of Alternative Fuels Comparative assessment demonstrates To utilize viable AF fully, cement players in the Dakar area will need to that, if barriers for access to finance for make modifications to their kilns to allow at least 25-30% substitution by RDF and TDF. Based on experience, IFC estimates that such basic waste collection and treatment modifications would require all three major players in the Dakar area infrastructure are removed and incentives to invest US$5 million each, amounting to US$15 million. A detailed for private sector players are created, breakdown of required upgrades is provided in Annex 1. the cost of sourcing of certain AF, such Special infrastructure for producing RDF and TDF needs to be as RDF and TDF, at US$2.1-2.5/GJ, can be developed. As indicated in Section 3, the global experience provides 35-50% lower than that of coal. Full successful examples of integrating RDF/TDF production infrastructure utilization of economically viable AF in solid waste management frameworks that prioritize material recovery would offset 25-30% of thermal energy as a waste treatment method. Using this approach would require putting and reduce total fuel costs by up to in place comprehensive MRFs that allow for separation of recyclables and compostable organic fractions and produce RDF from reject 10% across the sector. Total investment fraction. Building such facilities in the Dakar area with a capacity of of up to US$25 million would be 900,000 t/year of MSW to generate up to 350,000 t/year of RDF would needed (including AF production require investing up to US$20 million.44 The cost of facilities required to facilities and kiln modifications), paying process 100,000 t/year of waste tires (cutting, shredding, and removal back in 3-4 years. Expanding the use of metal content) is estimated at US$1 million. It might be feasible to co-locate RDF and TDF production, resulting in combined CAPEX of of agricultural residue beyond current US$20 million. levels may result in additional costs, and available volumes may be volatile due to For the purpose of this assessment, it is assumed that the cement sector fluctuations in crop production. would cover 50% of the investment in the required MRF in an equity form. This would afford cement players some control of the cost of the fuel and ensure security of fuel supply. Thus, the total investment requirement for the cement sector is estimated at US$25 million. Securing waste supply and participation of the waste management sector is crucial for any AF sourcing business model. To achieve this, it is essential that waste management service providers are able to recover the cost of waste collection and transportation and invest in infrastructure. In the context of this assessment, this would point towards implementation of the Option 1 scenario described in Section 2, i.e. the cost of basic collection and transportation infrastructure will be fully covered by the waste management sector players (rather than passed on to other players).45 44 See Annex 2 for detailed MRF characteristics and assumptions. 45 See Section 2 and Annexes for details on the cost structure. 34 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Based on the estimated cost of processing MSW into RDF and the 5 cost of delivery of the fuel to major cement plants in the area, the 4 4 3,8 total cost of sourcing RDF can be estimated at US$2.5/GJ, which 3 is 35% cheaper than the current price of coal. 1,5 2 Persistence of the barriers described in Section 6 would point 1 towards the Option 2 scenario. Under this scenario, cement companies in the Dakar area would co-finance the entire RDF 0 value chain, including basic collection infrastructure and full Peanut shells Agri residue Coal (current) (potential) operational costs, excluding the payments that waste management companies are currently receiving for their services. In the context Figure 17. Comparative cost of sourcing of Senegal, this would represent the current situation where the of agricultural residues as fuel for co-processing sector operators lack access to finance for their infrastructure in the cement kilns in the Dakar area, US$/GJ and are not incentivized to engage in waste recovery projects. In The cost of sourcing peanut shells is relatively low, as this type of this case, the total cost of sourcing RDF would be US$4.5/GJ, fuel is accessible in bulk quantities at processing facilities along accompanied by the risks of waste supply security, since the waste cement delivery routes, allowing for use of backhaul capacity of collectors will not be able to recover the cost of building and cement trucks to transport biomass fuel to the kilns. Based on the operating proper collection and transportation infrastructure. processing cost alone, the estimated cost of sourcing peanut shells 5 would be just US$1.5/GJ, approximately 2.5 times lower than 4,5 that of coal. 3,8 4 2,5 However, the opportunities for further expansion of the use of 3 peanut shells may be limited or incur additional cost. Sourcing 2 of other agricultural residues assessed in Section 5 would likely 1 be associated with additional transportation costs and higher processing costs. The total sourcing cost for such residues 0 would be up to US$4/GJ, depending on the geographic areas for Option 1 Option 2 Coal sourcing and physical properties of available waste. Though the Figure 16. Comparative cost of sourcing RDF required investment amount is small (less than US$1 million) a for co-processing in the cement kilns risk exists that the cost will exceed the current price of coal. in the Dakar area, US$/GJ Similar to RDF, TDF may be produced by a standalone facility or The cost of sourcing of agricultural residue as fuel can be assessed by a comprehensive treatment complex. TDF has the benefits of separately for peanut shells (currently the most commonly used low initial CAPEX (around US$1 million for the Dakar area), low AF) and other potentially available dry residues (such as rice processing costs and high calorific value per dollar invested. These husks, sorghum and millet). result in a total sourcing cost of US$2.1/GJ. The main issue for USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 35 unlocking the potential for sourcing TDF is access to waste tires, as Based on the estimated infrastructure for separate collection of tires is very limited. It can sourcing cost, there is be assumed that establishing a RDF production framework will also boost TDF production, as these facilities can be co-located. potential to offset at least 25-30% of thermal 3,8 energy demand with 4 2,1 AF, resulting in fuel cost 3 savings of US$6-7 million 2 per year (depending on 1 types of fuels used). 0 TDF Coal At US$25 million in CAPEX, Figure 18. Cost of sourcing of tire-derived fuel for these savings allow for a co-processing in the cement kilns in the Dakar area, 3-4 year payback period. US$/GJ It needs to be noted that The costs of sourcing key AF types (excluding peanut shells which potential investments are already exploited) under a scenario which assumes removal by individual players of barriers to fuel access and full inclusion of private sector in infrastructure investment are compared below. may result in shorter payback periods and 5 would need to be assessed 4 3,8 4 based on individual kiln 3 2,5 characteristics and fuel mix.  2,1 2 1 0 TDF RDF Agri Coal (Option 1) Figure 19. Comparison of sourcing costs for selected alternative fuels in the Dakar area, US$/GJ 36 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 8. Summary and Conclusions There is significant potential for sourcing AF for the cement sector With these measures implemented, the economic potential of in Senegal, specifically in the Dakar area where major cement sourcing AF can be assessed under the Option 1 scenario, producers are concentrated. Of the total forecasted thermal i.e. the cost of basic collection and transportation infrastructure energy demand of 18.5 million GJ/year, 7.9 million GJ could will be fully covered by waste management sector players. technically be sourced from waste-derived fuels, such as RDF, ‘Interim’ scenarios, however, are also possible, depending TDF and agricultural residues, all of which are available in the on factors relating to the stage of market development and Dakar area. The use of sewage sludge, though typically a high- parameters of each deal, including the following: potential source of energy, is not feasible due to the current low capacity of the wastewater treatment system. Ownership of waste collection, transportation and processing facilities; All major cement producers in Senegal are considering or already Contracting and payment mechanism, processing of have experience using AF, mainly agricultural residues (specifically payments (directly from service consumers, through peanut shells). Some cement producers also burn small quantities designated government agencies, etc.); of used oils, chemical wastes, and other industrial wastes. Further expansion of their fuel substitution capacity would require Composition of investors in waste management modifications to their kilns and, therefore, investment. To justify this infrastructure and their expected rates of return; investment, it is essential that the long-term supply of AF be secured Specific incentives for waste recovery (including those at a predictable cost that is lower than that of the predominant introduced as clauses of a PPP agreement) such as conventional source of energy, which is coal (at US$3.8/GJ). direct subsidies to players; one-off or recurring fees and surcharges (gate fees or equivalents), co-investment in The business case for increasing the use of AF is strong, provided infrastructure or offsetting part of CAPEX, tax credits, that certain waste management measures are implemented. The cross-subsidizing of waste management costs; and cost of sourcing RDF and TDF is estimated at US$2.1-2.5/GJ resulting in fuel cost savings that will support pay back of the Liabilities of the stakeholders engaged in the AF project, required investment of up to US$25 million by the cement sector risk insurance and penalties, etc. in 3 to 4 years. Key measures for supporting this investment include the following: The actual sourcing cost is therefore likely to fall between the Option 1 scenario and the Option 2 scenario, under which cement (1) Clear definition of waste ownership and responsibilities for players would cover the full costs of the RDF value chain. key waste streams, including treatment of waste tires as a standalone stream, separate from MSW, and enforcement Much will depend on the development of an enabling of the obligation to collect and treat end-of-life tires; environment and supporting infrastructure in the sector. In Senegal, the government has already been making significant (2) Establishment of a waste quantities measurement and efforts to build a more efficient waste management system. metering system at all stages of waste handling, which A dedicated waste management agency has been created to would enable payments for waste management services to coordinate policy work nationwide as well as operational work be linked to volumes of waste processed; and infrastructure upgrades in the Dakar area. Initiatives have (3) Establishment of a transparent long-term contracting been launched, including in partnership with the World Bank system for waste management services; and Group, to significantly improve wastewater treatment capacity in (4) Upgrading of technical capacity and knowledge of waste major cities and reduce environmental impact of waste disposal. management sector players, including private firms and This work, coupled with the specific measures outlined above, government agencies, focusing on possible deal structures, would create an enabling environment and unlock potential for and contracting and tendering practices. key AF types within the next few years. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 37 ANNEXES 38 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Annex 1 Assumptions on the properties of source waste streams, pre-processing requirements and corresponding modifications to the cement kiln. Municipal solid waste TIRES • 12-16 Lower Heating Value (LHV) GJ/dry ton • 12-16 LHV GJ/dry ton • -0.4 CO2 change • -0.8 CO2 change PROCESSING PROCESSING COLLECTION & Bag Drying & Screening / Shredding Tire transport opening shredding sorting & baling/ management & Chopping & sorting pelletizing collection & shredding Trash collection fleet o Bag open- o Blower o Infrared o Secondary o Tire shredder / ing system of rotary sensor shredder shredder Metal o Overhead aerobic o Mechanical o Pelletizer Granulating removal electro- digestion centrifuge magnetic drum moving o Primary belt or shredder rotating magnetic drums Typically up to 30% substitution, can be fed to kiln entry region, calciner or Typically 10-20% substitution when fed as 5-30mm pieces to kiln entry region or burner [<30mm, 15% moisture and <12% when fed to burner, <0.8% chlorine, calciner [dry process]; 10% substitution when whole tires fed directly to kiln and <2,00mg/kg heavy metal] Cement plant Typical upgrades required Typical upgrades required Indicative costs* (EUR) • Debaler: Breaks up compacted wasted (RDF, agricultural waste, etc.) to loosen the material and render it into a loose fluff TOTAL 4,255,000 Feeding / trasport machinery 750,000 • Storage systems: Store the AF in silos, hoppers or moving floor systems Foundations – civil works 550,000 • Flow control rotor type weighing systems, equipped with dosing mechanisms: Allow for accurate and Shredding systems and mills 500,000 consistent feed rate of AFs Pre-calciner and calciner 500,000 • Materials handling: Handle AFs using mechanical (screw conveyors, belt type conveyors, disconveyors, elevators, etc) and/or pneumatic transport systems Fuel storage & fire-fighting systems 400,000 Weigh feeders 150,000 • Pipe above the burner: A pipe coated with castable refractory materials above the main burner Environmental protection equipment 150,000 • Flexible multi-fuel burner – the AF must be fine, e.g. RDF in pellets and <12% moisture, sewage sludge in In-situ analyzers 150,000 pellets <5mm Moving machinery 150,000 • Calciner: Allows for lower temperature combustion, thereby reducing Nox – typically required for high AF Moving floors 120,000 levels and low grade AFs Double valves – flaps 50,000 • Analyzing system: Ensures kiln efficiency by monitoring O2 and CO levels (variations in AF moisture content may cause flame shape change or CO rise in the calciner) Pneumatic transport 35,000 Other (electromechanical fabrications, • 3G flap system (triple gate): Minimizes false air entry during AF feeding – required for solid AFs which are not installation, control, debaler, etc.) 750,000 pulverized and cannot be sent to the calciner pneumatically or via mechanical conveying systems Typically up to 20% substitution, can be fed to kiln entry region or calciner in Typically 20% substitution, can be fed at the main burner if below 6mm, or at kiln 2-5mm pellets (semi-dry and dry process systems) or pneumatically to burner entry region or calciner Sewage sludge Agricultural waste • 10.5-29 LHV GJ/dry ton • 14.4-19 LHV GJ/dry ton • -2.5 ∆ CO2 (ton/ton coal replaced) • -2.5 ∆ CO2 (ton/ton coal replaced) PROCESSING PROCESSING Collection through sewage Screening & Dewatering / Pelletizing collection Drying Shredding Pelletizing system/trucks treatment drying Notes: Lower heating value (LHV) calculated based on reported higher heating value (HHV). Change in CO2 emissions assumes that biomass is carbon-neutral; negative values represent a net reduction in emissions. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 39 Annex 2 Technical, operational and economic assumptions on waste management facilities involved in production of alternative fuels. TYPE OF FACILITY SET OF ASSUMPTIONS Material recovery of MSW Located very close to or on a major dumpsite. (MRF producing RDF) Capacity: up to 0.5 million t/year MSW. The MRF will have the capacity to perform the following operations: - Receiving of waste. - Manual removal of large items. - Bags knife splitter. - Magnetic separation. - Primary shredding. - Second magnetic separation, trommel screen separation, air or ballistic separation. - Thermal drying to reduce moisture to 10%. - Secondary shredding to the required product fineness of 30 mm and possible pelletizing of product to 12 mm (if needed). - Drying will be performed using open chamber firing in a rotary drum as the gas available from the landfill is not adequate or available. The operating hours of the facility are 8,000 hours/year. Electricity consumption: 30 kWh/t of waste at an electricity price from the grid of 0.1 US$/kWh. Cost of fuel for moving machinery (cars, pickups, forklifts and front loaders): 0.7 US$/t of MSW. Operation and administration costs: US$3 million/year. Maintenance costs: 20% of the operation and administration costs. Insurance: US$0.5 million. Total operating (OPEX) fixed costs: ~ US$4-5 million/year. Total operating (OPEX) variable costs: ~ US$13 million/year. CAPEX: up to US$10 million. Economic life: 20 years. SEWAGE SLUDGE Plant capacity (wet input): 30,000 t/year. TREATMENT PLANT The moisture of wet sewage sludge is considered 60% (average) and the plant will have the ability to dry the sludge to 5% moisture content. The operating hours of the plant are 8,000 hours/year. Electricity consumption: 300 kWh/t of dry product at an electricity price from the grid of US$0.1/kWh. Cost of fuel for moving machinery: US$0.7/t of wet sludge. Total operating (OPEX) fixed costs: ~ US$1 million/year. Total operating (OPEX) variable costs: ~ US$1.7 million/year. CAPEX of the plant: US$8-10 million. Economic life: 20 years. 40 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL TYPE OF FACILITY SET OF ASSUMPTIONS Tire processing plant Capacity: 30,000 tires per year. producing tire-derived fuel End-of-life tires will be shredded to a size of 5-30 mm so as to be (TDF) suitable for co-firing as AF by the cement industry. The plant will have the ability to handle any size and type of tires. From the large tires, the central steel cord will be removed, then will be cut and directed to the shredder. The small tires will be shredded directly in the primary shredder. Any oversize pieces of tires will be recycled for re-shredding. The operating hours of the plant are 8,000 hours/year. Electricity consumption: 50 kWh/t of tires at an electricity price from the grid of US$0.1 /kWh. Total operating (OPEX) fixed costs: ~ US$0.5 million/year. Total operating (OPEX) variable costs: ~ US$0.5 million/year. CAPEX of the plant: ~ US$1 million/year. Economic life: 20 years. Agricultural residue Capacity: 40,000 t/year. processing facility Agricultural residues will be shredded to a size of 5-30 mm so as to be suitable for co-firing as AF by the cement industry. The plant will have the ability to handle any size and type of agricultural residues. Sieving will be performed so that any slides of material not shredded will return for re-shredding. Large trunks will be cut into sizes of up to 500 mm before being fed to the primary shredder. Straw, etc. will be fed directly to the shredder. The operating hours of the plant are 8,000 hours/year. Electricity consumption: 30 kWh/t of agricultural residues at an electricity price from the grid of US$0.1/kWh. Total operating (OPEX) fixed costs: ~ US$0.5 million/year. Total operating (OPEX) variable costs: ~ US$0.7 million/year. CAPEX of the plant: ~ US$1 million. Economic life: 20 years. Sources: IFC, interviews with market players. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 41 Annex 3 Technical, operational and economic assumptions on the collection and transportation of source wastes and AF. FACTOR ASSUMPTION Number of loads per day for 5 km 50 km 100 km 200 km collection and transport to the processing facility (return trips) 1 3 3 2 Persons for collection (workers) Tires: 3 MSW: 4 Sewage sludge: 1 Agricultural residue: 4 Cost of each worker (US$/day) 11 (up to 100 km) 14 (200 km) Cost of the driver (US$/day) 14 Cost of truck (US$/day) 27.4 Truck fuel consumption (l/km) 0.2 Price of diesel 1 Truck load (t) Tires: 4 MSW: 10 Sewage sludge: 15 Agricultural residue: 7 Sources: IFC, interviews with market players. 42 USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL Annex 4 Share in waste composition and maximum selling price of recyclable materials. RECYCLABLES SHARE IN WASTE Maximum selling price COMPOSITION (%) (US$/t) Paper 7.0 40 Cardboard 6.0 50 Plastic bottles of Polyethylene 5.0 200 Terephthalate (PET) Glass 4.2 15 Recyclable construction and 3.2 80 Demolition (C&D) waste Aluminum cans 3.0 200 Ferrous matter 2.5 100 Low Density Polyethylene (LDPE)/ 2.4 120 Polypropylene (PP) Non-ferrous metals 1.0 150 Polyvinyl Chloride (PVC) 0.8 80 Sources: IFC, interviews with market players. USE OF ALTERNATIVE FUELS IN THE CEMENT SECTOR IN SENEGAL 43 Emmanouela Markoglou Cross-Cutting Advisory Solutions T: +1 (202) 473-9526 2121 Pennsylvania Ave, NW Washington, DC 20433, USA ifc.org 2017