VZCZCXYZ0014
RR RUEHWEB

DE RUEHGZ #0180/01 0810924
ZNR UUUUU ZZH (CCY  ADX 45D9D1/MSI5878)
R 220924Z MAR 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0357
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0132
RUEHBJ/AMEMBASSY BEIJING 0250
RHMFIUU/HQ EPA WASHINGTON DC 0018
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC 0072
RUEATRS/DEPT OF TREASURY WASHDC 0067
RHEHAAA/NSC WASHDC 0026
RUEAIIA/CIA WASHDC 0119
RUEKJCS/DIA WASHDC 0119
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS GUANGZHOU 000180 
 
C O R R E C T E D COPY - PARA 9 CHANGE ALL GIGAWATTS TO 
MEGAWATTS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, OES/PCI 
STATE ALSO PASS USTR FOR CHINA OFFICE 
STATE PASS TO ENVIRONMENTAL SCIENCE & TECHNOLOGY COLLECTIVE 
EPA FOR OFFICE OF INTERNATIONAL AFFAIRS 
 
E.O. 12958: N/A 
TAGS: EFIN SENV PGOV SOCI ECON CH
SUBJECT: Guangzhou's Garbage Goldmine: From Waste to Renewable 
Energy 
 
¶1. (U) Summary.  Is trash the ticket to solving Guangzhou's energy 
woes?  The city government sure thinks so.  Local officials are 
hoping that converting more of Guangzhou's waste into energy will 
help solve power shortages and strengthen environmental protection. 
Two garbage power plants are already operating; there are plans for 
further expansion.  The city aims to burn all of its garbage for 
electricity by 2015.  However, a lack of power lines for 
transmission and distribution, landfills and incinerators stand in 
the way of meeting this goal. Interestingly, the decline in 
consumption in south China due to the global financial crisis has 
also led to a decline in the amount of garbage produced.  It is 
unclear whether this is a temporary phenomenon or whether less 
garbage spells less energy in the future. End Summary. 
 
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Is Garbage Guangzhou's Energy Goldmine? 
--------------------------------------- 
 
¶2. (SBU) With persistent power shortages and a mandate to diversify 
its energy mix, it's no wonder that Guangzhou has turned to garbage 
to help meet its energy needs.   According to the 11th Five-year 
Plan, China will construct 60 refuse-fired power plants, and under 
the National Waste Disposal Plan, China is planning to increase 
waste-derived energy to 30% of waste disposal by 2030.  Guangdong 
Province will be a leader in this effort.  Director General of the 
Guangzhou Environment and Sanitation Bureau, Lu Zhiyi, recently 
announced that Guangzhou would incinerate all residential garbage to 
generate electricity by 2015. 
 
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Xingfeng Landfill Methane Recovery Plant 
---------------------------------------- 
 
¶3. (SBU) Xingfeng Municipal Solid Waste Sanitary Landfill, 
Guangzhou's only municipal-funded landfill, is looking to help 
bridge Guangzhou's electricity gap and promote renewable energy by 
capitalizing on its primary resource - garbage.  Constructed as one 
of the key environmental projects in Guangzhou's 10th Five-year 
Plan, Xingfeng was awarded first place among landfills in China's 
2007 Modern Cities Inspection.  Xingfeng's Simon Sandral, General 
Manager of Veolia Environmental Services (the plant's operating 
company), tells us that the plant has a total capacity of 25.6 
million tons of municipal waste, excluding hazardous waste. 
Xingfeng is the first Chinese waste treatment facility designed and 
operated by a multinational company. 
 
¶4. (U) With an initial investment of USD 7 million, Xingfeng began 
to generate electricity in 2004 through a process of methane 
recovery, using landfill gas to generate energy.  Xingfeng's power 
plant is equipped with three-1 megawatt GE generators, and one-2 
megawatt Caterpillar generator.   Xingfeng currently generates 
10,500 cubic meters of landfill gas per hour.  Capturing gas through 
landfill pipelines and converting it into a renewable energy source 
reduces the amount of greenhouse gas emissions that would otherwise 
be generated from decomposition if the garbage were simply 
land-filled. 
 
¶5. (SBU) Xingfeng's renewable energy project is earning carbon 
emissions credits under the Carbon Development Mechanism (CDM). 
Following a 2007 agreement, Xingfeng is currently trading its 
credits with ICECAP, a UK-based carbon business.  Through 2012, 
ICECAP plans to invest USD 50 million into the development of 
Xingfeng's methane-based power generation projects.  In return, 
Xingfeng has promised to cut its carbon dioxide emissions by five 
million tons.  This agreement is one of the first CDM Carbon 
Projects to be established in Guangdong. 
 
--------------------------------- 
Likeng Garbage Incineration Plant 
--------------------------------- 
 
¶6. (U) Likeng Waste-to-Energy Plant was Guangzhou's first waste to 
energy (WtE) incineration power plant.  Waste-to-energy plants burn 
trash to recover energy and produce electricity.  Phase I of the 
project commenced operation in 2005 with a total investment of RMB 
750 million (approx. USD 110 million).  Equipped with two 
incinerators, Likeng can take in 1,040 metric tons of garbage per 
 
 
day and with its one-22 MW generator, generate 130 million KWh per 
year.  On average, every ton of garbage generates 360 kwh of 
electricity, and every two tons of incinerated garbage can produce 
the same amount of energy as one ton of coal.  China's first WtE 
plant was constructed in Shenzhen in 1988. 
 
¶7. (U) Phase II, operation of Guangzhou's second WtE plant, will 
begin June 2009 and is expected to have a daily garbage intake 
capacity of 2,000 tons per day, almost one-fifth of Guangzhou's 
total.  Phase II's power plant is expected to generate 200 million 
kWh of electricity annually.  With an investment of RMB 970 million 
(USD 140million), the power plant will utilize Danish technologies 
to help reduce waste gas emissions. 
 
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Challenges: Capacity and Transmission Lines 
------------------------------------------- 
 
¶8.  (SBU) It is unlikely that Guangzhou will be able to meet its 
goal of incinerating all municipal garbage, or of significantly 
increasing its waste-derived electricity generation, according to 
Sandral.  Two of the biggest challenges facing the plan are the lack 
of landfill and incinerating facilities (due to a growing supply of 
garbage), and insufficient electricity transmission lines.  Xingfeng 
is designed to take in a maximum of 2,000 tons of garbage daily; 
however, it currently accepts upwards of 7,300 tons accounting for 
nearly 80% of the 9,776 tons of waste generated each day in 
Guangzhou.  The landfill is filling up at double the initially 
planned rate due to a lack of alternatives.  Xingfeng landfill is 
likely to hit its capacity by 2015.  Likeng's facilities are 
similarly overworked.  Guangzhou officials are currently planning to 
build another landfill in the valley neighboring Xingfeng pending 
land acquisition.  In addition, U.S.-based energy firm Covanta has 
signed a deal with Guangzhou Development Industry to construct other 
garbage-to-energy plants. 
 
¶9. (SBU) Lack of power lines also constrains the contribution of 
garbage plants to Guangzhou's power supply.  Sandral told us that 
Xingfeng started off with a transmitting capacity of six gigawatts; 
however, the transmission lines were only capable of accommodating 
two gigawatts, resulting in a loss of electricity.  Sandral said the 
Power Bureau has been slow to authorize the construction of 
sufficient transmission lines.  Currently, Xingfeng feeds five 
gigawatts of electricity into the Guangzhou power grid; in the next 
six months, Xingfeng is hoping to add two megawatts, if it can raise 
the necessary capital. 
 
--------------------------------------------- --- 
Economic Downturn Affects Trash Supply Too 
--------------------------------------------- --- 
 
¶10. (SBU) Although unlikely to change long-term trends, the global 
economic downturn has caused a substantial decline in the amount of 
municipal waste generated in Guangzhou, according to Sandral. 
Starting around July 2008, garbage volumes dropped significantly due 
to the effect of inflation on the consumption of food and fuel. As 
Sandral explained, Guangzhou residents simply stopped eating out and 
began staying at home more.  Now, with the continued downturn of the 
global economy, and China's growth slowing to the lowest levels seen 
in a decade, trends of reduced consumption continue.  Since 
mid-2008, Xingfeng's garbage intake has declined by 6% where 
previously there had been 6% growth. 
 
 
GOLDBERG