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Covanta moving forward on automated recycling plant

September 30, 2015
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Covanta is trudging forward with its plans to build a $45 million facility in Indianapolis that will use automation to pluck salvageable recyclables from household trash—all without any sorting from homeowners—despite protests over the deal that seem to be unrelenting in the heat of the city’s upcoming municipal election.

The company, which along with Mayor Greg Ballard’s administration is embroiled in an ongoing court battle over the contract, says it will start construction on the plant near its Harding Street trash incinerator once it gets clearance from the state on an outstanding permit.

“It’s not a comfortable position to be in, but the city contract is done,” said Scott Holkeboer, a vice president for the company, as he met with industry experts and critics of the deal Tuesday at the 2015 Resource Recycling conference in downtown Indianapolis. “The city is obligated to fulfill that contract and defend the contract.”

But those opposed to the deal say they haven’t given up on their plans to derail—or at least slow down—what they believe is a flawed contract. Though a Marion County judge ruled in April in favor of the city over the deal, two paper companies and a private citizen who sued the city have since appealed. The case is still pending.

Critics say the terms of the Covanta deal—which they allege improperly bypassed a public bidding process when it was negotiated as an amendment to the city’s ongoing contract with the company—unfairly tie the city’s hands when it comes to improving its recycling participation until the contract ends in 2028.

They also say the technology behind the plant is unproven and not ready for prime time, citing problems with contamination that have happened in other cities when waste from diapers and kitty litter are mixed in with paper, plastic and other recyclables.

“Our ability to improve is completely hamstrung by this contract,” said Carey Hamilton, executive director of the Indianapolis Recycling Coalition. “There is a lot of pent-up interest in growing recycling in our community. Now is the time. What do we want for our community? Let’s let folks compete.”

Covanta defended the deal, which is worth at least $112 million in revenue for the company, as a good move for Indianapolis that will put the city on the leading edge of recycling technology and help meet the state’s goal of recycling 50 percent of the waste stream.

Currently, only about 10 percent of Indianapolis residents participate in curbside recycling.

Under the deal, Covanta promises to recycle at least 18 percent of the waste stream and increase the city’s recycling participation rate to 100 percent—because people wouldn’t have to opt in to the system.

Instead, Covanta would use optical sorting technology at their new facility to sort recyclables from homeowners’ trash and sell them on the commodities market.

“As a company, we’re constantly looking for new ways to innovate to help our clients out,” Holkeboer said. “Indianapolis for decades has had a very low recycling rate.”

But City-County Council Vice President John Barth said that’s not good enough. He noted that the city of Lawrence saw its recycling participation shoot from 35 percent to 80 percent when it implemented a curbside recycling program.

“Seriously, 18 percent?” said Barth, a Democrat. “We can knock that out of the park. Moderate leadership will lead us to a much better place than Covanta is even pretending to agree to. I don’t want to let poor public policy choices mess up our future potential to be a great city when it comes to recycling.”

One part of the deal that worries skeptics is a clause that says the city cannot start a program that require or incentivizes separation of recyclables from trash, otherwise it faces a steep penalty of $333,333 per month.

The city, which receives a share of steam revenue from Covanta’s existing waste-to-energy plant, would see that revenue reduced if participation in curbside recycling increased by more than 5 percent over its 2013 level.

“I would ask other municipal officials, would you accept these as contract clauses for your cities?” Barth said. “That’s what happens when there’s no sunshine.”

Covanta, a publicly traded company, said the weighty language in the contract is about protecting its capital investment.

“We had to make sure that all the recyclables weren’t going to be pulled out of the waste before they got to us,” Holkeboer said. “There are some onerous contractual terms should they put a full-fledged program that basically is in front of ours.”

Though the company isn’t backing down from the deal, Holkeboer says it is interested in collaborating with others in the city if they bring them ideas about how to improve recycling.

“We’ll look at anything,” Holkeboer said. “There’s always improvements that can be made.”

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