Mayor Bennett should appoint a panel to renegotiate Powerdyne contracts
At the recent Terre Haute City Council special meeting, the public began the process of understanding the benefits and risks involved in the Powerdyne deal to bring an innovative yet unproven technology to refine diesel fuel from a variety of waste materials, including green waste and sewage sludge.
As an expert in the capabilities of the city’s wastewater treatment plant, I was invited to speak during the meeting about the “disconnect” between the amount of sewage sludge that could be provided by the city and the amount that would be needed as a feedstock to produce diesel fuel in the Powerdyne facility. It has been reported that the city will provide sufficient sewage sludge to produce 12 million gallons of diesel fuel per year. My testimony documented that the city’s sewage sludge could at most provide 1.5 percent of the feedstock needed to produce that much fuel. Powerdyne’s owner, Geoff Hirson, said that deficit could be made up by other feedstock, including landfill waste, refuse derived fuel (bundled solid waste) and used carpeting from sources outside of the city.
Still, many questions should be asked and answered. The following points (in italics) were made by Mr. Hirson during the meeting and should be questioned before the City renegotiates the contract with Powerdyne:
• The U.S. government provides financial incentives to offset higher costs of production and to ensure our Country continues to meet the Clean Air Act and Energy Independence Security Act.
Question: How likely is it that such government financial incentives will be in place for the next 20 years?
• The plant will employ plasma gasification and Fisher-Tropsch technologies to convert feedstock into hydrocarbon liquids. Both technologies are mature and proven and the combination of them is well suited for efficient conversion of carbon feedstock to hydrocarbons.
Question: Where can one go to see a plant producing diesel fuel from sewage sludge and other solid wastes employing plasma gasification and Fisher-Tropsch technologies? While both technologies are mature, I haven’t been able to identify any plant in the world that employs both technologies to produce diesel fuel from sewage sludge and other solid wastes.
• Waste to Fuel Facility will be built, owned and operated without any city financial investment or incentives.
Question: In the original Powerdyne contract, the city was committed to purchase 12,000,000 gallons of diesel fuel per year for $2.46 per gallon. How can that 20-year commitment not be considered a financial investment? Why can’t the purchase price of diesel fuel be market based at the time of purchase?
• Positive PR for green/sustainable initiatives.
Question: The city already employs the most green and sustainable sludge disposal method by land applying the digested sewage sludge on farmland. How can the use of staggering amounts of coalfired electric energy to produce diesel fuel from sewage sludge be considered more green and sustainable?
• The city will receive 50 percent of the RINs awarded to the 12 million gallons produced and sold through the city per year, equating to $5.16 million annually (based on current values).
Question: What has been the historic fluctuation of the market value for RINs? What is the likelihood that RINs will have any market value over the next 20 years?
• Powerdyne has a funding commitment from its pension fund partner for $260,000,000 to $300,000,000 to develop the waste to fuel facility in Terre Haute. The Pension fund is making an equity investment and there will be no debt or any of the risks associated with debt.
Question: If for any reason out of the control of the city, Powerdyne’s facility fails to produce 12 to 45 million gallons of diesel fuel per year, what would prevent the pension fund partner from suing the city when the venture fails to produce the financial returns promised? Powerdyne is a limited liability corporation with minimal assets, whereas the city has comparatively many more assets.
The city should be exploring opportunities to increase revenue and save money, not in secret, but in the open, exercising due diligence by tapping on the expertise of Terre Haute’s financial and engineering resources. Mayor Bennett and the City Council should appoint a blue-ribbon panel of community financial, investment, accounting and engineering leaders to provide the needed expertise to renegotiate the best contract for the city. What has been proposed is a complicated and risky financial and engineering venture that commits the city for the next 20 years. I have offered my expertise to city leaders, and I stand ready to help.
— Roger C. Ward, Sr.
Professional Engineer and Board Certified Environmental Engineer Indianapolis