Ntu075 PDF Eng
Ntu075 PDF Eng
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                This case discusses the trajectory taken by a Singapore-based entrepreneur who embarked on a multi-
                million business venture to turn food waste into energy. The brainchild of Edwin Khew, a veteran in
                the waste management business, IUT Global was formed in 2005 to set up and operate Singapore’s
                first organic waste treatment plant.
                IUT’s bio-methanisation plant was an ambitious project. Budgeted at $60 million, the plant was
                designed to process 800 tonnes of food waste and produce 10 megawatts of electricity most of which
                would be sold to Singapore’s national electricity grid. Investors were optimistic that with their state
                of the art process technology and a ready customer, the plant would generate a steady income stream
                once it was set up and running.
                However, from the start of production although less than 10% of food waste in Singapore was being
                recycled, IUT encountered problems in the collection of food waste needed to feed its plant. It was
                unable to collect enough food waste and those collected contained a higher percentage of contaminants
                than projected. Furthermore, food operators resisted the need to separate food waste from solid
                waste. Unable to meet its production targets, and after three years of losses, in 2011, IUT entered
                into liquidation, and with it the closure of Singapore’s first large scale food waste-to-energy facility.
                The case explores the following topics: First mover pitfalls in a sustainable energy venture; Analysis
                of new venture business plans; Implementation challenges for start-ups; Assumption testing/sensitivity
                analysis in costing of new ventures.
                Dr Wee Beng Geok, Priya Subramanian,Thiruneeran Murugavel & Stephanie Tan prepared this case based on public
                sources and interviews with key personnel of IUT Global Pte Ltd. As the case is not intended to illustrate either effective or
                ineffective practices or policies, the information presented reflects the authors’ interpretation of events and serves merely
                to provide opportunities for classroom discussions.
                COPYRIGHT © 2015 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may be
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                of Nanyang Technological University.
                For copies, please write to The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University,
                Nanyang Avenue, Singapore 639798
                Phone: +65-6790-4864/5706, Fax: +65-6791-6207, E-mail: asiacasecentre@ntu.edu.sg
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                EDWIN KHEW’S ENTREPRENEURIAL JOURNEY                                      the guest-of-honour, then Singapore’s Minister for
                                                                                          Environment and Water Resources Minister Yaacob
                Edwin Khew could be regarded as an engineer, a                            Ibrahim, noted that the plant marked an important
                manager as well as a serial entrepreneur.                                 milestone in the development of Singapore’s waste
                                                                                          management and recycling industry.2 He emphasized
                In early 2000s, he launched the rst ever large-scale                     in his speech that now that we have a backend plant
                food waste-to-energy project in Singapore driven                          to treat food waste we will push for segregation and
                by his belief in waste-to-resource technologies and                       recycling.
                sustainable energy. In this undertaking, he made use
                of his training as a chemical engineer, as well as his
                expertise from his years of experience in the business                    THE WASTE RECYCLING SCENE IN SINGAPORE
                of waste management.                                                      IN 2005
                He looked around him at the growing mountain of                           In 2005, the year when IUT announced its plans to
                food waste that was being sent to the incinerators for                    set up its food waste-to-energy plant, only 7% of food
                disposal, with only a very small amount-being recycled                    waste was recycled. Overall recycling rate in Singapore
                and saw a new business opportunity. By applying                           was reported to be 49% which was mostly due to the
                improved anaerobic digestion (AD) technology which                        recycling of industrial waste and construction and
                he led and patented, he could convert food waste                         demolition debris.3 Food waste accounted for more than
                into energy at higher rates of efciency compared to                      one-tenth the total waste output in Singapore and nearly
                available AD technologies which could then be sold                        20% of total waste disposed (See Table 1).
                as electricity to the power grid. The outcome was a
                $30 million rst-phase project to build a food-waste                      In 2005, almost 2.6 million tonnes of waste were
                recycling plant in Singapore that was then the largest                    disposed and there was growing concerns that given
                in Asia.1 It was the intention of Edwin to later expand                   this disposal rate, Singapore’s only offshore landll –
                the plant in its second phase to 800 tons per day. At                     Semakau – would only last till 2035.4 (See Appendix
                IUT’s ground breaking ceremony in September 2005,                         1 – Waste Situation in Singapore.)
                                                                          Table 1
                                                       Waste Statistics and Recycling Rates for 2005
                1   Basu, R. (2005, September 16). Leftover food to power 10,000 homes; Plant to convert waste from hotel kitchens and food courts
                    into energy. The Straits Times.
                2   ibid.
                3   National Environment Agency. Environmental Protection Division Report 2005.
                4   Ministry of the Environment and Water Resources. (2014, October 1). Retrieved on February 9, 2015, from http://app.mewr.gov.
                    sg/web/contents/contents.aspx?contid=1538
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                RATIONALE FOR IUT GLOBAL                                                  patented ADOS process was a specially designed wet
                                                                                          mill (ADOS mill) which performed the size reduction
                There were some 450 companies in the waste                                of organic solids while removing the remaining in-
                management and recycling industry in Singapore                            organics and inerts.8 The ADOS digestion system
                in 2005. They ranged from small operators to                              generated 15-20% more gas then other commercially
                multinational companies. Most of the companies were                       available anaerobic digestor systems in the market
                in the waste collection business and the rest carried                     and was functioning well for the 3.5 years it was in
                out sorting and recycling of industrial and commercial                    operation.
                waste.5 Most of these recycling firms and plants
                were involved in the recycling of construction debris,                    Steps in Food Waste-to-Energy Transformation
                horticultural waste, ferrous and non-ferrous metals,
                used slag and scrap tyres. None were in the food                          I. Source of Food Waste
                waste-to-energy conversion business.
                                                                                          Food waste in Singapore accounted for 531,500
                Edwin saw that food waste had good potential as                           tonnes in 2005, of which only 7%, or 36,500 tonnes,
                a source of renewable energy which had been                               was recycled.9 Total output of food waste per day was
                overlooked in the promotion of sustainable energy.                        approximately 1500 tonnes. IUT’s goal was to collect
                His research on anaerobic digestion technology                            300 tonnes of food waste per day in phase I and
                led him to specially design a commercially viable                         another 500 tonnes of food waste in phase II.
                process that could convert food waste to energy more
                efciently than in the incineration plants, leading to                    Commercial food establishments such as hawker
                higher power generation.6 He led his patent in 2007                      centres, hotels, restaurants and food courts were to
                and was awarded a patent under Patent No 145387-                          be the company’s main supply of food waste. IUT did
                WO2007/114787.                                                            not consider household waste as a viable source for
                                                                                          the collection of food waste. This was because at that
                Biomethane, a gas produced by the anaerobic                               time (and even up to 2015) 80% of all apartment units
                digestion process, would then fuel large gas engines                      in Singapore were each equipped with a single rubbish
                to generate electricity. He could then sell the electricity               chute through which each household would dispose
                generated to Singapore’s national power grid.                             of all their rubbish, both organic or otherwise. (See
                                                                                          Appendix 2 – Sources of Food Waste.)
                IUT Global’s Food Waste to Energy System
                                                                                          II. Collection of Food Waste
                The anaerobic or biomethanisation process, a
                relatively new technology, in which biodegradable                         Using its own eet of trucks and drivers, IUT collected
                material was converted to biogas under anaerobic                          food waste from various localities around Singapore.
                conditions, required the organic waste to be separated                    These included hawker centres, food courts, hotel
                from non-organic waste at source before being fed                         restaurants, and other commercial and industrial food
                into the bio-digestor. 7 In addition, IUT employed                        establishments. The Company charged these food
                a unique Anaerobic Digestion of Organic Slurry                            operators $69.30/tonne for the removal and disposal
                (ADOS) process (under patent no 145387) which was                         of food waste from their premises which was lower
                positioned between wet and dry digestion processes,                       in cost than charged by the general waste collectors
                as a 8-10% slurry, and was adaptable to different water                   (GWCs) and the public waste collectors (PWCs). In
                content in the organic waste collected. The heart of the                  most cases 10-15% lower.
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                III. Pre-treatment of Food Waste                                          a result was drawn out and stored in a gasholder
                                                                                          which was then fed into a gas engine for combustion.
                Before the food waste collected was treated, the                          This was then used to generate electricity. The net
                contaminants that could be separated by manual                            power expected to be generated annually, after
                labour such as tableware, crockery, boxes and                             excluding the electricity consumption of the plant, was
                containers were removed. During the mechanical                            25,056 MWh, at 300 tonnes of food waste per day with
                pre-treatment stage, a bag breaker shredded plastic                       an anticipated 11-15% of contaminants.10
                bags containing the food waste. The food waste was
                then fed into a screener, which separated the plastics                    V. Feed into Singapore’s Power Grid
                and in-organics to be sent to the nearest incineration
                plant for burning. The ADOS mill then performed size                      The national power grid was a ready customer for the
                reduction of the organics and removed the balance                         electricity generated by IUT (the power grid has to take
                in-organics and inerts efciently.                                        all renewable energy generated under 10 MW – this is
                                                                                          required by law). The nal price of electricity was that
                IV.Anaerobic Digestion/ Electricity Generation                            settled between large power generation companies and
                                                                                          major power purchasers in the deregulated electricity
                The remaining food waste was then put in an                               industry and varied every half-hour throughout a typical
                anaerobic digester. The temperature at which this                         24-hour day. The average selling price of electricity to
                digestion and decomposition process occurred was                          the national grid on the day that IUT announced its
                between 52 and 55 degrees. The biogas with 60 to                          launch was S$121.50 MWh.11
                64% methane (CH4) content that was produced as
                                                                            Figure 1
                                                              IUT Global Plant Process (In Phases)
                                             Food Waste
                   Electrical
                   energy input
                                                                           Anaerobic                          Gas Engine
                                           Pretreatment                                                                                 Generator
                                                                         Digestion (AD)
                                                                           Phase       Phase
                                                                             I           II
                Source: Food Waste Conversion Options in Singapore: Environmental Impacts Based on an LCA Perspective (2009).
                Science of the Total Environment, 40(2010): 1367-1373.
                10 United Nations Framework Convention on Climate Change (UNFCCC). (2006, December 22). Clean Development Mechanism – MW
                   Food Waste Based Grid Connected Power Project implemented by IUT Singapore Pte Ltd. Retrieved on 10 October 2014, from https://
                   www.certipedia.com/secure_area/quality_mark_documents/7261?locale=en
                11 Energy Market Company. Price Information. Energy Price in September 2005. Retrieved September 2, 2014, from https://www.emcsg.
                   com/marketdata/priceinformation#priceDataView
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                Compost was another output from the digested food                         The nal price of electricity was that settled between
                waste process and this could be sold as an organic                        large power generation companies and major power
                fertilizer for farming and horticulture. Another by-                      purchasers in the deregulated electricity industry.16
                product was heat (see Figure 2).                                          Electricity prices varied every half-hour as large power
                                                                                          generators competed to supply the forecast power
                                                                                          demand for every half-hour trading period throughout
                                                                     Figure 2
                                            Flow Chart of Biomethanisation Process in IUT Global’s Plant
                Source: United Nations Framework Convention on Climate Change (UNFCCC). (2006, December 22). Clean Development Mechanism –
                   MW Food Waste-Based Grid Connected Power Project implemented by IUT Singapore Pte Ltd.
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                a typical 24-hour day. The Uniform Singapore Energy                       Based on projections, the company expected to be
                Price (USEP)17 when IUT came up with its business                         protable at 300 tonnes of food waste treated per
                plan in September 2005 was approximately S$180                            day.23 The net electricity generated after taking into
                MWh.18                                                                    consideration the energy used by the plant, was
                                                                                          projected to be 25,056 MWh per year. In phase
                IUT Global’s Business Plan                                                II, expected to launch between 2009 and 2010, it
                                                                                          planned to recycle another 500 tonnes of food waste
                Financing the project                                                     to generate an additional 44,580MWh of net electricity
                                                                                          per year (see Table 2).
                The major sources of funds were from shareholders,
                bank borrowings and trade credit. However, IUT also                       Waste collection Fees: As a licensed waste collector,
                tapped on some small government grants as well as                         IUT collected waste from the food establishments and
                some tax deductions offered for local R&D.19                              charged a collection fee for this service. The standard
                                                                                          rate charged by major refuse disposal service providers
                Major sources of revenue                                                  was $77/ tonne.24 This was a major source of revenue
                                                                                          for IUT (See section on Revenue Estimates).
                Electricity sold to the power grid and waste collection
                fees for the waste collected were expected to be the                      Another source of revenue
                main sources of revenue for IUT.
                                                                                          Carbon Credits: In 2007, another source of income
                Electricity Generated: Electricity generation depended                    was sale of carbon credits. Carbon credit projects were
                on the amount of methane content in the biogas                            regulated by the United Nations (UN) under a Clean
                resulting from the anaerobic process.20 The power                         Development Mechanism (CDM), which was part of
                generated also depended on the percentage of                              the Kyoto Protocol. Under the global agreement to cut
                contaminants in the organic waste collected.                              greenhouse gas emissions – regarded by scientists
                                                                                          as responsible for global warming – companies
                IUT expected to ramp up operations to collect 300                         could convert emission reductions in their business
                tonnes of food waste daily within one to two years.21                     operations and sell them to polluting nations. If certied
                The plant designed was expected to handle food waste                      by the UN, IUT could have been one of the first
                with up to 15% of inorganic contaminants in it. With                      Singapore-based facilities to earn the right to sell such
                an anticipated inorganic content of 11% and moisture                      credits.25 One credit, or Certied Emissions Reduction,
                content of 84%, biogas with 60 – 64% methane was                          is equal to one less tonne of carbon dioxide emitted.
                expected to be produced and stored in a gasholder from                    In 2008, this was priced at around 22 Euros (S$46).26
                where it could be continuously fed into the gas engine
                for combustion which then generates electricity.22                        IUT, eligible for the Clean Development Mechanism
                                                                                          grant27, calculated the amount of carbon emission
                17 Weighted average of nodal price of electricity supplied to the national power grid (taken at half hour intervals).
                18 Energy Market Company. Price Information| Energy Price in September 2005. Retrieved September 2, 2014, https://www.emcsg.com/
                   marketdata/priceinformation#priceDataView
                19 Chua, G. (2010, October 18). Food recycling rm wins govt funding; Effort to boost bio-gas production among ve green projects
                   picked. The Straits Times.
                20 Energypedia. Retrieved December 22, 2014, from https://energypedia.info/wiki/Electricity_Generation_from_Biogas
                21 United Nations Framework Convention on Climate Change (UNFCCC). (2006, December 22). Clean Development Mechanism – MW
                   Food Waste-Based Grid Connected Power Project implemented by IUT Singapore Pte Ltd. Retrieved on 10 October 2014, from https://
                   www.certipedia.com/secure_area/quality_mark_documents/7261?locale=en
                22 ibid.
                23 Ng, K. & Lim, R. (2011, March 22). Recycling rm IUT Global being wound up; This follows three straight years of losses since start
                   up. The Business Times.
                24 National Environment Agency. (2013). Retrieved September 2, 2014, from http://app2.nea.gov.sg/energy-waste/waste-management/
                   refuse-disposal-facility
                25 Mulchand, A. (2007, June 13). Coming soon: Electricity from food scraps; Singapore’s rst food-waste recycling plant opens next
                   month. The Straits Times.
                26 Cheam, J. (2008, August 15). $500k funding for carbon credit projects. The Straits Times.
                27 Clean development mechanism grant was offered by the National Environment Agency and absorbed 50% of the cost of engaging a
                   carbon consultant capped at $100,000.
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                                                                         Table 2
                                                         Technical Parameters of IUT Global’s Plant
                                      Parameter                                     Unit                                   Values^
                                                                                                            Phase I                       Phase II
                Source: United Nations Framework Convention on Climate Change (UNFCCC). (2006, December 22). Clean
                Development Mechanism – MW Food Waste Based Grid Connected Power Project implemented by IUT Singapore Pte
                Ltd.
                ^Values bolded had been used to calculate revenue estimates in Table 3
                *Electricity consumption of the plant per year
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                reduction achieved by this project in the Clean                           collection fees charged and electricity supplied to the
                Development Mechanism Project Design Document                             power grid, which were expected to bring in revenues
                Form submitted to the United Nations Framework                            of approximately $7 million and $3 million respectively
                Convention on Climate Change (UNFCCC).                                    in Phase I. At optimum capacity of 800 tonnes of
                                                                                          food waste per day, when phase II operations begin,
                Revenue Estimates28                                                       the plant was projected to generate total revenue of
                                                                                          approximately $27 million (see Table 3).
                When the plant commenced operations, its two
                main sources of revenue were projected to be waste
                                                                           Table 3
                                                           IUT Global - Annual Revenue Estimatesa
                 Potential Revenue Generating Sources                                  Unit                       Phase I          Phase I + Phase II b
                                                                                                                  (2008)             (2009 - 2010)
                 Waste Collected                                                  Tonnes/year1                        99,000           99,000 + 165,000
                                                                                                2
                 Waste Collection fees                                              S$/Tonne                            69.30                          69.30
                 Revenue from Waste Collection                                                           S$       6,860,700                    18,295,200
                 Net Power supplied to the grid per year                               MWh                            25,056             25,056 + 44,580
                                                                                                3
                 Average Uniform Singapore Energy                                   S$/MWh                              121.5                          121.5
                 Price
                 Revenue from electricity supplied to                                                    S$       3,044,304                      8,460,774
                 grid
                Source: Adaptation from United Nations Framework Convention on Climate Change (UNFCCC). (2006, December
                22). Clean Development Mechanism – MW Food Waste Based Grid Connected Power Project implemented by IUT
                Singapore Pte Ltd.
28 Estimates were derived by the authors from the Clean Development Mechanism Project Design Document Form submitted to UNFCCC.
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                Sourcing for food waste                                                   IUT decided to collect food waste directly from
                                                                                          commercial establishments and obtained the General
                There were three main sources of food waste that                          Waste Collector (GWC) licence from NEA. GWCs
                IUT could tap on: Domestic food waste disposed by                         were a larger pool of companies (including PWCs)
                households and Commercial and Industrial food waste                       contracted by NEA to collect waste from industrial and
                disposed by food establishments including hotels,                         commercial premises.
                restaurants, food courts/hawker centres, hospitals,
                army camps, prisons, and food manufacturing                               Granted the class B licence to collect organic
                facilities.29                                                             waste, IUT was paid by the building managers of
                                                                                          the commercial establishments such as hotels and
                a) Domestic food waste                                                    shopping malls as well as by NEA which managed
                                                                                          110 food courts and hawker centres to collect their
                Waste disposed by households, mainly from HDB                             food waste.
                apartment blocks30 where more than 80% of the
                Singapore population resided31, included food waste.                      Collection of Food Waste
                These waste were unseparated and were collected
                by licensed Public Waste Collectors (PWCs) from                           IUT’s list of potential food waste suppliers ranged
                the collection bins on the ground floor of these                          from large chain hotels to restaurants, shopping malls
                high-rise residential buildings which were vertically                     and universities, to hawker centres and food courts.
                connected to the refuse chutes built on every level or                    With the assistance of National Environment Agency
                in every household to minimise nuisance to residents                      (NEA), Edwin reached out to 110 hawker centres and
                and neighbouring premises, and no pollution to the                        food courts across the island managed by the Agency.
                environment.32                                                            The aim was to encourage the food operators in these
                                                                                          centres to separate their food waste for collection and
                In 2005, three PWCs contracted by NEA, namely,                            disposal. As a pilot project, NEA and IUT worked with
                Alvater Jakob, Sembwaste and FME Onyx had                                 Chinatown market centre in late 2007. Other NEA-
                been appointed to collect refuse from residential                         administered food premises including Tekka Temporary
                and trade premises throughout Singapore.33 These                          Market, Bukit Timah Market & Food Centre, Taman
                large transnational companies, specialising in waste                      Jurong Market & Food Centre and Yuhua Village
                management, then transported the waste collected                          Market & Food Centre, were also in the pilot project.34
                to material recovery facilities to sort the waste for
                recycling – waste that could not be recycled was sent                     Some major hotel chains with restaurants also
                to the incineration plants. These PWCs were paid by                       participated, as well as some shopping malls which
                the town councils for waste collection and had to bid                     had restaurants and food courts as tenants. Another
                for their licences once every few years. Their revenue                    source of food supply was the food halls and canteens
                source was also from the sale of recyclables.                             at a local university.
                29 Hawker Centres are open-air eating spaces with food stalls selling a variety of inexpensive food and beverages.
                30 HDB apartment blocks are high-rise residential buildings with a lease holding of 99 years managed by the Singapore government.
                31 The percentage of Singapore residents residing in HDB ats has uctuated very little and remained at over 80% from 2005 – 2014.
                   – From HDB. Key Statistics.
                32 Building Construction Authority. (2011). Chapter Four: Precast Refuse Chutes, Reference Guide on Standard Prefabricated Building
                   Components.
                33 National Environment Agency. Environmental Protection Division Report 2005.
                34 Oh, B.P. (2008, October 21). Improving the taste of waste. The Business Times.
                35 National Environment Agency. (2013). Retrieved September 2, 2014, from http://app2.nea.gov.sg/energy-waste/waste-management/
                   refuse-disposal-facility.
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                paid to Public Waste Collectors (PWCs) for refuse                         Even in the kitchens of hotels and restaurants in
                disposal. The management of these establishments                          shopping malls, the effort to persuade kitchen staff
                also considered the move to be a good Corporate                           to separate food waste from waste products was an
                Social Responsibility (CSR) initiative as they were                       uphill struggle.
                participating in a sustainable energy initiative.
                                                                                          Food Waste Collection Challenges
                Getting the buy-in from restaurant and other food
                operators                                                                 Initially, IUT had planned to outsource collection to
                                                                                          one of the NEA-appointed PWCs. However, after a
                Although the idea of converting food waste to energy                      review of the collection fees quoted by the PWCs, the
                was novel and innovative, the challenge was in                            company decided to undertake food waste collection
                persuading food operators to separate organic waste                       internally.
                from inorganic waste. Although the management
                of these establishments supported the recycling                           As the food waste collected from suppliers had very
                initiative inherent in IUT’s collection of food waste,                    high water content, it was not possible to throw the
                workers found the separation process a hassle and                         contents into the usual refuse collection truck. While
                inconvenient especially during peak working hours.                        looking for specially designed trucks that could allow
                (See Box.) At Yuhua Village Market and Food Centre,                       this, the company decided to use 660-litre collection
                a pneumatic food-waste collection system went unused                      bins and to collect these bins on a daily basis. Because
                because stallholders worried it could slow down                           of the weight of food waste, bins could only be partially
                service especially during peak periods, and that it                       lled otherwise it would be too heavy for workers to
                could increase the cost of maintenance and electricity.                   move and place into the truck. This meant that the
                Others complained that space constraints in the food                      space in the truck was not fully used as it was difcult
                stalls made it difcult to separate food waste.36                         to manually pile the bins on top of each other. Also
                                                                                          replacement bins had to be provided as the lled bins
                A spokesperson for a privately operated food court                        were transported to the plant. At the plant, after the
                operator who did not sign up for the initiative noted                     contents in the bins were discharged, they had to be
                that it was easier to implement measures right from the                   washed, sanitised and deodorised before reuse.
                start at new outlets than to expect tenants at existing
                food courts to adopt the practice.37                                      IUT obtained a grant from the government for the
                                                                                          purchase of specially designed trucks with loaders to
                  The practice of segregation of food waste from other waste was not common in Singapore. The waste
                  minimisation and recycling strategies employed by the government was mainly for inorganic waste. (See
                  Appendix 3 – Waste Management Strategies.) Food waste disposed was very often mixed with inorganic
                  waste, especially with the packaging material that the food came in. Uncooked food preparation waste was
                  also discarded together with their plastic packaging.
                36 Chua, G. & Goh K.S. (2011, January 28). Pushing hard for eateries to think green. The Straits Times.
                37 ibid.
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                improve efciency and alleviate some of its collection                    By May 2010, IUT was only able to process 120-130
                problems. However, before the trucks were delivered,                      tonnes of food waste daily, less than half its initial
                IUT had gone into liquidation.                                            target of 300 tonnes. At that time, Edwin had noted
                                                                                          that, “It has taken us longer than we expected to get
                Unforeseen Operating Costs                                                the waste volumes we need to break even. We need
                                                                                          to be recycling 150 to 220 tonnes a day to break even
                IUT had expected the bulk of its costs to arise from                      … At 300 tonnes, we will start making money.”38
                depreciation costs of plant & equipment with other
                costs being labour and administrative expenses. The                       Although IUT’s target to recycle 99,000 tonnes of
                total operating cost, however, was much higher than                       food waste per year was just 17.7% of total food
                expected.                                                                 waste output of 558,900 tonnes39 in Singapore for the
                                                                                          year 2007, the rm found it an uphill task to collect
                IUT incurred significant logistics costs for waste                        300 tonnes of food waste daily because of the high
                collection. Initially, when the company started, it did                   impurities in certain premises especially the hawker
                not use trucks specially designed to handle food waste                    centres. With lower than expected revenue and high
                as the purchase and running of such trucks were cost                      costs of disposal and manual separation of inorganic
                prohibitive. The use of conventional trucks to collect                    waste , the business struggled to breakeven.
                food waste led to collection inefciencies given food
                waste was high in water content and as a result, heavy                    The End of the Road for a First Mover
                in weight. IUT had tried to outsource the collection of
                food waste to the PWCs but felt that the price quoted                     For IUT the problem of high inorganic contamination
                was not cost effective and carried out its own collection.                of its food waste supply was a major problem which
                For IUT, a vital part of the waste collection system, in                  severely hampered the company’s ability to meet its
                addition to the logistics of collection, is the efciency                 production/treatment targets. This resulted in the start-
                of waste inspection and source segregation, as well as                    up accumulating losses of more than $8 million and
                a good working relationship with the customer. These                      with total liabilities exceeding total assets by more than
                were all very important aspects of the collection cum                     $7 million in 2009.40 By then the start-up had incurred
                pre-treatment system.                                                     three years of consecutive losses since it started
                                                                                          operations in 2007.
                As the proportion of inorganic contaminants in
                collected food waste grew, so did labour costs as IUT                     The food waste contamination problem could be
                had to have workers manually separate unscheduled                         traced to the habits and accepted behavioural patterns
                non-organic waste (computers, large cane baskets,                         regarding the disposal of food waste in Singapore,
                cardboard boxes and even broken tables and chairs)                        whether in commercial places where food was
                contaminants from the food waste.                                         prepared and consumed, or in household kitchens. For
                                                                                          Edwin this was an issue which could only be addressed
                While the projected cost of disposal of inorganic                         through government regulations and mandates that
                contaminants was based on 11-15% impurities, the                          encouraged commercial and industrial facilities to
                actual costs exceeded the budgeted amount when                            dispose of their rubbish appropriately.
                inorganic contaminants rose to 30-40% of food waste
                collected.                                                                Confronted with this seemingly intractable community-
                                                                                          wide behavioural issue, at the end of 2010, plans for
                Additional costs beyond what was budgeted as                              Phase II were suspended. The yearly losses for the
                operating cost were also incurred to have these                           preceding three years were:
                contaminants sent for disposal at incineration facilities
                for which a tipping fee of $77 per tonne was charged
                38 Vaughan, V. (2010, May 7). Food recycling plant going to waste. The Straits Times.
                39 National Environment Agency. Environmental Protection Division Report 2007.
                40 Ng, K. & Lim, R. (2011, March 22). Recycling rm IUT Global being wound up; This follows three straight years of losses since start
                   up. The Business Times.
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                41 Ng, K. & Lim, R. (2011, March 22). Recycling rm IUT Global being wound up; This follows three straight years of losses since start
                   up. The Business Times.
                42 Chua, G. (2011, November 11). Food waste recycler folds. The Straits Times.
                43 Enviro-Hub buys IUT recycling plant. (2011, May 31). The Business Times.
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APPENDIX 1
                Singapore is a highly urbanised city-state with a land size of about only 710 square kilometres.1 In 2014, with
                a population of about 5.4 million2, it was one of the most densely populated nations in the world. About 80% of
                the population lived in high-rise apartment blocks more commonly known as Housing and Development Board
                (HDB) ats.3 Waste generated by the apartment blocks was mainly discarded through refuse chutes built either
                into each apartment unit or in the common area of every level of the block.
                This waste was then collected daily by Public Waste Collectors (PWCs) from the collection bins at the HDB
                blocks. General waste that was thrown into the recycling bins situated at every apartment block was also
                collected by PWCs weekly.4 To be recycled, all these materials had to be unsoiled or not ‘dirtied’ by food waste.5
                Waste that was not recycled was classied as incinerable or non-incinerable waste in Singapore. Incinerable
                waste, including food waste, was sent to the waste-to-energy incineration plants to be burnt to ashes where
                the waste volume was reduced by about 90%. Non-incinerable waste such as construction debris, human and
                animal waste, liquid and volatile waste, oil sludge, poisonous and radioactive waste as well as Polyvinyl Chloride
                (PVC) were not allowed to be brought to the incineration plants.6 If not recycled, non-incinerables were dumped
                directly at the Semakau landll, the only offshore landll in Singapore.
                Each year around 3 million tonnes of waste was disposed of. Most of the waste disposed were incinerated
                into ashes, reducing the waste volume to 10%. The ashes amounting to about 1400 tonnes per day and non-
                incinerable waste amounting to approximately 600 tonnes per day were dumped in the offshore Semakau
                landll, Singapore’s only offshore landll.7
                Semakau landll, located 8 km south of Singapore, was built in 1999. It was created by enclosing 350 hectares
                of sea space between two offshore islands with a 7km perimeter rock bund. The bund, lined with impermeable
                membrane and a layer of marine clay, ensures that leachate from the refuse is contained within the landll area.8
                The landll capacity was 63 million m3. At the current rate of use, Semakau landll was expected to last till 2035.9
                To protect the natural environment, the 13 hectares of mangrove that was destroyed during the construction
                of the landll was replaced by the National Environment Agency which planted 400,000 mangrove saplings on
                14 hectares of specially created mud-beds. The mangroves also act as biological indicator giving early warning
                if toxins leak into the sea.10
                1  Approximate gure as Singapore’s land size has been increasing due to land reclamation.
                2  Inclusive of Singapore citizens, permanent residents and foreign non-resident population.
                3  Housing Development Board. (2014, September 5). Retrieved March 19, 2015, from http://www.hdb.gov.sg/10/10320p.nsf/w/Abou
                   tUsPublicHousing?OpenDocument
                4 National Environment Agency. Environment Protection Division Report 2013.
                5 Cheam, J., Chua. G., & Yong, N. (2010, December 12). Recycling in Singapore: 10 years on - Chute, we got it wrong. The Straits
                   Times.
                6 National Environment Agency. Code of Practice for Licensed General Waste Collectors. Appendix 2.
                7   Waste Management World. (2009). Retrieved March 30, 2015, from http://www.waste-management-world.com/articles/2009/03/
                   semakau-landll.html
                8 National Environment Agency. (2013, June 14). Semakau Landll. Retrieved March 30, 2015 from http://www.nea.gov.sg/energy-waste/
                   waste-management/semakau-landll
                9 Ministry of the Environment and Water Resources. (2014, October 1). Retrieved February 9, 2015, from http://app.mewr.gov.sg/web/
                   contents/contents.aspx?contid=1538
                10 National Library Board. (2010). Singapore Infopedia. Pulau Semakau. Retrieved March 30, 2015, from http://eresources.nlb.gov.sg/
                   infopedia/articles/SIP_1008_2010-03-22.html
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                                                                               APPENDIX 1
                                                                              (CONTINUED)
Waste Statistics
                The total amount of waste generated in 2013, was 7.85 million tonnes, an increase from the 5.60 million tonnes
                in 2007 (see Table 1A). Of the 7.85 mn tonnes of waste generated, 61% was recycled and comprised mainly
                industrial and construction debris recycling (see Table 1B). Domestic waste was about 1.71 million tonnes in
                2013, which averaged to about 0.87kg per capita daily and domestic waste recycling rate remained low at 20%.11
                Total food waste generated was 796,000 tonnes and accounted for about 10% of total waste generated. Total
                food waste disposed however, was 696,000 tonnes and accounted for more than 20% of total waste disposed
                (see Table 1B).
                                                                     Table 1A
                                      Total Waste Generated, Recycled, Incinerated and Landfilled: 2007 to 2013
Source: Ministry of the Environment and Water Resources, Singapore. (2014, August 19). Key Environment Statistics.
11 Ministry of the Environment and Water Resources. (2014, May 9). Media Kit – Our Waste Situation, [News Release].
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                                                                               APPENDIX 1
                                                                              (CONTINUED)
                                                                          Table 1B
                                                            Recycling Rates by Waste Type in 2013
                                                                                                      Waste
                                                                                 Waste                                      Waste
                                                                                                     Recycled                                 Recycling
                 Waste Type                                                   Generated                                 Disposed of
                                                                                                                                               Rate (%)
                                                                               (tonnes)                                   (tonnes)
                                                                                                      (tonnes)
                 Construction debris                                               1,695,300            1,683,000                12,300            99
                 Used slag                                                           353,700              344,800                 8,900            97
                 Ferrous metals                                                    1,416,000            1,369,200                46,800            97
                 Scrap tyres                                                           21,600               19,000                2,600            88
                 Non-Ferrous metals                                                  135,100              114,000                21,100            84
                 Wood                                                                332,400             254,600*                77,800            77
                 Paper/Cardboard                                                   1,261,100              679,400              581,700             54
                 Horticultural waste                                                 252,600             120,900*              131,700             48
                 Glass                                                                 73,500               14,600               58,900            20
                 Food                                                                796,000              100,000              696,000             13
                 Plastics                                                            832,200                91,100             741,000             11
                 Textile/Leather                                                     156,600                16,300             140,300             10
                 Ash & Sludge                                                        190,600                14,200             176,400              7
                 Others (stones, ceramics, rubber, etc)                              334,800                 4,800             330,000              1
                 Total                                                             7,851,500            4,825,900           3,025,600              61
                *Includes 131,900 tonnes used as fuel in biomass plants
                Source: National Environment Agency. Environmental Protection Division Report 2013.
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APPENDIX 2
                The major sources of food waste in Singapore were food manufacturers, supermarkets/wet markets12, food
                retailers such as food stalls and restaurants as well as households.
                 In the rst quarter of 2015, the Singapore Food Manufacturing Association (SFMA) had about 350 members.13
                  In the food manufacturing process, food was wasted when it failed to meet manufacturing standards or
                  customer requirements. The retailers in Singapore had the practice of returning unsold food products (mainly
                  dented canned food or expired food) to manufacturers who lacked recycling options and knowledge on how
                  to sort waste.
                 Supermarkets/ wet markets were a huge source of fresh produce waste. Fresh produce that were “ugly”
                  or “imperfect” were not bought by consumers leading to the wastage of a large quantity of fruits damaged
                  when people touched and pressed it during the process of buying and vegetables with leaves that had dried
                  up. Cosmetic ltering was a common practice among many supermarkets who had staff to trim ‘unpleasant
                  looking’ leaves from vegetables so that they can be sold.14
                 Food retailers were a major source of food preparation waste such as peels, unusable portions of vegetables/
                  meat. In 2013, Singapore had a total of about 6750 food establishments15 of which 935 were food courts,
                  coffee shops and eating houses, 215 were canteens and about 110 hawker centres16 managed by the
                  National Environment Agency (NEA) in 2013. 6 in 10 Singapore residents ate out on a regular basis while
                  49.9% of Singapore residents usually had lunch at hawker centres, coffee chops or food courts in 2010.17
                  These safe and affordable eat-out options contributed to cooked food waste in the form of unnished meals
                  or unavoidable waste such as shells and bones.
                 Household food waste was similar to the food wasted by food retailers. Singaporeans also had the practice
                  of ‘taking away’ or ‘tapau-ing’ food from hawker centres, food courts or coffee shops back home to eat. This
                  practice meant that unnished meals and other cooked food waste was disposed of with packaging materials
                  which were usually Styrofoam boxes made of polysterene together with plastic bags used to carry them
                  home. In addition, households also threw away expired manufactured food products such as canned food
                  items.
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APPENDIX 3
                The management of waste in Singapore was motivated by two guiding principles of maintaining high levels of
                public health and optimizing resource utilization in the waste disposal system.18 The main aims of the waste
                management system were to19:
                a) Minimise waste generation: In 2007, the NEA spearheaded an initiative to reduce packaging waste in Singapore
                   to cut down domestic waste generation. This was done through the signing of the Singapore Packaging
                   Agreement (SPA) by industry associations, individual companies, non-governmental organisations, the Waste
                   Management & Recycling Association of Singapore (WMRAS) and public waste collectors. The SPA aimed
                   to also raise awareness and educate Singapore consumers on the need to reduce waste. Initially covering
                   only food and beverages packaging, in 2009, the agreement was extended to include all types of packaging.
                   Packaging waste was reduced by 20,250 tonnes by signatories to the agreement between 2007 and 2013,
                   and the companies involved saved more than S$44 million as a result of this.20 A second SPA was launched
                   in 2012, after the rst had expired and as at early 2015, 160 signatories had signed the SPA.21
                b) Maximise waste recycling: In 2001, the government introduced the National Recycling Programme where
                   PWCs collected recyclables segregated by residents such as paper, plastics and glass fortnightly. To
                   complement these collections, NEA placed a huge recycling bin at every ve HDB apartment blocks in 2007.
                   From mid-2014 onwards it was planned for every apartment block to have a recycling bin. The collected
                   recyclables were then sent to material recovery facilities for sorting and baling before being sent to recycling
                   facilities. Perishable waste such as food waste was not covered under this recycling programme.22
                   The recyclables were sometimes contaminated with organic waste. Many of the public recycling bins contained
                   up to 20% of materials that could not be recycled and some bins were soiled or contaminated by food waste,
                   which meant that none of the materials in the bin could be recycled and these then had to be sent to the
                   incineration plants.23
                Waste-To-Energy (WTE)/ Incineration plants were an efcient way in reducing waste volume to conserve landll
                space, in land-scarce Singapore. In 2015, there were four WTE plants and a Tuas Marine Transfer Station which
                served as an intermediate collection point for incineration ash from WTE plants and non-incinerable waste to
                be transported to the Semakau landll. In 2013, NEA announced plans to build a fth WTE plant to handle the
                increasing amount of waste disposed and this plant was expected to be completed in 2018.24 However, energy
                generated by incineration of food waste in WTE plants was less efcient compared to anaerobic digesters.25
                (The incineration ashes, together with non-incinerable waste, were disposed at Semakau landll.)
                18 Ministry of Environment and Water Resources. (2014, May). Our Waste Situation. Media Kit.
                19 National Environment Agency. Environmental Protection Division Report 2013.
                20 National Environment Agency. (2014). Factsheet on the Singapore Packaging Agreement and the 3R Packaging Awards, [Press
                   Release].
                21 National Environment Agency. (2015). Singapore Packaging Agreement. Retrieved February 11, 2015, from http://www.nea.gov.sg/
                   energy-waste/waste-management/singapore-packaging-agreement
                22 National Environment Agency. Environmental Protection Division Report 2013.
                23 Cheam, J., Chua. G., & Yong, N. (2010, December 12). Chute, we got it wrong. The Straits Times.
                24 Plans for 5th incineration plant for solid waste. (2013, September 11). The Straits Times.
                25 Hsien H. Khoo , Teik Z. Lim, Reginald B.H. Tan. Food waste conversion options in Singapore: Environmental impacts based on an
                   LCA perspective. Science of the Total Environment, 408 (2010): 1367–1373.
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                                                                               APPENDIX 3
                                                                              (CONTINUED)
                The 3Rs (reduce, reuse, and recycle) also played a complementary role by reducing waste sent to the disposal
                sites by reducing waste generated at source.
                On 1 April 2014, the Environmental Public Health Act was amended to effect the mandatory reporting of waste
                data and waste reduction plan by large commercial premises, starting with large hotels and shopping malls.
                The mandatory reporting requirement was aimed at drawing and sustaining management attention on the
                amount of waste produced by the premises and to help build greater awareness of the potential for improving
                their waste management systems.
                Commercial premises such as hotels with more than 200 rooms and shopping malls with net lettable area of
                more than 50,000 square feet would be the rst to be governed under these new requirement structures.26
                These establishments had to submit a report by March 2015, on their waste data for waste generated, reused
                and recycled (Classied by different material types) for the period between July 2014 and December 2014
                as well as waste reduction plans. From 2016 onwards, the reports had to include progress updates as well.27
                26 National Environment Agency. (2013). Mandatory Waste Reporting. Retrieved February 11, 2015, from http://www.nea.gov.sg/energy-
                   waste/waste-management/mandatory-waste-reporting
                27 National Environment Agency. (2014). Sample Notice to owner/ occupier/ lesse of premises under section 30A of the Environmental
                   Public Health (Amendment) Act 2014.
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