Industrial Ecosystems: Developing Sustainable Industrial Structures By Nicholas Gertler  Chapter 2. The Kalundborg Industrial Ecosystem: Development and Implications
Introduction Kalundborg, Denmark is home to a system of arrangements by which four large industries and a town share material and energy resources and reuse waste materials. Industrial symbiosis, as this practice has come to be called, has significantly reduced the environmental impact of industry in the area while decreasing its need for energy and raw materials. Although it was not explicitly intended as such, this beneficial arrangement forms the most highly developed implementation of the industrial ecosystem concept to be found anywhere in the world. As a result, Kalundborg has become the prototype for the application of industrial ecology. A number of articles [ See, for example, Peter Knight, "A Rebirth of the Pioneering Spirit" The Financial Times Nov. 14, 1990. p. 15. and Hilary Barnes, "Fertile Project Exploits Recycled Wastes" The Financial Times Oct. 8, 1992. ] and at least one extensive case study [ Holger Engberg, "Industrial Symbiosis in Denmark" New York University, Stern School of Business 1993.] have been devoted to describing this system of arrangements. However, the dynamics of their development had not previously been documented. This account picks up where the descriptions left off by taking an in-depth look at how the Kalundborg ecosystem came about. It is based on five days of interviews conducted by the author during July of 1994 which would not have been possible without the generous hospitality of Valdemar Christensen and Asnæs Power Station. The Concept of Symbiosis According to Valdemar Christensen [ Valdemar Christensen is production manager of Asnæs Power Station in Kalundborg, Denmark.] , one of the main architects of the symbiosis at Kalundborg and originator of the phrase, industrial symbiosis is "a cooperation between different industries by which the presence of each...increases the viability of the other(s), and by which the demands [of] society for resource savings and environmental protection are considered (e.i.o.) [ Quoted in Holger Engberg, "Industrial Symbiosis in Denmark" Stern School of Business, New York University, 1993. ] . Kalundborg's four main industries, Asnæs Power Station, a coal-fired power plant, Statoil refinery, Novo Nordisk, a maker of pharmaceuticals and enzymes, Gyproc, a plasterboard manufacturer, and the municipality trade and make use of waste streams and energy resources, and turn by-products into raw materials. The symbiosis developed gradually and without a grand design over the past twenty-five years, as the firms sought to make economic use of their byproducts and to minimize the cost of compliance with new, ever-stricter environmental regulations. Although industrial symbiosis is presented here as an implementation of industrial ecology, the Kalundborg system was not based on this philosophy, but rather on creative business sense and deep-seated environmental awareness. However, the linkages among the local firms (as well as some more distant ones) through which materials and energy are transferred are the sort of loop-closing measures that are called for by an industrial ecology paradigm. The power plant significantly increases the overall efficiency of converting coal to useful energy by selling excess heat to the town for district heating and by heating its own fish farm. The plant also sells steam to Statoil and Novo Nordisk, gypsum from its SO2 scrubber to Gyproc, and fly ash to construction firms. Statoil refinery sells its flare gas as fuel to Asnæs and to Gyproc instead of burning it off, and sends its cooling water to Asnæs thereby reducing the power plant's fresh-water requirements, while selling pure sulfur from its desulfurization plant to a sulfuric acid maker. Novo Nordisk generates a great deal of organic sludge as a process byproduct, which it treats and distributes to local farmers as a fertilizer supplement. At the time of its inception, this scheme was the lowest-cost way of complying with regulations. Gyproc makes plasterboard by using the power plant's scrubber byproduct and fuel gas from the refinery. Each of these linkages bears an economic advantage for the participating firms, while reducing the pressure on the environment and on resource stocks. While the participating companies herald the environmental benefits of the symbiosis, it is economics which drives or thwarts its development. From the perspective of public policy, however, the environmental and resource benefits should provide the motivation to create incentives which encourage such cooperation. The linkages at Kalundborg have reduced the material and energy through-put of the participating firms without hindering their production and expansion. It is such a systematic increase in the efficiency of materials and energy use which is called for by industrial ecology [ The Greening of Industrial Ecosystems Braden Allenby and Deanna Richards, editors. National Academy Press, Washington D.C. 1994. ] . And while the general public benefits from the symbiosis in the form of reduced environmental loading and better use of resource stock, this public benefit does not have a direct advocate among those managers responsible for bringing it about. Several of the symbiotic linkages developed, however, in response to environmental regulation. As discussed in the previous chapter, industrial symbiosis results in systemic pollution-reduction effects. This result is not lost on the Kalundborg participants, who take pride in the environmental benefits of their efforts. Valdemar Christensen, production manager at Asnæs Power Station, has advanced the notion that environmental impact becomes a downward sloping function of the number of firms cooperating in symbiotic arrangements. This approaches the vision of an industrial ecosystem with limited inputs and limited waste outputs, in which materials and energy are utilized to the full extent possible. Symbiosis Results Approximately eleven physical linkages comprise much of the tangible part of the industrial symbiosis in Kalundborg. They are the arrangements of materials and energy flows which go beyond the traditional, linear nature of industrial resource use. There are four types of tangible benefits which derive from the symbiotic arrangements: reduced reliance on resource inputs - especially water, also coal, oil, gypsum, fertilizer, etc. reduction in pollution - lessened thermal and chemical water pollution, reductions in CO2 and SO2 air emissions, greatly reduced pollution or potential contamination from land disposal. increased efficiency of converting fuel to useful energy - energy cascades have increased the efficiency of coal burning from 40% to over 90% (as an upper bound); refinery flue gas is used instead of burned off. beneficial uses of materials formerly treated as waste - several examples. Substantial disposal costs are avoided, and process byproducts are used as inputs elsewhere, foregoing the need for virgin materials. These results include: Inter-firm linkages have reduced the water demand of the four big participants by between 20-25%, depending on whose numbers one uses. The most recent assessment presented by Statoil [ Slides from Statoil presentation at CONCAWE-MOL Seminar, Siófok, Hungary. Oct. 6-8, 1993] is a reduction by 1.2 million cubic meters per year, from 4.8 million to 3.6 million. A water treatment facility recently completed by Novo Nordisk should make another 900,000 cubic meters per year of water available for re-use within the symbiotic system, and Gyproc is investigating possibilities for its use. Freshwater is scarce in the area, with industries more and more reliant in Lake Tissø as groundwater is depleted. Oil consumption has been reduced by 19,000 tons per year, due to the substitution of power plant heat for municipal heating and of refinery flue gas for oil at Gyproc and Novo Nordisk. Coal consumption is reduced by 30,000 tons per year, or about 2% of the power plant's requirements, by substituting with refinery flue gas. CO2 emissions have been reduced by 130,000 tons per year, or by about 3%. This reduction is due in part to the substitution of refinery flue gas for coal in the power plant's boilers. SO2 emissions have been reduced by 25,000 tons per year, or 58% [ Numbers differ on this issue as well. 25,000 tons is indicated on the slides cited above. "Facts About Industrial Symbiosis in Denmark", a document written in March of 1992 at Asnæs, credits the symbiosis with a 900 ton SO 2 reduction , prior to scrubbing by the power plant and the substitution of refinery flue gas for some of its coal. It can be inferred that at least 900 ton reduction can be credited to symbiosis arrangements, while much of the 25,000 ton reduction is attributable directly to pollution-control technologies. However, the two should not be considered in isolation.] . This reduction is due mostly to scrubbing at the power plant and at Statoil, and in fact could be higher than 58%. These results may not be directly attributable to industrial symbiosis, but scrubbing byproducts are used as feedstocks. Conversion of byproducts into raw materials not only reduces pollution and demand for waste disposal space, but also replaces the use of virgin materials. Gyproc, the plasterboard maker, gets about 80,000 tons of gypsum, 2/3 of its yearly requirement, as a byproduct of the power plant's scrubber. It has also substituted a continuous stream of fuel gas from the refinery for oil to fire its dryers. Other waste-to-raw-material conversions involve 135,000 tons per year of fly ash, 2800 tons per year of sulfur, and 800 tons of nitrogen and 400 tons of phosphorus in the form of biosludge fertilizer. In addition, once managers of the various firms started talking, they realized that the cooperation among their companies had other benefits as well. One such area is worker training. Companies formerly had to send employees to Copenhagen to receive specialized training because their small numbers did not warrant bringing the required instructor to Kalundborg. The increased openness that has accompanied the symbiosis has more recently enabled the firms to find areas of overlap among their worker training needs, making it cost-effective to provide training jointly in Kalundborg. Another area of increased cooperation has been general worker safety, not limited to concerns regarding specific symbiotic linkages. Symbiosis Chronology [From, Holger Enberg, "Industrial Symbiosis in Denmark" ] 1959 Asnæs Power Station commissioned 1961 Statoil Refinery commissioned; water piped from Tissø Lake 1972 Gyproc A/S established; gas is piped from Statoil Refinery 1973 Asnæs Power Station draws water from Tissø Lake through a pipeline after expansion 1976 Novo Nordisk starts delivery of sludge by trucks to farmers 1979 Asnæs Power Station starts to supply fly ash to cement producers, including Aalborg Portland 1981 Asnæs Power Station produces heating for the municipality of Kalundborg 1982 Asnæs delivers process steam to Statoil and Novo Nordisk 1987 Statoil pipes cooling water to the boilers of Asnæs Power Station 1989 Novo Nordisk is hooked up to Tissø Lake for freshwater, replacing groundwater use 1990 Statoil Refinery starts delivery of hot, liquid sulfur to Kemira in Jutland 1991 Statoil delivers treated waste water to Asnæs power plant to meet various water consumption needs (but not for use as boiler feedwater) 1992 Statoil pipes fuel gas to Asnæs Power Station after installing desulfurization plant. 1993 Asnæs supplies gypsum to Gyproc after installing scrubber Symbiosis Linkages The tangible linkages are as follows: Link Gas piped from Statoil Refinery to Gyproc A/S Cost of the link / Who paid Gyproc pays for gas Date of Inception 1972 Participants Statoil to Gyproc Material / Energy Flows Gyproc obtains all of the 900 kg of gas per hour it uses from Statoil. Statoil's flare gas contains a mixture of ethane and methane, from which impurities are removed. 90-95% of the time Gyproc exclusively uses gas piped continuously from Statoil. Gyproc switches to a butane backup system when fuel gas from the refinery becomes unavailable. Cause / Impetus / Inspiration Used to fire the furnaces which dry the gypsum; it is cheaper than using oil, and the equipment is easier to maintain. Flue gas replaces oil. Alternatives Oil-fired furnaces, and burning off the flue gas - a double environmental whammy. In order to hedge itself against disruptions of gas flow from Statoil has installed a butane back-up system. Impacts on Participants No matter what mix and proportion of petroleum products Statoil makes, it will produce the fuel gas, with minor variations in the ratio of ethane to methane; therefore its flare gas production is very robust with respect to changes in product mix. The gas flow to Gyproc is for the most part continuous, with a temporary reduction in volume when the refinery changes its production mix. In addition, the refinery shuts down for four to five weeks every fourth year. Gyproc is given advance warning of each impending reduction or shutdown. Gyproc continuously needs gas to fuel the ovens in which its plasterboard, which starts out as a wet mush, is dried to its solid consistency. The fuel gas from Statoil is very light, and therefore very difficult to liquefy, which makes its storage difficult. Gyproc thus has minimal capacity to store fuel gas from Statoil, but has a butane back-up system. Butane can be liquefied readily, and therefore stored readily, and Gyproc can operate using butane indefinitely. Thus, even though Gyproc needs fuel gas continuously, a breakdown in its gas supply from Statoil will not halt production and therefore is not a concern for management. Switching from one fuel source to another is simple and quick. Link Novo (later - Nordisk) delivers treated process sludge (NovoSlam) by trucks and pipelines to farmers as fertilizer supplement Cost of the link / Who paid Free to farmers, saving about $50,000 per year for the average recipient farmer. Novo has built a network of 40 miles of pipelines, and spends about $3 million a year distributing the stuff. This arrangement is still cheaper than conventional waste disposal under more stringent regulations passed in the 1970's. At the time the regulations were passed, spreading the treated sludge as fertilizer was the least-cost way to meet stricter requirements. Distribution costs are about $7 per cubic meter of sludge by truck, and $3.50 per cubic meter by pipeline. Date of inception 1976 Participants Novo Nordisk, about 1000 regional framers, trucking contractors Material / energy flows Novo Nordisk produces approximately 3000 cubic meters of sludge per day, which it must continuously dispose of. Possible alternate disposal mechanisms include drying the sludge and landfilling the remaining solids, and converting the sludge to biogas. However, the infrastructure exists only for distributing the sludge as fertilizer, so this is the only viable disposal option. The firm contracts the spreading responsibilities to others; all the farmers have to do is call and ask for or accept the sludge when it is offered. The sludge is free of heavy metals. Cause / Impetus / Inspiration Nitrogen-rich, watery biomass, or sludge, is a major byproduct of Novo's fermentation processes by which enzymes and insulin are produced. Until the mid-1970s, the sludge was mixed with waste water and discharged into the sea. Now Novo distributes treated sludge free to farmers, avoiding higher alternate disposal costs. In 1976 regulations placed significant restrictions on the discharge of organics into the sea to reduce biological oxygen demand (BOD). Novo Nordisk therefore needed an alternative way to dispose of its sludge, and at the time treating it and distributing it as fertilizer was the least-cost alternative. Alternatives Novo: conventional, high-cost disposal was the original alternative. Other possibilities to receive more recent consideration are using the sludge as pig feed and using it to produce biogas. Producing biogas may in fact be more economically attractive if not for the large existing infrastructure investment in the sludge distribution network. Novo Nordisk must continuously spread the sludge it produces because it has not developed the infrastructure for any other large-scale disposal alternative; and if it can't dispose of its sludge it must stop production. Impacts on Participants Farmers get high-quality fertilizer free, reducing their use of chemical fertilizers. Disposal security is Novo Nordisk's primary concern. The company could charge for its fertilizer but chooses not to in order to assure continued acceptance by the farmers. Novo Nordisk produces about 3000 cubic meters of sludge per day, with no practicable large-scale disposal alternative than spreading it as fertilizer. There is storage space for only three day's production worth of sludge and the production would have to be shut down at a cost of 10 million Danish Kroner ($1.67 million U.S.) if that storage capacity were exceeded. Accordingly, Novo Nordisk has assigned three employees the full-time task of arranging for deliveries to fields. Such deliveries are highly sought after by farmers during dry weather but much less so when the ground is wet, because then the heavy spreading equipment can damage the soil. Approximately 1000 farmers are intermittently recipients of the sludge. Not every field is so treated every day, so that the scheduling problem is not trivial. Novo Nordisk also benefits from the green image that its efforts afford it in the competitive European detergent and enzyme market, where consumers are very eco-conscious in their purchases. Plans are in place to extend the already impressive pipeline network for sludge distribution, motivated not only by cost savings but also by public irritation regarding noisy, polluting diesel trucks cross-crossing the countryside. The company's environmental report indicates that in the future, at least one-third of the sludge will be moved by pipeline instead of by tanker truck. [Environmental Report 1993 Novo Nordisk] Link Asnæs Power Station sells fly ash to cement producers, as well as for road building and construction Cost of the link / Who paid Asnæs built an ash silo with unloading facilities, sells the stuff to Aalborg Portland A/S Date of Inception 1979 Participants Asnæs Power Station, Aalborg Portland, others Material / Energy Flows 170,000 tons of fly-ash and 30,000 tons of clinker annually, as waste products of coal-fired power generation. Cause / Impetus / Inspiration The drive to make economic use of Asnæs' waste products and to avoid disposal costs Alternatives Landfilling (?) Impacts on Participants fly ash goes to cement manufacture Link Asnæs Power Station produces district heating for the Kalundborg Municipality. Heat from the power plant's cooling water is distributed throughout the town and carried into homes and other buildings by pipes. Cost of the link / Who paid Municipality pays Asnæs at a price indexed to the market price of coal, and charges the people who are thusly heated; their heating costs are lower than for oil heat. The municipality paid for the main capital investment at a time when finance costs were high, and the payoff to the town has so far not been large. Installation of the piping for district heating in homes is expensive, and this cost is born by the home-owners. Initially the Kalundborg Kommune, or town government, only encouraged such investment, but more recently has required that every house have district heating by 2005. Residents take out loans to pay for installation, and these loans are guaranteed by the town. This measure was met with some popular opposition, but that has since died down. Date of Inception 1981, ongoing Participants Asnæs Power Station, Municipality and residents of Kalundborg Material / Energy Flows Equivalent of 225,000 tons of steam per year, potentially raising the efficiency of energy extraction from coal from 40% to over 90%, although not all of the available waste heat is required to heat the town. A much larger city could be served by the waste heat, and in fact much of Copenhagen is heated in a similar fashion by a power plant located there. Oil heat is replaced, thereby greatly reducing the town's demand for oil. Cause / Impetus / Inspiration Asnæs needs to make economic use of its waste heat to decrease its cost of electricity production in order to be competitive with other power plants. The town was mostly heated by oil before, the availability of which became doubtful during the oil crisis. According to Fleming Malkær of the Kommune, heating security was the main driving force of the switch to district heating. The town also enjoys air quality benefits, as the smoke from the numerous oil furnaces used to foul the air. None-the-less, oil would be cheaper for the foreseeable future. Such a shift apparently is not unique to Kalundborg, as the first Danish national energy plan of 1976 has called for and resulted in a "massive change in heat supply from individual oil heaters to district heating and natural gas. [ The Danish Environmental Strategy Danish Ministry of the Environment 1994. p.27 ] Alternatives Oil heat Impacts on Participants Asnæs supplies heat to almost 5,000 houses and buildings, eliminating the use of 3,500 oil-fired house heating systems and contributing to a 19,000 tons per year oil use reduction. Over 90% of the heat demand in the area is met this way and all of it will be by the year 2005. Asnæs does not need to operate all of its five boilers in order to meet the heat demand, and a complete shutdown would be possible during the summer when heating needs are negligible. Link Asnæs delivers process steam to Novo (Nordisk) and Statoil Cost of the link / Who paid A two-mile long steam pipe connects the three plants. Novo paid for its share. Statoil pays for the steam. Date of Inception 1982 Participants Asnæs, Novo Nordisk, Statoil Material / Energy Flows Statoil gets 40% of its steam requirements from Asnæs, about 140,000 tons a year. Novo Nordisk gets all its steam from Asnæs, about 215,000 tons per year. The steam is used to heat pipes and tanks at Statoil, while Novo Nordisk uses it as a source of heat and pressure and to carry its sludge. Cause / Impetus / Inspiration For Novo Nordisk: cheaper to construct a pipeline and buy steam from Asnæs than to renovate and upgrade their boilers. So the need to renovate/upgrade was the impetus. The reason was similar for Statoil. For Asnæs, this arrangement represents another opportunity to make economic use of its waste heat. Alternatives For Novo, upgrade and renovate its old boilers (1982). Selection criteria Novo - save money -- pipeline cheaper than boiler upgrades. Impacts on Participants Reduced discharge of cooling water into Kalundborg Fjord. Novo totally reliant on Asnæs for process steam. J Christensen: we are "vulnerable to any irregularities in Asnæs' steam generation." so this was a major decision, requiring a high degree of cooperation and information exchange between the two firms. Novo Nordisk has so far experienced no problems with the steam from Asnæs, and reports that the pipeline paid for itself in two years. Cost savings were 7 million Kroner (over $1 million U.S.) a year for the first several years, but Asnæs will soon raise the price of steam to reduce Novo's savings to 2-3 million Kroner per years. Asnæs is contractually obligated to supply steam continuously, even if it could meet its power generating requirements by buying cheaper power from Norway and Sweden. The price Asnæs receives for its steam includes a premium for this possibility. The arrangement does not require any extra technical investment or changes on the part of Asnæs, only that it perpetually run enough boilers to produce the steam required. Link Statoil pipes cooling water to the boilers of Asnæs Power Station Cost of the link / Who paid Investment in pipeline shared equally by Asnæs and Statoil. Asnæs pays for the water, but saves on using lake water. Date of Inception 1987 Participants Statoil, Asnæs Power Station Material / Energy Flows Water from lake Tissø to Statoil; also to Asnæs but this is substituted for in part by about 700,000 m3 of reused cooling water; this along with wastewater make up nearly 75% of Asnæs' fresh-water requirements. Cause / Impetus / Inspiration Statoil: community resistance to thermal pollution of fjord. Asnæs: high cost of water from lake Tissø and awareness of water scarcity in general. Alternatives Statoil: discharge into fjord. Asnæs: fresh water piped from lake Tissø. Impacts on Participants Reduced water intake by Asnæs, reduced waste water discharge, and reduced public irritation, by Statoil. Link Asnæs Power Station fish farm Date of Inception 1989 Participants Asnæs Power Station, fish Material / Energy Flows Waste heat goes in. 250 tons of fish per year come out. Cause / Impetus / Inspiration Deriving economic value from waste heat Impacts on Participants Asnæs fish farm operates 57 ponds worth 250 tons of fish per year, using heated cooling sea water. The fish like the warmer water and grow faster. Sludge from the fish farm is sold as fertilizer. Link Statoil refinery delivers hot, liquid sulfur from its desulfurization plant to Kemira Cost of the link / Who paid Liquid sulfur sold to Kemira, transported in special trucks. Date of Inception 1990 Participants Statoil, Kemira Material / Energy Flows Statoil's desulfurization plant yields hot, yellow, liquid sulfur. Cause / Impetus / Inspiration Statoil built its desulfurization plant in 1990 under community and regulatory pressures to reduce the amount of SO2 formed when burning the refinery's flue gas. The liquid sulfur is recovered by the desulfurization plant and sold, as is the purified gas. Here a pollution control technology recovers waste materials that are then sold as a process inputs and conditions the waste stream - the flare gas - to be used as fuel by Asnæs. Alternatives Desulfurization (removing H2S) inevitably yields these products, so that the symbiotic potential of the products of pollution control were not relevant to the choice of pollution control technology, if indeed there was a choice. Impacts on Participants By separating its waste stream, Statoil is able to sell its components. Link Asnæs uses treated waste water from Statoil for cleaning and other purposes (but not as boiler feed water). Cost of the link / Who paid Asnæs paid for the pipeline but gets its water free, also reduces fresh water intake from Tissø. Date of Inception 1991 Participants Statoil, Asnæs Material / Energy Flows Up to 900,000 m3 (500,000 by a more conservative estimate) of treated wastewater per year is available as a continuous flow, but Asnæs has been using only about 200,000 cubic meters per year. This is less than the amount expected by Statoil, and in fact the water is only used in Asnæs' newer and separate Unit 5 boiler, which accounts for about half of the plant's generating capacity. The treated waste water is led to the sea from Statoil along a drainage ditch, into which Asnæs can tap by way of an adjoining pipeline. Cause / Impetus / Inspiration Community pressure and anticipated regulations led Statoil to invest in a biological treatment plant, which renders the water clean enough for use by Asnæs. Asnæs thus can forego the use of fresh water. Here too, a pollution control technology renders a waste usable as a process input. Alternatives Asnæs: acquire fresh water from lake Tissø via pipeline. Statoil: discharge all treated waste water into the sea. Impacts on Participants Reduced water intake and discharge of waste water Link Flue gas from Statoil to Asnæs Cost of the link / Who paid Asnæs pays for the gas used. Statoil spent about $3.5 million on the gas export system, but expects to recover that within four years. Asnæs saves 30,000 tons of coal per year. Date of Inception 1992 Participants Statoil, Asnæs Material / Energy Flows The byproduct of petroleum processing contains much sulfur, which is removed by the refinery's desulfurization plant. A gas remains, which is used in-house as fuel, and sold as fuel to Asnæs power station (also to Gyproc beginning in 1972, see above). The sulfur goes to Kemira. Asnæs can forego 30,000 tons of coal per year. This, too, as a result of pollution control technologies. Cause / Impetus / Inspiration Statoil: desulfurization plant built under community and regulatory pressures to reduce emissions of SO2, which forms as flue gas was burned. Asnæs: less coal burned mean reduced CO2 emissions. This reduction forms a part of an overall greenhouse emissions reduction program that Asnæs has to present to the county government. Impacts on Participants Drastically reduced discharge of SO2 and CO2 by Statoil since scrubbing makes waste products marketable instead of being flared off. Link Gypsum from Asnæs to Gyproc Cost of the link / Who paid $115 million scrubber for power plant emissions, removes 90% of sulfur content. Though gypsum is sold, the scrubber cost will not be recovered. Selling the gypsum more or less covers the cost of the calcium carbonate required to operate the scrubber. Date of Inception 1993 Participants Asnæs, Gyproc Material / Energy Flows Scrubbing with calcium hydroxide captures calcium sulfate (industrial gypsum) at a rate of 80-85,000 tons per year, about 2/3 of Gyproc's input requirements. Gyproc also gets gypsum from the scrubber of a German power plant, and still uses virgin rock gypsum because to mix in varying proportions with the scrubber gypsum (mostly for ceiling tiles). Cause / Impetus / Inspiration Agreement between Danish power stations and the government to reduce overall sulfur air emissions (a performance standard for the industry) Where to undertake scrubbing and choice of specific technology were left to the industry. The use of the scrubber's byproduct was a key reason to scrub at Asnæs, even though little of the capital cost is recovered this way. Gyproc obtains the gypsum from Asnæs' scrubber, as well as from that of another power plant, under a long-term contract which locks in a price which is much lower than the price of imported natural gypsum. Once again, a result of pollution control technologies. Alternatives Gyproc: purchasing imported natural gypsum from open-pit mines in Spain at higher prices and/or scrubber gypsum from more distant power plants. Selection criteria Low price, sufficient quality. Impacts on Participants Gypsum is an input to the building industry, and it was important to the scrubber technology choice that Gyproc, the largest Dutch plasterboard manufacturer, was 2 miles down the road. There was extensive prior consultation between the two firms and Asnæs was given material specifications for its gypsum. Gyproc had experimented with gypsum from a German power plant's scrubber before, as well as with other, unsuccessful sources. Gyproc obtains gypsum from Asnæs under a ten year contract and sells that which it does not use to other plasterboard makers. Gyproc's considers its relationship with Asnæs just as it would be with any other supplier. A Potential Link: In response to a law passed in the late 1980's requiring tighter controls on the discharge of liquid waste containing nitrogen and phosphorus, Novo Nordisk completed a wastewater treatment plant in the fall of 1992. Gyproc is now considering whether this more thorough treatment is sufficient to render the water usable for plasterboard making. In addition to evaluating the economics of investing in a pipeline between the two firms as opposed to getting its water from elsewhere, Gyproc "must be 150% sure that the water is 110% fine". Such Pete Rose-like effort is necessary to ward off any perception by Gyproc's customers that its plasterboard is made from scrap. As of the summer of 1994, these discussions are on-going. Symbiosis Requirements The symbiosis in Kalundborg is worthy of study in and of itself, but even more so as a possible model for such development elsewhere. To this end, it is worth examining some of the conditions which have been necessary or at least helpful in making the symbiosis in Kalundborg possible. The industries must fit together. Kalundborg is host to four different process industries. Asnæs and Statoil produce energy in the form of heat, steam, and fuel gas, while all participants consume energy in various forms. Linkages such as those found in Kalundborg do exist elsewhere, but usually one or two at a time. For example, it is not uncommon in cold climates to use the excess heat produced by power plants for district heating. Novo Nordisk operates a similar plant in North Carolina, which also spreads its sludge as fertilizer. It would thus appear that the serendipitous mix of industry outputs and industry needs makes such a highly developed symbiosis possible in Kalundborg while the potential may exist elsewhere as well. The industries must be geographically close. This statement, echoed by several architects of the symbiosis, is more true of some of the linkages than of others. Certainly distance is a factor that affects the economic viability of symbiotic arrangements, as the farther something must be transported, the more expensive it is to get it there [ The extent to which transportation cost is of determining importance is called into question, however, if one considers that Gyproc's supply of virgin gypsum is shipped from 4000 km (2500 miles) away. ] . This is especially true in the case of heat and steam, in which temperature and pressure are the commodities which must be transported. The construction of pipelines has been a major infrastructure investment for the firms in Kalundborg, and the greater the distance, the longer the pipeline and the greater the cost. Close geographical proximity is not an absolute requirement even in Kalundborg, however. Gyproc obtains much of its gypsum from the scrubber of nearby Asnæs, but also from the scrubber of a much more distant German power plant. Statoil sells sulfur to Kemira, which is nowhere near Kalundborg. And Asnæs sells fly ash and clinker to industries elsewhere. The Kalundborg example indicates that geographical closeness is very important for the sharing of physical energy, such as heat and pressure, and only helpful in the transportation of material resources. The mental distance between the participants must be short. This requirement is at least as important as the previous one. It is said that a monkey will write the collected works of Shakespeare given enough time with a typewriter. Yet the types of inter-firm arrangements found in Kalundborg did not and cannot arise out of thin air, nor from within traditional corporate boundaries. Openness, communication, and trust are necessary among the firms involved. Kalundborg's small size and relative isolation have been important elements in bringing this about. According to Gyproc's Finn Grobb, Kalundborg is a small society in which managers of the various firms often run into each other, providing opportunities for them to find out what's going on with their neighboring companies. If there were forty large industries instead of four, or if the managers were dispersed throughout the suburbs of Copenhagen, then this sort of communication would be much more difficult. The fact that the four firms are planted in the same interconnected society in which their employees live makes inter-firm cooperation more readily achievable. Both cultural and regulatory pressures encourage environmental awareness. Although each firm strives for economic gain through each symbiotic arrangement, the symbiotic business linkages are created amid a backdrop of widespread and deep-seated environmental awareness. As managers they are profit-seekers, but as individuals they are environmentalists. Valdemar Christensen the power plant manager looks for ways to increase the economic value of the coal burned by Asnæs Power Station, while Valdemar Christensen the individual takes pride in bringing about a more sustainable future. It is encouraging that these two goals can exist in parallel. The Danish regulatory framework encourages this sort of evolution. Firms are required to submit plans to the overseeing county government detailing their efforts to continually reduce their environmental impact. A cooperative relationship is fostered between government and the regulated industries, and as a result the firms seem to focus their energies on finding creative ways to become more environmentally benign, instead of fighting the regulators. At the same time, the flexibility afforded the firms for compliance allows development of the kind of creative arrangements found in Kalundborg. [ Danish EPA apparently goes even further, by attempting to find uses for all waste streams on a case-by-case basis. This informal program is motivated by a scarcity of disposal space.] Symbiosis Development Although it is presented here as such, industrial symbiosis in Kalundborg did not develop as a case study for the application of industrial ecology. Rather, the symbiotic links can roughly be divided into two categories. The initial links tended to involve the sale of waste products without any significant pretreatment. This pattern includes the initial sale of Statoils flue gas, Asnæs sale of fly ash, clinker, waste heat and process steam, as well as the use of cooling water to heat fish farm ponds. These arrangements were based on a re-routing of what used to be waste, without the need to alter the byproducts to any significant extent. The more recent links, however (most of those over the last seven years or so) have tended to be dependent upon and a direct outgrowth of the application of pollution control technologies. These links, which comprise just over half of the symbiotic arrangements, do not simply move regular process byproducts around, but alter the processes and disposal practices to make them more environmentally benign. The symbiotic relationships that comprise these links are the direct results of and dependent upon these pollution control measures. It was community and regulatory pressure to eliminate thermal pollution of the fjord (along with general water scarcity) that was a major impetus for the power stations use of the oil refinerys cooling water. Changes in regulations regarding water pollution rendered the treatment and distribution of Novo Nordisks sludge the least-cost disposal alternative. Scrubbing for SO2 by the power plant and desulfurization at the refinery conditioned the waste stream to turn what used to be pollution into fuel gas, sulfur, and gypsum. And pressure to alleviate water pollution compelled the refinery to invest in a wastewater treatment facility which now renders the water clean enough to be re-used by the power plant. Valdemar Christensen of Asnæs power station explains this evolution. Existing incentives alone will be sufficient to inspire a certain amount of symbiosis, that which is economically attractive. This is the low-hanging fruit. Other symbiotic arrangements which would yield environmental benefits are potentially available at this point, but cost more than conventional practices. To go further, political impetus is necessary - to require reductions in pollution and/or to adjust prices to make symbiotic arrangements economically viable. Such external signals are not sufficient, however, since innovative and pioneering cooperation is required among companies for symbiosis to occur. Yet such cooperation is only viable if it makes economic, not just environmental, sense. The stricter environmental regulations which have in large measure been the driving force for the more recent linkages have been performance standards, not technology standards. This distinction is significant because it has allowed the local firms to choose pollution control technologies which rendered their waste streams usable as feedstocks elsewhere, yielding an additional benefit beyond pollution reduction. From among several alternatives, Asnæs Power Station chose a scrubber technology which resulted in the production of gypsum as its byproduct. This gypsum is sold to Gyproc, reducing Asnæs cost of pollution control. The distribution of Novo Nordisks treated sludge as a fertilizer was motivated by requirements that the firm decrease its emissions into seawater. The method by which such emissions were to be decreased was not specified, leaving Novo Nordisk the flexibility to develop the use of its sludge as a fertilizer. In addition, the firms recently completed wastewater treatment facility employs a fermentation process chosen by Novo Nordisk because of the companys familiarity with fermentation. The flexibility allowed by performance standards for pollution control as opposed to fixed technology standards was a necessary condition for several of the symbiotic linkages to develop. If one accepts this as a generalizable requirement for industrial symbiosis, then performance standards should be viewed more favorably than technology standards from the point of view of encouraging and allowing such development. The prospect that one type of pollution control technology is preferable to all others in all situations is therefore rendered unlikely, such that the concept of Best Available Control Technology loses meaning in an industrial ecology context. The Kalundborg example points out another interesting relationship between industrial symbiosis and pollution control technologies. The relevance of waste stream conditioning as feedstock pretreatment should temper the silver bullet view of industrial ecology. A systemic perspective that redefines the concept of waste is indeed necessary, but may not be sufficient in many specific instances in which a waste stream requires some treatment before being usable as a process input elsewhere. In the Kalundborg example, pollution control technologies such as scrubbers play a necessary intermediary role, transforming waste streams into valuable, usable materials. In general, it may be helpful in an industrial ecology system to consider a role for such intermediaries, which condition a waste stream so that it becomes usable as a feedstock of another process. Salient Issues Regarding Symbiosis in Kalundborg The following section contains a discussion of a number of issues associated with the development of symbiosis in Kalundborg which are relevant to the development of such arrangements elsewhere. Who in the companies supports/makes these decisions/arrangements? Who is opposed and why? According to Valdemar Christensen at Asnæs Power Station, no one was opposed to linkage decisions because they were earning money, and thus were like any other business decisions. (of course some may be opposed to ordinary business decisions) In general, each company has its own economic interest in mind. Negotiations are reportedly intense and just like those for any other business deals. Kalundborg city has required that all its residents install the piping necessary for district heating, which uses hot water from the power plants excess heat, replacing individual oil furnaces. There was some opposition to this requirement among the locals, but they have since acquiesced. What is the role of resource scarcity in these arrangements? Is this scarcity felt by the firms through prices only, and if not then how else? Freshwater is scarce in Kalundborg. The town and some firms have been using groundwater, but the water table is getting to be low, so they need alternate sources. The town operates a pipeline from nearby lake Tissø, and charges for the water. The scarcity is thus felt by the symbiosis partners as a direct cost, and this in fact has inspired water reuse schemes. The oil crisis in the seventies inspired the town government to invest in the infrastructure required for district heating, which uses the power plant's excess heat. In this move away from in-situ oil-fired furnaces, heating security was the town's driving force. What is the role of regulation? Do the Kalundborg firms receive special consideration from the regulators due to the symbiosis? How has the government supported / hindered these efforts? Regulation has played a major role in inspiring linkages and forcing the use of pollution control technologies which made linkages possible. According to Valdemar Christensen, "economics alone will bring you a certain amount of symbiosis - the low lying fruit. To go further, you need political impetus - to require pollution control technologies and / or to adjust prices to make symbiotic arrangements economically viable." Specifically, Danish power plants were recently required to decrease their aggregate SO2 emissions. The decision as to how to distribute the emission reductions was left to the industry. Not all power plants built scrubbers, but Asnæs did, in large part because it can make use of the scrubber by-product by selling it to Gyproc, the plasterboard manufacturer. This linkage will never pay for the scrubber, however, but does more or less pay for the calcium carbonate, which is the scrubber feed -- this would thus be lower-cost compliance. Novo Nordisk distributes its treated waste sludge as fertilizer to farmers. This scheme was the least-cost way to meet 1976 regulations restricting the outlet of organics into the sea. Before 1976, there was some mechanical treatment of the sludge prior to discharge. Although the large investment in treatment and distribution infrastructure makes changing to an alternative disposal mechanism unattractive, the conversion of sludge into biogas fuel would be a salient alternative if the initial decision had to be made today. Statoil, the oil refinery, sells its treated flue gas to others - the treatment was brought about by regulations restricting the amount of SO2 emitted into the air. Also, regulatory pressure forced more complete waste-water treatment, with the result that the water is now clean enough for miscellaneous uses by Asnæs. Special consideration from regulators is not granted per se. The power plant, and I assume the other industries as well, have to plan and execute programs to reduce their environmental impact, and this process is supervised by county government. Symbiosis linkages thus form part of Asnæs' overall program, and thus implicitly receives regulatory favor. How robust is the system / symbiosis to disruptions? (especially Novo's steam requirements being fully met by Asnæs) Are there stand-by's and at what cost? The system is, in fact, fairly robust. Gyproc receives gypsum from Asnæs' scrubber and gas from Statoil. The gas is so light that it cannot be easily liquefied, so that Gyproc has very little storage capacity for the gas and instead uses it in a continuous flow from the refinery. To cope with any disruptions in the flow of gas from the refinery, Gyproc has a large butane tank (butane can be liquefied and thereby stored compactly), and the factory can operate continuously on butane, if necessary. The refinery does go down every 4 years for four to five weeks, and Gyproc is given distant early warning of this imminent event. There are also temporary reductions in gas flow when the refinery changes its product mix; Gyproc is similarly informed of these events. Gyproc also gets gypsum, its main raw material, from the scrubbers of Asnæs and another power plant. This material is easily stock piled. At the same time, it still buys mined gypsum because it uses a mixture of the two. Asnæs is treated as any other supplier, and it could be replaced easily by another source of gypsum; such as virgin/mined, or perhaps another power plant. Novo Nordisk relies on Asnæs Power Station for all of its steam needs. Asnæs has five boilers, each of which generates a good deal of steam. Asnæs is contractually bound to supply steam to Novo, which generally is not a problem, since not all boilers are required to meet Novo's (and Statoil's) steam needs. In case the power plant must go down, it has emergency boilers, which it would have even without the symbiosis, which can kick in to supply the steam. It is conceivable that at some point in the future Asnæs could buy electricity from hydro power plants in Sweden and Norway cheaper than it could generate it. It would still have to run some boilers to meet its contractual steam supply obligations, and the price of the steam to Novo and Statoil includes a premium as insurance against this possibility. Statoil supplies gas as fuel for the plasterboard dryers at Gyproc (as well as a fuel supplement to Asnæs). This gas contains methane and ethane, which are mostly what remain after the refinery's scrubber removes impurities from the flare gas. No matter what petroleum product mix the refinery produces, the ethane / methane mix will be produced as a byproduct, though the ratio of the two components, and therefore the gas' energy content, may change somewhat. The linkages do not constrain Statoil's choice of product mix. As the refinery expands its capacity from 3 to 4.8 million tons per year, more gas will become available to be burned by Asnæs in place of coal. Novo Nordisk only has storage capacity for about 3 days worth of its sludge - therefore, it must continuously find farmers who will accept the sludge as fertilizer, or else stop production, at a cost of 10 million Danish Kroner ($1.66 million) per day. Such a shutdown has never happened. About 1000 farmers participate in this scheme, but each farm does not receive sludge every day. Therefore, Novo Nordisk's problem is one of finding enough farmers every day to accept that day's production of sludge. Novo receives all of its steam from Asnæs, and reports no problems with steam delivery and steam quality over the history of the link. How are the scales of the processes interrelated? Are there alternate suppliers and how readily available are they? Gyproc, recipient of scrubber gypsum and refinery flue gas, considers these symbiosis linkages to be like any other supplier relationships. Alternate suppliers of both gypsum (virgin, mined gypsum, or other power plants) and fuel (butane) are readily available, and changing sources is quick and easy. Conversely, Gyproc sells excess gypsum to other plasterboard manufacturers. Novo Nordisk must be able to dispose of its sludge by putting it on farmland. It has built a 70km pipeline network (with plans to expand) and also uses a large number of tanker trucks. It is conceivable that expansion of production could be limited by an inability to dispose of all the sludge, but there is no indication that this will happen. Statoil is expanding its capacity, and will thereby produce more gas and use more cooling water and process water. The excess gas is expected to be burned by Asnæs in place of coal. No expansion or contraction of Asnæs Power Station is imminent. Overall, within a reasonable range of variation, the symbiosis has not limited the participants' ability to alter the scale of their operations. How does the symbiosis affect the speed of the firms' response to changing market conditions? Is there any policy protection for this? From this perspective, the symbiosis participants are fundamentally one-trick ponies. Asnæs generates electricity by burning things. Competitive pressures pushing down the price of electricity are compelling plant management to maximize the economic return on the plant's energy use, but this is an example of reverse causality - changing market conditions are inspiring more symbiosis. A power plant is a power plant, symbiosis or no, and as long as it operates, the symbiosis does not affect its operation. The same is true of Statoil. The refinery does one thing - process crude oil into a mix of petroleum products. As long as it operates, it produces a gas that varies little along the domain of variation of the product mix. Fermentation is Novo Nordisk's middle name, and it is this fermentation that produces the fertilizer sludge. If, for some reason, Novo were to alter its processes so that it did not produce the sludge, that would be fine too, since its primary motivation is waste disposal, not agriculture. A different waste stream would require a different form of disposal, however. Gyproc, as long as it remains in the plasterboard business, is a fairly straight-forward operation. Gypsum goes in, plasterboard comes out, albeit in an impressive variety of shapes, thicknesses, and sizes. Some of its products even have a pattern of holes in them for better acoustics, but Gyproc still only does one thing - make plasterboard. There is no policy protection to ensure flexibility in the face of symbiotic linkages, and there does not appear to be a great need for it. Where have these companies gone? Have they enlarged capacity there or elsewhere? Statoil is expanding its capacity by 50% in order to sell in the markets recently opened in the Baltic republics and thereabouts. All this expansion means from a symbiosis standpoint is that there will be more gas to be burned, most likely by Asnæs. In order to get even more out of its heat, Asnæs is contemplating a refrigeration cascade that would involve Novo Nordisk and Statoil, which conveniently have refrigeration needs in different temperature ranges. Another participant is required, however, to make the scheme economically viable. This firm would get to use the refrigerant in the coldest range, from -30°C to -5°C. Food processors and breweries have such cooling needs, and possible candidates are actively being sought. Asnæs is also considering the idea of using its heat energy to operate a desalinization plant to supply drinking water for the town, as the aquifer previously used is being exhausted. This option is not imminent at this point, however. Novo Nordisk operates in a market where a 'green' image is very important - it manufactures enzymes for detergent and, despite what the ads say, detergent is detergent, so that eco-friendly products tend to get the nod from environmentally conscious European consumers. Novo thus works hard to project an eco-friendly image, and the fertilizer sludge scheme plays a large role in furthering this goal. Gyproc, on the other hand, operates in a eco-indifferent market, where the focus is on product quality. The firm is considering the use of treated waste-water from Novo Nordisk. In the words of Finn Grob, who handles symbiosis-related affairs for at Gyproc, "We have to be 150% sure that the water is 110% fine." Customer perception that the plasterboard is made form scrap would significantly hurt demand. How do the market prices of alternatives and virgin materials compare with the cost of symbiotic arrangements / acquisition? Each link must be economically viable aside from any environmental considerations, so that the market prices of alternatives and virgin materials must be consistently higher than the cost of symbiotic arrangements. Is every link in and of itself economically beneficial? (i.e. least cost alternative?) What other motivations are there? Each link has either made economic use of a byproduct or has represented a low- (least?) cost mechanism for compliance with environmental regulations. Thus, each link is economically preferable for the firms to the alternatives available at the time, given the state of the world at the time, including regulatory pressures. Even the elaborate infrastructure by which Novo Nordisk converts its byproducts to fertilizer and distributes it to local farmers was at the time of its inception the least-cost way to comply with regulations. What did the participants need to know (technical specifications, etc.) before and in order to make the link arrangements? The success of the Kalundborg linkages required the companies involved to treat each others operations as more than black boxes. Gyproc, which receives gypsum from Asnæs scrubber, initially experimented with a number of gypsum sources, including fertilizer byproducts from Sweden and scrubber ash from a German power plant. Asnæs consulted with and visited Gyproc prior to investing in its scrubber and received material specifications for the gypsum. Asnæs needed information on the steam needs of Novo Nordisk and Statoil in order to ensure an adequate and appropriate supply. This information included what the steam was to be used for and the temperature and pressure needed. What sort of contractual / enforceable guarantees are there among the participants? Or is it totally voluntary? The links are contractual and akin to any other supplier relationship. Prices are agreed upon for set periods, and renegotiated when those periods end. Is there a natural progression towards symbiosis? Yes, if the government response to the environmental impacts of industrial activity sends the right signals. According to Valdemar Christensen of Asnæs Power Plant, increased industrial activity causes increased pollution, which inspires government/policy intervention to increase pollution costs, which makes symbiotic arrangements more attractive. Of course symbiosis does not necessarily follow from a regulatory push for pollution control; there has to be some propensity. After all, industries in places other than Kalundborg have been forced to decrease pollution, without the effect of inspiring symbiosis. However, it would appear that government involvement is necessary to level the playing field in favor of loop-closing arrangements by raising the relative cost of conventional practice (or lowering the cost of symbiosis). It is not, however, sufficient. Symbiosis requires information, cooperation, and creativity, and these requirements are more difficult to supply by fiat. Why not elsewhere, either in Denmark or in some other country? Kalundborg is a sleepy town and there is not much else to do but dream up symbiotic linkages. This claim is not entirely frivolous; people at the various industries know or at least know of each other and tend to live in the same community. According to Finn Grob of Gyproc, managers from the different plants run into one-another and discuss common problems and challenges, from which the realization springs that the different firms should tackle some of them together. None of the symbiosis participants are even remotely competitors with one-another, so there is no cost to cooperation. The Danes tend to be environmentally conscious, so that there is a common drive to minimize the environmental impacts of their industrial activity. While the linkages must be economically viable, the environmental benefits are by no means lost on the participants, and even less so on the community. There are a limited number of potential participants within close proximity. Kalundborg is surrounded by rolling farmland and the sea, so that it is very easy to establish the boundaries of the local industrial system - whats there is there, and what isnt does not come into play. Of course this is not entirely true, as both the power plant and the oil refinery ship waste products to industries that are not in the immediate vicinity. The power plant is directly across the fjord from the town, and the two are visible to one-another. The other industries are similarly in plain view. Perhaps this obvious proximity makes it more difficult to think of industry as existing in isolation.
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