This past July, an infrastructure conglomerate acquired Detroit Renewable Energy (DRE). This is the entity that owns the incinerator. Terms of the deal were not disclosed, and Atlas Holdings, LLC, a private equity firm based in Greenwich, Connecticut sold DRE to Basalt Infrastructure Partners, a multinational, privately held company that specializes in acquiring and running various forms of infrastructure assets across the globe.
For years, the incinerator has been a boondoggle. In the early and mid 1980s, the country went through a bit of an municipal incinerator craze. A total of four were built in Michigan: one in Jackson, one in Grand Rapids, one in Litchfield and one in Detroit. The concern at the time was that landfills were rapidly reaching their capacity, and that we needed to do something about managing solid municipal waste. This was during a time before the concept of residential recycling programs had really caught on, and right after various energy crises of the 1970s had driven up the costs of industrial production and jacked up the price of coal and oil.
The combination of these factors all made for a compelling case for the construction of a municipal incinerator, wherein the City of Detroit would issue debt, build and operate it and then instead of paying to dispose of garbage in landfills, they would burn it, and create both steam and electricity that could be sold. The idea was that instead of having to pay to get rid of garbage, they could turn that garbage into a revenue stream and serve as a regional disposal syst. The site was selected because of the confluence of interstates 75 and 94 making transport easy, and it was already an industrial park.
Instead, by the time the incinerator came online in late 1980s, the conditions that had lead to it being built had all receded in importance. The state of Michigan made it easier to create more landfills, energy prices had crashed and residential recycling programs were beginning to gain traction. Even at the time of its construction, the incinerator was granted waivers by the Michigan Environmental Protection Agency at the time that allowed it to come into operation without scrubbers that cleansed the emissions of the most harmful contaminants, a state that continued for decades.
The City sold the incinerator in 1991 to Philip Morris and Aviation Services for cash purposes, but retained the public debt. Several transitions of ownership occurred but in 2009, Covanta, the publicly traded incineration company, purchased the facility. Covanta failed to earn a return and in less that a year, sold the complex to Atlas Holdings LLC in the fall of 2010. Atlas agreed to take it over, and be paid for the disposal of solid municipal waste. Other municipalities dispose of their waste here, and to this day, much of the waste that’s burned here comes from outside of Detroit.
Beginning in 2015, the Great Lakes Environmental Law Center began scrutinizing the operations at the incinerator with more rigor, and found that very serious violations were the norm at the site.
The incinerator has various revenue streams which include: 1) ‘tipping fees,’ which consist of what municipalities pay to dispose of garbage there, 2) tax credits that are granted because this is considered a ‘renewable’ power source, which is a highly dubious point, 3) electricity is generated onsite and sold to DTE and 4) steam which is produced through the combustion of garbage is sold to the steam trunk line distribution system that operates on a loop throughout Midtown and Downtown.
The rate of return to Detroiters has been abysmal. Downwind of the incinerator is Michigan’s largest concentration of asthma cases. The unregulated combustion of garbage cannot be a coincidence. The overlay between the weather patterns and where folks are getting asthma on the east side of Detroit is simply to great for there not to be a connection.
And for people who don’t live downwind of the incinerator, while you may not be subject to pulmonary or public health concerns, if you’re around Wayne State University or Midtown in general, and it’s summer, and you smell one of the most vile, rotten smells of your life, guess what? That’s the stench of piled up refuse that’s baking in the sun. It’s garbage that the incinerator just can’t manage to dispose of quickly enough, and the rancid smell permeates for nearly a mile, with the incinerator as the epicenter of the radius of the stench.
The Detroit Water and Sewerage Department also has an incinerator in which they burn waste (read: dried poop) though there’s plans on the books to construct a facility that will turn it into organic fertilizer as many other municipalities have. Jackson and Litchfield shut down their incinerators years ago, and Kent County invested heavily in upgrading theirs so as to mitigate the environmental concerns.
So what’s to be done in in this case? If there’s a problem, there has to be a solution, correct? Usually. I believe that the City government has the ability to make it illegal to burn garbage within the City limits. In fact, they already have. For you and me, and for any other business or household, it is indeed illegal to burn solid waste. But not in this case. The incinerator has an approval from the City.
And that means that you can take that approval away. If the City saw fit to break contracts with bondholders, retirees and other creditors, we can surely break a contract, that contract being the approval itself, with the incinerator operators. They could instead burn natural gas, which probably wouldn’t make the far left enviros very happy, but it would still be a substantial improvement over burning garbage in the midst of a relatively unhealthy, relatively poor American city on the cusp of a great comeback.
And the great thing about burning natural gas onsite is that for long periods of time in the past, the incinerator actually ran on it already, so the costs of retooling and reengineering the facility wouldn’t be that great. Though it would cut greatly into the operating profits, the way that the setup is currently constituted.
Don’t burn our garage in Detroit. Don’t burn garbage from other places in Detroit. Embrace a more robust residential and commercial recycling program to get this stuff out of our waste stream. While the up front costs would be substantial, what we have now is just about the most expensive setup possible. I don’t know how you go about putting a dollar amount on having the highest concentration of asthma in the state. I don’t know how you price the indignity of experiencing the scent of decay while driving down beautiful sections of Woodward near the Detroit Public Library, the Institute of Arts, or along adjoining neighborhoods, where folks are just trying to get by.
I don’t think you can put a dollar amount on either of those things. But I know that it’s expensive.