[00:00:00] Speaker A: 1.78.
That's the amount of water Coca Cola uses for every liter of beverage it produces.
So in a business that generated $47 billion in revenue last year, that ratio isn't just a footnote. Apart from the secret recipe we've all been talking about for over 100 years, it seems water is the company's most essential input, and it's becoming more constrained, more regulated, and more expensive.
Behind the iconic red label is a reminder that even the world's most powerful consumer brands are ultimately water businesses, dependent on a resource they can only manage, not control.
I am Reece Tisdall, and this is the Future of Water, in which we talk about all the ways which companies, utilities and people are addressing the challenges and opportunities in water.
This is episode 132.
You know what that means. There are 131 other episodes you can give a listen to.
And like all the others, I have a good feeling this is going to be a great one.
Today I'm joined by my Bluefield research colleague, Pat Byrne.
Pat has just published what I think is super interesting research and analysis on, of all things, biosolid management in the US Wastewater sector.
Yeah, the question is, what happens to all the wastewater byproduct that comes out of the process?
So one thing that people probably don't want to think about, well, we're going to give you an idea what happens to it, because I think it's interesting. It goes to landfills, it's incinerated, and in some places it's converted to fertilizer. Who knew?
Well, wastewater utility operators know because it costs a lot of money to manage it, and it's not going to get easier with things like PFAS and tightening landfill capacity on the horizon.
So in this episode, Pat and I are going to try to unpack what are the challenges and opportunities shaping biosolid management across the country?
What's the size of the market in dollar terms? Which regions and geographies are more exposed to rising costs and constraints?
How are emerging contaminants like PFAS changing the outlook?
Those questions and many more.
But before we get to Pat, you're just going to have to bear with me just a little bit longer because one thing caught my eye this past week, or at least since I recorded the last episode, which was about, I believe it was wastewater reuse.
At least since the last episode, there has been some early speculation that wsp, the Canadian engineering firm, may be exploring a takeover of Jacobs, another engineering firm. Nothing confirmed, but strategically, it does fit into WSP's. Playbook.
They've made a reported 90 acquisitions since 2010. They've consistently used M and A to expand and more recently into things like water in the environment. So think about companies like Golder Wood, ENI Power Engineers, Ricardo.
WSP also made a run at AECOM a couple years ago. So the rumor isn't coming out of nowhere. It, it kind of where there's smoke, there's fire.
But for the water sector, what jumps out at me when I think about WSP picking up Jacobs? Well, first, the financial scale of the two companies. Together, the two companies generated about 23, 24 billion dollars last year, roughly in US dollar terms, about 11 and a half billion dollars each.
So when you isolate water, though, and depending on your math, you get a pretty sizable platform.
WWSP reports about 4 billion for its Earth and environmental segment in which water sits. And then Jacobs, its water and environment platform or business unit should I say is also about 4 billion. So depending on maybe the, the size or the cut of your scalpel, when you're looking at their financials, you're Talking about a $4 to $6 billion water business under one roof if they come together.
So it's pretty sizable, pretty significant.
Secondly, it does reinforce that water is a core M and a target in the engineering space. WSP's recent deals have all expanded as PFAs, remediation, climate resilience and advisory capabilities.
And Jacobs generates as much as 25% of its revenue from its water environment environment business. So both companies are clearly leaning into the water space on a number of fronts. And I think this is going to have an impact on the competitive landscape. There have been some big deals, but WSP is one that has been active in the space and clearly has the will to do so.
And lastly, the geographic angle does matter. Jacobs is very heavy U.S. by that I mean about 62% of its total revenues are focused on the U.S. market, while WSP is more evenly split between the U.S. europe and another 15% in Canada.
So it's a bit more diversified globally than Jacobs.
A combined firm would shift Jacobs from what is, I don't know, US Centric, it's a more US Centric profile to a more balanced US Europe footprint, which also aligns with what we're seeing across engineering. M and A companies are buying not just capabilities but geographic balance to capture infrastructure spending on both, on both sides of the Atlantic in this case. But also engineering is a very local business and it does make a difference when you're working one on one with utilities and industrial customers as well as governments.
So it'll be interesting to see how this plays out over the next month or two.
All right, so there you have it. That's what caught my eye this past week. There are a lot of other things that are interesting in the water space, so if you're curious, you can always let me know. You can always reach out to us@water expertsluefieldresearch.com and I might add, while I have you on the horn before the Thanksgiving holiday, if you are interested, you can always sign up for our Bluefield Research's weekly newsletter. It's called Waterline. If you go to our
[email protected], you can look to the top of the page. There's a place to register for the newsletter and you'll get weekly news, three weekly news items, plus you'll get announcements of podcasts such as this. Also Dave McGimpsey's podcast Water Values, which is another good one to listen to, but also other reports and insights such as Pat Burns biosolid report, Megan Bondar's reuse report that we've put out, Amber Walsh's data center report that we've put out in the past. We've got Sophie Washington, who has also been on this podcast, talking about midstream water management and the list goes on and on and on. There's a lot of content out there, so if you're interested, just go to the website and sign up for the newsletter and you'll get weekly updates. It's pretty useful, I think, and I think a lot of people like it.
So with that being said, let's get to Pat Byrne and talk a bit about biosolids.
All right, so I'm joined here by Pat Byrne. Pat, how are things?
[00:08:14] Speaker B: Doing well. Reese, doing well. Beautiful Friday morning, nice and nice and sunny.
[00:08:19] Speaker A: Well, there's our weather tip of the day for those tracking the weather in the Boston area. So Pat, you're a first time podcaster with this episode 132 and you're in Boston and so why don't we just really jump into it? So I'll just sort of lay the groundwork.
As of yesterday, we just released a report on biosolids, biosolid management, including forecasts, market trends, drivers, competitive landscape, what's happening in that space.
And this is something that I don't think a lot of people quite honestly think about.
And basically biosolids, it ain't sexy, but it's a real business that a lot of companies are interested in and every wastewater utility is interested in. So let's just start with the super basic question, what are biosolids and why should anybody care about this?
Yeah.
[00:09:19] Speaker B: Thanks, Reece. So biosolids, every year in the US we've got just under 24,000 wastewater treatment plants. They serve about 267 million people.
And sludge is an unavoidable byproduct of wastewater treatment as we practice it. I think this is a key thing to remember that every single wastewater treatment plant has to deal with this stuff. It isn't something of your utility is or isn't doing well. It's there, they have to dispose of it. What happens is there is conditioning it, kill some pathogens, reduce odors, remove a lot of excess water after some combination of these steps. The industry refers to this as biosolids. You have this byproduct of wastewater treatment and you have to dispose of it. And there are a few different ways that the stability happens. So landfilling, incineration and land application, what the industry likes to term beneficial use. So reusing the nutrients are the main ways where this happens.
[00:10:20] Speaker A: So I mean, we're really talking organics and water, right? That's really pretty much.
[00:10:26] Speaker B: Yeah. The stuff, when it really first comes out of the wastewater treatment plant, it's mostly water, like 3% solid. The goal, you know, with the utility is to get that up maybe more to like 8 12%, maybe higher, around 20% makes it easier to dispose of.
[00:10:42] Speaker A: Okay, well, all right, so let's talk about the disposal. So now that everybody knows that they are producing this organic waste, I guess it's probably not a secret, but then what? Where does it go? Everybody just thinks they flush the toilet or it just goes disappears into the ether.
But you mentioned landfilling, incineration, land application. So let's just walk through these. Let's talk a little bit about landfilling. What's that process?
What's the role of landfilling in biosolid management?
[00:11:14] Speaker B: Yeah, so landfilling is a pretty basic one. Oftentimes this goes into, you know, biosolids will go to municipal solid waste landfills. They might go to like a dedicated wet waste landfill, but it's probably more of the municipal solid waste landfill. And again, it's pretty simple. It's very final.
You can of put it there and forget it. And it's really that destination of last resort when you don't have other options as a wastewater utility, you probably are going to end up putting your biosolids into a landfill.
It's not super cheap and There are definitely are methane emissions associated with it. So not ideal for utilities.
And also the capacity isn't always locally available.
So, you know, for utility, like I said, these are mostly water. They're expensive to haul. We'll kind of get back to that part.
So you might have to go further for disposing of landfill if you don't have local capacity. The other option is incineration here or one of the other options. And also it's relatively expensive. You kind of need to have an incinerator already. It's tough to build these nowadays, but it is fairly final ash. The ash leftover is easier to dispose of than biosolids, but again, you kind of need to have an incinerator already. And these are mostly concentrated in. In the Northeast, which is where the incineration mostly happens.
[00:12:31] Speaker A: Yeah. And I suspect, I mean, you're talking about they're tough to build. I think air quality permits are a big part of that.
I think, I suspect they're expensive to run.
And you know, the ones we have are aging, so they're not a lot of them. And like you said, northeast, which kind of makes sense. Densely populated, not a lot of landfill space or capacity.
And maybe we can get into that in a little bit. But those are two of the three things that you mentioned. But then those are disposal options. But what about beneficial use? Right. This is going to get everybody excited because everybody likes the idea of, you know, reusing recycling, taking advantage of what is essentially a byproduct in this case.
So let's talk a little bit about that.
What are the pathways or what are the beneficial uses that are utilized?
[00:13:25] Speaker B: Yeah, so the main one is land application. This is, you know, the data around how biosolids are managed in the US Isn't great, but near as we can tell, about half of biosolids are applied to lands. And one thing I love to point out is that this is a practice that far, far predates even modern wastewater treatment. Like, we've been putting human biological waste on farm fields as fertilizer for about as long as we've been doing agriculture.
And again, it's cheap because it's very simple. You take the biosolids, you get some water out, kill some pathogens, and then put them out of the fields. And it's also a really easily communicated set of sustainability benefits. I think everybody can kind of grasp. Like, yeah, we would like to reuse these nutrients, give them to local farmers, they get cheap fertilizer, and the utility saves some money. It's kind of a Win. Win. It is important to remember, though, that on the scale of the agricultural industry as a whole, this is a pretty small practice.
Based on standard application rates, less than 1% of US farm fields are getting biosolids. So utilities end up relying a lot more on farmers than farmers are relying on them. But at the same time, it is still a pretty good deal for farmers. For the farmers that are getting biosolids, it can be a pretty significant sort of savings because you may need to buy very little fertilizer.
And speaking of fertilizer, another kind of way that biosolids are managed in the US is through what's termed Class A EQ production. So Class A EQ is the EPA's highest grade for quality of biosolids. You know, no pathogens, heavy metal, you know, low content of heavy metals, very few restrictions because of all this. And so they can be sold directly to consumers. And also they have more flexibility with what can be done with them.
In some cases, you know, the revenue can actually offset a portion of disposal costs for utilities or maybe just unlock some cheaper revenue options.
The EPA would love to see utilities doing more of this along with land application. It's a trend that they've been tracking over the past few years.
[00:15:29] Speaker A: Yeah, and I think there are.
I think you talk a little bit about this in the report, and we've definitely talked about it. That is, there are utilities that are doing this. Right. I think DC Water comes to mind. Bloom fertilizer, I think Milwaukee maybe has one as well.
[00:15:46] Speaker B: Yeah, I'm actually from Milwaukee for those listeners who don't know. And my.
I was long familiar with milorganite fertilizer that the Milwaukee Metropolitan Sewage District does long before I even knew what biosolids are.
But yeah, that, that is. It's not a super common thing for utilities to be doing this, but it is like something that they love to be known for when they are.
[00:16:07] Speaker A: Right. And biosolids, I mean, you're. You mentioned offsetting.
These are operating costs. Right. It's not like they can defer the costs of the disposal.
[00:16:17] Speaker B: Right.
[00:16:17] Speaker A: It's not like a capital investment where you can say, let's stretch this out a year, see if we can get by with our existing, you know, capital equipment.
These are operating costs that in some cases represent a pretty big chunk of utility. OpEx line item.
[00:16:34] Speaker B: Right, Absolutely. Yeah.
[00:16:37] Speaker A: So fertilizer. All right. So then this gets at kind of a sticking point within the industry or the, the public discussion.
So we're talking fertilizer, and they're growing in What I would say notable concerns about things like PFAS and emerging contaminants.
Is there a conflict there or is there a rub, either now or coming down the line, that's going to be a problem for whether it be the fertilizer companies or just land applications.
[00:17:08] Speaker B: Yeah, there's definitely an issue here, and it's growing. The extent to which it will grow to be a serious existential problem for the industry still remains to be seen.
But to break the problem down, I think pretty simply, it's that there are some contaminants that modern wastewater treatment just isn't really designed to remove very well. PFAS is the big one here, but we're also talking microplastics, pharmaceutical compounds, other emerging contaminants. And there is a mounting concern, kind of both in the industry, among utilities, but also from the general public as well, as to whether or not municipal biosolids are actually a serious concern or large problem for society.
And really this stems from a lack of scientific clarity. We still really don't know the answer to these questions. And so wastewater treatment plants are stuck in a very difficult place because they are passive receivers of these compounds. They aren't really designed to remove them, but they still have to dispose of the biosolids. Like we said, it's an operating cost, it's part of doing business.
But they may not be totally confident, or their level of risk kind of may not be acceptable for putting this on the farm fields, even though they want to. But again, their hands are somewhat tied when it comes to eliminating it at the source, because again, we're talking about a larger problem here of PFAS in society.
And so they can't exactly spend a ton of money because it's, again, not very efficient use of their resources to avoid doing that. Eliminating at the source is the more important thing here. And importantly, that this entire time the BIOS HUDs are continuing to pile up. Again, it's an unavoidable byproduct of wastewater treatment. And ultimately why we care is that it's an operating expense, meaning that it's funded through wastewater rates. It's something that ultimately you and I pay for as consumers of the service.
[00:19:02] Speaker A: Yeah. And I think. And it's not just land applications. I think it even goes beyond that, even depending on how, whether it be the EPA or state governments classify biosolids, if they have emerging contaminants, you know, are they hazardous or not, depending on what's in them, you know, it changes what landfills they can go to. But there's a whole nother question which is not the point of this conversation is what does that mean for landfill operators too, right? They've got leachate issues that they have to deal with.
If, if it's classified differently, then it may be more expensive to dispose of. So it's, my point is it's land applications, fertilizer and landfills, they're all impacted depending on what happens at the policy.
[00:19:50] Speaker B: Level and how biosolids are classified and incinerators too. You know, it's still another piece of the science is still can incinerators actually destroy the PFOS and biosolids? So it's really affecting the entire disposal value chain.
[00:20:04] Speaker A: So now the big question, which is a big part of this analysis you did, and that is how big is biosolids market? We've talked about it being a big OPEX expense to be redundant. So what's the cost burden to utilities by our forecasts and our assumptions?
[00:20:23] Speaker B: So right now in 2025, I'm estimating that US utilities are spending about $2.5 billion on biosolids management.
So the land spreading, the land filling, incineration, et cetera, by 2035, that's probably going to climb to somewhere around 4.8 billion.
And there's a few different components that kind of go into this. A big part of it, to be perfectly honest, is hauling cost inflation. If it leaves the gate, it's getting more expensive. This is a broader economy wide problem, consistent inflation and hauling costs. And again, as we mentioned that because local management pathways might be drying up again, we'll kind of come back to this. Potentially they have to travel further too. So it isn't just that the cost of hauling is getting more expensive, but it's also that it has to be hauled more. And just generally too, this is biosolids costs tend to inflate a lot faster than other kind of just general economy wide inflation.
The Bay Area clean water agencies found that it's in many cases quadruple what it is going to be in the broader economy.
And then also just kind of, you know, with the inflation that we're looking at over the next 10 years with biosolids management, I think a big part of that is going to be inflation of costs with landfills and incineration. So right now about 45% of biosolids go to landfills and incinerators, but about 63% of the total spend is spent on those two methods because they just tend to have higher unit cost of land spreading, especially in Certain regions, certain localities. But it's also a unit cost that is continuing to rise because there is a capacity squeeze at certain landfills and incinerators. There just isn't enough space for the biosolids and so prices go up.
[00:22:10] Speaker A: So you mentioned that it's localized and I think even earlier you alluded to the fact of the Northeast and the number of incinerators is higher in the Northeast, but it's a very localized issue. Right, Shaped by, like you said, transportation costs, landfill availability, incineration.
When you were running the numbers, how does it vary by region or geography?
[00:22:35] Speaker B: It varies pretty extensively. So in the Northeast, the forecast over the next 10 years is for a spend of about 13.6 billion, which is 37% of the total forecast, despite the fact that the Northeast is probably only producing about 24% of the total volume. Again, landfilling and incineration are a big part of that because they lack those lower cost land spreading outlets. They just don't quite have the same amount of space. And so you see this capacity squeeze really happening the most in the Northeast where the municipal solid waste landfill space just isn't quite there. The incinerators are really all at capacity and kind of, as we mentioned, it's very difficult with the permitting rules to build incinerators. And so all these three things combined for utilities don't really have a place to put their biosolids. The cost are inflating. In the Southeast we also see a pretty high spend. They're the second highest region, about 27%.
But they are a bit more driven by landfilling specifically in kind of really we're thinking more. A few specific areas like Texas, Georgia and Florida are really drivers of this, but then also just population growth. You know, the actual volume of biosolids is going to continue to grow faster than other regions.
And conversely in the Midwest and the west, because they're more reliant on land spreading, they have much lower unit costs on average. However, they do still tend to have higher local costs. For example, in the Bay Area, you see significantly higher median costs than you might see in other parts of the rural West.
[00:24:07] Speaker A: Right. But to your point, in the breadbasket, so the Midwest, you have population centers, let's just say Indianapolis and then. But you have plenty of agriculture opportunities beyond the, the city limits.
[00:24:22] Speaker B: Yeah, I think it's really the availability of that local proximate agricultural land. Because for example, like in Massachusetts, there may be areas in western Mass. Where you could land spread, but if your biosolids are at eastern Massachusetts, it's really expensive to get them out there. And so in the Midwest, when you have that local agricultural land, you can just dispose of it more closely and cheaply.
[00:24:45] Speaker A: Right. And just, I mean, just costs are just higher in the Northeast and maybe even the Bay Area than, you know, lots big other parts of the country. So. All right, so we mentioned pfas, but let's just talk and maybe, you know, wrap up in the sense of what's changing the outlook as you look at those numbers. When we were running the forecast, what were you thinking about as far as what was moving the. The needle up or down as far as cost, market size, etc.
[00:25:19] Speaker B: Yeah. So a big one like especially in the Northeast is landfill capacity is continuing to tighten.
One thing we, I have mentioned is that a challenging thing with biosolids disposal in landfills is that the rate at which you can dispose of biohazing landfills is limited because they're just a bit too moist. So landfills don't want to take a ton of them. And you don't always have the ability to put all the bioseeds you want to in there.
And generally, as we mentioned, like incinerators, it is difficult to permit new landfills. Building landfills, especially in the urban areas where you seeing the population growth and the biosolid volume that needs to be disposed of. And again similarly with incinerators.
Back in 2016 when the EPA passed a new cleaning act, performance standards, I would say it's again difficulty to tell, but only 56 facilities are remaining after the EPA passed these new standards. And the facilities that are still remaining are many of them are kind of getting to the end of their service life where they're going to need to, you know, they had some air emissions capacity upgrades installed previously, but now they may actually need to kind of do more of a whole system renewal.
And they, one, are going to be very expensive, but two, they're going to face community pressure maybe to close.
You know, these incinerator facilities are kind of notorious for. They definitely have some externalities, I guess you could say when they're used as these kind of like regional disposal facilities, you have the truck traffic noise odors that creates community pushback against these facilities. Even in situations where, you know, there may actually be a third party that's operating the incinerator and maintaining it and the community may still decide that they're not interested in having it around.
And then the third is really community pushback against land application. Kind of what we talked about with the pfas that those kind of undercurrents starting to come to a head.
Even without the formal bans. There's, you know, the cat's out of the bag now. You're kind of starting to see some pushback against this.
[00:27:19] Speaker A: But also just the trucks rolling through town too, right? That's a whole nother piece. We see that in the management of produced water and let's say the Marcellus Shale region in Pennsylvania, West Virginia, Ohio, you know, just trucks rolling through town. It's tough on the roads. I mean, there are bridges in Boston that can't be built or rebuilt because communities have said, no, we don't want the construction trucks rolling through town. So the voice of the public is, is louder than ever. So. All right, let's talk. You mentioned land application bans, and this is something that, if you're reading the news about things like pfas, one thing you see is, you know, what about the fertilizer or what about the land applications? And there are a couple states that have.
The pendulum has swung pretty far to one end. And I'll let you talk about it. But how is PFAS disrupting land applications?
[00:28:23] Speaker B: Yeah, so I think, like, you know, with lead application bans, Maine is really the elephant in the room here.
So several years ago, there were some municipal biosolids that were spread on some organic farm fields that were industrially impacted by pulp and paper manufacturing that ended up seriously elevating the PFAS content of the soil animals like it was. It was showing up in the milk of dairy cows. And obviously there's a really strong reaction in Maine as to. That's really big on organic farming.
And so they set screening levels for their biosolids that ended up being pretty low at five parts per billion. And just for context, the other states that do screening levels now, they go about as low as 20.
And when pretty much all the biosolids in the state didn't hit that very low, low screening level, their response was then just to ban the land application of biosolids entirely, which has now been recognized as maybe not the most sustainable practice for a few different reasons. You know, one landfill space, as well as methane emissions from landfills, the expense of having to truck your biosolids all the way to Canada in some situations.
[00:29:35] Speaker A: I don't think that Canadians are going to take our biosolids much longer.
[00:29:39] Speaker B: Exactly. Maybe not going to be very popular with them, but at the same time, it's a very difficult sell if you're a politician. Okay, I'm going to re legalize spreading toxic Biosolids on farm fields. And when you have this kind of ongoing scientific uncertainty as to whether or not biosolids, municipal biosolids specifically, are actually a broader societal issue, then you have again, that real rock and a hard place for those utilities.
And again, that there's a recognition that this is not exactly a long term sustainable practice. But at the same time, you have New York and Vermont that propose land application bans as well as Oklahoma and Mississippi this year, and Maryland has stopped issuing new land application permits.
So even though there isn't a clear scientific certainty, the public is kind of already aware and is maybe not super enthusiastic about this practice anymore.
[00:30:40] Speaker A: Okay, so what does it mean that stepping beyond the federal level or state level, what does it mean at the federal level? What's happening there?
[00:30:50] Speaker B: So not a whole lot of clarity happening at the federal level, unfortunately. This is a. The epa, even before the Trump administration, before, even before the Biden administration, the EPA has just been avoiding the issue of regulating biosolids too strictly in general.
I think you see this even more broadly beyond biosolids, just in EPA regulation. They tend to not like to get involved in issues that are very localized and very complicated. Because they're so localized, this is one where they would like to stay as hands off as possible. There was a risk assessment that the EPA released at the tail end of the Biden administration, but it didn't really offer a whole lot of clarity, actual actionable clarity for utilities.
And so it's not very likely, but also not impossible that we get substantive EPA regulations around PFAS and biosolids over the next year or two. Again, it's unlikely, but the epa, current epa, continues to surprise a little bit when it comes to PFAs.
But at the end of the day, this uneven standards, uncertain future regulations, it's all forcing utilities to kind of take their destiny into their own hands.
[00:31:59] Speaker A: And just for clarity, this is different from drinking water altogether, right? I mean, we've seen a little bit of back and forth when it comes to managing pfas and drinking water. The mcls, which contaminants, it's gone from zero to six, down to be back down to two. I can't remember.
[00:32:17] Speaker B: I think it's four.
[00:32:18] Speaker A: Four, sorry, four. And then.
So, all right, so now for the. What I think is interesting or fun part, not that all of this is interesting to me, I'm super excited about it. And that is, who are the players to watch, right? Because that was one, that was part of the exercise was to look at the business models and who's managing all of this? You've got the fertilizer companies, you've got the utilities themselves who are at the epicenter of this. You've got land application companies, you've got waste management companies. So lay it out for me. Who's, who's interesting or who jumps out at you?
[00:32:58] Speaker B: Yeah, so I think some of the interesting ones are those waste management firms because, you know, one, there are the landfill operators. They're the ones that own the facilities where these biosolids are going. And there is, you know, maybe going to be some potential, you know, as they continue to maybe become more and more of a destination for biosolids. Could they be installing more biosolids treatment technologies on site?
May they also continue to get more into Holland, you know, Casella, gfl, Those are two of the main kind of larger waste management companies that we see in the space, but not a whole lot of other players kind of in specifically municipal biosolids handling.
WM is maybe kind of starting to get into this space through RNG and landfill gas.
But it'd be really interesting to see, you know, what they continue to do as they move more into the space. I think Violi is also a really interesting one, especially because they kind of do a broader range of facilities like digesters and dryers. You know, I think that they, it's really interesting have Veolia recently started marketing a biosolids sludge dryer that specifically has a thermal oxidizer attached for pfas. So they're really thinking about like what the market is going to be, you know, moving towards the next. Over the next five years.
[00:34:16] Speaker A: Yeah, I think that's what's interesting. Veolia, they're obviously on the water wastewater treatment side, the technology side of the equation, but even their business, I mean, I think globally they're 18, 19 billion dollars a year water business. But on top of that, they do like waste management as well.
So they clearly understand what's happening here. They understand how to manage the waste side of the equation. So. All right, so. But there are also, you know, there are some general waste management companies.
And what about more specialized firms, others that are unique in this space that are definitely worth considering?
[00:34:57] Speaker B: Yeah, so I think like the, the really, you know, the obvious kind of one, the top dog in the room, if you will, is Senegral. You know, they, in terms of the scale, their geographic reach, volume of biosolids managed, they're pretty unique in this industry.
They work along the entire value chain, which is really not something other Companies can seriously say. And they're also, you know, doing a lot of interesting things in terms of alternative delivery, you know, building dryer facilities. They're also fairly acquisitive. They scooped up the New England fertilizer company back in 2023 and I believe that netted them a total of six facilities. And they also, even just since the, since this report actually went to production, they scooped up a, a Virginia based biosolids handler. So they're continuing to. I think this is also interesting because Virginia next to Maryland is kind of in an area where again there's a little bit of that public pushback against biosolids. But Syne Grow doesn't seem to be terribly deterred by that. They're continuing to expand in this region.
Also interesting too there's some other firms like Denali I think is an interesting one because they are kind of similar to Synegro in that sort of like the scale and the geographic reach. They're handling of biosolids but they're also kind of more into generalized organics and food waste handling. And I think that could be a potentially interesting play in the future as you start to see more and more states do what New York and California have done and start to implement these organic waste disposal bans. Can that maybe have some synergies with biosolids management? And then also Merrell Bros. I think is an interesting one. They're kind of more of an up and coming ferment of Indiana but starting to pop up more and more kind of east of the Mississippi I think.
[00:36:35] Speaker A: What is. Well, Senegro. I mean I get there they're acquisitive but they're also private equity backed. Right. They've also changed hands a couple of times. They were owned by EQT up until say about five years ago when they exited. I think they sold it to.
[00:36:53] Speaker B: Yeah, they're open to Goldman Sachs right now, I believe.
[00:36:55] Speaker A: Yeah, I think they're managed by. It's a fund managed by Goldman Sachs. Yeah, west street infrastructure I think is what it is. So they're interesting, right? That makes sense. I just love the dynamic of these players sort of moving horizontally across the value chain. One through acquisition. But looking at technologies for PFAs side of the equation, but then also the hauling piece which is a big part of it. And then there are obviously the landfills, but it's back to a lot of things like this as we've already talked about. It's pretty localized. Certainly a lot of this crap, I guess I don't know if that's a pun or not. It is what it is. But an apologies for my French, but it's very pretty localized. Right. So there must be just contractors moving this stuff around as well, right?
[00:37:45] Speaker B: Yeah, like there is definitely a pretty significant portion of biosolids that get moved by these. Like I turn them like regional haulers, the companies that are operating in a single state, maybe even like a single metro area and maybe like a single utility is a big chunk of the biosolids that they handle. I think those ones are interesting because, you know, they're definitely poised for expansion as utilities are reliant more and more on putting biosolids somewhere else for the destination. But also like candidates for acquisition. Like the. These are the types of companies that Denali and Synergro are scooping up as they are expanding into new markets to kind of get that localized infrastructure and those relationships that they have.
[00:38:25] Speaker A: All right, so it's expensive.
There are some smart people addressing it, whether they be publicly traded, private equity backed, etc.
So let's talk about the opportunities, right, because it's, it's costly. So what are ways to either reduce cost, reduce risk, comply with the regulations. So what are some of those opportunities and maybe who's doing some of this?
[00:38:54] Speaker B: Yeah, so definitely, I think like the biggest opportunity that's emerging is utilities are increasingly looking at drying and dewatering their biosolids. So there's last kind of two steps of pre treatment where you're getting your biosolids from like, you know, 3 to 5% solid material up to like 12 to 20%.
And again, removing that water is cutting down on hauling costs. And so utilities are investing in, I mean really a wide variety of equipment. Equipment with a pretty, pretty diverse range of different companies. You know, there are some that are like really specialized.
So for example, let's just take thermal dryers, for example. You know, you can. Palm Line is a really big one. You know, they are making a lot of different sludge drying equipment. Har slip also too, you know, smaller companies. Harslip pretty much just does dryers or Oozlak rather is another. Actually a better example. Oozelac is just doing rotary drum dryers and that's it. However, you also have companies like Mitsubishi Heavy Industries and Veolia that are also making these dryers. So a really wide range of scales and levels of specialization.
Same thing with centrifuges, you know, Alpha Laval Gea companies that you might associate more with just generalized industrial process equipment that are also playing in this space.
And Again, they also kind of work in industrial wet waste management and, or kind of municipal waste management. And again, like the, the real goal here is to cut those hauling costs and remove excess water because it'll save you money, but it also can maybe enable some new outlets. So we kind of mentioned, you know, the landfilling. There's also some really interesting kind of up and coming technologies that rely on this.
[00:40:35] Speaker A: So, all right, so in a nutshell, we're talking centrifuges, belt filter presses, presses, thermal dryers, you mentioned.
Those are some of the, and so, and some of these companies do both, some do different.
I'm. This is really interesting because I think that gets at, I don't know, is it the 64 million dollar question or at least one of the 64 million dollar questions and that being like, how do we reduce costs? Because it's not going away. If you're in Florida or Arizona or Texas, your population is increasing.
And I think, I suspect, and I don't even know if we've talked about this, but kind of biological waste is probably a pretty, there's pretty much a direct correlation per person and kind of run the numbers and say, look, this is what it's going to be. So you see those waste levels increasing with population in certain parts of the country and then you got these costs. So how do you reduce the cost? So, but then there are also emerging biosolid technologies I think you mentioned. Right. So can you walk us through a couple of those that you see happening when it comes to addressing some of these contaminants, et cetera?
[00:41:54] Speaker B: Yeah, definitely. So I think that, you know, there are these alternative technologies, different ways to, you know, destroy disposal, biosolids that are emerging. And you know, this kind of gets at this whole picture of this capacity squeeze. And the PFAS concerns, is that a kind of like a fourth pathway besides land spreading, incineration and landfilling? A fourth management option that would destroy PFAS is incredibly attractive to utilities, especially if, you know you're somewhere like New England or South Florida where you have this really tight capacity crunch and you may legitimately not have a lot of other options. And so you have a lot of companies that are kind of chasing this. So pyrolysis and gasification are kind of two of the big ones. So incineration adjacent technologies, we'll call them, where they need really dry inputs to function, but they have a pretty clean emissions profile compared to an incinerator.
Similarly, supercritical water oxidation, basically when you take your wet waste and you pressurize it and heat it, where basically all of the organic material turns inorganic. And basically you feed in biosolids and you get out filterable brine, which to utilities is awesome. They love that concept.
The problem is that, you know, with both the pyrolysis gasification as well as the water oxidation, really high Capex and opex, you know, they're expensive to build, expensive to operate. But also we still haven't quite got them to work on a commercial scale yet, which is, you know, challenging. But at the same time, these. This promise is so attractive to utilities that you're continuing to see these companies expand, get new contracts, even though they have struggled to demonstrate commercial viability yet.
[00:43:42] Speaker A: It sounds pretty expensive, I'm not going to lie.
So what are the options for utilities?
[00:43:51] Speaker B: So I think one thing that's going to be interesting to watch in the future is definitely, especially as alternative delivery for just utility construction in general becomes more and more of a common practice, I think you'll see them especially become used more for these biosolids facilities. These really technically complicated facilities. They're going to be really capitally expensive.
They also are going to have high operating costs. You know, these design, build, operate, maintain, design, build, own, operate, maintain. We're going to start seeing, I think, more of that. There's even already a public private partnership with LISTEC in the Bay Area, which those who aren't familiar, not a very common thing in the US despite kind of being common in some other countries.
And so these complicated facilities that utilities may not be interested in, the operating themselves, they don't want to really build it, but they will pay for access, and they want to make sure it's built correctly and function properly. So they're willing to kind of collaborate with these firms that have more technical expertise to deliver these complicated facilities.
[00:44:56] Speaker A: That's super interesting. All right, and then what about, I mean, is this based on cost? Does it mean that is the Northeast the hottest market in the country?
[00:45:07] Speaker B: Or.
[00:45:07] Speaker A: I mean, what about geographic expansion for companies? Are they.
What do you think when you look at that?
[00:45:13] Speaker B: I mean, I think it's going to be, you know, probably in the Northeast, but I think it's more going to be, you know, the utilities are going to be expanding into those kind of more specific urban areas. Like, you know, it may be the Northeast, but they're also maybe going to be looking at the metro Atlanta area or in south Florida or possibly even like the Denver area.
And so it'll be interesting to see, you know, Synagro, Denali, do they Continue to acquire more local players.
Merrell Bros. I think is interesting because they're also expanding, but a bit more organically. They don't have a whole lot acquisitions under their belt. I think another one to keep an eye on is Schwing Bioset.
So Schwing makes equipment for moving the biosolids around, like their piston pumps.
And Metawater recently acquired them, just as they had acquired a company that does biosolids handling and also a few years back had acquired a company that does fertilizer production, like nutrient extracted from biosolids. So it'll be really interesting to see kind of what they do next now that they have that Metawater backing.
And also I'm interested to see too what some of these waste management companies continue to do. Obviously WM I think is one to really watch, you know, how they continue to build out landfill capacity. Will they get more into hauling? And also some of them like, you know, Republic Services, Waste Connections, Clean Harbors, like they don't really do a whole lot of municipal biosol expansion. But I think Clean Harbors is like an interesting example because they're definitely doing PFAS management. So will we see them kind of get more and more into this space?
I think also too, like, it'll be interesting, you know, as these companies like the Sinegra, the Denali, you know, they continue to kind of align with this trend. I think it was interesting when I was reading Cambi, they are a producer of equipment. They were talking in their annual report about how there is still a larger societal preference for the kind of like circular economic principles and sustainability. Even though there isn't always alignment in regulations in government, there's still maybe a larger societal desire for this and an ultimate utility preference to reuse these biosolids.
And so I think it'll be interesting to see how companies like Syne grow and Denali or even these waste management companies continue to unlock this for utilities because again, they want to do stuff, they would rather not put it in a landfill or send it to incinerator. If they have to, they'd like to reuse it. Interesting to see how these companies continue to help them do that.
[00:47:41] Speaker A: Right? And particularly if they can offset some of their operating costs, you know, or lower them for one.
But also, you know, as you talked about market size, if you're looking at 2/billion growing to 4/billion over the next 10 years, it's doubling essentially.
[00:48:00] Speaker B: Right.
[00:48:00] Speaker A: And so that is going to continue to squeeze utilities, wastewater utilities that are like infrastructure as a whole, they're dealing with aging infrastructure you mentioned. They're dealing with, you know, tightening landfill capacity or just increased tipping fees to dispose of biosolids.
They've got rising labor rate. I mean, they've got all the pressures that basically everybody else does. Right. But it ain't sexy. Right. You know, politicians, it's going to be tough to get them out there to stand in front of a anaerobic digester and say, hey, everybody, look at this. I'm cleaning up your waste and I'm going to send these biosolids that come out of this to this or that. Fertilizer is an interesting marketing play though, for. From a brand management. I mean, you talked about it in Milwaukee like you knew what it was, but then you didn't know exactly what it was. And you know, having looked at this in more detail more recently, it's interesting to see how that plays out. So, look, I really like this. I was excited when we talked about this from the beginning. I think your explanations of this are great.
I think the report is awesome.
And you know, so with that, I just. Thanks for jumping on and I don't know if there's. Give you one last moment to add anything else we missed or things to think about.
[00:49:31] Speaker B: No, just.
[00:49:31] Speaker A: Yeah.
[00:49:32] Speaker B: Thank you for having me on. I think it's been a really, really interesting market to just learn more about and yeah, really excited to continue to learn, continue to connect with people in the industry who.
No more than I do.
[00:49:44] Speaker A: Yeah. Like I was telling you, I mean, this is just the starting point. I think there are a couple different pathways that we can and will take going forward, particularly as we get towards 2026, as we look to next year, you know, looking at the company, the company landscape, where there's opportunities, you know, what technologies are being rolled out because of things like pfas. But also talked sort of behind the scenes. There's some back and forth about what's happening with these incinerators, who owns them, there's some cities and towns that really want nothing to do with them, it sounds like.
And yeah.
So. Well, Pat, thanks a million for jumping on. This is great. And whoever thought. I can't say that even 10 years ago, let alone maybe one year ago, I'd be so excited about biosolids.
But I love this stuff. It's interesting. So thanks for jumping on and. All right, we'll talk soon.
[00:50:43] Speaker B: Thank you. Take care.
[00:50:47] Speaker A: All right, so thanks to Pat for jumping on. I'm not going to lie. And I'll say it again, I think this stuff is super interesting. Who would have thought? So before we sign off, I want to recognize the team that makes these conversations possible. Mike Gaylor, Ryan Sullivan, Kelly Talbot, Stef Aldack. Without them, you'd just be listening to me.
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