Please introduce yourself and your background

I’m David Mawer, and for the last 9.5 years, until recently, I was the Managing Director of Gippsland Regional Water Corporation in south-eastern Victoria. Before that, I was Managing Director of Westernport Water, a smaller water corporation in Victoria, for two years having spent the previous 16 years in gas utilities, both wholesale and retail. I managed the gas business of BHP Billiton Petroleum in New South Wales for five years and I was a Senior Business Manager for a national electricity generator and retailer in New Zealand, after originally training as a metallurgist. I have an MBA from Henley Business School at the University of Reading, a Master of Sustainability from The University of Sydney — and I’m currently finishing a Master in Integrated Water Management from the University of Queensland.

How did the Gippsland Water Soil & Organic Recycling Facility (SORF) come about?

The Soil and Organics Recycling Facility (SORF), run by Gippsland Water, was developed in response to the company’s longstanding statutory obligation and entitlement to treat waste at Dutson Downs, an 8500 ha coastal property south of the town of Sale in south-eastern Victoria.

That site was a receiving point for wastewater from various sources, particularly lagoon-treated water from the Australian Pulp and Paper Mill, 88 km inland. When Gippsland Water took over accountability in the mid-‘90s the site was quite degraded after years of very salty recycled water being dumped on its light sandy soils. The site also receives other wastes including those classified by the Environment Protection Authority as ‘prescribed’ — i.e. with special requirements for cartage and disposal.

Dutson Downs had had some areas of pine plantation in the past and had been farmed on and off for about 50 years but is not naturally good farmland. Currently, about two-thirds of the site is regenerating native bushland that accommodates numerous endangered species, both flora and fauna. For example, the Wellington mouse, mint-bush and bellmouth frogs. it’s like an ark for species that hadn’t been seen in Victoria for nearly 100 years. So it has very high environmental and ecological value, and being so large a property there are areas where you can treat waste effectively, out of sight and without affecting the ecology.

In the early 2000s, the EPA insisted on a change to the practice of the paper mill sending its smelly concentrated waste stream, which was pretty disgusting material, to the Dutson site largely through 40 km of open channels. Gippsland Water’s management decided to remove the smell by treating the organic components of the waste stream near the mill itself and they designed and built an extremely complex wastewater treatment plant. It was one of the first in the world to deal with inland waste that way, separating out the bio-solids.

When I arrived at Gippsland Water it was recognised that this system would produce 45,000 to 50,000 tonnes of bio-solids to be dealt with at ‘Dutson Downs’ — a volume we could not simply dispose of by putting it into holes in the ground!

How did you set about treating the waste profitably?

My view was that we needed to turn these bio-solids into a useful product because I have a personal philosophy of turning a problem into a strength rather than just trying to fix it because the return on investment is so much better.

The question was, what can you do with this volume of biosolids that could be beneficial? We decided to explore composting, and what that would involve, what types of waste were appropriate, what kind of investment would be needed, and so on. And we realised that the normal business model for waste like that, including septic tank waste, is that the waste-remover charges the waste-producer at the collection point. It’s like a gate fee, and then the remover disposes of the waste as cheaply as possible. Most organic wastes were being used as some form of landfill because the market for 20 kg bags of garden compost from green waste was very small. In fact, we saw that the growing amounts of green waste being produced from urban areas were another emerging environmental waste problem. How could we use those two growing issues to create a better outcome?

On analysis, we worked out that the gate fee model incentivises waste-removers to spend the least they can on treating, handling or disposing of the waste product, because they get no more payment after they have collected it. I wanted us to find an end-use market for any product we made because science trials were showing that simply dumping bio-solids on farmland strips nitrogen from the soil to help decompose the waste. That means the bio-solids usually take more out of the soil than they put in. In some circumstances, the chemistry of the decomposition works OK, but in most cases when bio-solids are just spread around, particularly human bio-solids waste, the application is not conducive to productive soils.

Our labs at Gippsland Water ran chemistry trials and soil trials and engaged a couple of well qualified agricultural science people, and looked at how we could complete the decomposition cycle. This was different from current practice because the EPA requirement was only that raw or partially treated bio-solids should be pasteurised (to remove live viruses and similar contaminants) before being dumped on farmland. The material does not decompose during pasteurisation.

We looked at full composting — and we did a great deal of work to create a consistent composting process. Without that, it’s a dark art! The only way to do large-scale composting economically is in large outdoor windrows, and that means you are subject to changes in the elements, be it climatic change or wet weather or lots of wind, or all the above. Fortunately, Gippsland Water had an incentive to find the solution, and we had a large enough site where we could experiment without affecting people — who might not like the smell.

As each new problem came up we worked out how to fix it and keep the whole process on track. A lot of our trials were with Ellinbank, the National Centre for Dairy Research and Development. They allowed us to test our compost on pasture and then watch the difference in grass growth and effects on milk production. We also worked with several farmers who were keen to try anything new because superphosphate’s getting very expensive. The product we developed, now called Revive, while not as fast-acting as superphosphate, is certainly beneficial to the soil and a lot cheaper than mineral fertiliser. It gradually builds up the quality of the soil over a period of time and acts as a conditioning agent.

Dairy farmers in the Gippsland region are accustomed to spreading cow manure over their paddocks, so the principles of farm application of Revive were already there. We had only to extend the application while demonstrating that Revive does no harm and that there are no ill-effects from its main ingredient; i.e. bio-solids.

What was involved in getting the business going successfully after the trials?

We needed to go through numerous approval processes both nationally and with the EPA in Victoria, which was not simple. Again, we were fortunate in several ways: we needed to find a really workable solution; we had a site where we had the flexibility to run trials, and I had a Board who were prepared to let us run some of that experimentation. We were demonstrating adaptive management: doing experiments and learning from the doing.

We started off small and the business has grown quite dramatically. The objective all along was to complete the decomposition cycle and create a useful product. That was quite different from simply having a site full of something we needed to get rid of. The bioproduct now has its own brand, Revive, which Gippsland Water owns.

To create a market among farmers, we engaged with a well-known operator in the business of spreading fertiliser and came up with a process. Again, we were fortunate because we could apply 10,000 or 12,000 tonnes a year on our own farmland at ‘Dutson Downs’, which meant we could physically check what was going on, and the benefits, and identify issues and tailor the product for the conditions in a ‘real-world’ distribution system. Gippsland Water does not want to get into the distribution business and would have had trouble doing so.

We are getting rid of the bio-solids and we are doing so into an innovative way – and also demonstrating an end product that is significantly better than anything else based on bio-solids as the main ingredient. Our product also resolves the disposal and treatment of bio-solids in prescribed waste and green waste, in a way that completes the carbon cycle.

Our test results demonstrate the improvement in the quality of the soil, and we know the chemistry so we can demonstrate all the chemical benefits. And, as was always intended, you can now buy the compost product alone or you can buy it with some NPK-type fertiliser added. The fertiliser gives plants a quick boost and then the Revive product gives a longer-lasting improvement to growth, and also builds up the soil. The most recent adaptation I saw before I finished work at Gippsland Water in June was an addition of a grass seed mix – so you can now spread long-lasting compost with a quick stimulant of superphosphate and with grass seed to patch up areas of bare soil. The point is, everything that comes out of that product line now finds a home as a beneficial product, as distinct from just being a way to get rid of waste streams.

Can you tell us more about the business model, developing a product that people want to buy?

There are lots of options. Some wastewater treatment facilities have developed struvite, but there is not a big market for that.

We identified that, in our rural area, there was a market for broad-scale compost, and we identified what the market could afford to pay for it. There wasn’t anything else like it available, and that is still much the same – there are not many fully composted products like this. When Gippsland Water started looking into this business, the market for pelleted compost in Melbourne urban area was around 11,000 tonnes a year, but we are creating anything from 30,000 to 80,000 tonnes a year, so it was clear that there would have been broadacre demand for it. We could sell a lot more Revive now than we create.

It just happens that Gippsland Water had the need, it had the site and it had the determination – and it could afford to invest.

There’s nearly $14 million down there sitting in hardstand areas and weighbridges and infrastructure to facilitate the process. You need to have the governance to satisfy the environmental requirements as well as the procedural and processes to deliver the product on a reliable basis.

Most other operators in the industry use the ‘gate fee’ model because they want their money upfront and are reluctant to make a much bigger capital outlay. Most of these operators use maybe a front-end loader instead of a windrow turner (the last windrow turner that I signed off on cost $1.3 million). They’re working at a much smaller scale, and some are quite primitive, but there are a number of ways to do this. People with composting toilets are doing the same thing on a much, much smaller scale. And you can do it in a distributed way with very large numbers of small sites: Australians compost green waste and food scraps in their backyards all over the nation and are encouraged to do so. Lots and lots of people are more than familiar with how to compost. The issue here is the commercial-scale we work at, and that our model differs from the gate-fee business model not only by giving you a back-end revenue stream, but also by creating a worthwhile product that completes the carbon cycle, improves soil, and turns two increasingly large waste streams into a growing beneficial product. It’s a ‘no-brainer’, in hindsight.

The Gippsland Water composting business is treated as a stand-alone operation. Gippsland Water pays the composting business a fee for treating Gippsland Water’s bio-solids – and that is exactly the same fee that Gippsland Water would have to pay someone else if the composting business wasn’t there. The composting business borrows its working capital from inside Gippsland Water but it runs its own set of accounts, for want of a better phrase. And it has to pay its own way so that the business remains economic. In fact, it makes quite a decent return on investment because the costs in the industry are designed without a back-end product. That means that any return you get for the back-end product is better than everyone else. And the market is there for the back-end product and pays for it, and that money then comes back into Gippsland Water and is reinvested in the operation at the SORF. Before long it will be paying dividends back to Gippsland Water, which will then go to offset the revenue charges on the rest of the customers of Gippsland Water.

I’m quite proud of it, but it stands up to scrutiny. The organisation had a need to do something. We were prepared to take the process forward believing we could make it work, despite the doubters. It took perhaps three or four years longer than we expected, but now it’s a functioning site and, if anything, growing. I think there is now four times the hardstand area we had when we started, and each of those costs $1.5–2 million to build, but you need to have the hardstand. We’ve learnt a lot about materials handling, how to handle those volumes, how to sequence them because they need to be turned multiple times (by the windrow-turner) during the composting process to get oxygen into the exposed stuff that’s being churned out of the middle. You need to add water as part of the fuel … you can see we have learnt a lot about the chemistry. But you can do this on any scale you want, once you understand the local conditions. You just need the green waste as fuel to create the high temperature that will compost the bio-solids as well as the green waste itself. And, as I said earlier, I was fortunate to have a board that was prepared to allow us to set up this operation.

And the end-game is beneficial (i) for society, and (ii) for our customers, and (iii) for the users because the farmers now have a product they didn’t have before and that they can have confidence in – because it’s backed by a major organisation with a technical science-based capability that certifies the product. We did it, we made it, and that’s why Gippsland Water keeps ownership of the name so people know it’s Gippsland Water that has created the product.

Are there technical documents about this process so other groups could see what they might be able to do with their own bio-solids?

There is no manual – no recipe book – because reliably making compost really depends on having local knowledge of the climatic conditions, particularly when it’s done out in the open. It’s not hard to get an understanding of the process when you see the aerial pictures and the windrow turner. Everyone knows what they do.

Gippsland Water has had frequent field days and open days on-site at ‘Dutson Downs’, and has hosted a significant number of people who are interested, including farmer groups. I have personally shown around members of the embassy staff from seven or eight different Asian countries, taking them through both the Water Factory, which is the waste treatment plant and the subsequent processing.

Essentially, you need to understand the science and do temperature monitoring to ensure your process meets the local requirements (for sterilising) set by the EPA for compost production. We need the compost to be at 55 degrees for seven days, and we have to be able to log that temperature and show that it has been maintained for that time. Therefore, you need to devise procedures for material handling, mostly, because that’s where you can achieve efficiencies. These are very large volumes, and the costs are mainly in the handling and the screening and those sorts of physical processes. Currently, we are working with 100,000 tonnes per year, and the amounts are increasing all the time. More and more councils are collecting green waste and organic materials, food scraps and so on from their residents, and most of that is now going to Dutson Downs, from almost the whole of the east of Melbourne.

Beyond Melbourne, I am keen to see this replicated particularly by cities overseas where there is a bio-solids issue and they’ve got a green waste issue of one sort or another. When those two things come together they give you an opportunity to look at what you might then choose to do.

Anyone can write to Gippsland Water or contact Gippsland Water itself to ask for information or a tour. It’s a public entity. They are not precious about the operation at all. I expect that at some stage there’ll be a significant commercial competitor, but the difference will be that the commercial competitor will need to make a significantly greater return on capital than Gippsland Water needs to do.

Gippsland Water’s waste problem

Gippsland Water has a longstanding statutory obligation and entitlement to treat waste at a property of 8,500 hectares in the east of Victoria. The property is known as Dutson Downs and it adjoins some coastal lakes of ecological value. It has been a receiving point for wastewater from among other industries, Australian Pulp and Paper’s Maryvale Mill, 88 km inland of the site, which is lagoon treated and then released to the ocean. The site also receives prescribed waste, such as asbestos.

In the early 2000s, the EPA served Gippsland Water with a pollution abatement notice related to the odours from the Regional Outfall System that transferred waste from the paper mill mainly from forty kilometres of open channels leading to ‘the cardboard pond’, which is 60-years and filled with an undefined sludge.

The Dutson Downs site is 8,500 hectares with two-thirds rehabilitating native bushland in the process of rehabilitation. Because it is near the coast, it is not particularly good farming land and there is a large number of endangered flora and fauna. There is the New Holland mouse (Antechinus agilis), wellington mint-bush (Prosthanthera galbraithiae), green and golden bell frogs(Litoria aurea), as well as other species.

The adjoining Gippsland Lakes are part of an international network of Ramsar wetlands important for the lifecycle of migratory birds.

When the mill was sold to PaperlinX, a settlement was reached to construct an advanced wastewater treatment plant, which was a world-first approach for managing inland waste. One remaining issue though was the tens of thousands of tonnes of biosolids produced from treating the organics without an appropriate management strategy.

Managing bio-solids beneficially

One of David’s first roles at Gippsland Water was to address the challenge of managing these bio-solids and set to work developing a business model based on composting. One challenge was developing an appropriate revenue stream, which in most cases for waste is based on a ‘gate fee’, where waste management operators charge a utility for removing the waste problem.

Consequently, David attended a conference highlighting a major emerging problem for many cities in Australia and worldwide regarding an increase in the volume of organic waste going to landfill. The scale of this waste stream is very large compared with the compost market and other options such as electricity production from biomass still are not considered to be economically viable.

There is a belief that the gate fee model provided a perverse incentive as it promoted cost-minimisation rather than a closed-loop process to produce an end-use marketable product and an integrated water management result.

However, unstable bio-solids used on farmland that have been pasteurized but not completely composted can actually consume nitrogen within the soil and affect the availability of other nutrients to crops. Unfortunately, this is a widespread approach and the ‘gate fee’ business model reinforces this business-as-usual approach to ‘disposing’ of bio-solids in soils especially for large-scale applications where significant investment is required.

David referred to the ‘dark art’ of composting and the risks associated with it from the viewpoint of both environmental regulators in Victoria and nationally, where standard processes are subject to the elements (climate change, wet weather or high winds). David referred to the drivers of the EPA order and a permissive board as factors in ‘the holes in the cheese lining up with the concept of integrated water management’ and adaptive management.

Creating demand for closing the loop

Creating a marketable bio-product involved a lot of trial and error, but resulted in a brand backed by Gippsland Water called Revive. Achieving this was helped by being able to spread 10,000 or 12,000 tonnes a year of the composted green waste and bio-solids on farming sites at Dutson Downs to acquire physical evidence of the benefits and barriers and tailor the product to broad-acre farmers. To improve acceptance with farmers, the compost can be blended with NPK fertiliser to replicate properties that farmers are attuned to. Revive compost provides slower more sustained benefits to crop yields and soil quality than superphosphate fertilizers.Gippsland Water used experts to develop and monitor trials and track nutrient flows in the soil at a government research-oriented dairy farm called Ellinbank. Using this approach enabled results to be tailored to meet the needs of the dairy industry related to pasture and milk production. A well-known local operator that spreads fertiliser was used to better understand how to tailor the product to address the issue rising superphosphate costs for dairy producers.

Developing an economic incentive through a ‘back end’ bio-solid product ‘at scale’ that represents a circular economy

Composting is primarily about the science of temperature management andhttp://www.wioa.org.au/conference_papers/2011_nsw/documents/Katie_Jones.pdf maintaining the windrows at about 55 degrees for 7 days (EPA requirements) by controlling the microbial activity of the decomposing bio-solids. It requires local knowledge of climatic factors. The economic viability of the process is dependent on material handling efficiency. In the case of Gippsland Water 100,000 tonnes of waste per year and there is an ever-increasing volume of inputs from local councils, which demands this.

Income derived from the composting process used to produce Revive is reinvested back into managing the investment in wastewater infrastructure. Gippsland Water receives a fee for treating the bio-solids, but in addition to business-as-usual, the SORF is considered to be a stand-alone operation. It has borrowed working capital and demonstrates an economic outcome from the reused product. The operation pays dividends back to Gippsland Water, which offsets charges to customers for water and wastewater services.

How this success may be replicated in other contexts

Gippsland Water has had interest from several countries in the Asia Pacific Region in both the Gippsland Water Factory and the composting process. David describes how doubts from stakeholders were addressed using an adaptive process of continually resolving problems. The most significant lessons have been about materials handling and sequencing to maintain the oxygen requirements in the windrows for the aerobic composting as profiled in this Landline episode.

It is now understood that the process is possible to achieve on any scale if local conditions are understood and an effective ratio of green waste and biosolids is available. A key element is marketing reuse products that people will buy. For example, other utilities in Australia produce struvite from human waste, but there has been scant interest in the product.

In the case of Revive, it was necessary to understand what dairy farmers could afford to pay based on existing practices; the problems with existing partially composted products, with low stability; and what the board of the utility and government regulators were willing to allow. Aligning these different perspectives by adapting enabled an end outcome that has been beneficial for society, local water users, and farmers.

There is an opportunity to replicate this process in cities where there are bio-solids and green waste issues on a certain scale. It can be applied on a much smaller scale or at a larger urban-scale. The issue of scale and breaking the ‘gate fee’ business model is more challenging for less centralised processes with large numbers of small collection sites but this is possible if a revenue stream can be developed from a product that demonstrably improves agricultural outcomes through improved soil quality. It is clear that private institutions exist will invest in strategies that solve waste problems and produce long-term financial returns.