Lawmakers are advancing a bill to help a company raise up to $50 million to develop a new waste-to-energy operation on Oahu even as the city pays hundreds of thousands of dollars in penalties each year because it can’t provide enough trash to feed the existing H-POWER garbage-to-energy plant.

Anthony Hong and Danny Kim, partners in the new company called Next Level Solutions Group, say their operation will not compete with H-POWER for Oahu’s trash and other combustibles because their project will consume “recycled waste, ocean waste and other waste not being processed by H-POWER.”

In an interview this week, Hong and Kim declined to say how much the plant will cost or where it would be located, or to identify their partners.

They said plants in a number of countries are using the same “low-temperature pyrolysis gasification” technology that Next Level intends to use, but they declined to identify those plants, saying that information is confidential. Pyrolysis involves burning waste to generate power and produce potentially useful byproducts along with some waste ash.

Danny Kim, left, and Anthony Hong have asked Hawaii lawmakers for $50 million in special purpose revenue bonds to finance a new garbage-to-energy plant on Oahu to be developed by their company. Screenshot/2022

Next Level Solutions is seeking approval from the Legislature to have the state issue up to $50 million in special purpose revenue bonds, which would be sold to private investors. The company would need to convince the investors that the company can repay that debt.

The state would not be obligated to repay the bonds, and since special purpose revenue bonds don’t add to the state debt, lawmakers often don’t inquire deeply into the details of these kinds of requests. The handling of the Next Level proposal appears to be following that pattern this year.

The Senate voted 23-2 in favor of House Bill 1682 on Tuesday to authorize the bonds, and the House voted 46-2 in favor of the same measure on March 4, but there has been a total of less than seven minutes of public discussion on the bill.

Most of that time was filled by brief online pitches Hong made to House and Senate committees in support of the project on March 2 and March 21. Sen. Laura Acasio was the only lawmaker who asked any questions during three public hearings on the bill.

Despite the limited public debate, the project may become controversial because Honolulu is on the hook to provide at least 800,000 tons of garbage each year to the existing H-POWER waste-to-energy plant in Leeward Oahu. Meeting that obligation has proved to be difficult for the city.

Whenever the city fails to deliver the required tonnage, the municipal contract with H-POWER operator Covanta requires the city to pay for a portion of Covanta’s lost energy sales. A 2017 report by the Honolulu auditor found the city paid out $6.2 million from 2013 to 2016 to cover those penalties and liquidated damages.

Data provided by the city Department of Environmental Services shows the city paid out another $3.4 million in liquidated damages and lost revenue compensation in fiscal years 2018 to 2021 because it failed to meet the tonnage targets in those years.

Kim and Hong say their project won’t compete with H-POWER for material to burn, but are vague about exactly where they will get the material they will need to operate.

“The main source is going to be trash — the trash of privatized recycling, the goods, pretty much all of the privatized trash that is currently here that is not taken in, that is being stored, that is being sold off island,” Hong said.

“We’re doing research on it right now, so we don’t have the full numbers yet, that’s why we really haven’t gone public, is that we’re actually taking the trash here locally and going to the facility to get the actual numbers,” he said.

“For example, if we were to take in 100 tons per month, we would be able to produce a pretty adequate amount of megawatts per month,” Hong said.

The plant “will drastically reduce pollutants in the air and land and reduce the amount of waste going into the landfill in comparison to H-Power, which is an outdated incinerator technology,” the company said in written testimony to lawmakers.

The plant will be modular so that it can be expanded as needed, and the company would start with a modest “pilot project,” Kim said.

House Vice Speaker John Mizuno is the lead sponsor of HB 1682, but he did not reply to emailed questions asking if he had vetted the company or its plans.

Mizuno did issue a written statement saying that Next Level Solutions will supplement H-POWER, and won’t compete with it. The company “is planning to develop a low-temperature power generation system that greatly reduces pollutants and landfilling,” he said.

The new plant will generate far less ash than H-POWER does, according to Mizuno’s statement, and “Next Level Solutions Group Inc. is actively seeking ways to reuse its ash for building materials through other technologies for its phase 2 plan.” The first phase of the project will burn trash to produce electricity, according to Next Level.

Ted Bohlen of Climate Protectors Hawaii told lawmakers on March 21 that “burning trash is out of step with the City and County of Honolulu’s waste and greenhouse gas reduction plans.”

“Our complaint was that there was very little scrutiny of this project, almost no testimony other than from the proponents,” Bohlen said. “The profit motive here for a producer like this is to not reduce waste, and what Hawaii needs to do, rather than burn its trash, emitting more greenhouse gasses, is to reduce its trash.”

Department of Environmental Services Director Roger Babcock said in a written statement that “we have not heard of this company. We do not know what technology they are proposing, and we cannot take a position without additional information.”

A spokesman for the department said the department is tracking the special purpose revenue bond bill, but declined further comment.

HB 1682 now advances to a House-Senate conference committee, where lawmakers will attempt to reconcile differences between the House and Senate versions of the bill before it is scheduled for final votes.

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