CCAC Case Study: Linking Waste Management and Protein Production Through Insect Technology

Organic waste decomposing in landfills and dumpsites is one of the top three sources of methane emissions globally and often a key source of black carbon through open burning. In developing countries, organic waste comprises around 50% of all waste and is more than 70% in certain regions. Alternate methods of collecting and processing of organic waste represent a huge opportunity to reduce methane and black carbon emissions, enhance landfill lifespans, and improve health outcomes for communities.  

The waste sector in developing countries is however characterised by high levels of informality, fragmented stakeholders, and limited resources to establish comprehensive separation, collection, and processing systems. These challenges limit the potential for methane and black carbon emissions mitigation as most solutions require efficient end-end sorting and collection mechanisms to enable profitability and financial sustainability.

The CCAC’s Technology and Economic Assessment Panel (TEAP) has identified two potential solutions for the waste sector which both employ well-established and accessible technology to significantly reduce emissions at a range of scales. 

These are landfill bio-covers and Black Soldier Fly organic waste processing. Treatment of organic waste using Black Soldier Flies (BSF) has demonstrated the potential reduce emissions from organic waste by more than half compared to traditional composting. Beside producing a high value insect protein, which is used as animal feed, BSF technology also has the added benefits of producing high quality value-added products for the agriculture sector, like biofertilizers, as well as resources for other industries such as for the pharmaceutical sector and the chemical sector. For full details of the mechanisms and potential of BSF technology, see the CCAC TEAP Brief here. 

To advance the use of large-scale BSF technology for use in large cities, CCAC supported a feasibility study project in Lima, Peru, titled Linking Waste Management and Protein Production Through Insect Technology (referred to as the Lima BSF project).  

Lima produces 8,630 tonnes of municipal solid waste per day with approximately 50% of that composition being organic matter. The project aimed to study the feasibility of a large-scale BSF organic waste processing plant capable of handling 250 tonnes per day from selected sources such as local markets. 

The project, which ended in December 2023, provides investors and project implementers with valuable insights into the requirements for establishing financially viable BSF plants which can have a significant impact on methane and black carbon emissions, in addition to its contribution to the solid waste management system in Lima.

Overarching challenges

Since BSF technology is new to many waste management systems, health and municipal authorities may also be limited by knowledge and have misunderstandings of the nature of the operations, including concerns about the risk of insect plagues and BSF breeding. 

Developing countries also face resource and systemic challenges in the most important stage of waste management – collection and separation. Low municipal tax collection and informality in the waste sector severely limits municipal budgets for solid waste management and fragments the stakeholders responsible for the sector.

Further, BSF technology overlaps a range of sectors, including health, waste, agriculture, and industry. This means that to establish the full productive viability of these systems, they must comply with multiple regulatory frameworks and compete in established market structures which do not necessarily consider the nature of their operations. These regulations will vary across countries but will be affected by the regulations of targeted markets of BSF products. 

These challenges were identified as possible barriers during stakeholder interviews conducted during the project. For example, while Peru is not directly affected by European regulations, current European regulations on potential sources of insect food exclude waste from wholesale markets, supermarkets, and household waste, and limit the products that can be produced with this type of waste to biofuel products, or plastics. Some regions also impose quality standards for compost prepared from organic waste and used on agricultural land, which BSF products must ensure compliance with. Such regulations in other jurisdictions can have impacts on the project if the byproducts are exported.

Project Approach

The Lima BSF project sought to produce a comprehensive feasibility study of a large-scale pilot BSF plant in Lima, Peru. The Lima BSF project identified that of the total metropolitan area, the northern zones – with a population of nearly 2.5 million people – could be served by such a facility.  

The study included stakeholder interviews, waste analysis, regulatory analysis, and an economic feasibility analysis. These activities sought to identify the local context regarding current waste management practises, the logistical challenges, local regulations, and cultural factors effecting waste management, and the opportunities for BSF technologies.

Thirteen stakeholder interviews were carried out with public and private stakeholders responsible for food markets, organic waste, recycling, industry, sanitation, and public health. Given the challenges in municipal organic waste collection, markets were identified as the largest and most accessible generators of organic waste. Interviews were delivered in a standardised format which allowed open-ended answers from stakeholders. Interview questions focused on:

• Opportunities and threats to organic waste management and recycling
• Regulations prohibiting the use of organic waste for animal feed
• Availability of data on organic waste in different sectors  
• Level of interest in organic waste management programs to produce upcycled products.

In addition to the stakeholder interviews, the contextual analysis of the pilot plant included an extensive waste management system analysis. The waste management system analysis looked at official organisational structures for the provision of waste management in Northern Lima; the costs per tonne of collection, transportation, and disposal; generation of waste and its composition, existing providers of solid waste services; and current organic waste processing providers. 

The information collected in this stage of the analysis was compared against existing knowledge in literature and assessment criteria of organic waste suitability for Black Soldier Flies. As the quality of the organic material fed to Black Soldier Flies greatly impacts their productive capacity, this step was critical for determining the potential efficiency of the planned BSF products. This step of analysis reviewed moisture and protein content of available waste sources, and environmental conditions within the plant. The waste collection systems analysis also compared organic waste separation and collection in Lima against international best-practice and provided policy recommendations which would facilitate successful implementation of BSF technology in Lima. 
 

Economic Feasibility Analysis

The economic feasibility component of the Lima BSF project looked at both the economic feasibility of a pilot BSF plant (processing one tonne of organic waste per day) and the feasibility of a subsequent large-scale plant (processing 250 tonnes per day).

It stressed a critical point of understanding for reference by other project implementers. These were that the pilot stage of such projects is essential to the success of a BSF project, but that due to the nature of BSF plants – which require a large scale to be economically sustainable via their output products – pilot projects would rarely prove to be economically sustainable on their own. Further, it stressed that pilot plants are not small scale BSF plants, but rather initial stages of implementing a larger scale plant.

The Lima BSF project assessed that initial capital expenditure and operational expenditure for the pilot project processing one tonne per day for 24 months would amount to US$1,928,000. The methodology of this assessment looked at four different possible financing structures which could form this investment. These were: 
 

• Private investment with a long-term business vision for alternative protein sources.
• Public sector financing of the pilot project via grant financing.
• Start-up financing of the pilot project and the industrial plant through third-party investors.
• Financing the pilot project and the industrial plant with public sector funds from the public sector.

In practice, the Lima BSF project investigated interest among domestic and international financing bodies within the realm of circular economy, climate mitigation, and waste management agendas. Across both private and public funding agencies, the Lima BSF project found that BSF plants still faced the challenge of a lack of awareness among financing bodies, and that their risk-aversion meant that they were not ready to fund projects in which they have little experience. This experience showed that the feasibility study itself needed to be combined with further support from   international organisations to raise awareness and prove the commercial viability of BSF plants.  

 
The project assessed that a large-scale BSF plant processing 250 tonnes of organic waste per day would require an investment of around $25 million in capital expenditure (in a greenfield scenario) and achieve a return on investment after eight years. Over an operational period of 20 years, it would generate a 12.93% internal rate of return. The financial case would even improve significantly for a brownfield project.1

The Lima BSF project also prepared a broader project implementation roadmap customised to Lima. This included design dimensions for a pilot BSF plant, supporting the feasibility assessment to progress to the next stage pending approvals and financing.

Benefits/Outcomes 
 

A clear benefit of BSF plants is their ability to reduce methane emissions from organic waste with an “upcycling” strategy since products such as proteins and biofertilizers have high added value. In this area, BSF plants are proving highly successful compared to traditional composting. Initial studies done outside of this project show that BSF plants can halve methane emissions from organic waste. This does not consider additional climate mitigation impacts, such as those coming from the replacement of unsustainable fish meal by avoiding emissions during transport and production of existing fish meal systems. 
 

The cost-competitive and circular nature of the products produced by BSF plants makes them a hugely promising addition to waste management strategies currently available.

The BSF high protein content and oil products make them a key resource to agricultural value chains while also forming an important building block of integrated and sustainable circular food systems.

BSF plants are also highly efficient at producing protein and oil products, as they require less water, less land and less production time compared with other technologies, which is particularly important considering the need for a global shift towards more sustainable agricultural production systems, due to climate change and biodiversity loss. 

The BSF products that are primarily oil and protein-based contribute to the growing market for alternative protein sources, particularly as feed additives in agriculture. In addition to the main protein product, BSF insect oil can be used as ingredient for the production of animal feed, biodiesel and in the pharmaceutical industry. BSF also produces ‘frass’ – a valuable organic fertilizer produced in high volumes and at a competitive market price.  

The market analysis conducted in the assessment showed that global trends in products similar to BSF outputs – such as fishmeal – show growing demand and increasing prices. Given the trends in pressure on agriculture and aquaculture globally, it is likely that this trend will continue, making BSF output products more and more competitive given their high quality and sustainability compared to existing agriculture inputs and fishmeal. 

The growing prices for BSF products will only improve their profitability, which has been demonstrated as suitable for mid- and long-term investments with impressive rates of return. This does not consider any subsidy schemes supporting such projects from a sustainability and climate mitigation point.  

  

Results and Lessons Learned

Given the need to access economies of scale to achieve provable financial sustainability, the Lima BSF project clearly identified a need for initial BSF plants to be in an urban area and with close access to organic waste streams from large and medium food markets. The Lima BSF project found that despite the numerous legislative frameworks affecting BSF plants, there would not be any significant barriers to connecting the plant with current waste management systems in Peru. 

The assessment highlighted the need for a pilot phase before investing in large-scale operations to gain data about the environmental and waste conditions which affect bioconversion efficiency. This data and trial period allows more detailed and efficient design of the larger plant.

It is important for future projects to consider that the Black Soldier Fly’s performance in producing protein depends on a series of environmental, substrate and economic factors.

Environmental success factors depend on emulating the ideal tropical conditions for the BSF – these include a constant temperature between 27-30°C and the right illumination (as close as possible to tropical irradiation) with humidity around 70%. Substrate pre-processing improves the digestibility, and the moisture content of the organic substrate should be between 65-75%, with protein content as high as possible to increase the size of the larvae prior to harvesting. Local climate factors will also influence the levels of technological investment needed to operate the plant in the right conditions. 

Economic success for BSF plants is more likely in large economies of scale, as larger plants can reduce significantly the production costs in comparison to smaller plants. Small-scale projects rarely can compete with traditional animal protein sources, like fishmeal, for example. The ideal size of a plant depends on factors such as tipping fees, labour, automatization, and energy cost, however it is recommended that projects aim to process a minimum of 100 tonnes of organic waste per day. 

The existence of local niche markets such as pet food, animal feed or fish meal impacts the economic success of projects, as existing local or regional markets with high demand will enable steady sales of the BSF products.  

Government responses to the Lima BSF project highlighted the unique benefit of BSF technology for both its climate mitigation impacts and contribution to circular economy systems. 

“Considering that more than half of the municipal solid waste in Peru is organic, technological alternatives such as the one being developed with the CCAC-supported project on the rearing of the black soldier fly for the production of high quality protein from this type of waste, offer enormous potential not only for its contribution to the transition towards a circular economy, but also because it contributes to the reduction of greenhouse gas emissions.” 

~ Dr. Giuliana Becerra, former Deputy Minister of Environmental Management. MINAM 

“The project allowed us to explore and learn in more detail the scope and benefits of one of the forms of recovery that are indicated in our regulatory framework (Legislative Decree 1278, Law on Comprehensive Solid Waste Management) such as bioconversion, through the soldier fly.

This form of valorisation allows products to be obtained in compact systems and in less time, which, unlike other technologies (composting, vermiculture, methanation), makes it an alternative to be considered by local governments and the private sector, and thus be able to increase the recovery rate of organic solid waste at the national level.

Another important aspect is that the replication of bioconversion with the soldier fly would also contribute to the mitigation of greenhouse gases (such as methane). This technology could be considered as a new mitigation measure for the waste sector and thus be able to increase our climate ambition.

Finally, given the necessary and ideal conditions for the development of bioconversion with the soldier fly, it could fit perfectly in the Amazon area of the country, due to the climate conditions that favour it, the obtaining of organic waste, and the need for proteins (final product of bioconversion) for aquaculture activity. 

~ William Agustín Chata Yauri, Solid Waste Valorisation Specialist, Directorate of Management and Handling of Solid Waste, Ministry of Environment, Peru