A look inside David Steiner’s waste-to-gold alchemy

I first met Waste Management president and CEO David P. Steiner in 2008, when I interviewed him onstage at a corporate sustainability event. He talked about “reinventing everything” at his then 40-year-old company by changing behavior and leveraging technology in order to turn waste into assets — energy, fuels, materials, and other things.

It was a compelling vision. During that interview, I asked Steiner, “What’s the elevator pitch for Waste Management five years from now, in 2013?”

“Five years from now, what I see us doing is a very simple equation,” he responded. He explained that the materials Waste Management’s customers were generating — and paying the company to haul to a landfill — had a potential market value of $8 to $10 billion — no small thing for a company whose annual revenues were only $14 billion. “Shouldn’t we be trying to get as much value out of those materials as we can before they go into the landfill, or maybe keep them out of the landfill and put them back into the manufacturing loop?” he asked.

Five years later, I had the chance to sit down with Steiner, earlier this month at Fortune Brainstorm Green, for an update. I began by asking, “How much of your vision five years ago has taken hold?”

It turns out change is hard — and slow. “Five years ago I would have said this could be a sweeping change through the industry,” he began. “Now, I would say it's going to be a creeping change through the industry.”

One thing that has changed significantly is the size of the opportunity: a Waste Management executive told Businessweek’s Andrew Herndon last month that “the $12.3 billion it gets for carting off rubbish to landfills may be worth more than $40 billion a year in energy.” That’s at least four times Steiner's estimate back in 2008.

As such, Steiner’s five-year-old vision remains firmly intact. And the company has made progress toward his goal of extracting value from the waste it collects. “We have not yet gotten to the point where we can mine the landfills,” he said, but then corrected himself. “We're actually mining the landfills for some materials, but we're taking incremental steps along the way.”

He referred to the company's incremental progress through the lens of “generations.” Generation 1 technologies, things that are practical and scalable right now, include standard recycling, single-stream recycling, landfill gas to energy, and waste to energy.

Generation 2 technologies have been proved viable but haven't yet been scaled. For example, he said, “We've just built our first pelletized fuel plant. The beauty of the pelletized fuel plant is that it takes standard municipal solid waste and turns it into fuel that you can use as clean coal. It basically burns like coal, except with about 10 percent of the particulates.”

Steiner explained that pelletized fuel can be substituted one-to-one for coal, but also can be customized for a variety of uses. “Different users of coal want different BTU content. They might want 7,000 BTUs for a cement kiln, 11,000 BTUs for a coal-fired power plant, or 13,000 BTUs for an industrial power plant. We can take the waste and modify what goes in there and adjust the BTU content for them.” Waste Management has built its first pelletizing plant, in San Antonio, Tex., currently running at about 60 percent of capacity. It’s building a second plant near Philadelphia.

Next page: “The garbage-to-gold stuff"