Wastewater
Wastewater

Wastewater

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TL;DR

  • Wastewater and its management is an area with major potential for impact as it touches climate mitigation and adaptation, as well as five of the nine planetary boundaries.
  • New regulations in the EU are pushing for stricter pollution monitoring and control, reduced energy consumption, and will likely include “polluters pay” principles meaning the manufacturer of products will be responsible for financing any cleanup associated with it.
  • VC investability is unclear due to high capital costs and long investment horizons but could include digitalized platforms and services for increased performance and efficiency.

What is wastewater?

Wastewater refers to any water that has been used and is no longer suitable for its original purpose due to contamination by various substances. Wastewater can be harmful to the environment and public health if not properly treated and managed.

The United Nations Environmental Program recommends three action areas for wastewater:

  1. Reduce the volume of wastewater produced, i.e., be more responsible with freshwater consumption.
  2. Prevent and reduce contamination.
  3. Sustainably manage wastewater for resource recovery and reuse.

Domestic/urban sources

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Rising populations + more people in cities = more wastewater

Wastewater treatment is expensive, and so it’s primarily high-income countries that are able to perform this service for their citizens. On the high-income side, about 70% of wastewater gets treated, while on the low-income side, that number falls down to 8%.

  • Black water: water from toilets containing urine and feces + any pathogens and chemicals that accompany those.
  • Grey water: water used for household uses like bathing, laundry, cooking, and cleaning.
    • If a household is not properly disposing of things like paint and pharmaceuticals, grey water may also contain these.

Industrial/commercial sources

According to the EU, 92% of toxic pollutants found in its aquatic environments are from the pharmaceutical and cosmetic industries. One of the problems here is that we’re not just talking about waste from the production process itself but also from the use and disposal of these products. Cosmetics are used externally, so they are washed off into domestic wastewater, and improper disposal means that the chemicals contained within these products are leeching out of landfills and into the environment.

  • Inorganic waste containing:
    • Chemicals
      • PFAS (”forever chemicals”)
      • Acids
    • Metals
    • Petroleum products and byproducts
    • Sand and gravel
    • Pharmaceuticals
  • Organic waste from:
    • Fruit/veggie processing
    • Meat and dairy processing
    • Pulp and paper production
    • Brewery and fermentation

Wastewater processing

To remove contaminants, wastewater must go through a treatment process. The process changes depending on the type and source of the wastewater but generally has four steps.

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Additional processing

For wastewater with microorganisms or leftover sludge, additional processing is needed.

  • Disinfection (bacteria, viruses, other harmful microorganisms)
  • Advanced treatment (really sophisticated membranes, ion exchange, bioreactors)
  • Sludge treatment (after it is filtered out, the sludge will often need to be treated in other ways to dispose of it)

Wastewater and climate

About 5% of global greenhouse gas emissions come from the freshwater infrastructure sector (845 million tonnes CO2e). Of those, about 62% result from wastewater, which is what we will focus on here, specifically the treatment of wastewater.

Values from Mapping Water’s Carbon Footprint (
Values from Mapping Water’s Carbon Footprint (Global Water Intelligence, Nov 2022)

All of the emissions associated with water use in the chart above are CO2 from energy inputs. By 2030, the energy demands of the water sector are expected to increase by 50%.

Wastewater treatment also requires energy, so there are indirect emissions of CO2 from the burning of fossil fuels, but the process itself also directly releases nitrous oxide (N2O) and methane (CH4), two potent greenhouse gases (GHGs). One molecule of N2O is capable of absorbing about 300x more heat than CO2, and for CH4, the amount is about 80x more.

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Wastewater treatment and discharge are responsible for 12% of global methane emissions and 4% of Nitrous oxide emissions.

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Opportunities to mitigate emissions: renewable energy, increased energy efficiency of treatment facilities (enhanced pumping operations, energy audits, advanced aeration control, etc), new treatment processes (including nature-based solutions), methane capture, improved decentralized sanitation solutions (like composting toilets and household biogas digesters)

Optimizing wastewater management will clearly reduce GHG emissions, but there are also multiple reasons to invest in wastewater management from the climate adaptation side as well:

  • Stormwater surge readiness: As our planet continues to warm, we can expect more intense weather around the world. Stormwater from extreme rain events (and even melting snow) can overflow and overload transportation and treatment facilities and even drive raw sewage into our streets and homes. Water infrastructure was not built to accommodate these heavy weather events, and overhauling them will be costly.
  • Agricultural fertilizer: Plants require phosphorus to grow, and so our modern agricultural system has come to depend on phosphorus fertilizer to enhance crop growth and feed our rapidly increasing population. There are two problems here: (1) we’re using too much phosphorus and it’s having some pretty devastating environmental effects, and (2) we’re running out of phosphorus. Fortunately, most of the phosphorus that people eat will pass right through us, making human waste a source of phosphorus fertilizer.
  • Freshwater security: Our mismanagement of water resources has put access to clean and safe water at risk, and climate change is only exacerbating that situation. Water conservation is essential, but so is developing better ways to manage our wastewater and ensure we’re able to clean and reuse it efficiently.
    • Singapore has invested in advanced filtration systems that turn wastewater back into water of drinkable quality—enough to meet 40% of the city's water demand.

Wastewater and the planetary boundaries

Wastewater is an area with the potential to address five of the nine planetary boundaries.

Boundary
How they intersect
Climate change
Direct emissions from methane and nitrous oxide released during processing, and indirect emissions from energy consumption.
Freshwater change
We can’t afford to waste fresh water. Efficient wastewater treatment will ensure that we don’t run out of water for consumption and agriculture.
Biogeochemical flows
Wastewater carries nitrogen and phosphorus into our aquatic systems, causing dangerous algae blooms that are killing off aquatic life.
Novel entities
80% of wastewater is discharged without treatment, introducing pollutants into the natural environment.
Ocean acidification
Anything that reduces or sequesters CO2 also addresses ocean acidification.
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Learn more about the planetary boundaries here.

Regulations

A brief look at some of the regulations that apply, or will soon apply, to the EU and US markets.

European Union: Urban Wastewater Treatment Directive

The EU Urban Wastewater Treatment Directive was first adopted in 1991, and in 2023 a revised version was adopted by the European Council in order to align wastewater management with the European Green Deal. Under the revised directive:

  • The sector should be energy-neutral by 2040
  • Pollution should be better monitored and tracked
  • New standards and limit values (especially around micropollutants and plastics)
  • More reuse (wastewater as a resource)
    • Obligations to recover nutrients (i.e., phosphorus for fertilizer)
    • Sludge quality improvement (aim to use, not dispose)
  • Operators must publish their performance indicators
  • Special interest in medicine and cosmetics
    • 90% of micro-pollutants come from these industries
    • Will be required to employ new treatment
  • Extended producer responsibility (EPR) applied to any product placed on the EU market, in any country, and by any means.
    • Cosmetics Europe (an association of personal care companies) and Cefic (the European Chemical Industry Council) have pushed back on this aspect. They claim that producers should not be singled out as their products have “benefit to society,” so society should also pay for the cost of cleaning up related pollution.

United States: Clean Water Act

Originally enacted in 1972, the Clean Water Act’s purpose is to regulate and protect surface water in the US (including rivers, lakes, streams, wetlands, and coastal areas). The Clean Water Act established the National Pollutant Discharge Elimination System (NPDES) to regulate the discharge of pollutants into US waters.

  • Permits issued through the NPDES specify what is an “acceptable” amount of pollutants to discharge, and it is up to the recipient of that permit to decide what technologies to use to meet that level.
  • The “How’s My Waterway” tool allows anyone to see the quality of the water in a given area, including any permitted discharge points.

Innovation and solutions

This list is only a small snapshot of some of the solutions out there. It is not intended to be exhaustive or to serve as investment advice.

Completely new products/processes

New membranes & filters
New types of membranes and filters will enable easier/cheaper separation of water from the waste and resources contained within the mix. Under development here are cellular membranes and nanomaterials like carbon nanotubes.
Energy recovery
5 to 30% of wastewater utilities expenses come from electricity costs. The energy contained within sewage is 9.3x higher than the energy needed to treat it, so using 10% of wastewater’s own energy may be enough to power a treatment plant. Sewage treatment itself can produce both heat and electrical energy, and the force of wastewater coming into a treatment plant can be used to spin turbines for fossil-free electricity.
Constructed wetlands
A low-cost, nature-based treatment process showing potential when it comes to removing personal care product residues. These are highly controlled environments that mimic the occurrences of soil, flora, and microorganisms in natural wetlands to aid in treating wastewater. Constructed wetlands can also reduce odors associated with wastewater management, making them suitable (if the land is available) for areas close to residences. Constructed wetlands are capable of removing some common pharmaceuticals (like paracetamol and ibuprofen) and show promise for other personal care products like some chemicals and micropollutants from the cosmetics industry.
Enhanced treatment
With new types of contaminants constantly being developed, we need more advanced methods to treat wastewater. Microorganisms (either natural or genetically enhanced), ultrasonic reactors, oxidation, and electrocoagulation are some of the new methods in development. Even acoustics can be used to drive water away from contaminants rather than filtering them out.
New pumping technology
Variable speed drives (VSD) or Variable Frequency Drives (VFDs) adjust the speed of water pumps to match the water supply, reducing energy consumption (up to 30%) and increasing pump lifespan.

Optimization of current processes

Monitoring & analytics
Advanced monitoring and sensing systems are being used to collect data on water quality, flow rates, and energy consumption. This data is used to optimize the treatment process, predict potential issues, reduce energy consumption, and improve the efficiency of the plant. Automated monitoring systems use various sensors (such as IoT devices) and data collection tools to monitor the quality and flow of wastewater in real-time, allowing wastewater treatment plants to make immediate adjustments to their processes, optimizing treatment efficiency, and ensuring compliance with environmental regulations.
Biosensing
Fast and inexpensive diagnostic tools, primarily used for virus and bacteria detection.
Automation & control
Automation and control systems are being used to optimize the treatment process, reduce energy consumption, and improve the efficiency of the plant. These systems use real-time data to adjust treatment processes and reduce energy consumption.

Valorization of wastewater

Water reuse
Most wastewater is treated to be disposed of, or it may be used for irrigation, but very little is recirculated as drinking water. Prioritizing wastewater treatment to recirculate as drinking water can reduce demands on freshwater resources and desalination needs. Drinking water from wastewater reuse can be less expensive to produce than drinking water from desalination or groundwater extraction.
Biogas capture
Methane can be captured from wastewater, sludge, and treatment processes and used for electricity generation.
Material recovery
Domestic black water contains valuable nitrogen and fertilizer; wastewater from mines and desalination plants can be filtered to recover more minerals and precious metals (like lithium for batteries);
Nutrient recovery
Wastewater from food production contains nutrients that can be captured and transformed into feedstock for biomanufacturing.
Hydrogen production
Certain biological processes, like fermentation, can produce hydrogen from organic wastewater while treating it at the same time.
Polyesters
Domestic wastewater sludge can be used as a raw material for bioplastic production. The bacteria found here naturally produce a family of polyesters called polyhydroxyalkanoates (PHAs) that produce biodegradable plastics with many uses in the medical industry.

Is wastewater VC-investable?

The potential for impact here is clear. If you’re looking for an area that covers climate adaptation and mitigation, wastewater management is a great place to start. It also cuts across multiple planetary boundaries, making it an industry that can really safeguard our future on this planet. But for whether wastewater management is investable for a VC fund, that’s a bit trickier.

The wastewater treatment market was valued at $55.9 billion in 2022 and is expected to grow to $80.4 billion by 2028, but it is a high-cost industry that needs investors who can commit to long investment horizons.

Still, there may be opportunities for VC to come in on this space, and we would love to talk to founders working with data and analytics to optimize current wastewater treatment processes. If that sounds like you, please reach out to us on the contact form of our website.

Resources

Last updated: Nov 2023