Cleanaway Waste Management Limited (CWY) Earnings Call Transcript & Summary

Welcome to the Cleanaway Strategic Infrastructure Growth Pillar Deep Dive presentation. I will now hand the conference over to your host, Mr. Mark Schubert, Managing Director and CEO. Please go ahead.

Thank you, and good morning. Can I just ask everybody who is online just to mute your phones, if you're listening, just so we don't get any sort of distraction. Can I just ask Richie, can you hear us okay in the room then?

Yes. Thanks, Robert.

All right. Well, thank you to the analysts who have joined us in person today and everybody else that's joined us on the webcast. I guess, apology from me that I can't be there with you. It's obviously a highlight to be on-site and it's very disappointing not to be there with you, but I know the team is looking forward to showing you around later in the day. Firstly, I would like to acknowledge the traditional owners on many lands on which we meet today and on those lands from across Australia that Cleanaway operates on and pay my respects to elders past, present and emerging. In terms of agenda for today, I'm going to run through the presentation materials and then open the floor for questions. There is an ability to ask questions through the webcast and, obviously, we'll monitor those for any that have not already been asked. And to the extent that we don't have time to address all of your questions, we will endeavor to get back to you directly after the event, so please do send them for us to have the opportunity to answer them. We'll allow approximately 2 hours in total for the formal sort of Q&A and presentation. And so let me start with some introductions. So in the room there today, you've got Paul Binfield, our CFO; Frank Lintvelt, who is the EGM for Strategy, Sustainability and M&A; James Pearce, who's our Energy from Waste Project Director; Taku Ide, our Head of Carbon. And obviously, Richie, who you know well, our Head of Investor Relations. If we move on to the next slide. The next slide is the disclaimer on the screen, and I will take that has been read. Move on to the next slide, which is the agenda slide, which is on the screen now. Firstly, I'll set the scene for you in terms of the broader strategy and market context. Taku is then going to take you through a bit of Carbon101 as it relates to the waste sector and how we are thinking about developing relevant targets consistent with Paris commitments. We're then going to pass it over to James or Paul to discuss energy from waste. Frank will take us through construction, demolition and our organics blueprint. I'll cover landfill optimization and core infrastructure expansion blueprints. And then Frank will take us through the innovation blueprint. And then finally, Paul will take us through the capital allocation framework, and then I'll wrap up with a few closing remarks. And then we will open the floor on site to questions. So if we move on to Slide 4, BluePrint 2030. As a refresher, we introduced the BluePrint 2030 strategy back in February. And while BluePrint really represents Cleanaway, it represents sustainability, and it represents the blue sky ambition and mindset that we'll bring to the strategy. While Print acknowledges this is an extension of Footprint 2025, which underpins this strategy evolution. What we do in BluePrint 2030 is that we will create superior shareholder value by integrating and extending our leading network of infrastructure assets to provide high circularity, low-carbon solutions, seamless customer service, and value for money to customers. We move on to Slide 5. Under our BluePrint 2030 strategy, we will create a competitive advantage and generate significant value by extending and integrating our assets and capabilities to address its various increasingly complex waste needs. Doing this in the most sustainable way possible with an exceptional customer experience and powered by the passion of our workforce. Building upon the platform created during Footprint 2025, BluePrint 2030 is supported by 3 strategic pillars, and they are strategic infrastructure growth, sustainable customer solutions, and operational excellence. And obviously, today, we're here to talk about the strategic growth pillars. We move on to Slide 6. On this slide, we've illustrated how our BluePrints have come together to enable the delivery of our strategy. Under our strategic infrastructure pillar, we will continue to invest to extend our recycling and landfill diversion infrastructure and services platform. We will be more innovative and ensure we are well positioned to capture opportunities from emerging at-scale waste streams to meet the country's future recycling needs. Under our sustainable customer solutions pillar, we will integrate our priced assets to circularity, carbon and seamless customer service. We'll create products and services to provide our customers with access to integrated platforms that best meet their needs and the shape of their waste. And then under the operational excellence pillar, what we do is we'll align our culture with our strategy, and here extend our performance culture to the front line to both deliver for today, whilst also improving for tomorrow. We will better connect our frontline teams to our business and work together for continuous improvement. We will be able to work smarter through the data and analytics and digitization programs that we're rolling out. And it's through these programs and how we use them that we'll achieve a step change in operational productivity. And then what you'll see is people and culture sit across all 3 of these pillars as a key enabler of our strategy and recognizing the integral role of our people and how we will work together and how important that is to fully achieving our mission. If you move on to Slide 7. So today our focus is on the 6 blueprints that comprise our strategic infrastructure growth pillar supplemented by an introductory section on how we are thinking about carbon. You will see from today's presentation that we have a lot going on. And when I say that, what I mean is that we are going on serving customers today, improving our business today, and growing for the future. And I've said many times before, and often to each of you individually, I don't think Cleanaway employees could work much harder. But for us to do this well and be able to deliver the step change in growth and value that we're looking to achieve, we will and have been bringing in targeted new capability throughout the organization. And the annualized cost of this capability is going to be approximately $15 million. If we move on to Slide 8. So let me begin by taking you through the context within which we've undertaken the strategy refresh. We are really fortunate to have strong regulatory and strategic tailwinds that are set by the National Waste Policy and has a broad-based political support. The national policy calls for less waste, higher landfill diversion, and greater domestic reprocessing and reuse. And then this is underpinned by the National Waste Policy key actions. If you know, the waste export ban started back in 2020 with progressively more waste commodities falling under the ban, leading to the requirement for onshore processing solutions. The phasing out of problematic and unnecessary plastics by 2025 will contribute to pushing up the resource recovery rate for plastic. And then by 2030, the action plan aims to reduce total waste generated by 10% per person, to have an 80% average recovery rate from all waste rooms and to halve the amount of organic waste sent to landfill. It also looks to significantly increase the use of recycled content by government and industry, and make the comprehensive economy-wide and timely data publicly available to support better consumer investment and policy decisions. And then following on from that, all states and territories have or are progressing plans that align to or a more ambitious plan, the national plan. The next slide is a really good illustration of that ambition. I'm on Slide 9. As you can see from the slide, across all states and territories, there are numerous policy tools from landfill levies to container deposit schemes to energy-from-waste policies in place with the shared goal of greater landfill diversion and increased circularity. Obviously, timing and ambition levels of each state varies, but states such as Victoria and Queensland have been thoughtful about the diversion challenges and have supportive energy-from-waste settings that allow for residual waste to be managed close to the source of the waste generation. And in a world where our carbon budget is rapidly being depleted, it makes little sense to transport large volumes of residual waste to far away locations when they can be treated and disposed of safely close to the source. If we move on to Slide 10. The key policy tool for the industry is the state-based landfill levies. And later in the presentation, we have a chart that shows the strong correlation between the levy and the corresponding resource recovery rate. With South Australia and New South Wales being the early adopters of high landfill levies, we are now seeing an acceleration in levy rates across the other metropolitan areas, with most states forecast to have landfill of more than $125 per tonne by 2025. The harmonization of the levy rate removes any arbitrage opportunity to move waste interstate and removes the associated carbon emissions that was associated with that activity. Furthermore, waste levies are the primary driver of landfill diversion price. So there is a greater and growing incentive to divert waste from landfill. And with the levy rate increasing each year, this can then offset volume growth flattening. Harder to recycle waste streams typically involve innovation and more expensive equipment or processes. So increasing landfill levies also have the benefit of improving the economics of these developments. As more and more resources are extracted from waste streams, we are advancing the circular economy. If we move to Slide 11. This slide is a visual representation of the evolution of waste collections driven by source separation options. And while the illustration is using domestic or muni bins, the same story would obviously apply for the C&I segment. Progressively, what's happening is we're providing people with more options to source separate their waste streams to enable better resource recovery potential. This naturally then leads to more collections. The frequency of collections may change depending on the bin size, but there is typically an increase in the number of overall collection services as the bin numbers increase. With the introduction of a scheme such as the container deposit scheme, we can also benefit from the collections related to those schemes to the extent that we are a service provider and/or by connecting the CDS materials to our growing plastics recycling infrastructure. And the example of that is what we've done by connecting the New South Wales CDS materials to our Albury PET recycling facility. To achieve national and state landfill diversion targets, we must first have more source separation options. And secondly, we must get better at doing the separation at the source. Those of you that are in the room there today, you will go on a tour and will see how poorly, as a community, we are generally doing the latter. Notwithstanding the provision of source separation service, contamination rates in the mixed recycling bin are still around 1/3, and therefore, the single largest product that leaves the facility that you're sitting in today is contamination that ends up back in the Melbourne Regional landfill. Moving to the next slide, we can see how this is playing out across a broader range of waste stream nationally. Unfortunately, waste sector data is difficult to compile and often has gaps. The most comprehensive report for the sector are the national waste reports. And those are prepared periodically for the Department of Agriculture, Water and the Environment. The most recent report is the 2020 report, and that contains 2018-2019 data, and we've referenced that extensively through the presentation. On the left-hand side of the slide is the major waste categories and their respect to recycling rates. And then what we've done is we've mapped these against the blueprints that we're going to talk to you about today. We see market share growth, market development, and market leadership opportunities for Cleanaway across these waste streams. We see opportunities to transition to energy from waste for residual waste, while maximizing the value of our landfills. In C&D, there are market share gains to be made in a large market with already high circularity. In organics, there are structural changes driving growth in volume and value with opportunities to invest in sophisticated post-collection infrastructure. And as recovery rates increase, the provision of more source separation options, there will be a need for ongoing investment in MRFs, container deposit schemes and supporting infrastructure such as transfer stations. There will also be a need to expand and upgrade liquids and hazardous waste processing and recycling infrastructure to meet increased demand. We are already starting to deliver circular solutions for plastics with more facilities planned. Recovery rates are still very low, so further opportunities are expected in the future. The textile market is large with very low recycling rates at sort of 7%. And we expect technological solutions to come to the market, and we will look to participate to drive this rate much higher. Moving to Slide 13. We'll outline the BluePrint 2030 growth framework. As you can see from the graphic on this slide, our strategic pillars build on each other to generate superior shareholder value while providing customers with great service and value for money sustainable solutions. Our current business today is well diversified across all sectors of the economy and our contracts with our customers have inflation protection mechanisms. Together, this provides GDP plus growth to our core business and creates the opportunity to deliver operating leverage. Our operational excellence pillar, which we'll touch on in another one of these sessions, will drive improved profitability and the opportunities from the current and changing market dynamics such as described earlier, and give us the opportunity to deploy capital into accretive growth infrastructure. Integrating our assets and capabilities will deliver sustainable customer solution and lead to growth in market share through our compelling customer proposition of service and value and sustainability. I'm now going to hand you over to Taku to talk to you about managing our greenhouse gas performance.

Thanks, Mark. Great to be with everyone today. To set the scene for today's presentation, I'll quickly run through this slide, which many of you have seen before. So our ambition is to reduce our emissions in accordance with the Glasgow Climate Pact, which reaffirmed the long-term global goal defined in the Paris Agreement to hold the increase in the global average temperature to well below 2 degrees above preindustrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees above preindustrial levels. By successfully getting on a path to deliver this ambition, we will have the confidence and credibility to offer decarbonization products and services to our customers from our key strategic infrastructure. To execute our emission reduction vision, our internal carbon program is divided into 5 pillars of key activities: forecasting our emissions from our business units, setting 2030 and 2050 targets aligned with latest scientific findings, prioritizing decarbonization initiatives by developing a single marginal abatement cost curve, defining simple annual metrics that motivate and prioritize initiative implementation, and tracking our performance through credible reporting frameworks like NGER and CERT. We will then extend our know-how and position our products and services to help our customers fulfill their climate and decarbonization ambitions. Today, we'll focus on our internal carbon management approach and specifically on how we are thinking about setting our 2030 and 2050 targets. We're continuing to grow our expertise in carbon and climate at Cleanaway because we are passionate about getting carbon and climate right for our customers, investors, communities, employees and our planet. And we see an exciting and emerging opportunity at the intersection of waste and carbon. This IPCC diagram depicts a global carbon cycle, and we present here 3 opportunity areas where the waste sector intersects with carbon. A helpful way to navigate this diagram is to divide it into 2 halves. So the upper half with the arrows and the lower half that highlights the waste sector relevance. Focusing on the top half of the figure, the arrows show carbon sources and sinks where the upward arrows show carbon entering the atmosphere and the downward arrows show carbon being removed from the atmosphere. Fossil fuel sources, the gray arrow, are the predominant sources of carbon in the atmosphere, along with land use changes. Once carbon is released into the atmosphere, the carbon can be reabsorbed back into land, remain in the atmosphere, or dissolve in the ocean. This is shown by the light green downward arrow, the blue dot, and the green downward arrow, respectively. The carbon sources and sinks establish a new higher equilibrium as more carbon is released. And thus, the atmosphere concentration of carbon dioxide will continue to rise so long as we continue to release the carbon that is stored in the subsurface today. Shifting our attention to the bottom half of the figure, 3 areas of opportunity for the waste sector is highlighted. First, both landfill diversion and landfill gas capture can reduce the use of version fossil fuels. For example, plastic and textile recycling are ways to reduce the need for new fossil fuel-based products, and electricity and pipeline gas created from landfill gas can be sources of low carbon fuels. Second, food or garden waste can be transformed into lower carbon energy sources through technologies such as anaerobic digesters. And finally, organics that we collect can be transformed into fertilizers and compost and introduced back into carbon depleted Australian soil to enhance soil productivity and sequester carbon. As a player in the waste sector, we emit 2 different greenhouse gases: methane from landfills and carbon dioxide from the use of grid electricity and combustion of fossil fuels in our fleet and facilities. These gases have different impacts on the climate due to their residence time in the atmosphere and their molecular structure. One way to quantify relative impact of greenhouse gases and other atmospheric species to climate warming is by using a term called radiative forcing or RF. Species that have positive RF contribute to atmospheric warming, while species with a negative RF contribute to atmosphere cooling. The figures on the left show different impacts of greenhouse gases and species on climate relative to 1850. So by adding up the values at any given point in time, we can assess the species' overall impact on climate since the preindustrial era. The goal here is to flatten the shape of each of the warming species as quickly as possible and decrease them, when possible, back towards 1850 levels. Different magnitudes of radiative forcing show that CO2 growth is the main contributor to warming. The CO2 curve can only flatten when CO2 emissions reach net zero. It can decrease if carbon storage initiatives such as soil carbon and carbon capture and sequestration scale over time. The methane curve is already relatively flat owing to the oxidation reactions that remove methane out of the atmosphere. Unlike CO2, any decrease in CH4 emissions has an immediate cooling effect. It's important to note, however, that methane decrease alone will not solve the climate challenge without reaching net zero CO2 emissions. At best, a decrease in methane emissions will delay the onset of peak warming. These differences in both magnitude and nature of warming requires us to establish specific targets for each gas. As we noted on the previous slide, we primarily produce 2 greenhouse gases: methane from landfills and carbon dioxide from electricity use, fleet and facilities. And the breakdown of emissions is shown on the figure to the left. When expressed in carbon dioxide equivalent terms, approximately 80% of our emissions are from landfills in the form of methane and the remaining 20% is CO2 emissions. Methane emissions are distributed across 10 active and closed landfill sites. Emissions from our fleet is the bulk of our CO2 emissions, followed by emissions from electricity use and combustion of natural gas at our facilities. This breakdown shows the relative magnitudes of emissions across the key emission sources and where our attention will be focused as we deliver on our ambition to reduce our emissions aligned with the Paris Agreement. When establishing targets, we will adopt targets that are both scientifically rigorous and consistent with global commitments. The first column on this table titled IPCC summarizes 2030 and 2050 targets for CO2 and CH4 that are consistent with a 1.5 degree rise in temperature in 2100 compared to preindustrial levels. These data can be found in IPCC's latest publication in Working Group III, AR6, which was published in April of 2022. The paper called for net zero carbon dioxide emissions by 2050 with a deep reduction in methane emissions over the same timeframe. This difference is supported by the radiative forcing discussion earlier. The second column, titled COP26, summarizes key global commitments that were made at or leading up to COP26. With respect to CO2, the key commitments that are summarized in the Glasgow Climate Pact include an ambition to reduce CO2 emissions by 45% by 2030 versus 2010, and a net zero emissions by mid-century. Accounting for the growth of emissions between 2010 and 2020, this translates to a 48% reduction in emissions by 2030 versus the 2020 baseline. There are existing global commitments to reduce methane emissions by 30% by 2030 versus a 2020 baseline, and there are no clear agreements around methane targets in 2050. We incorporate these IPCC targets and global commitments to our specific emissions forecast, and we are looking forward to announcing a robust set of CO2 and methane targets in August of this year. And I'm sure you'll have a lot of questions on this topic, which I'm happy to take at the end of the presentation. And I will now hand you over to James, who will talk you through the Energy-from-Waste BluePrint.

Thanks, Taku. And hello, everybody. My name is James Pearce. I head up the Energy-from-Waste Projects at Cleanaway. Today, we are going to speak about a few different things. Firstly, why we need energy from waste as a solution, then I'll take you through the feedstock that we're proposing to use for our Energy-from-Waste projects. We'll touch on the technology that we have selected, and then on each of the projects that we're currently pursuing. Paul Binfield will then take you through the project economics for those projects. On the first slide, we've split this slide into 2 parts. The left-hand side shows the waste hierarchy, which demonstrates that it is necessary to move the disposal of residual waste to further up the waste hierarchy. As you're probably well aware, Cleanaway actively participates in all aspects of the waste hierarchy, seeing waste as a resource with value that can be captured at all stages within the hierarchy before disposal. Energy from waste recognizes the value of the residual waste and allows for the recovery of energy prior to disposal. As you can see on the right-hand side of the slide, Australia is lagging a long way behind the world in resource recovery and adopting energy from waste is a key part of us moving towards best-in-class. As demonstrated, our recycling rates can be further improved through better source separation. And then coupled with energy from waste as part of the waste hierarchy has successfully been deployed as part of the solution in reducing waste to landfill without compromising recycling efforts. The keyword there being part of the solution, not the solution. Over the page, we can see, when complemented with a 3 or 4 bin system, as Mark took us through previously, energy from waste feedstock is residual waste which is not suitable for recycling. Cleanaway is committed to ensuring that both mixed recyclables and food and garden organics are separated and that only the residual municipal solid waste and C&I or commercial and industrial waste will be used as a feedstock. Removal of FOGO or Food and Organics has been mandated in many states across Australia by 2030, which was on the previous slide, and this will assist in removal of a significant part of the recoverable Red Bin waste. We've undertaken detailed waste forecasting and are comfortable that there is sufficient residual waste feedstock available even with removal of FOGO and recyclables for the Energy-from-Waste facilities we're proposing. To be clear, our Energy-from-Waste facilities will not use recoverable organics and/or any recyclables as a feedstock. We go over the slide. This is a typical outline of an energy from waste project that we're looking at for the technology. We've done a lot of significant research and investigation, and our preferred technology continues to be moving great technology paired with an advanced flue gas cleaning system. We've looked at a lot of facilities around the world and, as part of our research, have selected reference facilities to inform our design, environmental approval submissions, and the technology itself. The reference facilities have been selected on the basis of: one, that they're operational and have available emissions and operational data; two, that they use similar waste streams for feedstock from similar jurisdictions based on compositional analysis and habits; three, that they use proven moving grate technology; four, that they use the same proven advanced flue gas treatment systems; and five, that they have a comparable throughput size to our proposed projects. Our reference facilities allow emissions and input modeling in local conditions to prove up and ensure that the feedstock, technology, treatment, and operations can provide suitable operations and compliance with regulations in Australia. The reference facilities are a critical part of any environmental approvals process that we go through. Over to the next slide is a slide which compares our reference facility emissions, and this one is modeled on the Covanta project in Dublin, which is in Ireland, with 3 different items, and I'll take you through one in a minute. But firstly, it compares with the European Industrial Emissions Directive, or IED limits. Second is the best available techniques reference document or it's also called the BREF high limit for energy-from-waste emissions, and third is the best available techniques reference document, low limit for energy from waste. The reason why we compare those is that the BREF is considered the world's best standard for energy from waste and is the benchmark for our Queensland and Victorian Energy from waste facilities approvals. The Covanta and Filborna facilities, both as our reference facilities, provide a clear demonstration of superior compliance with the document when they use similar waste streams from similar jurisdictions, proven moving grate technology, proven advanced flue gas treatment systems and comparable throughput to our proposed project. Our technology selection is underpinned by comparison such as these and evidence-based facts will ensure compliance for our facilities in Australia. I'll just take you through a typical example. So at the top left-hand side is the sulfur dioxide. These are the 4 common pollutants which we consider in approvals. So the top left of the screen has 50 on it, which is the Industrial Emissions Directive limit, the IDE limit. The next one down is the BREF High, the next one down is the BREF Low. And then the reference facility at Covanta, Dublin, is the green on the right-hand side. So those are real emissions measured in realtime throughout the operations of that facility. So when we look at world's best standards or best-in-class on the 3 left-hand side and then compliance that demonstrates real technology and real emissions. We move over to the next slide. We'll look at 2 of the projects we're developing. So this slide is our site in Victoria. We did acquire this site in late December 2021 and that's located in Wollert, Victoria, Northern suburbs of Melbourne, where we are here. The site is substantial. It's about 82 hectares and will allow, in addition to energy from waste for precinct development, as well as houses on large on-site buffers. The site has many other favorable attributes as outlined on the slide. And site investigation studies are substantially complete on this site, and they are now assisting in the preparation of our environmental permit documentation. Stakeholder engagement is ongoing with key government and industry stakeholders already engaged as well as local government as well. As you're probably well aware, the Victorian Energy From Waste policy has an initial cap of 1 million tonnes per annum of energy from waste capacity. Our cap allocation from the regulator will be sought in late 2022 for our proposed facility. Moving over the slide to our Queensland project. So we have exclusivity over a 10-hectare site for energy from waste in Southeast Queensland. We're currently finalizing the option agreement for this site and we will then commence on the environmental approvals for the project. Site selection has been critical based on the changes in the regulatory framework in Queensland over the past 12 months, particularly with the issues encountered at Ipswitch. Our site is in an existing industrial area and is owned for heavy industry. I will clarify that it is not in Ipswitch and has good buffers and heavy industrial neighbors as well as good transport and road and rail access with additional future infrastructure upgrades planned. Stakeholder engagement has commenced with key government and industry stakeholders again, and we continue on that pathway moving forward. Absent from this pack is a discussion of a New South Wales project. We do continue to monitor the situation in New South Wales, but as you're aware, our advanced Western Sydney proposal became unviable because of the revised policy. We also look to develop an option in Lithgow or Wallerawang, but the EPA has indicated that our preferred location on the site of the old Wallerawang Power Station is also now not acceptable. We move over to the next slide. Given the stage of development of our Victoria and Queensland projects, we thought it was more appropriate to lay out a generic timetable for the development of energy from waste projects, and that is demonstrated on the slide there to give a general indication on those projects. I'll now hand over to Paul, who will take you through the economics of the projects.

Thank you, James. Good morning, everyone. I'd like to start by telling you why we believe that we're best placed to be successful in terms of delivering energy from waste. So Cleanaway's competitive advantage stems from the strong municipal customer relationships that we have. We understand our customers' needs and their wants. We can couple that with our deep integrated supporting infrastructure network and our logistics in key markets. And this will enable us to deliver sustainable waste solutions that others will struggle to replicate. The fact is we own the waste stream, which is key to these projects. As James mentioned, our projects are at a relatively early stage of development, which means that I can't give you specific project economics today, but we can set out some high-level benchmarks. So in terms of the CapEx, you should be factoring in a range of $700 million to $1 billion for project capacity ranging from 300 to 500 million kilotonnes per annum. This is a step-up from what we previously guided. And surprisingly, global supply chain issues and general inflation also impacted energy from waste. The bigger contribution to the higher figure, however, is that what we're calling out here is the all-in costs as opposed to just the EPC cost previously quoted. So this range now captures substation and connections costs and financing costs. It's the total cash outflow in relation to each of these projects. In terms of the profile of phasing of the capital expenditure, you can expect it to follow an S curve, so low in the first year, ramping up significantly, and then tapering off as we approach commissioning. We expect revenue will comprise roughly 85% to 90% gate fees and 10% to 15% in electricity sales. Our investment case doesn't factor in other benefits that might accrue to the projects such as the co-location benefits or the sale of recovered commodities. Operating costs are expected to be approximately 50% fixed, 50% variable, with the fixed cost comprising overheads, insurance, utilities, life cycle and day-to-day operating costs. The variable costs comprise maintenance, consumables, ash treatment, and disposal costs. The site will typically shut down for maintenance on average a couple of times a year, probably for about 4 weeks in total. Thinking about the waste supply to feed the facility, we see this as being a blend of long-term municipal contracts, medium-term C&I contracts, and then uncontracted volumes. The contracted base volumes will underpin financing and then we can optimize the base volumes with exposure to market pricing with the uncontracted volumes. The infrastructure nature of these facilities means that they'll be largely debt funded. The older level of gearing will be dependent on the extent to which the volumes are contracted, but overseas experience suggests that gearing around 60% would be quite typical. We believe there will be strong interest for a number of financial institutions to participate in funding a long-term sustainability linked infrastructure projects such as these facilities. That said, the investment and funding of these projects will always have regard to our commitment to a strong group credit profile. I'll now hand over to Frank to cover the C&D and the Organics BluePrint.

Thanks, Paul, and good morning, everyone. My name is Frank Lintvelt and I'm the executive responsible for Strategy, Sustainability and M&A at Cleanaway. As Paul said, I will take you through the C&D and Organics BluePrint starting on Slide 30 with C&D. So this slide is similar to the one Mark took you through for the broader strategy that applies specifically to the C&D Blueprint and showing the growth potential for the market as a whole. Up until now, Cleanaway has been under-represented in this large C&D market. BluePrint 2 is about us taking our fair share of this market and tapping into the structural changes that enable GDP plus growth levels. Beyond the ongoing growth in overall activity levels, the overall market benefits from rising levies that will boost the gate fees and enable investments in advanced resource recovery infrastructure. Outside of a few key players, the C&D market remains fragmented and there is potential to supplement organic growth with acquisitions. I'll touch on a few of these key drivers in the next slides before outlining how we plan to benefit from the market dynamics and growth of our C&D business. The C&D market generates 27 million tonnes of waste each year, which represents around 45% of the total core waste generated, excluding ash, making it the largest source in terms of volume. C&D is also the fastest-growing market in terms of volume with a 10-year volume CAGR of 4.1% versus 2% for the total market and having increased by 52% in the 5 years to 2019. While this growth tends to be a bit more cyclical, we have exposure across multiple customer segments and with C&D remaining only one part of a much larger business, we believe any volatility will be immaterial at a group level. The growth trend is set to continue based on forecast building commencement with all sectors trending up. Turning to Slide 32. You can see the strong correlation between the resource recovery rates and the landfill levy that Mark referred to earlier. We can see the significantly lower recovery rates in states where there are low landfill levies. By way of example, before Queensland introduced the levy in 2021, the cost to send waste to landfill was below $50 per tonne. At those gate fees, you simply cannot make a return on capital by investing in resource recovery infrastructure. Mark earlier talked about a significant increase in landfill levies, and we see this driving value in the C&D segment with the increased diversion price, enabling investments in new resource recovery infrastructure across key states. We have already seen the impact of this in Queensland, which has significantly lifted source recovery rates of 30% shown here. Cleanaway's focus will be on key markets with a high and growing diversion price as well as a key enabling infrastructure. Moving to Slide 33. We've talked a lot about diverting resources for landfill and capturing the diversion price created through the landfill levy. But these resources need a new home. In the C&D sector, unlike other sectors, there's growing demand for recycled contents in products. We've called out some of the leaders in building materials and construction on this slide. They are increasingly looking to have more recycled content in their building materials and hence the buildings. They will set the standards and others will follow or get left behind. Importantly, as businesses progressively look to tackle their Scope 3 emissions, it will be things like the embodied carbon in the building they own or operate from that will be one of the major contributors. So the opportunity for Cleanaway is to have an integrated network to internalize C&D volumes and create high-quality products sold back to our customers. On the next slide, we outline how we will approach developing this segment within our business. Consistent with our overall customer proposition, our approach to this segment will be to deliver reliable customer service, transparency and high resource recovery outcome, and value for money. We will have diversity across customer segments with coverage across infrastructure, commercial and residential construction sectors. We will have targeted solutions to see different customer segments. We will develop a vertically integrated network of resource recovery facilities to maximize the economic benefits of internalization to control the product quality and to provide transparency on resource recovery outcomes. What will be different to before is that we will establish the focus in specialized C&D team. We will have dedicated management operations in sales and customer teams. We have previously sought to run our C&D effectively as a bolt-on to our C&I business, but C&D is a different business with different operational characteristics and value drivers. To be great at C&D, it needs to have the dedicated focus where, as a team, we can attack the value drivers and develop those sustainable customer solutions. Fortunately, we are starting from a fairly good position. We have an existing business that we can expand and with new dedicated focus, we can optimize Cleanaway's existing C&D collections and resource recovery businesses. We can leverage our related infrastructure, including transfer stations and landfills, which will be critical parts of the vertical value chain. From there, we can grow across the value chain from collections to resource recovery and infill footprint gaps through a combination of green and brownfield development and selective acquisitions. I'll now move on to the Organics footprint. Organics is the fastest growing blueprint category as more and more councils move to source-separated organics collections. In our organics strategy, we will target food and garden organics as well as grease trap waste through our liquids business. We will develop a vertically integrated business comprising collections, processing and product sales with feedstock volumes sourced from a combination of long-term canceled contracts and commercial and industrial customers. Structural changes in the sector are creating the need for new organics processing infrastructure beyond the traditional open window composting facilities, including universal composting, anaerobic digestion and other innovative solutions. Cleanaway will consider each of these options depending on feedstock, volumes, location and customer preferences in order to provide fit-for-purpose solutions. The organics growth opportunity is significant with 2 key factors driving the growth. Firstly, we see a step change in volume growth in an already sizable market. Current recycling rates are relatively low at around 52% and are expected to increase over the coming years as mandated targets are implemented and as customers seek improved resource recovery outcomes. Organics currently presents the largest opportunity for landfill diversion and resource recovery. Across Australia, there are a range of organics recycling targets in place for the coming years. If the national recycling rates of 80% are achieved, the organics market will increase by 55% from 7.5 million tonnes today to almost 12 million tonnes. The second driver is price growth. Much of today's volume is garden organic, which attracts relatively low rates compared to when this garden organics is mixed with food organics, which requires a shift to more advanced and higher cost processing technologies. These 2 factors, market growth and increased product value, presents an attractive opportunity for Cleanaway. I won't dwell on this slide other than to highlight that there are regulatory tailwinds driving the organics sector growth. Across Australia, we are starting to see various FOGO and food waste regulations come into play with aggressive targets being set for the next 5 to 10 years. If we take New South Wales as an example, they've recently introduced mandatory FOGO collections by 2030 and mandatory commercial and industrial food waste collections for certain sectors by 2025. The regulatory and policy changes that we're seeing to some degree in all states will significantly increase the need for FOGO processing to meet the growing demand. Now as we transition towards higher rates of food in our organic-based feedstock, the existing infrastructure will become less suitable. Currently, most garden organics are processed at open window composting facilities, which are outdoors and have limited odor controls. Given the odor that can be produced through FOGO processing, these open window facilities are less suited to FOGO feedstock, particularly in or near metropolitan areas. Instead, the industry is likely to move towards the development of in-vessel composting facilities, which are enclosed and can, therefore, have more effective odor controls. We anticipate that these types of developments will be underpinned by long-term cancel contracts. Smaller regional areas could also be served by in-vessel composting facilities or other technology solutions. Moving on to the next slide. Given most of the existing organics infrastructure is not suited to FOGO processing, there are emerging opportunities across the country, particularly on the East Coast and in WA. On the right-hand side of this slide, you can see a map showing the market size per state at the current rates of organics recovery and at an illustrative 80% recovery rate. This highlights the potential size of the opportunity over the coming years. In Victoria, Queensland, WA and Tasmania, there's currently limited FOGO processing capacity. This presents an attractive opportunity for Cleanaway to deliver the necessary capacity to meet the expected demand. In New South Wales, in addition to the growth in the market, the industry is also currently transitioning away from processing of mixed waste organics and is instead looking to source separated FOGO processing. This requires a change in the existing infrastructure, which will further increase the opportunity for Cleanaway to expand its New South Wales footprint. Our ability to offer an integrated solution to our customers positions us well to win long-term organic contracts, which will underpin the development of new facilities. In addition to our existing relationships with key C&I partners, it will allow us to support these organizations in meeting their landfill diversion targets by providing a range of organics collection, depackaging and processing solutions. We have the ability to leverage our existing sites, infrastructure and capabilities and have sufficient capital available to rapidly progress significant infrastructure projects. That concludes the section on the Organics BluePrint. I'll now hand over back to Mark.

Thanks, Frank. Okay. So while we've spent a bit of time today talking about resources that we're looking to keep out of landfills, it is important to note that landfills, we believe, remain critical infrastructure. As such, it's increasingly important to explore ways to extend the life of existing sites and selectively invest in new capacity to ensure there is sufficient air space. There are also several ways we can look to maximize the value of our existing air space. And these include 4 areas. First is more sophisticated pricing models to better reflect the varying cost of disposal; second is better compaction to increase the volumes per cubic meter of air space; thirdly, by expanding licenses to tap into high-value waste streams; and finally, by optimizing day-to-day operations. As a simple example, we recently received approval to receive asbestos containing waste at our Melbourne Regional landfill. Importantly, most of these initiatives are capital-light and have, therefore, high return investments. Moving to the next slide on optimizing gas recovery infrastructure. As Taku mentioned earlier, landfill gas is the largest source of our greenhouse gas emissions. And so our internal carbon management is the first step towards creating sustainable customer solutions for residual waste. This blueprint is a key enabler of our value proposition to customers. We are currently exploring optimal ways of reducing emissions from landfills and maximizing the economic benefits of the landfill gas produced. New investment options, including generating renewable energy, producing compressed natural gas for vehicles, and other uses will be built into our marginal abatement cost curve and assessed against our capital allocation framework. And from the work that we've already done to date, we're confident that increasing gas capture efficiency will be one of the most cost-effective ways of tackling our greenhouse gas footprint. If we move now on to the core infrastructure expansion blueprint. In Footprint 2025, we saw significant investment in the expansion and upgrade of our resource recovery infrastructure. Under this blueprint, we will continue to expand our existing core business across all segments to build on our competitive advantage and capture efficiencies. As part of our periodic footprint reviews, we do a detailed deep dive across all segments and all regions to seek out new and emerging opportunities. This has been complemented with regular market developments and opportunities that are being identified by our branch teams. As the name of this blueprint suggests, it is core to what we do. Have no doubt, you would have observed the blueprints that we've discussed today are all closely tied to the Solid Waste Services segment. That is more a reflection of the scale of those waste streams relative to the other business units. Investments in our liquid waste, health services, hydrocarbons and industrial and waste services are typically a much smaller scale, but they are still assessed under the group capital allocation framework. On the next slide, we've selected 3 examples of these types of investments. The Blacktown MRF is being developed off the back of winning the Blacktown Council co-mingled recycling contract. It has gone through its state significant development approval public exhibition. Site preparation is underway, including demolition of existing structures on site and a builder has been engaged. And this will be our first co-mingled MRF in the Sydney region. In the Health Services business, we are undertaking expansion and enhancement of our autoclaves. In Yatala in Queensland, we've recently commissioned 2 new autoclaves. We have 1 under construction in Tasmania, site mobilization of another is underway in Silverwater in New South Wales, and we have identified a new site in Victoria. Finally, the Victorian team identified an opportunity to develop a Bendigo Transfer Station. With the local landfill closing down towards the end of 2023, our team saw an opportunity to capture circa 15,000 tonnes per annum. Due diligence on the land has been completed, the land purchased and signed layout and planning underway. Moving on to Slide 49, which is another core part of our business in container deposit schemes and one that we hope to see grow significantly over the next couple of years. As you may have seen reported, the Tomra-Cleanaway joint venture will continue in the role of network operator under the New South Wales Container Deposit Scheme of return until late 2026 with the network operator agreement having recently been extended for 4 years. Under the extension agreement, Tomra-Cleanaway continues to be responsible for the New South Wales Container Deposit Scheme network of return points, including reverse vending machines, over-the-counter drop-offs and automated depots. The joint venture will also be responsible for recycling collected containers and ensuring the material is sent to appropriate destinations, such as the Circular Plastics Australia facility in Albury. The joint venture is also committed to greater community access to the scheme by increasing the number of collection points across New South Wales. This extension will support further investment in the collections and processing network over time. We are also looking to participate in the upcoming Victoria and Tasmanian schemes. In the Victorian scheme, the scheme is expected to commence in mid-2023. A 2-stage procurement process is being run with final appointments to October 2022. Victoria is going to run a split responsibility model with a scheme coordinator and one or more network operators, which is the same as the New South Wales scheme. We are supportive of this approach given the success of the model demonstrated through the New South Wales scheme. The procurement process allows bids for one-off or up to all of 6 network operator zones. There are 3 metro and 3 regional zones. And if we compare that to context, there are 7 zones in New South Wales and all are operated by the Tomra-Cleanaway joint venture. We hope, given the success of the New South Wales scheme, that our credentials will be a key factor through the procurement process. Our ability to deliver bottle-to-bottle circular solutions should also stand us in good stead. Similarly, in Tasmania, the scheme is expected to commence mid-2023. Tasmania is also running a 2-stage procurement process, which commenced in April 2022, with final appointments expected late 2022. The same split responsibility model as New South Wales and Victoria will apply with a scheme coordinator, but only one network operator for the whole of the state. Success in one or both of these procurement processes will drive further investment in our core infrastructure and fleet, including the potential opportunity to further expand our plastics reprocessing capacity. And that's a good segue. So let me hand it back to Frank who will take you through our Innovation BluePrint.

Thanks, Mark. So this blueprint recognizes that continued investment in new solutions and technologies is required to move ever closer to a fully circular economy. There are 3 key focus areas. The first is to constantly push to reduce waste and to landfill. This is about targeting waste streams with low resource recovery rates and identifying new ways to collect, sort and process these. One example is textiles, a large market with very low recycling rates beyond the reuse market. Another example is soft plastics. Both of these require new technologies to enable effective resource recovery. The second is to create more sustainable solutions for materials already collected. This has been finding the highest order, most circular and lowest carbon outcomes for these material. Our investments in plastic palletizing, which I'll touch on in a moment, are a great example of this. The third is to tap into large, new and emerging waste streams linked to the energy transition and other structural changes. We will invest in proven technologies and support development of emerging technologies to achieve these objectives. In doing so, we will be able to offer our customers sustainable solutions that will make us a supplier of choice. Importantly, our national footprint and capabilities in sourcing and sorting of materials that can be recovered are key competitive advantages to enable these investments. We understand our strengths and know the boundaries of our expertise. So our success will be driven by partnerships across the value chain and through working with technology providers. The next slide is a great example of those value chain partnerships. To provide our customers with the most circular solutions in plastics, we have formed a unique cross-value chain partnership to create a domestic network of mechanical recycling facilities which create pellets as a substitute to virgin plastics to enable bottle-to-bottle solutions. There are many different types of plastics, 4 major polymers used in packaging, which comprise just over half of total consumption, are suitable for mechanical recycling, depending on the packaging form. They each require different processing technologies and we are targeting solutions for each of these. The first facility commissioned is the $45 million PET plastic pelletizing facility in Albury, which can process the equivalent of 1 billion plastic bottles. Our volumes from the Container Deposit Scheme in New South Wales and from our MRFs and plastic recovery facility here at Leverton are processed through Albury. We have a similar second PET facility under construction in Melbourne, supported by a $6 million grant from the Victorian and federal governments. This takes the combined PET processing capacity to around 60,000 tonnes. Cleanaway is a 33% shareholder in these 2 businesses through our CPA joint venture with Pact, Asahi and Coca-Cola. We have entered into a separate 50-50 JV with Pact to develop a 20,000-tonne HDPE and PP pelletizing facility on this side at Leverton on land that was acquired as part of the original SKM acquisition. The Victorian and federal governments have awarded $3 million in grant funding for this facility. Lastly, we're well progressed in developing a mechanical recycling solution for plastic film made from LDPE plastics. Finally, I'll touch on 2 feasibility studies that we are working on with joint venture partners. What I would say at the outside is that these are just an illustration of the types of circular solutions we are looking to participate in. Even if they are commercialized, and some won't succeed, they are unlikely to be material in the overall Cleanaway group. However, they are strategically important to our customer proposition, and we believe they will play an important role in making us that supplier of choice. As Mark mentioned earlier, we would hope that our ability to provide circular solutions for plastics will stand us in good stead in the upcoming CDS procurement process. Similarly, when tendering for large national accounts or municipal contracts, being able to offer a suite of circular solutions for an increasing number of waste streams should prove beneficial. So moving to the feasibility studies that we have called out on Slide 53. We are participating with Qenos in the feasibility study into chemical recycling of polyethylene polymers. Australia has set ambitious targets for packaging circularity by 2025, including 50% average recycled content in packaging with a 10% target for soft plastics initially. Not all plastics are suitable for mechanical recycling, and to meet the 50% target requires this to be complemented by the chemical recycling. The second study is relevant to our liquids business and relates to new processing solutions for our grease trap wastes and other fats and oils. Our grease trap is currently dewatered with residuals mostly sent to composters. Through this study, we are seeking to convert it into sustainable fuels and other industrial products utilizing our partner's proprietary process. It's an early-stage feasibility study with ambition to develop production trial that should pass through the appropriate stage gates. That concludes the Innovation BluePrint. And I'll hand over back to Paul to run through the Capital Allocation BluePrint.

Thank you, Frank. So with regard to capital allocation, our overarching principle is that we're committed to maintaining a strong balance sheet. In the last 12 months, we've increased our focus on how we're allocating capital across the group, and we've improved our processes to support our capital decision-making process. So for example, we're developing a pipeline of projects so that we have a visibility of all the opportunities that we have to deploy capital. This moves us away from the first come, first served mentality and into a focus on risk and return. It also gives us a clear view as to the complete opportunity set and helps us to be more selective about what new opportunities to go after. With a more comprehensive approach regarding how we assess the risk of particular projects. So we have a better understanding of what could go wrong and hence, how we can better manage the downside risk. We're undertaking detailed post-implementation reviews so that we can learn from past decisions, both good and bad. And we've a stronger focus on the split between maintenance capital and growth capital. History tells us that we spend about 2/3 of our capital -- 2/3 of our capital on maintenance CapEx. The major variable in maintenance CapEx tends to be cell development costs, which by nature are lumpy. You've heard Taku talk about our approach to carbon and as we develop our thinking in this area. You can expect to see capital being allocated to projects that will deliver on meeting our greenhouse gas emissions targets. Our benchmark is always relative to a return of capital to shareholders and our growth opportunities are assessed with that in mind. M&A has always been a part of Cleanaway's growth strategy and we expect that to continue. We see there being limited opportunity to undertake large-scale M&A, but we will consider bolt-on transactions where organic solutions are not available. You should also expect to see that we'll continue to deploy capital into JVs or partnerships such as our plastics JVs where it makes sense to draw on the skills of other parties and to diversify risk. So as Frank and James discussed above, Energy from Waste and Organics, the timing around these and when we're going to be deploying capital is uncertain. The capital expenditure for these projects is most likely going to be underwritten by contractual volumes and more certain cash flows. So consequently, you should expect the returns that we'll earn from these to be more akin to a typical infrastructure project. Capital deployed into C&D, landfill optimization and core infrastructure will be similar in nature and quantum to what you've seen Cleanaway spend in the past. We may undertake some limited bolt-on M&A, but this would be because there are no superior organic solutions available. With regard to landfill optimization, which Mark talked about, there are a number of initiatives in this space that require little or no capital and these will naturally be prioritized. The maturity of the initiatives in the innovation blueprint varies. We have 3 plastics JVs, which are well progressed and where the equity contribution is modest. There are other projects that are in the feasibility stage and for the foreseeable future, we do not expect to be deploying significant amounts of capital on these initiatives until the technical and commercial viability of these projects is proven. The returns from these projects and opportunities are all assessed against our capital allocation hierarchy with regard to their risk-adjusted return profile, and we're seeking a balanced portfolio of projects that provide us with a blend of risk and return. So I'll pass you back now to Mark for closing remarks.

All right, let me stretch now. So thanks, Paul. There was a lot covered in today's materials. So I'll try and bring it altogether for you. So as I said at the start that in Blueprint 2030, we will create superior shareholder value by integrating and extending our leading network of infrastructure assets to provide high-circularity low-carbon solutions, seamless customer service and value for money to customers. We talked about the supportive regulatory settings and customer demand for sustainable solutions that creates the strategic tailwinds for us. The value of the industry will grow with the increasing diversion price. The transition to a more circular economy moves investment opportunities further up the waste hierarchy. Sophisticated and vertically integrated participants will be best positioned to invest in the new resource recovery and processing infrastructure. For Cleanaway, this will make our business more infrastructure-like, complemented with the already defensive characteristics that it displays. Cleanaway has an opportunity to grow its market share in segments that we are underrepresented. We'll do this thoughtfully and purposely. We will seek to invest in at scale, strategic infrastructure that is necessary to deliver landfill diversion goals, and we will continue to expand and optimize our core infrastructure to deliver for today and improve tomorrow. And we will support innovation to deliver on our customer proposition of service and value and sustainability. Setting targets and actioning plans to manage our greenhouse gas emission is critical to the sustainability leg of our customer proposition and leads throughout our strategy. As a business and as a Cleanaway team, we are united by our purpose of making a sustainable future possible together. So that concludes the formal presentation, and I'll open the floor for questions and perhaps, Richard, you can sort of lead us to.

Thanks, Mark. I'm going to do a roving mic because of the sound in this room. So can I just ask you all to get the microphone before asking questions.

James Wilson from Jarden here. Just a question on that $700 million to $1 billion CapEx for waste energy. Is that on a per site basis? Or is that on a total project basis?

That's a per site basis. And dependent on the size of [indiscernible].

And are you able to speak to us about maybe the potential returns profile that you're thinking about some of these sites generate?

I think the point we made is if you look at the nature of these bits of CapEx, you're going to have contracted revenue streams. So again, long-term bank funding. So expectation is that you'd expect to have very typical infrastructure-like returns from those sorts of investments. Again, we haven't now done exactly what that looks like. But I think if you look at the nature of that investment, it's absolutely in that sort of beta of sort of core infrastructure, and that's in our expectations. And particularly, given if you look at a key driver of what's going to drive the economics there is obviously the levy rates. And as you can see, we're seeing on the East Coast as levy rates hitting around that 150-plus CPI. Given the situation, we've got 2 sites, 2 plants, which are well progressed in terms of construction in WA. And their levy rates obviously are substantially below the East Coast. So they can make it work in WA. We're very confident that East Coast is going to stack up nicely.

Sorry, just to ask a follow-up on that. Paul, if you think just over the evolution of energy-from-waste, as you've been looking at it. Obviously, Sydney was a high price with $140-odd, $133 probably at the time. You're now talking about $114 Queensland where your build costs are probably going to be a little bit lower than what it would be in Sydney. Victoria hitting the same way. What's the evolution of that return expectation been in light of the additional cost increases as well? Has that actually gone up if you think of your journey in energy-from-waste.

Yes, I think we are increasingly confident that particularly Vicki and Queensland will be very attractive projects financially for us. So as you say, we've seen an increase in levy rates. We've also seen, unfortunately, obviously increasing construction costs as well. So the figure we've given you there reflect what we believe are current construction costs, are reflecting the step-up that we've seen in the last 6 months as well. So certainly, tailwinds in terms of improved levy regime, headwinds in terms of increased construction cost.

Paul, just on the -- with the cap in Victoria, does that mean that there's going to be an advantage for the first mover and we have to -- so you're going to have to do something faster to make sure that you're not at a competitive disadvantage; 1, relative to the cap; 2, the feedstocks absorbed by someone else?

The framework and the guideline in Victoria outlines how cap is going to be applied. So there's a criteria, there's about 10 items in the criteria, and those go through a range of things. So it's not just first move up. There's a stage process to go through with credentials, capacity, ability to do a feedstock, approvals and stage of approvals, land and a site are all considered in that as a key criteria for a capital allocation. So it's not just purely first mover under the cap, there is criteria which must be met and that is outlined already. The cap sort of application process is not open as of today. However, we do know the criteria that they're going to assess. And we have looked at that in Cleanaway in a very strong position compared to others who don't have the range of capacity and capability that we do. So we are confident in our ability to get that.

I think in terms of feedstock as well, we have in deep relationships in terms of muni contracts in both Melbourne and CQ. So we feel we're in a good position as well.

Amit Kanwatia from Jefferies. If I could just ask a high-level question. I mean you're highlighting plenty of growth opportunities for the business over the next few years. But if you can just talk to what the success or what's the scorecard for success looks like over the next 2 years, 3 years down the line in terms of return expectations, margins? Or I mean, where do you see the business for the next few years after this deep dive you've done of the study over the last few years?

Mike, do you want to pick up what you said success looks like?

Yes. So I think -- so just remember success for Cleanaway looks like all the blueprint -- sorry, all the pillars getting delivered. Yes, it's not just this one. And I think what we've talked about before is strategic infrastructure growth pillar, which is what we went through today and the blueprint [indiscernible] is work that we do today that comes on progressively over the next 1, 2, 3 years. And obviously, project comes on in 3 years' time to answer your question, it's not going to really drive return metrics in the near term. That's why we also have the operational excellence pillar, which is a lot about getting at that remaining potential of the existing business, and we'll go through that with you later this year about what's going on there. But remember, that's about data and analytics. That's about value drivers. That's about taking those key metrics to the front line and getting them improved, whether that's route density or [ leaps ] per hour. Those sorts of things and getting the teams working on those, and we're seeing some real leaps forward. So I think what I'm trying to say here is strategic infrastructure growth pillar. We'll -- obviously, we're doing a lot of work on, as you can see here, which lines us up really nicely for the next 2 or 3 years' time. And obviously, it's the operational excellence bill that will drive obviously, the near-term gains, low CapEx or no CapEx effectively in many instances that will help to boost and maintain margins going through in sort of that 2-year time frame that you're looking for. Does that help answer your question of what -- the way we're thinking about or you will be something different?

No, no, definitely. That's very useful. And is it fair to then say, your longer-term margin assumptions that you laid out previously, that all of those still hold? Because most of these investments are -- you're highlighting in the infrastructure-like projects, post-collections, which would have higher margins. So I didn't really expect your margins to expand, obviously, as you deliver on these projects, maybe beyond 2, 3 years.

Well, I think what we didn't do today as we didn't mention the midterm margin target. And so therefore, we haven't stepped away from them. Today was an update about strategic infrastructure growth pillar, the 6 blueprints associated with that. And we still stand by those margin targets. We'll reach them. And then we'll discuss what happens after that.

Maybe just a follow-up for me on the flip side of that. You mentioned there's obviously a lot going on. Paul, you talked about a refined risk assessment process. In general, can you just maybe talk about how that's evolved over time and what's changed there?

Yes. So it's all probably in the last 12 months. So if you look at previous allocation process. CapEx, we looked at in the context of revenue. So it was cash CapEx. So lease CapEx was left to 1 side. Cash CapEx was at a constrained 10% of revenue. I think coming into this business, you realize it is quite a capital-hungry business, and therefore, having some port constraints important. And I'm simply questioning whether revenue or percentage of revenue is the best thing to do. So you got a situation, for example, in Perth a couple of years ago where we built [indiscernible]. That was a very substantial bit of CapEx. WA was still constrained to 10% of their revenue for CapEx for that year. So you can imagine a number of other elements of the CapEx needed for that particular area, frankly they've neglected. So we want to encourage the business unit to be bringing growth projects to us with good ideas because the risk is, if we add up a great idea to build a [indiscernible]. That means, in fact -- your fleet for next year, that's not domestic what we want to be putting out there we're saying there is core CapEx, maintenance CapEx that we need to keep the lights on. And in terms of growth projects, projects over and above that, basically, we're saying to the business units, you've got to bet for that. So you've got to come to us with your best possible projects and put it in the pipeline and it will be assessed centrally. It will be a transparent process. There will be no sort of -- no skulduggery going on. And basically, the projects will be assessed on there. And we'll try and get a blend. We recognize some price will be a little bit more risky than other projects, and we'll get a blend. And we'll recognize to what else is going on in terms of -- for example, right now, we've got -- the big CDS standard is currently underway. If we're successful there, that will be a substantial amount of CapEx with very good returns. On that page, is there going to be other competing projects? Which, frankly, I think they could be great projects, but we sit going to say, not this year, I put it on the shelf, get it ready to go. Next year, perhaps, as our thought process.

Just on -- your longer focus on just back of the original point on the carbon, I guess, emission targets. Just balancing the dynamic of the cost of the business of those targets, a customer base or portion of customer base that wants you to transition as well. But then a big I guess, competitors said that doesn't necessarily have targets in place as well, how do you, I guess, marry that over the next decade. In your business, do you see your transition to those targets as a net impact for the company? Or you're basically managing that target number to be, I guess, value neutral for the business?

You want to first take that, Mark?

Yes, sure. So I mean, I think [ another take ], if you like. But I think the way we approach it is we really think about it on a marginal abatement curve. So we stack basically the projects by their effectively equivalent cost of carbon reduction. And we stack them from the lowest cost projects to the highest cost projects. We would expect to have a series of negative cost projects, meaning they've got a whole lot of return associated with doing. But it's always the case is low-hanging fruit, things that we can do that will recover, maintain and allow us to, for example, sell it and turn it into things. As Taku outlined and as I outlined during the course of the morning, we see a lot of opportunities, particularly around landfill gas. Landfill gas capture, improving efficiency rates and then doing smart things with that gas. I mean the really nice part for Cleanaway is that, that gas has a use in the sense that it can be turned into electricity, it can be turned into compressed natural gas, it can be turned into RNG, meaning sort of cleaned up and put into a pipeline or even other uses that have positive benefits that we would expect to yield an economic return from. And so we'll do all those things first, and then we would get into the harder ones and obviously do those in the order. So I think our focus at the moment is building out that marginal abatement cost curve and really focusing on our landfills as the big lever to pull on. And I think I've said to you before, traditionally, that has not been the focus. The focus on sort of gas capital liability has been mainly around compliance as opposed to obviously maximize out the recovery and the economic benefit.

Do you want to add to that? [indiscernible]

Nathan Lead from Morgans. Just 2 for me. Just first off, just the $700 million to $1 billion CapEx for the waste-to-energy. Is that an estimate like today's dollars? Or is that for that '24 to '27 sort of build period?

It's an estimate in today's dollars.

Okay. So we'd add inflation on top of that, depending on where we think construction is going to be. Okay. Second thing is probably a dumb engineering question for me. The focus on, FOGO more and more coming through and the investment going into that. And then sort of tying that up with waste-to-energy would have thought FOGO would be your highest calorific value type waste stream, you're carving that out of what's going into the waste-to-energy. Is there sufficient sort of high calorific value product going in the waste-to-energy facilities to actually...

Yes. So that's a good question. Thank you. We do, do waste sampling and we are very comfortable with that. We do a range of the calorific value. So we go out of the sample across different periods throughout the year, both with organic fractions and without organic fractions as they are coming up. So then trying not to get too technical, but then we look at a wiring diagram for the waste today and the waste of the future once that organic fraction comes out, and the facility is designed on that. So yes, we are very comfortable, and we've done that based on theoretical and real testing and that forms part of our environmental submissions to prove that, that can actually work. So in terms of calorific value, yes, the calorific value is suitable of the waste of today and of the waste of the future once those things and bits and pieces come out.

Raju [indiscernible]

It's Raju from CCZ. Just going back to that EfW. Just to be clear, I think on the slide, you mentioned 10% to 15% revenue is going to come from electricity generation. Would the business model still stack up from a returns perspective, if you didn't generate a single dollar in revenue from electricity?

Very hypothetical question, clearly the key output is going to be the electricity. So what's behind your question?

What I'm trying to get at is if you couldn't get any revenue from generating the electricity where you said you're going to get about 10% to 15%. And I presume -- I could be wrong, I presume that, that would be a reasonably high margins. If you didn't get that electricity revenue in, does the return on investment still look attractive?

To be quite frank, we have not modeled this without -- we assume that we're going to be connected to the group. We're going to be sort of incurring those costs in terms of the grid connection and our expectation is that we will be selling the electricity coming off the plant. And [indiscernible], you want to answer that?

It might just be worth adding that there's a few different ways to look at the electricity. One is that there is direct to the grid, which goes to houses and business and whatever. There's another thing called power purchase agreements where we can sell off that privately to businesses, and that is a key part of what we're looking at. So if you look at the site in Wollert, we're right next to Brickworks. We're right next door to actually API-proposed gas-fired power station, and I'll come on to that in a minute, but we're also next to heavy industry. So as power purchase agreements, there's also what's called a behind-the-meter solution. So 3 different ways to get rid of power grid, power purchase agreement using the existing grid infrastructure or a power purchase agreement, which is in very basic terms, it's a cable from our facility to a big heavy power user. So we can look at that in those different ways. The other key thing to think about and to look at is other offtakes of steam, for example, and heat. There's a proposed gas-fired power station, we can supplement that with the boiler. So I think in terms of taking it out and saying that there's no revenue from it is probably unrealistic because there are so many different ways to utilize those offtakes just in what way it looks at. If it's taking away from the grid for houses and the normal grid, you may consider that, however, there is a specialized work stream on that to ensure that the power is going somewhere.

[Technical Difficulty] Pardon me. We now have the main speaker line reconnected.

Thank you. Is Mark online as well?

Yes, I'm here. Now again.

Apologies for the dramas there. Maybe we'll go back to Raju.

Yes. So does that answer your question? Let's say, our view is that we've pretty comfortable strategy, that's the way you've go. I'm sure our competition will come up with alternatives. I think we feel pretty comfortable that we can compete against one customer current. And I don't think you see a great need to change our strategies because as the competition has come up with something different.

James?

It's James from Jarden here again. A couple more, if I may. So firstly, on that $15 million per annum that you've called out for Blueprint 2030. Are we right us thinking about that as coming through the corporate line? And also, are those costs already adjusted for inflation? Or is that something that we could see increase the implementation of the project.

So the vast majority of help coming through the corporate line, absolutely, there will be a little bit in the individual segments. And that $15 million is today's dollars. So it's what we would expect to see coming to FY '22.

Okay. And also just -- it's a little bit unrelated to today. But on your staffing costs for EBAs, how are you guys going with those? Any updates?

Mark, [indiscernible] again?

[indiscernible] As You know, sort of the strategy in Cleanaway is to have a significantly large number of EBAs to sort of diversify the risk in terms of industrial risk. I think what we saw during COVID was a number of those discussions got rolled back. So in other words, rather than having sort of, say, 25 a year, we've got more like 40 coming up. It's not as linear as it has been. I think it's early days. We're not seeing a big push through on those negotiations around wage increases, but we're certainly very, very aware of that environment, if that answers the question.

Can I -- So a follow-up question [indiscernible]. So can we just confirm that it's only for 1 year -- and then what is it that you're actually spending it on?

That is an annual cost, yes.

So an annual cost, it's ongoing or it's only happening one?

No, it is an ongoing annual cost.

It's an ongoing annual cost.

Correct. So we are increasing the depth and capability of the team to basically execute on this strategy.

I'm happy to give you a little bit more color, if you like. So when I think about the $15 million, is it as, Paul said, so it's increasing capability, increasing depth. You can kind of take the $15 million and split it 4 ways. I'd say about half of it is going towards the foundations, whether that's sort of sustainability, circularity, carbon, HSE, the core processes or asset integrity. So it's about half is going in that direction. About 1/4 is going towards the strategic infrastructure, blueprints that we talked about today, whether that's organic, energy-from-waste, M&A, et cetera, capability and depth, then about 1/4 is going towards the data and analytics to make sure that we can actually deliver and roll out that program rather than just do the math. Hopefully that gives you the color.

Cameron?

If I can just go back to energy-from-waste again, -- and if I think about -- I think 1 of the slides, you show Slide 10 in the presentation by the landfill levies increasing at a rate which is greater than inflation. So is it fair then to think that the Energy-from-Waste project IRR should be -- should increase or is that's favorable to you Energy from Waste investments if gate fees can be increased above inflation, and you not have to pay them from those?

We have an expectation as to what we think that lever will be when those sites are being commissioned. So we're not sort of sitting here using current levy rates. We basically have clear views what we think they will be. And our assumption has been very conservative in terms of assuming that those levies will still increase in CPI and [indiscernible].

But if it's a bit more than CPI, then [indiscernible]?

[indiscernible] Upside, yes.

Peter Steyn. Just a quick follow-up on the $15 million. Presumably, there's going to be a reasonable return on investment that you gain to return. So just thinking about -- my mindset is I'm going to go and put minus $15 million in, but there's going to obviously be a net number there. How do you think about the return profile? Well, perhaps 2 questions. How do you think about the $15 million ramping up? Is it fit down from 1st of July run rate? And then what is the return against that? Because obviously, a lot of what you've spoken of has been thought about at least very high level in terms of the [indiscernible] but I think we just need to understand what the [indiscernible]?

In terms of ramp-up, we certainly have started to incur some of those costs, like for example, in the carbon space, we've recruited carbon expertise, sustainability expertise. And since that process has started [indiscernible] continue moving into '23. In terms of returns, as Mark, you should look at the nature of the work that we're undertaking in terms of the blueprint. So a lot of what we talked about today is -- some of it is Investor Day and the returns will be 1, 2, 3, 4 years down the track. Some of the projects like landfill optimization, it's relatively needed in the sense that we can undertake activities now that we actually give us some quite nice returns in the short term. If you look at the other key pillar, which is operational excellence, a lot of the activity there, whether it be data analytics, some of the fleet optimization work. Again, you get a very rapid turnaround in terms of return from those. Others are a little bit longer. So again, within that pillar is a project we're calling Customer Connect, which is essentially a digitization of one of our back-office activities. That, again, has got some really nice returns, but they're probably 18 months, 2 years out from now. So it's very much a phased approach. We're in a lucky position whereby we can sit there and look at the runway of activities that we've got in the context of blueprints. And we can see some to delivering right now today. Others, we can say, Energy from Waste will be 4 or 5 years out. But again, it's all pretty much clearly on the runway.

And then we'll go back to [indiscernible]

Sorry, I just wanted to ask an unrelated question just around regulation, probably twofold. First was just in [indiscernible] regulation and its impact on FOGO, how are you thinking about that, particularly in the New South Wales context. And while we're talking about New South Wales, what your latest thoughts on Energy from Waste? It seems like everything is in a bit of a state of flux, no matter the hope and intent of the EPA, but just curious...

I'm sorry, Frank , do you want to go that first one? I'll do the energy- from-waste.

Yes. So on the [indiscernible] regulations, so just for everyone's benefit, effectively, that's the processing of mixed waste into organic. So that is taking a general waste been extracting the organics out of that, encompassing that. That used to be the preferred solution in New South Wales, where the EPA has gone a couple of years ago and it's now sort of in transition mode, is to say the quality of that compost is not good enough. So we're going to instead move the industry as a whole to source separated collection of food and garden organic. So you will start with a clean stream relatively and turn that into compost. So what will happen is the residual waste will become smaller because the [indiscernible] falls away. And part of that [indiscernible] will be substituted by FOGO. So effectively, it helps create the FOGO industry, and it will reduce to some degree, the residual waste as it moves towards the energy-from-waste. That's complementary or it's a substitution.

So in terms of Energy from Waste in New South Wales, I mean, I think most of you know the history, obviously, we had the Western Sydney project. Unfortunately, last sort of September, October, the government changed the rules. We just submitted the 20,000-page approval document and all of a sudden, Energy from Waste wasn't allowed in Western Sydney. They then went to an approach different to everywhere else in Australia where the approach is to pick or to draw boundaries around specific properties in regional New South Wales and say that energy-for-waste can be done in those specific locations. And they [ are a casino ], which is a long way north of sort of think, Western Byron Bay Park, which is obviously deeply inland, New South Wales, Golden, which the actual drawing is around Veolia's property there. And then [indiscernible] the map is of Mount Piper Power Station. Now the issue is EnergyAustralia has come out and say they're not going to do energy-from-waste to our facilities and now we've only 3. We'd hope that Wallerawang would be -- which is the power station site that's now owned by Greenspot. We'd hope that, that would be given that now Piper was okay, that Wallerawang would be acceptable because it's only a short distance away, it's an ex-power station site. If now Piper is okay, then we think Wallerawang should be. And we were working down that pathway with quite advanced discussions with Greenspot. Unfortunately, the EPA has advised us that Wallerawang is no longer -- Wallerawang is not going to be acceptable. And so effectively, New South Wales is going to be left with an effective 3 locations, which will be Casino, Parks and Golden. So we'll wait and see what the rigs actually look like when they come out and then we'll reassess the way forward in New South Wales, but obviously incredibly disappointing. And some of the comments today about preferring the approach that Victoria and Queensland is taken, which is more a merit-based, put up the best project you can in the best location, and we'll assess it on those grounds.

[indiscernible]. Frank made some comments earlier about to be successful in C&D. You've kind of need a separate business unit to be driving that business. Just a general question about, Mark, how you're setting up your management structure, your business going forward in the past. Cleanaway has fueled ground a little bit of this. But just to ensure you're, I guess, maximizing the entire, I guess, the value chain or returns from the entire value chain at the behest of some units, potentially cannibalizing others. Can you just talk about how you're setting up the corporate structure?

Yes. So the corporate structure really hasn't changed. So the way I think about it is we have 2 segments, which I call a liquid segment and the solid segment, and that sort of is as simple as that. Obviously, with Tim and Tracey running those segments. And then sitting underneath that, we have -- we traditionally have 9 what we call SBUs. We currently have 10. The one -- that is 5 and solid and 4 in sort of liquids and obviously, we report by IWS separately, even though internally, we run IWS as part of liquids. And then -- and I think with the liquid segment is it sort of 4 quite different businesses in leads, whereas over in solids it's 5 or now 6 quite similar businesses in a state-based approach. The way it's really like a state-based approach because the rigs are different. The landscape is very much around the state-based infrastructure there as little waste goes across boundaries. What we've added in solid is we've added a specific segment around CDS so that we approach our CDS business as -- with the respect that it should be given, particularly as we go across, we look to try and build out our CDS gas business. And we talked about that with respect to Victoria and Tasmania so we want to take the expertise that we have generated in New South Wales and make sure we can apply it rather than needing to cross a state boundary and also make sure it's core focus. A lot of value to be created by doing that activity incredibly well. I think what we said today [indiscernible] to the question was around maybe it's around C&D and those sorts of things. We are very aware that we don't want to create issues with the existing business. But we do also want to respect businesses that are different. And so we're still thinking about how we'll do C&D in terms of -- is it a separate -- is it an SBU within solid? Or is it within the state base station? What's the certain is that it will rely heavily on existing infrastructure, for example, the landfills and the transfer stations in solids. The thing in Cleanaway is this is a very lean organization. There is not a lot of sort of corporate friction. People will just focus on getting the job done and what's the best outcome for Cleanaway rather than arguing the cost about where a dollar lies.

Just 2 follow-on questions for me. So first off, you've obviously provided some really good project economics related stuff to do with waste-to-energy. Can you just sort of fill it out a bit for FOGO, just giving us an idea about what sort of CapEx per tonne? Will it be off balance sheet top financing you're looking at since you're looking for long-term contracts with councils, et cetera. And then the second one for me is just on electricity price has obviously been booming. You've got your landfill gas generation. Are you guys net beneficiaries or getting hurt by these higher electricity prices because -- on the cost side?

[indiscernible] In terms of FOGO, our view is going to be that we will underwrite into those plants [indiscernible] municipal contracts. So we basically underwrite those cash flows. The size of the plant is going to depend on the size and nature of those contracts. But if you look at something like, say, I don't know, say 50,000 tonne plant, we're talking about CapEx of about, say, $30 million to $40 million to $50 million, that's sort of deal, it's nothing like the Energy from Waste dollars. So that's the sort of project that we would fund out of our normal debt stack. We wouldn't need a specific funding or for JV infrastructure. And again, in terms of returns there, our thought process would be that if your entrance for a contract with counsel and say, expect sort of 30,000 tonnes from that council, we probably built a facility for 50,000 tonnes. The 30,000 tonnes would underwrite the economics of the plant and the extra 20,000 tonnes will give us scope to actually just leverage the [indiscernible].

Yes. Just touching on the landfill gas. I think as we mentioned in the presentation, historically, it's been run much more compliance purposes. So the amount of value creation from the gas is limited to a few of the large sites or MRO is a good example here in Melbourne. So there we do sell the electricity depending on the nature of the contracts, higher prices obviously benefits us. But on the whole, at the moment, our exposure to those electricity prices for the overall equation is relatively limited. The big opportunity is when you increase the volumes coming through the site and you start looking at alternative ways at sort of pure electricity generation together and CNG or also be it the end smarter ways to generate the electricity, whether it's behind the grid solutions using it on-site batteries and other solutions. So there's a suite of options that will enable better value generation from the gas we extract once you bulk up the volumes.

The next question.

Ed Mckinnon from Citi. Maybe just a question on data and analytics and the investment there. Are there any sort of metrics or signposts of the investor community can sort of look for ways that we can sort of measure your progress in our investment.

I guess the key thing is the next deep dive strategy session that we'll have later on this year, we'll take you through that blueprint in some detail in terms of telling you how we're looking to roll it out and where our thought process is. The really nice thing from my perspective is that -- we have a vast amount of data. There is huge amounts of data. And the quality of our technology at this stage, good size compliance-related technology, but it doesn't give us the version to manipulate access that returning to information. And that's what the [indiscernible] is doing for us is giving us those [indiscernible]. So an example of the news is that we know exactly when a driver will turn up to the depot to pickup truck and exactly when he gets into the truck and turns the engine on. How far it goes and that they will know exactly where it is at a certain customer site when he picks the [indiscernible], how much is in that -- how much is in that today, what was in there last week, the week before, the preceding 300 minutes as well. We'll know when he stops for lunch, even though [indiscernible] for us. Now we return to traffic, to the depot in terms of the cognition after we [indiscernible] leave the day. And that will be spread across about 6 or 7 independent systems, none of which talk to each other. So data analytics literally sits on the top of that and gives us the ability to convert each of those individual data points into a store into a particular route. So a really simple example, if you talk to our guys in the depot about how they do rounding trucks. So you've got 300 minutes to pick up in this particular area, how do you sequence that? They don't know [indiscernible]. So all we've done for them to say is we can now geo-locate every single beam that we've got. We color coded based on what they picked up and we just stick on the screen and say, this is wrapped [indiscernible] what you're just look, we've done back in here, and it's simple stuff like that, that we can really bring in sight to -- it to the businesses. So our initial approach was to sit down, I guess, like a head office approach in terms of sit down with one of our regions, Melbourne [indiscernible] South and say, well, this is more we think, and actually turning to a consulting project that I said, well, yes, we know what things, what you like to -- we actually will be valuable for us is, in fact, something a little bit different. If you can provide us the example, they gave [indiscernible], they make money by the number of times they actually flipped in. And that could be once every 2 weeks, once every 3 weeks. They don't know how often that's actually happened. So they've got a contract that says contract -- the customer wants every single week, and we price accordingly. Actually, what happens, we don't know. Now we've got to report that simply is what's the looking [indiscernible]. They can sit there and they can say, hang on, this guy, it was going to be -- meant to be contracted every week [indiscernible] actually moving it every month, that's charging rental. It's simple stuff like that. So there's lots of [indiscernible] moments. In terms of -- there are some examples in terms of giving you some signpost as I say, we get to the fee then I will give you an idea as to how you can monitor our progress on that -- sort of our key drivers to get to those medium-term items tied to the [indiscernible].

Yes. Can I just go back to the Energy from Waste points, the life of sort of this facility.

So we design and build them for about 30 years initially. However, as they upgrade, they can go on for at least another 20 years subject to the regulatory upgrades and what we need to do. So essentially, we look at them on a 30-year base program [indiscernible].

And I know we've sort of talked around the expected return you get here. But is it a complete no-brainer but this will work because you locked in the waste stream where you get 90% of the revenue. You know what that cost base presumably. We've got a fixed price construction contract. Where is the risk in it that you're concerned about?

I think executing on them is a key part of it. So ensuring that we are meeting that EPC time and cost and then ensuring that they run throughout to be efficient, effective and compliant as well as a key part of it. And we're very comfortable with the technology that we've selected. We think that that's a critical piece in terms of dealing with the waste in this type of jurisdiction. So that is a really fundamental part. It is tried and tested, and we're well aware of that. But that is executing on that strategy in that time frame.

And if I could ask 1 more about C&D. I guess the way -- I mean when you were first talking about C&D, it was just a bit of a bolt-on, which might boost returns now. I think you're talking about having it as maybe a separate business. What advantages that Cleanaway have to -- grow that business. I mean you've talked about potentially doing some bolt-on acquisitions. Why does this make sense by the way?

Yes. Good question. The key pillar here is, again, a vertical integration. So you've got -- on one hand, you've got collection businesses in the C&D space, very fragmented, that only do the inside of it, don't have a vertical integration. What we see as a competitive advantage is we've got that full suite of options. We already have the landfills. We've got the sites and transfer stations that can perform the role of the resource recovery. So not only collecting that beam, but then picking out the high-value materials at initial presorts at the transfer stations, investing in the more advanced resource recovery and then sending residuals into a landfill is where we can capture value across that whole value chain rather than just lifting. So there's not many that provide that integrated network. And again, with what we have in place already plus existing C&D business in key states, we think we've got a very strong platform there.

So geographically, where would you target growing?

The biggest opportunities we see are in New South Wales, in Victoria; Queensland with the pricing levy now; and depending a little bit on where the levy is going WA, there's opportunities there as well. So as these rates go up, the opportunity to divert waste away from landfill and invest in those more expensive advanced resource recovery facilities become possible, and that's where we want to be.

I mean when you used to have a thing more closely. I think that they had potentially overinvested in post-collection assets and businesses, that's not a concern for you?

Look, we've got to be selective on what we invest, but there's no doubt that there's still a need for more within Sydney. A lot of the C&D waste has historically not been recycled and it's gone up to Queensland. C&D within new South Wales is very much dominated by Bingo and the resource recovery side. So we see absolutely an opportunity for more resource recovery infrastructure there. In Queensland, it's limited in terms of what happens around the resource recovery because the levy is only coming to the play in the last couple of years. So there's a whole new industry to be developed there, so we're starting from a similar platform. Victoria is a little bit ahead of that, so there is some. But again, there's more opportunity to go, but they're slightly different dynamics. New South Wales is about gaining a share. Victoria is about building on what we already have, which is a sizable business and including resource recovery, but upgrading that. In Queensland, it's about leveraging, again the existing collections we have, but they're really more from landfill and investing in resource company.

When you think about the cyclicality we see the market brings to Cleanaway, maybe before and Mark, that was one of the biggest issues that we saw with Bingo, the cyclicality of the construction market in New South Wales, which you guys haven't traditionally had. Is that you're looking to increase that exposure?

Yes. I guess at especially, we see C&D as being in addition to what is really a large portfolio -- waste portfolio. Yes, it is more cyclical than our core business. but it's going to represent a relatively small part of our total business, particularly if we start getting into energy-from-waste. Yes, it's more cyclical. But we're not -- we believe that we can handle that in the context of the cash flows to border group and that is very stable.

And I think the other interesting thing is we talk about the different customer segments. We bought Grasshopper in Sydney a couple of years ago, and well, that's serving the high end of the infrastructure market or the big commercial construction, large projects, we thought that would be less volatile than the residential market, for example, but then you look at the COVID, those are the sites they got some down and everyone's doing the building projects. So it's quite a complex mix. And just by virtue of having some exposure to the different customer segments, you would do some of that volatility. But we do see opportunity to play across the segments to, again, minimize some other intake.

While I have you, Frank, I've got a couple of interrelated questions on the webcast of the CDS. Are there operating synergies across New South Wales and Victoria? And if you're successful in Victoria, what does that mean for, can you take additional capacity in the [indiscernible] plant and what plastic ban of all exports from [indiscernible] that impacted sector in the business.

Yes. So in terms of the synergies between the states, I think the big synergy is we know what it costs to run a network like that. So the amount of information we have and the knowledge taken from these suburbs has been really important in developing a competitive proposal for Victoria and to price it up. The second thing in terms of the ongoing savings, there's some in terms of sharing resources. But in the overall scheme of things, that's relatively immaterial. I think the key thing is the learnings. In terms of the further reprocessing, it's a key component of our offer is to say, well, not only are we going to collect $1 billion bottles in the scheme, we're also going to send that into a facility that turns it back into a bottle. Now there's a capacity initially that will go into [indiscernible]. So there is a capacity there. But we are building that second facility that's recently started construction in Melbourne. So we'll have another 30,000 tonnes locally so that it can be reprocessed closest to dispose. So we feel we're very well placed to offer not only the collections of it but also the reprocessing of the materials.

[indiscernible] energy-from-waste [indiscernible] and is the $700 million to $1 billion of CapEx for us to be [indiscernible] per facility basis, what's the operating [indiscernible] ongoing this year.

[indiscernible]

Yes, it is per facility. So $700 million to $1 billion is per facility or per site. That is correct. And the second one is, what was the ongoing [indiscernible]? We did put some numbers.

Yes. We've not been specific in terms of calling out what that is, but that's obviously been factored into that modeling.

[indiscernible] can you please update us on the state of the company [indiscernible] in light of history a few years ago on modern slavery, can you tell us where you might provide the risk areas, example glove manufacturers, [indiscernible] who are the key community stakeholders. Maybe, James, first on the -- finish off the energy-from-waste and then over to Mark.

So, there are key stakeholders, which range from state government down to local government. So we have engaged with the state government on that already. So the deal, we have sustainability of Victoria. We've got Victorian Planning Authority. We've also got a key ministers that we're working with. At a local level, we have Whittlesea Council, which is the host council. Interestingly, Whittlesea Council have published their waste report and the divergent targets from landfill are some of the most aggressive in Victoria. So we have engaged with them already. We also had some community groups around the area, but we have very little community groups out there. It is quite a remote location when you stand on-site. We have quarries to the north. We have Brickworks [indiscernible] and quarry to the south. To the Southeast, we have APA-proposed gas-line power station. To the east, we have a major basalt quarry, which is approved and to be developed. And to the west, we have some fun areas and communities. There's also a key stakeholder called Mary Creek -- Friends of Merri Creek, runs to the west side as well.

Yes. Just the other 2 questions is [indiscernible] and 1 on the status of company culture initiatives, and the other 1 on modern slavery, can you tell us where you buy into in risk areas? For example, the glove manufacturer.

Yes, sure. So maybe just on culture first. So like we've said before, we've got a lot of work going on, commencing around sort of culture. I think what I said before is like previous engagement score that we published was 66, top quarter breakpoint back then was 69. So we're kind of like we're not far off the top quarter break point. It's not the culture in Cleanaway is not broken. That's the message there. That said, there's always opportunities to improve. And what our approach is, is obviously we've brought in, obviously, Michelle to the Chief People role. We're in a process sort of working through what sort of values and behaviors reset will look like. We don't -- we have the purpose statement of making a sustainable future possible together, obviously added the work together, which is quite important. And but we need to refresh the values and we need behaviors. We don't have any associated behaviors with the values. And so it's quite a bit of work to do that in a thoughtful way that involves our frontline teams in finding the values and behaviors that really resonate for them. That will take us more than really over deliver on the [indiscernible]. That's really work for, I think, we're framing it up now, and we'll really get into it during FY '23. We've just completed the engagement survey. We do actually have the results for -- the very recent results in the last couple of months, I'm not going to share it here because I haven't shared it internally with the team yet. But again, pleased with the outcome. In terms of modern slavery, obviously, we're doing quite a lot of work on modern slavery work. We weren't particularly happy with where we were on sort of modern slavery report card. Obviously, our key area that we need to be focused on is use of labor hire. We've got a lot of labor-hire employees, particularly in the IWS space, where we will increase and decrease our workforce for turnarounds and shutdowns we might be supporting. And obviously, that's one of the key risk focused areas that we've done a lot of work expanding out, but also getting some specialist expertise to help us to really map out our plans to improve modern slavery. And I think what you'll see from us is a much improved set of statements going forward that will really articulate work we're doing, but also real examples of what's happening in the organization.

Final one from Nathan on the floor, and then I've got 1 on the webcast, and then we'll wrap up.

Thanks, Richard. And Mark, just I suppose a question for me. If we look at the electricity industry, lots of solar panels getting put on roads and into [indiscernible] utility-scale plants, lots to talk about batteries coming through. I think I've heard you talk about this before about being over the horizon or Horizon 3 top opportunity. But just the handling of the disposal of those, is the limited live assets, right? They're 10 years or so type assets. So can you sort of talk through the opportunities and the issues, I suppose, with dealing with what could be a quite significant amount of waste in decades to come.

Yes, I will. But I think actually, Frank has done a huge amount of work themselves on it. So maybe I'll just get him to give you the rundown. So Frank...

Yes, sure. On the solar side, yes, there's no doubt at some point, there will be a lot of volume around it. At this stage, it's still relatively limited. So we don't see it as an immediate priority compared to [indiscernible]. So as it stands, it's a relatively small industry and served by individuals, the builders, finding a slightly better solution to deal with it. So we don't see it as it stands as a large, scalable potential opportunity for us, but then the fact that might change.

We just go straight into landfills.

No, there are niche players that focus on trying to collect that from building sites, for example, or dealing with the installation companies. So those are kind of the 2 different ways to tap into that market a year ago to the people that replace the existing ones on the roof or you go to the builders demolition side of it. But again, how it all works at different schemes implies, it's not quite there for us to see a big opportunity on that. But we're looking at, as it relates to the innovation more broadly, we're looking for things that are able to move the needle if we can make it work. No doubt an attractable change.

So there's [indiscernible] actually ends up in the waste-to-energy facilities in the end?

That will end up in -- if it's not processed by a specialist provider. And that's the other thing we look at a little bit of what comes out of it, and it's not that obvious. It gets the [indiscernible] from landfill, but then what are the materials you're getting out of it? And does that really give you this recycling outcomes? Or is it prelimited. No doubt, it will be a sector that it involves and there'll be a big ramp-up at some point where it's worth revisiting and balance it up, but not right now.

Finally, on greenhouse gas emissions, maybe talk to James on the Energy from Waste facility, question around the absolute emissions out of that and whether we're considering approach to capturing some of those emissions if they are material? And then there was one around the greenhouse gas targets announced FY '22 results be split between carbon and methane for 2030 and 2050 targets are both and also is the inclusion of the IPCC and '26 targets indicative of where [indiscernible] targets will land.

Sure. I'll have -- I guess, on the first on the ESW, the emissions from ESW depends strongly on the intake waste composition. So we're doing a lot of analysis on that. So as we update our assumptions on that intake waste composition, we'll share those results. And simultaneously, we're looking at different ways to think about ways to reduce that CO2 emissions footprint coming from the ESW. So that will include things like carbon capture sequestration, so carbon greenhouse facility use, et cetera. So that's the ESW emissions. And then on the second question, we are thinking about being aligned with the latest scientific findings, which does set different targets for both CO2 and methane and they're slightly different. And it's significant for us because we're just such a methane as you saw, predominantly 80% of our emissions come from methane. Different story if we were very little on methane and most of it is CO2. So it's dangerous for us to just say, "Hey, net-zero greenhouse gas", right? We just have to be a little bit more scientific and rigorous around that. And we are looking at the IPCC reports and considering those and factoring those in when we set our targets for FY when we announced our targets coming in August here.

Thank you. We'll wrap it up there. I'll turn it to Mark before we let them after the [indiscernible] to make any final remarks.

Yes. Thanks, Richie. Thanks, Taku. I mean, hopefully, that's been a useful session for analysts and obviously, team on the phone. I guess thank you for your support, both in person and also on the phone today. Obviously, we're really excited about the future for Cleanaway in terms of bringing our purpose to life. I think you can see from what we've presented today of the strategic infrastructure pillar that we've got a huge runway ahead of us of growth activities. That is all on the same runway as the existing business. It's not like we need to turn the plane around and fly at different direction. It's in the short term, it's in the medium term, it's in the long term, all different horizons, and that provides sort of wonderful -- opportunities to go after. And the team is 100% focused on delivering the business today, improving the business today, but also getting after those growth opportunities for the future in terms of our investors. So I won't say any more apart from hope you have a wonderful site tour with the team. I know they're really excited to show you around and show you how it all works. Please stay safe out there, and we'll talk to you soon.

Thanks, Mark. Thank you, operator.

That does conclude our conference for today. Thank you for participating. You may now disconnect.