I was born in Japan back in the day. My siblings and parents reported that the Japanese grew amazing vegetables using human waste on their gardens. It seems like we should be using methane capture at least and anaerobic digestion has been studied at Cornell for some time. In the process of cleaning the Hudson, NY state farmers are collecting their manure in large containers to keep it from polluting the Hudson River watershed, which supplies NYC's water. They aren't powering their compact fluorescents with it... yet.
So I went to Agrimass... here's what the process looks like.

You are on to something - I found a posting from the Canadian Centre for Policy Alternatives from December 2004 titled "Waste Not, Want Not" on this subject and it certainly confirms your observations and Martha's observation about human waste as fertilizer - here is how the process works in other parts of the world - this could be done here... say to replace the processing plant down by Edgewater Park, which would free up that waterfront land for better uses...:

The vast potential of biomass resources has not been entirely overlooked. In Sweden, for example, the inner-city buses in the capital, Stockholm, run on ethanol, not diesel fuel, and the city’s garbage trucks are also being converted to “bio-gas” manufactured from sewage and organic wastes from restaurants. Stockholm has built a big bio-gas plant, adjacent to its sewage treatment plants, which produces bio-gas from the sewage equivalent to 180,000 gallons of gasoline—and two more bio-gas plants are in the planning stage.

The European Union as a whole is also becoming conscious of the benefits of tapping this potential source of energy and food. The EU is actively encouraging other communities to emulate Stockholm in the productive use of human biomass.

In Canada, too, several cities and towns in Western Canada, including Calgary, Alberta, and Kelowna and Vernon in B.C., acting on their own, have undertaken creative sewage recyling. Calgary, in particular, can take pride in its recycling of about 355,000 cubic metres of sewage daily, returning purified water to the Bow River and fertilizer to farms within a 60km radius of the city. The process initially involves removing waste water from the sewage through a centrifugal mechanism, purifying it through ultra-violet radiation, and returning it to the river. The remaining sludge is heated to 33°C to kill any pathological bacteria, then passed through a process that removes many of the heavy metals. What remains is a bio-solid liquid fertilizer. This is pumped into lagoons, and from there moved to “nurse” tankers. Large fertilizing machines (called Terragators) fill up from the tankers and go to farmers’ fields where they apply the sludge by injecting it 2 to 6 inches into the soil. This makes the fertilizer readily available to the roots of plants, and also reduces the smell as well as run-off. Each field gets such an injection every three years, for a total of about 7 tons per hectare.

The fields treated with the human-waste fertilizer are so much more productive and their crops so abundant that farmers are virtually lined up waiting for the product, which is supplied to them free of charge.

An added benefit of this sewage reclamation in Calgary is that the bio-gas emanating from the sludge is captured and fed to four large generators which generate 80% of all the electricity needed by the processing plants.

This is a remarkable success story, and one that puts to shame other Canadian cities such as Victoria and Halifax which still dump their raw sewage into the ocean.

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Sudhir is definitely on to something important with this. It is inevitable that the world's population centers will become more intelligent about processing human and other animal waste. Why don't we do it best here, first. Considering the scale of our water treatment system, which is regional, and the $billions they control and will spend on new treatment system upgrades and technologies, we have the money to deploy some advanced energy and next generation human waste processing technologies here, now. Even more important, this is an industry that has not yet taken off, but will be huge. So why don't we make this one of our clusters. If you read the posting above, about the technology and scope of facilities and equipment needed to go from human waste to fertilizer in the ground, you realize there are many components to be manufactured and engineered and improved upon - this seems as big an industry opportunity as wind turbine manufacturing, and we would probably have a bigger jump on any competition in this space. To put this in better perspective, consider, in 1862, the great French novelist Victor Hugo deplored that country’s failure to utilize human excrement as manure. His lament can be found in one of the chapters of his masterpiece Les Miserables titled The Entrails of the Monster or The Intestines of a Leviathan, depending on the English translation. It’s worth quoting at length:

“Paris pours 25 million francs a year into the sea. That is no metaphor. She does so by day and by night, thoughtlessly and to no purpose. She does so through her entrails, that is to say, her sewers.

“Science today knows that the most efficacious of all manures is human excrement. The Chinese, be it said to our shame, knew it before us. No Chinese peasant goes to town without bringing back, at either end of his bamboo pole, two buckets filled with unmentionable matter; and it is thanks to this human manure that the Chinese earth is as fruitful today as in the days of Abraham. The Chinese can harvest amounts to 120 times the amount of seed. No guano can be compared in fertility with the droppings of a town. To use the town to manure the country is to ensure prosperity.

“But what do we do with our golden dung? We throw it away. The human manure which is thus lost to the world because it is dumped into the sea instead of on the land would suffice to feed all mankind.

“Do we know what this human muck and sludge really is? It is the flowering meadow, green grass, marjoram and thyme and sage, the lowing of contented cattle, the scented hay and the golden wheat, the bread on your table and the warm blood in your veins—health and joy and life.

“It has been calculated that France through her rivers pours 5 billion francs every year into the Atlantic. Such is our astuteness that we prefer to rid ourselves of this vast sum through our sewers. The result is that the land is being impoverished and the water contaminated. . . The present process does great harm in seeking to do good. The intention is good, the results lamentable.”

Disrupt IT

In countries that have ratified Kyoto, animal waste to energy is huge business.    With my last employer we did a feasability study with http://farmatic.de/englisch/index.htm regarding digesting animal waste from two theme parks in FL.     Farmatic sells package biogas plants.  Turnkey operations.  Big boy German players in the field.

Additionally, and for your reference, Anheuser-Busch has anerobic generation facilities at many of its breweries.  They call em Bio Energy Recovery Systems (BERS) .    And while its not poop, its the same process... using anaerobic digestion to produce methane. 

At A-B brewing-related wastewater is pretreated anaerobically (in the absence of oxygen), and the resulting biogas (methane) is captured before the pretreated wastewater is discharged to the local sewer system. Pretreating wastewater in this fashion reduces its strength by up to 90 percent, decreasing its impact on local sewer systems. In turn the methane is plugged into their boilers (brewing is heat intensive).   Recovering energy that would otherwise quite literally be going down the drain.

http://www.abehsreport.com/docs/water2.html

In general in countries that have ratified Kyoto, package biogas production plants have been popping up for some time now.  With the crash in the price carbon credits were trading for last year in the European Trading Scheme (read nonvoluntary carbon market), the pace has slowed a bit.   Moral of the story is that large scale systems are available off the shelf, and leading edge (best in class) companies in US and elsewhere are using them.

    I am still wondering what is happening with that alpaca manure in at Rassi's farm in Brooklyn... Any word Laura?

    I spoke with our County Animal Shelter about recycling the pet waste from the shelter. They are very nearby the Cuyahoga Soil and water Conservation District offices. I suggested this might be a good idea to test rather than the current practice of "flushing" it. It could provide a source of income for the shelter. I even spoke with Jan Rybka about turning this into economic development opportunities in central city neighborhoods. Even in the suburbs, where people think they pick up their pet's waste because they wouldn't like to step in it, they don't realize that they are protecting our waterways from toxic runoff. (If they did, they might have been more conscientious about removing plowed snow from impervious surfaces.)

These guys in San Fran haven't seen the EPA studies done in Fairbanks, Alaska or in Ottawa, Ontario where they have composted pet waste and killed all the pathogens. But it is still a good idea. From my correspondence with Ottawa, despite the evidence, the local government just couldn't "embrace" the concept. So there it sits, in a drawer or on the web, like many strategic plans written for nonprofit organizations who have no plans to follow through.

       The away idea will be one that is difficult to overcome.

San Francisco Hopes to Turn Pet Feces Into Power

From Larry West

City’s Goal to End Landfill Use Sparks Effort to Get Energy from Animal Waste

According to a popular bumper sticker, “sh*t happens.” It also happens to have the power to heat homes, cook meals and generate electricity. At least, that is the hope of San Francisco and other cities in the Bay Area, which are looking at ways to recycle and reuse animal waste as part of their mission to stop sending trash to landfills by 2020.

Converting Animal Waste Into Fuel
San Francisco has become the first city in the United States to consider converting pet feces into methane that can be used for fuel, according to the San Francisco Chronicle. If the experiment goes well, it won’t be the last.

"American dogs and cats produce 10 million tons of waste a year, and no one knows where it's going," said Will Brinton, a scientist in Mount Vernon, Maine, and one of the world's leading authorities on waste reduction and composting, in an interview with the Chronicle.

"That's really beginning to be looked at as a nightmare."

Keep Animal Waste Out of Landfills
A lot of it is goes into landfills. In San Francisco, for example, animal feces accounts for nearly 4 percent of the city’s residential waste—almost as much as disposable diapers, another landfill nightmare. Tossed into landfills inside plastic bags, animal waste becomes a nearly permanent part of the landscape for generations. For a city that is striving to eliminate its use of landfills, finding a better way to manage animal waste is an important issue.

Pet feces that is not tossed out is left on the ground, where it dissolves and flows untreated into the water table or San Francisco Bay. Some is inadvertently collected along with yard waste and tossed into compost bins, a dangerous practice because animal waste is full of pathogens. Until pet feces can be converted into methane as a cost-effective energy alternative for communities, waste experts say the most eco-friendly way to dispose of animal waste is to flush it down the toilet so that it can be treated in the sewage system.

A Strategic Plan to Turn Animal Waste Into Methane
The city has asked Sunset Scavenger, a subsidiary of Norcal Waste, the company that collects most of the waste in San Francisco and a dozen other Northern California cities, to find a way to use dog and cat droppings instead of tossing them into landfills or leaving them unmanaged to pollute the water.

"Poop power? Yes, it's possible to produce electricity, natural gas and even fuel from Rover's poop and other waste material," said Robert Reed, a spokesman for Norcal Waste, in an interview with the Chronicle. "There are a lot of bugs to work out, steps to figure out, costs to be considered, but we are beginning to talk to the city about it and look into this area more actively."

Norcal plans to place biodegradable bags and dog-waste carts in one of the city’s busiest dog parks, collect the waste, and toss it into a methane digester—a low-tech machine that uses bacteria to convert animal waste to methane in about two weeks. After that, the methane can be used to power anything that normally runs on natural gas, such as a kitchen stove or a heater.

Many Nations Already Use Animal Waste for Fuel
Converting animal waste to fuel may be a new concept for cities in the United States, but the strategy is already well established in several European countries and a number of developing nations, not to mention a handful of U.S. dairy farms that convert waste from dairy cattle into methane that powers farm machinery and saves the farmers thousands of dollars every month.

While it is conceivable that home methane digesters could catch on as an alternative source of household energy, the idea probably isn’t practical. Most individual households don’t produce enough organic waste, such as food scraps and animal feces, or produce it consistently enough to provide a reliable source of energy for an entire home. City and state governments are another matter.

"California sends 40 million tons annually to landfill, and over half of it is organic in nature. It makes sense to look at the alternatives," said Fernando Berton of the California Integrated Waste Management Board. "If we can turn something from a waste into a resource, we should be doing that."

Here's one more view from 1997 that should tell us that this is not a new idea.

I don't know whether I'm too late to join in all the scatological talk here, but have we been talking about ZooDoo, which program is a moneymaker for the Cleveland Metroparks Zoo, I understand, and part of an overall educational process? The last time I talked to anybody working in the ecological-scatological zoodoo science-art, it was Nancy Hughes, and she was merchandising the sanitized product at one of our neighborhood events at Art House on Denison.

Well, about the poop.  What I have done since the start (4 years ago) was to put the poop in large piles along with dirty straw, grass, hay, weeds and anything else organic -- sticks -- but no garbage because that would attract animals.  The I let the pile sit and "ferment" for along time... at least 1 year.  I turn the pile every few months with a front end loader.  The poop decomposes into a rich, organic soil and no sign of waste exists that can be detected.  Of course, as you know, alpaca poop has no odor, it is odorless, just one more pleasant thing about this species!  Then I spread the organic material over the pasture in places that are low, or need more organic material added for grass to thrive.  This helps me utilize the poop and keep the cost of commercial fertilizer to a minimum.  Fertilizer is VERY expensive, so if I can keep the ground in good condition naturally it is my preferred method.  SO, you see, even the poop becomes valuable to me.  Someday I may have enough to sell the compost as a soil additive for gardening but not at this time.

The Humanure Handbook
everything you always wanted to know about crap

Animal waste recycling could start in my neighborhood (Ohio City). We have a source (lots of local dogs) and a potential composting location (the large community garden on Franklin). This could make Ohio City a better place. Animal waste is a nuisance here. Many people walk their dogs and don't clean up. The tree lawns and even sidewalks are like mine fields. I frequently have to clean off the bottoms of my shoes and my children's shoes after taking a walk. the dog poop problem made kicking around a soccer ball with the kids one weekend a very bad idea. I don't have a dog, but I can't imagine how unpleasant it would be trying to keep your dog from stepping in other dog's feces and then tracking it in your house.  Composting could be  an incentive to clean things up.