Virtually all of us are served by the nation’s vast public and private networks that manage the solid waste we generate—which, in 2012, amounted to about 251 million tons per year, or around 4 pounds per person per day, according to the US Environmental Protection Agency (EPA). From the local city dump that handled waste at the turn of the century, the waste industry has evolved to now include large-scale modern landfills, state-of-the art incinerators, widespread recycling and composting facilities, and a vast network of interstate and international shipments of paper, glass, metal, plastic, and other materials.
RFF researchers have long studied numerous aspects of the sector, including the significant role of local government in relation to private companies in waste management, the effect of Supreme Court and other legal decisions based on the Interstate Commerce Clause in regulating state-to-state shipments of waste, optimal policies for recycling, and the management of e-waste. Among the most recent developments is the emerging role of landfills in helping to manage greenhouse gas emissions. Landfill gas is the third largest anthropogenic source of methane in the United States, estimated by EPA to account for about 17.5 percent of total US methane emissions in 2011. Growing interest in reducing greenhouse gas emissions has led states to promote the capture of some of the 103 million metric tons of carbon dioxide–equivalent (CO2e) from landfills every year in approaches known as landfill gas energy (LFGE) projects.
As we detail in a new RFF discussion paper, with coauthors Shanjun Li (former RFF fellow and now at Cornell University) and Han Kyul Yoo (of the Greenhouse Gas Inventory and Research Center in Seoul), LFGE projects include construction, installation, operation, and maintenance costs, which, without policy incentives, could be prohibitive. We evaluated the effectiveness of four types of government policies used to encourage the adoption of LFGE projects: renewable portfolio standards, production tax credits, investment tax credits, and state grants.
Our simulations suggest that although production tax credits and state grants do not appear to encourage adoption, investment tax credits and renewable portfolio standards may account for a combined 13 out of 277 LFGE projects, and an overall reduction of GHG emissions by 12.5 million metric ton CO2e, with a net benefit of around $52 million.
A benefit–cost analysis confirms that an investment tax credit is a cost-effective method to reduce emissions while generating net social benefits of between about $70 million and $217 million, depending on the discount rate used. The outcomes of projects spurred by renewable portfolio standards are much more dependent on the chosen discount rate, and range from a $17 million loss to a $109 million net gain.
The adoption and subsequent success of LFGE projects will be affected by factors in addition to public policy, including whether ownership is public or private, the rate of methane production, and the distance from the landfill to the nearest electricity transmission grid. But there exist cost-effective options to promote the use of LFGE and realize both energy and environmental benefits.