By Shanjun Li, Han Kyul Yoo, and Jhih-Shyang Shih.
Americans produce about 4.4 pounds of waste per capita every day, according to the latest information from the US Environmental Protection Agency (EPA). About 65 percent of that waste—a total of about 164 million tons each year—is disposed in landfills. But is burial in a landfill the end of the story? Not at all. The organic matter in landfills is eventually broken down by bacteria. This process produces an abundance of gases, including methane. In fact, landfills represent the third-largest source of methane emissions in the United States. Methane is a potent greenhouse gas and thus a concern—but it increasingly is being captured and used to power homes and other establishments.
The first landfill gas energy projects started operation in Wilmington and Sun Valley, California, in 1979. Today, more than 630 US landfill gas energy projects generate 16.5 billion kilowatt hours of electricity per year—equivalent to the electricity consumption of 1.5 million homes—and deliver 317 million cubic feet per day of landfill gas to direct-use applications. EPA has identified an additional 450 landfill sites for the potential development of energy projects.
However, these projects come at a price. Between 1991 and 2010, the average cost for a landfill gas energy project to generate a kilowatt hour of electricity was 4 to 5 cents. The wholesale electricity price was 2.5 to 3 cents during that same period.
Given the important energy and environmental benefits of these projects—and the potentially prohibitive price tag—state and local governments use various policy tools to encourage municipal landfills to adopt them. But do these incentives work?
To answer this question, we conducted the first in-depth analysis of the factors that affect project adoption, primarily using two datasets: a database of potential landfill sites for landfill gas energy project development from EPA’s Landfill Methane Outreach Program and a database of state tax incentives and renewable portfolio standards from the Database on State Incentives on Renewable Energy and Efficiency, maintained by North Carolina State University. We looked at policy variables, the physical characteristics of landfills, and energy prices. Our focus was on four types of government policies that offer incentives to landfill gas energy projects: renewable portfolio standards, production tax credits, investment tax credits, and state grants.