Incentivizing Renewable Energy Projects from Landfills

by Shannon O’Neill

Every year, a total of 164 million tons of waste is disposed of in landfills. This has created a concern for waste management, particularly due to the fact that landfills are the third largest source of methane, a greenhouse gas that negatively effects the environment. However, methane has been developed as an energy source, in which it is recaptured and used to power homes and businesses. Today, there are more than 630 landfill gas energy projects that together, produce 16.5 billion kilowatt hours of electricity a year. This is enough energy to provide for 1.5 million homes. The picture above suggests an additional approach of adding photovoltaics, but this post is just about biogas.

The EPA has recognized 450 landfills sites capable of developing such energy projects, however there are heavy prices associated with such projects, limiting the benefits of removing methane while simultaneously creating a renewable energy source. Because of the great environmental and energy advantages, the government has used various tools in order to incentivize such projects.

The researchers looked at four different policy tools (a renewable portfolio standard, production tax credits, investment tax credits, and state grants) in order to conclude which policies incentivize projects the most successfully. It was concluded that only the renewable portfolio standard and investment tax credits significantly and positively contributed to the success of renewable energy projects. The renewable portfolio standard allows landfills to gain a profit from both the energy and the renewable energy credits it sells. The investment tax credits are given in order to install the necessary renewable energy facility at a subsidized price. These two policies alone provide a net benefit of 41.8 million by reducing methane and creating a renewable energy resource.

This provides powerful insight when looking to the future, specifically looking at the 450 landfill sites able to develop renewable energy projects. There should be greater emphasis on the two aforementioned policies as the benefits are quite large not only in profits, but also in energy and the environment, in order to create the most renewable energy possible while concurrently reducing greenhouse gas emissions of methane.

Li, S., Yo H.K., Shih, J.S., (2015). Renewable Energy from Landfills. Resources for the Future, 188:18-19.

Resources for the Future http://www.rff.org/RFF/Documents/RFF-Resources-188_Featurette-LiYooShih.pdf

 

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