New Financing Options and Incentives for Landfill Gas Energy

Abstract

ABSTRACT Stakeholders promoting landfill gas (LFG) energy projects are identifying new funding incentives to implement LFG energy (LFGE) projects. This article focuses on how landfills are participating in voluntary carbon and renewable energy markets, and presents case studies from award-winning projects that utilize these funding mechanisms. Landfills participate in the voluntary carbon markets using one of two main mechanisms: on an exchange or through an over-the-counter (OTC) transaction. An exchange, such as the Chicago Climate Exchange (CCX), is likely the most well known mechanism. At present, CCX has 35 registered landfill methane offset project providers in the United States [1]. As of April 2008, landfill methane projects comprised approximately 9 percent of all the carbon credits issued by CCX. OTC transactions are private between the seller, buyer, and/or broker involved in the transaction. Despite their private nature, the volume of OTC traded emissions has substantially grown in recent years according to research from Ecosystem Marketplace [2]. Recent data from Point Carbon indicate that 132 U.S. landfills have either made a transaction in the carbon market, or are in the process of developing, producing, certifying, or verifying their emissions reductions to prepare for an OTC transaction or exchange on the CCX [3]. In addition to carbon finance, LFGE projects generating electricity are also selling renewable energy certificates (RECs). These RECs are then purchased by companies wishing to reduce their environmental footprint or used by utilities to comply with various renewable portfolio standards. Stakeholders are also using state and federal financial incentives to promote LFGE projects. In 2008, the IRS awarded 45 applicants the authority to issue Clean Renewable Energy Bonds (CREBs) to support LFGE projects [4]. Several other new financial incentives were funded under the American Recovery and Reinvestment Act of 2009 (ARRA) including the Energy Efficiency and Conservation Block Grants (EECBG) and extensions to the federal production tax credits. This article summarizes financial incentives available for LFGE projects and provides case study examples of several landfills that are implementing projects with these funds.