For several years, the voluntary greenhouse gas market has offered both municipal and private landfill owners a potential source of capital investment and revenue. Despite the current economy and recent setbacks to domestic and international reduction regulatory efforts, investors are still interested in partnering with public agencies to undergo projects at eligible landfills.
Many agencies interested in landfill gas collection and control systems have attracted investors to help develop their projects in exchange for a share of the resulting greenhouse gas credits. Find out how landfill owners can better understand recent changes in the marketplace to ensure success of their projects.
Within the U.S., landfill-gas-based projects develop credits primarily under the following programs: Chicago Climate Exchange, Climate Action Reserve, and the Voluntary Carbon Standard. Solid waste managers should review the specific methodologies and protocols associated with these programs, but all have requirements in common, including:
All greenhouse gas programs have eligibility criteria that relate to a project's commencement date and regulatory status. Some programs also require further demonstration of eligibility, either through a performance standard test or the determination of financial additionality, (i.e., that the project faces capital or investment return constraints that can be overcome by the additional revenues generated by carbon credits).
Initially, all programs specified the earliest date a gas collection and control system could be voluntarily installed and remain eligible. These days eligibility is based on a specified length of time between the project's commencement of operation and its registration with the specific program. In general, eligibility requires a project to be voluntary (not required by regulation or standard practice) and “new” (not status quo). Some projects with existing systems may qualify as eligible, but age of their emission reductions limits their market appeal. Here we'll focus on sites that are planning new systems or have installed systems within the last six months.
MONITORING AND DOCUMENTATION
The commodity being traded relies on verifiable data on the amount of methane destructed at a landfill. Accurate data collection and record keeping are essential for owners to maximize revenue from the sale of greenhouse gas credits. Verification and monetization of credits occur periodically, not continuously, so it's crucial to monitor and record verifiable data.
The monitoring plan should prescribe procedures, develop and maintain a supporting information file, implement monitoring and record-keeping systems, and implement a quality assurance/quality control (QA/QC) program.
A supporting information file would contain items such as air and solid waste permits, landfill design information, waste disposal data, current landfill gas modeling results, New Source Performance Standards Tier 1 or 2 reports to demonstrate nonmethane organic compound emission rates, gas collection and control system construction and design information, and information on the monitoring systems used at the landfill for the project.
Site-specific monitoring and record-keeping plans typically include descriptions of the monitored parameters, types of monitoring instruments and recording devices used, frequency of data recording, measurement units, and documentation of any calculations used to calculate emission reductions. QA/QC requirements typically involve the calibration and maintenance of monitoring devices used at a project to ensure accurate process information is collected. Documentation should be kept in the project's supporting information file and will be needed to verify the credits.
FACTORS TO CONSIDER
An eligible landfill (or expansion area) with a voluntarily installed gas collection/control system must:
Landfill owners who plan to voluntarily install a system need to protect their interests in order to develop a future project. Document the voluntary nature of the system, make sure that status is clear to the relevant permitting authorities, and document installation and startup dates. If you plan to install a temporary or transitional system (e.g., a passive collection system with solar-ignited flares), note that some of these systems are ineligible. The methane destroyed may not be used to develop verifiable credits. Evaluate the benefits of installing an eligible collection/control system upfront.
IMPACT OF IMPENDING REGULATIONS
Efforts to create a market-based mechanism (such as a federal “cap and trade” program) and possible EPA regulatory actions could significantly affect a small landfill's ability to voluntarily collect landfill gas and create reduction credits for sale in the market. The current emission threshold of 50,000 to 75,000 metric tons of carbon dioxide equivalent (CO2e) per year proposed by EPA under the Prevention of Significant Deterioration and Title V GHG Tailoring Rule represents a significant unfunded mandate/private-sector burden (conservatively $1.1 billion at the original 50,000 threshold and $533 million at the 75,000 threshold). Many small and medium landfills that have been pursuing the market may have to use their own funds to comply.
Absent the proposed thresholds, many landfills not currently required to collect and destroy gas would be developed voluntarily as reduction projects, particularly if the credit price remains in the $5 to $6/ton of CO2e range.
If you're a landfill owner interested in launching a greenhouse gas project, here are some suggested steps:
— Peterson is vice president, Leatherwood is a project manager, and Michelsen is a project director with SCS Engineers, headquartered in Long Beach, Calif.