[greenyes] Energy Bill and Recycling: Update April 8, 2004

["Doug Koplow" <koplow@no.address>]

I've posted some updated information on problematic policies and subsidy levels in the Energy Policy Act, including its total cost, provisions of greatest concern, and detailed analysis of who benefits from production tax credits to "renewable" energy (only some of the beneficiaries could be defined as such).  Detailed information can be found on our main Energy Policy Act page:

http://earthtrack.net/earthtrack/index.asp?catid=76

This overview focuses primarily on the recycling impacts of the legislation.  As many of you know, the original bill (HR 6) was supplanted by S. 2095 in February of this year.  In the last couple of days, the energy tax portion of the legislation has been appended to the "Jumpstart Our Business Strength (JOBS) Act."  As seems to be the norm, each legislative iteration contains buried within it unmarked modifications to the language.  Since the primary purpose of the JOBS bill is to fix the existing subsidies to Foreign Sales Corporations (frequently used by oil companies) that the World Trade Organization found to be illegal, it is of course ironic that most of the legislation focuses on granting massive new subsidies to many of these very same industries.

Findings of note from the latest analyses:

1)  TOTAL COST REMAINS EXCEEDINGLY HIGH.  Although S. 2095 has been presented as a "lean" energy bill, it remains massively expensive, with anticipated costs well in excess of $100 billion.

2)  ACCELERATED ACCESS TO FEDERAL RESOURCES OF POTENTIAL CONCERN TO FIBER RECYCLING. Damaging language of all sorts has been transferred forward from HR 6, ensuring massive new subsidization for conventional fuels and a general weakening of financial and environmental controls on natural resource development on public lands.  Reduced cost for federal energy minerals could have some incremental benefit for virgin materials over recycled.  While hard rock mining access is not addressed in the bill, accelerated and expanded timber harvesting on federal forests is.

3)  "RENEWABLE" ENERGY TAX CREDITS UNDERMING RECYCLING AND COMPOSTING ECONOMICS.  Orwellian redefinitions of "open-loop biomass" and "municipal solid waste" remain in both S. 2095 and the JOBS bill, providing tax credits to almost any agricultural, industrial, municipal, commercial, or mining waste stream that can be converted into electricity.  Composting or recycling these very same waste streams would not be eligible for these tax breaks.   

Specific waste streams subsidized if burned, but not if recovered, include:  all agricultural/farm residues; pallets, crates, manufacturing and construction wood wastes (excluding painted, chemically treated), all grades of paper that is "not commonly recycled" (no definition of what "commonly" means), and municipal solid waste.  

Subsidies to production of coke (a key input in virgin steel but not recycled steel) also remain, though I've not been able to quantify this subsidy amount yet.

4)  SOME DAMAGING AND EXPENSIVE PROVISIONS HAVE BEEN REMOVED.  There have been some improvements worth noting in these legislative iterations that reduce the risk to recycling programs (no changes have benefited composting).  Thanks to any of you who worked through trade associations/elected officials to help this happen.  However, these successes can easily be reversed in the next legislative iteration, so continued vigilance is needed.
 
-LANDFILL GAS.  Subsidies to conversion to electricity (section 45) and to heat recovery (section 29) do NOT include landfill gas in the current JOBS bill language.

-VIRGIN PAPER.  Language in the JOBS bill for existing open-loop biomass facilities now explicitly EXCLUDES "spent chemicals from pulp manufacturing" in deciding who gets section 45(c) production tax credits.  This change will cut roughly $1 billion in subsidies to virgin paper production that would have considerably undermined recycling efforts around the country.  While these waste streams would still likely be eligible for tax credits under the overly broad definition of municipal solid waste, the current language will not allow existing energy recovery operations to benefit. Regrets from us all to International Paper, which would have gained roughly $400 million in taxpayer subsidies from the previous language.  

5)  LOOKING FOR INFORMATION ON WASTE STREAMS LIKELY TO BENEFIT FROM INCLUSION AS "MUNICIPAL SOLID WASTE."  If you know of particular waste streams from industry, mining, municipal, or commercial sectors that are produced in large enough volumes to feed electric generating plants, please let me know.  This information will help me ballpark subsidies under the current section 45(c) production tax credit language that includes all solid waste under the "MSW" rubric, and to identify the potential threat to recycling economics more accurately.

-Doug Koplow

_______________________________
Doug Koplow
Earth Track, Inc.
2067 Massachusetts Avenue - 4th Floor
Cambridge, MA  02140
www.earthtrack.net
Tel:  617/661-4700
Fax: 617/354-0463