Waste-to-Energy Systems Need to be Valued Fully, Fairly

In mid-October, the North Carolina Public Utilities Commission (PUC) delayed for another year the requirement that the state’s electricity providers use energy converted from poultry and pork manures to meet a very small percentage of the power they produce under the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS).

The delay in implementing the REPS carve-out is disappointing in and of itself. But even more unfortunate is the fact that last month’s decision marks the sixth year in a row that the extremely modest mandate has been put off.

The set-aside adopted back in 2012 requires only 0.07 percent of each utility’s power come from converted hog waste. Additionally, the REPS set a first-year goal of just 170,000 megawatt-hours that all utilities together must generate from converted poultry litter – the poultry portion representing a miniscule portion of the 113 million megawatt-hours of electricity generated annually from conventional resources like natural gas, coal and nuclear.

To be fair, the utilities began meeting the poultry litter requirement in 2014, though two-years late. But they have made no progress since, and the PUC has hesitated enacting the entire set-aside. Power providers are nowhere near the next required level of poultry litter-derived power: 700,000 megawatt-hours.

What continues to be lost year after year is the opportunity that the mandate provides to bring substantial social, health and environmental benefits to a state that is among the leaders in pork and poultry production, and the manure management issues the industries bring with them.

The process of anaerobic digestion is the decomposition of biodegradable materials such as manures and waste foods, producing value-added products. The recovery of biogas and plant nutrients through anaerobic digestion systems is a proven technology. However, the current compensation schedule makes this waste-source for power generation economically challenging. Renewable energy advocates contend that the technology can help meet the goals of the North Carolina REPS and similar policies. What is not there, are the incentives that would motivate livestock producers to make the expenditures to pursue these cleaner sources of energy.

The North Carolina case underscores the need for policy makers, utilities and regulators to get serious about investing in the research that will make the conversion technologies – anaerobic digestion and gasification, combustion, among others – even more efficient.

And they must fairly compensate livestock producers who generate renewable energy from their operations through rates that reflect the increased environmental and health benefits their renewable energy investments provide. The social value of reduced nutrient runoff, less odor, reduced methane (a potent greenhouse gas), sustainable land management and greater biodiversity, among other benefits, should be included in the rates paid to those who invest in these systems and projects.

Congress also has a role to play. Legislation has just been introduced in the House that will extend the renewable electricity tax credit for open- and closed-loop biomass systems and other waste-to-energy technologies, as well as for hydropower and geothermal systems. Tax incentives for biogas and anaerobic digestion technologies expired at the end of 2016, while tax credits for wind and solar electricity resources were continued. With tax reform on the table this year, lawmakers need to remedy that disparity.

The American Biogas Council says the industry has the potential to build at least 13,000 new systems, which would catalyze about $40 billion in new capital investments, create 335,000 construction jobs and 23,000 permanent jobs, all while building the infrastructure needed for recycling organic material and protecting air, water and soil.

It’s important to note that the industry itself is taking an active role in promoting renewable energy development at operations to meet not only meet environmental goals, but bottom line considerations as well. For example, Smithfield Foods Inc. has launched Smithfield Renewables, a new platform within the organization to unify, lead and accelerate the company’s carbon reduction and renewable energy efforts.

The 25x’25 Alliance calls on stakeholders across the nation to reach out to local, state and federal policy makers and regulators, and urge them to offer full and fair valuation of the environmental and health benefits of the renewable energy that the owners of waste-to-energy systems produce. Rates should reflect more than the avoided cost value of the electron produced. By including the social value of the benefits provided, policy makers not only make the fair choice, they also encourage investments in new projects, compounding the benefits that are available.

 

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