SWANA Supports Changes Made to the Climate Bill

The Chairman of the House Energy and Commerce Committee introduced a revised draft of the American Clean Energy and Security Act of 2009 HR 2454 that included a number of changes consistent with SWANA’s recommendations in an April 28 letter.

On Friday, May 15, Chairman Waxman introduced a revised draft of HR 2454 that is much more supportive of waste-to-energy operations and recognizes their contribution to reducing greenhouse gas emissions.

Consistent with SWANA’s recommendations, waste-to-energy operations would no longer be regulated under the cap in this version of the bill. The May 15 draft specifically excludes operations that derive 95% or more of their energy from municipal solid waste.

The revised renewable portfolio standard in HR 2454 includes “qualified waste-to-energy” as an eligible renewable source. Energy derived from the combustion, gasification or pyrolization of municipal solid waste and construction, demolition or disaster debris would qualify as a renewable as long as it meets a number of stipulations.

The draft also includes waste-to-energy as an eligible renewable under the federal renewable purchasing program.

“SWANA is very pleased that the renewable energy and climate benefits of waste-to-energy are now recognized in the climate bill,” said John H. Skinner, Ph.D. SWANA Executive Director and CEO. “While there are still a number of questions and concerns that need to be resolved in the bill’s language, SWANA looks forward to working with the Congress in improving this important legislation,” Skinner added.

On Our Minds: Thoughts of John Hadfield

A recent telephone conversation has made me think about how we can deal with declining revenues and lower waste quantities while still providing the quality and array of services that our customers (i.e., the public) have come to expect, even in difficult economic conditions. Waste management systems tend to be heavily capitalized, meaning they have a lot of fixed costs that do not decline when quantities decline. Even the more traditional operating costs have a fixed or “readiness to serve” component that is incurred regardless of shifts in quantities. Most systems rely on the tipping fee in whole or in part to generate the revenue needed for the various expenses. When quantities decline, revenues decline, typically much faster than costs decline. So, what is a guy to do?

One answer might be a “Waste generator fee” in which the customers pay a fixed component of charges based on their ability to generate waste. Using different names, this approach is often called economic flow control, but in this instance, I am approaching the issue from a slightly different perspective: not for flow control but for revenue control, at least a portion of the revenue. In its simplest form, this approach would generate consistent revenue regardless of the variations in quantities that stem from uncontrollable circumstances. Rainfall affects quantities but would not affect this revenue stream; holiday seasons can affect quantities but this revenue would be consistent. Similarly, an economic downturn would be less injurious to this source of revenue.

But, you say, what about the political aspects of economic flow control? Well, as we are now hearing, if this was easy, it would already have been done and we could go home. Maybe there are components of this approach that would not work in my community; but maybe some aspects could be implemented. What if this was done for just those customers which are “captured” anyway, through contracts or because the local government provides the service? A two part fee (one part being a waste generator fee; the second part being a truly variable tipping fee) might be more palatable especially to our political leaders who are struggling to finds innovative ways to make ends meet.

Just a thought and maybe we can all weather the storm.

John Hadfield
Vice President, SWANA

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