Environmental Valuation & Cost-Benefit News

Link: http://online.wsj.com/article/SB122445473939348323.html##

America's garbage dumps are reaping a windfall from the fight against global warming. But their payday might not be doing much to reduce greenhouse-gas emissions.
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Eliminating methane lets dumps sell "carbon credits" to environmentally conscious people and companies. The long-term goal of trading credits -- basically, vouchers representing reductions in carbon dioxide and other greenhouse gases -- is to reduce global pollution by encouraging others to cut emissions when the buyers of the credits can't or won't cut their own.

The Cape May County Municipal Utilities Authority ... has raised $427,475 selling credits since February, or 3% of the authority's projected solid-waste revenue for the year.

The sale of credits by these landfills undermines a premise of the global fight against climate change. The credit system was designed to encourage pollution cuts that wouldn't have happened without a financial incentive. But the credits aren't helping the environment if they're merely providing extra profit for cleanups already made. And dumps already have an incentive to capture methane because selling it can be profitable.

The biggest carbon credit market in the U.S. is the Chicago Climate Exchange. It's an experiment in which polluting companies are trying to develop an inexpensive way to comply with limits on greenhouse-gas emissions that they expect the government to impose. The companies promise to cut emissions partly by retooling their facilities, and partly -- and often more cheaply -- by buying extra credits representing reductions made at landfills or other outside sources.
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The majority of the emission cuts reported by the Chicago Climate Exchange come from member companies' own facilities -- energy-efficiency improvements at factories, for instance. Only a small slice of the reported emission cuts come from outside projects such as landfills, the exchange says.

But the exchange acknowledges that on some of those outside projects, it is authorizing the sale of credits for cleanups that had been performed anyway.
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The U.S. carbon credit trade more than doubled in value last year, to $131 million.

Outside credits from landfills represent only about 1% of the total emission cuts reported by the Chicago exchange.
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The Federal Trade Commission also is examining whether the marketing is deceptive.
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There is no single organization policing the sale or environmental soundness of credits in the U.S.
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The first landfill to join the Chicago exchange is in Lancaster County, Pa.... The Lancaster County Solid Waste Management Authority spent about $1.5 million to install machinery back in 2005 to capture methane instead of letting it escape into the air. It makes about $50,000 a year selling the gas to a local power company. The power company uses some of it to generate steam for the Turkey Hill Dairy, a big ice-cream maker nearby. It uses the rest to make electricity.
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Among the companies buying credits on the Chicago exchange is American Electric Power Co., an Ohio-based electricity producer that's one of the largest U.S. greenhouse-gas emitters.
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Another buyer of credits on the Chicago exchange is Fintura Corp., an Atlanta company that designs specialty credit cards . Last year, Fintura, working with MetaBank, a unit of Meta Financial Group Inc., launched the GreenPay MasterCard.... For every dollar spent using the card, Fintura buys a fraction of a carbon credit.

In October 2006, Lancaster made its first carbon credit sale, netting $26,600 after paying $11,900 in fees and commissions to the exchange.

Including that initial trade, Lancaster County has so far made about $320,727 selling credits on the Chicago exchange. It's as if, James Warner, executive director of the Lancaster County Solid Waste Management Authority, says, "I looked under a rock and found a couple hundred thousand bucks."
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The Greater Lebanon Refuse Authority had installed a methane-capture system a quarter-century ago. [Since signing up in 2006] ... The Lebanon County dump has since made about $125,000 selling carbon credits. It also sells its gas to a local power company.

By Jeffrey Ball
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The Wall Street Journal www.wsj.com
October 20, 2008