Landfill Gas Project

(NOTE: The current form of this page is simply the first draft of what I intend to address the county commissioners with during the 3-minute public comment section.)

Introduction

In the February 1st 2010 Rutherford County Commissioners meeting agenda (pages 43-47) there is a proposal for a cooperation between Foothills Connect and Rutherford County, on a project involving potential use of green house gases released by the county's landfill. This document documents and explores the background and possible consequences of this agreement.

Additional information was made available on Friday January 30th 2010, as part of the supplemental agenda document (page 4,5 & 6) being released.

The Deal

I learned in this month's agenda that the county is considering a project/partnership with Foothills Connect, which would capture landfill gases from the county's landfill, and use the energy from those gases to operate enclosed mini-gardens. 30 sections inside this enclosure would be available to be leased by local entrepreneurs, who can then market their produce via the Farmer's Fresh Market initiative and other channels. Each enclosure is estimated to produce $10,000 per year in vegetables, thus allowing the operation to generate up to $300,000 worth of vegetables per year.

There is also an opportunity to generate electricity via gas turbines, which can be sold to utility companies. This opportunity hasn't been quantified yet.

Brilliant Idea

I think the idea is brilliant, especially since it gets about 1/2 of its funding from a private entity, the Environmental Credit Corporation. The other 1/2 would come from state grants, which technically is taxpayer money being redistributed, but that is a discussion for another time. Even with the grants, I still think the project is brilliant.

The writeup in the agenda estimates that the landfill can produce about 20 metric tons of landfill gas per year. With some research, which is available at our site http://rutherford912.com/carbon, I determined that the current carbon offset value of those 20 metric tons starts at about 420 carbon credits per year, or $1155 per year.

So right off, the operation has a money generating value by simply creating carbon offsets due to the captured "green house" landfill gas. This led me to consider what all parties involved are putting into the project and what they get out of it.

The Contributing Parties

The Environmental Credit Corporation

  • The Environmental Credit Corporation (ECC) would contribute:
    • $500,000 one time investment, money voluntarily given to ECC by its customers and investors.
  • ECC gets in return
    • $1155 in carbon credits per year
    • I suspect they anticipate carbon credits to skyrocket in price as Cap-and-Trade legislation makes its way through Congress.
    • As a private corporation they have all the right in the world to speculate with their money and possibly lose it.
    • That money was voluntarily given to them by people who believe in their business plan.
    • If those investors lose confidence in ECC's ability to properly invest their money, they can get it back at any time thus stopping the venture by financial starvation.

Rutherford County

  • The county would contribute the following:
    • 20 Metric tons of landfill gas per year, for 15 years - that is gas from a landfill operated with money taken from county taxpayers
    • 3 acres of land, no cost use for 15 years - that is land purchased with money taken from county taxpayers
    • If you disagree with the phrase "taken from county taxpayers" just look at page 39 of today's agenda. The title on that page is: "Tax Administrator to present the 2009 tax liens and receive the Order to Advertise on March 12, 2009" - In other words, the county is about to start a process of forcefully taking money from county households, so it can then spend it on projects like the one we are discussing today.
  • The county gets in return
    • The first $100,000 earned from carbon credits not claimed by ECC, placed in an escrow for future cost of infrastructure removal.
      • How long will it take to generate this money at a fraction of $1155 per year?
    • Any landfill gas revenue in excess of $200,000 will be retained by the county.
      • This can turn into a complicated partnership with audits and disputes as it happens with all partnerships, especially unequal ones.
    • No new property taxes from the 3 acres as it is county owned, and bound as such for 15 years under this agreement.
    • Property taxes on the infrastructure build on the property may be collected, I am not sure?
      • The 100,000 sqft structure is priced at $200,000, which is about $1000 in property taxes per year? again, maybe?
      • Even if the county does collect that in property taxes, it will effectively give it right back by giving away the 20 metric tons of landfill gas worth $1155 per year in carbon credits.
    • Property taxes on the infrastructure to capture the landfill gas, funded with the $500,000 from ECC? Not sure on this either, as it will be on the landfill, which is county owned?
      • In the best case scenario, the county will collect $2,500 per year at the current property tax rates.
      • How does that add up to not charging anything for the 3 acres?
    • The county will not be able to sell the property for 15 years, to a private operation that WILL pay property taxes and not require free use of the landfill gas.
    • The county will not be able to lease the a right of use of the methane gas to a private operation for the next 15 years.

So, why is such a good opportunity riddled with concerns and problems? It is because the county is getting entangled, yet again, into business ventures that governments were never designed to deal with.

The Problem

This is the real reason for much of the confusion and controversy over projects like the Fiber infrastructure, the Daniel Road Complex and this Landfill gas venture… The county is simply not capable of being an expert in all those areas, thus it fails to adequately structure and enter contracts, failing to protect taxpayer money and interests.

Each one of those areas are very specialized industries, and require years of experience and learning by frequent failures. Private business are perfect for those environments, as they allow people to volunteer their resources to companies that show the highest competence and best return on investment.

Proposed Solution

I would like to propose the following steps for you to consider before finalizing this agreement:

  • Sell the 3-5 acres to the Foothills Connect project or an interested individual or business.
  • Let Foothills Connect deal with the use of those acres by owning it, or leasing it from a private entity.
  • Lease the use of the landfill gas to Foothills Connect at periodically adjustable lease rates in step with the Chicago Climate eXchange (CCX) prices for carbon credits.
  • Establish a timeline for turning over the landfill operation to a private entity, so that the county can start disengaging from functions which belong to the private sector.

The county is a government body established by the people for with a limited purpose of providing a few basic services like law enforcement, road maintenance and emergency services. Anything beyond that enters a field where free market enterprise is intended to function, and governments by definition are destined to fail 100% of the time, not being structured to function in those areas.

If you seriously consider the steps in my recommendation, I am convinced that we will have a much more satisfied constituency, a simpler and cheaper government to operate, and a more business friendly county… It is the best way for you to encourage REAL job creation.

Thank you for your time.

Research Findings on Rutherford County Landfill Capacity

An EPA document on landfill sizes and potential in NC lists the following:

  • The Rutherford County Landfill has 1.6 Million Tons of waste in place.
  • The Cumberland County Landfill has 1.65 Million Tons of waste in place.
    • They generate about 725,000 Cubic Feet of Landfill Gas (LFG) per day.
  • 1 Million Cubic Feet of gas = 1.09 Metric Tons

This means that a 1.6 Million Ton waste landfill can generate 0.79 Metric tons (Mt) of landfill gas per day.
* 0.725 * 1.09 = 0.79
* 0.79 * 250 ~= 200
That is about 200 Metric tons of landfill gas per year, in a 250 work-day year.

Landfill gas is made up of 50% Methane and 50% Carbon Dioxide (CO2)

  • 1 metric ton of CO2 is worth one carbon offset credit.
  • 1 metric ton of methane has the equivalent carbon offset value of 21 metric tons of CO2, or 21 carbon offset credits.

So a 1.6 million ton waste landfill generating 200 metric tons of landfill gas per year will generate 2200 carbon offset credits per year

  • 50% CO2 * 200 Mt LFG = 100 Mt CO2 * 1 credit = 100 credits
  • 50% Methane * 200 Mt LFG = 100 Mt Methane * 21 credits = 2100 credits

At current carbon offset credit prices, $2.75 per credit, the Rutherford County landfill has the capacity of producing about $6000 with of carbon offset credits.

Calculations

  • 1 Carbon Credit = 1 Metric Ton of Carbon Dioxide
  • 1 Metric Ton of Methane reduction equals 21 Carbon Credits
  • 1 Carbon credit sells for $2.75 on the CCX (Chicago Climate Exchange)
  • The prices vary from $2.75 to $90 on the world markets, as the prices are heavily dependent on the climate control legislation various governments have under consideration.
  • 1 Metric Ton of methane = 21 Carbon credits * $2.75 = $57.75
  • 20 Metric Tons of methane per year (estimated) = 420 Carbon Credits * $2.75 = $1155
  • 15 years of 20 Metric tons of methane = 20 * $1155 = $23,100

References

Other related reading

carboncountyfoothillslandfilloffset
page revision: 32, last edited: 10 Mar 2010 22:35
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