County to generate electricity, carbon credits
That's good news for all Kent County taxpayers — even those who don't believe in global warming or that it's caused by greenhouse gases — because there will be two revenue streams coming out of the landfill: the sale of electricity and the sale of carbon credits.
Douglas Wood, director of Kent County Public Works, said it’s estimated that the county will take in about $381,000 in 2009 from the sale of the electricity. The plant is expected to generate 3.2 megawatts, enough electricity to power about 1,700 homes, according to Wood.
Wood said that "hopefully" the carbon credits from the elimination of methane emissions from the landfill will be offered for sale in the first quarter of 2009. He said that in 2009, the gas wells are predicted to capture methane (a form of carbon) equivalent to 111,103 tons of carbon dioxide, which would otherwise eventually enter the earth's atmosphere, adding to the greenhouse effect that is believed to be the cause of global warming.
A carbon credit is one ton of carbon, which means, in effect, that the landfill will generate 111,103 credits per year. When asked how much those carbon credits might be worth, Wood said that a few months ago, he would have taken a guess — "but with today's economy, who knows?"
A carbon credit was selling on the Chicago Climate Exchange early last summer for more than $5; last week it was under $2.
"Cap and trade" is an expression indicating that a government has put a cap on carbon emissions. The "trade" is in reference to carbon credits.
John Tiemstra, professor of economics at Calvin College, said a government could simply enact a Draconian law requiring every company and organization across the board to reduce carbon emissions, which could prove "fantastically costly" to some companies or industries. In the cap-and-trade system, a company that wants to maintain or increase activity that would result in carbon emissions above its cap would be required to purchase carbon credits from other companies that have reduced their carbon emissions below their mandated cap.
"That way, the total amount of carbon emissions stays the same," said Tiemstra, and the companies that are reducing emissions are subsidized by those that are not.
There is a worldwide market for carbon credits, with one major wrinkle: U.S. companies that buy them are doing so voluntarily, as part of a commitment to try to reduce their greenhouse gas emissions. That is because President Bush pulled the U.S. out of the Kyoto Protocol on global warming in 2001; he does not believe that a cap on greenhouse gas emissions is necessary.
According to Fortune Magazine, the global carbon markets generated $59 billion in revenues in the first half of 2008. The credits are generated by banks, companies or nonprofit organizations that invest in a less expensive way to curb greenhouse gases, including projects in many of the underdeveloped areas of the world.
Tiemstra said that "pretty much all" the big industrialized countries in Europe and some other parts of the world have agreed to cap-and-trade regulations to help fight global warming.
"The U.S. has not yet, but everybody in this country has the feeling that it is only a matter of time, especially in the last presidential election. Both Obama and McCain talked about a cap-and-trade system for carbon emissions. For a while now, we've known it is coming. It was just a matter of George Bush getting out of the way," said Tiemstra.
A key condition of carbon credits is that they are the result of voluntary actions to reduce greenhouse gas emissions. Kent County voluntarily invested about $850,000 in a series of wells bored into the landfill to capture methane gas from the rotting waste underground. The wells are connected to the electrical generation plant built in a partnership with Granger, a Lansing-based company that owns and operates several landfills in Michigan, plus landfill gas recovery plants in other states. Kent County invested about $2 million in the generating plant and the Granger Energy division invested another $6 million. Granger installed the generators and will be responsible for operation and maintenance of the plant. Granger will receive the balance of revenue from the sale of the electricity above and beyond the county's share, said Douglas Wood of Kent County.
Because the South Kent Landfill methane gas wells were installed voluntarily, there are carbon credits available each year that belong solely to the county, said Joel Zylstra, president and COO of Granger Energy. Although the carbon credits are a much smaller revenue stream compared to the sale of the electricity, the credits are an incentive — "sort of a primer for some of these newer, smaller projects," he said.
Granger began its first landfill gas recovery project in Lansing in 1985, selling the gas to a nearby industrial plant. According to the Granger Web site, this was the first landfill gas project in Michigan.
The fuel value of methane is approximately half that of natural gas, according to Granger, but it generally costs less to collect and process.
Granger built the electrical generation plant at Ottawa County Farms, the large, privately owned landfill near Coopersville, which went online in 1997. That project apparently does not qualify for generation of carbon credits because its large size mandated collection and flaring off of the methane gas there, under environmental protection laws.
The Granger generating plant near Coopersville is now generating almost 6.5 megawatts, according to Zylstra, "and it will grow as the landfill continues to grow."
He said landfill methane is a much more consistent source of energy than wind and solar. According to the Granger Web site, a landfill continues to produce methane for 20 to 30 years after it is closed.
"The good thing about the (landfill generating) facilities we build and run is, they are on-line about 99 percent of the time," said Zylstra. "They are extremely reliable facilities. On the renewable front, landfill gas is one of the best things we've got going."
According to a Kent County document describing the South Kent Landfill Gas Utilization Project, it has a total designed capacity of 10 million cubic meters and was approximately 43 percent full one year ago. The current estimated date for when it will be full is 2029. The South Kent Landfill can accept about 600 tons of waste a day, compared to the much larger Coopersville landfill, which Wood guesses can probably accept 2,000 tons per day.
Rather than the Chicago Climate Exchange, Wood said Kent County is planning to have the landfill gas carbon credits registered under the California Climate Action Registry, a private nonprofit organization originally formed by the state of California in 2001.
"We thought it would improve the value of the credits," said Wood, noting that the CCAR has been a leader in the promotion of efforts to voluntarily reduce GHG emissions by organizations. It was formed by a group of CEOs who asked the California state government to create a place to accurately report their greenhouse gas emissions history.
According to the Web site of the California Climate Action Registry, "these farsighted CEOs saw eventual regulation of greenhouse gas emissions … and wanted to protect their early actions to reduce emissions by having a credible and accurate record of their profiles and baselines." The California Registry started with 23 charter members and currently has more than 300 of the world’s corporations, universities, cities, counties, government agencies and environment organizations voluntarily monitoring and publicly reporting their GHG emissions.
In October, the California Climate Action Registry became the first independent GHG offset program recognized by the Voluntary Carbon Standard Association, a global organization with offices in Los Angeles and in Switzerland. The VCSA is involved in developing the world's carbon market and will help ensure that North American credits can be traded worldwide.
"I think we will have a market" for the South Kent Landfill carbon credits, said Wood. "There are some high profile companies that purchase these, like Microsoft."
Wood said the thought within his department was that it "would be neat" if local companies bought South Kent Landfill carbon credits.
"So we are going to try to see if we can set something up" with local companies such as Steelcase and Alticor, he said.
In fact, Steelcase, Alticor and Haworth are members of Climate Leaders, an industry-government partnership set up by the U.S. Environmental Protection Agency to "develop comprehensive climate change strategies," according to the EPA Web site.
Steelcase pledged to reduce its greenhouse gas emissions by 40 percent from 2004 through 2009, based on its sales volume during that period, and Haworth by 20 percent during the same period. Alticor and Kellogg's, which is also a Climate Leaders partner, are still developing their goals, according to the EPA.