Composting Generates Cash For Greenhouse Gas Benefits

BioCycle June 2009, Vol. 50, No. 6, p. 18

A recently established protocol will encourage landfill diversion of organic wastes to composting and anaerobic digestion.

Stephen McComb

CHICAGO Climate Exchange (CCX) recently finalized an initiative to develop a protocol for issuing offsets to projects that avoid greenhouse gas (GHG) emissions through composting or other similar approaches. This article explores the development of the new protocol, reviews its key attributes and describes how an entity can earn tradable credits for its GHG mitigation project.

In 1992, the U.S. ratified the United Nations Framework Convention on Climate Change (UNFCCC), which called for stabilizing GHG concentrations in the atmosphere at levels that prevent dangerous change and to allow for gradual adaptation to a changing climate. Since that time, U.S. annual GHG emissions have increased from 6 billion metric tons (1990) to over 7 billion (2007), a 17 percent increase. Of this amount, methane emissions from solid waste landfills accounted for a small but not insignificant portion: 149 million metric tons (2.4 percent of the total) in 1990 and 139 million metric tons (1.8 percent of the total) in 2007. The decrease in landfill methane emissions was largely driven by a continued increase in gas collection for regulatory compliance. Figure 1 illustrates total GHG emissions within the U.S. in 2007, with a more detailed section for generated methane.

To date, landfill gas capture and destruction, with or without utilization for energy production, has dominated the landscape as the primary project-based opportunity for reducing landfill methane emissions to the atmosphere. CCX developed its project qualification and quantification guideline “protocol” for carbon emission reduction credits from landfill gas systems in 2004; several institutions and programs have developed similar protocols.

These projects are relatively well accepted and represent a large share of registered GHG mitigation projects executed in the U.S. to date. Within the CCX program alone, over 5 million tons in carbon dioxide equivalent (CO2e) have been registered by project proponents, representing 7.4 percent of total registered project based emission reductions. Most notable has been the influx of capital to the waste management sector with the sole purpose of developing GHG projects at landfills. Rare is the waste management authority that has not been approached by some entity looking to capitalize on a latent GHG project.

Landfill gas capture and destruction projects are, however, not the extent of project related opportunities to reduce GHG emissions from the waste industry. There are numerous technologies and processes that reduce or avoid GHG emissions to the atmosphere, including technologies for recycling and composting.

CCX Protocol Development
CCX is an international rules-based GHG emission reduction, verification, registry and trading program based in the U.S. Launched as a pilot program in 2003, the CCX market now includes over 400 entities. CCX participants in the industrial, governmental and academic sectors execute legally binding commitments to meet annual emission reduction goals of 4 percent below baseline for 2006 and 6 percent below baseline by 2010. These annual reduction goals may be met by internal emission reductions, through trading of credits with members who make extra emission reductions, or by generating project-based emission mitigation credits (known as offsets). CCX rules require that all emission baselines, annual reduction commitments and offset projects are annually subjected to independent verification by CCX-authorized experts. The total included baseline emissions of CCX members is currently in excess of 600 million metric tons CO2, indicating that the U.S. has more GHG emissions under a legally binding cap than any other country in the world.

Every active or proposed GHG cap-and-trade program worldwide includes a role for project based emission reductions or offsets. Offsets are tradable certificates produced by implementing emission mitigation projects in sectors or activities not covered by an emissions cap or limit. Every GHG mitigation project enrolled in CCX must meet eligibility standards and undergo independent verification before it can be issued tradable offsets in the CCX Registry.

CCX, in cooperation with experts from the academic, industrial, government and nongovernmental sectors, has and continues to develop eligibility criteria for a variety of offset project types. CCX has prescribed eligibility, quantification and verification procedures for projects that: Capture or avoid methane emissions at landfills, coal mines and agricultural operations; Sequester carbon in soil under row crop, grass and ranch farming best management practices; Sequester carbon in forests and forest products; and Generate electricity without CO2 emissions. Methane emissions avoidance by composting is among the most recent protocols approved by CCX.

Offset Project Development Process
All CCX offsets projects must be evaluated and verified against the rules and methodologies approved by the CCX Offsets Committee. The Offsets Committee consists of individual representatives of CCX member companies, and typically incorporates expert input from a diverse range of sectors. It meets monthly to review new project applications and to consider enhancements to existing rules, as well as proposals for new offset project protocols. The process of developing a new protocol begins with a request for project approval. Where project types are scalable, measurable and ecologically desirable, the Offsets Committee will recommend the establishment of a subcommittee of technical experts who will work with CCX on the development of the sector specific protocol.

The protocol for avoided landfill methane emissions via practices such as composting was developed through this process. Based on the instigation of CCX staff and a request by the Offsets Committee, a group of technical experts was established to assist in developing the protocol. Participants in the subcommittee were: Sharad Deshpande (Chair) and Scott Subler, Environmental Credit Corp; Sally Brown, University of Washington; Jean Schwab, USEPA; Jim Warner and Gary Forster, Lancaster Solid Waste Authority; Brian Bahor, Covanta Energy; William R. Schubert, Waste Management; Robert Bylone, the Pennsylvania Recycling Markets Center; and Brenda Smyth, California Integrated Waste Management Board.

The protocol development began with an assessment of common practice in the industry to determine what practice and waste types should be addressed and eligible, and under what conditions. With that assessment the following was concluded: Nearly all food residuals generated in the U.S. are landfilled, with only about 2.2 percent diverted from landfills in 2006; A much higher proportion (62 percent) of the yard trimmings generated in the U.S. is currently being diverted from landfills (due largely to local and state bans on landfilling of yard trimmings); and, Approximately 55 percent of biosolids are land-applied for fertilizer value, with 15 percent incinerated and the remainder landfilled.

The technical subcommittee met almost a dozen times during 2008 and 2009, engaging in detailed discussion and debate on all aspects of the protocol, including items that are considered somewhat controversial in the solid waste industry. Key parameters of the carbon crediting protocol that were developed are shown in Table 1.

Projects eligible under the new CCX protocol are defined as facilities that compost organic waste that would have otherwise been landfilled. The facilities prevent methane release from anaerobic degradation of the waste through aerobic treatment by composting. While CCX’s current project definition includes only aerobic composting processes, other projects using alternate process technologies such as the anaerobic digestion of organic wastes with methane capture would be eligible to earn offsets based on CCX quantification and eligibility criteria after the review and approval of project specific monitoring and verification procedures by the CCX Offset Committee.

In terms of quantifying avoided landfill methane emissions, the CCX guidelines take a standardized approach for all projects by using a single activity baseline derived from estimates of landfill methane recovery averaged across all landfills in the U.S. The baseline emissions exclude methane emissions that would have to be captured and destroyed to comply with national, local or other legal requirements. Based on a schedule outlined in USEPA’s New Source Performance Standards for landfills, it is assumed that, on average (and considering that some landfills operate for extended periods without landfill gas collection), methane generated from a batch of waste deposited in a landfill is emitted unabated to the atmosphere (other than oxidation by the landfill cover) for up to 5 years from the time of deposition until captured by a gas collection system. Nonetheless, for the purpose of this protocol, it was conservatively assumed that methane generated from a batch of deposited waste is emitted unabated to the atmosphere for only 3 years. Additionally, the protocol conservatively assumed that the average recovery rate of methane generated from a batch of deposited waste is 75 percent from years 4 through 10.

Status of the protocol
Having been subjected to several rounds of review by the CCX Offsets Committee, the protocol was approved for use on April 17, 2009. The protocol will be posted on the CCX website for project owners to download and design their projects to meet the criteria, or institute measurement and monitoring changes that satisfy the requirement to ensure conformance going forward.

The first project to receive offsets for methane emission avoidance with CCX, in May 2009, was the Waste Options mixed waste composting operation on the Island of Nantucket, Massachusetts (see sidebar). In addition to meeting the protocol, the project was also reviewed by the Offsets Committee and CCX staff. The project is represented by Environmental Credit Corporation and was verified by Richardson Smith, Gardner and Associates.

Offsets projects can be registered at CCX directly by the project owner, or can be registered through a CCX-approved aggregator. In order to minimize transaction costs for small project providers, aggregators may serve as administrative agent for multiple small projects. Aggregators manage project documentation, arrange for independent verification by CCX-qualified entities, conduct market trades on behalf of project owners, and distribute sales proceeds to them. Entities wishing to register eligible offset projects with CCX must first qualify as a CCX Member, Offset Provider or Offset Aggregator.

Steven McComb is an Economist for the Chicago Climate Exchange, Inc. He can be reached at smccomb@chicagoclimateexchange.com.

SIDEBAR p. 19
CASE STUDY: WASTE OPTIONS NANTUCKET
Waste Options Nantucket, LLC, manages a recycling, composting and landfill operation on Nantucket Island, 30 miles off the coast of Cape Cod, Massachusetts. Recyclables are separated at the source and also at a MRF (materials recycling facility) operated by Waste Options, so the municipal organic waste stream is comprised largely of food residuals. These food residuals, along with biosolids cake from the local wastewater treatment plant, are composted for several days in a large rotating “Bedminster” tunnel digester, screened and then composted again in aerated static piles in an indoor, negative air pressure facility that exhausts through a biofilter. Afterwards, yard waste is mixed with this material for further composting and curing in turned outdoor windrows. All of the materials handled by this facility come from the small island of Nantucket with a population of 10,000 to 50,000, depending on the season. Finished compost is used locally for landscaping and gardening.

Composting operations began diverting organic waste from the Nantucket landfill in late 1999. Since yard trimmings are prohibited from landfills in Massachusetts, only the diversion of food residuals and biosolids are eligible for carbon offset credits. About 10,000 tons of food residuals and 1,000 tons of biosolids cake are composted each year. The weight of any inerts mixed in with the food residuals, based on a detailed material flow analysis, is subtracted from the total.

For each ton of food residuals, the Chicago Climate Exchange (CCX) may credit 0.9 metric tons of CO2 equivalents for avoided (baseline) methane emissions over a 10-year period (in metric units: 0.872 Mg CO2e per metric ton of food residuals). For biosolids, the credit rate is 0.17 metric tons CO2e per ton (0.15 Mg CO2e per metric ton) over 10 years.

Composting project emissions, which may include indirect emissions from electricity use and direct emissions from fossil fuel combustion by equipment and vehicles, need to be subtracted from baseline emissions to calculate the amount of credits a project can be issued. Total project emissions for the Waste Options Nantucket facility were about 1,000 metric tons CO2e per year, with over 90 percent coming from electricity use.

Overall, the Nantucket facility reduced its net greenhouse gas (GHG) emissions by almost 30,000 metric tons CO2e by composting organics instead of landfilling them over a six-year period (2003 to 2008), as quantified and verified by the CCX program. Although carbon offset prices are highly volatile, the average price for CCX credits last year (2008) was $4.43. At this price, the total value of the Nantucket composting project averages around $2.00/wet ton of food residuals and biosolids received. Transaction costs associated with monitoring, verification and registration of the credits may reduce the net value to around $1.25/ton.

Carbon credits cannot be created without routine periodic monitoring according to specified protocols. Tip-scale receipts, scale calibration records, daily compost batch turning and temperature measurements (necessary to demonstrate conformance with EPA Part 503 PFRP Class A time and temperature requirements), permit reports, estimates of fuel and electricity use for composting operations and estimates of compost transport distances are examples of the types of records required to document and calculate the amount of carbon credits ultimately issued to the project. These records were audited, including a site visit, by a CCX-accredited independent verifier (RSG & Assoc., Raleigh, North Carolina). Subsequent annual verifications for this project may not always require site visits.

A forthcoming article in BioCycle will describe in greater detail the process of calculating GHG emissions at Waste Options Nantucket and securing carbon credits.

— Scott Subler, President of Environmental Credit Corp

SIDEBAR p. 20
WAXMAN-MARKEY BILL: GOOD OR BAD NEWS FOR COMPOSTERS?
THE Waxman-Markey Bill was voted out of the House Energy and Commerce Committee in late May. It is a new comprehensive energy and climate change bill that provides numerous incentives for renewable energy and energy efficiency and sets up a cap-and-trade system for regulating greenhouse gas emissions. Scott Subler, President of Environmental Credit Corporation, has been actively involved in the development of climate change policy that encourages carbon offset market opportunities for organic resource generators and managers. Subler provided BioCycle with a few highlights of the bill as it stood when it passed out of the Committee. We will continue to track its progress, and impact on composting and anaerobic digestion, throughout this Congressional session.

Will composting or anaerobic digester facilities be regulated under the “cap”?
Not likely. Some of the larger operations may have to submit GHG emissions reports, but since GHG emissions from electricity, natural gas and diesel fuel will be covered “upstream,” under most circumstances there won’t be any emission reduction obligations imposed on composters themselves.

Will there be economic incentives for anaerobic digestion of food wastes?
Yes. The national renewable energy standard established in the bill will create a strong demand for energy produced from biogas. In addition, there appears to be a good chance that biogas projects will receive some set aside allowances as an extra incentive. Although technically these are “carbon credits,” they are not the same thing as carbon offset credits and, although they might be distributed based on the quantity of energy produced, represent more of a traditional subsidy policy than a “market-based” incentive. Additionally, the bill may create an opportunity for “true” offset credits for anaerobic digestion projects that divert organics, such as food wastes, from landfills (see below).

Will there be economic incentives for composting?
Maybe. But this is currently an area of major confusion and debate among policy makers and industry advocates. The current bill would allow EPA to establish GHG regulations for landfills in the form of “performance standards.” These mandatory performance standards might ban certain organic wastes from landfills, or might require all landfills to implement enhanced gas collection and control systems to reduce methane emissions. Either way, these performance standards would effectively eliminate the opportunity for carbon offset credits for composting projects (because they would not pass the fundamental test of “regulatory additionality,” i.e., it is required by law so there is no offset incentive (see Eligible Practices in Table 1 in the accompanying article).

Some well-meaning composting advocates have mistakenly argued that new performance standards and carbon offset incentives could go hand-in-hand, but this could actually undermine the environmental integrity of the proposed emissions “cap,” and is therefore highly unlikely. Incentives in the form of set aside carbon allowances may be possible, but again, this is simply a subsidy approach (subject to old-fashioned “pork politics” and often inefficient and unreliable). Because of this, the proposed mandatory performance standards may in fact be far more costly and less environmentally effective than providing true carbon market-based incentives and offset methodologies for new composting projects and technologies. It is critical that community leaders, organic residual generators and composters clearly understand the potentially “industry making” (or breaking) consequences of the different policy options currently being debated in Congress.

Copyright 2009, The JG Press, Inc.