Don't Stop Believing
DESPITE THE WISHES of the solid waste industry, the energy bill passed this spring by the U.S. House of Representatives does not contains Section 45 tax credits for renewable energy sources such as landfill gas. However, with the Senate expected to begin deliberations on its own energy bill this summer, the solid waste sector is hopeful that an extension of the credits will become law.
President George W. Bush has lobbied Congress to pass comprehensive energy legislation this summer. The House passed its version of an energy bill (HR-6) in late April by a vote of 249 to 183. Critics of the bill say it does not do enough to reduce American consumption of foreign oil or to increase the use of alternative sources of energy.
If the Senate passes an energy bill, it must be reconciled with the House version by a committee of House and Senate members. The compromise bill would then have to be passed by both chambers before the legislation could be sent to President Bush for his approval or veto.
Section 45 tax credits for landfill-gas-to-energy (LFGE) projects and waste-to-energy (WTE) facilities became law last fall as part of the American Jobs Creation Act of 2004. The credits apply to LFGE and WTE projects that are placed in service between Oct. 23, 2004, and Dec. 31, 2005, and apply only to projects that generate electricity. The credit is equal to 0.9 cents per kilowatt hour of energy produced and is paid over five years.
Despite the lack of such credits in the House version of the energy bill, solid waste industry members say there is reason to hope that they will end up in energy legislation passed by Congress this year.
John Skinner, executive director and CEO of the Solid Waste Association of North America, Silver Spring, Md., says the “word on the street” is that the lack of Section 45 credits in the House bill is part of a negotiating strategy on the part of House Ways and Means Committee Chairman Bill Thomas, R-Calif. “The feeling is that Thomas knows that the Senate wants renewable tax credit provisions, so he deliberately left it out,” Skinner explains. “When they [try to reconcile the different bills in committee conference], Thomas then negotiates with [the Senate] for something he wants.”
Even if tax credit extensions for LFGE and WTE are not included in the energy bill, they could be included in other legislation, says Robert Eisenbud, director of federal legislative affairs for Houston-based Waste Management Inc. “I have not been told by anyone that there definitely won't be an extension of Section 45 credits,” he says. “[From] what I've been told, it's a question of when and how much money is available.”
However, Ed Repa, director of environmental programs for the Washington-based National Solid Wastes Management Association (NSWMA), is skeptical. Noting the increasing federal budgets, he says, “Anything that is going to cost the Treasury money is not going to be looked upon too favorably.”
The tax-credit issue is not the only component of the House energy bill of interest to the solid waste industry. The legislation also is notable because it reauthorizes the Renewable Energy Production Incentive (REPI), a program run by the U.S Department of Energy (DOE) that provides incentive payments to public entities — such as local governments, electric utilities and regional waste management districts — that generate electricity for consumer use from renewable sources such landfill gas.
The DOE stopped accepting applications for REPI payments on Sept. 20, 2003. Under the House reauthorization, renewable energy projects that begin operations after Oct.1, 2005, and before Oct. 1, 2015, would be eligible to receive REPI payments, which equal 1.5 cents per kilowatt hour (1993 dollars and indexed for inflation), for a 10-year period.
Solid waste industry members have downplayed REPI, noting that it is funded only by annual appropriations from Congress, which can be relatively small. In the past, the average annual appropriation for the program has been about $5 million, according to a DOE official.
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