Would Cap and Trade Work for Solid Waste?

City Services Director Proposes Nationalized System

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Jason Marcotte is director of city services for the city of Everett, Mass.

Posted: Wednesday, September 4, 2013 5:30 pm

As population and consumption trends continue to squeeze the nation's available landfill space, one public works professional sees a possible solution: Why not try "cap and trade" for solid waste?

Jason Marcotte, director of city services for the city of Everett, Mass., researched the idea for a thesis he wrote while earning his Master of Public Administration degree at Norwich University in 2011. He presented his findings in a workshop at the American Public Works Association's Congress and Exposition held last week in Chicago.

Marcotte said the objective of his paper was "to outline a workable solution toward waste reduction using a cap-and-trade-based solid waste system."

Cap and trade is a market-based environmental policy tool that has been used effectively as a method of reducing air pollution in the U.S. and Europe. But so far, no one has tried using it to reduce solid waste.

Marcotte said his research suggests it would work. "But I'm not here to lecture anyone... this is just my opinion, my thought on how we could have a better waste management system," he said.

Central to his thesis is the idea of putting a value on natural resources and assigning hard costs to waste.

"Whether you're in Nashua, N.H. where a ton of municipal solid waste can cost you $80 dollars to dispose of, or College Station, Texas where that same ton will cost $21.50, there are hidden, external cost of waste," he said.

About half of that waste is produced by manufacturing and mining activities, while municipal trash accounts for about 25 percent.

"What this means is that each item we purchase has already produced twice its weight in waste, even before we buy it and bring it home," Marcotte said.

As an example, Marcotte held up a plastic bottle of soda. That bottle, he said, began generating waste the minute the raw materials were extracted from the earth and throughout the manufacturing process. The bottling, packaging, transporting, refrigerating and handling of the soft drink generated even more waste. Although many plastic bottles are recycled, they are still the single largest source of waste found in landfills today, according to Marcotte.

"They surpassed disposable diapers a long time ago," he said.

About 54 percent of solid waste in the U.S. ends up in a landfill, according to the EPA, as of 2010. Another 13 percent is incinerated at scores of "waste-to-energy" plants across the country. But, the emissions that result from burning trash aren't worth the electricity it generates, in Marcotte's opinion.

Recycling is good, he said, but many materials get weaker each time they're re-processed, resulting in a condition known as "down-cycling." And Marcotte thinks recycling is too expensive to be the ultimate solution to the problem.

"I know a solid waste department in Texas that spends about $400,000 on recycling about 1,000 tons of material. They could very easily take that 1,000 tons and throw it into the landfill for about $30,000," he said.

So, if recycling, landfilling and incinerating waste aren't sustainable, then what is? Marcotte said the best solution is to stop making so much waste in the first place. And that will only happen when people have to pay the true price of waste.

"I propose a cap and trade system," Marcotte said. "A sound strategy for implementing any type of change management in our society starts by creating awareness and a sense of urgency," he said.

"To set in place a cap-and-trade program, Congress would enact legislation to establish an economy-wide cap on solid waste, measured in metric tons, and the cap would be tightened over time based on population, efficiencies and the economy of individual states. The EPA would then auction “waste allowances” that correspond to the level of the waste cap," Marcotte said.

"The program would require each state to have an allowance for each ton of their waste. States would acquire allowances during the initial auction or by trading for them with other states. This allowance market would enable states that are able to reduce their waste relatively cheaply to sell allowances to those that are unable to do so, thereby establishing a market price for waste. The program would create an incentive for states to implement the most cost-effective waste reduction options and, by putting a price on the environment, encourage investments in new technologies in recycling, reduction and re-use," Marcotte said.

He said the cap on waste would be a regulatory mechanism enforced by the EPA. States would be free to choose how or if they would reduce their waste, but if they exceeded the cap, they'd be fined. As a result, Marcotte said, states would choose the least-costly way to comply with the regulation, which would lead to the most efficient solutions to reducing waste.

"Revenues from auction trading would essentially be recycled back into the economy to facilitate the transition to an efficient, lower waste producing economy and ensure that consumers are not unduly burdened by potentially higher costs to manage their waste," Marcotte said.

Each state would have a waste permit for every ton of waste that enters a landfill or incinerator. The tonnage limit would be based on its population.

"Over time, the limits would become stricter, allowing less and less waste, until the ultimate reduction goal is met," he said. "This is similar to the cap and trade program enacted by the Clean Air Act of 1990, which reduced the sulfur emissions that cause acid rain, and it met the goals at a much lower cost than industry or government predicted."

Marcotte said some states would find it easier to reduce waste than others. These more efficient states would be able to sell their extra permits to states that couldn't make reductions as easily.

"This creates a system that guarantees a set level of overall reductions, while rewarding the most efficient states and ensuring that the cap can be met at the lowest possible cost to the economy," he said.

Marcotte said reporting and verification systems would need to be put in place at two levels: States would generate reports based on local entity's weights and measure reports. These would then be submitted to the EPA to verify and then used to generate a national report for states to use in the buying and trading process.

Marcotte believes more pressure needs to be put on manufacturers to design products that generate less waste, or take responsibility for the waste they create. States and municipalities would apply that pressure if a federal cap and trade system was in place, he said.

"No economic system is sustainable unless it accommodates the ecosystem it depends on," Marcotte said, paraphrasing a line from the Green Party platform of 2010. "Our current system, based on the notion of perpetual economic expansion on a finite planet, is flawed. By creating a waste reduction plan in our society, we would devise a system of production and commerce where every act is sustainable and restorable."

Marcotte's thesis helped him earn his MPA, but it hasn't gone much further than his college professor and some of his colleagues at the APWA. Still, he's hoping to get the word out and make people think.

"When you look at everything in the big picture," he said, "what is our environment worth to us? What is it worth to businesses? What's it worth to local, state and federal government? Is the true cost really represented in what we buy?"

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