September 26th, 2014

Landfill gas: taxable commodity or a potent pollutant?

by Chris Eden

 

Spanish renewable energy policy has always been a broad brush affair, with a wide range of different technologies lumped into the same basket. Indeed, one area where Spain has been quite successful is a form of energy that some might not even call renewable: biogas, specifically landfill biogas. This gas is essentially a by-product of the process of degradation of organic material, such as food garden or animal waste, which both EU law and environmental ideals would keep well away from landfill.

 

Bio-logical

However, in practice diversion of organic waste in Spain hasn’t happened exceptionally quickly, and a lot of decomposing material is already buried. Whilst those circumstances obtain, there’s a double benefit from using landfill biogas as a fuel. The main component is methane (CH4), an element that is some 21 times more effective than carbon dioxide (CO2) as a greenhouse gas. If captured and used as a fuel, its global warming impact is greatly reduced, and it replaces a fossil fuel that might otherwise be used to generate the same energy.

Biogas, and landfill gas management in particular, can be fraught with technical difficulties such as the changing composition of the gas with time, high levels of metal-eating hydrogen sulphide or cloying silica – elements that can arise from the juxtaposition of the local geology with the aggressive environment that is a landfill, or from the degradation within the waste mass of consumable products that we, as a society, regard as rubbish.

But, despite these technical complications, and directly as a result of government initiatives, this form of energy has been successful in attracting private investment, something that under other circumstances would have been impossible due to the complex and often un-definable engineering obstacles involved. Landfill biogas power generation plant have been built all over the world, and the technology is now well understood, with a track record of success based on solid engineering practices and technological innovation.

Perhaps the strongest indication of the success of any alternative energy technology that receives public financial assistance is that it develops to the point where it can survive as a purely commercial enterprise. In this respect, landfill gas power generation has been a huge success. Since 2012, landfill gas power generation (as well as power generation using biogas from anaerobic digestion) has lost much of its public subsidy – but this is in itself survivable thanks to previous investment.

However, legislative and fiscal change, combined with an ineffectual enforcement regime is working against the development of new plant and even threatens the continuation of landfill gas capture in Spain.

 

Tilting at windmills

Despite all the evidence for climate change and the overt stance of the Spanish government as an active participant in the fight against it, the current Spanish government formed by the right-wing People’s Party, under Prime Minister Mariano Rajoy, has substantially and retroactively cut back subsidies to many alternatives to fossil fuels. The fiscal measures it has introduced can at best be considered ill-advised and at worst emblematic of a rabidly sceptical outlook on climate change as a phenomenon.

The government argues that it is unaffordable for the Spanish public to subsidise renewable energies such as wind and solar to the tune of €9bn a year, especially where their effectiveness is questionable.

The effect of the fiscal changes looks set to be a substantial dimming of the once rising star of Spanish green industrial development. The changes appear likely to render many facilities, including a raft of new solar thermal plant and the wind farms that supplied 23% of Spain’s electricity in 2013, no longer commercially viable; an enigmatic situation that defies logic when so much public money has already been invested to get to this point.

 

Gas attack

Capping it all, from my perspective, are two new taxes imposed on landfill gas. First, the gas falls under a tax on generation, the act of producing energy; second, the government view is that as landfill gas is composed of methane it is therefore a hydrocarbon, and hydrocarbon use as a fuel is taxable. Whilst the way the two taxes work is complicated, together they mean paying out around 15% of gross income, before any other taxes or payments. Neither of these two taxes is employed in offsetting costs of landfill enforcement or waste policy, but disappears into the bottomless pit of a ‘financial deficit’.

 

OLYMPUS DIGITAL CAMERA

Even landfill gas flaring is not uniformly carried out in Spain. Photo by Transformas, via Wikimedia Commons.

 

Added to the substantially greater cost of producing landfill gas derived power compared with conventional fossil-derived energy, it puts the industry on a parlous financial footing. Current thinking is that it is not in the financial interests either of developers or landfill site managers to use landfill gas as a resource, which gives rise to some pretty unpalatable consequences.

Landfill biogas is currently the focus of many global initiatives designed to control its emission and it is also subject to strict European Directives that incorporate landfill gas control measures into any landfill design. In Spain, fiscal measures were in effect being used to stand in place of effective enforcement of landfill rules. Following the government’s fiscal reforms, compliance is now under severe threat.

Even basic control of methane emissions by flaring is neither checked nor supervised by any national or European-wide organization, and many thousands of additional tonnes of methane are being freely emitted to atmosphere on an annual basis.

 

Seville engineering

Let’s put it into context: Seville in southern Spain has a population of around 800,000 people (around the same size as the city of Leeds). It produces approximately 400,000 tonnes of waste per year being generated, of which some 200,000 tonnes goes directly to landfill. The rest is recycled – although in Spain, the organic fraction from the recycled material is landfilled regardless, simply because there is no practical use for it – but that’s a whole other topic of discussion.

Over a period of 10 years, the landfill accumulates around 2 million tonnes of refuse. This translates to around 7 kilograms of methane per person per year being produced. As methane is 21 times more effective than CO2 as a greenhouse gas it means that each and every one of us is directly responsible for generating around 147kg of CO2 equivalent (CO2e) a year – the equivalent of each citizen leaving a low energy bulb switched on for over 470 days. For the whole city that equates to around nearly 118,000 tonnes of CO2e a year!

Further, it is currently estimated that we can only capture and destroy around 60% of the landfill gas produced. This means that our notional landfill is generating 196,000 tonnes of CO2e a year. Without a capture system, all of that goes straight to atmosphere.

 

Fiscally impaired

Yet the result of lax enforcement compounded by fiscal changes in Spain is exactly this. Landfill gas, and biogas in general, has gone from being a saleable commodity to a cost of doing business. The situation is compounded by an inspection regime that allows for questionable practices that undercut the legitimate market by avoiding having to pass on costs associated with operating and maintaining equipment designed to control a highly potent greenhouse gas or convert it into a resource.

The argument over whether or not global warming is taking place sadly remains within the respectable political arena in Spain. Subsidies have accelerated the development of numerous forms of renewable energy, putting their cost of production almost on a par with conventional energy generation; now their removal is making it hard for renewables to compete.

Alongside this unfortunate change of policy, the heavy taxation of landfill gas is stifling a reliable form of power generation that greatly reduces the CO2e emissions from landfill and is a ‘no-brainer’ to anyone but the most ardent sceptic. It is also putting Spain’s compliance with its Landfill Directive obligations into doubt. Proper landfill enforcement should be a high priority – and the costs could be offset to a considerable extent by additional hydrocarbon tax receipts. If the government won’t take this action, it should consider repealing the fiscal measures that have increased reliance on enforcement. But either way, change is urgent: if we have to wait for the next election in December 2015, the damage may already have been done.

 

Chris Eden

 

Chris Eden

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4 Comments on "Landfill gas: taxable commodity or a potent pollutant?"

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Adebola
Guest
Hi Chris, That was a wonderful writeup. Just want to ask some few questions about the new policy of the Spanish government; Is there any other means introduced by the government to encourage the use of renewable energies? Or is it that the government does not care about the issues of the health of her citizens, the climate change and global warming? Contribution of 23% of the total electricity is no mean a small contribution in my own view. (Indeed it will be interesting to know the quantity of this 23% of electricity in terms of MW) I think this… Read more »
Rob Eden
Guest

It sounds as if the Spanish government has chosen to discount environmental issues as relevant. Taxing landfill gas projects is tantamount to terminating them. Perhaps it would be wise to take note of the fines the Greeks are being subjected to for non-compliance with EU regulations when it comes to landfills and landfill gas.

Peter Jones
Member

Hi Chris,

I found this a really interesting piece – whilst there are certainly enforcement problems in the UK, regulation does seem to be pretty effective at making sure that landfill gas is managed properly. It sounds as though the situation in Spain is one where landfill remains a cheap and competitive market, which might help to explain Spain’s relatively disappointing recycling rates. Are you able to say roughly what it costs to landfill a tonne of active waste in Spain?

Chris Eden
Guest
Hi Peter and thanks for the comment. Landfill indeed is still relatively cheap but it does vary throughout Spain. Probably the highest cost is in Catalonia, where the concept of ‘Ecoparks’ is quite popular. These are installations that are dedicated to recycling and pretreatment of waste prior to landfilling. In these cases (and don’t quote me on this as it is not my field of speciality), I think the price is around 40€ per tonne. The further south you go, the cheaper the rate for landfilling. In the south of Spain, the price can be as cheap as 18€ per… Read more »
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