February 2000

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 SolidWasteTechnology (www.solidwastetech.com)

 

 LANDFILL GAS MANAGEMENT

 

 TRADING GREENHOUSE GAS EMISSION REDUCTIONS

 

 An interview with ZAPCO, a company that’s actually done it!

 

 Mike Michels (MM) sat down with Bernie Zahren (BZ) from ZAPCO to discuss his company and the world's largest emission reduction trade from landfill gas. Following, are some insights into this new potential revenue source for landfill owners and LFG developers.

 

 MM.- Can you provide some back ground on ZAPCO?

 BZ., Zahren Alternative Power Corporation (ZAPCO) has been in the LFG business since 1981. Currently ZAPCO has 14 operating electrical generation projects, three operating medium BTU projects, seven more projects under construction, and has assisted many other landfills with studies of their LFG-to- Energy potential, ZAPCO is involved in the development, financing, and operation of these plants and owns the gas rights to many of them. These numbers rank ZAPCO as one of the largest independent LFG alternative energy producers in the U.S. ZAPCO has also structured numerous partnerships in order to monetize Section 29 IRS tax credits from the beneficial use of landfill gas.

 MM: Where are your LFG-to-Energy projects located and are all of them going to trade emission reductions?

 BZ: Our energy projects are located in Illinois, Pennsylvania, Massachusetts, Vermont, New Jersey, New Hampshire, New York, Virginia, Texas, and Arizona. In order to determine which projects will trade emission reductions, PricewaterhouseCoopcrs, LLP is currently reviewing each project, Only projects that can prove how much methane they prevented from going to the atmosphere during years 1998, 1999, and 2000 will be selected for the emission reduction trade.

 MM: I understand the deal to trade emission reduction credits from your LFG-to-Energy projects was made with a Canadian power company. This is the first trade of its kind. Can you provide some insight how this trade came about?

BZ: Canada has taken a much more aggressive approach to comply with the Kyoto Treaty than the U.S. The Canadian government and Canadian industry have volunteered to reduce its greenhouse gas emissions. In order to meet these reductions (i.e., voluntary goals) they must reduce emissions, trade/buy offsets, plant trees, or take other mitigation steps. ZAPCO worked with Dr. Richard Sandor of Environmental Financial Products, Chicago, IL, to broker this trade. Dr. Sandor (formerly with the Chicago Board of Trade) spent two years trying to 'cut the deal.' The challenge was that no standards exist for such a trade. Therefore, Dr. Sandor had to establish the rules for the trade and try to get others to recognize the standard rules. After two years of work the rules are still not standardized, but the independent validation by PricewaterhouseCoopcrs, LLP should help. Ontario Power Generation, Inc. has agreed to purchase emission reductions (in carbon dioxide equivalents) in an effort to find effective solutions to climate change and to meet the voluntary goals they placed upon themselves.

 MM- Do you feel other landfill owners or LFG- to-Energy developers can repeat this type of trade? If so, what is the first step for them to take and what challenges will they face?

 BZ. Yes. Others can conduct similar emission reduction trades with their LFG, but it is important to understand the risk of future rules. For example, future rules may not allow trading emission reductions from landfills that were federally required to install a LFG collection system, These final rules are unknown as of now, thus the risk. The first step to be taken in trading your LFG emission reductions is to validate the reduction, In other words, determine The exact number of tons per year of emissions you reduced, This should be done with written flow measurements and gas compositions. The next step to be taken in trading your emission reductions is to find a company willing to purchase them.

 

MM: What legislation need to be enacted to allow more trading of LFG emission reduction credits?

 BZ: The rules for verification of the emission reductions need to be established. These rules need to clearly state what landfills can trade emission reductions, make sure no double counting of the emission reduction occurs, and establish the level of record-keeping required to document the reduction, The Solid Waste Association of North America (SWANA) is also preparing some guidelines to help standardize future LFG emission reduction trades.

 

MM. If our readers have more questions on trading of LFG emission reductions, whom should they contact and how should they select a firm to work with?

 

BZ: Many air emission trading companies exist to assist in validating the emission reduction and find an industry willing to purchase your LFG emission reductions. Some of these trading companies are AirBank, Andover, MA-, NatSource, New York, NY; ZAPCO; and Environmental Financial Products, Chicago, IL. I recom- mend that a LFG developer or the landfill owner not sign-up with any company until you have discussed the issues with many trading companies and then select the com- pany that meets your needs and minimizes your risk.

 

Mr. Zahren is President of ZAPCO and can be reached by e-mail at bzabren@zahren.com or by phone at 860- 678-7537 or visit them on the web at www.zahren.com.

 

Mr. Michels is EMCON/OWT's Director of LFG Services and can be reached by e-mail at mmichels@theit-group. com or by phone at 920-894-4088.