BioCycle Magazine

Reducing the Economic Friction of Regulation

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Last month, we looked at two distinctly different bioenergy business models that are merging. Energy profit centers and waste cost-recovery facilities are learning the benefits of each other's business model. The resulting projects generate maximum revenue with lower production costs.

The same kind of business model duality occurs in biomass energy regulation. There are more than two kinds of regulations occurring at the same time, but comparison of commercial and environmental regulations covers the extremes of economic efficiency. It gets more complicated when environmental regulations require multiple permits (air, wastewater, solid waste, storm water, etc).

Environmental regulations traditionally have noneconomic objectives, which is quite different from commercial regulations. Because of this, the benefits of environmental regulations are difficult to quantify, especially when they end up costing more than the economic benefits they provide. Environmental regulation arguably costs the U.S. billions of dollars.

For instance, the U.S. spent $51 billion in 2002 on waste remediation. Today environmental regulations are driven by public mandate to make wastes go away. Cost estimates are assigned to provide an upper boundary. A private, market-driven shift to biomass energy and composting markets would allow the legal environmental responsibilities to be achieved without the single, publicly-driven focus on remediation alone. This would provide billions of dollars in economic growth.

Comparing commercial and environmental regulatory models is challenging, due to their different objectives. The regulations that oversee commerce are more efficient. The benefits of these regulations greatly outweigh oversight costs.
In the 1970's there were problems with rivers burning, communities contaminated with industrial wastes and acid rain. Emerging laws and regulatory agencies evolved along industry-specific lines. Depending on the industry, either the air agencies, the solid waste agencies or the water agencies took leadership over regulations.

Combining energy and waste treatment functions, under traditional protocol, requires the regulations to be additive. Projects that include multiple feedstocks may need permits to process each one.

For example, the incineration of solid waste may fall under a solid waste regulation, but also have an air quality component. If the feedstocks are most traditionally solid waste, but a sewage component is also included, it now includes wastewater regulations. Add a gasifier instead of a conventional incinerator/boiler (or an anaerobic digester) and most state regulatory agencies are just not prepared to navigate this process.

Every agency that becomes involved translates into more initial costs and time involved in starting a biomass energy project. Streamlining the permitting process without compromising the legal authority of environmental agencies would lower the costs of new energy projects.

The New York State Energy Research and Development Authority (NYSERDA) has added clarity to the impact of various feedstocks and environmental risk with their Biomass Guidebook. A key innovation is to divide projects into simple feedstock categories and technology conversion categories. Based on this simple risk matrix, specific emission concerns are identified.

Feedstocks for example are clarified as either 'unadulterated' or 'adulterated.' The lower-risk, 'unadulterated' feedstocks include: harvested and silvicultural wood, agricultural residues and clean wood wastes. The higher-risk, 'adulterated' feedstocks are: landfill biomass, animal manures, source-separated waste wood and biomass from mixed waste.

Environmental risks can be identified by feedstock, technology and output products. The NYSERDA Biomass Guidebook goes a long way toward that end. Once that is achieved, moving environmental regulations toward the commercial regulation model becomes much simpler.

For commercial oversight to succeed, benefits must outweigh costs. In the April 2007 report from University of California-Berkeley, “Creating Markets for Green Biofuels,” the authors identified the environmental benefits from ethanol production technologies. This is an excellent concept and a great beginning to moving biomass energy benefits beyond less tangible environmental and wildlife benefits.

To bring this home, if a project was going to burn perennial energy crops (switchgrass or poplars) in a very efficient gasifier, the permitting agencies should have the science to speed this through the process with confidence. The perennial crops will sequester carbon, shelter wildlife, enhance water quality, while the air emissions and ash from the gasifier will be negligible and the resulting energy will be renewable and essentially carbon neutral.

Energy projects must be accountable, but it doesn't require a 30 year old regulatory process. Once the science is established surrounding energy crops and gasification, the permitting process should be reduced to a postcard-sized process with the environmental benefits codified in the process. The result will be lower project costs, fuel for the economy and a greener environment.

Mark Jenner, PhD, is the owner of Biomass Rules, LLC and has over 25 years of biomass utilization expertise. Burning Bio News is Jenner's monthly scorecard of bioenergy project adoption, available at Jenner developed the locally grown biomass power plant concept for the Indiana Department of Agriculture's BioTown, USA.

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