CLFP Comments on Proposed CalRecycle Program

CalRecycle, the state agency that manages solid waste issues and programs, has proposed using up to $100 million in greenhouse gas (GHG) Cap-and-Trade funds for a grant program to reduce the amount of methane emissions associated with organic materials disposed in landfills. The grant funds could be used by local governments and non-profits for a wide array of projects, including the composting or anaerobic digestion of organics, food rescue programs or recovery of food waste from institutions.

CLFP staff participated in a recent workshop on this topic conducted by CalRecycle and subsequently submitted comments to the agency. CLFP’s primary concern is that the proposed program includes no standards regarding the cost effectiveness of the projects that receive grant funds. The nexus between grant program costs and validated methane emissions reductions is critical. Sound economics and policy would indicate that the emissions reduction costs associated with this program should roughly align with the carbon allowance prices being paid by companies participating in the California Air Resources Board (CARB) GHG cap-and-trade program. Carbon allowances are currently trading in the CARB auction market in the $11 per metric ton range, and are forecast by CARB to increase modestly in coming years. To be relatively cost effective, the food waste reduction grant projects funded by CalRecycle should all be designed to reduce GHG emissions at a cost of about $11 per metric ton or less. If the costs greatly exceed the CARB GHG auction price, then the projects are not cost effective at achieving the goal, and the funds should be expended elsewhere.  

CLFP stressed that the GHG auction revenue is not "free money" and is derived from food processors, manufacturing plants, utilities and other businesses that have to purchase GHG allowance allocations to meet their regulatory compliance obligations. The costs that they incur must be passed on to customers or deducted from their revenue.