DEQ’s Additional Credit

Waste-to-Energy ZESC

July 2010 1
 “ZESC”?
Zero
Emissions
Sanitary
Combustion

ZESC is a combination of technologies.

The “highest and best use” design options:

 Award title to solid waste

 Award additional credits for most favorable impact
 Avoid non-favorable IRS treatment

2
 Waste Policy Impacts:

1. Air emissions from methane plume

2. BTUs locked in landfill
3. Cracked landfill liners = emissions into ground water
4. Bury and Forget omits maximum recycling law

 DEQ’s credits only reflect metric from quantifiable data

3
PROBLEM
ONE
 IRS definition of “solid waste”
1. Waste streams recycled above 35% by weight or volume,
considered by IRS as a commodity.
2. Commodity transactions are taxable
3. Tax-exempt bond financings or 501 (c) 3 status in jeopardy of
losing tax-exempt status from IRS
4. IRS targets solid waste tax violations as primary cause of litigation
Current Condition:
1. Recycling more waste in Oregon wastesheds caps
credits
2. Capping recycling volumes freezes Oregon’s additional
credit incentive
3. Metrics from scientific data of reducing impacts omitted
from consideration
http://www.scribd.com/doc/30999508/Irs-Solid-Waste
http://www.scribd.com/doc/31782738/IRS-Tax-Position-MSW
Solutions ->
http://www.scribd.com/doc/31752447/Orrick-postedbyrequest 5
http://www.scribd.com/doc/33095326/Or-EPA-Waste-Background-Noncompliance
 CHALLENGE: Transfer title to solid waste.

 How?
 - Solid waste priced at $0.00/ton (zero) may exchange
Solid waste title for “Services”
 Parameters: achieving least waste pollution
impacts/ton = greatest DEQ rewards = greatest service
 IRS compliant, DEQ compliant target, and State Law
compliant.
 DEQ to enable more recycling with less environmental
impact as basis for awarding any additional credits
 Result*1 Oregon wastesheds become tax-compliant

http://www.scribd.com/doc/34570159 Result *2 is even better:

http://www.scribd.com/doc/34570294 6
 Waste “rots” or oxidizes,
OUTGAS.
Use of recycling credit/additional credit as
suggested allows DEQ to provide the
service of assisting the public in
ascertaining which technologies
address/repair/prevent environmental
impacts associated with solid waste on an
apples-to-apples basis.
HDPE LANDFILL
http://www.scribd.com/doc/34576632 LINERS LEAK into
http://www.scribd.com/doc/34576665
http://www.scribd.com/doc/34581352 Water Supply.
http://www.scribd.com/doc/34581392
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 ZESC design achieves priorities.

Compare to coal:
$$$cost of fuel> 30%
of budget

ZESC solution 30% more $$$

8
No smokestack ~ DEQ monitoring
additional credits :
CO, CO2, NOx, SOx, Hg, Sc,
dioxin/furans/ air.
Heavy metals and
$0/fuel creates margin ->
acid/groundwater
remediation

Flyash to:

Greenest
We’ve known
Brickshow
+
Prefab
to do itfoamed
for a long
concrete
time.

= nothing left for the landfill. 9
 The upshot:
DEQ quantifies
efficiency of remediation ~ environmental impacts.

ZESC offers solution that is

tax-compliant and applied to Most
all. WTE
have a
smokestack,
and send the
All of thesethat
Technologies technologiesash to the
are not designed
toleave thesolid
address solidwaste
wasteenvironmental
in thelandfill
landfill,
impact asproducing
ZESC: pollution:
or ashpond.
up (air) and This repeats
down (aquifer). Up/Down
But what about otherpollution.
WTE technologies?
What is not in doubt is that the DEQ, when presented
with a feasible (no cost to the people) plan to

increase recycling in Oregon by allowing recycling to

become tax-compliant through their recycling credit
(also, prevent recycling stagnation/rollbacks by failing
to cooperate in cobbling a tax-compliant solution)
while

increasing environmental transparency by

participating in even greater oversight of sources of
pollution and making those results available to the
people in an understandable merit-based “currency” –
DEQ credits

DEQ should agree to the proposal or counter with

another proposal that yields similar results.
PROBLEM
Moving on…. to…
TWO
 What would happen if
this commodity pictured here, Tristone Energy survey prices

the BTU Reserve, BTUs according to industry-

accepted discount rate method.

was exchanged?

A TAXABLE EVENT

LANDFILL
Better: Constructive sale tax treatment.
 What does that mean?
 “selling something”
 Capital gains

this.
THIS:

may be liquidated for…

VAT is value added tax 13

1. BTU collateral exchanged for
2. Emissions reduction DEQ credit =

3. Constructive sale IRS tax treatment

A service may be exchanged for a title.

Viola!

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 Excerpted from:

Question A. What is RPS compliance measured in?

Answer: in RECs = megawatt/hours.

Question B: Does ORS grant DEQ authority to issue credits?
Excerpt of ORS 459a.
(e) A wasteshed may receive, upon application to the Department of Environmental Quality, a recovery credit
greater than two percent for a residential composting program. To receive the recovery credit under this paragraph,
the wasteshed must provide quantitatively verifiable documentation of residential composting tonnage to the
department. The documentation must show that more than two percent of the wasteshed’s generated tonnage of solid
waste is diverted from the wastestream by residential composting.
      (f)(A) If there is not a viable market for recycling a material under paragraph (a) of this subsection, the
composting or burning of the material for energy recovery may be included in the recovery rate for the
wasteshed. (Emphasis mine)
Answer: Yes.
Question C: What should DEQ credits be measured in?
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Answer: Tons/year : (methane, CO, CO2, NOx, SOx, Mg, Sc...)
DEQ to award on scientific merit:

Mercury abatement
Arsenic abatement
Dioxins and Furans reductions
Heavy Metals in groundwater gradually eliminated
Methane Plume eliminated
IRS recycling 35% cap compliance

Planned results:

Smokestack elimination becomes standard of the future

Bond financing not in peril, landfills become compliant
501 (C) 3 status safe: state and federal compliance

Jobs created from green economy

US energy independence from dwindling fossils
ZESC solution raises revenues not taxes

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 DEQ incentives
 Level playing field for awarding additional credits by assessing all
impacts, avoids selective defaulting to least environmentally-
favorable, political objective
 Self reliance – merit based ethic.

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 My thanks for
your time and attention,

Marni Zollinger
ZESC Developer
Zesc1971@gmail.com