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March 4, 2013

CT seeks recycling financing

Connecticut needs to use its quasi-public financing agencies to leverage private capital in order to meet Gov. Dannel Malloy's goals of greater recycled materials use, according to a task force dedicated to modernizing the waste stream.

“Our business is very capital intensive,” said Tom DeVivo, president of Willimantic Waste, a member of the state's Modernizing Recycling Working Group. “You have to upgrade to new technology to meet changing consumer demands.”

Malloy on Thursday launched his plan to increase Connecticut's recycling rate, create jobs in the waste industry, and become a national trendsetter in solid waste management, building upon the 4,800 jobs, $275 million payroll, and $59 million in state tax revenue that recycling already contributes to Connecticut.

The core of Malloy's initiative is the formation of the Recycling Market Development Council, which will help businesses find ways to use in-state recycled materials.

“We can recapture millions of tons of materials from our waste stream — everything from food and yard trimmings that can be turned into compost, to wallboard, roof shingles and carpeting that can be used in many manufacturing processes,” Malloy said. “This will significantly reduce the volume of trash in Connecticut, offers the state another opportunity to grow our economy, and lowers the cost of materials — helping our businesses be more competitive.”

Yet, programs already established to increase recycling among Connecticut businesses have been slow to fruition, largely because of the lack of financing.

In 2011, the Connecticut General Assembly passed a law forcing large producers of food waste — grocery stores and food manufacturers — to send all their byproducts to anaerobic digestion facilities, which would convert the decomposing food into electricity. The requirements would kick in once the digestion facilities are built, but they have had difficulty setting up shop.

“According to the several facilities that have been meeting with us with plans to establish in Connecticut, private construction financing is relatively slow and there is very limited public financing,” said Macky McCleary, DEEP deputy commissioner, environmental quality.

The quasi-state agency Clean Energy Finance & Investment Authority — originally established to leverage private capital for renewable energy projects — has launched a pilot program to provide grants, loan enhancements, and power purchase agreements to help these digestion facilities find their footing in Connecticut and bring in additional private capital.

This type of public financing will be necessary to facilitate further recycling in Connecticut, particularly helping recycling facilities link up with manufacturers in the state that can use recycled resources instead of raw materials, McCleary said.

“In a rapidly developing global environment, raw materials for manufacturing become scarcer and more expensive to extract and energy supplies must be optimized,” McCleary said. “Reusing and recycling materials that have already entered the stream of commerce have less environmental impact and require less energy to convert to feedstock.”

Several recycling materials offer significant energy savings than processing raw goods, including 95 percent savings from aluminum, 75 percent from plastic, 61 percent from steel, 45 percent from newspaper, and 31 percent from glass.

Even though local recycled materials have fewer global transportation issues as well, switching Connecticut's manufacturers over to recycled goods takes facilitation and financing. Manufacturers need to ensure they are provided with the specific materials they need, in enough quantity and on a steady schedule to avoid any disruption.

While the Recycling Market Development Council can facilitate partnerships, quasi-public financing organizations such as CEFIA and Connecticut Innovations are necessary to provide the start necessary for those relationships and to get private financiers interested in the future, according to the working group report.

Private capital is better for the industry than 100 percent public financing because public funding is taxpayer dependent and is limited, DeVivo said.

“Private financing is a little more nimble and quicker,” DeVivo said.

The state's previous attempt at public financing for recycling initiatives, the Connecticut Resources Recovery Authority, cannot handle the load necessary to modernize the waste stream, according to the working group.

CRRA was founded in 1973 to help cities and towns provide waste disposal at reasonable costs and later tasked with promoting recycling throughout the state. CRRA does not receive direct state funding, but earns revenue from tip fees and selling the electricity at its waste-to-energy plants.

The problem is CRRA is tasked with statewide responsibilities and expenses, its service area is limited to Greater Hartford, so its funding is stretched thin. In addition, the dropping price of electricity due to the large natural gas supply has made waste-to-energy plants less economical.

The working group recommends CRRA be given a reduced regional role and focus more on its recycling and waste-to-energy facilities.

CRRA spokesman Paul Nonnenmacher said the state's goals of deriving maximum value out of its waste stream could work with CRRA in a reduced role, but that future isn't here yet.

“Until we get to that new paradigm, we still have to dispose of garbage,” Nonnenmacher said.

To help the CRRA fill its funding hole, the agency is asking the legislature to allow existing waste-to-energy facilities to receive credits for creating renewable power, which the facilities can sell in the renewable market.

That renewable energy credit program would expire after five years, Nonnenmacher said, helping bridge the gap between today's waste needs and Malloy's recycling vision.

“We, as a state, are trying to derive maximum value out of what we use to consider trash,” Nonnenmacher said. “There is a surprising amount of economic input already, but there can be significantly more.”

Connecticut just isn't set up for more recycling at the moment, McCleary said. All 169 municipalities make individual decisions on waste disposal. In addition, waste disposal fees typically are hidden in property taxes, so property owners don't have any financial incentive to recycle and reduce their waste, since they will pay on a per-acre basis no matter what.

DEEP will provide municipal assistance to modernize cities and town recycling pricing systems based on user fees rather than property taxes, McCleary said.

Once the new programs are in place with the necessary financing, the state will judge the success of its plan based on the amount of waste per capita, the tonnage of recycled material turned into new product, and the amount of recyclables still left in the trash.

“It is critically important for us to move to a more sustainable way of managing materials,” McCleary said. “We can't afford to waste anything, from the perspective of the environment, energy efficiency, and the economy.”

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