Date: August 2, 2024
To:
Aviva Aron-Dine, Acting Assistant Secretary for Tax Policy
Department of Treasury
1500 Pennsylvania Avenue
NW Washington DC, 20005
Re:
IRS REG-119283-23
Section 45Y Clean Electricity Production Credit and
Section 48E Clean Electricity Investment Credit
Dear Acting Assistant Secretary for Tax Policy, Aviva Aron-Dine,
The Inflation Reduction Act establishes the 45Y clean electricity production credit and the 48E clean electricity investment credit.1 These credits were developed to decarbonize the power sector by creating incentives for the generation of solar, wind, geothermal, and other clean energy sources. If responsibly implemented, these tax credits can be a powerful tool in protecting the health of communities and the climate.
If used to boost false solutions such as plastics incineration and other combustion-based technologies, or to enable tradeable offsets for fossil gas facilities, these tax credits will incentivize some of the most heavily polluting industrial sectors and will perpetuate environmental injustice in already-overburdened communities.
Moms Clean Air Force seeks reassurance that the 45Y and 48E tax credits shall not be used to subsidize health-harming and climate-damaging practices such as the burning of municipal solid waste, plastics, and methane gas from landfills. These technologies must be excluded categorically. The U.S. cannot burn its way out of the climate crisis, nor can it profess to support environmental justice while turning low-income and Black and Brown communities into sacrifice zones. Incentivizing combustion processes would subject marginalized communities to elevated levels of hazardous air pollutants, and to the resulting cancers, reproductive and developmental effects, respiratory ailments, and other harms.
Zero-emissions or less
The 45Y and 48E tax credits are designed to reward and incentivize facilities that have greenhouse gas emissions rates of zero or less, calculated in accordance with section 211(o)(1)(H) of the Clean Air Act.2 This section requires regulators to count all direct greenhouse gas emissions plus significant indirect emissions from the entire fuel lifecycle. If measuring lifecycle emissions accurately and comprehensively, on a climate-relevant timeline, the IRS and the Treasury Department will find that combustion technologies do not qualify for the 45Y and 48E tax credits. A well-designed methodology with a rigorous lifecycle analysis will promote sustainable and effective energy solutions while protecting frontline communities from an expanded buildout of industrial polluters.
In gauging the emissions values and climate benefits from applicant industries, the Treasury Department and the Department of Energy need to consider environmentally preferable baseline scenarios. For example, rather than simply model the greenhouse gas emissions of a landfill with and without a methane gas collection system, or rate the methane emissions released by waste combustors against those from landfills, the calculations should assess and compare emissions levels from systems that separate out metals, glass, and paper for recycling; that re-use, refill and repair products and packaging; and that divert food and yard wastes to composting systems. Just because a heavily polluting technology excels on a singular emissions variable does not mean it will help address the climate crisis.
Environmental justice
While greenhouse gas emission rates are the focus of 45Y and 48E eligibility for tax credits, the US government cannot turn a blind eye to the toxic air and water pollution released into surrounding communities. This would run counter to President Biden’s commitment to environmental justice for all.3 It is critical to assess the greenhouse gas emissions rates as well as the toxic releases such as the dioxins, PFAS, heavy metals, and other industrial pollutants that impact the health of people living alongside waste incinerators and other heavily polluting facilities.
We urge the Treasury and IRS to remove from its proposal so-called Book-and-Claim accounting, an offset program under which new fossil-gas facilities could qualify for tax incentives by purchasing tradeable credits. Such a system would undermine efforts to protect communities and to mitigate global heating.
Municipal Waste Combustion
It is essential to exclude municipal waste combustors from 45Y and 48E. In addition to climate-heating gases, these facilities release into the air4 vast amounts of fine- and ultrafine particulates, dioxins, heavy metals, nitrogen oxides, and other pollutants. The emissions are linked to elevated risk of lung and heart diseases, neurological disorders, cancers, and other health harms. Most waste incinerators are sited in low-income neighborhoods and communities of color.5 Residing in proximity to these facilities is especially dangerous for children.
Burning trash is an expensive, inefficient, polluting way to make electricity.6 Even compared with dirty coal plants, incinerators release far more dioxins, mercury, and other air toxics. Especially harmful is the burning of chlorinated plastics such as PVC, emitting heavy metals, dioxins, hydrogen chloride, phosgene, and other hazardous air pollutants. In addition, incinerators release much more greenhouse gases than other energy sources, per unit of electricity generated. It is the epitome of environmental injustice to build waste incinerators in localities already harmed by other industrial polluters.
Waste combustion must not be rewarded with 45Y and 48E tax credits. A much better solution involves systemic reduction of waste materials, repair, reuse, regeneration, recycling, and composting. Basic sorting systems can redirect materials to more appropriate waste streams such as metals, paper, and glass. Food and yard waste can be sent to composting facilities. It is particularly absurd to be burning food and other organic waste when it can be beneficially diverted to composting facilities. Roughly 22 percent of the municipal solid waste that gets incinerated is food waste.7
As EPA writes on its website,
“Incineration [of food waste] is one of the least preferred pathways because valuable nutrients in wasted food are not recovered. Though incineration produces energy, wasted food makes for a poor feedstock because it is so wet and produces little energy compared to other municipal solid waste.”8
Plastic Waste Combustion
Pyrolysis and gasification incinerators are even more carbon intensive and polluting. These incinerators heat plastic waste (made from more than 16,000 synthetic chemicals), transforming it into harmful air pollution, char (residue left from incomplete combustion), synthetic gas, and pyrolysis oils.10
Incinerating plastic generates climate-warming gases and releases toxic pollution that can impact health.11 12 13 The pollutants include dioxins and brominated dioxins, PFAS and other plasticizers, chlorinated and brominated flame retardants, benzene, formaldehyde, particulate matter, and heavy metals, such as mercury and arsenic.14 15 Pyrolysis incinerators operate in low-oxygen conditions at temperatures ideal for the production of incomplete combustion products such as dioxins, which are among the world’s most toxic air pollutants.16 17 18 19 20 Exposure to this pollution increases the risk of cancer, birth defects, reproductive system damage, developmental issues, cardiovascular problems, respiratory impairment, hormonal irregularities, and neurological problems.21
The plastics industry lobby is trying to convince lawmakers and the EPA that this so-called “chemical recycling” should not count as solid waste incineration.22 Such a determination would result in significant regulatory subsidies, enabling companies to emit unlimited amounts of harmful air pollution without any monitoring, reporting, or control technologies. 45Y and 48E must not be used to further incentivize these ineffective and heavily polluting incinerators.
Plastics waste is on track to triple by 2050.23 The climate-protective, health-promoting solution is to halt the permitting of new and expanded plastics production facilities – not to burn the evidence of our climate recklessness.
Methane gas collection from landfills
Landfills are a huge source of climate-heating methane gas, with rates of emission more than 50 percent higher than EPA estimates.24 25 These emissions arise largely from the anaerobic decomposition of organic waste. The solution ought to be rather straightforward: stop landfilling food, yard waste, and other organic materials.
While collecting landfill gases can also be beneficial, tax credits for methane collection may incentivize some of the worst practices. Paying landfills to collect methane gas for use in electricity production can lead waste management facilities to maximize the output of methane and toxic air pollutants, thus increasing the harm to communities and the planet.26 27 Providing tax credits for landfill methane can incentivize operators to add water or recirculate the toxic chemical-rich leachate that percolates through the landfill, and to delay covering landfills for several years, in order to increase the moisture content needed for higher methane generation. These extra-damp uncovered landfills can emit more CO2e than the landfill gas displaces, turning landfills into super-emitters.28 29 30
Much more beneficial to communities and the climate is to operate covered landfill systems at lower levels of moisture, and to reduce the amount of organic waste that gets landfilled, for example by reducing food waste and implementing organic waste diversion, anaerobic digestion, biostabilizing residual waste before landfilling, composting, and biocovering landfills. No path forward is emissions-free, not even composting, but diverting food and other organic waste is clearly beneficial.31 A 2023 study in Nature Scientific Reports found that composting emissions were 38–84% lower than those from landfilling.32
Methane gas from livestock manure/ factory farms
Another source of methane gas generation that ought to be excluded from 45Y/48E is that involving large-scale industrial animal production in concentrated animal feeding operations (CAFOs). Offering tax credits for the giant waste lagoons in which such facilities deposit heavily polluted animal manure creates a market distortion, incentivizing the largest and most dense factory farming operations, rewarding them over the smaller farming units that use vastly more sustainable practices.33 By encouraging the capture and sale of methane biogas emissions, the tax credits could actually result in greater climate impact from supersized CAFO operations, while doing nothing to mitigate the massive discharge of phosphorus and nitrogen, heavy metals, pesticides, pharmaceuticals, bacteria, and other harmful waterway pollutants and the vast amounts of carbon monoxide, sulfur dioxide, and other air pollutants from the biogas collection facilities themselves.34
The lack of federal regulation of concentrated animal feeding operations, and the success of the factory farming industry in sidestepping a comprehensive accounting of lifecycle emissions, has enabled the sector to gain eligibility undeservedly for climate benefits – while putting communities at extreme risk of fires, explosions, and environmental contamination. It is critical that the 45Y and 48E tax credits do not end up favoring the least sustainable and heaviest polluting sectors.
Book-and-Claim Accounting
Disturbingly, the Treasury Department is considering the potential introduction of offsets through so-called book-and-claim accounting. These offsets could allow new or expanded fossil gas power plants to qualify for tax incentives by purchasing tradeable credits, for example from methane production at landfills or at livestock manure lagoons. The cost of these credits would likely be a drop-in-the-bucket for industrial mega-polluters. In the words of our colleagues at Friends of the Earth, “This would turn the high bar of zero emissions into a minor inconvenience for polluters.”
Moms Clean Air Force urges the Treasury to drop the proposed book-and-claim accounting in 45Y and 48E. This carbon offset system would undermine efforts to protect communities and to mitigate global heating. By incentivizing and locking in fossil fuel facilities, book-and-claim would contradict the plain meaning and the legislative intent of the Inflation Reduction Act.
A book-and-claim accounting system is simply not consistent with a program to reward zero emission energy sources and to encourage their deployment in underserved and overburdened communities. The White House Environmental Justice Advisory Council (WHEJAC) specifically calls out such approaches as harmful to communities. We urge the Treasury to remove book-and- claim from its final rule.
Targeting “energy communities”
The proposed rule states that the 45Y credit will be 10 percent greater in so-called energy communities, as defined in section 45(b)(11)(B).35 This includes, inter alia, (1) brownfield sites under the Superfund/CERCLA laws, meaning “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant,”36 (2) locations involved in “the extraction, processing, transport, or storage of coal, oil, or natural gas,” and (3) census tracts in which a coal mine or coal-fired electric generating unit has closed.
In other words, the Treasury’s tax credits will incentivize the siting of new facilities in the marginalized communities that have a history of hazardous pollution and environmental racism. Thus it is all the more critical that combustion technologies and other industrial polluters are categorically excluded from consideration. The Treasury Department must carefully design its methodology to ensure that the award of these tax credits involves a rigorous lifecycle analysis that incentivizes truly clean electricity sources such as wind and solar.
We look forward to a robust 45Y and 48E rule that rewards clean energy projects while protecting human health and the climate. Thank you for this opportunity to comment.
Sincerely,
Cynthia Palmer
Senior Analyst, Petrochemicals
Moms Clean Air Force
Dominique Browning
Director and Co-founder, Moms Clean Air Force
Vice President, Environmental Defense Fund
Learn more about Moms’ work on clean energy.
Sources
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3 The White House. “Executive Order on Revitalizing Our Nation’s Commitment to Environmental Justice for All.” The White House, 21 Apr. 2023, www.whitehouse.gov/briefing-room/presidential-actions/2023/04/21/executive-order-on-revitalizing-our-nations-commitment-to-environmental-justice-for-all/
4 Azhar, Aman. “Advocates Welcome EPA’s Proposed Pollution Restrictions on Trash Incineration. But Environmental Justice Concerns Remain.” Inside Climate News, 13 Jan. 2024, Advocates Welcome EPA’s Proposed Pollution Restrictions On Trash Incineration. But Environmental Justice Concerns Remain - Inside Climate News
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