Incinerators won renewable energy subsidies despite violations

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New Jersey waste incinerators were allowed to collect millions of dollars in renewable energy credits even after racking up air permit violations that critics claim should have denied them the state subsidy.

The state Department of Environmental Protection is investigating the allegations, POLITICO has learned. And environmental justice groups in New Jersey are using the regulatory failure to bolster their case that the program be shut down completely.

They say incinerators, which tend to be located near lower-income communities, contribute to pollution and should not be considered sources of clean power.

“We paid for our own disproportionate deaths,” said Maria Lopez-Nuñez, director of environmental justice and community development for Ironbound Community Corp., a Newark-based social services group. “People are losing their homes, their lives and their livelihoods, and we’re subsidizing a dirty industry.”

Across the country, 23 states — including Oregon, Oklahoma, Massachusetts and Virginia — include energy from incinerators in their renewable portfolio standards, according to data from the Energy Recovery Council. For years, environmental groups coast to coast have asserted that burning garbage undermines governments’ green agendas.

That argument is gaining ground as the environmental justice movement amasses influence across the U.S. and in Washington. A growing body of research has exposed the health and social costs paid by fenceline communities, which have long fought to evict sources of industrial pollution from their neighborhoods, with limited success.

In New Jersey, the issue was raised in a letter obtained by POLITICO through a public records request. In it, lawyers for Ironbound Community Corp. and New Jersey Environmental Justice Alliance presented data showing that the state’s five incinerators have violated federal and state laws, including the Clean Air Act, every year since 2004.

An analysis of state data showed incinerators had been cited for more than 800 permit violations between 2004 and 2020, the groups said. Still, the incinerators continued to sell renewable energy certificates worth more than $30 million, an estimate based on data provided by the Board of Public Utilities and PJM, the state’s grid operator.

The incinerator investigation has surfaced as the New Jersey Department of Environmental Protection writes rules to implement a landmark environmental justice law passed in August. More than a decade in the making, the law aims to limit new pollution sources in overburdened neighborhoods and impose stricter conditions on permit renewals for existing facilities, like incinerators.

James Regan, a spokesperson for Covanta Holding Corp., which operates three waste-to-energy facilities in the state, said the letter mischaracterized the company’s performance.

“The assertion of hundreds of violations is really a sensationalized account of the actual events," Regan said. “One event may lead to multiple types of violations due to our permit, but it’s not hundreds of events.”

A spokesperson at Wheelabrator Technologies, which operates a single New Jersey site, did not respond to requests for comment.

DEP Acting Commissioner Shawn LaTourette also found fault with the group’s claims.

“Not every violation is created equal. Some violations can be ministerial, some violations can be of low environmental and public health consequence individually,” LaTourette said. A simple count of violations doesn’t determine whether a facility is in compliance, he said.

New Jersey’s renewable credits program has its roots in a 1999 law — most recently updated in 2018 — that requires a share of energy sold in the state to come from renewable sources. By 2025, the state must get 35 percent of its energy from renewable energy sources such as wind and wave. Another 2.5 percent must come from second-tier sources, which the state defines as hydropower and resource recovery facilities such as incinerators.

Between 2004 and 2019, on average, nearly 90 percent of second-tier energy came from incinerators, according to data from PJM.

An in-state incinerator is eligible to sell renewable energy certificates only if it meets “the highest environmental standards and minimizes any impacts to the environment and local communities,” limits that never were explicitly defined under New Jersey’s Electric Discount and Energy Competition Act.

LaTourette said the department is open to exploring a rulemaking process to set criteria for meeting the “highest environmental standards” laid out in the law.

After receiving the April letter, the environmental department and Board of Public Utilities in October entered into an agreement under which the DEP would notify the board if incinerators fell out of compliance with state law. Those facilities would be prohibited from selling renewable energy credits.

Regan said Covanta’s New Jersey facilities exceed emissions standards set by their permits and that the company is “continuing to improve.” Technology improvements have decreased its emissions by as much as 72 percent since 2007.

The Morristown, N.J.-based company says its incinerators are minor sources of emissions and they provide essential public services, including processing trash, reducing landfill waste and cutting greenhouse gas emissions.

“We’re disposing of the waste society generates, we’re not just there to generate money and do it on the backs of these communities,” Regan said. “We’re not talking emissions that are egregious in nature or that hurt public health and the environment, and that’s how they’re portrayed in that letter."

Regan declined to disclose what Covanta earned from selling New Jersey renewable energy certificates between 2004 and 2020. Energy generation revenue accounted for about a fifth of its operational revenue from North America facilities, according to federal filings.

New Jersey’s incinerator subsidy pales in comparison to the annual $300 million from state ratepayers that support the PSEG’s three nuclear plants. But the $30 million directed to incinerators since 2004 could have covered more than a year of the state’s annual electric vehicle rebate fund, and the subsidies imply that the incinerators are in good standing with the state.

“The whole idea behind the renewable energy credits is we’re looking to reduce air pollution by having cleaner sources of energy generation,” said Stefanie Brand, director of the state Division of Rate Counsel. It’s “crazy,” she said, for ratepayers to fund subsidies for companies that violate their air permits.

At least one facility has lost its eligibility. In 2014, a Covanta site in Virginia failed to meet environmental standards required to sell New Jersey renewable energy credits. The Board of Public Utilities kicked the incinerator out of the program.

Environmental advocates want more action.

“There’s nothing renewable about burning trash,” said Doug O’Malley, director of policy and advocacy group Environment New Jersey. “It’s part of a decades-long marketing effort for industry to brand themselves as waste-to-energy. We should move beyond a world where we’re dependent upon power from incinerators.”

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