BioGas in Eugene: More Taxpayer Waste from Portland’s Waste

Right From the Start

By Larry Huss,

Monday’s Eugene Register Guard carried an article about the new biogas power plant just north of Eugene. Apparently it is mired in a controversy between its former CEO and its primary shareholder. But the real story is not the “cat fight” between the parties. That fight is just about money and it isn’t even “their” money they are fighting about.

The real story here is about abuse of taxpayers funds, about another version of an unsustainable “green dream” and about customers being forced into uneconomic choices. For those of you uninitiated in the newest rage in “sustainable” energy, a biogas project basically gathers methane gas generated by rotting food and burns that methane to generate electricity – it’s just a step up from the wags who complained about cows emitting methane and urged that they be enclosed and the gas trapped and used as an “alternative” fuel. But more about the quality of that process later.

According to the Register Guard:

“The JCB plant cost a total of $17.5 million, of which at least $9.4 million is coming from government agencies or utilities.”

And there is the first rub. Taxpayer money is being spent to start a business that must be continuously subsidized for the foreseeable future. In a free market it is a losing proposition. It like solar energy and wind generated energy cannot come anywhere close to competing with traditional sources of energy of which is there an overabundant supply. What possesses Oregon’s liberal Democrats to sublimate common sense to champion one loser after another. Oh, that’s right – it’s the use of someone else’s money without accountability for the outcome. That’s why they have spent millions on solar energy in the Willamette Valley where it rains for eight months a year; that’s why they have spent billions on light rail when buses would have been more economical and more flexible; that’s why they have spent millions on wind energy in Eastern Oregon but have resisted construction of the power lines necessary to bring the power to the Willamette Valley; and that’s why they won’t put fluoride in Portland’s water but they will put marijuana in children’s hands.

But I digress albeit with good purpose.

Next the Register Guard states:

“The plant received a $4.35 million federal grant, $1.7 million in federal stimulus money, and a $1.35 million business energy tax credit — or BETC — from Oregon. Also, it will receive a $2 million cash incentive from the Energy Trust of Oregon, which distributes the proceeds of the ‘public-­purpose’ charge that Portland General Electric customers pay.

“JC-Biomethane has also signed a 10-year contract with the utility-­funded Climate Trust of Oregon, which uses utility money to fund projects that compensate for power plants that exceed Oregon’s carbon dioxide emission limits. JCB is eligible for this so-called “carbon offset” money because its biogas process captures methane that would otherwise be released into the atmosphere, the Climate Trust said.”

So there is the second rub. In addition to the state and federal taxpayer money, this project gets money from mandatory fees imposed by the legislature and the Oregon Public Utility Commission on the state’s electric utilities who in turn pass it on to the captive ratepayers of Oregon. In the first instance it is a direct mandatory “public purpose” charge for ratepayers. And then there is the mandatory charge to utilities to fund the Climate Trust of Oregon. And finally, there is the requirement imposed by the Oregon Public Utility Commission and the state legislature to purchase the electricity that is generated by this plant even though the cost of that electricity significantly exceeds the cost of existing and readily available traditional sources. But for government interference, the developers of this plant would have been laughed out of the office of every bank and investment firm in the state.

Next the Register Guard notes:

“JCB has countersued Foor [its former CEO]to ensure JCB would secure the proceeds of a state business energy tax credit for the project that Foor had sold for almost $1 million.”

* * *

Meanwhile, JCB sued Foor in November to lay claim to almost $1 million in proceeds Foor received when he sold the state tax credit to Lithia Motors in Springfield earlier this year.

Under state law, energy ventures that qualify for and receive tax credits for renewable energy projects can sell the credits to any business with a state tax liability. It’s the state’s way of trying to encourage renewable energy. In this case, Foor sold JCB’s $1.35 million tax credit to Lithia for around $1 million. Lithia can use the tax credit to reduce its Oregon income tax liabilities. [Bracketed words added]

This is the third rub. The parties are fighting over the proceeds of yet another government program. In this instance a tax credit is granted to developers of these government financed projects. The developers can sell the tax credit for cash to third parties who must have such credits to avoid penalties imposed by the government for other environmental programs. There are two huge problems with this. First, the government creates an asset for private parties by using taxpayer money and it is made even worse that the tax credit goes to an entity that will never provide a positive economic impact. Second, the credit can be transferred to a third party so that the third party can avoid a penalty for a regulation the government creates – the regulation obviously is not meant to actually improve the environment but to establish a basis for the transfer of an asset artificially created by the government.

And finally, the Register Guard states:

“The company appears to have suffered start-up troubles.

“The plant began operating a year behind schedule. It was originally envisioned to use ‘pre-­consumer’ food waste — as most other similar biogas plants do. Pre-consumer waste is any waste generated in the manufacturing and production of food prior to the item being sold in grocery stores or served in restaurants. An example would be waste produced by a food manufacturer.

“But when a tax credit that required the JCB plant to use pre-consumer food waste expired, the company pivoted to using ‘post-consumer’ food waste, according to an October article in Renewable Energy World magazine. Post-consumer food waste includes spoiled produce that has been displayed in a grocery store, for example, or food scraps and leftovers from restaurants or school cafeterias.

“That change caused extra construction costs for the plant, Foor said in the article.

“Then, the plant faced immediate difficulties with the tons of post-consumer food waste it was receiving from Metro, the Portland area’s regional governing body. The waste contained too much non-food material, such as compostable cardboard plates and cutlery, paper napkins and biodegradable cups. JCB workers had to pick out non-food materials and dispose of them in a landfill, Foor told The Oregonian newspaper in April.

“Because the JCB plant is the main recipient of Metro’s commercial compost waste, Metro is trying to fix the problem by changing its commercial composting rules and allowing only genuine food waste in its bins. The new restrictions kick in March and will affect an estimated 1,000 Portland restaurants, grocery stores and schools.”

And that is the next rub. The government changed rules on Portland businesses for no purposes other than to benefit a technology in which the government is substantially invested. The cost of such rule changes will be passed on to consumers (taxpayers) providing yet another indirect subsidy for a business that, but for the government support, would have never begun.

Portland recently changed the rules for households requiring them to separate “wet garbage” (food stuffs) from the other refuge causing garages (where it must be stored) to smell like a “two-holer” outhouses after a Saturday night binge. You might now wonder whether this had anything to do with environmental concerns or is just another burden imposed on the population to subsidize the left’s “Green Dream.”

What a waste.