Economic incentives are mechanisms that provide financial rewards for reducing environmental impacts or penalties for increasing them. Some economic incentives provided by the Department of Resources Recycling and Recovery (CalRecycle) includes grants to address household hazardous waste, used oil, and tires. In addition, CalRecycle’s Recycling Market Development Zone Loan Program combines recycling with economic development to fuel new businesses, expand existing ones, create jobs, and divert waste from landfills. However, CalRecycle has no dedicated funding to provide grants and other incentives for the vast majority (i.e., approximately 90 percent) of the disposal stream, which is composed of organics and materials such as plastics and construction and demolition debris.
- June 2009 Economic Incentives Workshop
- Financial Economic Incentives
- Funding: Grants, Loans, and Bonds
- Tax Credits
- Tradable Permits and Tariff Contracts
- Tipping Fees
June 2009 Economic Incentives Workshop
An Economics Incentives Workshop held in June 2009 included discussion about economic incentives that could be used to assist jurisdictions and businesses in diverting material from the landfill and using more organic and recyclable materials. This information is helping CalRecycle continue to achieve strategic directives regarding organic materials and development of additional processing and manufacturing infrastructure in the state.
Financial Economic Incentives
The following categories are financial economic incentives and disincentives that are either currently applied or could be applied to increase diversion of organics and other recyclable materials. These categories focus on incentives and programs that are not offered by the CalRecycle or the Department of Conservation.
Funding: Grants, Loans, and Bonds
Grants are a sum of non-refunded money given by a government agency for specific purpose.
- California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007
- Process Energy—Agriculture Loan Solicitation
- American Recovery and Reinvestment Act of 2009 (H.R. 1)
- Rural Energy for America Program (REAP)
Loans are money borrowed from a government agency.
- California Small Business Loan Guarantee Program (SBLGP) (PDF, 1 MB)
- California Capital Access Program (CalCAP)
Bonds are certificates issued by a government or public company promising to repay money at a fixed rate and specified time.
- California Pollution Control Financing Authority (CPCFA)
- California Industrial Development Financing Advisory Commission (CIDFAC)
- California Infrastructure and Economic Development Bank (I-Bank)
Tax Credits reduce business tax liability.
- Research and Development (R&D) Credit (PDF, 810 KB)
- Federal Biogas Production Incentive Act of 2009 (S. 306, H.R. 1158)
- Federal Ethanol Tax Credit (S. 622)
- Federal Biodiesel Tax Credit
- Federal Renewable Energy Production Tax Credit (H.R. 907)
- Economic Development Areas
Tradable Permits and Tariff Contracts
Tradable Permits are market-oriented environmental policy that sets a ceiling on the quantity of pollution allowed, and give marketable or tradable permits to emit pollutants up to a cap.
- Cap-And-Trade System
- Climate Action Reserve (CAR)
- Chicago Climate Exchange (CCX)
- Chicago Climate Exchange (CCX) Offsets Program
Tariff Contracts are guaranteed contracts that provide predictable revenue streams over a specified term, with specified operating conditions.
- California Feed-In Tariffs
- Federal Feed-In Tariff
- Local Disposal Tipping Fees provide funding for diversion programs administered by CalRecycle and local jurisdictions. Tipping fees are generally used to fund daily operational and closure costs of a landfill, but may also be used to fund recycling programs, litter abatement, public education efforts, and other programs. A local tipping fee can act as an incentive to encourage certain practices or disincentive to discourage other practices. For example, the disposal tipping fee for compostable organic materials can be set at a much higher rate than that set by the composting facility. This would act as an incentive for haulers to bring these materials to the compost facility rather than the landfill.
- Integrated Waste Management Account Disposal Tipping Fee. CalRecycle’s current maximum tipping fee of $1.40 per ton took effect on July 1, 2001. State law [AB 1220 (Eastin) Chapter 656, Statutes of 1993] caps the tipping fee at this level. The current fee of $1.40 per ton is so low as to offer little disincentive to landfilling. In the past, attempts to raise the tipping fee have been defeated (e.g., AB 1610, Nunez). In the event the tipping fee is increased, one option for these funds is developing a grant program that would provide new incentives for diversion activities.
- Differential Fee structures (PDF, 189 KB) can be used to incentivize products and manufacturing processes.