The Need for State and Local Initiative

American citizens are rich. They own governments that are “of the people, by the people and for the people”. Through them as trustee, citizens own land, water, and air as well as public infrastructure such as transportation, water and energy management assets and land parcels with improvements. Arguably, they even have an earned interest in the internet. So there is an obvious need for change when such wealthy citizens must stand in food lines, die in overcrowded emergency rooms, watch homes and personal property lost to fires, floods, tornadoes and hurricanes, and suffer loss of businesses and jobs.

The private sector can provide capital and expertise to:

(1) plan;

(2) finance;

(3) obtain regulatory approvals;

(4) mitigate and insure against risk; and then

(5) design, build and operate works necessary for accomplishing community goals.

Thus, with minimal investment and minimal risk, State and local governments can gain significant value through adoption of community goals and related policies which create investment opportunities for groups like pension funds. If properly executed, capture of such value can:

(1) provide an accelerated path to economic recovery; and

(2) transform ordinary citizens into stakeholders for whom their equity stake in the socio-economic system earns for them a sustainable basic income.

Why Local Leadership?

State and local governments are closest to citizens and are being urgently petitioned for help. However, business closure and loss of income seriously impact revenue, forcing them to seek federal help. Federal assistance comes with red tape and increasing federalism tied to conditions on fund availability. Feds also face a rapidly increasing budget deficit as well as polarization grid lock. Such a situation creates urgent need for independent state and local leadership.

What Can be Done?

Pursue a State supported local initiative based on the proven logic behind California’s Carbon Capture Initiative which generated $2.29 billion for the State economy while adding some 10,500 jobs in Fiscal Year 2019, with a cumulative contribution of $14.5 billion in economic upside over the life of the program. The author has also suggested capturing potential value from water by change from Western State “use or loose it” based rights to limited property-based, tradable rights. For the Colorado River as an example, the market value of a right recently traded within a very limited market was $65,857 per acre foot, which at a return of 3% would value water delivery for a year at nearly $2,000 per acre foot. This is a dramatic increase compared to the value realized from many such historic locked-in “first-in time, first in right” use-right applications. With a more modest valuation of $1,000 per acre foot, the 15-million-acre foot yield of the Colorado River would create some $15 billion in liquid assets annually, – enough to significantly aid economic recovery in the 7-state region served by the river. Such a transition could also transform ordinary citizens into holders of valuable water equities.

As another example, the following section will consider repurposing municipal solid wastes into a carbon neutral feedstock. Waste repurposing could create value, address critical local needs, provide jobs, and reduce present budget outlays. This could also help address social unrest by making every citizen an equity stakeholder in the national economic engine.

Suggested Approach

Employ a Smart-Community formula:

(1) adopt a vision;

(2) transform the “vision” into a set of desired outcomes;

(3) use a request for information (RFI), followed by a request for proposal (RFP) to find and engage a private partner to lead pursuit of each outcome or set of related outcomes;

(4) work with the partner to develop an action plan with milestones, budget and schedule for outcome realization;

(5) upon joint adoption of the action plan, authorize the partner to proceed with implementation and

(6) utilize a change management protocol to jointly monitor progress as compared to expectations. Then plan and implement corrective action as necessary to keep the process on track toward intended outcomes.

Basis for Change

Finance: The Digest recently hosted a webinar on finance, which indicated that there is some $11.3 trillion available from sources which consider environmental, social and governance (ESG) risks. The webinar also included a presentation on sustainability accounting. This webinar documented both the availability of capital for sustainable projects and interest from sources such as pension funds – which also represent a mechanism for providing equity to ordinary citizens.

Also note: The Chicago futures exchange recently began trading water futures contracts linked to water prices in California. Rostin Behnam, a Commissioner with the Commodity Futures Trading Commission, indicated that water and similar futures will become essential in helping businesses and investors manage increasingly dramatic risks of climate change.

Goals: Begin with a Community Vision translated into goals and action plans. Much emphasis has been on switching transportation fuels from fossil to recycled carbon due to the large impact on atmospheric carbon. However, as opposed to fixing historic systems, to meet future needs and gain ESG certification, this process needs to carefully consider what future transportation needs will be. For example: “Will virtual communications dimmish business travel?” “Will work from home diminish commuting?” “Will consumers rapidly adopt electric vehicles?” “Will shipping move through regional distribution centers, with goods flowing directly from them to consumers?” Another set of questions are those such as: “If water prices rise toward $1,000 per acre foot, will irrigated carbon-to-fuel feedstocks remain viable?” Planned initiatives need to consider such questions. Then, should hindsight demonstrate that we have guessed wrong on some of those answers, we must stand ready to adjust our plans and investments accordingly.

Technology:  Demonstrated systems are available for repurposing various fractions of municipal solid wastes (MSW) into energy, building materials, food, and products including plastic, paint additives, filter material, fertilizer, soil additives and other valuable products. In major metropolitan areas, clusters of such processes could economically repurpose the entire waste stream. With total repurposing, landfills could also then be transformed into valuable commercial, industrial, or public-use sites with an upside in value and greater acceptability as a local asset.

Proponents of such repurposing technologies have demonstrated adequate returns for investment in accordance with ESG certification criteria as well as compliance with applicable regulatory requirements. The value of this concept is that it allows small-scale installations to be fitted to situations in which local supply meets proximate demand. This optimizes market value by minimizing transportation and distribution issues. Smaller scale also means that a community partnership can network sets of like installations to achieve scale by numbering up; or mix differing technologies across the metro area to meet diverse community goals. In some cases, a larger single-purpose facility may be the right choice. Examples are used to illustrate these alternative approaches.

MSW Repurposing Examples

MSW to carbon neutral fuel. A recent BioFuels Webinar highlighted Oberon’s process for converting methane into di-methyl either (DME). (DigestConnect episode on renewable DME fuels). The webinar noted that DME can be blended with propane or utilized as a direct replacement for diesel. Carbon bearing fractions of MSW can be converted to methane by either anaerobic digestion or oxygen free thermal process. Both waste conversion and DME production can be scaled to match supply with demand to permit “shopping the metro area” for potential markets. Two decades ago, the author used this approach to identify several fleet operations interested in switching to clean fuel. Today these would be ideal locations for either Diesel to DME or a gasoline to a DME/propane blend. Recent emphasis on a circular carbon economy should provide significantly more widespread interest among fleet operators, sources of ESG certified financing, and regulators.

Another example would be provision of DME as a substitute for fuel for a highway-oriented distribution center, such as Inland Port San Antonio. The author served as strategic planner for conversion of Kelly AFB to that installation which has become a nexus for managing freight originating in the maquiladora plants in Mexico and also switching freight flowing east or west along the I10 corridor and north or south along the I35 corridor. An initial target would likely be DME fueling stations at San Antonio and Monterey, Mexico. It is likely that a large truck freight operator, a fuel supplier and at least one municipal support contractor could be attracted as Port partners for such an MSW to DME fuel initiative.

MSW to Electricity: As with the DME example, MSW derived methane is ideal for small waste to energy plant development. The author reviewed one case where a company purposed to scavenge load centers by marketing waste to energy units directly to large users of electricity. While the proposed approach was viable, it would have caused issues for the local electricity supplier. A better strategy would be for that local supplier to scan its own distribution system for such opportunities. Such a program could meet ever-growing power demand at a much lower cost than traditional means of adding centralized generation.

A Multi-function MSW Repurposing Center: It is also possible to form an energy-independent waste repurposing center designed to satisfy selected public goals. As an alternative, repurposing units could be spread into networked clusters with each unit situated to minimize supply costs and satisfy nearby demands. An example might be use of one type of small installation to satisfy nearby electricity demand centers while another type provided DME to meet a local demand for fuel. Note, also that CO₂ from these and other sources could be utilized in a greenhouse or a local algae production unit to create food or fertilizer (for the latter, see: BioFuels Digest, October 2, 2020, Carbon Farming Algae Biofertilizer).

The cost of processing and value of products vary considerably with location, mix of processing components, and mix of products. However, the “vision, partner, plan, and execution strategy” outlined can entice the private sector to determine potential net value and offer a partnering relationship. There are several large, qualified full-service organizations ready to pursue such opportunities, which demonstrates that the private sector is looking to position for a role in the coming circular economy.

A Single-Purposing MSW Repurposing Center: An example might be a case where a large foreign plastics manufacturer might be looking for an opportunity to position in the US market. Carbon from MSW can be repurposed into ethylene. The result would be a yield of feedstock sufficient to support a large plastic production operation. Such a situation is known to exist, so the missing pieces are an interested community and a focused team building initiative. The result could be the “first of a kind” plastic made entirely from non-fossil carbon.

Conclusion

With minimal investment, minimal risk and State support, local governments can create investment opportunities for groups like pension funds. If properly executed, such initiatives can capture value sufficient to: (1) provide an accelerated path to economic recovery; and (2) transform ordinary citizens into stakeholders in the socio-economic system sufficient to earn them a sustainable basic income.