Washington (Platts)--11Sep2009/631 pm EDT/2231 GMT

Coalitions of power producers, carbon offset developers and solid waste management groups this week asked the US Senate to allow the capture of landfill gas and other fugitive methane emissions to count as carbon offsets, reversing language in a House of Representatives' bill that would make these emissions subject to regulation.

In a letter released late Thursday, the groups asked that Senate Environment and Public Works Committee Chair Barbara Boxer, Democrat-California, and EPW's top Republican, James Inhofe of Oklahoma, craft language that allows landfills to participate in the offset arena and contribute to the pool of offsets seen as critical to cost containment for emitters subject to a national cap-and-trade program.

Approved in June, the House cap-and-trade bill (H.R. 2454) would require the US Environmental Protection Agency to impose command-and-control performance standards on fugitive methane emission sources such as coal mines, natural gas systems and landfills. The Senate is set to release its bill language this month.

"These sectors have been expected to be a critical source of offset supply -- and thereby cost containment -- during the early years of the climate program when other emission reduction options may be limited," the letter said. The groups noted that the average landfill in a pool of currently approximately 200 without gas collection systems could produce by itself 8 million mt CO2 equivalent of offsets annually.

The House bill sets a 2 billion metric-ton CO2e annual cap on offsets, split equally between domestic and international offsets unless the domestic level cannot be reached. If not, international offsets can account for up to 1.5 billion mt CO2e.

Also in the letter, the groups said that the performance standards would impose "very high costs on small landfills, many of which are operated by financially stressed municipalities facing severe budget constraints." They pointed out the standards would remove the opportunity for landfills to pay for expensive emission capture systems by selling offsets, noting that a typical methane capture installation costs between $500,000 and $1.5 million. --Christine Cordner, christine_cordner@platts.com