The Recycling Payoff In Energy-Tax Plan

IT looks now as if Bill Clinton's proposed tax on the energy content of fuels - the so-called Btu tax - will be lost in the legislative meat-grinder. In its place is likely to be a scaled-back levy more pleasing to affected industries and lawmakers from energy-producing states.

It's too bad, because the original proposal had considerable economic and environmental merit. It stimulated progress in the direction that some businesses, institutions, entrepreneurs, and communities already are headed.

This is clear in two recent studies by the Institute for Local Self-Reliance, a nonprofit research and educational organization with offices in Minneapolis, Philadelphia, and Washington. One study is titled "Beating the BTU Tax: The 6 Percent Solution," and the other is called "Saving BTUs Through Recycling: How Manufacturers Can Offset the Proposed Energy Tax."

Under the original Clinton proposal, oil would be taxed at just under 6-cents-per-million British thermal units (Btus), a measure of energy. Other traditional fuels would be taxed at about half that rate, and renewable sources (except for hydropower) would be tax-exempt. The average tax rate would be 6 percent, hence the first report's title.

Using government, industry, and academic figures, Institute for Local Self-Reliance analysts (one-third of whom are engineers) concluded that almost all farmers, manufacturers, homeowners, and building managers could reduce energy consumption by 6 percent "with investments that quickly pay for themselves."

We're not talking here about far-out or even highly sophisticated measures, but rather low-tech devices and relatively simple practices that already have successful track records.

In agriculture, for example, thousands of farmers have adopted low-tillage or no-till practices under government programs to prevent soil erosion. This also saves several gallons of diesel fuel per acre, particularly for energy-intensive crops like corn.

An Indiana program begun in 1989 shows farmers using no-till methods increasing their net per-acre income by $6.35 (more than $4,000 for a 700-acre farm), and the economic payback is immediate.

In key primary manufacturing sectors (aluminum, steel, glass, and paper), achievable increases in recycling using current technologies would offset a Btu tax.

In glass, for example, the industry average is 30 percent recycled content. The Owens-Brockway glass plant in Portland, Ore., however, uses an average scrap content of 54 percent, which saves energy because cullet (crushed scrap glass) melts at a lower temperature than raw ingredients.

If the glass industry were to achieve those figures - and there's no reason to think it couldn't do even better - considerable energy costs could be avoided. In steel, increasing recycling by 10 percent would offset the Btu tax of $4.50 a ton. Raising the average level of aluminum recycling from one-third to 45 percent would do the same thing. (A Golden Aluminum Company state-of-the-art plant in San Antonio already uses 70 percent scrap.)

Recycling benefits go beyond energy savings. In paper-making, for example, using recycled fiber not only requires 60 percent less energy but also consumes half the water. And it reduces air pollution by 74 percent and water pollution by 35 percent.

Energy efficiency in residential and commercial buildings also could more than offset a Btu tax. The Environmental Protection Agency's "Green Lights" program of conversion to more efficient lights in office buildings has been shown to reduce lighting energy consumption 47 to 83 percent with a payback of three years or less. High-efficiency rehabbing of multifamily dwellings in Illinois involved an investment increase of 5 percent but reduced energy costs 31 to 75 percent.

The main argument against a Btu tax has been economic. But once the cost of investing in offsetting technologies and practices had been paid back in a few years, there would be that much more money to invest in new jobs.

As the Institute for Local Self-Reliance accurately concludes: "The BTU tax is not a threat to the economy. It is a challenge to our ingenuity."