How to Turn Blighted Property into Community Assets through Re-powering

by | Jul 6, 2010

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The Environmental Protection Agency (EPA) is taking recycling to a new level with its RE-Powering America’s Contaminated Lands and Mines initiative. Cities, businesses, developers, and investors stand to benefit greatly if they are prepared.

Since its establishment in the 1990s, EPA’s “Brownfields” land revitalization program has enabled states, communities, and other stakeholders to clean up and sustainably reuse many contaminated properties.  RE-Powering links Brownfields and other environmentally impaired properties to the burgeoning renewable energy movement. Now, with America’s love affair with renewable energy in full bloom, this new program offers transformative possibilities.

Left untouched, contaminated sites create public health and safety risks, drag down property values, drain the tax base, and tend to attract criminal or other undesirable activity. While many sites can be cleaned up and reused as residential, commercial, or conventional industrial facilities, blighted and abandoned sites that are not readily put to these uses may be perfectly suited for solar arrays, wind farms, geothermal installations, or manufacturing centers for renewable energy components. According to one high-ranking political appointee, “RE-Powering is not just win-win; it’s a triple win because communities are fully engaged, the economy flourishes with new jobs and renewed hope, while forgotten or abandoned eyesores are given new life.”

Some early success stories illustrate this point. For example, a wind farm on previously contaminated industrial property generates enough renewable energy to power 9,000 homes. A closed inner-city incinerator and landfill site now houses the country’s largest urban solar energy facility, helping the state to meet its renewable energy portfolio requirements. A former steel mill now manufactures solar panels and wind turbine components, employing 450 people, while an abandoned mining site now supports a new micro hydroelectric plant, reducing the cost of treating contaminated water by 40 percent. Finally, a former municipal landfill uses microturbines to burn waste gases, supplying 80% of the power needs for an onsite leachate treatment plant at a savings of $400,000 per year.

The program’s potential turnaround of former wastelands in cities and states across the country, in conjunction with the positive contribution to “green” energy, jobs, and revenue, has sparked interest among municipal and state government authorities, corporate landowners, developers and investors, environmental groups, and environmental justice advocates.

Use of these lands for renewable energy production has many advantages. For instance, Brownfields usually have built-in infrastructure such as existing electrical transmission lines, roads, and sewers, and are zoned for development. Additionally, transaction costs are often lower than for pristine property, known as greenfields, due to the relative ease of acquiring large swaths of land from one or few owners.

Further, given the limited usefulness of these properties, they are cheaper, and their undesirability for other purposes likely means they are in locations where the community will not oppose their productive use for clean, high-tech applications like renewable energy production. These projects also bring employment in manufacturing, distribution, and installation of solar, wind, geothermal, and biomass components. Plus, RE-Powering offers business opportunities for property owners, developers, investors, and lenders.

Situating renewable energy development on a brownfield or old mine property may also give a project an edge in securing governmental financial incentives. For example, reusing an existing facility can make it simpler and faster to complete the necessary review under the National Environmental Policy Act (NEPA), a prerequisite for the Department of Energy’s loan guarantee programs.  State and community support can be helpful in securing certification for renewable energy tax credits.

Last month, Senate bill S.1642 was introduced by Sen. Frank Lautenberg (D-N.J.). The bill seeks to encourage utilities to build renewable energy projects on former industrial sites. It would provide triple credits toward meeting a national renewable electricity standard (RES) for developers that build wind, solar and geothermal facilities on contaminated lands and mines. This action is a bell-weather for the opportunities that await savvy investors and developers.

To be sure, these deals are complex, requiring the successful collaboration of property owners, energy companies, developers, and investors, along with the expertise of tax, environmental, energy, real estate, and contract experts. But on a positive note, the federal government is firmly behind this initiative and the word is starting to spread.

Over the past few months, EPA has actively solicited feedback from diverse business perspectives concerning barriers, as well as potential incentives that might promote fuller use of EPA-tracked lands for RE-Powering redevelopment. The next step is a report with recommendations on what EPA and its federal and state partners can do to facilitate these projects. They are looking at a diverse menu of options, including streamlining the regulatory process, education and outreach to local governments, and other administrative improvements. There have also been calls for the agency to issue guidance on how to deal with common issues and information on best practices. Many projects are moving ahead already, but EPA’s focused and positive interest can propel a deal over the finish line.

At a time when the investment community is starting to reassert itself, opportunities flowing from the RE-Powering initiative offer the desirable combination of government backing, “green” social values, and lower costs. In other words, recycling contaminated lands for renewable, sustainable energy makes good business sense.

Marjorie Buckholtz, President of Environmental Consulting Solutions in Potomac, Maryland, was EPA’s first National Brownfields Coordinator and the outside facilitator of EPA’s RE-Powering stakeholders’ dialogues in 2009 and 2010.  Jane Luxton, partner in the Washington, DC office of Pepper Hamilton LLP, and Chair of its Sustainability, Clean Tech and Climate Change Team, practices in the area of environmental and energy law and was an invited participant in the 2009 RE-Powering session at the national brownfields conference; she served as General Counsel of the National Oceanic and Atmospheric Administration from 2007-09.

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