Aug 27 - Assembly Passes Sales Tax Exemption for Recycling, Composting Equipment

The California Assembly today approved a sales tax exemption on equipment that California companies can use to help build a closed loop economy, using recycled and composted materials to create new products and jobs in the state. AB 199, authored by Assembly Member Susan Eggman (D-Stockton) and sponsored by Californians Against Waste, now goes to the Senate.

The sales tax exemption applies to equipment used for recycling and composting (and anaerobic digestion), as well as equipment that utilizes the recovered materials in the manufacturing of new products. CalRecycle estimates that every year California exports $8 billion worth of plastics, paper and other recyclable materials, only to have much of that material shipped back to the state as new products.

Creating opportunities for in-state companies to incorporate more of these materials into new products manufactured in California was a major focus of a select committee hearing last week on how the state can achieve its goal of having a 75 percent recycling rate by 2020.

“There’s no reason California shouldn’t be reaping the rewards of having generated all that material and manufacturing products here within our own state and reaping those economic and environmental benefits,” said Scott Smithline, Director of CalRecycle.

Assembly Member Susan Eggman

According to CalRecycle, meeting the state’s recycling goals with in-state infrastructure could generate an additional 110,000 California jobs, on top of the 125,000 people already employed in recycling.

“Manufacturing and processing capabilities and investment in those areas will draw the industry and create a more sustainable industry in which we operate,” explained Rod Rougelot, President of RePlanet. RePlanet is the state’s largest company offering drop-off recycling locations for consumers and uses much of that material in the production of new food containers.

However, Rougelot explained that, “the number one issue that we face today is the break down in commodity prices.” Cheap global oil prices have made it difficult for the recycling industry to compete with virgin materials, the extraction of which causes significant greenhouse gas emissions and environmental degradation.

In 2010, the passage of SB 71 authorized the California Alternative Energy and Advanced Transportation Financing Authority to approve a sales and use tax exemption for projects that would encourage the use of alternative energies. AB 199 would expand the exemption to the recycling sector, which has been able to achieve significant reductions in greenhouse gas emissions by limiting the extraction of virgin materials. Composting achieves significant greenhouse gas reductions by keeping organic waste out of the anaerobic landfills conditions that create methane. Additionally, the application of compost to degraded soil has been demonstrated to help absorb carbon from the atmosphere.

Read more about the compost-carbon connection and California’s recycling economy in our recap of the hearing here, and stay tuned for more updates on AB 199.