WASHINGTON — Congress should phase out annual virgin-materials subsidies totaling $2.6 billion because they put recycling at a disadvantage, according to a report released April 8.
The ``Welfare for Waste'' report, released by a coalition of recyclers, environmentalists and taxpayer groups, said the subsidies total 15 percent of the value of all recycled materials, inadvertently hurting recycling by making virgin materials cheaper.
The report was written by Taxpayers for Common Sense in Washington; the Athens, Ga.-based GrassRoots Recycling Network; and Friends of the Earth and the Materials Efficiency Project, both in Washington.
The report detailed $1.1 billion in annual subsidies to the oil industry, and said making virgin plastic can consume eight times the energy of recycling. But its authors said it is hard to pinpoint how much plastics recycling suffers from subsidies to its feedstocks, compared with other economic and political pressures.
``Lots of things affect oil prices,'' said Ralph DeGennaro, TCS executive director. ``We are not claiming that these subsidies are the only thing that affects plastics.''
A plastics industry trade association official said resin prices are more heavily influenced by production cycles, supply and demand. World oil volume also probably plays a larger role than U.S. subsidies, the official said.
The chief legislative priority for TCS and GRRN from the report will be eliminating timber subsidies, DeGennaro said. The report said timber subsidies total $811 million a year from tax breaks, cheap government timber and road construction.
``There is a subsidy to timber companies to come into national forests and cut our trees at below cost,'' he said.
A spokesman for the American Forest and Paper Association in Washington said the government does not subsidize the timber industry, and he said that less than 3 percent of national forest timber is used for making paper.
The report also recommended phasing out tax-exempt bonds used to pay for landfills and incinerators because they give those facilities access to much cheaper capital than most recyclers. Those bonds, which finance 70 percent of all solid waste facilities, pay for incinerators, which compete for the same materials that can be recycled, said Brenda Platt, a GRRN spokeswoman.
``Some of this is a little more subtle,'' DeGennaro said. ``It gradually changes where investment is put when people are thinking 20 years ahead.''
The most direct subsidy is electricity for aluminum smelters, DeGennaro said. The smelters pay about 2.26 cents per kilowatt hour for electricity from a Department of Energy agency, the Bonneville Power Administration, a subsidized rate that costs taxpayers $200 million a year, the report said.