The R&D Tax Credit Aspects of Urban Recycling
There has been a trend of increasing U.S.
urbanization over the past few years. The movement of
Americans to metropolitan areas escalated when the economy
began to improve in 2010. 2013 Data from the U.S. Census
Bureau shows that there were 2.3 million more people living in
cities that year compared to 2012. Altogether, about 270
million people were living in cities and surrounding areas in
With urbanization comes an increase in urban waste. The United
States is the world’s largest creator of waste, sending around
240 million tons of trash to landfills each year. Many
people and businesses in urban areas are beginning to discover
the benefits of recycling.
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 19, 2014 President
Obama signed the bill extending the R&D Tax Credit for the
2014 tax year.
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Why Do Urban Areas
Need to Recycle?
The urban population growth has led to
additional garbage which requires even more handling. In 2013,
Americans recycled and composted over 87 million tons of
waste, yet produced around 255 million tons of municipal solid
waste. The most common types of solid waste in 2013 consisted
of packaging, food, grass clippings, apparel, furniture,
computers, tires, and refrigerators.
This waste takes up space in landfills which will eventually
run out of space. A major problem seen throughout the U.S. is
the 80% decrease in possible sites for landfills. Garbage will
always be produced and developing innovative recycling
strategies can help improve the garbage handling process. By
implementing new technologies and initiatives, urban areas can
learn to make an even greater impact on recycling and
Increased recycling efforts can lower the trash sent to
landfills, which minimizes costs. Besides reducing the
amount of waste, emissions are also reduced since fewer
garbage trucks are needed.
Compared to landfills, the process of recycling decreases the
amount of greenhouse gas (GHG) emissions, which leads to
global warming. Recycling reduces carbon dioxide by
around 186 million metric tons per year. Recycling efforts
also benefit residents and commercial businesses economically
The Zero Waste
Many metropolitan cities are moving towards
the concept of Zero Waste which strives to reduce the amount
of waste going to landfills and in return, increase the
methods of recycling and composting. The City of San Francisco
has already implemented the Zero Waste plan and is
successfully moving closer to their goal of reaching zero
waste by 2020. The Zero Waste plan is enforced by a San
Francisco mandate that requires residents and companies to
recycle and compost. The city has conducted several case
studies which show how beneficial the actions of recycling and
composting are for companies. Businesses, hotels, and
restaurants have put these practices into action and are
reaping the benefits of financial savings. The success
of the Zero Waste initiative in San Francisco will only
increase recycling rates in the future.
In addition to San Francisco, New York City Mayor Bill de
Blasio recently stated that the city will also implement a
Zero Waste plan. The city’s goal is a 90% reduction in the
amount of trash produced by the year 2030. Historically, the
city’s garbage has been sent to upstate New York or out of
state due to lack of closer options. Reducing the
transportation of waste alone could save the city more than
$350 million annually.
order to make the recycling process more accessible, by 2020,
residential buildings will implement a single-stream recycling
plan using one recycling bin instead of the two type stream
used presently. The program for commercial buildings
would be a model of the one used for residential buildings.
Companies developing new technologies to improve recycling
processes are eligible for federal and state R&D tax
Another example is the recently approved Connecticut Mattress
Stewardship Plan, which is the first statewide mattress
recycling program. The program offers residents free drop off
of unwanted mattresses at designated recycling sites. Mattress
retailers, hotels, military facilities, universities and
healthcare facilities are getting involved in the program and
other states such as California and Rhode Island are looking
to develop similar programs in 2016. Recycling mattresses
contributes to the Zero Waste concept by diverting mattresses
from landfills leaving more space for other garbage.
New York City Takes on
Mayor Bill de Blasio’s OneNYC plan
proposal for businesses to separate food waste (and recycle
it) from regular garbage aims to help reduce the amount of
solid waste that is produced. The law would allow businesses
to the option of collection by private hauler, transport the
waste themselves, or compost on site. Hotels, arenas, and
large scale restaurants would be required to compost, which
would save more than 1 million tons of food from going to
Specifically, restaurants in hotels with more than 150 rooms,
vendors in stadiums with seating of 15,000 people or more,
food manufacturers with at least 25,000 square feet, and
wholesalers with at least 20,000 square feet will be mandated
to divert organic waste from the trash. This proposal
would greatly influence the success of the NYC’s Zero Waste
program because of large company participation.
Another aspect of the OneNYC plan includes the a mandate that
all of the 180 million square feet of New York City Housing
Authority (NYCHA) developments implement recycling by 2016.
This aspect is a smaller part of the plan, which seeks to
improve NYC and make it a cleaner and greener place to live.
NYCHA stated that they will invest $15 million to build
recycling centers and train the public on how to recycle
The city intends to encourage residents
to get involved and teach them what materials need to be
recycled. Upon implementation, this plan will further
advance the city’s goal to increase recycling in New York
Companies in the growing recycling industry need updated
technology and methods to support the amount of waste being
diverted from landfills. New York State has a Qualified
Emerging Technology Company (QETC) Capital Tax Credit
that can be obtained by businesses making qualified
investments in a certified emerging technology company. There
are two options to receive a QETC Capital Tax Credit.
The QETC Capital Tax Credit is a great option for New York
State investors to attain if they choose to invest in a New
York certified emerging technology company.
- A four year holding period with a
maximum credit of $150,000 for a credit calculated at a
rate of 10% of qualified investments.
- A nine year holding period with a
maximum credit of $300,000 for a credit calculated at a
rate of 20% of qualified investments.
Composting makes up one of the most significant parts of the
Zero Waste plan. Of all the garbage discarded, food makes up
around 15% of the municipal solid waste.iii Composting
consists of the recycling of food scraps into a nutrient rich
soil through bacterial decomposition. Food scrap and recycling
programs mostly use the process of windrow-based composting.
Windrow-based composting consists of a controlled aerobic
decomposition process by putting organic materials in long
rows (windrows) and bringing in oxygen by turning or forcing
air through the windrows. Other viable options for
composting consist of in-vessel aerobic composting and
anaerobic digestion. Both of these techniques require vessels
or fully closed containers to have a successful compost.
Going further than just recycling organic
materials, using certain processes, composting can lead to
renewable energy which is just one of the many benefits of
composting. A multitude of locations throughout the U.S. have
done feasibility studies looking at the function of anaerobic
digestion of organic materials from municipal waste. The
anaerobic digestion system allows for the production of
energy, such as electricity, heat and natural gas, by using
the methane gas that is created during the composting
procedure. A report prepared by New York City on new and
rising technologies for municipal solid waste led to the
discovery that anaerobic digestion and biogas energy
generation technologies were less expensive on a commercial
scale than the current practices for getting rid of
materials. The study found that anaerobic digesters
presented a better environmental performance than
waste-to-energy facilities, lower air-pollutant emissions, and
reduced dependence on landfills. With the right technology,
composting can recycle organic materials and create renewable
energy at the same time.
Innovative developments within the software
industry have transformed the traditional methods of recycling
and composting into more efficient and accessible processes.
Global, based in Atlanta, GA, provides comprehensive
waste stream solutions to businesses nationwide, allowing them
to reduce operating expenses and implement recycling and waste
initiatives. Rubicon’s cloud based platform has helped
customers attain higher efficiencies and low costs by managing
data and mitigating risks. Rubicon utilizes
enterprise resource planning (ERP) technology, big data, and
predictive analytics to help customers manage waste and
recycling across various locations and achieve sustainability
and cost savings.
Software, based in Cockeysville, MD, has developed
software to assist clients in handling and analyzing big
data. Their CompuWeigh, CompuRoute, and WeighStation
systems provide customers with fast transaction processing and
solutions in the weighing and routing industry. The
systems allow users to keep track of customer information,
assignment of RFID tags to specific garbage trucks, and route
transactions. Paradigm’s developed solutions allow customers
to control and organize their data by using modern technology.
Some of Paradigm’s clients consist of the District of
Columbia, Maryland Environmental Services and Delaware Solid
Blue Software & Development, based in Tampa, FL, has
developed their Nexus Recycling Management System for
recycling centers, scrap yards, metal recyclers and exporters,
and paper processors. The company has been mentioned in
magazines such as Recycling Today and Waste Advantage. The
Nexus software, recognized by Recycling Today and Waste
Advantage, is able to handle multiple processes including
scale ticketing, inventory, commodities and pricing, law
compliance, booking and containers, contract sales, container
tracking, motor vehicle information, and employee
management. The Nexus Recycling Management System is
allows companies to handle all of their information on one
RFID (Radio Frequency
Identification) tags are also being utilized to
help cities with their recycling programs. There are an
abundance of reasons why RFID tags are valuable for urban area
recycling. RFID technology can communicate data between a
reader and an object, such as a cart or dumpster to record
data such as the location and the time of service at each
The use of RFID technology can track who participates in
recycling programs, find out what their participation rates
are, determine how many recyclables per household, and help
create quicker recycling routes. Cities can use the data
produced by RFIDs to see which neighborhoods have a low
recycling yield and can create incentives for increased
RFID tags can function in adverse environments including
extreme temperatures and exposure to gases and chemicals which
make them ideal for recycling purposes.
technology is also an important part of the “Pay-as-You-Throw”
(PAYT) recycling program in which garbage is charged by volume
or weight. Data collected from RFID tags can be used to
accurately bill customers for the amount of waste they
dispose. RFID tags are essential when the PAYT method is used
because it assists in keeping the procedure organized and
reduces people customer worry about being accurate billing.
headquartered in New York, has created a recycling business
that utilizes RFID chips. The company works in conjunction
with cities and receives a part of their recycling savings.
Recyclebank first worked with the town of Chestnut Hill, PA
where residents received bins with RFID tags. Residents and
small businesses that recycled were able to earn and redeem
rewards which produced a quick response from the community and
made this project a success, increasing the recycling rate
from 30% to 90%. Soon after, Recyclebank established
deals with large companies such as Coca-Cola, Macy’s, and
Whole Foods Market. Today, Recyclebank stands as a model for
recycling businesses and has applied their plan throughout
various metropolitan cities throughout the country.
Urban cities are becoming increasingly aware of the advantages
of using RFID tags to assist with the recycling procedures.
The City of Virginia Beach, for example, replaced old
recycling bins with new RFID equipped bins. Not only did this
cost Virginia Beach only $1.50 per tag, but the city has found
that the benefits of implementing RFID technology are many.
The emergence of new technologies has given
way to advancements in the recycling industry, particularly in
urban areas and this trend will only continue. Many businesses
and residents in metropolitan areas are implementing recycling
programs, whether because of mandates or possible incentives.
Federal and state R&D tax credits are available for
companies developing new technology and processes related to
the recycling industry.