Municipal Solid Waste and Carbon Finance

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Municipal Solid Waste and Carbon Finance
Workshop on CDM and Africa Jinja, Uganda, 11
November 2005 Andrea Pinna
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What makes LFG projects attractive for the CDM?

• All wastes anaerobically decomposed
• Liquid and solid food and agribiz waste and MSW
• 20 times the price of carbon per ton methane
  avoided (referred to as the methane kick
• Great potential for community benefits
  (groundwater protection, safety, local air
  quality)
• Baseline and monitoring methodologies relatively
  straightforward

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Typical elements of LFG project
1. Landfill gas recovery and flaring

• 2. Generation of electricity for
• Consumption on site
• Sale to the grid

3. Collection and treatment of leachate
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Sources of emission reductions

• Avoided methane emissions
• Methane is produced by anaerobic decomposition of
  organic material in MSW (min 6m depth)
• Key parameters affecting methane volumes
• Organic fraction can reach 80 in poor countries
• Climate temperature, humidity
• ER generation Up to 1 ER for each t MSW/day (ex.
  100 t/day landfill may generate up to 365,000 ERs
  over 10 years)

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Brazil Nova Gerar LFG Production (two sites)
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Composting

• Composting of MSW uses aerobic processing to
  achieve the conversion of the organic MSW
  fraction to a safe and marketable solid form with
  CO2 the main gaseous product
• Composting of MSW is an above ground process
  requiring significant surface area and extensive
  handling and it is not necessarily odor,
  emission, or effluent neutral
• Composting is dependent on a steady near-by
  market for the volume of material produced
• Composting is not applicable to all situations
  but can be a legitimate CDM activity within
  specific project design boundaries since it has a
  high production cost estimated at US20 40 per
  ton (UNEP estimate)
• Small scale composting has a better track record
  of success than large scale

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Composting
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MSW Production Case of Kampala Uganda

• Kampalas population is 1.4 million
• Waste stream profile (kg/person/day)
• Household waste 0.69
• Market waste 0.04
• Commercial/Industrial 0.17
• Street sweeping 0.09
• Total Waste 1.00 kg/person/day
• Waste production in USA 2.00 kg/person/day
• Only about 40 of the waste is collected and
  hauled to the landfill in Kampala

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MSW Production Case of Kampala Uganda

• Waste Composition in Kampala
• Vegetable Matter 73.8
• Tree Cuttings 8.0
• Sawdust 1.7
• Total Decomposable Matter 83.5
• Paper, glass, metal, plastic, and other matter
  make up the 16.5 balance (recyclable locally?)

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Impact of Carbon Finance

• Increased cash flow boosts IRRs (26 or more)
• High quality cash flow reduces risk
• OECD - sourced in hard currency (//Yen)
• Investment grade payer
• Eliminate currency convertibility or transfer
  risk
• Projects can borrow against ERPA cash flows OR
• Municipal Bond issues can be made with carbon
  payments as security
• Well-suited to countries with high liquidity in
  local currency
• Financing for complete overhaul of waste
  management

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