The CDM Solution for Municipal

Solid Waste Management

Kenneth Butler
VIKEN and Associates / Kotamadya Bekasi

The World Bank - Executive Workshop / Training on the CDM,

Jakarta, January 24 – 26 2006

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Konsep pengelolaan sumberdaya
lahan TPA
Siklus Sampah Perkotaan Negara Maju

Skema ini menjelaskan siklus sampah kota di negara-negara berkembang yang

dimulai dari penghasil hingga pembuangan dan pemanfaatan sampah. Dana
pengelolaan sampah dan penyediaan pelayanan yang diharapkan masyarakat
diperoleh dari “profit center”. Kemampuan pendanaan ini didasarkan pada prinsip
“user pays atau pembayaran distribusi” yang dibebankan pada penghasil sampah.

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 Konsep pengelolaan sumberdaya
lahan TPA
Siklus Sampah Perkotaan Negara Transisi

Sebaliknya, masyarakat (penghasil sampah) di negara-negara yang sedang dalam proses

transisi ekonomi tidak memiliki dana untuk membiayai Pengelolaan Sampah,
sehingga ‘Tingkatan Pelayanan’ yang disiapkan oleh pemerintahan jauh
dibawah Negara-negara yang sudah berkembang. Konsep Pengelolaan Sumberdaya Lahan TPA
pada akhirnya dikonsentrasikan pada perolehan segi pendanaan melalui cara pengelolaan dan
pemanfaatan sumberdaya yang diperoleh dari lahan TPA. Pemasukan yang
diperoleh melalui pendekatan cara ini akan dapat mengurangi keterbatasan keuangan dan/ atau
mengalir kembali ke sistem Pengelolaan Sampah.
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 Presentation Outline

1. Case study:- Kota Bekasi CDM project

proposal

3. Process of CDM Project Development

4
 Bekasi Methane Gas
Destruction and Landfill
Organic Recovery

Proposed CDM Project

Location: TPA Sumur Batu, Kota

Bekasi, Jawa Barat
5
 Current Project Status

 PIN submitted to The World Bank’s Carbon

Finance Unit – October 2005
 Notification of the World Bank acceptance and
support of the project – December 2005
 Current discussion on Letter of Intent and MOU
between the World Bank and Kota Bekasi –
January 2006

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 Project Objectives
 Avoidance of present and future methane emission from
the City of Bekasi landfill, TPA Sumur Batu, through;
 1. Methane gas flaring and small scale electricity
generation, and
 2. Removal of decomposing organics from the landfill for
sales as compost avoiding future methane gas production.
 Recycling the existing landfill to provide sustainable solid
waste disposal, protecting the local environment and
health impacts on the local community and improved
collection services in the city.

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 Additional Objectives
 Provision of an appropriate and sustainable solution to
MSWM problems through the implementation a new
landfill management system,
 Improved solid waste collection service and disposal,
 Reduction of environmental, social and health impacts of
solid waste disposal,
 Improvement in conditions for the non organic recycling
community,

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 Project Location
TPA Sumur Batu
Kotamadya Bekasi
DKI Jakarta

LPA Bantargebang

Desa Sumur Batu

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 Baseline data
 Population 1.9 million
 MSW generated approx 1,360
tonne / day
 Collection and disposal approx.
30% of MSW generated.
 Target of improving collection
service to 80% within 5 years
 TPA Sumur Batu:
 Area 10 hectares
 Opened mid 2002
 Capacity approx. 2 million m3
 Approx 200,000 tonnes in place
to December 2005
 Potential methane generation from
2002 – 2019 waste disposal =
522,000 tonne
 C02equivalent during project years
2006 – 2019 = 11 million tonne
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 Project Components
 Methane generation in landfills generally follows two
phases, initial rapid degradation with a peak of
methane production within approximately 4 to 5 years
and a slower or decelerated rate of methane
production that can last many decades.
 This project will deal with both stage of methane
generation via;
 Methane capture and destruction, dealing with
methane production as it occurs, and
 Organic recovery, avoiding future methane
production during the slower stage through the
removal of all organic carbon sources from the
anaerobic environment of the landfill.
 Methane Gas flaring component will be implemented
first.
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 Forecast Abatement from CDM
Project
 Total emission abatement over 2006 – 2019 =
5.7 million tonne CO2equivalent

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Estimated Initial Flaring Investment
Cost ($US) Cost (Rp)
1 Flaring Facility
LFG Flaring Equipment (2200 SCFM Facility) $ 143,000 1,358,500,000
Spare Parts $ 6,000 57,000,000
Shipping USA to Jakarta ( 1 x 40ft container) $ 10,000 95,000,000
Import and other taxs and charges (50% of Equipment Cost) $ 71,500 679,250,000
Local transportation Jkt to Bks $ 750 7,125,000
Installation and commissioning $ 18,000 171,000,000
Technical/Operational Training $ 4,000 38,000,000
Documentation $ 500 4,750,000
Maintenance Agreement (per year) $ 12,000 114,000,000
Site Facility/Building $ 5,000 47,500,000
Insurance (2.5% of Equipment Cost) $ 3,575 33,962,500
sub total $ 274,325 2,606,087,500

2 Emissions Monitoring
Monitoring Equipment (equipment, installation, commissioning) $ 30,000 285,000,000
Monitoring, Reporting Agreement and Maintenance (per year) $ 25,000 237,500,000
sub total $ 55,000 522,500,000

3 Landfill Gas Field (16 wells / hectare x 2 hectares)

Gas well field (inc drilling and materials) $ 42,000 399,000,000
sub total $ 42,000 399,000,000

Total $ 371,325 3,527,587,500

Exchange Rate - Rupiah to $US 9500

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 Return on Investment
 Estimated Initial Flaring Capital Investment Cost
$US 371,000
 This investment, in CER’s terms, equates to;
 123,775 tonne CO2e @ $US3.00/tonne
 74,265 tonne CO2e @ $US5.00/tonne

 Modeling estimates that during the first two years of

operation 152,000 tonne CO2e will be flared.

 Estimated CER’s income after two years of

operations are;
 $US 456,000 @ $US 3.00/tonne CO2e
 $US 760,000 @ $US 5.00/tonne CO2e
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Process of CDM Project
Development for Local
Governments

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 Relevant issues of CDM

 The CDM mechanism of Kyoto Protocol is a

COMMERCIAL approach to combat global
Climate Change and assist in improving local
environmental impacts.
 CDM projects generate a tradable commodity,
Certified Emissions Reductions (CER’s).
 Without strict monitoring and verification CDM
projects will not produce CER’s

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 Typical CDM Project Cycle
Preparation and Review of the Project
•Submission of the Project Information Note (PIN)
Project completion

3m
ont Carbon Asset Due Diligence
h

rs
•Development of the Project Design Document (PDD)

PIN
a
ye
21
to

2m
up

onth
?
Validation process
1–3

Periodic verification & certification •Acceptance and Registration of the project

years

th
on
3 mon 2m
th Project Appraisal and Negotiation
•Signing of Emissions Reductions
Construction and Start up Purchase Agreement (ERPA)

Source: adapted from Carbon Finance Branch, World Bank 2005 17

 PIN Development
 The aim of this stage of
the cycle is the
development of project Preparation and Review of the Project
•Submission of the Project Information Note (PIN)

PIN(s) which have the

potential to be accepted 3m
ont Carbon Asset Due Diligence

rs
h •Development of the Project Design Document (PDD)
by a Carbon Financing
a
ye
21
to

Institution (CFI).

2m
up

onth
 A Letter of Intent to
further develop the Validation process
1–3

•Acceptance and Registration of the project

project PDD would be
years

th
expected from the CFI on
on
the acceptance of the 3 mon 2m
th Project Appraisal and Negotiation

PIN. •Signing of Emissions Reductions

Purchase Agreement (ERPA)

 At this stage the project is

“Bankable”
Source: adapted from Carbon Finance Branch, World Bank 2005 18
 PIN Development
The PIN consist of approx. 5 pages providing indicative
information on:
 The type, size and location of the project,
 Anticipated total amount of Greenhouse Gas (GHG)
reduction compared to the “business-as-usual” scenario
 Suggested crediting life time,
 Suggested Certified Emission Reductions (CER)/
Emission Reduction Units (ERU) or verified Emission
Reduction (vER)price in US$ or € /ton CO2e reduced,
 Financial structuring,
 Socio-economic or environmental effects/benefits.
Source: The World Bank – PINTemplate.doc 19
 Guides to CDM PIN Development
 Establish inter Dinas working group to gain knowledge of
CDM and the management of CDM projects development,
 Evaluate CDM project opportunities within the municipality
boundary: Government and Private sectors,
 Identify / shortlist suitable project/s for Project Information
Note (PIN) development,
 PIN’s can be developed by staff but would benefit from
assistance of suitable CDM project development consultants.
 Coordinate PIN(s) development with potential CFI.
 Develop estimated budgets and resource requirements for the
development of Project Description Documents (PDD’s),
advise DPRD of projects submitted.
 Determine the capital investment required for implementing
the projects and whether self financing, joint venture, or
private investment. 20
 Government Budget Preparation

 Budget process and timetables are important for

all stages of CDM development,
 Key timing;
 November - the following years budgets must be
finalized,
 July - Revision of budget for the second half of
the financial year are finalized.

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The Next Step

22
 Typical CDM Project Cycle
Preparation and Review of the Project
•Submission of the Project Information Note (PIN)
Project completion

3m
ont Carbon Asset Due Diligence
h

rs
•Development of the Project Design Document (PDD)

a
ye D
21
to

PD

2m
up

onth
Validation process
1–3

Periodic verification & certification •Acceptance and Registration of the project

?
years

th
on
3 mon 2m
th Project Appraisal and Negotiation
•Signing of Emissions Reductions
Construction and Start up Purchase Agreement (ERPA)

Source: adapted from Carbon Finance Branch, World Bank 2005 23

 PDD Development
PDD contents are an elaboration
of the PIN document consisting
of; Preparation and Review of the Project
•Submission of the Project Information Note (PIN)

Technical & Financial

Development 3m
ont
h Carbon Asset Due Diligence

rs
•Development of the Project Design Document (PDD)

a
ye
Feasibility Study to
21

2m
up

Baseline and

onth
Additionality
Validation process
1–3

Financial Assessment •Acceptance and Registration of the project

years

th
Monitoring Quality

on
Assurance Plan 3 mon 2m
th Project Appraisal and Negotiation
•Signing of Emissions Reductions
Environmental and Social Purchase Agreement (ERPA)

Impact Assessment
Community Consultation
Source: adapted from Carbon Finance Branch, World Bank 2005 24
 Activities and Responsibilities of
PDD Development Stage
Financing the PDD
 Financial and resources requirements would be determined
prior to signing LOI and MOU between all parties. This
would normally be determine based upon future ownership of
the CER’s generated.
 In some instances the CFI would bear the initial costs of the
PDD development. These cost recovered once the project is
generating CER’s.
 Normally the CFI takes responsibility due diligence,
coordination with DNA and potential CER’s buyers.
 Cost estimates for PDD; $US180,000 - $250,000 which
would include all associated CDM registration fees
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 Activities and Responsibilities of
PDD Development Stage
Community Consultation
 This is an important component of CDM and the PDD and
should commence once the project has reached the LOI
point,
 All stakeholders must be made aware of the project and
provided a forum in which to comment and input into the
project design,
 This is especially important during the earlier stages of CDM
development in Indonesia,
 Local government has the prime responsibility to ensure the
quality and openness of this process. Even when the project
is wholly undertaken by the private sector,
 Poorly communicated projects are unlikely to be certified or 26
 Typical CDM Project Cycle
Preparation and Review of the Project
•Submission of the Project Information Note (PIN)
Project completion

3m
ont Carbon Asset Due Diligence
h

rs
•Development of the Project Design Document (PDD)

a
ye
21
to

2m
up

onth
PD Validation process
1–3

Periodic verification & certification •Acceptance and Registration of the project

years

th
on
3 mon 2m
th Project Appraisal and Negotiation
•Signing of Emissions Reductions
Construction and Start up Purchase Agreement (ERPA)

Source: adapted from Carbon Finance Branch, World Bank 2005 27

 Typical CDM Project Cycle
Finalisation of PDD development
is the signing of Emission Preparation and Review of the Project
•Submission of the Project Information Note (PIN)
Reductions Purchase Agreement
(ERPA) 3m
ont Carbon Asset Due Diligence
h
The price per tonne CO2e

rs
•Development of the Project Design Document (PDD)

a
ye
21
is normally determined based
to

2m
up

on the IRR of the project.

onth
The ERPA is a long term PD Validation process
purchase and delivery
1–3

•Acceptance and Registration of the project

commitment.
years

th
on
2m
Monitoring project
3 Project Appraisal and Negotiation
CER’s must have a “quality month •Signing of Emissions Reductions
Purchase Agreement (ERPA)
process”

Source: adapted from Carbon Finance Branch, World Bank 2005 28

The Next Step

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 Project Implementation

 An important component of implementation is the

monitoring and validation of ER’s generated.
 Selling of ER’s relies on the ability of the project
to demonstrate to independent validators that the
ER’s are “real”.
 Failure to properly monitor the emission
reductions may default the ERPA or reduce the
amount of ER’s claimed.

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