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

1

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.
2

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.
3

Presentation Outline
1.

Case study:- Kota Bekasi CDM project proposal Process of CDM Project Development

3.

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

6

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.
7

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,

8

Project Location
TPA Sumur Batu Kotamadya Bekasi
DKI Jakarta

LPA Bantargebang

Desa Sumur Batu

9

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

10

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.
11

Forecast Abatement from CDM Project

Total emission abatement over 2006 – 2019 = 5.7 million tonne CO2equivalent

12

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

2 Emissions Monitoring Monitoring Equipment (equipment, installation, commissioning) $ Monitoring, Reporting Agreement and Maintenance (per year) $ sub total $ 3 Landfill Gas Field (16 wells / hectare x 2 hectares) Gas well field (inc drilling and materials)

30,000 25,000 55,000

285,000,000 237,500,000 522,500,000

$ sub total $ $

42,000 42,000 371,325 9500

399,000,000 399,000,000 3,527,587,500

Total Exchange Rate - Rupiah to $US

13

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

14

Process of CDM Project Development for Local Governments

15

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
16

Typical CDM Project Cycle
Preparation and Review of the Project •Submission of the Project Information Note (PIN) Project completion
3m ont

PIN

to

21

ye a

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

up

rs

Periodic verification & certification

3 mon

?
th

Validation process •Acceptance and Registration of the project
2m on th

1–3 years

Construction and Start up

Project Appraisal and Negotiation •Signing of Emissions Reductions 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 PIN(s) which have the potential to be accepted by a Carbon Financing Institution (CFI).  A Letter of Intent to further develop the project PDD would be expected from the CFI on the acceptance of the 3 mon th PIN.  At this stage the project is “Bankable”
rs to 21 ye a up

Preparation and Review of the Project •Submission of the Project Information Note (PIN)

3m ont

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

Validation process •Acceptance and Registration of the project
2m on th

Source: adapted from Carbon Finance Branch, World Bank 2005

1–3

years

Project Appraisal and Negotiation •Signing of Emissions Reductions Purchase Agreement (ERPA)

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.
19

Source: The World Bank – PINTemplate.doc

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.

21

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

ye a

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

rs

D PD

up

to

21

?
3 mon th

Periodic verification & certification

Validation process •Acceptance and Registration of the project
2m on th

1–3

years

Construction and Start up

Project Appraisal and Negotiation •Signing of Emissions Reductions 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; Technical & Financial Development Feasibility Study Baseline and Additionality Financial Assessment Monitoring Quality Assurance Plan 3 mon th Environmental and Social Impact Assessment Community Consultation
to 21 ye a rs up
1–3 years

Preparation and Review of the Project •Submission of the Project Information Note (PIN)

3m ont

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

Validation process •Acceptance and Registration of the project
2m on th

Project Appraisal and Negotiation •Signing of Emissions Reductions Purchase Agreement (ERPA)

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
25

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

to

21

ye a

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

up

rs

D D PD PD

Periodic verification & certification

Validation process •Acceptance and Registration of the project
2m on th

1–3 years

3 mon

th

Construction and Start up

Project Appraisal and Negotiation •Signing of Emissions Reductions 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 Reductions Purchase Agreement (ERPA) The price per tonne CO2e is normally determined based on the IRR of the project. The ERPA is a long term purchase and delivery commitment. Monitoring project 3 CER’s must have a “quality month process”
to 21 ye a rs up
1–3 years

Preparation and Review of the Project •Submission of the Project Information Note (PIN)

3m ont

h

Carbon Asset Due Diligence •Development of the Project Design Document (PDD)
onth 2m

2m on th

D D PD PD

Validation process •Acceptance and Registration of the project

Project Appraisal and Negotiation •Signing of Emissions Reductions Purchase Agreement (ERPA)

Source: adapted from Carbon Finance Branch, World Bank 2005

28

The Next Step

29

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.
30

Sign up to vote on this title
UsefulNot useful