Municipal Solid Waste and Carbon Finance

1. Municipal Solid Waste and Carbon Finance Workshop on CDM and Africa Jinja, Uganda, 11 November 2005 Andrea Pinna

2. 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

3. 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

4. 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)

5. Brazil Nova Gerar LFG Production (two sites)

6. 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 US$20 – 40 per ton (UNEP estimate) • Small scale composting has a better track record of success than large scale

7. Waste production Recyclable materials Waste Sorting of Landfill collection waste operation and transport Aerobic Reject Composting materials Operation Compost E nd users Boundary limit Composting

8. MSW Production: Case of Kampala Uganda • Kampala’s 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

9. 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?)

10. 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

11. www.carbonfinance.org