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Landfill Gas Offsets

Landfill Gas Offsets. The Untapped Potential Michael Gerbis, P.Eng. President, The Delphi Group. The Delphi Group. 15 th Anniversary (around since 1987) First climate change project in 1989 Business Focus Climate Change & Clean Energy Health & Environment Technologies & Markets

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Landfill Gas Offsets

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  1. Landfill Gas Offsets The Untapped Potential Michael Gerbis, P.Eng. President, The Delphi Group

  2. The Delphi Group • 15th Anniversary (around since 1987) • First climate change project in 1989 • Business Focus • Climate Change & Clean Energy • Health & Environment • Technologies & Markets • Corporate Strategy - EXCEL • EECO & Globe Series of Conferences

  3. Overview • LFG Potential Across Canada • LFG within Canada’s Action Plan • Business Case • Offsets • Other Benefits • Key Steps, Players & Challenges • Examples

  4. 2000 Canadian Emissions • Canada’s Total GHG Emissions 726,000 kt eCO2 • Manitoba’s ~ 21,400 kt eCO2 • Canadian CH4 Emissions 91,000 kt eCO2 (12.5% of Total) • Manitoba Total CH4 Emissions 3,400 Kt eCO2 • Canadian LFG (CH4) Emissions 23,000 kt eCO2 (25% total CH4) • Manitoba LFG ~ 550 Kt eCO2

  5. LFG Management - 1999/2001 TOTAL REDUCTIONS > 7 MT

  6. Additional Opportunities • 6.5 Mt eCO2 reductions • Approx. 70 sites identified • Ranked • Brady Rd. – Ranked #1 overall • Kilkona – Ranked #32 • Summit Rd. – Ranked #36 • 85 MW of additional power • Estimates Ranged from < $1/ eCO2 to > $5 / eCO2 Source: Identification of Potential Landfill Sites for Additional Gas Recovery & Utilization in Canada Prepared for Env. Canada by CRA & Delphi

  7. Climate Change Plan for Canada • Three Step Approach to Achieve Target => 240 Mt / year * Offsets are estimated at 20 to 28 MT - because they may be sold to industry through domestic emissions trading, they are not added to the total.

  8. Climate Change Plan for CanadaOngoing Activities • LFG Projects Moving Forward (e.g. Vancouver) • Green Municipal Funds for Landfill Gas capture (2.2 MT) • Government purchasing offsets • Pilot Emission Removals, Reductions & Learnings (PERRL) • Air Pollution Prevention Directorate, Environment Canada www.ec.gc.ca/PERRL • NRCan • Green Power Initiative • TEAM projects • CIDA • $15 mil Investment in Prototype Carbon Fund (PCF) • $100 mil Canada Climate Change Development Fund

  9. Climate Change Plan for CanadaProposed Next Steps • Consultations on whether to regulate emissions reductions from new capture and flaring of landfill gas or allow them to be sold as offsets • Renewable Energy • 10% new generating capacity from green sources • Future community action • Domestic Emissions Trading System being developed • Landfills provide possibility to reduce emissions and represent potential offset credits • Purchase a Minimum of 10 MT International Credits

  10. Benefits of LFG Capture • Reducing the potential for adverse health impacts • Source of revenue/profit (energy + offsets) • Reduction of Potent GHG Emissions • Reducing Potential Safety Hazards • Lessen Landfill owner's liability • Source of Green Power • Improved Air Quality

  11. Landfill GHG Offsets Emissions Baseline Benefit Quantification M&V COMPANY A (w/ GHG Emissions Reduction Target) LFG Offset Project Tradable GHG Offsets Finance ($$) Technology Capacity Building Credit Purchase Contract

  12. Establishing High QualityLFG Offsets • Establish baseline • What would have happened in absence of project • Does flaring count as a reduction, or required BAU? • Would the methane truly have been released? • Quantify potential emission reductions • Develop transparent monitoring & measurement plan • Maintain records that provide clear audit trail

  13. Establishing High QualityLFG Offsets • Estimate Value of Emissions • Can be a challenge • No official DET or IET in place • Not yet homogenous commodity • Buyers have different levels of willingness to pay • CO2 values could change substantially….or not • Preserve/secure rights in contracting • Seek external validation of results

  14. Establishing High QualityLFG Offsets • Conduct Feasibility Study • With and Without Offsets • Ranges of Prices, Ownership & Selling Strategies • e.g. 1/3 – 1/3 – 1/3 • Engage Key Players • Federal, Provincial, Municipal Governments • Project Developers, Technology Company, Engineering Firms, Utility, etc. • Investors & Potential GHG Offset Buyers • Strategic Advisors • Brokers

  15. LFG Challenges • Quantification • Direct (flaring) vs. Indirect (electrical & thermal) • Timing of Offsets • Valuation / Cash Flow / ROR • Price of Offsets & Selling Strategies • Establishing Offset Ownership • Multiple Stakeholders • Unknowns • Project performs as predicted • Future Market & Price • Government Approval / Future Policy

  16. Vancouver Landfill • Owned & operated by the City of Vancouver • Serves 40% of Greater Vancouver Region • 400,000 tonnes per year of MSW • Existing LFG collection and flare system • 1991 installed => expanded in 2000 • 142 Hectares • Over 300 vertical collection wells • 3000 cubic foot per minute (cfm) blower/flare system • Extracts and flares over 2000 cfm of 55% CH4 LFG

  17. Vancouver Landfill Gas Collection and Utilization Project • Proposed Initiative • Expand LFG collection & flare system over 58 hectares of the landfill (completed 2000) • Utilization LFG in cogeneration system • Electricity sold to BC Hydro as “green” power • Heat in the form of hot water to be used by CanAgro’s greenhouses • Full operation by fall 2003 • Lifetime > 20 years

  18. Vancouver LFG ProjectKey Players & Benefits • Projected Overall Results • Reduce GHG emissions by > 200,000 tonnes/year • equivalent to 40,000 automobiles • Capture 500,000 GJ/year of energy • equivalent to 3,000 to 4,000 homes’ energy requirements • The City of Vancouver • receive ~ $250,000 to $300,000 annually for LFG • % revenue from thermal offsets • Capture offsets • Corporation of Delta • receive ~ $80,000 to $110,000 in new tax

  19. Vancouver LFG ProjectKey Players & Benefits • CanAgro • receive a secure low-cost heating source for greenhouses • Offset non-renewable power requirements by ~ 20% • BC Hydro • Electricity under its Green Energy Program & elect. offsets • Maxim Power Corp • provide $8.5 mil financing for 2.5-km pipeline & co-gen plant • $ from BC Hydro for Green Power & Offsets • % of thermal offsets • CH2M Hill Canada Limited • Design & built 2000 collection system

  20. Mangrove Green Energy ProjectBarbados • Potential CDM Project – Unique Concept • LFG Collection & Flaring System • 14 – 15 million m3 per year (60% CH4) • 1.4 million tonnes eCO2 reductions over 10 years • Landfill Utilization with Storage • ~ 5 MW => 190,000 tonnes eCO2 reductions over 10 years • Wind farm to be constructed • 1 – 2 MW of power => ~ 43,000 tonnes of eCO2 reductions over 10 years

  21. Mangrove Green Energy ProjectGHG Credits

  22. The Delphi Group Catalyzing Environment and Clean Energy Opportunities • International Transactions (CDM & Tech Transfer) • International Transactions (CDM & Tech Transfer) Market Valuation Pricing & Positioning • GHG Reduction Strategies Business Planning & Project Structuring

  23. Wrap Up • LFG Represents an Untapped and Potentially Lucrative Opportunity to Reduce GHG • Canadian Government is Supportive • Corporate Buyers Will be Looking for Quality Investments & Offsets • Business Case Can be Made • Understand, Measure & Monitor (diff. scenarios) • Lots of Players – engage experts • Be Prepared - Watch Potential Stumbling Blocks • Stay In-Tune – Int’l / Nat’l Policy; GHG Market

  24. The Delphi Group For More Information Contact: Mike Gerbis, P.Eng. President The Delphi Group (www.delphi.ca) 428 Gilmour St. Ottawa, Ontario K2P 0R8 Tel: (613) 562-2005 Fax: (613) 562-2008 email: mgerbis@delphi.ca

  25. CO2 Value for 1% ROR Impact

  26. Impact of Carbon Finance on Project Project, Not Equity, IRR. Source: PCF….Assuming a revenue stream based on emission Reduction (at US$ 3/TCO2e) the change in internal rate of return (IRR) of projects:

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