Wm In Cdm Project Bekasi

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. 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

3.

Process of CDM Project Development

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Bekasi Methane Gas Destruction and Landfill Organic Recovery

Proposed CDM Project Location: TPA Sumur Batu, Kota Bekasi, Jawa Barat 5

Current Project Status 

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

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. 7

Additional Objectives 

 

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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. 11

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) 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

Cost (Rp)

$ $ $ $ $ $ $ $ $ $ $ $

143,000 6,000 10,000 71,500 750 18,000 4,000 500 12,000 5,000 3,575 274,325

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 $

30,000 25,000 55,000

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

$ sub total $

42,000 42,000

399,000,000 399,000,000

$

371,325

3,527,587,500

3 Landfill Gas Field (16 wells / hectare x 2 hectares) Gas well field (inc drilling and materials)

Total 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.

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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 

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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

years

?

3 mon

th

Construction and Start up

Source: adapted from Carbon Finance Branch, World Bank 2005

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

ye a 21 to up 1–3

Periodic verification & certification

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

h

onth 2m

PIN

rs

3m ont

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

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

3m ont

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

h

onth 2m

up

to

21

ye a

rs

 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” years

Source: adapted from Carbon Finance Branch, World Bank 2005

2m on th

1–3

Validation process •Acceptance and Registration of the project

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

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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

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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.

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Government Budget Preparation 

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Budget process and timetables are important for all stages of CDM development, Key timing; 

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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

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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

rs ye a 21 to up

onth 2m

D PD

Validation process •Acceptance and Registration of the project

3 mon

th

Construction and Start up

Source: adapted from Carbon Finance Branch, World Bank 2005

2m on th

years

?

1–3

Periodic verification & certification

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

h

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

23

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

3m ont

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

h

onth 2m

up

to

21

ye a

rs

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 years

Source: adapted from Carbon Finance Branch, World Bank 2005

2m on th

1–3

Validation process •Acceptance and Registration of the project

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

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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

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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 •Development of the Project Design Document (PDD)

to

21

ye a

rs

h

years

3 mon

th

Construction and Start up

Source: adapted from Carbon Finance Branch, World Bank 2005

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

up

onth 2m

D PD

1–3

Periodic verification & certification

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

27

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

3m ont

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

h

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

years

D PD

1–3

Source: adapted from Carbon Finance Branch, World Bank 2005

onth 2m

up

to

21

ye a

rs

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”

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

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The Next Step

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Project Implementation 

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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