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Carbon Finance Instrument to Improve Coastal Zone
Solid Waste Management
MEDITERRANEAN WORKSHOP ON INTEGRATED COASTAL ZONE MANAGEMENT (ICZM) POLICY
Alghero, Sardinia (Italy), May 19-21, 2008
World Bank/METAP
Waste and ICZM
• Situation for solid waste? – Collection of municipal solid waste; – Waste separation/recycling;– Controlled sanitary landfills & Composting
Challenges
• Need to design and enact adequate financial and economic incentives to encourage behavioral changes in human activities in the coastal areas.
• Self-standing ICZM capacity building interventions often do not accomplish much.
• Support for institutional strengthening, restructuring, and policy reform works best in the context of a holistic, longer-term programmatic operation that links policy interventions with tangible benefits on the ground.
• Catalyzing and sustaining ownership at the national, local, and community levels.
How can CF solve some of these problems?
• Promoting environmental protection and sustainable economic activities
• By providing revenues for:– Improvements in solid waste management;– Improvements in sewage systems.
• By channeling revenues at the local level (Municipalities)
The Kyoto Protocol
• Kyoto commitments – In 1997, 38 Industrialized Countries committed to
reduce GHG emissions by 5% below 1990’ levels (entered into force in 2005)
• Kyoto targets are basically achieved by – Domestic reduction of GHG emissions– Trading emission permits (“allowances”) among
companies (EU-ETS) and Assigned Amounts Units (“AAUs”) among governments
– Purchase GHG emission reductions from projects» In developing countries (Clean Development
Mechanism – CDM)» In economies in transition (Joint Implementation)
Carbon Finance is NOT about …• CF is NOT about carbon only, but 6 Greenhouse Gases (GHGs):
– Carbon dioxide (CO2), – Methane (CH4) = 21x more potent than CO2, – Nitrous oxide (N2O) = 310x,– Sulphurhexafluoride (SF6) = 23,900x,– Hydrofluorocarbons (HFCs) HFC23 = 1,300x,– Perfluorocarbons (PFCs) CF = 46,500x, C2F = 69,200x– To promote understanding and facilitate calculations, all GHGs are
measured in tons of CO2 equivalents (CO2-e): 1 ton CO2-e = 1 “carbon credit”
• CF is NOT about Finance:– No loan, no grant, no line of credit, but PURCHASE
• CF is NOT about Financing (i.e., promoting) Carbon, but:– Purchase of GHGs REDUCTION, mainly through long-term agreements
(ERPAs)• GHGs can be avoided (e.g., CH4 avoidance in composting projects),• GHGs can be mitigated (e.g., CO2 mitigation in RE/EE projects) or• GHGs can be sequestered (e.g., CO2 sequestration in LULUCF activities)
Industrialized country with an emissions cap
Baselin
e em
issions
Baseline Scenario
Developing country/economy in
transition with no emissions cap
EmissionReductions (ERs)
Project em
issions
Project Scenario
Emissions target
Developing country/economy
in transition benefits
from technology and financial flows
$$
ER
Purchase of ERs
Domestic action
Carbon credits
How does Carbon Finance work for a landfill?
• Baseline Scenario = generation of CH4• Capture of CH4:
– Avoided emissions = emission reductions (ER)• ER will be generated during the lifetime of the
landfill• ER can be sold: additional revenues to
improve IRR and cashflow • Works also with composting, wastewater
treatment, etc.• Incentive to collect and operate the landfill
adequately, otherwise no ER will be generated
Description of the project
• 18 districts within the city covering a total area of 7,200km2
• The services provided under the contract include:– Street Cleaning Program: daily manual and mechanical
sweeping covering over 12,000 km of city streets and roadways– Household waste collection: collection of 1 million tons of waste
per year– Waste Transfer: 3 transfer stations have been put in service to
limit the number of vehicles transporting waste from the city to the treatment centers
– Landfills : 2 modern landfills have been constructed– Composting : 3 composting centers are operated and produce
over 120,000 tons of compost per year
Environmental Benefits of controlled landfills
• Flaring of the collected LFG does not only destroy methane, but also destroys compounds in the LFG, such as volatile organic compounds and ammonia.
• Prevention of risks associated with landfill gas at uncontrolled landfills:– Risk of explosion– Risk of fire– Unpleasant odor nuisances– Potential atmospheric pollution– Damage to vegetation by asphyxia
Benefits of the project
• Environmental Benefits:– Preservation of water resources – Uncontrolled dumps have
been replaced by engineered modern landfills with fully lined disposal areas for leachate (wastewater produced by the landfill) containment.
– Fight against desertification and depleted soil – The local production of compost provides much needed organic soil amendments.
• Social benefits:– Improvement of environmental health– Employee training
• Economical benefits:– Creation of 4500 job opportunities– Retrocession of a percentage of the value of the generated
credits to the Governorate of Alexandria.
CF: What is next ?• Project by
project: higher transaction costs, lower predictability for project owners, and non-transformational impact on emissions
• Programmatic: larger scale, better planning environment for project owners, and transformational impact on emissions
Future of Carbon Finance
• New methodologies, including small scale
• Post 2012 regime?
• Carbon Partnership Facility: sustaining the market under transitional phase and increase investments by ensuring long-term C-revenues. Open to consider future assets and regimes