Landfill Gas OffsetsLandfill Gas Offsets
The Untapped PotentialThe Untapped Potential
Michael Gerbis, P.Eng.Michael Gerbis, P.Eng.
President, The Delphi GroupPresident, The Delphi Group
The Delphi GroupThe Delphi Group
1515thth Anniversary (around since 1987) Anniversary (around since 1987) First climate change project in 1989First climate change project in 1989 Business FocusBusiness Focus
Climate Change & Clean EnergyClimate Change & Clean Energy Health & EnvironmentHealth & Environment Technologies & MarketsTechnologies & Markets Corporate Strategy - EXCELCorporate Strategy - EXCEL EECO & Globe Series of ConferencesEECO & Globe Series of Conferences
OverviewOverview
LFG Potential Across CanadaLFG Potential Across Canada
LFG within Canada’s Action PlanLFG within Canada’s Action Plan
Business CaseBusiness Case OffsetsOffsets Other BenefitsOther Benefits
Key Steps, Players & ChallengesKey Steps, Players & Challenges
ExamplesExamples
2000 Canadian Emissions2000 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
LFG Management - LFG Management - 1999/20011999/2001
Total Methane Generated In Canadian Landfills 1,321Kt CH4
Landfill Methane Capture 342 Kt
Landfill Methane Released to Atmosphere
979Kt
Flaring 25 Sites147Kt ~ 3MT eCO2
Utilization 16 Sites
Produced 84 MW of Power8 Facilities
182 KT ` 3.8MT eCO2
Direct Utilization 8 Facilities
13Kt ~ 270Kt eCO2
TOTAL REDUCTIONS > 7 MT
Additional OpportunitiesAdditional Opportunities 6.5 Mt eCO6.5 Mt eCO22 reductions reductions
Approx. 70 sites identifiedApprox. 70 sites identified
RankedRanked Brady Rd. – Ranked #1 overallBrady Rd. – Ranked #1 overall Kilkona – Ranked #32Kilkona – Ranked #32 Summit Rd. – Ranked #36Summit Rd. – Ranked #36
85 MW of additional power85 MW of additional power
Estimates Ranged from Estimates Ranged from < $1/ eCO< $1/ eCO2 2 to > $5 / eCOto > $5 / eCO22
Source: Identification of Potential Landfill Sites for Additional Gas Recovery & Utilization in CanadaPrepared for Env. Canada by CRA & Delphi
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.
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
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
Benefits of LFG CaptureBenefits of LFG Capture Reducing the potential for adverse health impactsReducing the potential for adverse health impacts
Source of revenue/profit (energy + offsets)Source of revenue/profit (energy + offsets)
Reduction of Potent GHG Emissions Reduction of Potent GHG Emissions
Reducing Potential Safety HazardsReducing Potential Safety Hazards
Lessen Landfill owner's liabilityLessen Landfill owner's liability
Source of Green PowerSource of Green Power
Improved Air QualityImproved Air Quality 0
10
20
30
40
50
reductions
cost
Internal reduction Offsets
COMPANY A(w/ GHG Emissions Reduction Target)
Technology
Capacity Building
Credit Purchase Contract
Emissions Baseline
Benefit Quantification
M&V
Landfill GHG Offsets
LFG Offset Project
Tradable GHG Offsets
Finance ($$)
Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets
Establish baselineEstablish baseline What would have happened in absence of projectWhat would have happened in absence of project
Does flaring count as a reduction, or required BAU?Does flaring count as a reduction, or required BAU? Would the methane truly have been released?Would the methane truly have been released?
Quantify potential emission reductionsQuantify potential emission reductions
Develop transparent monitoring & Develop transparent monitoring & measurement plan measurement plan
Maintain records that provide clear audit trailMaintain records that provide clear audit trail
Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets
Estimate Value of Emissions Estimate Value of Emissions Can be a challengeCan be a challenge No official DET or IET in placeNo official DET or IET in place Not yet homogenous commodityNot yet homogenous commodity Buyers have different levels of willingness to payBuyers have different levels of willingness to pay COCO22 values could change substantially….or not values could change substantially….or not
Preserve/secure rights in contractingPreserve/secure rights in contracting
Seek external validation of resultsSeek external validation of results
Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets
Conduct Feasibility StudyConduct Feasibility Study With and Without OffsetsWith and Without Offsets Ranges of Prices, Ownership & Selling StrategiesRanges of Prices, Ownership & Selling Strategies
e.g. 1/3 – 1/3 – 1/3e.g. 1/3 – 1/3 – 1/3
Engage Key PlayersEngage Key Players Federal, Provincial, Municipal GovernmentsFederal, Provincial, Municipal Governments Project Developers, Technology Company, Project Developers, Technology Company,
Engineering Firms, Utility, etc.Engineering Firms, Utility, etc. Investors & Potential GHG Offset BuyersInvestors & Potential GHG Offset Buyers Strategic AdvisorsStrategic Advisors BrokersBrokers
LFG ChallengesLFG Challenges QuantificationQuantification
Direct (flaring) vs. Indirect (electrical & thermal)Direct (flaring) vs. Indirect (electrical & thermal) Timing of OffsetsTiming of Offsets
Valuation / Cash Flow / RORValuation / Cash Flow / ROR Price of Offsets & Selling StrategiesPrice of Offsets & Selling Strategies
Establishing Offset OwnershipEstablishing Offset Ownership Multiple StakeholdersMultiple Stakeholders
UnknownsUnknowns Project performs as predictedProject performs as predicted Future Market & PriceFuture Market & Price Government Approval / Future PolicyGovernment Approval / Future Policy
Vancouver LandfillVancouver 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
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
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
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
Mangrove Green Energy ProjectMangrove Green Energy ProjectBarbadosBarbados
Potential CDM Project – Unique ConceptPotential CDM Project – Unique Concept
LFG Collection & Flaring SystemLFG Collection & Flaring System 14 – 15 million m3 per year (60% CH14 – 15 million m3 per year (60% CH44)) 1.4 million tonnes eCO1.4 million tonnes eCO2 2 reductions over 10 yearsreductions over 10 years
Landfill Utilization with StorageLandfill Utilization with Storage ~ 5 MW => 190,000 tonnes eCO~ 5 MW => 190,000 tonnes eCO22 reductions over 10 years reductions over 10 years
Wind farm to be constructedWind farm to be constructed 1 – 2 MW of power => ~ 43,000 tonnes of eCO2 1 – 2 MW of power => ~ 43,000 tonnes of eCO2
reductions over 10 yearsreductions over 10 years
Mangrove Green Energy ProjectMangrove Green Energy ProjectGHG Credits GHG Credits
The Delphi GroupThe Delphi Group
Catalyzing Environment and Clean Catalyzing Environment and Clean Energy OpportunitiesEnergy Opportunities
International Transactions (CDM & Tech Transfer)
International Transactions (CDM & Tech Transfer)
GHG Reduction Strategies
Business Planning & Project Structuring
Market ValuationMarket ValuationPricing & PositioningPricing & Positioning
Wrap UpWrap Up
LFG Represents an Untapped and Potentially LFG Represents an Untapped and Potentially Lucrative Opportunity to Reduce GHGLucrative Opportunity to Reduce GHG
Canadian Government is SupportiveCanadian Government is Supportive
Corporate Buyers Will be Looking for Quality Corporate Buyers Will be Looking for Quality Investments & OffsetsInvestments & Offsets
Business Case Can be MadeBusiness Case Can be Made Understand, Measure & Monitor (diff. scenarios)Understand, Measure & Monitor (diff. scenarios) Lots of Players – engage expertsLots of Players – engage experts Be Prepared - Watch Potential Stumbling BlocksBe Prepared - Watch Potential Stumbling Blocks Stay In-Tune – Int’l / Nat’l Policy; GHG MarketStay In-Tune – Int’l / Nat’l Policy; GHG Market
The Delphi GroupThe Delphi Group
For More Information Contact:For More Information Contact:
Mike Gerbis, P.Eng.Mike Gerbis, P.Eng.PresidentPresident
The Delphi Group (The Delphi Group (www.delphi.cawww.delphi.ca))428 Gilmour St.428 Gilmour St.
Ottawa, Ontario K2P 0R8Ottawa, Ontario K2P 0R8
Tel: (613) 562-2005 Fax: (613) 562-2008Tel: (613) 562-2005 Fax: (613) 562-2008
email: email: [email protected]@delphi.ca
COCO22 Value for 1% ROR Impact Value for 1% ROR Impact
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
Effect of CO2 Revenues On Rate of Return
Coal Mine Methane GasUtilizationLandfill Gas to Energy
Anaerobic Digestion
Biomass Co-Firing
Cement Plant Upgrade
CHP- District Heating Plant
Biomass Combustion
Municipal Streetlight Upgrade
Small Hydro
Wind
Impact of Carbon Finance on Impact of Carbon Finance on ProjectProject
TechnologyTechnology IRRIRR
Energy Eff.-District HeatingEnergy Eff.-District Heating 2- 42- 4
WindWind 0.9-1.30.9-1.3
HydroHydro 1.2-2.61.2-2.6
BagasseBagasse 0.5-3.50.5-3.5
Biomass with methane kickBiomass with methane kick Up to 5.0Up to 5.0
Municipal Solid Waste with Municipal Solid Waste with methane kickmethane kick
>5.0>5.0
Project, Not Equity, IRR.
Source: PCF….Assuming a revenue stream based on emission Reduction (at US$ 3/TCO2e) the change in internal rate of return (IRR) of projects: