Clean Development Mechanism and Development of a Methodology for the Recycling of Municipal Solid Waste

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1 Clean Development Mechansm and Development of a Methodolog for the Recclng of Muncpal Sold Waste CONTACT Charles Peterson, World Bank Jule Godn, World Bank Contact name: Charles Peterson Jule Godn Organzaton: World Bank World Bank Postal address: 1818 H Street, NW (MC 3-309) 1818 H Street, NW (MC 3-309) Washngton, DC USA Washngton, DC USA Telephone: (202) (202) Emal: cpeterson@worldbank.org jgodn@worldbank.org EXECUTIVE SUMMARY The World Bank (Bank, s nvolved wth more than 100 projects (actve or under development) wth muncpal sold waste 1 management components n developng countres. Loan and grant commtments have been made for captal nvestments n a broad scope of waste management functons ncludng recclng, collecton, transfer statons, and landfll desgn/constructon. Loans and grants are an mportant, tradtonal, Bank actvt. A more recent Bank program s carbon fnance, whch s the purchase of greenhouse gas (GHG) emsson reductons from developng countres under the Clean Development Mechansm (CDM), a sustanable fnancng nstrument created b n the Koto Protocol. The Bank purchases CDM emsson reductons for a group of 11 carbon funds or facltes for varous European countres and Japan, utltes, and manufacturng companes to assst n offsettng ther emsson reducton targets under the Koto Protocol. Emsson reductons are determned under methodologes approved b the CDM Executve Board of the Unted Natons Framework Conventon on Clmate Change (UNFCCC). These methodologes establsh elgblt crtera for projects Baselne scenaro and emssons. Exstng, or busness as usual, level of emssons. Addtonalt scenaro and emssons. The proposed CDM project actvt that needs to be addtonal (beond the baselne scenaro). Montorng procedures to allow project performance to be tracked durng the credtng perod. 1 Muncpal sold waste s composed of dscards prmarl from resdences and commercal operatons, such as retal stores and offce as well as nsttutons and non-hazardous ndustral wastes.

2 CDM approved muncpal sold waste methodologes nclude the capture of landfll gas (ACM0001) and methane avodance projects such as aerobc compostng and ncneraton (AM0025). Recclng s one mportant waste management area for whch a CDM methodolog has et to be approved. The Bank s seekng to remed ths through the development of a methodolog for recclng. In conjuncton wth a draft CDM methodolog, an assessment (project desgn document, or PDD) was prepared on a plot project that wll nvolve nstallaton of eght sortng plants n the area of Buenos Ares, Argentna. The draft CDM methodolog focuses on recclng of plastcs - hgh denst polethlene (HDPE) and low denst polethlene (LDPE). When the methodolog s approved b the CDM Executve Board and made avalable to an project developers, addtonal methodologes wll be submtted for other recclables ncludng metals, paper, and glass. It s antcpated b the World Bank that a methodolog for HDPE and LDPE ma be approved b md Development of a recclng methodolog s a complex process. The methodolog follows the prncples of lfe-ccle assessment and compares the greenhouse gas emssons from all steps nvolved under the project actvt. The methodolog wll promote hgher recover rates for recclables and hgher market for recclables through upgradng of the materals offered for sale. In addton, t wll mprove the workng condtons for those that recover materals from the waste stream. The nformal recclng sector s a global phenomenon that nvolves 1 to 2% of the urban populaton n developng countres. The people n ths sector often are at the ver low ncomes and lvng standards n urban areas. The expected emsson reductons from the methodolog under development are expected to be relatvel small because of the small quantt of plastcs (HDPE and LDPE) forecast to be reccled and the focus on onl one recclable categor. The rate wll ncrease as addtonal methodologes for recclable materals are developed and approved. The Bank also s workng towards an urban methodolog that wll enable smaller ndvdual actvtes to gan the fnancal benefts of ncremental reductons n GHG emssons. Ths new program s targetng three sectors envronmental management, (prmarl sold waste), energ effcenc (areas such as buldng effcenc and street lghtng), and transt. INTRODUCTION Muncpal sold waste s a sgnfcant contrbutor to GHG emssons. One effort to date to remed the effect of muncpal waste on clmate change has been the capture and destructon of the methane generated n landflls from the decomposton of the organc bomass fracton of sold waste such as food, paper, and wood. Another effort s the avodance of methane generaton b the treatment of muncpal waste through varous non-landfll processes ncludng aerobc compostng and ncneraton. Even though recclng of the materals n muncpal sold waste has been shown to reduce the level of GHG emssons relatve to the use of vrgn feedstock, a methodolog that wll measure and montor the emsson reductons from a recclng program has et to be

3 approved b the CDM Executve Board. The Bank s workng to remed ths stuaton wth the development of a methodolog for the recclng of materals from muncpal waste. Except for paper, recclables, such as plastcs, alumnum, ferrous metal, and glass, do not degrade n a landfll to form methane. The greenhouse gas beneft of recclng s a reducton n emssons from the use of fossl-fuel energ n the extracton and manufacture of products from vrgn materals versus secondar materals. The Bank s methodolog ntatve to measure and montor GHG emssons s focused on the recclng of products manufactured from hgh denst polethlene (HDPE), such as plastc bottles, and low denst polethlene (LDPE), such as plastc bags. Methodologes wll be developed for other materals after the methodolog for HDPE and LDPE s approved. The process for development of a methodolog requres a specfc project to demonstrate the applcaton. A recclng project n the area of Buenos Ares, Argentna s the sample project beng used for ths purpose. BACKGROUND World Bank The World Bank s role s to reduce povert n developng countres through loans, grants, and techncal assstance n a range of areas ncludng nfrastructure such as waste management. Currentl, the Bank has more than 100 projects (actve or under development) wth waste management components wth total nvestment commtments of US$2.3 bllon. The waste management projects cover the spectrum of the sold waste feld recclng, collecton equpment, transfer statons, and landfll desgn/constructon. Carbon fnance or the purchase of GHG emsson reductons from projects s a servce the Bank ( has offered to developng countres snce the ear Carbon fnance was developed to meet the opportuntes provded b the Clean Development Mechansm (CDM, a provson n the Koto Protocol ( whch enables buers from developed countres to purchase GHG emsson reductons from projects n developng countres. Such emsson reductons are credted towards the emsson reducton targets for developed countres under the Koto Protocol. The Bank s as a trustee for a group of 11 funds and facltes. In the waste management area, exstng CDM methodologes n whch the Bank s nvolved nclude landfll gas collecton wth energ recover / flarng and compostng projects. The Bank s developng a methodolog for methane avodance through recclng. In the carbon fnance area, the Bank has 32 muncpal waste management projects, ncludng 25 n landfll gas capture and 7 n compostng; plus addtonal projects for agrcultural wastes. Sold Waste and Greenhouse Gas Emssons Methane, a b-product of the decomposton of the organc bomass porton of sold waste dsposed of n a landfll, s a greenhouse gas, whch has 21 tmes the global warmng potental of carbon doxde (CO 2 ). 2 2 Methane has an atmospherc lfe n the range of 9 to 15 ears wth a GWP over 20 ears of 56, declnng to 21 over 100 ears, ncludng ndrect effects of tropospherc ozone producton and stratospherc water vapor producton. (Source: Values of the Revsed 1996 IPCC Gudelnes

4 Total anthropogenc (human nduced) methane emssons represent about 15% of greenhouse gases (EPA, June p. I-2). Worldwde, waste dsposal accounts more than 20% of anthropogenc methane (EPA. June P. III-1), whch makes waste dsposal the fourth largest source of non-carbon doxde greenhouse gas. Carbon doxde from bomass organcs n muncpal waste are consdered clmate neutral. Ths ncludes CO 2 from compostng (aerobc) as well as burnng of methane n a flare or a generator to produce electrct. Clean Development Mechansm Projects n developng countres that have ratfed the Koto Protocol must compl wth the condtons of an approved methodolog to develop an elgble project and sell ther emsson reducton credts. These methodologes are overseen b the CDM Executve Board under the UNFCCC ( ). A common element of all methodologes s the need to set a baselne scenaro, whch s the level of greenhouse gas that would be emtted n the absence of the CDM project actvt (also known as the busness as usual or base case scenaro). For recclng projects, the baselne s rate of recover for the targeted materal under exstng condtons. Addtonalt, or the addtonal level of GHG emsson reductons that would be acheved beond the baselne because of CDM ncentves, s a second basc element. Addtonalt can be demonstrated usng the barrer approach, the obstacles that prevent a project from happenng n the absence of CDM ncentves. Examples of barrers that prevent a CDM project nclude access to fnancng sources, sgnfcant technologcal rsks, barrers due to prevalng practce n the host countr where the project s takng place. In addton, on current practces barrer, the frst-of-ts-knd barrer could be used to demonstrate the addtonalt of the CDM project usng documented evdences on the sector and common practces n the host countr. Addtonalt can be also be demonstrated usng an nvestment analss such as a smple cost analss, nternal rate of return (IRR) or net present value (NPV) of the project. The project must show that t s not the most fnancall attractve nvestment scenaro. Alternatvel benchmark approach could also be used to demonstrate the addtonalt f a project usng nvestment analss. In ths case, t s necessar to demonstrated that the CDM project actvt has a less favorable ndcator (e.g. lower IRR) than the benchmark. Approved CDM Methodologes Snce a CDM approved methodolog for recclng does not exst, the Bank s pursung development of such methodolog. The methodolog s beng developed under the CDM small-scale modaltes and rules that wll eld a maxmum 60,000 tons 3 of carbon doxde equvalent (tco 2 e) per ear per project. An advantage wth small-scale projects s that the can be developed usng smplfed rules, ncludng smplfed montorng once operatons begn. Offsettng these advantages s the relatvel hgh development cost for the emsson reductons that can be earned wth smallscale projects. for Natonal Greenhouse Gas Inventores (1996) are to be used for the frst credtng perod of CDM project (.e, 21 for methane). 3 Ton = metrc ton.

5 Methodolog Applcatons Preparaton of a Project Desgn Document (PDD), a formal requrement of the CDM Procedures and Modaltes to regster a CDM project and start generatng credts, defnes the nature of a proposed project, the expected emsson reductons, the factors used to estmate expected reductons, and descrbes a montorng plan to track future performance, s a crtcal step n the development of a project. The completon of a PDD s also requred to demonstrate a tpcal applcaton when developng a new CDM methodolog. A PDD has been prepared as part of the development ntatve for a recclng methodolog. A project n the metropoltan area of Buenos Ares, Argentna s the sample project addressed n the PDD. PROJECT DESCRIPTION The CEAMSE Plastc Recclng Project wll be developed b CEAMSE 4, the entt n charge of the collecton and fnal dsposal of muncpal sold waste n Buenos Ares ct and ts surroundngs. The project conssts of the nstallaton of eght recclng plants where HDPE and LDPE dscards wll be recovered from post-consumer waste, classfed, packaged and sold as raw materals for the producton of HDPE and LDPE products such as bottles and bags. These recclng plants, also called socal plants, wll be operated b cvl assocatons. CEAMSE wll collect the waste and provde the land, the nfrastructure and some of the equpment needed for operaton of the recclng facltes. The workers wll keep the net revenue from the sale of recovered HDPE and LDPE. The project s forecast to reduce GHG emssons b 914 tco 2 e per ear wth the use of reccled HDPE and LDPE rather than the manufacture of products from vrgn raw materals. The amount of emsson reductons and credts wll ncrease sgnfcantl once the methodolog wll cover other recclables such metals and paper. About 500 tons of HDPE and LDPE wll be recovered annuall because of ths project actvt. In absence of the project, the HDPE and LDPE resdues would have been dsposed n CEAMSE s landfll. Ths project onl takes nto account the emsson reductons assocated wth the energ saved durng the producton of plastc products because of the complext of trackng overall materal lfe-ccle emssons. The project n Buenos Ares wll contrbute to sustanable development n the followng manner: Decrease n overall energ use, greenhouse gas emssons, and the envronmental effect from raw materal extracton through manufacture wth secondar materal nstead of usng vrgn materal. 4 Coordnacón Ecológca Área Metropoltana Socedad del Estado (CEAMSE) s a governmental organzaton n charge of the collecton, treatment and fnal dsposal of sold waste generated n Buenos Ares and ts surroundngs. CEAMSE collects more than 435,000 tons of resdues per month, whch s the equvalent of the resdues generated b 13.0 mllon habtants. CEAMSE has nter-jursdctonal character, snce ts captal stock s shared n equal parts b the Government of the Provnce of Buenos Ares and the Government of the Independent Ct of Buenos Ares.

6 Reduced demand for capact at CEAMSE s landfll. Provde emploment n the recclng plants that wll be operated b local people lvng n the extremel poor neghborhoods. Currentl these people are earnng ncome as waste pckers, an unsantar workng envronment. The eght socal plants wll hre about 40 people per plant. The revenue generated from the sale of recclables wll be pad to the emploees. Promoton of organzed recclng actvt n Argentna and technolog transfer for the producton of plastc usng reccled materal. The followng actvtes wll be undertaken at the recclng facltes: At the eght recclng plants, the dscards collected b CEAMSE wll be delvered to a recclng plant, placed on a conveor that wll move the waste to be sorted through a faclt. Workers wll manuall separate recclables and place them n baskets accordng to ther tpes: cardboard, plastcs, paper, and alumnum. The resdues that are not recclable wll fall nto another contaner at the end of the lne and wll be dsposed at the CEAMSE s landfll. Separated plastcs n the ntal step wll be manuall sorted further accordng to dfferent plastc tpes ncludng HDPE, LDPE, PET, PC, PP, PVC or PS and colors. The classfed materal, ncludng LDPE and HDPE, wll then be packaged to be sold. The total ex-ante emsson reductons for the 10-ear credtng perod of the project are estmated to be 9,140 tco 2 e. The actual amount of emsson reductons wll be based on the quantt of waste reccled and, therefore, wll be evaluated ex-post. Estmatng Emsson Reductons The emsson reductons acheved b the project actvt wll be the dfference between baselne emssons and project emssons as well as leakage 5, see equaton 1. ER BE PE LE (1) Where: ER BE PE LE = Emsson reductons n ear (tco 2 e). = Baselne emssons n ear (tco 2 e). = Project emssons n ear (tco 2 e). = Leakage emssons n ear (tco 2 e). Baselne emssons are calculated usng equaton 2. BE L * BE * r (2) B,, PM, Where: BE I = Baselne emssons n ear (tco 2 e/). = Materal (HDPE and LDPE) 5 Leakage s emssons assocated wth a project actvt that occur outsde the project boundar.

7 L B,, = Quantt of materal reccled n ear (ton of materal /) ths parameter wll be measured ex-post. For ex-antes estmaton, L B,HDPE, = 116 tons, L B,LDPE, = 388 tons. BE PM,I = Emssons generated durng the processng/manufacturng of materal produced from vrgn nputs per ton of materal (tco 2 e/ton of materal ). r = Rato to account for materal loss (%), specfc to materal (0.77). Equaton 3 provdes the calculaton for emssons durng processng / manufacturng. BE EG * EF PM, PM, grd (3) Where: EG PM,I EF grd = Electrct consumed at the processng/manufacturng level per ton of materal made of vrgn nput, usng data from publshed references (MWh/ton of materal ). As no countr specfc values are avalable, values for HDPE and LDPE are from the lterature (McDougall, 2007), EG PM,HDPE = 9.31 MWh/ton HDPE, EG PM,LDPE = MWh/ton LDPE. = msson factor for the electrcal grd sstem (tco 2 e/mwh). Emsson factor, made avalable b the Desgnated Natonal Authort (DNA), the CDM representatve n Argentna 6. EF grd = tco 2 e/ MWh. Project emssons are calculated usng the formula provded n equaton 4. PE L ( PE PE ) (4) Where: PE L B,, PE R,I, B,, * R,, PM,, = Project emssons n ear (tco 2 e/). = Reccled materal n ear (HDPE, LDPE). = Quantt of materal reccled n ear (tons of materal /). Ths parameter wll be measured ex-post. For ex-antes estmaton, L B,HDPE, = 116 tons, L B,LDPE, = 388 tons. = Emssons generated at recclng faclt for the reccled materal n ear (tco 2 e/). PE PM,I, = Emssons generated durng the processng/manufacturng of the reccled materal n ear (tco 2 e/ ton of materal ). Emssons assocated wth transportaton of recclables under the project actvt are neglgble when compared wth baselne and consequentl are neglected under ths methodolog (EPA, September 2006). Emssons at a recclng faclt wll be calculated usng equaton 5. PE R,, ( EGR, * EFgrd ) j FC SP, j * NCV SP, j * EF CO2, j *44 /12 (5) M 6 Lnk URL, access November 2008:

8 Where: EG R, EF grd FC SP, J NCV j EF CO2,j = Electrct consumed at recclng faclt at ear (MWh) - ths wll be measured ex-post separatel for HDPE and LDPE. For ex-ante estmaton, an estmate of 350 MWh s used (total for the eght plants). = Emsson factor for the electrcal grd sstem (tco 2 e/mwh). Emsson factor for the electrcal grd sstem (tco 2 e/mwh). Emsson factor, made avalable b natonal DNA 7. EF grd = tco 2 e/mwh. = Quantt of fossl fuel tpe j combusted at the recclng faclt at ear (ton). Ths wll be measured ex-post, for ex-antes estmaton, ths s estmated at 20,000 tons for the eght plants per ear for gasol. = All fuel tpe combusted at manufacturng level onl gasol. = Net calorfc value of fuel j (GJ/ton). NCV of gasol = TJ/ton. (IPCC, 2006) = Weghted average CO 2 emsson factor of fuel tpe j = 20.2 tco 2 e/tj. 44/12 = Mass converson factor. M SPT, = Quantt of sold waste enterng the recclng faclt at ear (ton/) Ths parameter wll be measured ex-post, 60,000 tons/ s used for ex-ante estmaton (based on capact of the eght plants). Emssons at reccled faclt are allocated to materal usng mass fracton of materal on total mass enterng the recclng faclt at ear. Processng/manufacturng emssons are expressed b equaton 6. PE * PM, EGPMR, EFpm (6) Where: EG PMR, = Electrct consumed at the processng/manufacturng stage per ton of materal made of reccled nputs, usng data from publshed references (MWh/ton of materal ). As no countr specfc values s avalable, values for HDPE and LDPE are from the lterature, (McDougall, 2007) EG PMR,HDPE = 2.13 MWh/ton HDPE, EG PMR,LDPE = 7.11 MWh/ton LDPE. EF grd = Emsson factor for the electrcal grd (EF pm = EF grd ) or emsson factor correspondng to the hghest fossl fuel used for generaton of heat or electrct fuel. Value used for Argentna s 1.3 tco 2 e/mwh. Derved from, fuel ol; 41,816 Kg/KJ (low calorfc value; emsson factor tco 2 e/tj; oxdaton 100%. (IPCC, P 1.24). Montorng The montorng protocol s mportant to trackng the performance of a CDM project. Pament for emsson reducton s based on the verfed results of the montorng data, so projects must be judcous n the collecton and storage of montorng data. A montorng plan wll be mplemented b CEAMSE n collaboraton wth the assocatons n charge of the each recclng plant. The plan s made to verf that the 7 Lnk URL, access November 2008:

9 emsson reductons are real and measurable. The montorng protocol wll nvolve the collecton of the followng: Mass of each reccled materal enterng the recclng faclt (L B,, ), measured b drect weghng. Total mass of sold waste enterng the recclng faclt (M SPT, ) measured b drect weghng. Amount of electrct consumed at the recclng faclt for power equpment (EG R, ). Emsson factor for the electrcal grd sstem (EF grd ). Amount of fossl fuel tpe j combusted at the recclng faclt (FC SP, ). Net calorfc value of each fuel used at recclng faclt (NCV j ). The weghted average CO 2 emsson factor of fuel tpe j (EF CO2,j ). Sale prce of reccled materal s montored and reported annuall, sale recepts are collected for annual verfcaton. At processng/manufacturng faclt, producton factors that comprse PE PM,j Methodolog Development - Tmelne The proposed methodolog and assocated PDD were orgnall submtted to the Small-Scale Workng Group (SSC WG) n December of As of earl Jul 2009, the Bank has responded to two rounds of questons, and at ths tme the methodolog s stll under revew. Two topcs stll pendng wth the SSC WG are: Materal loss. The SSC WG has commented that there should be a dscount on the quantt of materal recovered to account for materal losses durng the recclng process as well as the loss n product qualt that requres a hgher level of materal use n producton of a manufactured tem. As an example, the Workng Group has stated that plastc bags made from secondar LDPE use 50% more materal than such bags manufactured wth vrgn stock. Prmar energ and electrct use. The Bank suggested the use of a unversal default value, whch the SSC WG determned to not be applcable n all locatons. As an alternatve, emssons data for a range of developng countres s beng revewed to formulate default values on a regonal bass. Fnal responses on these topcs are to be submtted to the Workng Group for ther next formal meetng, whch s scheduled for late September It s antcpated that f ths effort t successful that a methodolog on the recclng of HDPE and LDPE wll be approved b md Wth approval the Bank wll pursue smlar methodologes for other recoverable materals ncludng ferrous metal, paper, and glass. Addtonall, the Bank s separatel workng on the development of a new urban-wde approach to carbon fnance (Ranade). The approach wll combne emsson reducton actvtes from several urban areas, ncludng waste management, transport, and energ effcenc, to ncrease the scope of carbon fnance programs to nclude smaller actvtes that mght not justf a separate CDM project. CONCLUSION

10 As a stand-alone project, the proposed project for the recclng of HDPE and LDPE s ver small as a CDM actvt. Even wth the antcpated, eventual of other recclable materal the project wll generate onl small level of greenhouse gas emssons. Nonetheless, the development of the proposed methodolog for the recover of secondar materal from postconsumer dscards s deemed a worthwhle undertakng as regstered projects wll generate addtonal revenue for waste pckers who as a group survve on ver low ncomes. ACKNOWLEDGEMENTS Rama Chandra Redd. Manager, Methodolog Team. Carbon Fnance Unt, World Bank. Roberto Aello. Latn Amercan and Carbbean (LAC) Regonal Offce, World Bank (formerl wth the Carbon Fnance Unt, World Bank) and Horaco Terraza (formerl wth the LAC Regonal Offce, World Bank). Jontl ntated the recclng methodolog. Sandra Contreau. Sold Waste Advsor, World Bank. REFERENCES Eggleston, S., Buenda, L., Mwa, K., Ngara, T., Tanabe, K IPCC Gudelnes for Natonal Greenhouse Gas Inventores. Intergovernmental Panel on Clmate Change Global Mtgaton of Non-CO 2 Greenhouse Gases U.S. Envronmental Protecton Agenc. Washngton, DC. June McDougal, F., Whte, P., Franke, M., Hndle, P. (ed) Integrated Sold Waste Management: A Lfe ccle Inventor. 2 nd Edton. Blackwell Publshng Compan (Chapter 22). Smplfed modaltes and procedures for small- scale CDM project actvtes. UN Framework Conventon on Clmate Change, Clean Development Mechansm. Ranade, M., Peterson, C., Pnno, N. Access to carbon fnance for clmate change mtgaton n urban areas. In: Proceedngs of the 5 th Urban Research Smposum, Marselle, France. June 28-30, Sold waste management and greenhouse gases a lfeccle assessment of emssons and snks. U.S. Envronmental Protecton Agenc. Washngton, DC. September 2006.