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Landfill Gas Offsets The Untapped Potential Michael Gerbis, P.Eng. President, The Delphi Group 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 Overview LFG Potential Across Canada LFG within Canada’s Action Plan Business Case Offsets Other Benefits Key Steps, Players & Challenges Examples 2000 Canadian Emissions Canada’s Total GHG Emissions Canadian CH4 Emissions 91,000 kt eCO2 (12.5% of Total) Manitoba’s ~ 21,400 kt eCO2 726,000 kt eCO2 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 - 1999/2001 Total Methane Generated In Canadian Landfills 1,321Kt CH4 Landfill Methane Capture 342 Kt Flaring 25 Sites 147Kt ~ 3MT eCO2 Landfill Methane Released to Atmosphere 979Kt Utilization 16 Sites Produced 84 MW of Power 8 Facilities 182 KT ` 3.8MT eCO2 Direct Utilization 8 Facilities 13Kt ~ 270Kt eCO2 TOTAL REDUCTIONS > 7 MT 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 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 Canada Ongoing Activities LFG Projects Moving Forward (e.g. Vancouver) Green Municipal Funds for Landfill Gas capture (2.2 MT) Government purchasing offsets NRCan Pilot Emission Removals, Reductions & Learnings (PERRL) Air Pollution Prevention Directorate, Environment Canada www.ec.gc.ca/PERRL 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 Canada Proposed 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 Domestic Emissions Trading System being developed 10% new generating capacity from green sources Future community action Landfills provide possibility to reduce emissions and represent potential offset credits Purchase a Minimum of 10 MT International Credits 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 50 Lessen Landfill owner's liability Source of Green Power 40 cost 30 20 10 Improved Air Quality 0 reductions Internal reduction Offsets Landfill GHG Offsets COMPANY A (w/ GHG Emissions Reduction Target) Emissions Baseline Benefit Quantification M&V Tradable GHG Offsets Finance ($$) Technology Capacity Building Credit Purchase Contract LFG Offset Project Establishing High Quality LFG 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 Establishing High Quality LFG 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 Establishing High Quality LFG 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 LFG Challenges Quantification Valuation / Cash Flow / ROR Price of Offsets & Selling Strategies Establishing Offset Ownership Direct (flaring) vs. Indirect (electrical & thermal) Timing of Offsets Multiple Stakeholders Unknowns Project performs as predicted Future Market & Price Government Approval / Future Policy 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 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 Project Key Players & Benefits Projected Overall Results Reduce GHG emissions by > 200,000 tonnes/year Capture 500,000 GJ/year of energy equivalent to 3,000 to 4,000 homes’ energy requirements The City of Vancouver equivalent to 40,000 automobiles 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 Project Key Players & Benefits CanAgro BC Hydro Electricity under its Green Energy Program & elect. offsets Maxim Power Corp receive a secure low-cost heating source for greenhouses Offset non-renewable power requirements by ~ 20% 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 Project Barbados Potential CDM Project – Unique Concept LFG Collection & Flaring System Landfill Utilization with Storage 14 – 15 million m3 per year (60% CH4) 1.4 million tonnes eCO2 reductions over 10 years ~ 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 Mangrove Green Energy Project GHG Credits The Delphi Group Catalyzing Environment and Clean Energy Opportunities Market Valuation Pricing & Positioning GHG Reduction Strategies International Transactions (CDM & Tech Transfer) International Transactions (CDM & Tech Transfer) Business Planning & Project Structuring 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 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: [email protected] CO2 Value for 1% ROR Impact Effect of CO2 Revenues On Rate of Return $10.00 Coal Mine Methane Gas Utilization Landfill Gas to Energy Anaerobic Digestion $8.00 $6.00 $4.00 Biomass Co-Firing Cement Plant Upgrade CHP- District Heating Plant Biomass Combustion $2.00 Municipal Streetlight Upgrade $0.00 Small Hydro Wind Impact of Carbon Finance on Project, Project Not Technology DIRR Energy Eff.-District Heating 2- 4 Wind 0.9-1.3 Hydro 1.2-2.6 Bagasse 0.5-3.5 Biomass with methane kick Up to 5.0 Municipal Solid Waste with >5.0 methane kick Source: PCF….Assuming a revenue stream based on emission Reduction (at US$ 3/TCO2e) the change in internal rate of return (IRR) of projects: Equity, IRR.