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

Collection of MSW

Waste separation / recycling

Controlled sanitary landfills

The real world is different

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

BORG EL ARAB AND EL HAMMAM LANDFILLS, ALEXANDRIA, EGYPT

© Veolia Propreté/Onyx

Landfills

• Before

• After

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

Thank you

Questions ?

Gaël Grégoire

ggregoire@worldbank.org