PELANGI Solid-Waste Management and Financing: With Special Focus on CDM Agus P. Sari Managing Director Pelangi – Ecosecurities Alliance on Climate and Energy

PELANGI Choices of waste-management LandfillingSanitary Landfilling WetDry Separator Anaerobic bio-digestion Methane-capture to energy Electricity Incineration Recyclables Recycling

PELANGI Choices for solid-waste management Landfilling Land, to be provided by the municipal government, is assumed to be free. Sanitary Landfilling Minimum construction of landfill walls and cap is needed. Anaerobic digestion Anaerobic digester reactors are needed, not necessarily cheap (about $3 million). Recycling Separation of usable and recyclable materials. Incineration Expensive, requires a large amount of dry, combustible waste (mostly paper) — direct conflict with recycling. Power generation Methane-capture. Digestion methane-capture. Combustion of dry waste.

PELANGI Characteristics of (typical small) municipal waste in Indonesia (500 tpd) Types of wastePercent Organic (wet) waste78 Inorganic waste22 Recyclables9 Combustibles10

PELANGI Financing arrangements (typical, 500 tpd) Investment costs (M)Income to 2012 (M) Bio-digestion reactors2.0Recycling10.5 Other Construction3.5Composting7.0 Power plant2.5Electricity6.3 O and M1.0Others1.4 Others1.0CDM7 Total10.0Total27.9

PELANGI Industrial countries Developing countries How does CDM work? Emissions reduction with CDM Certified Emissions Reduction (CERs)

PELANGI Concepts and terms Baseline : Emissions that occur with the absence of the CDM project.  Methane that will be released by the landfills.  Carbon-dioxide that will be released from fossil-based electricity generation. CERs : Certified (and Verified) emissions reduction due to the CDM project implementation. Emisi tanpa CDM (Baseline) Emisi dengan CDM CER

PELANGI Institutional setting of CDM Conference of the Parties serving as Meeting of the Parties (COP/MOP) Countries / Parties CDM Executive Board Secretariat (Accredited) Operational Entities: Validation (Accredited) Operational Entities: Verification Designated National Authority (Komnas MPB) Project Proponents

PELANGI CDM in waste-management Methane avoidance: 21 times carbon-dioxide Out of 500 tpd typical landfills:  Emissions of CH4: 10 kt/year  Carbon equivalent: 200 kt/year  CER $5/t: $1 M/year  In 2006 – 2012 (7 years): $7 M Electricity generation out of 3 MW  24 kt/year  CER $5/t: $120 K/year  In 2006 – 2012 (7 years): $840 K

PELANGI Steps to develop a CDM project 1 Feasibility and Due Diligence 2 Documentation 7 Implementation 3 Public consultation 4 Validation by Operational Entity 5 Approval by National Authority 9 Verification by OE 10 Issuance of CERs by EB 11 Transaction of CERs 2 Methodological approval 6 Registration by Executive Board

PELANGI Financial needs of the CDM Feasibility and Due Diligence$5,000 - $10,000 Documentation (PDD)US$ 20,000 – $50,000, up to $100,000 with new methodology Public consultationAbout $2,000 – 10,000 Validation$8,000 - $15,000 Approval by the National AuthorityAt present: free. Registration by Executive Board$5,000 - $30,000 (depending on the project) Underlying investmentDepending on the project Project implementationDepending on the project MonitoringDepending on the project Verification$5,000 – $10,000

PELANGI Markets of CDM in the world Demand: 3.2 billion tons of CO 2 -equivalent.  1.2 billion tons from Canada.  1.1 billion tons from European Union.  0.8 billion tons from Japan, and others. “Cash” demand: $2.5 billions.  $880 million from the Netherlands, $800 juta from Canada, $160 juta from Denmark, and $140 million from Japan.  World Bank provides about $250 million.  Private sector provides about $200 million. “Price” was originally set by the buyers (buyers’ market): Commencement of the EU Emissions Trading Scheme moves the CER price up (even though not the same market, not the same commodity): Entry into force of the Kyoto Protocol increases the certainty of the market. Supply is not as much as we originally thought.

PELANGI Thank you — Terima kasih Agus P. Sari Pelangi – Ecosecurities Alliance for Climate and Energy Graha Niaga Lantai 17 Jalan Jenderal Sudirman Kav. 58 Jakarta Tel: (62-21) Fax: (62-21)