a Presentation by D L Ho Southern Waste Management … Outline Greenhouse Gas Emission Reduction...

Landfill Gas CDM Projects by SWMLandfill Gas CDM Projects by SWM

a Presentation bya Presentation byD L HoD L Ho

Southern Waste Management Southern Waste Management SdnSdn BhdBhdMarch 2006March 2006

Presentation Outline

Greenhouse Gas Emission Reduction through Landfill Gas Management

Kyoto Protocol to reduce Greenhouse Gases (GHG)

Clean Development Mechanism (CDM)

LFG CDM projects by SWM

Project Benefits

DISPOSAL SITES “B”

NEGERI SEMBILAN

JOHOR

MELAKA

Lipat Kajang

Sikamat

Chembong

Kg Keru

Bkt Palong

Sg Segamat-Bandar Segamat Baru

Air ItamBakri

Kg Batu Empat

Kg PG Baru

Pekan Nenas

Krubong

Pagoh

Yong Peng

MachapMinyak Beku

Larkin

Saleng

Pajam

Kluang

Ulu Maasop

Kg Koh Foh

Masjid Tanah

Ulu Tiram

Mersing

Jementah

Tomayoo-Air PanasSua Betong

Pengkalan Kempas

Kg ChennahSimpang Pertang

Sri Asahan

Gemas

P. Sebang Btg Melaka

Sanglang

Rimba Terjun

Kelapa Sawit old

Parit SulongKg Gajah

ChamekJln Sengkang-Bkt Gambir

Jln Sialang-Tangkak

Endau

Jemaluang

Bandar Tenggara

Bandar Petri Jaya

Bkt Tua TauOTHER EXISTING DISPOSAL SITES

Sg Muntoh

Rantau

Kelapa Sawit new

NEW SANITARY LANDFILLS

Seelong

SWM Existing Disposal Sites

DISPOSAL SITES “A”

SWM Landfills

Dumpsites initially inherited from CouncilsDumpsites initially inherited from CouncilsDumpsites initially inherited from Councils Dumpsites closed by SWMDumpsites closed by SWMDumpsites closed by SWM

SWM Landfills

New Sanitary Landfills built by SWMNew Sanitary Landfills built by SWMNew Sanitary Landfills built by SWM

Landfill Gas Control

Landfill gas is formed by anaerobic degradation of waste, and takes place in all landfills.

Organic waste

+ Anaerobic biological process

+ Moisture

+ Temperature

+ Time

= Landfill Gas

Component %Methane 40 - 60%Carbon Dioxide 20 - 40%Nitrogen 2 - 20%Oxygen < 1%Hydrogen Sulphide 40 - 100 ppmHeavier Hydrocarbons <1%Complex Organic 1,000 - 2,000 ppm


Significance of Landfill GasPotential energy recovery from Methane GasMethane is a potent Greenhouse GasExplosive natureHealth hazards associated with trace gasesOdour nuisance


Extracting and burning the landfill gas, is in all cases environmentally beneficial, and in many cases economically attractive to the owner.

Many countries have already set-up regulations for landfill gas control as part of proper landfill closure.

Kyoto Protocol on Greenhouse Gases

COP 3 (Kyoto Conference)COP 3 (Kyoto Conference)1997, 161 Countries attended1997, 161 Countries attendedKyoto Protocol SignedKyoto Protocol Signed

Contents of Kyoto ProtocolContents of Kyoto Protocol• Target Year: 2008-2012• Base year, 1990• Level: Total 5% reduction of GHG to ANNEX 1 (Developed)

countries• Greenhouse Gases : CO2, CH4, N2O, HFC, PFC, SF6• Flexibility• CO2-equivalent Carbon Emission Reduction (CER) trading• Joint Implementation

Clean Development Mechanism• Developing countries

Clean Development Mechanism

Electricity Sale

Non-Annex I Host Country

CDM Projectdustry

ntry

Southern Waste

Management CO2 Credit (CER) Market

Approval/Registration byCDM Executive Board

(UNFCCC)

Annex ICountry / In

Annex I Cou

CER Trading

Landfill Gas Utilization System

Landfill Gas CDM Project Phases

Gas Potential CalculationTheoretical potential is calculated based upon all available information concerning types and quantities of waste, degradation properties and extraction restrictions.

Computational analysis for the production rates for landfill gas takes into account the humidity and temperature of the waste.

Based on the gas potential the first economical calculation can be made, and if it is positive, a gas pumping test is performed.


Gas Test PumpingA gas test pumping is performed at the landfill site to determine the actual extraction conditions and confirming the assumptions used in the theoretical calculations.

During the test pumping, the following parameters are determined:

(1) Optimal well spacing(2) Optimal suction flow rate

A final gas prognosis is made from the field results obtained from the test pumping and determined whether the quantity & quality of gas produced will be suitable for destruction by flaring or by burning in a gas engine-generator.


Full-Scale Gas Extraction SystemThe gas extraction plant for the landfill consists of the following systems:

(1) Gas Wells

(2) Gas Collection System

(3) Gas Pumping System

(4) Gas Utilisation System


CDM Application

Project Developer

Host Country Letter of Approval

Project Registration with CDM Exec Board

Project Idea Note (PIN)

Project Monitoring

Technical Committee Evaluation

Validation by Desig. Op. Entity

(DOE)Project

VerificationConditional Letter of Approval

Project Design Document (PDD) Issuance of CERs

by CDM EB

Chronology of Krubong LFG-CDM projectJuly 03 - Application for Annex I Govt grant for LFG-CDM Feasibility Study

Oct 03 - Annex I Govt approval for FS grant

Nov 03 - Commence FS (incl boring of test wells)

Dec 03 - FS completed

Jan 04 - Project presentation to stakeholders (land owner, residents, Govt)

Mar 04 - Project Idea Note (PIN) submitted to NCCDM (Host Country)

Apr 04 - Project progress update to stakeholders and confirmation of project approval from stakeholders

Aug 04 - CDM Project Validation by Operational Entity (OE) commences

Sept 04 - OE conducts site survey and interviews stakeholders as part of Validation

Sept 04 - PDD submitted to NCCDM

Oct 04 - Validation report submitted to NCCDM

Dec 04 - Project CDM report submitted to Annex I Govt for approval

Jan 05 - Approval of CDM project by Annex I Govt

Mar 05 - Presentation of PDD and clarification to NCCDM

July 05 - Approval of PDD by NCCDM

Now - Registration of project with CDM Exec Board (UNFCCC)

Chronology of Ulu Tiram LFG-CDM projectJuly 03 - Application for Annex I Govt grant for LFG-CDM Feasibility Study

Aug 03 - Annex I Govt approval for FS grant

Sept 03 - Commence FS (site survey and desktop research)

Nov 03 - FS completed

May 04 - Application submitted to Annex I Govt for approval of Demo Project at site

May 04 - Approval by Annex I Govt for Demo Project

June 04 - Project presentation to stakeholders (land owner and Council)

July 04 - Approval given by stakeholders for LFG-CDM Demo Project

Nov 04 - Demo Project works commences (6 gas wells with test pumps and flares)

May 05 - Demo Project completed

Aug 05 - Demo Project Final Report submitted to Annex I Govt

Now - PIN to be submitted to NCCDM (Host Country)

Chronology of Seelong LFG-CDM projectApr 04 - Site visit and preliminary project investigation

May 04 - Application to Annex I Public Utilities Company for grant for LFG-CDM Feasibility Study and Demo Project

Aug 04 - Project Idea Note (PIN) submitted to NCCDM (Host Country)

Sept 04 - Annex I Public Utilities Company approval for FS and Demo Project grant

Nov 04 - Commence FS and Demo Test Pumping Project at site (2 gas wells, test pump, flare)

Feb 05 - Initial draft LoI for purchase of CERs for this project submitted to Annex I Country for review

Feb 05 - Annex I Country made site visit to Seelong Demo Project

Mar 05 - NCCDM meeting to review PIN

Sept 05 - FS and Demo Project completed

Now - LoI for CER purchase by Annex I Country to be signed

SWM Landfill Gas CDM Capability

Our ServicesWe are committed to preserving mother nature and our environment for a greener future.

We are capable in providing a whole range of services on “Methane Control and Destruction Project from Landfills” as follows:

Feasibility Studies

CDM Application Advisory

Technical Consultation

Project Budgeting

Quantity Surveying

Technical Design

Construction

Supervision

Monitoring

Gas Sampling & Analysis

Operation

Maintenance

Future LFG CDM Projects

NEGERI SEMBILAN

JOHORMELAKA

Current LFG CDM Projects

Ulu Tiram

Larkin

Seelong

Krubong

Yong PengMuar

Pagoh

Chembong

Perhentian Tinggi

Sikamat

Sungai Udang

SWM Landfill Gas CDM Projects

SWM Krubong Landfill LFG CDM ProjectSWM SWM KrubongKrubong Landfill LFG CDM ProjectLandfill LFG CDM Project

Production Well

Electrical Equipment and Office BuildingGas Engine Generator Facility

LFG Pipe φ300 : 1,024mLFG Pipe φ200 : 1,432mProduction Well

SWM Krubong Landfill LFG CDM Project

SWM Larkin Landfill LFG CDM ProjectSWM Larkin Landfill LFG CDM ProjectSWM Larkin Landfill LFG CDM Project

SWM Ulu Tiram Landfill LFG CDM Project

B

A

C

B

2

D

D A 6

6

5

5

4

4

3

3

C

1

1

2

100m75502510 0

100m90807060504030201050

SWM Ulu Tiram Landfill LFG CDM ProjectSWM SWM UluUlu TiramTiram Landfill LFG CDM ProjectLandfill LFG CDM Project

SWM Seelong Landfill LFG CDM ProjectSWM SWM SeelongSeelong Landfill LFG CDM ProjectLandfill LFG CDM Project

SWM Seelong Landfill LFG CDM ProjectSWM SWM SeelongSeelong Landfill LFG CDM ProjectLandfill LFG CDM ProjectConsulting Engineers, Planners,

Environmental Scientists & Project Managers

Maunsell Australia Pty LtdABN 20 093 846 925THIS DRAWING AND DESIGN REMAINS THE PROPERTY OF LANDFILL MANAGEMENT SERVICES

PTY LTD AND MAY NOT BE COPIED OR USED FOR MANUFACTURE OR CONSTRUCTION IN ANY WAY WITHOUT PRIOR WRITTEN APPROVAL FROM THIS COMPANY.

D RA FTING D E SIGN

PRE PARED

THE SIGNING OF THIS TITLE BLOCK CONFIRMS THE DRAFTING OF THIS PROJECT HAVE BEEN PREPARED AND CHECKED IN ACCORDANCE WITH THE MAUNSELL QUALITY ASSURANCE SYSTEM CERTIFIED TO AS/NZS ISO 9001-1994.

C HEC KEDD ATEPAS SEDP REPARED C HEC KED

SWM Seelong Landfill LFG CDM ProjectSWM SWM SeelongSeelong Landfill LFG CDM ProjectLandfill LFG CDM Project

SWM LFG CDM Project DevelopmentSWM LFG CDM Project DevelopmentSWM LFG CDM Project Development

SWM LFG CDM Projects

CER projections for SWM CDM Projects

0

50,000

100,000

150,000

200,000

250,000

300,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Year

CER

tonn

age

Seelong CERsKrubong CERsUlu Tiram CERs

Project Developer’s Concerns

From a project owners and investors point of view prices for CER’s between 5$ and 7$ are too low.Environmental protection is normally very expensive.In developed countries billions of dollars has been spent without any revenue has been expectedOn the other hand the buyers of CER’s have some of the same argument for buying CER’s to a low price: Value of forward CER’s are low due to high risk of non delivery.

Project Risks

Below are some of the reasons why project owners need a higher price to cover the risk:

The investment must be paid off before 2012 as now one knows what happens after. This is quite a short period for an environmental investment.The risk of doing projects in undeveloped countries is higher than doing projects in developed countries. Change of government or other political changes nullifying existing agreements!Host country may not respect agreementBaseline after 1 period changes due to change in politicsIf the project owner goes bankrupt or changes in politics in theCDM country the project collapsesThe companies with the expertise in specific technology are normally not project developers and do not have the capital to develop the projects, as the preparation of feasibility studies, PDD, validation, etc.,. is quite expensive.

Technical risks:Rate of gas production compared to budget- rate of decomposition-amounts of waste deposited-humidity and temperature in wasteWater saturation of landfill -before and after Landfill closureSettlements in landfill

Measures:Conservative estimate based upon actual test-pumping

Effect and amount of water in landfill evaluated during Test-PumpingWell design incorporating telescopic joints

Risk Assessment

Stormwater drainage can be constructed on-site but it does not guarantee against total mitigation of major flooding and infiltration of stormwater through the landfill earth cover. Earthslips can occur upon saturation due to prolonged rainfall.

Intense rainfall and resulting flood – has been prevalent recently (2004 recorded 60-year flood levels in Seelong) due to climactic change, and this has the potential to clog gas wells and possibly cause erosion and settlement of thewastefill to damage the landfill gas equipment.

No supplier will provide a guarantee against lightning protection, thus measures such as installation of lightning arresters and enhanced ground-conductors merely act as partial risk mitigation. Insurance coverage for lightning risk can be obtained but at an understandably high premium.

Lightning strike – since Malaysia is one of the most lightning-prone countries in the world, the element of risk of direct lightning strikes to the landfill gas equipment on site is very high,

considering that the equipment (especially flare stack) protrudes at the highest point of the landfill.

Lightning strikes at other parts of the landfill can also ignite landfill fires.

Fire prevention measures can be added, such as earth bunds/trenches to retard spreading of landfill fire, as well as insurance coverage for fire risk.

Landfill fires – spontaneous combustion is known to happen in landfills, so the landfill gas equipment is at risk of fire damage from these fires.

Operational risk:

MeasureRisk

The equipment must be designed to be secured, against burglary, and the possibilities of taking out an insurance investigated.Burglary

To be clarified before implementingCost in connection with monitoring and validation to be specified.

development of the LFG extraction system.to delays and losses.beforehand enabling a detailed planning of thein a way conducive to LFG-extraction leading

Future depositing strategy on landfill to be agreed Future sections of landfilling not carried out

The landfill is sloped at a fairly stable gradient but seismic tremors of varying degrees can cause slope failures and total collapse.

Earth tremors from recent seismic activity inIndonesia has the potential to destabilise thelandfill and putting the landfill gas wells andequipment at risk.

Baseline after 1 period changes duet to change in politics.

Import duties imposed on project in conflict with agreements – may be for later extensions/

The purchaser of the CER’s to make firmagreement taking full responsibility and coveringrisks for political changes or changes in conditionsleading to the project being reduced or cancelled

Change of government or other political changes nullifying existing agreements. Host country will not respect agreement

POLITICAL RISK

MEASURERISK

Owner/operator needs to be secured a financial motive to strengthen and optimise conditions for the LFG-project rather than benefits up front.

Concession agreement has to be entered with landfill operator/owner securing the rights to, extract gas also for the coming sections

Change of waste strategy involving incineration and/or source separation taking the organic fraction elsewhere.

Waste supplies interrupted or reduced

A fixed / peg to a particular currency to price the CER can be considered.

Currency fluctuations related to the price of the CERs would affect financial projections.

The CER pricing mechanism should consider the risk of removal of tax incentives.

Government tax incentives may be removed if the CER pricing rises, but the impact of this tax addition to a financial model based on a fixed CER pricing can be disastrous.

A fixed or scheduled CER pricing mechanism which takes into account the risks of market price fluctuations would enhance the bankability of landfill gas projects.

Fluctuation in CER market pricing makes financial and investment planning very difficult. Banks and other sources of financing require a stable projection of returns on their investment so the bankability of the landfill gas project is in question due to the project financial sensitivity to the CER pricing.

The bankability of the project can be increased for a long-term CER purchase agreement if the fixed CER price takes into account the risks of market pricing projections over the same duration.

Duration of agreement to purchase CER at fixed price will have a bearing on the bankability of the project.

Financial Risk:

MeasureRisk

LFG CDM Project Benefits

To provide a safe closure of the landfill by controlling flammable and hazardous gases.

Accelerate stabilization of the landfill.

To meet the Kyoto Protocol to reduce Greenhouse Gases (GHG).

Potential of power cogeneration, for internal use or connection to the local power grid.

To meet Ministry of Energy’s renewable energy objectives of 5% total national production.

““TOWARDS A CLEAN ENVIRONMENTTOWARDS A CLEAN ENVIRONMENT””

THANK YOUTHANK YOUSOUTHERN WASTE MANAGEMENT SDN BHD


Power projections for SWM CDM Projects

0

2,000

4,000

6,000

8,000

10,000

12,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Year

Pow

er G

ener

ated

(MW

h/yr

)

Seelong PowerKrubong PowerUlu Tiram Power


Revenue for SWM CDM Projects

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Year

Rev

enue

(RM

) SeelongRevenueKrubongRevenueUlu TiramRevenue


Cost for SWM CDM Projects

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

15,000,000

16,000,000

17,000,000

18,000,000

19,000,000

20,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Year

Cos

t (R

M)

Seelong Cost

Krubong Cost

Ulu Tiram Cost


CDM Application

Project Developer

Project Idea Note (PIN)

Technical Committee Evaluation

Conditional Letter of Approval

Project Design Document (PDD)

Validation by Desig. Op. Entity

(DOE)

Host Country Letter of Approval

Project Registration with CDM Exec Board

Project Monitoring

Project Verification

Issuance of CERsby CDM EB

Krubong LFG – PDD approved. Ready to register with Exec

Board.Ulu Tiram LFG – FS & demo project done.

Ready to submit PIN.

Seelong LFG –FS done. Trial

gas wells done. Awaiting PIN

approval.

a Presentation by D L Ho Southern Waste Management … Outline Greenhouse Gas Emission Reduction...

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