ODS-and-Livestock-Methane-Overview by huangyuarong

VIEWS: 10 PAGES: 35

									An Introduction to Two ARB-
Approved CAR Protocols:

Livestock Methane Destruction

and

Ozone Depleting Substance
Destruction
CAR Offsets Workshop, NYC, July 26, 2011
Environmental Credit Corp. (ECC) is the #1 US Offset
Project Developer (Point Carbon, 2010). Since 2004, ECC has been
developing emission reduction projects and providing
greenhouse gas services to projects throughout the US,
as well as in Mexico, Brazil, and India.



ECC has 65 projects listed through programs including the Climate
Action Reserve (CAR), the Clean Development Mechanism (CDM),
and the Chicago Climate Exchange (CCX).



ECC has registered credits for a wide variety of project types:
   •Ozone Depleting Substance Destruction
   •Livestock Methane Destruction
   •Composting
   •Landfill Methane Destruction
   •Renewable Energy
     ECC Projects in the US




•Livestock methane capture
•Landfill methane capture
•Composting
•Destruction of Ozone Depleting Substances
Presentation Overview
I. Livestock Methane Destruction
      General Characteristics of the Project Type
      Utilization of the CAR protocol to date
      Project process, Crediting issues, and Risks
      Outlook for Livestock Methane Projects
II. Ozone Depleting Substance destruction (ODS)
      General Characteristics of the Project Type
      Utilization of the CAR protocol to date
      Project process, Crediting issues, and Risks
      Outlook for ODS Projects
Livestock- General Characteristics

Livestock Agricultural Methane Destruction projects
prevent the release of methane into the atmosphere.

Manure from dairy cows, swine, and other farm animals
often decomposes anaerobically- a process which creates
methane.

Rather than allowing the methane to escape, Livestock
projects capture the methane. Once captured, the
methane can be flared; used to create heat or electricity
on-site; or cleaned and transported for use as renewable
natural gas.
                                                   •manure lagoon

•Case Study: Fessenden Family Dairy
     King Ferry, New York (Finger Lakes Region)
     1,100 dairy cows
     Liquid manure management (flush system)                       •dairy barns


     Open-air anaerobic manure lagoon
•Animal manure storage is a widespread
source of methane emissions



                                            •Odor •Greenhouse gases

                                       •VOC, NH3, H2S, N2O, CO2, CH4




                                             •anaerobic decomposition
                                                    •(bacteria)

 •Air Quality Concerns:
 • Greenhouse gas emissions (Fessenden Farm ~200 metric tons methane/year)
 • Odor
 • Ammonia
                                                           •Open-air manure lagoon
•Manure collection




                     •Photos: USEPA AgStar
•Simple covers can capture methane from
lagoons and reduce GHG emissions

              •Air-tight membrane cover

                                             •Biogas collection system


                                                                        •Generator/flare
                                                        •biogas
                                                                    •CH4
                                                 •anaerobic digestion




 •Benefits:
 • Reduced GHG emissions (Fessenden Farm > 4,000 metric tons CO2e/year)
 • Reduced odor
 • Improved stormwater management
 • Potential for biogas use (renewable electricity, heat) •Covered manure       lagoon
•Lagoon Cover Design &      Simple, low-cost
                             technology
Implementation              U.S. supplier, local jobs
                            Rapid installation
                            Reliable operation
                            Farmer friendly
•Methane Emission Reductions
                               •Methane Combustion
• Established protocols

• Independently audited

• Formal registration




                                 •Renewable Energy Production
•Fessenden Dairy -- Anaerobic Digestion to Energy


   •2nd Stage Effluent Storage


                                                       •Manure &
                                                       Food waste


                                       •1st Stage Heated
                                        Covered Lagoon Digester




                                          •Genset & Heat Exchange
Anaerobic digesters in US (livestock)
                   •Number of operating digesters (Nov. 2010): AgStar Database




                                                            •(129 Dairy)
•Source: USEPA AgStar
Common Technologies
    Ambient Temperature
     “Lagoon Covers”



    Plug Flow/Mixed Plug
     Flow
                            •Photo: RCM International




    Complete Mix



    Other…
                                    •Photo: Fair Oaks Farms
•Plug Flow Manure Digester
•Mixed Plug Flow Manure Digester
•Centralized Complete Mix Digester




•Huckabay Ridge, Texas
Ag Methane- General Characteristics


  Duration of Project      Long- 10-30 years
  Relative Credit Yield    Low- 500-25k per
                           year
  Total Available Market   Large, stable
  Capital Requirements     High
  Associated Revenues      Energy Sales, Manure
                           Management Cost
                           Savings
Ag Meth- Utilization of the CAR Protocol
                                # of Issuances:
                                2007- 2
                                2008- 7
                                2009- 14
                                2010- 11
                                2011- 0
                                Average
                                Issuance Size:
                                2007- 18,000
                                2008- 4,700
                                2009- 7,600
                                2010- 11,100
                                2011-




*As of July 14, 2011
Ag Methane Process, Issues, and Risks
General Process of an Agricultural Methane Project:
1. Identification of a candidate dairy or swine farm
2. Selection of digester technology and design
3. Electricity? Flaring? Thermal? Decision is largely dependent
   on the availability, on a state by state basis, of incentives,
   RECs, feed-in tariffs, etc.
4. Installation of the monitoring equipment necessary to comply
   with CAR protocol
5. Accumulation of a year of activity- CRTs are only granted to
   emission reductions which have already occurred
6. CAR Project Developers like ECC monitor and quantify the
   emission reductions, and hire independent third-party
   verifiers to assess the accuracy of our emission reduction
   claims
Ag Methane Process, Issues, and Risks
Ag Methane Projects face some unique challenges:
1. The CRT value tends to be relatively smaller compared to
   other revenues and cost savings associated with the project
2. Relatively small quantity of emission reductions per project
   means that CAR listing and verification expenses, along with
   required monitoring and sampling costs, tend to exceed the
   value of the CRTs for all but the largest farms
Ag Methane- Outlook
The implementation of new projects will likely be influenced more
by Federal and State energy policy than by GHG programs.

However, changes which act to reduce fixed GHG-program related
project expenses could spur new project development.

Possible cost-saving mechanisms that could spur investment:
   •Bundling of projects
   •Allowing conservative defaults in place of direct
   measurements
   •Use of electrical production data in lieu of gas flows and gas
   composition
   •CDM-style “small scale” project designation with different
   requirements and costs
Ag Methane- Outlook
For their upcoming compliance program, CARB has thus far
treated CAR Ag Methane CRTs favorably, but there are risks:
    • Initial proposal discounted CAR CRTs on a 1 CRT for
         .87 ARBs basis, but ARB appears to have corrected this
         in its recent drafts
    • A “desk review” may be possible for some project
         verification transitions, but the cost of even a “desk
         review” is likely to be substantial on a per-credit basis




                              -2-
Presentation Overview
I. Livestock Methane Destruction
      General Characteristics of the Project Type
      Utilization of the CAR protocol to date
      Project process, Crediting issues, and Risks
      Outlook for Livestock Methane Projects
II. Ozone Depleting Substance destruction (ODS)
      General Characteristics of the Project Type
      Utilization of the CAR protocol to date
      Project process, Crediting issues, and Risks
      Outlook for ODS Projects
ODS- General Characteristics
The destruction, usually by high-heat incineration, of high GWP
CFC gases including R-11, R-12, R-114, and R-115. These are
gases whose production has been banned internationally by the
Montreal protocol.



This project type should not be confused with CDM projects
which involve the destruction of HFC-23 (HFC-23 is a by-product
of the production of HCFC-22).
ODS- General Characteristics
ODS gases are primarily sourced from four main stockpiles:
1. Gases used as refrigerants in older (pre-1996) household appliances,
   commercial HVAC units, and industrial chillers
2. Gases used as coolants in older vehicle air conditioning systems
3. Gases used as blowing agents in foam appliance insulation
4. Gases used as blowing agents in building insulation (1960-1996
   constructions)
ODS gases have extremely high Global Warming Potential (GWP):

 Gas                                             GWP (CO2 equivalent)
 R-11                                            4,750
 R-12                                            10,900
 R-114                                           10,000
 R-115                                           7,370

In other words, one pound of R-12 is has the same climate change impact as 10,900 pounds
of Carbon Dioxide
Climate Smart
 PG&E ECC
ARCA Video-
  Appliance
  Recycling
 ODS- General Characteristics
   Accessible Banks of CFCs in Refrigeration/AC Equipment in
   the United States will decrease rapidly as CFCs leak (chart
   assumes no intervention of carbon market- no destructions):
Year               CFC-11            CFC-12   CFC-115   Total
                                                        (MMTCO2e)

2005               44                290      15        349

2010               31                146      6         182

2015               9                 32       1         41

2020               0                 0        0         0


       US EPA Vintaging Model 2007
ODS- General Characteristics


 Duration of Project      Short- 0-3 months
 Relative Credit Yield    Extremely High- 50k-
                          180k per destruction
 Total Available Market   Large, finite, rapidly
                          declining
 Capital Requirements     High
 Associated Revenues      None
ODS- Utilization of the CAR Protocol




                            # of Issuances:
                            2010- 9
                            2011- 6
                            Average
                            Issuance Size:
                            2010- 133,000
                            2011- 87,325




*As of July 14, 2011
ODS Process, Issues, and Risks
General Process of an ODS Destruction Project
1. Refrigerants are aggregated together, often in what the
   industry calls an “ISO”- a large transportation tank which can
   hold 30-35,000 pounds of gas
2. Tanks are taken to one of six destruction facilities in the
   United States which use EPA-approved incineration methods
   to destroy the gases
3. Inbound and outbound weights are measured, along with
   chemical composition analysis of the shipment
4. CAR Project Developers like ECC monitor and quantify the
   emission reductions, and hire independent third-party
   verifiers to assess the accuracy of our emission reduction
   claims
ODS Process, Issues, and Risks
ODS Projects face some unique challenges:
1. Declining opportunity- as stockpiles are destroyed, they will
   never be replaced
2. Increasing cost/ diminishing returns:
   • low hanging fruit has been grabbed first- eligible gases
       which were sitting around in large quantities have been
       destroyed (Note- US government stockpiles are not eligible)
   • Accessing some stockpiles, for example gases used as
       blowing agent in building insulation, is possible, but very
       expensive and logistically challenging
   • The success of the program causes the market
       value of the gas to increase- socially desirable
       outcome, but limits offset supply
3. Limited destruction facilities in US- capacity constraints
ODS Outlook
While ODS projects are not likely to grow substantially over the
next few years, these projects should be a significant and stable
supply of offset credits for 5-10 years.

For their upcoming compliance program, the CA Air Resource
Board (CARB) has offered CAR ODS CRTs fairly favorable
treatment-
    •1 for 1 exchange of CAR CRTs for ARBs
    •Most ODS verifications will be subject to only a “desk
    review” by an ARB-approved verifier in order to transition
    •Cost of “desk review” process should be relatively
    insignificant per project, given the large size of typical ODS
    verifications
      Derek Six,
Portfolio Manager and
          CFO
  dsix@envcc.com
   (607) 288-4045

								
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