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					CDM PROSPECTS FOR SOLID
WASTE MANAGEMENT IN THE
      PHILIPPINES
 Presented to DENR Workshop on
               CDM
    Climate Change Institute




    By S. West Stewart, Managing Director
   Philippine Bio-Sciences Co., Inc. ‘PhilBIO’
               November 4, 2003
           CDM Prospects
   for Solid Waste Management
             Overview
Relative Size of MSW in the Philippines
Typical Ways to Extract LFG
Typical Ways to Upgrade & Utilize LFG
Payatas Demo Project Case Study
Basic Parameters for LFG CDM
LFG CDM Potential
The ‘Methane Kick’ Benefit
               (1990-2025) Municipal Solid Waste Generation
                            (Million tons/year)
35
                                                                                                                 29.55
30
                                                                                                                         constant
25                                                                                               23.18                   generation
                                                                                                                         rate
                                                                                 18.21                   19.21
20
                                                                 14.44                   16.19
                                                 11.63                   13.67
15                                    9.48               11.64
                                             10.07
                                                                                                                         increasing
     5.62
10                 7.04   7.04 8.82                                                                                      generation
            5.23                                                                                                         rates
5

0
        1990          1995       2000           2005          2010          2015            2020            2025
                                                       Year

        1. waste generation rate -What a Waste: Solid Waste Management in Asia, World Bank, 1999
        2. Urban population data - (http://apps.fao.org); Philippine Statistical Yearbook
GHG Emissions from the Waste Sector




Source: Ms. Joy Goco, IACCC
AEROBIC TREATMENT ANAEROBIC TREATMENT


                      1.2 kg2O             0.353m
 CO H                                    methane
  2+ 2O               - 1 kWh
                                           + 12.9 MJ
                      - 3.6 MJ

                          1 kg BOD
                Air
                           removed




Biomass 0.6                          Biomass 0.06
kg dry weight                        kg dry weight
                     Legend:
                     1- Leachate drainage system
                     2- Geosynthetics liner
                     3- Temporary soil cover
                     4- Compacted waste
                     5- Impermeable clay liner




                         6- Top soil layer
                         7- Flare
                         8- Pumping system
                         9- Surface water collection
                         10- Leachate treatment works


Cross Section of Typical Landfill
       Huitex HDPE Liner
Effective Leachate Containment
                                                                                                                                 CHP
                                                                                                Bi ogas
                                                                                                        3
                                                                                               1 9 6 0 m /d                           1 6 0 kWe
                               3 m3/d Un th i ck n e d
                                                 e                                                                                                      Fl a re
                                 S e wa g e S l u d g e
                                         +
                                       3
                                1 1 7 m /d S e wa g e
  2 5 t/d We t                                                                   1500 m3
                                                                                                                                  Sol i ds
M a rke t Wa ste                                                                                                                  S e p a ra to r            E ffl u e n t
                                                                                                                                                                     3
                                                                                                                                                             1 2 0 m /d
                                                                                Di g e ste r



                                     3
                                20m
                             Fe e d T a n k                                                                              S o l i d s 1 0 .7 t/d
                                                             Fig u r e 3.9 L o w So lids Dig e s te r




                                                                                            Bi ogas                                           1 6 0 kWe
                                                                                                    3
                                                                                           1 9 6 0 m /d              CHP
                                               3
                                                           e
                                         1 .2 m /d T h i ck n e d
                                          S e wa g e S l u d g e                                                                                                  Fl a re
                    2 5 t/d We t
                  M a rke t Wa ste                                              3
                                                                                       Di g e ste r
                                                                         550m
                                                                                                               Sol i ds
                                                                                                               S e p a ra to r




                                                           3
                                                      1 0 m /d Re cycl e L i q u o r
                                                                                                                                                  S o l i d s 1 0 .7 t/d
                                                                                                                           E ffl u e n t
                                                                                                                                  3
                                                         Fig u r e 3.10 Hig h So lid s Dig e s te r                        1 5 m /d

                                 3
                                             e
                           1 .2 m /d T h i ck n e d
    2 5 t/d We t             S e wa g e S l u d g e
  M a rke t Wa ste
                                                                                    CHP                                               Fl a re
                                                                 1 6 0 kWe                                         Bi ogas
                                                                                                                           3
                                                                                                                  1 9 6 0 m /d




            4 Conc rete v es s els or
            20 Cargo Containers

                                                                                                                     3
                                                                                                              1 0 0 m S to ra g e T a n k
                                                                   3
                                                         1 ,1 0 0 m T o ta l B a tch
                                                            Re a cto r V o l u m e
  S o l i d s 1 0 .7 t/d
                                                          Fig u r e 3.11 T w o Ph as e Dig e s te r
  PhilBIO’s
  RESTORE
CONCEPT FOR
 MANAGED
 LANDFILL

 LEACHATE &
 METHANE GAS
RECOVERY WITH
ON SITE POWER
 GENERATION


USING ANAEROBIC
    DIGESTER
TECHNOLOGY FOR
  WASTEWATER
 TREATMENT AND
   HIGH SOLIDS
PhilBIO’s Waste-to-Energy Solutions
  LFG UTILIZATION TECHNOLOGY
Direct Gas Utilitization ~ Gas Pipeline to
nearby industrial gas user (for boilers)
  118 Projects in the USA
  .5 to 5 km Gas Pipelines
Electric Power Generation
  Internal Combustion Engines ~ 500 kW -3 mW
  Gas Turbines ~ 3 mW to 50 mW
  Nearly 1,000 Projects in the USA with installed
  based of 900 mW
  Microturbines (Lopez Canyon, California)
  In the future, Fuel Cells
Vehicular Fuel
Leachate Evaporation
     SO2                                      N2O

                                                    CH4
                  CO
                                        Furans
     NOX                                             Dioxins


         H2 S
                                                     CO2
                                   leachate

                               groundwater
Source: Climate Change Institute
 Case Study: Payatas Dumpsite
   Waste Stream Composition
Type    %           %        %                % Ash   % Fixed
        Composition Moisture Volatile                 Carbon
                             Matter
Plastic 10.07           1.11        94.87     0.07    3.95

Paper   6.83            25.18       56.54     0.39    17.89

Food    52.88           58.95       30.57     0.74    9.74

Film    15.11           36.07       57.93     0.26    5.75
Plastic
Yard    Not             56.58       31.50     0.65    11.27
        Specified
  PNOC/EC from “Payatas Extraction Project”
          PAYATAS DUMPSITE
          GAS COMPOSITION
Composition      Old Dumpsite   New Dumpsite


CH4              40.7%          53.5%

CO2              29.7           32.6

O2               4.2            0.5

N2               15.8           1.9

PNOC/EC, ibid.
        LFG PROJECT
       REQUIREMENTS
INVESTMENT COSTS – LFG RECOVERY
 Assuming electric power generation option
 (US$/rated kW)

    Gas Collection U.S.$200-400
    Gas Pipeline        200-300
    Power Plant        850-1200
    EPC                 250-300
    TOTAL          U.S.$1,550-2,250
     PNOC/EC, ibid.
LFG PROJECT REQUIREMENTS

INSTITUTIONAL – LFG RECOVERY
 Legal ~ Project Itself is R.A.9003 Compliant
 LGU ~ Meets Local Requirements for Solid
 Waste Management
 Social ~ Community Outreach
      Constant Interaction on Merits of Project
      Local Barangay Approvals
      Public Participation Forum & Comment Period
      Avoid NIMBY ~ Example, Gapan, Nueva Ecija
 Contracts ~ PPA, Gas Offtake Agreement,
 Waste Stream Conveyance Contracts
 Carbon Ownership
  LFG Prospects for the
       Philippines
Standard Adaptation of Developed
Country Technologies will rarely be
economical without
    Tipping Fees to sustain landfill development
    Use of plastics for containment
    Coverage & Compaction of waste
    An appropriate Operations & Maintenance
    Budget, and
    ERPA Contract(s)
LFG Prospects for the Philippines
       LFG Prospects Improve
    Substantially with CDM Status

            Typical Requirements
              LFG CDM Projects
 Waste Stream Contract of at least 10 years
 Legal Right to the LFG for Commercial
 Purposes
 Capacity for a SLF or MLF of at least 1 mm
 Tons
 Long Term PPA or Gas Offtake Contracts
  CDM: Monetizing Carbon Credits
     Increases Project IRR’s
                            % IRR    % IRR     IRR Increase     % IRR
Country    Project Type
                              w/o    w/cer's    [% points]    Increase
Romania District heating      10.5    11.4          0.9           9
Costa Rica Wind                9.7    10.6          0.9           9
Jamaica Wind                  17.0    18.0          1.0           6
Morocco Wind                  12.7    14.0          1.3          10
Chile      Hydro               9.2    10.4          1.2          13
Costa Rica Hydro               7.1     9.7          2.6          37
Guyana     Bagasse             7.2     7.7          0.5           7
Nicaragua Bagasse             14.6    18.2          3.6          25
Brazil     Biomass             8.3    13.5          5.2          63
Latvia     Methane            11.4    18.8          7.4          65
India      Methane            13.8    18.7          4.9          36
Source: World Bank, July 2001
The Economics of waste to energy projects
        are especially attractive
Jamaica Wind Farm Project        PhilBIO’s CAT Waste to
  20 MW installed capacity              Energy Project
  50,000 t CO2 ER’s p.a.(10      2 MW installed capacity
  years)                       >50,000 t CO2 ER’s p.a.(10
  Project costs: US$20m (+)      years)
                                 Project costs: US$3.5m
Carbon value:
  @ $3/ t CO2         =          Carbon value:
  $1.72m                       @$3 /t CO2   = $1.72m
@ $5/ t CO2 = $2.87m           @$5 /t CO2   = $2.87m
Proportion of project costs:
@ $3/ t CO2 = 8.6%             Proportion of project costs:
@ $5/ t CO2 = 14.35%           @ $3/ t CO2 = 49.1%
                               @ $5/ t CO2 = 82.0%
                      Fugitive Methane
           Achieves Greatest Carbon Potential

 Generate more CERs in proportion to installed assets
     Due to GWP of methane being 21 – i.e. 1 tonne of methane
      released has warming effect of 21 tonnes of CO2
 1 MW of baseload power (8000 hrs/yr) can earn 25,000 to 40,000
  CERs per year when powered by fugitive CH4
     US$75k to US$200k per MW capacity per year
 Barriers . . . Globally, a limited number of projects > 20 MW
     Most < 5 MW (In Philippines only a handful of projects are this
      large!)
     As scales decreases – cost of carbon trading increases
     High degree of stakeholder and bureaucratic obstacles
     Low hanging fruit – all types of landfills – are politically charged
         Converting all major Manila based ‘dumps’ into controlled or
          managed landfills ~ the most obvious of the ‘fruit’
                                 Fugitive Methane
                Philippines Greatest Carbon Potential
   Job 1: Converting all major Manila based ‘dumps’ into controlled or managed
    landfills ~ the most obvious of the ‘ low hanging fruit’
       Convert Payatas & Vitas to Managed Dumpsite
       Convert Montalban Sanitary Landfill for LFG Capture
       Energy Potential: from 5,000 tons per day of waste
             If 100% for electric power generation: > 50 mW Power plants
            At >80,000 operating hours
            Or with Carbon Potential of > 15,000,000 Ers
            With Current Value ($3) of $45,000,000 (7 Year Crediting Period)
      With CDM, the NCR Waste Management Crisis and its solutions become more
       realistic.
      For Provincial Areas, compacted waste transported to Regional SLF with LFG
       or Waste to Energy Facilities
          General Santos SLF with PhilBIO/BTA WTE,
        At least 15 Major LFG or WTE Projects can be sited in the Philippines that would have
         significant economies of scale and attract investment.
              Cebu, Davao, GenSan, Zamboanga, CDO, Ilo Ilo, Bacolod, Legazpi, Naga, Tacloban, Tagbilaran, Batangas,
               Urdaneta, San Fernando (2)
CERs Improve Debt Service
       Coverage
Sale of CERs involve minimal costs
This cash flow can be readily applied to Debt Service
  Direct Payments on Annual Debt Service Requirements
  Funding Debt Service Reserve Accounts
  Using Forward EPRA Sales as Collateral
  Funding an Account to supplement variations in EBITDA
Applying Carbon Cash Flow to Debt Service Can
Result in more favorable Capital Structures
  Higher DSCR (More Debt Carrying Capacity) means less
  Equity Requirement – Thereby Increasing ROE
  Allows Project to be Financed Because Increases DSCR past
  Predetermined Threshold set by the Lender
Either Way, Both Project Developer and Project
Lender are Better Off.
 A Wind Project Example
Example Assumption:
   US$82m Capital Outlay    300GWh
   75% EBITDA Margins       0.7 tCO2e/MWh Coefficient
   $4 Price per CER         D/E of 50%
   $40 Price per MWh        15 yr Term, 7% interest Rate
CER Cash Flow Can Increase DSCR by up to 0.2, or roughly $4m
(10%) in additional debt carrying capacity.
If CER price is increased to $8 (current forecasts are between
$8-$12 in 5 years) this could mean up to $8m LESS equity
investment – a full 20% reduction.
At price of $4 – CER sales represent 19% of annual debt service
At price of $8 – CER sales represent 37% of annual debt service

In methane (CH4) projects these benefits are
significantly enhanced
                     Debt Service Coverage Ratio
                      Matrix for a Wind Project
                                                                                                                         Price per MWh
                                                   $35        $38       $40       $43           $46       $48        $51        $54     $56     $59     $62     $64     $67
                                         5.0%    19.34     20.67      22.00     23.34         24.67     26.00      27.34      28.67   30.00   31.33   32.67   34.00   35.33
                                         7.5%    12.89     13.78      14.67     15.56         16.45     17.34      18.22      19.11   20.00   20.89   21.78   22.67   23.56
      Project Cost   $82,000,000        10.0%     9.67     10.34      11.00     11.67         12.33     13.00      13.67      14.33   15.00   15.67   16.33   17.00   17.67
     Interest Rate        7.00%         12.5%     7.74       8.27      8.80      9.33          9.87     10.40      10.93      11.47   12.00   12.53   13.07   13.60   14.13
        Debt Term           15.0        15.0%     6.45       6.89      7.33      7.78          8.22      8.67       9.11       9.56   10.00   10.44   10.89   11.33   11.78
   EBITDA Margin            75%         17.5%     5.53       5.91      6.29      6.67          7.05      7.43       7.81       8.19    8.57    8.95    9.33    9.71   10.10
        CO2 Costs        $10,000        20.0%     4.83       5.17      5.50      5.83          6.17      6.50       6.83       7.17    7.50    7.83    8.17    8.50    8.83
                                        22.5%     4.30       4.59      4.89      5.19          5.48      5.78       6.07       6.37    6.67    6.96    7.26    7.56    7.85
     Target DSCR             2.0        25.0%     3.87       4.13      4.40      4.67          4.93      5.20       5.47       5.73    6.00    6.27    6.53    6.80    7.07
                                        27.5%     3.52       3.76      4.00      4.24          4.49      4.73       4.97       5.21    5.45    5.70    5.94    6.18    6.42
    Carbon Price          $4.00         30.0%     3.22       3.45      3.67      3.89          4.11      4.33       4.56       4.78    5.00    5.22    5.44    5.67    5.89
           MWh          300,000         32.5%     2.98       3.18      3.39      3.59          3.80      4.00       4.21       4.41    4.62    4.82    5.03    5.23    5.44
                                        35.0%     2.76       2.95      3.14      3.33          3.52      3.71       3.91       4.10    4.29    4.48    4.67    4.86    5.05
                                        37.5%     2.58       2.76      2.93      3.11          3.29      3.47       3.64       3.82    4.00    4.18    4.36    4.53    4.71
    Carbon Coeff.           0.70        40.0%     2.42       2.58      2.75      2.92          3.08      3.25       3.42       3.58    3.75    3.92    4.08    4.25    4.42
                                        42.5%     2.28       2.43      2.59      2.75          2.90      3.06       3.22       3.37    3.53    3.69    3.84    4.00    4.16
                                        45.0%     2.15       2.30      2.44      2.59          2.74      2.89       3.04       3.19    3.33    3.48    3.63    3.78    3.93
                                        47.5%     2.04       2.18      2.32      2.46          2.60      2.74       2.88       3.02    3.16    3.30    3.44    3.58    3.72
                                        50.0%     1.93       2.07      2.20      2.33          2.47      2.60       2.73       2.87    3.00    3.13    3.27    3.40    3.53
Extra Debt Capacity                     52.5%
                                        55.0%
                                                  1.84
                                                  1.76
                                                             1.97
                                                             1.88
                                                                       2.10
                                                                       2.00
                                                                                 2.22
                                                                                 2.12
                                                                                               2.35
                                                                                               2.24
                                                                                                         2.48
                                                                                                         2.36
                                                                                                                    2.60
                                                                                                                    2.49
                                                                                                                               2.73
                                                                                                                               2.61
                                                                                                                                       2.86
                                                                                                                                       2.73
                                                                                                                                               2.98
                                                                                                                                               2.85
                                                                                                                                                       3.11
                                                                                                                                                       2.97
                                                                                                                                                               3.24
                                                                                                                                                               3.09
                                                                                                                                                                       3.37
                                                                                                                                                                       3.21
                                        57.5%     1.68       1.80      1.91      2.03          2.15      2.26       2.38       2.49    2.61    2.72    2.84    2.96    3.07
                                        60.0%     1.61       1.72      1.83      1.94          2.06      2.17       2.28       2.39    2.50    2.61    2.72    2.83    2.94
                                        62.5%     1.55       1.65      1.76      1.87          1.97      2.08       2.19       2.29    2.40    2.51    2.61    2.72    2.83
                                        65.0%     1.49       1.59      1.69      1.80          1.90      2.00       2.10       2.21    2.31    2.41    2.51    2.62    2.72
                                        67.5%     1.43       1.53      1.63      1.73          1.83      1.93       2.02       2.12    2.22    2.32    2.42    2.52    2.62
                                        70.0%     1.38       1.48      1.57      1.67          1.76      1.86       1.95       2.05    2.14    2.24    2.33    2.43    2.52
                                        72.5%     1.33       1.43      1.52      1.61          1.70      1.79       1.89       1.98    2.07    2.16    2.25    2.34    2.44
                                        75.0%     1.29       1.38      1.47      1.56          1.64      1.73       1.82       1.91    2.00    2.09    2.18    2.27    2.36
                                        77.5%     1.25       1.33      1.42      1.51          1.59      1.68       1.76       1.85    1.94    2.02    2.11    2.19    2.28
                                        80.0%     1.21       1.29      1.38      1.46          1.54      1.63       1.71       1.79    1.88    1.96    2.04    2.13    2.21
                                        82.5%     1.17       1.25      1.33      1.41          1.50      1.58       1.66       1.74    1.82    1.90    1.98    2.06    2.14
                                        85.0%     1.14       1.22      1.29      1.37          1.45      1.53       1.61       1.69    1.76    1.84    1.92    2.00    2.08
                                        87.5%     1.11       1.18      1.26      1.33          1.41      1.49       1.56       1.64    1.71    1.79    1.87    1.94    2.02
                                        90.0%     1.07       1.15      1.22      1.30          1.37      1.44       1.52       1.59    1.67    1.74    1.81    1.89    1.96
                                        92.5%     1.05       1.12      1.19      1.26          1.33      1.41       1.48       1.55    1.62    1.69    1.77    1.84    1.91
                                D/E     95.0%     1.02       1.09      1.16      1.23          1.30      1.37       1.44       1.51    1.58    1.65    1.72    1.79    1.86
                               Ratio    97.5%     0.99       1.06      1.13      1.20          1.27      1.33       1.40       1.47    1.54    1.61    1.68    1.74    1.81
                                       100.0%     0.97       1.03      1.10      1.17          1.23      1.30       1.37       1.43    1.50    1.57    1.63    1.70    1.77
                                              Note: This matrix analyzes coverage ratios for the FIRST annual repayment period only
        A Fugitive Methane Project
                 Example




BLUE Indicates
Extra Debt Capacity
  CDM Prospects for LFG Projects

 IF PROJECTS MEET CERTAIN CRITERIA
    AT LEAST 10 YEAR LIFE OR CONTRACTUAL ARRANGEMENT
    AT LEAST 1 MM TONS OF CAPACITY
    AT LEAST 500 TPD INPUT
 THEN,
    GWP OF 21 TIMES CARBON DIOXIDE
    ADDS UP TO 40,000 MTCE PER ANNUM
    OR UP TO U.S.$200 PER RATED KW
    WITH SUBSTANTIALLY INCREASED DEBT CAPACITY ~ UP TO
     100% DEBT
 FINALLY, PAYATAS EXAMPLE…
       Payatas: From Poor to…
Power Plant     % IRR   Electricity P/kWh
Capacity (kW)
250             -8.7    3.32
500             -9.1    3.36
750             -10.2   3.50
1000            -10.9   3.60
1500            -13.1   4.01
                     Achievable…
Crediting        Estimated         Price per    % of Total
Period           CER based on      MTCE         Project Cost
                 Capacity &        (U.S.$5)     (Actual)
                 Input             (U.S.$/kW)   ($/kW)
7 years          1,500,000         $215         $2,250
10 years         5,300,000         $2,650       $2,250
21 years         11,818,000        $2,810       $2,250

  Based on a similar LFG Project
  PhilBIO: SWM Track Record
 1995: Feasibility Study for Ayala Alabang Village Association &
  City of Muntinlupa
 1998: PhilBIO incorporated by PEI, U.S. Green Fund & U.S.
  Project Developer
 2 Years: Waste-to-Energy Project Feasibility Studies for Baguio
  and Talisay, Negros Occ. (Also in Thailand, Bangkok and Chiang
  Mai)
 2001: Rocky Farm CIGAR Project ~ 8 Farms with CIGAR
 2001: 1st To do a Carbon Assessment & Validation -- CAT – 1st
  to receive ‘Letter of No Regrets’ from IACCC
 2002: 1st To Execute Contract for City Waste to Energy Project-
  - General Santos City WTE Project
 3/2003: 1st to Execute a PDD for a City Waste to Energy
  Project-General Santos City WTE Project (Pending Additional
  Data)
 11/2003: 1st to Execute Contract for Landfill Gas Project --
  Payatas 100 kW LFG Project
PhilBIO: Team/Resources
  S. West Stewart, Managing Director
      U.S. Investment Banking & Project Finance
      More than 20 years of experience in Japan and other
      parts of Asia, 6 years of project experience in
      Philippines.
    David A. Donnelly, Director
      U.S. Investment Banking and Environmental
      Engineering Capability
      More than 12 years of Asian business experience,
      currently General Manager, CleanTHAI, Bangkok
    Dr. Marc Stuart, Mr. Justin Guest,
    EcoSecurities, Ltd.
      Premier Carbon Global Financing Team
      Financed Largest CDM LFG Project (NovaGenar, Brasil)
PhilBIO: Local Team Resources
   PhilBIO Team
     Roberto C. Julian
        Philippine Investment Banking, Insurance and
        Renewable Energy/Energy Efficiency Financing Expert
     Ricky Beltran
        Staff Economist
        Philippine Project Development and Management
        Expert
     Alberto Pascua
        Philippine Engineering Water and Anaerobic Digester
        Design Expert
     PhilBIO Construction Inc.~ Plastics, Geo-synthetic
     welding, seaming and installation & electric power plant
     installation.
Philippine Bio-Sciences

   Suite 1703 Centerpoint
   Dona Julia Vargas Ave
  Ortigas Center Pasig City
       (02) 631-2745
       (02) 635-9686
     Philbio@pei.net.ph

				
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