Landfill Gas OffsetsLandfill Gas Offsets

The Untapped PotentialThe Untapped Potential

Michael Gerbis, P.Eng.Michael Gerbis, P.Eng.

President, The Delphi GroupPresident, The Delphi Group

The Delphi GroupThe Delphi Group

1515thth Anniversary (around since 1987) Anniversary (around since 1987) First climate change project in 1989First climate change project in 1989 Business FocusBusiness Focus

Climate Change & Clean EnergyClimate Change & Clean Energy Health & EnvironmentHealth & Environment Technologies & MarketsTechnologies & Markets Corporate Strategy - EXCELCorporate Strategy - EXCEL EECO & Globe Series of ConferencesEECO & Globe Series of Conferences

OverviewOverview

LFG Potential Across CanadaLFG Potential Across Canada

LFG within Canada’s Action PlanLFG within Canada’s Action Plan

Business CaseBusiness Case OffsetsOffsets Other BenefitsOther Benefits

Key Steps, Players & ChallengesKey Steps, Players & Challenges

ExamplesExamples

2000 Canadian Emissions2000 Canadian Emissions Canada’s Total GHG Emissions 726,000 kt eCO2

Manitoba’s ~ 21,400 kt eCO2

Canadian CH4 Emissions 91,000 kt eCO2 (12.5% of Total) Manitoba Total CH4 Emissions

3,400 Kt eCO2

Canadian LFG (CH4) Emissions

23,000 kt eCO2 (25% total CH4) Manitoba LFG ~ 550 Kt eCO2

LFG Management - LFG Management - 1999/20011999/2001

Total Methane Generated In Canadian Landfills 1,321Kt CH4

Landfill Methane Capture 342 Kt

Landfill Methane Released to Atmosphere

979Kt

Flaring 25 Sites147Kt ~ 3MT eCO2

Utilization 16 Sites

Produced 84 MW of Power8 Facilities

182 KT ` 3.8MT eCO2

Direct Utilization 8 Facilities

13Kt ~ 270Kt eCO2

TOTAL REDUCTIONS > 7 MT

Additional OpportunitiesAdditional Opportunities 6.5 Mt eCO6.5 Mt eCO22 reductions reductions

Approx. 70 sites identifiedApprox. 70 sites identified

RankedRanked Brady Rd. – Ranked #1 overallBrady Rd. – Ranked #1 overall Kilkona – Ranked #32Kilkona – Ranked #32 Summit Rd. – Ranked #36Summit Rd. – Ranked #36

85 MW of additional power85 MW of additional power

Estimates Ranged from Estimates Ranged from < $1/ eCO< $1/ eCO2 2 to > $5 / eCOto > $5 / eCO22

Source: Identification of Potential Landfill Sites for Additional Gas Recovery & Utilization in CanadaPrepared for Env. Canada by CRA & Delphi

Climate Change Plan for Canada Three Step Approach to Achieve Target => 240 Mt / year

* Offsets are estimated at 20 to 28 MT - because they may be sold to industry through domestic emissions trading, they are not added to the total.

Climate Change Plan for CanadaOngoing Activities

LFG Projects Moving Forward (e.g. Vancouver) Green Municipal Funds for Landfill Gas capture (2.2 MT) Government purchasing offsets

Pilot Emission Removals, Reductions & Learnings (PERRL)

Air Pollution Prevention Directorate, Environment Canada www.ec.gc.ca/PERRL

NRCan Green Power Initiative TEAM projects

CIDA $15 mil Investment in Prototype Carbon Fund (PCF) $100 mil Canada Climate Change Development Fund

Climate Change Plan for CanadaProposed Next Steps

Consultations on whether to regulate emissions reductions from new capture and flaring of landfill gas or allow them to be sold as offsets

Renewable Energy 10% new generating capacity from green sources Future community action

Domestic Emissions Trading System being developed Landfills provide possibility to reduce emissions and represent

potential offset credits

Purchase a Minimum of 10 MT International Credits

Benefits of LFG CaptureBenefits of LFG Capture Reducing the potential for adverse health impactsReducing the potential for adverse health impacts

Source of revenue/profit (energy + offsets)Source of revenue/profit (energy + offsets)

Reduction of Potent GHG Emissions Reduction of Potent GHG Emissions

Reducing Potential Safety HazardsReducing Potential Safety Hazards

Lessen Landfill owner's liabilityLessen Landfill owner's liability

Source of Green PowerSource of Green Power

Improved Air QualityImproved Air Quality 0

10

20

30

40

50

reductions

cost

Internal reduction Offsets

COMPANY A(w/ GHG Emissions Reduction Target)

Technology

Capacity Building

Credit Purchase Contract

Emissions Baseline

Benefit Quantification

M&V

Landfill GHG Offsets

LFG Offset Project

Tradable GHG Offsets

Finance ($$)

Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets

Establish baselineEstablish baseline What would have happened in absence of projectWhat would have happened in absence of project

Does flaring count as a reduction, or required BAU?Does flaring count as a reduction, or required BAU? Would the methane truly have been released?Would the methane truly have been released?

Quantify potential emission reductionsQuantify potential emission reductions

Develop transparent monitoring & Develop transparent monitoring & measurement plan measurement plan

Maintain records that provide clear audit trailMaintain records that provide clear audit trail

Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets

Estimate Value of Emissions Estimate Value of Emissions Can be a challengeCan be a challenge No official DET or IET in placeNo official DET or IET in place Not yet homogenous commodityNot yet homogenous commodity Buyers have different levels of willingness to payBuyers have different levels of willingness to pay COCO22 values could change substantially….or not values could change substantially….or not

Preserve/secure rights in contractingPreserve/secure rights in contracting

Seek external validation of resultsSeek external validation of results

Establishing High QualityEstablishing High QualityLFG OffsetsLFG Offsets

Conduct Feasibility StudyConduct Feasibility Study With and Without OffsetsWith and Without Offsets Ranges of Prices, Ownership & Selling StrategiesRanges of Prices, Ownership & Selling Strategies

e.g. 1/3 – 1/3 – 1/3e.g. 1/3 – 1/3 – 1/3

Engage Key PlayersEngage Key Players Federal, Provincial, Municipal GovernmentsFederal, Provincial, Municipal Governments Project Developers, Technology Company, Project Developers, Technology Company,

Engineering Firms, Utility, etc.Engineering Firms, Utility, etc. Investors & Potential GHG Offset BuyersInvestors & Potential GHG Offset Buyers Strategic AdvisorsStrategic Advisors BrokersBrokers

LFG ChallengesLFG Challenges QuantificationQuantification

Direct (flaring) vs. Indirect (electrical & thermal)Direct (flaring) vs. Indirect (electrical & thermal) Timing of OffsetsTiming of Offsets

Valuation / Cash Flow / RORValuation / Cash Flow / ROR Price of Offsets & Selling StrategiesPrice of Offsets & Selling Strategies

Establishing Offset OwnershipEstablishing Offset Ownership Multiple StakeholdersMultiple Stakeholders

UnknownsUnknowns Project performs as predictedProject performs as predicted Future Market & PriceFuture Market & Price Government Approval / Future PolicyGovernment Approval / Future Policy

Vancouver LandfillVancouver Landfill

Owned & operated by the City of Vancouver

Serves 40% of Greater Vancouver Region

400,000 tonnes per year of MSW

Existing LFG collection and flare system 1991 installed => expanded in 2000 142 Hectares Over 300 vertical collection wells 3000 cubic foot per minute (cfm) blower/flare system Extracts and flares over 2000 cfm of 55% CH4 LFG

Vancouver Landfill Gas Collection and Utilization Project Proposed Initiative

Expand LFG collection & flare system over 58 hectares of the landfill (completed 2000)

Utilization LFG in cogeneration system Electricity sold to BC Hydro as “green” power Heat in the form of hot water to be used by

CanAgro’s greenhouses

Full operation by fall 2003

Lifetime > 20 years

Vancouver LFG ProjectKey Players & Benefits

Projected Overall Results Reduce GHG emissions by > 200,000 tonnes/year

equivalent to 40,000 automobiles

Capture 500,000 GJ/year of energy equivalent to 3,000 to 4,000 homes’ energy requirements

The City of Vancouver receive ~ $250,000 to $300,000 annually for LFG % revenue from thermal offsets Capture offsets

Corporation of Delta receive ~ $80,000 to $110,000 in new tax

Vancouver LFG ProjectKey Players & Benefits

CanAgro receive a secure low-cost heating source for greenhouses Offset non-renewable power requirements by ~ 20%

BC Hydro Electricity under its Green Energy Program & elect. offsets

Maxim Power Corp provide $8.5 mil financing for 2.5-km pipeline & co-gen plant $ from BC Hydro for Green Power & Offsets % of thermal offsets

CH2M Hill Canada Limited Design & built 2000 collection system

Mangrove Green Energy ProjectMangrove Green Energy ProjectBarbadosBarbados

Potential CDM Project – Unique ConceptPotential CDM Project – Unique Concept

LFG Collection & Flaring SystemLFG Collection & Flaring System 14 – 15 million m3 per year (60% CH14 – 15 million m3 per year (60% CH44)) 1.4 million tonnes eCO1.4 million tonnes eCO2 2 reductions over 10 yearsreductions over 10 years

Landfill Utilization with StorageLandfill Utilization with Storage ~ 5 MW => 190,000 tonnes eCO~ 5 MW => 190,000 tonnes eCO22 reductions over 10 years reductions over 10 years

Wind farm to be constructedWind farm to be constructed 1 – 2 MW of power => ~ 43,000 tonnes of eCO2 1 – 2 MW of power => ~ 43,000 tonnes of eCO2

reductions over 10 yearsreductions over 10 years

Mangrove Green Energy ProjectMangrove Green Energy ProjectGHG Credits GHG Credits

The Delphi GroupThe Delphi Group

Catalyzing Environment and Clean Catalyzing Environment and Clean Energy OpportunitiesEnergy Opportunities

International Transactions (CDM & Tech Transfer)

International Transactions (CDM & Tech Transfer)

GHG Reduction Strategies

Business Planning & Project Structuring

Market ValuationMarket ValuationPricing & PositioningPricing & Positioning

Wrap UpWrap Up

LFG Represents an Untapped and Potentially LFG Represents an Untapped and Potentially Lucrative Opportunity to Reduce GHGLucrative Opportunity to Reduce GHG

Canadian Government is SupportiveCanadian Government is Supportive

Corporate Buyers Will be Looking for Quality Corporate Buyers Will be Looking for Quality Investments & OffsetsInvestments & Offsets

Business Case Can be MadeBusiness Case Can be Made Understand, Measure & Monitor (diff. scenarios)Understand, Measure & Monitor (diff. scenarios) Lots of Players – engage expertsLots of Players – engage experts Be Prepared - Watch Potential Stumbling BlocksBe Prepared - Watch Potential Stumbling Blocks Stay In-Tune – Int’l / Nat’l Policy; GHG MarketStay In-Tune – Int’l / Nat’l Policy; GHG Market

The Delphi GroupThe Delphi Group

For More Information Contact:For More Information Contact:

Mike Gerbis, P.Eng.Mike Gerbis, P.Eng.PresidentPresident

The Delphi Group (The Delphi Group (www.delphi.cawww.delphi.ca))428 Gilmour St.428 Gilmour St.

Ottawa, Ontario K2P 0R8Ottawa, Ontario K2P 0R8

Tel: (613) 562-2005 Fax: (613) 562-2008Tel: (613) 562-2005 Fax: (613) 562-2008

email: email: mgerbis@delphi.camgerbis@delphi.ca

COCO22 Value for 1% ROR Impact Value for 1% ROR Impact

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

Effect of CO2 Revenues On Rate of Return

Coal Mine Methane GasUtilizationLandfill Gas to Energy

Anaerobic Digestion

Biomass Co-Firing

Cement Plant Upgrade

CHP- District Heating Plant

Biomass Combustion

Municipal Streetlight Upgrade

Small Hydro

Wind

Impact of Carbon Finance on Impact of Carbon Finance on ProjectProject

TechnologyTechnology IRRIRR

Energy Eff.-District HeatingEnergy Eff.-District Heating 2- 42- 4

WindWind 0.9-1.30.9-1.3

HydroHydro 1.2-2.61.2-2.6

BagasseBagasse 0.5-3.50.5-3.5

Biomass with methane kickBiomass with methane kick Up to 5.0Up to 5.0

Municipal Solid Waste with Municipal Solid Waste with methane kickmethane kick

>5.0>5.0

Project, Not Equity, IRR.

Source: PCF….Assuming a revenue stream based on emission Reduction (at US$ 3/TCO2e) the change in internal rate of return (IRR) of projects: