Clean Development Mechanism (CDM) & Carbon Credits

1. CDM & Carbon Credits are important & valuable aspects that must be considered in biogas projects that mitigate (or prevent the fugitive emission of) large volumes of biogas.
2. These aspects are complex & confusing. We recommend working with qualified consultants who also possess good track records in this field.
3. The examples & explanations below attempt to simplify CDM & Carbon Credit concepts but should only be used as background information.

Executive Summary & Initiatives:

The documentation, registration & validation process required to qualify for CDM incentives is diverse & expensive. At costs of over U$15,000 for Small-Scale Projects, a backyard biogas system for home cooking that mitigates 22 tCO2e/yr will never recover its CDM processing cost.

In reality, CERs are currently priced at only U$4 to U$8 per tCO2e depending on volume, availability, risks, etc. This is because some technology providers, consultants and/or Annex-1 countries carry the costs of the CDM process with the expectation that their expenses will be defrayed when the CERs are issued.

The 14 registered CDM projects in the Philippines plus an additional 30 projects in the pipeline are large pig farms that can afford to shoulder CDM costs and/or avail of financial incentives like BOT & generous low-interest loans.

The Philippines, however, possesses many animal farms ranging from the very small backyard farms, to small & medium-scale farms. As an aggregate, as in the Nepal BSP, these farms that are also comprised mostly of poor farmers & industrious small businessmen cannot even afford to install biogas systems Ð a classic situation that makes the rich get richer & the poor get poorer Ð because the latter are marginalized in their access to foreign capital investments & clean technologies intended by the CDM program for them.

In this context, the proponent offers to coordinate efforts towards establishing these initiatives in the Philippines & to assist interested parties (locally & internationally):

á        Clusters of 1,000 of more ÒHome Biogas Systems (HBS2)Ó in specific communities like barangays, towns & provinces.

á        Clusters of 2 or more ÒMethane CaptureÓ projects using the Multi-Stage Philippine Bio-Digester (MS-PBD) described in this website for Electricity Generation, Bottling (compressing & scrubbing biogas for use as fuel in engines, vehicles, generators, boilers, stoves, air-conditioners, etc.), Flaring, etc.

If you need more information, want to help or participate in these initiatives please contact the proponent at biofuelswork@gmail.com.

Examples of CDM projects pertaining to Biogas Systems

Biogas is a potent GHG. It has a GWP (Global Warming Potential) of 21 which means mitigating 1 ton of Biogas is equivalent to mitigating 21 tons of CO2 from escaping into the atmosphere.

The many pigfarms in the Philippines (both large & small) have a HUGE opportunity to be eligible as CDM projects that capture biogas & use it for electricity generation.

The projects presented below prove they exist & should be studied as models towards implementing similar projects.

The Nepal Biogas Sector Partnership

Despite Nepal's extreme weather; a livestock industry that does not include swine for religious reasons; and, a CDM baseline that only provides 1/3 of usual incentives (when cow dung is used in lieu of pig manure)*, Nepal has been able to build over 150,000 home biogas systems. What's more, 19,396 units are CDM eligible & can mitigate 93,883 tons of CO2 emissions per year. The CERs for these emissions can be worth up to U$2.06 Million (if they are sold for U$22/tCO2e based on September 2007 quotes for delivery in December 2008.)

See: http://cdm.unfccc.int/Projects/projsearch.html (Advanced Search, Host country: Nepal)

In the Philippines, where clusters of 1,000 Home Biogas Systems (HBS2) are an extremely easy objective, a potential mitigation of 22 tCO2e/yr/unit (compared to Nepal's 7 tCO2e/yr/unit)* can generate 22,000 tCO2e/yr (that can be worth up to U$484,000/yr.) These funds can be used to sustain the program and/or fund research into other biofuels.

The project will save precious petrodollars & protect against global warming. More importantly, as mentioned above, it will provide new capital investments & clean technologies for marginalized poor farmers.

The 5 cubic meter Home Biogas System (HBS2) presented in this website that can be built for P15,000 or less is ideal for this project.

The Agrosuper (Chile) Biogas Programme

This programme pertains Agrosuper Chile that owns 102,000 sow (farrow-to-finish farms) in 5 locations. They are covered by 3 identical PDDs. Summary data is shown below:

PDD/Farm CERs Issued Credit Period Annual CER Project Cost

Peralillio     121,606 1/1/05-5/31/06     78,867     U$2.022M

Corneche &

Los Guindos 243,678 5/1/02-4/30/05

                 117,441 5/1/05-5/31/06   102,000     U$1.655M

Pocillos &

La Estrella   453,528 1/03/03-4/30/05

                 260,973 5/1/05-5/31/06   247,248     U$3.765M

Totals:    1,197,226                             410,193    U$7.932M

1.    Some CERs have a credit period that dates back to 5/1/02. Although, they precede the Òcoming into forceÓ of the Kyoto Protocol in 2005, projects initiated from 2002 onwards that were CDM eligible, qualify for retro-active benefits.

2.    If total CERs issued as of 5/31/06 are sold & delivered in December 2008 at U$8 (or less than 50% of U$22 September 2007 prices), CER income = U$ 9.577M.

3.    Versus Project Cost of U$7.932M the project is FULLY PAID OUT in less than 3 yrs as 1,197,226 < 410,193x3.

4.    CERs issued after 5/31/06 will amount to U$3.281M/yr (if sold at U$8). MORE if sold at higher prices.

5.    The projects are for "Methane Capture and Combustion from swine manure" only. Biogas is simply FLARED or burned. NO ELECTRICITY is generated.

6.    HIGHER incomes are possible if electricity is generated. Although electricity systems need larger investments & operating expenses, they are viable in countries like the Philippines where power cost is high.

References: 

http://cdm.unfccc.int/Projects/projsearch.html (Advanced Search, Host Country: Chile)

http://cdm.unfccc.int/Issuance/cers_iss.html (Host Party: Chile)

Biogas to Electricity Projects in the Philippines

There are 14 Registered CDM projects in the Philippines (as of September 2007) that include 9 pig farms. They are all Methane Capture & Electricity Generation projects.

More information is available at the following links or references:

http://cdm.unfccc.int/Projects/projsearch.html (Advanced Search Host Country: Philippines)

http://cdm.unfccc.int/Issuance/cers_iss.html (Host Party: Philippines)

The Kyoto Protocol Òcame into forceÓ in 2005 for a 7 year period that ends in 2012. New guidelines are being negotiated to extend it by another 7 years. Until those guidelines are finalized, we must pursue CDM projects in the Philippines aggressively before the program lapses in 2012.

Guide to Acronyms:

CDM      The Clean Development Mechanism is an agreement under the KP allowing Annex 1 countries to invest in projects that reduce GHG emissions as an alternative to more expensive projects in their won countries.

CERs     Since the atmospheric effect of any GHG reduction project is global, under the CDM program, an Annex 1 country can ÒsponsorÓ project in a developing country where the cost of such projects are usually lower. For meeting the emission reduction targets of the project, Certified Emission Reductions or carbon credits will be issued by the UN Executive Board that can be applied by the ÒsponsorÓ towards meeting its emission reduction commitments.

            This program has the added benefit of providing developing countries of capital investment and clean technologies.

ERPA     Emission Reduction Purchase Agreement

GHG      Greenhouse gases are components of the atmosphere like water vapor, carbon dioxide, methane, nitrous oxide & the ozone. These gases have to be maintained at certain levels to prevent the greenhouse effect.

            Example: High levels of CO2 in the atmosphere caused that excessive burning of fossil (or petroleum) fuels warms the earthÕs surface Ð hence the term global warming.

GW       Global warming refers to the rising average temperature of the earthÕs surface air & oceans in recent decades and its projected continuation.

            Increasing global temperatures will cause sea levels to rise, increase the intensity of extreme weather events, affect agricultural yields, melt glaciers, etc.  

KP         The Kyoto Protocol is an update of the UNFCCC that was ratified by 172 countries composed of 36 countries (known as Annex 1 countries) that are required to reduce GHG emission to levels specified for each of them and 137 countries (non Annex 1 countries) that are simply obligated to monitor & report their GHG emissions.

tCO2e    tons Carbon Dioxide equivalent

UNFCCC The United Nations Framework Convention on Climate Change is the original treaty of the UN (United Nations) aimed at reducing emissions of GHG in order to combat global warming.

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