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
23.18
25
20
14.44
15
10
9.48
5.62
7.04
7.04 8.82
11.63
10.07
19.21
18.21
13.67
16.19
11.64
increasing
generation
rates
5.23
5
0
1990
1995
2000
2005
2010
constant
generation
rate
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
CO
2+ H
2O
- 1 kWh
- 3.6 MJ
Air
Biomass 0.6
kg dry weight
0.353m
methane
+ 12.9 MJ
1 kg BOD
removed
Biomass 0.06
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
Biogas
3
1960m
/d
160kWe
Flare
3m3/d Unthickened
Sewage Sludge
+
3
117m
/d Sewage
25t/d Wet
Market Was te
3
1500m
Solids
Separator
Diges ter
Effluent
120m3 /d
20m3
Feed Tank
Solids 10.7t/d
Figure 3.9 Low Solids Digester
Biogas
3
1960m
/d
160kWe
CHP
1.2m3/d Thickened
Sewage Sludge
25t/d Wet
Market Was te
Flare
550m3
Diges ter
Solids
Separator
10m3/d Recycle Liquor
Figure 3.10 High Solids Digester
25t/d Wet
Market Was te
Effluent
15m3/d
1.2m3/d Thickened
Sewage Sludge
CHP
160kWe
Flare
Biogas
1960m3 /d
4 Concrete ves s els or
20 Cargo Containers
100m3 Storage Tank
1,100m3 Total Batch
Reactor Volum e
Solids 10.7t/d
Figure 3.11 Two Phase Digester
Solids 10.7t/d
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
N2O
SO2
CH4
CO
Furans
NOX
Dioxins
H2 S
CO2
leachate
groundwater
Source: Climate Change Institute
Case Study: Payatas Dumpsite
Waste Stream Composition
Type
%
%
%
Composition Moisture Volatile
Matter
% Ash
% Fixed
Carbon
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
Plastic
36.07
57.93
0.26
5.75
Yard
56.58
31.50
0.65
11.27
Not
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
U.S.$1,550-2,250
TOTAL
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
w/o
Romania District heating
10.5
Costa Rica Wind
9.7
Jamaica Wind
17.0
Morocco Wind
12.7
Chile
Hydro
9.2
Costa Rica Hydro
7.1
Guyana
Bagasse
7.2
Nicaragua Bagasse
14.6
Brazil
Biomass
8.3
Latvia
Methane
11.4
India
Methane
13.8
Source: World Bank, July 2001
Country
Project Type
% IRR
w/cer's
11.4
10.6
18.0
14.0
10.4
9.7
7.7
18.2
13.5
18.8
18.7
IRR Increase
[% points]
0.9
0.9
1.0
1.3
1.2
2.6
0.5
3.6
5.2
7.4
4.9
% IRR
Increase
9
9
6
10
13
37
7
25
63
65
36
The Economics of waste to energy projects
are especially attractive
Jamaica Wind Farm Project
20 MW installed capacity
50,000 t CO2 ER’s p.a.(10
years)
Project costs: US$20m (+)
Carbon value:
@ $3/ t CO2
=
$1.72m
@ $5/ t CO2 = $2.87m
Proportion of project costs:
@ $3/ t CO2 = 8.6%
@ $5/ t CO2 = 14.35%
PhilBIO’s CAT Waste to
Energy Project
2 MW installed capacity
>50,000 t CO2 ER’s p.a.(10
years)
Project costs: US$3.5m
Carbon value:
@$3 /t CO2
= $1.72m
@$5 /t CO2
= $2.87m
Proportion of project costs:
@ $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
75% EBITDA Margins
$4 Price per CER
$40 Price per MWh
300GWh
0.7 tCO2e/MWh Coefficient
D/E of 50%
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
Project Cost
Interest Rate
Debt Term
EBITDA Margin
CO2 Costs
$82,000,000
7.00%
15.0
75%
$10,000
Target DSCR
2.0
Carbon Price
MWh
$4.00
300,000
Carbon Coeff.
0.70
Price per MWh
$35
$38
$40
$43
$46
$48
$51
$54
$56
5.0%
19.34
20.67
22.00
23.34
24.67
26.00
27.34
28.67
30.00
7.5%
12.89
13.78
14.67
15.56
16.45
17.34
18.22
19.11
20.00
10.0%
9.67
10.34
11.00
11.67
12.33
13.00
13.67
14.33
15.00
12.5%
7.74
8.27
8.80
9.33
9.87
10.40
10.93
11.47
12.00
15.0%
6.45
6.89
7.33
7.78
8.22
8.67
9.11
9.56
10.00
17.5%
5.53
5.91
6.29
6.67
7.05
7.43
7.81
8.19
8.57
20.0%
4.83
5.17
5.50
5.83
6.17
6.50
6.83
7.17
7.50
22.5%
4.30
4.59
4.89
5.19
5.48
5.78
6.07
6.37
6.67
25.0%
3.87
4.13
4.40
4.67
4.93
5.20
5.47
5.73
6.00
27.5%
3.52
3.76
4.00
4.24
4.49
4.73
4.97
5.21
5.45
30.0%
3.22
3.45
3.67
3.89
4.11
4.33
4.56
4.78
5.00
32.5%
2.98
3.18
3.39
3.59
3.80
4.00
4.21
4.41
4.62
35.0%
2.76
2.95
3.14
3.33
3.52
3.71
3.91
4.10
4.29
37.5%
2.58
2.76
2.93
3.11
3.29
3.47
3.64
3.82
4.00
40.0%
2.42
2.58
2.75
2.92
3.08
3.25
3.42
3.58
3.75
42.5%
2.28
2.43
2.59
2.75
2.90
3.06
3.22
3.37
3.53
45.0%
2.15
2.30
2.44
2.59
2.74
2.89
3.04
3.19
3.33
47.5%
2.04
2.18
2.32
2.46
2.60
2.74
2.88
3.02
3.16
50.0%
1.93
2.07
2.20
2.33
2.47
2.60
2.73
2.87
3.00
52.5%
1.84
1.97
2.10
2.22
2.35
2.48
2.60
2.73
2.86
55.0%
1.76
1.88
2.00
2.12
2.24
2.36
2.49
2.61
2.73
57.5%
1.68
1.80
1.91
2.03
2.15
2.26
2.38
2.49
2.61
60.0%
1.61
1.72
1.83
1.94
2.06
2.17
2.28
2.39
2.50
62.5%
1.55
1.65
1.76
1.87
1.97
2.08
2.19
2.29
2.40
65.0%
1.49
1.59
1.69
1.80
1.90
2.00
2.10
2.21
2.31
67.5%
1.43
1.53
1.63
1.73
1.83
1.93
2.02
2.12
2.22
70.0%
1.38
1.48
1.57
1.67
1.76
1.86
1.95
2.05
2.14
72.5%
1.33
1.43
1.52
1.61
1.70
1.79
1.89
1.98
2.07
75.0%
1.29
1.38
1.47
1.56
1.64
1.73
1.82
1.91
2.00
77.5%
1.25
1.33
1.42
1.51
1.59
1.68
1.76
1.85
1.94
80.0%
1.21
1.29
1.38
1.46
1.54
1.63
1.71
1.79
1.88
82.5%
1.17
1.25
1.33
1.41
1.50
1.58
1.66
1.74
1.82
85.0%
1.14
1.22
1.29
1.37
1.45
1.53
1.61
1.69
1.76
87.5%
1.11
1.18
1.26
1.33
1.41
1.49
1.56
1.64
1.71
90.0%
1.07
1.15
1.22
1.30
1.37
1.44
1.52
1.59
1.67
92.5%
1.05
1.12
1.19
1.26
1.33
1.41
1.48
1.55
1.62
95.0%
1.02
1.09
1.16
1.23
1.30
1.37
1.44
1.51
1.58
97.5%
0.99
1.06
1.13
1.20
1.27
1.33
1.40
1.47
1.54
100.0%
0.97
1.03
1.10
1.17
1.23
1.30
1.37
1.43
1.50
Note: This matrix analyzes coverage ratios for the FIRST annual repayment period only
Extra Debt Capacity
D/E
Ratio
$59
31.33
20.89
15.67
12.53
10.44
8.95
7.83
6.96
6.27
5.70
5.22
4.82
4.48
4.18
3.92
3.69
3.48
3.30
3.13
2.98
2.85
2.72
2.61
2.51
2.41
2.32
2.24
2.16
2.09
2.02
1.96
1.90
1.84
1.79
1.74
1.69
1.65
1.61
1.57
$62
32.67
21.78
16.33
13.07
10.89
9.33
8.17
7.26
6.53
5.94
5.44
5.03
4.67
4.36
4.08
3.84
3.63
3.44
3.27
3.11
2.97
2.84
2.72
2.61
2.51
2.42
2.33
2.25
2.18
2.11
2.04
1.98
1.92
1.87
1.81
1.77
1.72
1.68
1.63
$64
34.00
22.67
17.00
13.60
11.33
9.71
8.50
7.56
6.80
6.18
5.67
5.23
4.86
4.53
4.25
4.00
3.78
3.58
3.40
3.24
3.09
2.96
2.83
2.72
2.62
2.52
2.43
2.34
2.27
2.19
2.13
2.06
2.00
1.94
1.89
1.84
1.79
1.74
1.70
$67
35.33
23.56
17.67
14.13
11.78
10.10
8.83
7.85
7.07
6.42
5.89
5.44
5.05
4.71
4.42
4.16
3.93
3.72
3.53
3.37
3.21
3.07
2.94
2.83
2.72
2.62
2.52
2.44
2.36
2.28
2.21
2.14
2.08
2.02
1.96
1.91
1.86
1.81
1.77
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
Capacity (kW)
% IRR
Electricity P/kWh
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
Period
Estimated
Price per
CER based on MTCE
(U.S.$5)
Capacity &
Input
(U.S.$/kW)
% of Total
Project Cost
(Actual)
($/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