Brazilian Landfill Gas to Energy Project Makes History as First Greenhouse Gas Reduction Project Registered Under the Clean Development Mechanism of the Kyoto Protocol
News Release No:2005/167/ESSD
Contacts:
Anita Gordon 202-473-1799
Tracy Osborne 202-473-4033
Washington DC, November 18, 2004-The developing world just got a big boost in its efforts to participate in the growing carbon market when the Clean Development Mechanism (CDM) of the Kyoto Protocol approved its first project by registering the NovaGerar, Landfill Gas to Energy Project in Rio de Janeiro, Brazil.
The NovaGerar project represents a joint venture of EcoSecurities Brasil Ltda and SA Paulista. The certified emission reductions generated by the project will be purchased by the Netherlands CDM Facility (known as the NCDMF). This Facility, established under an agreement signed between the State of the Netherlands, acting through the Ministry of Housing, Spatial Planning and the Environment (VROM) and the World Bank, authorizes the World Bank, as Trustee, to purchase greenhouse gas emission reductions from projects on behalf of the Netherlands The NCDMF will purchase (up to and including 2012) 2.5 million tons of carbon dioxide equivalent from the NovaGerar project at a price of €3.35 (US$3.34 at today’s exchange rate) a ton of carbon dioxide equivalent, for a total estimated purchase o€ 8,492,250 (US$11,001,257).
The Kyoto Protocol3⁄4which, with Russia’s ratification today, will now come into effect in February 20053⁄4is the 1997 agreement to limit climate altering greenhouse gas emissions. The CDM, a flexible mechanism of the Protocol, allows OECD countries to fulfill some of their greenhouse gas emission-reduction commitments through projects in the developing world.
"We are very happy with this event, for two reasons,” said Peter Van Geel, State Secretary for the Environment of the Netherlands. “First, because it is a project in Brazil. Brazil has always played an important role in the climate negotiations and it is fitting that the first ever CDM approved project comes from that country. Second, the Dutch government is very pleased because the NovaGerar project creates significant additional social and environmental benefits.”
The NovaGerar project will collect methane in landfill gas from two dumpsites in the state of
Rio de Janeiro. The project is comprised of a gas collection system, leachate drainage system and a modular electricity generation plant at each landfill site (with expected final total capacity of 12 megawatts), as well as a generator compound at each site. The generators will combust the methane in the landfill gas to produce electricity for export to the grid. Excess landfill gas, and all gas collected during periods when electricity is not produced, will be flared. Combustion and flaring together will reduce emissions of 11.8 million tons of carbon dioxide equivalent over the next 21 years. In addition, the project will lead to emission reductions attributable to the displacement of grid electricity, but these reductions will not be claimed by NovaGerar. By collecting and combusting landfill gas, the NovaGerar project’s sanitary landfills will reduce both global and local environmental effects of uncontrolled releases of pollutant gases.
The landmark NovaGerar project is in one of the five public/private carbon funds and facilities managed by the Carbon Finance Business of the World Bank that purchase greenhouse gas emission reductions on behalf of the funds’ participants in projects in developing countries and countries with economies in transition.
“We are proud to be associated with this pioneering event in the global carbon market,” said Odin Knudsen, Senior Advisor, Sustainable Development at the World Bank. “The World Bank’s Carbon Finance Business has been specifically developed to help build market confidence. This activity means that the carbon market is coming of age.”
The project sponsor, EcoSecurities, formed in 1996, is an environmental finance company specializing in the provision of advisory services to companies, governments and United Nations agencies on greenhouse gas mitigation and carbon trading strategies. S.A. Paulista is a Brazilian civil engineering and construction firm based in the city of São Paulo, Brazil.
“This is a very important step for the development of the CDM as a mechanism for reaching global targets”, said Pedro Moura Costa, the Managing Director of EcoSecurities. “ This is a major reinforcement that we are on the right track. EcoSecurities has been working on carbon finance since 1996 and we’re excited to see that we’re getting closer to an active market.”
For developed countries, such as the Netherlands, the establishment of a Clean Development Mechanism facility increases the range of options for complying with their Kyoto Protocol emission reduction requirements, while at the same time promoting sustainable development, capacity building, and fostering knowledge, and market creation in developing countries.
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For more information please visit: www.carbonfinance.org
ANNEX 1:
The Kyoto Protocol and the Clean Development Mechanism (CDM)
The Kyoto Protocol provides an unprecedented opportunity for the Organization for Economic Co-Operation and Development (OECD) countries to reduce greenhouse gas emissions and at the same time help developing countries and economies in transition invest in climate friendly technologies and infrastructure. The Protocol’s Clean Development Mechanism (CDM) and Joint Implementation (JI) provide an element of flexibility for the industrialized countries to meet their obligations under the Protocol to reduce greenhouse gas emissions by on average 5.2 percent below their 1990 levels by 2010. In so doing, the Protocol provides an unprecedented incentive for those seeking lower cost emission reductions, to leverage the flow of private capital and privately held clean technology from North to South.
ANNEX 2:
The Carbon Finance Business
Carbon finance is the general term applied to financing seeking to purchase greenhouse gas emission reductions (“carbon” for short) to offset emissions in the OECD. Commitments of carbon finance for the purchase of carbon have grown rapidly since the first carbon purchases began less than seven years ago. The global market for greenhouse gas emission reductions is estimated at a cumulative 200 million tonnes of carbon dioxide equivalent since its inception in 1996. Nearly 70 million tons was originated in 2002 alone. Volumes are expected to continue to grow as countries that have already ratified the Kyoto Protocol work to meet their commitments, and as national and regional markets for Emission Reductions are put into place, notably in Canada and the European Union (where trading is to start formally in 2005).
ANNEX 3:
The Netherlands Clean Development Mechanism Facility (NCDMF)
On April 15, 2002, an Agreement was signed between the State of the Netherlands, acting through the Ministry of Housing, Spatial Planning and the Environment (VROM) and the International Bank for Reconstruction and Development (IBRD, the World Bank), establishing the IBRD-Netherlands CDM Facility, (known as NCDMF) through which the IBRD assists VROM in acquiring certified emission reductions generated by CDM Project activities. The NCDMF’s initial target was to place up to €70 million in projects over the first two years of its agreement, leading to emission reductions of approximately 16 million metric tons of carbon dioxide equivalent. The total capitalization of the fund now stands at approximately €136 million (approximately US$176 million), or 31 million metric tons of carbon dioxide equivalent.