Nanjin Tianjingwa Landfill Methan Gas Utilization Project in China

Global Environment Centre Foundation(GEC)

Reports of CDM/JI Feasibility Studies

Title of the researchNanjin Tianjingwa Landfill Methan Gas Utilization Project in China
FYFY 2004
Main research organizationChubu Electric Power Co., ltd
Research partner(s)-
Location of the projectNanjin in China
Summary of the research report (PDF)Summary (259kb)
Description of the projectThis project is conceived as a CDM project for the recovery and utilization of LFG that had been released into the atmosphere at waste landfill sites. Here a study was made of the LFG recovery systems, gas engine generator systems, and flaring systems to burn off surplus LFG that will be installed in order to achieve that purpose. The project is further intended to supply the electric power that it generates to the nearby electric grid system and earn a certain amount of income from electric power sales while it also acquires carbon credits. In this way, the project will be made cost-effective. The projected volume of LFG produced, which is the most important factor in plant design, was calculated using the First Order Decay Model of the US EPA. The results of those computations indicate that it will be possible to introduce a maximum of 1,000kW-class six gas engine generators (Caterpillar G3516LE generators with an output of 1,030 kW). In the case of an LFG power generation project, the volume of LFG produced is difficult to measure accurately. Therefore the maximum effective utilization of the LFG that is generated in implementation of this project, and, conversely, not installing surplus equipment capacity, are crucial issues for assuring high profitability. The present project is distinctive because it seeks to overcome that shortcoming of the typical LFG project by designing it to allow increasing or decreasing the number of gas engine generators installed according to increases and decreases in the volume of LFG. In other words, it has been designed so that if the volume of LFG diminishes in the future, the equipment can be sold to other project
sites. Another distinctive feature of this project is that it has been given a large flaring capacity so that the total amount of LFG can be treated by flaring even when the gas engines are not operating. This is to process the recovered LFG fully in order to maximize the carbon credits revenue.
Sector of the projectWaste Management
Duration of the project activity/ crediting periodcrediting period: 2005 to 2011
Baseline methodology/additionality・The Project boundaries were defined around the site of the project that recovers and utilizes the LFG whose impact on the calculation of the baseline emission level must be taken into account, and the electric power grid for which the project serves as an alternative source of power. ・The methodology used for the baseline this time was the Consolidated Baseline Methodology for Landfill Gas Project Activities (ACM0001), which had already been approved by the CDM Executive Board. This methodology is applicable to projects for the recovery and utilization of landfill gases. There are presently almost no sites in the host country that are equipped for LFG recovery system, with the exception of some model sites supported by multilateral agencies, nor are there any LFG recovery controls in effect. Consequently, the release of almost all the LFG into the atmosphere without recovery was set as the baseline. There is virtually no likelihood that controls will be adopted in the future, and the effectiveness adjustment factor (AF) was therefore set at 5%. The emission reduction that is obtained by replacing energy from other sources with electric power generated by the project and transmitted to the grid was calculated by the methodology applicable to small-scale CDM projects for generating 15 MW or less power (Type 1.D).

・Demonstration of additionality:
<Investment Barrier> The rate of return would remain low if the project relied on income from electric power sales alone (assessed by benchmark methods using market money rates and government bonds). Moreover, power purchasing agreements in the short term (1.2 years) entail risks. Therefore this is not attractive as an investment project.
<Technological Barrier> LFG power generation technology is not new in global terms, but the host country has not accumulated a record of experience operating such technology. Therefore this can be considered a project utilizing new technology.
<Institutional Barrier> There are no laws and regulations that mandate obligatory LFG recovery.
Estimation of GHG emissionsThe emission reduction to be realized by implementation of this project is calculated as the sum of two factors: One is the recovery and utilization of methane (utilization in gas engine generators and burning off in flaring equipment) so that release into the atmosphere is avoided. The other is the reduction in fossil fuels burned to generate the electric power that is replaced by the power generated in this project. (Calculation of the emission factor of the electric power grid) The average emission factor (t-CO2/MWh) of the Huadong electric power grid, where the project site is located, was calculated using data extracted from the 2002 China Year Book. (Result: 1.11 t-CO2/MWh) There is limited public disclosure of information concerning plans for the development of power generating capacity within this grid, and it is difficult to estimate an average grid emissions coefficient for the period in which credits are to be gained. Therefore this average emissions coefficient was used for ex-ante calculations to derive the future emission reduction. It was decided, however, that the average grid emission factor will be subject to monitoring, and the figures are to be subject to ex-post review on the basis of data that
are revised annually. (Result of calculation of reduction in emissions) The results from calculation of the reduction in emissions during the initial project period are as shown in the below table.

This project is not envisioned to experience any LFG leakage.
Monitoring methodologyMonitoring methodology and methods are adopted from the consolidated methodology for landfill gas project activities (ACM0001), which had already been approved by the CDM Executive Board. This methodology is applicable to projects that recover landfill gas for burning off or for power generation, and that connect to the power grid in order to replace the grid power source and thus reduce emissions of methane gas.
Environmental impactThe environmental impact assessment (EIA) is to be implemented according to guidance received from the State Environmental Protection Administration in the host country. Approval is implemented by different agencies depending upon the size of the investment. Large-scale projects (100 million USD or more) are handled at the national level, and small-scale projects (under 100 million USD) are handled at the provincial level. This project is expected to come under the small-scale category, so approval is being handled at the provincial level. LFG recovery and utilization for electric power generation constitutes an environmental improvement project. It is therefore considered to have basically no negative impact on the environment. There are,
nevertheless, two conceivable headings for assessment of environmental impact, as shown below. Evaluation under these headings showed that no problems existed.
(1) NOx, noise, and vibration generated in the course of recovering methane, generating electric power, and burning off methane
(2) Problems of impact on scenic views in surrounding areas resulting from installation of equipment at the landfill site
Issues and tasks for project implementationThe host country has instituted Interim Measures for Operation and Management of Clean Development Mechanism Projects, and it imposes various restrictions on the investing country with respect to the price of credits, taking of profits, and other such matters in order to grant approval. The greatest issue for Chubu Electric Power Co., Inc. is whether the Chinese government will approve the project under conditions that will prevent it as a foreign-owned corporation from suffering unreasonable loss. At present, the project capital is anticipated to be composed of investments and loans from local enterprises in the host country. These circumstances make it difficult for Chubu Electric Power Co., Inc., to participate as an investor. The company therefore aims to take part in the project by structuring the CDM scheme, carrying out the procedures to obtain credits, and purchasing carbon credits.